ANNUAL REPORT
ELECTRICA S.A. - ANNUAL REPORT 2022
ELECTRICA S.A. - ANNUAL REPORT 2022
SUMMARY
6
8
Message from the Chairman
of the Boards of Directors
Message from the
Chief Executive Officer
267
323
2022 Separate Financial
Statements
Independent Auditor’s
Report on The Separate
Financial Statements
329
399
2022 Consolidated Financial
Statements (OMFP
2844/2016)
Independent Auditor’s
Report on the 2022
Consolidated Financial
Statements (OMFP
2844/2016)
407
477
2022 Consolidated Financial
Statements (IFRS-EU)
Independent Auditor’s
Report on the 2022
Consolidated Financial
Statements (IFRS-EU)
11
263
2022 Directors’ Report
Explanations Regarding
the Differences between
Consolidated Financial
Statements OMFP
2844/2016 vs IFRS-EU
485
Statement
of the Management
Message from the Chairman
of the Board of Directors
6
it
that
Looking back on the year 2022, it is
obvious
represented another
chapter marked by unexpected elements
and challenges at company, industry and
even at country
level. Certainly, the
geopolitical context at the border with
Ukraine, together with repeated legislative
adjustments and the end of a pandemic,
quickly
company’s
evolution, so we were faced again with
exceptional situations, where we had to
manage the company’s strategy and its
resources as efficiently as possible.
influenced
the
Undoubtedly, the last few years have been
marked by important transformations in
the energy industry, both legislative and
conceptual, and in this regard, Electrica’s
Board of Directors and the management
team have worked together and have
constantly sought to generate solutions
and create a balance between long-term
strategic objectives and specific short-
term or operational needs, generated by
the context in which we operated.
The measures implemented in order to
streamline the core activities, reduce costs
and optimize investments have led to very
good financial results, in fact the best since
the IPO, both in terms of total revenues
(RON 10 billion), EBITDA (RON 1.36 billion)
and net profit (RON 559 million), mainly
due to the regulation of the capitalization
of certain cost categories in the distribution
segment, but also to the performance of
the supply segment.
Furthermore, we have managed to take a
new step in our target to expand our
activity across the borders of the country
and, in addition to the opening of the
branch in the Republic of Moldova in 2020,
in 2022 we have obtained a license from
the Hungarian Energy and Public Utility
Regulatory Authority that will allow us to
trade electricity on the wholesale market.
Therefore, from our perspective, the year
2022 was a new opportunity to show the
solidity and the high degree of resilience
of Electrica Group, as well as the essential
role it plays in the Romanian economy. All
this would not have been possible without
a strong and dedicated team. That is why I
would like, on behalf of myself and my
colleagues in the Board of Directors, to
thank all the Group’s employees, who we
know have made sustained efforts to
effectively overcome the challenges and
achieve the set objectives.
We hope that 2023 will be a year in which
the focus will be on developing production
capacities.
We will definitely still need to demonstrate
in the future that we are capable of
adapting to the continuous changes in the
energy market, which may come with
challenges difficult to anticipate, especially
due to the legislative changes. At Group
level, we have set a series of objectives
and a way of operating that respond to
the significant changes in the market and
to the needs of our customers, and at the
same time ensure the growth of the
company. We are confident that we will
continue the sustainable development of
the business and that we will generate, as
our
before,
shareholders,
customers,
partners and employees.
stable prospects
investors,
for
Iulian Cristian Bosoanca,
Chairman of the Board of Directors
Electrica
7
Message from the CEO
8
At both national and international level,
2022 has brought a new set of challenges
for the entire energy market, and beyond.
Despite the challenging environment in
which we operated, the financial perfor-
mance achieved by the Electrica Group,
the best in the 8 years since the listing,
once again demonstrates that we are a
solid, stable, and perhaps more impor-
tantly than ever, responsible business.
This is the result of a continuous process
of optimization and adaptation to market
developments, and I thank colleagues,
customers, investors and partners, who
supported these efforts, as well as the
Board of Directors, who trusted the mea-
sures proposed by the management team.
Together, we have managed to increase
the capacity of the Group’s companies to
optimize their operations, to undertake
the planned investments and to improve
the services offered. Clearly, the process is
a complex, long-term one, and will conti-
nue in line with market requirements, while
pursuing both the interest of our clients
and that of our shareholders.
As always, we have been and will continue
to be dedicated to maintaining this ba-
lance between creating value for our
clients and maximizing profits for our
shareholders, while consolidating our po-
sition in the market and expanding into
complementary segments. All this, within
a culture of ethics,
integrity, and
sustainability.
At Group level, we have already imple-
mented a series of ESG policies, and we
consider the difference from the optimal
standards to be low. In addition to existing
initiatives, we intend to align our strate-
gies, policies and current activities with
the paradigm assumed at the level of the
European Union, so that we can contribute
to the common effort to reduce the effects
of climate change and social inequalities.
Corporate governance and investor rela-
tions remain at the forefront for us, seeking
continuous improvement and implemen-
tation of the best practices in the field.
Therefore, for the second consecutive
year, Electrica was among the companies
that received a score of 10 in the VEKTOR
evaluation, the investor communication in-
dicator for listed companies.
Last year, Electrica ranked 7th in the top of
the most valuable Romanian brands. This
is the highest position achieved so far in
this ranking, with an estimated market
value of 203 million euros, representing a
24.5% increase compared to the previous
year.
In this context, we are confident that we
are rapidly moving towards meeting all the
criteria for the inclusion in the internatio-
nal FTSE Russell indices, having already
successfully achieved many of them. This
is an ambition that will allow us to attract
new investors and consolidate our posi-
tion in the capital market.
Going forward, we will continue to adapt
our activities and strategy to market con-
ditions, relying on sustainable growth of
Group companies, so as to ensure financial
stability and efficiency across all portfolio
business lines. Regarding our future plans,
we will continue to develop the pro duction
segment, especially from renewable sour-
ces, all the more so given the challenges
arising internationally in the supply chain.
We are already working on a new medium
and long-term strategy at Group level,
with the common thread being the adap-
tation of the business to the complex
ecosystem in which we operate.
Certainly, 2023 will also have its own cha-
llenges, but we remain firmly committed
to taking all necessary measures to bring
added value to our stakeholders, conti-
nuing to focus on achieving sustainable
performance. We will ensure that the
Electrica Group maintains the flexibility
and agility necessary to quickly adapt to
any market changes and to address new
business opportunities.
Alexandru Aurelian Chirita,
CEO Electrica
9
DIRECTORS’ REPORT
FOR THE YEAR 2022
(based on the consolidated financial statements prepared in accordance with the International
Financial Reporting Standards as adopted by the European Union – IFRS-EU)
as well as
(based on the individual and consolidated 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 - OMFP 2844/2016)
REGARDING THE ECONOMIC AND FINANCIAL ACTIVITY OF
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 2022
NOTE: This report contains the financial analysis of both sets of financial statements mentioned above,
which were drawn up and submitted to the approval of the Ordinary General Meeting of Shareholders
on 27 April 2023 by the Board of Directors of Electrica S.A.. Further in this report, where there
are differences between financial indicators, the corresponding standard will be expressly marked
(S-IFRS-EU, respectively S-OMFP 2844/2016)
2022 Directors’ Report
Free translation from Romanian, which is the official and binding version, and will prevail, in the event of any
discrepancies with the English version
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2022 Directors’ Report
Content
2022 Directors’ Report
2022 Directors’ Report ................................................................................................. 11
1 Electrica 2022 Overview ............................................................................................................. 17
1.1. 2022 Key financial data ............................................................................................................ 19
1.1.1. Key financial data - S-IFRS-EU ................................................................................................... 19
1.1.2 Key financial data - S-OMFP 2844/2016 ................................................................................. 20
1.2 Key events in 2022 ...................................................................................................................... 26
1.2.1 ELSA’s General Meetings of Shareholders (GMS) ................................................................ 26
1.2.2 Litigations with significant impact on the financial performance ................................ 31
1.2.3 Distribution segment ..................................................................................................................... 33
1.2.4 Supply segment ............................................................................................................................... 34
1.3. Subsequent events to the balance sheet date ..................................................... 35
2 Electrica Group ................................................................................................................................. 39
2.1. Organizational structure ....................................................................................................... 40
2.2. Mission, vision, values ............................................................................................................ 43
2.3. Key elements of the 2019 – 2023 Corporate Strategy .................................. 44
2.4. Outlook ........................................................................................................................................... 47
2.5. Key factors, directions and significant market trends affecting the
operational results of Electrica Group ................................................................................. 50
3 Electrica on the capital markets .......................................................................................... 55
3.1. Ownership structure ................................................................................................................ 56
3.2 Shares evolution on BSE and Global depository receipts (GDRs)
evolution on LSE .................................................................................................................................. 57
3.2.1 BSE shares ......................................................................................................................................... 57
3.2.2 Global Depositary Receipts (GDRs) on the LSE:............................................................... 58
3.3. Investor relations (IR) ............................................................................................................ 60
3.4. Related parties transactions ............................................................................................. 61
4.1. Corporate Governance Code ............................................................................................. 66
4.2. General Meeting of ELSA’s Shareholders ................................................................ 67
4.3. Shareholders’ rights ................................................................................................................ 69
4.4. ELSA’s Board of Directors ................................................................................................ 71
01 January – 31 December 2022 ............................................................................................. 79
4.5. The activity of ELSA’s Board of Directors and of its consultative
committees in 2022 ........................................................................................................................... 80
4.6. ELSA’s Executive management ..................................................................................... 85
4.7. Remuneration of the Directors and of the Executive Managers with
mandate agreements ........................................................................................................................ 92
4.8. Statement regarding the corporate governance
“Comply or Explain” ......................................................................................................................... 93
4.9. Implementing action plans undertaken by signing the framework
agreement with EBRD ..................................................................................................................... 99
The action plan regarding corporate governance ..................................................... 100
The Environmental and Social Action Plan (ESAP) ..................................................................... 102
4.10. Internal audit activity report for 2022...................................................................... 109
5 Operating activity of Electrica in 2022 ........................................................................... 111
5.1. Operating segments ................................................................................................................. 112
DISTRIBUTION SEGMENT ..................................................................................................................... 112
.
SUPPLY SEGMENT ................................................................................................................................... 113
ENERGY SERVICES SEGMENT ............................................................................................................ 114
ELECTRICITY PRODUCTION ................................................................................................................ 114
5.2. Fixed assets ................................................................................................................................. 115
5.2.1 Tangible assets – summarize key aspects of their location and main
characteristics ............................................................................................................................................ 115
5.2.2 Tangible assets – summarize key aspects of their attrition ........................................... 116
3.5. Dividends policy ........................................................................................................................ 61
5.2.3 Investments ...................................................................................................................................... 117
3.6. Dividend distribution ............................................................................................................. 62
5.2.4 Aspects of ownership of tangible assets ............................................................................ 120
3.7. Own shares .................................................................................................................................... 63
4 Corporate Governance in ELSA ........................................................................................... 65
5.3. Procurement ................................................................................................................................. 121
5.4. Sales activity ................................................................................................................................ 121
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2022 Directors’ Report
Content
2022 Directors’ Report
5.5. Personnel ........................................................................................................................................ 124
A.1.1.3 Other significant litigations (with a value higher thanEUR 500 thousand) .......... 183
5.6. Environmental considerations ......................................................................................... 127
5.7. Research and development activities ........................................................................ 128
5.8. Significant aspects regarding the impact on the recognition of
financial assets as a result of the amendment of the concession
agreements – S-IFRS-EU ................................................................................................................ 129
5.9. Significant aspects of the impact of subsidies on the
capitalization of additional costs related to technological consumption
(NL) – S-OMFP 2844/2016 ........................................................................................................... 130
5.10. Principle of business continuity – substantiation and working
hypothesis ................................................................................................................................................ 130
6 Electrica financial reporting for 2022 .............................................................................. 133
6.1. Consolidated statement of the financial position – S-IFRS-EU ................ 134
6.2. Consolidated statement of profit or loss – S-IFRS-EU .................................. 138
6.3. Consolidated cash flow statement – S-IFRS-EU ................................................ 143
6.4. Consolidated statement of the financialposition
- S-OMFP 2844/2016 ........................................................................................................................ 145
6.5. Consolidated statement of profit or loss - S-OMFP 2844/2016 ............ 149
6.6. Consolidated cash flow statement - S-OMFP 2844/2016 .......................... 155
6.7. Separate statement of the financial position 2844/2016 ............................ 157
6.8. Separate statement of profit or loss 2844/2016 ............................................... 161
6.9. Separate cash flow statement 2844/2016 ............................................................. 162
6.10. Risk management ................................................................................................................... 165
6.11. Description of the main features of internal control and risk
management systems in relation to the financial reporting process ............ 174
7 Statements ........................................................................................................................................... 177
Appendix 1 – Litigations .................................................................................................................. 179
A.1.1 Electrica Group litigations in 2022: .............................................................. 179
A.1.1.1 Disputes with ANRE ..................................................................................................................... 179
A.1.1.2 Fiscal matter disputes ................................................................................................................ 181
A.1.1.4 Litigations against the Romanian Court of Accounts .................................................... 189
A.1.1.5 Other litigations with significant impact ............................................................................. 190
Appendix 2 – Details of the main investments of
Electrica Group during 2022 ........................................................................................................ 195
Appendix 3 – Applicable regulatory framework............................................................ 202
A.3.1 - Applicable legal framework compared to 2022 vs 2021: ........................ 202
A.3.1.1 Distribution activity ..................................................................................................................... 202
A.3.1.2 Supply activity ............................................................................................................................. 219
A.3.2. Changes to the legal framework in 2022/2023
up to the date of approval of the financial statements ........................................... 240
A.3.2.1. Distribution segment ............................................................................................................... 240
A.3.2.2. Supply segment ....................................................................................................................... 248
Appendix 4 – Corporate Governance .................................................................................... 251
A.4.1. The Board of Directors of ELSA’s subsidiaries ................................................. 251
A.4.2. Executive management of ELSA’s subsidiaries .............................................. 252
A.4.3. Number of shares owned by the managers of Electrica Group ......... 254
A.4.4. General Meetings of Shareholders of ELSA subsidiaries ........................ 255
Glossary .......................................................................................................................................................................260
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1 Electrica 2022 Overview
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2022 Directors’ Report
2022 Directors’ Report
1 Electrica 2022 Overview
Identification details of Electrica
Report date: 24 March 2023
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:
y International Financial Reporting Standards as approved by the European Union (“IF-
RS-EU”)
y Order of the Ministry of Public Finance no. 2844/2016 for the approval of the Account-
ing Regulations in accordance with International Financial Reporting Standards (OMFP
2844/2016)
Reporting period: 2022 Year (period 1 January - 31 December 2022)
Audit: The consolidated financial statements (both sets, S-IFRS-EU and S-OMFP 2844/2016)
and respectively the individual financial statements as of and for the period ended 31 December
2022 are audited by an independent financial auditor.
Table 1. Company details
ISIN
Bloomberg Symbol
Currency
Nominal Value
Stock Market
Ticker
Source: Electrica
Ordinary Shares
GDR
ROELECACNOR5
US83367Y2072
OQVZ
RON
RON 10
ELSA:LI
USD
-
Bucharest Stock Exchange REGS
EL
London Stock Exchange MAIN
MARKET
ELSA
1.1. 2022 Key financial data
1.1.1. Key financial data - S-IFRS-EU
S-IFRS-EU: In 2022, the net result of the Electrica Group was a profit of RON 559 mn., a result
generated mainly by the performance of the electricity supply segment in the context of the increase
in energy costs, simultaneously with the impact generated by the amendment of the concession con-
tracts regarding the recognition of additional costs (effective costs vs recognized ex-ante in tariffs)
with the purchase of electricity to cover the NL for the distribution segment, against the background
of the increase in the unit price of electricity as well as the deficit of electricity existing throughout the
European Union.
S-IFRS-EU: Based on the concession contracts amendments, the additional cost of purchas-
ing electricity for covering the own technological consumption of the distribution operators (actual
costs with the purchase of electricity for own technological consumption (“NL”) coverage compared
to the costs included in the regulated tariffs) are recognised as financial asset (guaranteed asset) as
part of the concession agreement.
S-IFRS-EU: The company recorded income from initial recognition of financial assets rising
from concession contracts in amount of RON 951.6 mn., representing additional NL calculated as the
difference between the net cost with the purchase of NL and the NL cost included in the regulatory
tariff, for the period 1 January - 31 December 2022.
S-IFRS-EU: The revenues of the Electrica Group in 2022, 2021 and 2020 were RON 10,010 mn.,
RON 7,179 mn., respectively RON 6,501 mn.
Table 2. Key financial data for 2022 - 2020 – IFRS-EU
(RON mn.)
Revenue
Other operating income
Operational costs
EBITDA1
EBIT
Gross profit
Net profit
Source: Electrica
2022
10,010
3,793
(12,973)
1,325
829
664
559
2021
7,179
196
(7,980)
(128)
(606)
(632)
(553)
2020
6,501
165
(6,215)
953
459
442
388
.
S-IFRS-EU: As can be seen in the graphs below, the EBITDA margin increased by RON 1,453
mn. in 2022 compared to 2021 (vs. RON 1,081 mn. decrease in 2021 compared to 2020), while the net
profit margin increased by RON 1,112 mn. (vs. decrease RON 940 mn. in 2021 compared to 2020).
S-IFRS-EU: As of 31 December 2022, the Group has a capital structure with net debt position2
of RON 3,051 mn. (31 December 2021: RON 1,056 mn., respectively 31 December 2020: RON 81 mn.).
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 meth-
od 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.
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2022 Directors’ Report
2022 Directors’ Report
Table 3. Key financial data for 2022 - 2020 – S-OMFP 2844/2016
Figure 1: Consolidated revenue
of Electrica Group (RON mn.)
Figure 2: EBITDA (RON mn.)
and EBITDA margin (%) - S-IFRS-EU
10,010
609
9,401
6,501
557
7,179
582
5,944
6,597
2020
2021
2022
Revenue excl Green Certificates
Green Certificates Revenues
14.7%
953
2020
13.2%
1,325
2022
-1.8%
(128)
2021
EBITDA
EBITDA Margin
Source: Electrica
Source: Electrica
Figure 3: Consolidated net profit (RON mn.)
Figure 4: Net debt/(cash) (RON mn.)
6.0%
388
-7.7%
5.6%
559
0.9%
25
(553)
(625)
-28.9%
3,051
1,056
81
2020
2021
Q4 2021 2022 Q4 2022
2020
2021
2022
Net Result
Net Result Margin
Source: Electrica
Source: Electrica
1.1.2 Key financial data - S-OMFP 2844/2016
S-OMFP 2844/2016: In 2022, the net result of the Electrica Group was a profit of RON 559
mn., a result generated mainly by the performance of the electricity supply segment in the context of
the increase in energy costs, simultaneously with the impact generated by the amendment of the
concession contracts regarding the recognition of additional costs (effective costs vs recognized
ex-ante in tariffs) with the purchase of electricity to cover the NL for the distribution segment, against
the background of the increase in the unit price of electricity as well as the deficit of electricity exist-
ing throughout the European Union.
S-OMFP 2844/2016: Starting with 30 September 2022, the Company applies the provisions
of GEO no. 119/2022, by which the additional costs for the purchase of electricity realized between 1
January 2022 and 31 August 2023, in order to cover the own technological consumption, compared
to the costs recognized in the regulated tariffs, are capitalized quarterly.
S-OMFP 2844/2016: The company recorded income from NL capitalization in the amount of
RON 951.6 mn., representing additional NL calculated as the difference between the net cost with the
purchase of NL and the NL cost included in the regulatory tariff, for the period 1 January - 31 December
2022.
S-OMFP 2844/2016: The revenues of the Electrica Group in 2022, 2021 and 2020 were RON
10,010 mn., RON 7,179 mn., respectively RON 6,501 mn.
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(RON mn.)
Revenue
Other operating income
Capitalised costs of
intangible non-current
assets
Operational costs
EBITDA1
EBIT
Gross profit
Net profit
Source: Electrica
2022
10,010
2,841
989
(13,011)
1,363
829
664
559
2021
7,179
196
-
(7,980)
(128)
(606)
(632)
(553)
2020
6,501
165
-
(6,215)
953
459
442
388
S-OMFP 2844/2016: As can be seen in the graphs below, the EBITDA margin increased by
RON 1,491 mn. in 2022 compared to 2021 (vs. RON 1,081 mn. decrease in 2021 compared to 2020),
while the net profit margin increased by RON 1,112 mn. (vs. decrease RON 940 mn. in 2021 compared
to 2020).
S-OMFP 2844/2016: As of 31 December 2022, the Group has a capital structure with net debt
position2 of RON 3,051 mn. (31 December 2021: RON 1,056 mn., respectively 31 December 2020: RON
81 mn.).
Figure 5: Consolidated revenue of Electrica Group
(RON mn.)
Figure 6: EBITDA (RON mn.)
and EBITDA margin (%) - S-OMFP 2844/2016
10,010
609
9,401
6,501
557
7,179
582
5,944
6,597
2020
2021
2022
Revenues excl Green Cetificates
Green Certificates Revenues
Source: Electrica
Source: Electrica
14.7%
953
2020
13.6%
1,363
2022
-1.8%
(128)
2021
EBITDA
EBITDA Margin
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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 meth-
od 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.
2
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Figure 7: Consolidated net profit (RON mn.)
Figure 8: Net debt/(cash) (RON mn.)
Figure 10: Evolution of the number of users (mn.)
Figure 11: Quantity distributed (TWh)
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6.0%
388
-7.7%
5.6%
559
0.9%
25
(625)
(553)
-28.9%
3,051
1,056
81
2020
2021
Q4 2021 2022 Q4 2022
2020
2021
2022
Net Result
Net Result Margin
Source: Electrica
Source: Electrica
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), owns
3 network zones, CEZ through Distributie Oltenia and E.ON through Delgaz Grid own the
remaining two;
– Electrica Group is a key player in the electricity distribution sector, both in terms of areas
covered and of number of users served;
– The estimated Regulated Assets Base (RAB) value at the end of 2022 was RON 6.2 bn;
– 202,159 km of electric lines - 7,603 km for High Voltage (“HV”), 46,589 km for Medium
Voltage (“MV”) and 147,967 km for Low Voltage (“LV”);
– Total area covered: 97,196 km2, 40.7% of Romania’s territory;
– 3.88 mn. users (2022) for the distribution activity;
– 17.73 TWh of electricity distributed in 2022, a decrease of 4% as compared to 2021;
– 39.9% market share for the distribution of electricity to final users in 2021 (based on
.
distributed quantities, according to ANRE report for 2021).
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Source: Electrica
9.55
5.78
9.67
9.79
5.87
5.96
44.90
44.10
27.17
26.62
46.30
27.83
3.77
3.80
3.83
17.73
17.48
18.47
2019
2020
2021
2019
2020
2021
Electrica
Others
Electrica
Others
Source: ANRE Report for performance indicators’
monitoring 2021, Electrica
Source: ANRE Report for performance indicators’
monitoring 2021, Electrica
Key financial indicators for Distribution segment
In 2022, revenues from the electricity distribution segment increased by approx. RON 665.8
mn., or 24.4%, to RON 3,396.6 mn., from RON 2,730.8 mn. in 2021. The effect of the increase by RON
110.9 mn. of revenues recognized in accordance with IFRIC 12, to which was added the increase in
distribution tariffs as well as the decrease in volumes of electricity distributed, net impact of RON
554.9 mn. or 24.9%.
S-IFRS-EU: EBITDA in the distribution segment is positively affected by the income from ini-
tial recognition of financial assets rising from concession agreements amendments o have contribut-
ed with an increase of RON 951.6 mn.
S-OMFP 2844/2016: EBITDA in the distribution segment is positively affected by the income
from the production of intangible assets from capitalizing additional costs with NL that have contrib-
uted with an increase of RON 989.3 mn.
The net result of the segment is profit in amount of RON 308.2 mn. in 2022 compared with
the loss registered in 2021 in amount of RON 139.0 mn. The net profit is unfavorably affected by the
increase of the negative financial result with RON 78.6 mn. reaching the amount of RON 152.0 mn. in
2022 compared to the negative financial result in 2021 in amount of RON 73.5 mn.
We also mention the fact that, at the beginning of the current PR4 regulatory period, ANRE
made a total negative correction for the closing of PR3 in the amount of RON (730) mn. (nominal
terms), respectively (RON 665) mn. (2018 terms), of which RON (341) mn. for the meters recognized
as investments in PR2 (2008-2013). The meter correction was challenged in court by the distribution
branch of the Electrica Group, because in 2013, ANRE recognized the meters in BAR based on the
principle of non-discrimination of all distribution operators, although they were not registered as fixed
assets. The total negative correction related to PR3 decreased the regulated profitability related to
PR4, with an average annual value of RON (146) mn.
Figure 12: Revenues - distribution
segment (RON mn.)
Figure 13: EBITDA – distribution
segment (RON mn.) - S-IFRS-EU
2,751
2,731
3,397
624
2020
372
2021
980
2022
2020
2021
2022
Source: Electrica
Source: Electrica
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Figure 14: EBITDA –
distribution segment (RON mn.) - S-OMFP
2844/2016
Figure 15: Net Profit –
distribution segment (RON mn.)
1,017
77
624
372
2020
2021
2022
308
(139)
Figure 17: Revenues - supply segment (RON mn.)
Figure 18: EBITDA - supply segment (RON mn.)
8,186
616
7,570
5,015
557
5,772
585
4,458
5,188
5.3%
265
4.8%
391
-7.6%
(440)
2020
2021
2022
2020
2021
T4 2021
Source: Electrica
Source: Electrica
Figure 16: Net debt/(Cash) – distribution segment (RON mn.)
1,397
781
706
2020
2021
2022
Source: Electrica
SUPPLY SEGMENT
Essential market data (according to ANRE Report for September 2022)
– The supply market is composed of both competitive and universal service and last resort
segment (US and LR);
– The universal service and last resort segment consist of 6 last resort suppliers designated
at national level;
– The competitive segment consists of 91 suppliers (including the last resort suppliers oper-
ating on retail competitive segment), out of which 83 are relatively small (below 4% market
share);
In 2022, EFSA is the market leader with a market share of 17.61%; it is also the leader on the LR seg-
ment having a market share of 30.53%, while its market share on the competitive segment is 12.82%
(in accordance with ANRE September 2022 Report). Comparatively, in 2021, EFSA had a market
share of 18.42% in total energy market; 30.59% of the LR market and a market share of 12.72% of the
competitive market (ANRE report for December 2021).
Key financial indicators for Supply segment
Revenues from the supply of electricity and natural gas increased in 2022 by approx. RON 2,413.6
mn., or 41.8%, to RON 8,186.0 mn., from RON 5,772.4 mn. in 2021.
This evolution represents mainly the effect of the increase of the sale prices of electricity on the re-
tail market by 53%, but also of an increase of the quantity of electricity supplied by 8,7%.
Regarding EBITDA, the supply segment registered in 2022 a significant increase reaching the
amount of RON 390.9 mn. (positive EBITDA) from RON 439.7 mn (negative EBITDA) recorded in
2021, and a significant improvement of the EBITDA margin from -7.6% in 2021 to 4.8% in 2022.
The supply segment has a net cash financial position which has increased compared to 2021 by ap-
prox. RON 1,207.7 mn, reaching the level of RON 1,449.3 mn. in 2022.
Revenues excl Green Certificates
Green Certificates Revenues
2020
2021
2022
EBITDA
EBITDA Margin
Source: Electrica
Source: Electrica
Figure 19: Net profit - supply segment (RON mn.)
Figure 20: Net debt/(Cash) - supply segment
4.3%
214
3.2%
261
-6.8%
(390)
2020
2021
Net Result
2022
Net Result Margin
1,449
242
(183)
2020
2021
2022
Source: Electrica
Source: Electrica
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1.2 Key events in 2022
During 2022 the following main events took place:
1.2.1 ELSA’s General Meetings of Shareholders (GMS)
ELSA’s General Meetings of Shareholders (GMS) and the main projects developed and com-
pleted during the year as a result of the approval received from ELSA’s GMS
In 2022, one Ordinary General Meetings of Shareholders (OGMS) took place on 20 April, and
four Extraordinary General Meetings of Shareholders (EGMS) was held on 21 March, 20 April, 9 June
and, respectively, on 12 October.
On 28 January 2022, ELSA’s BoD convened the Extraordinary General Meeting of Shareholders
(EGMS) for 21 March 2022, which mainly approved the empowerment of ELSA’s representative in the
EGMS of EFSA to vote for the total ceiling of short-term financing that can be contracted by EFSA
during the 2022 financial year from bank institutions (commercial banks or international financial in-
stitutions) to finance the current activity in the amount of up to RON 1.5 bln, with ELSA’s guarantee of
maximum RON 1.65 bln. The EGMS resolution is avalable on Electrica’s website:
https://www.electrica.ro/en/investors/general-meetings-of-shareholders/2022-gms/general-meet-
ing-of-shareholders-as-of-21-march-2022/ .
On 28 February 2022, ELSA’s BoD convened the Ordinary General Meeting of Shareholders
(OGMS) and the Extraordinary General Meeting of Shareholders (EGMS) of ELSA, for 20 April 2022.
Within the OGMS, ELSA’s shareholders have mainly approved the following:
– The Separate and Consolidated Annual Financial Statements for the financial year ended 31
December 2021, as well as the Budget of Revenues and Expenses for 2022 – both individual
and at consolidated level;
– The distribution of the net profit for the financial year 2021: total gross dividend value of
RON 152,798,852, the gross dividend per share of RON 0.4500, ex-date - 24 May, registra-
tion date - 25 May 2022, date of payment of dividends - 17 June 2022;
– The discharge of liability of the members of ELSA’s BoD;
– The amendment of ELSA’s Remuneration Policy for Directors and Executive Managers in
force, by revising the provisions regarding the weights of the key performance indicators
(KPI) and the principles underlying the calculation of the result of the annual evaluation of
executive directors;
– The Remuneration Report for Directors and Executive Managers of ELSA.
The shareholders who participated in the EGMS mainly approved a ceiling of up to RON 900
mn. for the bond issues of Electrica for the period 2022-2023, as well as the empowerment of ELSA’s
BoD to take all measures to carry out and complete the bond issuance operations. The GMS resolu-
tions are available on Electrica’s website below:
https://www.electrica.ro/en/general-meeting-of-shareholders-as-of-20-april-2022/ .
On 15 April 2022, ELSA’s BoD decided to convene the Extraordinary General Meeting of
Shareholders (EGMS) of ELSA, for 9 June 2022. During the EGMS, ELSA’s shareholders have mainly
approved the following:
– the empowerment of Electrica’s representative to participate in EFSA’s EGMS and vote for
increasing the total ceiling of short-term financing that can be contracted by EFSA during
the financial year 2022 for financing its current activity up to the amount of RON 1.7 bln.
with Electrica’s guarantee of maximum RON 1.87 bln.
– the empowerment of Electrica’s representative, to participate in DEER’s EGMS and to vote
for the approval of a total ceiling of medium and long term financing that can be contract-
ed by DEER during the financial year 2022 from banking institutions to cover the additional
costs related to own technological consumption as well as to finance the working capital
and the investment projects in value of up to RON 0.7 bln., with the guarantee of Electrica
of maximum RON 0.77 bln.
– a total ceiling of guarantees (which will not be real guarantees) that may be granted by
Electrica for the above-mentioned financing in the amount of up to RON 1.87 bln. for EFSA
and of up to RON 0.77 bln. for DEER.
The EGMS resolution is avalable on Electrica’s website here:
https://www.electrica.ro/en/investors/general-meetings-of-shareholders/2022-gms/
general-meeting-of-shareholders-as-of-9-june-2022/
On 18 August 2022, ELSA’s BoD decided to convene the Extraordinary General Meeting of
Shareholders (EGMS) ELSA, for 12 October 2022, the topics on the agenda being related to the up-
date of the Articles of Association on the Company. The EGMS approved the new version of Articles
of Association
that was published here: https://www.electrica.ro/en/the-group/about/
constitutive-act/
Changes in the structure of ELSA’s Board of Directors (BoD) and its committees
At the beginning of 2022, the composition of the Board of Directors was as follows: 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.
Regarding the position of Chairman of ELSA’s BoD, it was occupied Mr. Iulian Cristian
Bosoanca being elected in this capacity during the Board meeting of 15 December 2020 for the peri-
od starting from 1 January 2021 and until 31 December 2021. Subsequently, as result of the change of
the Board 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. On 15
December 2022, ELSA’s BoD reelected Mr. Bosoanca as Chairman of the Board starting with 1 January
2023 until 31 December 2023.
Regarding the composition of ELSA’s BoD consultative committees, as of 31 December 2022,
the composition of the consultative committees of ELSA’s BoD was the following:
The Audit and Risk Committee:
– Ms. Radu Mircea Florescu – Chairman;
– Mr. Dragos-Valentin Neacsu – Member;
– Mr. Iulian Cristian Bosoanca – Member.
The Nomination and Remuneration Committee:
– Mr. Adrian-Florin Lotrean – Chairman;
– Mr. Radu Mircea Florescu – Member;
– Mr. Ion Cosmin Petrescu – Member.
The Strategy and Corporate Governance Committee:
– Mr. Gicu Iorga – Chairman;
– Mr. George Cristodorescu – Member;
– Mr. Adrian-Florin Lotrean – Member.
In accordance with the decision of the Board of Directors of 20 December 2022, the compo-
sition of the committees will remain the same until 31 December 2023.
Regarding ELSA’s executive management during 2022, several changes occurred, as follows:
– On 3 January 2022, the mandate agreement as Chief Financial Officer of Mr. Mihai Darie,
will effectively terminate upon the end of the 4-year duration.
– On 3 January, ELSA’s Board of Directors appointed Mr. Stefan-Alexandru Frangulea as in-
terim executive director of the Financial Division starting 4 January 2022 until 31 December
2022.
– On 15 April 2022, the Company’s Board of Directors took note of the notification submitted
by Mr. Stefan-Ionut Pascu regarding his resignation from the position of Chief Business
Development Officer and considers 30 April 2022 as the effective termination date, repre-
senting the last day on which the mandate contract was in force.
– On 5 May 2022, the Company’s Board of Directors (BoD) decided to revoke Mrs.
Georgeta-Corina Popescu from the position of Chief Executive Officer (CEO) without
cause, starting with 16 May 2022, and appointed Mr. Chirita Alexandru-Aurelian, as interim
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CEO, starting with 17 May 2022, for a period of 3 months, or until the appointment of a new
CEO, respectively until the revocation.
Treasury matters
– On 16 August, ELSA BoD decided to extend the appointment of Mr. Chirita Alexandru-
Loans related to third-parties
2022 Directors’ Report
2022 Directors’ Report
Aurelian, Romanian citizen, as interim CEO, until 31 December 2022.
– During the meeting held on 29 December 2022, the Board of Directors decided to ex-
tend the appointment of Mr. Alexandru-Aurelian Chirita, as interim CEO, and Mr. Stefan-
Alexandru Frangulea as Financial Executive Director until 28 February 2023 (inclusively),
or until the appointment of a new CEO/CFO, respectively until the revocation, whichever
occurs first, with the possibility of revoking the mandate granted at any time during the
period.
Transactions with related parties
During 2022 ELSA published 34 announcements, according to art. 108 of Law no. 24/2017,
reporting transactions concluded between DEER - OPCOM, EFSA - OPCOM, DEER – EFSA, EFSA -
Transelectrica, EFSA – CEO, EFSA – Nuclearelectrica, EFSA - TEL, DEER - SNN, DEER - Eximbank in
this period, whose cumulated value in the case of each announcement case exceeds the threshold of
5% of ELSA’s net assets, calculated on the basis of Electrica’s latest available individual financial
statements.
Also, on 26 January 2022 ELSA published the Auditor’s report regarding the transactions
reported in H2 2021 according to Art. 108 Law 24/2017 (R), and on 29 July 2022 published the Auditor’s
report regarding the transactions reported in H1 2022 according to Art. 108 Law 24/2017 (R).
All these announcements and auditor’s reports can be found on ELSA’s website, at this ad-
dress: https://www.electrica.ro/en/investors/results-and-reports/current-reports-art-108/.
For more details, please see chapter 3.4 in the current report.
Other relevant events
– By the Decision no H879/2022 of the Hungarian Energy and Public Utility Regulatory
Authority, on 2 February 2022, an electricity trading License was granted to EFSA – the
Company’s supply subsidiary. This license will allow EFSA to register and trade electricity
in Hungary, on the wholesale market, including the derivatives market, the operations being
performed from EFSA’s headquarters. Also, the Group holds a natural gas supply license
valid until 2032.
– On 31 March 2022, at the recommendation of the Strategy and Corporate Governance
Committee, the Board of Directors (BoD) of Electrica decided to reposition EEV1 within the
Group by concluding a transaction between Societatea Electrica Furnizare SA (EFSA), as
seller and sole shareholder of EEV1, and Electrica Productie Energie S.A. (EPE), as buyer.
– On 6 July 2022, Electrica signed, as buyer, a shares sales and purchase agreement (“SPA”)
in one project company, Green Energy Consultancy & Investments S.R.L., wholly owned by
sellers, for a total estimated price of EUR 600,000. Green Energy Consultancy & Investments
S.R.L. develops the photovoltaic project “Vulturu” with an installed capacity of 12 MWp DC
(peak power at the level of the panels) and 9.75 MW AC (power authorized for delivery into
the grid), located in the area of Vulturu commune, Vrancea county.
– On 7 July 2022 the company published the Sustainability Report for 2021. This is avail-
able on Electrica’s website, at: https://www.electrica.ro/en/investors/results-and-reports/
sustainability-reports/.
– On 15 July 2022, the company organised a workshop dedicated exclusively to proposals for
amending the Articles of Association of the company. The purpose of the workshop is to
clarify any questions formulated by the shareholders regarding the proposals for amending
the Articles of Association, as well as to increase their commitment to this project.
– On 9 December 2022, Electrica entered into the shareholding structure of CCP.RO, follow-
ing the approval of the Board of Directors therefore the company will own 8.06% of the
share capital of CCP.RO.
– On 19 December 2022, the company signed two agreements for market making servic-
es for the Issuer with BRK Financial Group and Wood & Company Financial Services a.s.
(Wood&Co) for a period of 2 years, starting with 3 January 2023.
– On 25 January 2022, was signed the Credit Agreement no. 2022012502 concluded by
DEER and BCR by which the Lender makes available to the Borrower a multi-product cred-
it facility up to the value of RON 180 mn. for a period of 1 year, as follows: an Overdraft
Facility with the validity 25 January 2023 and a Facility for issuing bank guarantees with
the validity 25 January 2024. By the additional act no. 1 signed on 7 March 2022 the credit
facility increased from RON 180 mn. to RON 220 mn.
– On 26 January 2022, the additional documents were signed for the group’s subsidiaries,
including for ELSA in order to extend the contract no. 3189/28 January 2020 for the IDL
intraday credit limit concluded with ING Bank within the cash-pooling structure through
which the bank makes available to the borrower a credit facility in the total amount of RON
210 mn. until 27 January 2023.
– On 2 February 2022, was signed the Credit Agreement no. 11673879 concluded by EFSA
and Transilvania Bank, SE Electrica SA as co-debtor through which the Lender makes avail-
able to the Borrower a loan ceiling up to the value of RON 190 mn. until 31 July 2022.
– On 4 February 2022, was signed the Credit Agreement no. 17/8130/2022 concluded by
EFSA and BRD Groupe Societe Generale SA, SE Electrica SA as co-debtor by which the
Lender makes available to the Borrower a loan in the form of a ceiling up to the value of
RON 220 mn. until 03 August 2022.
– On 18 February 2022, was signed the Credit Facility Agreement no. WB/C/14 concluded by
EFSA and ING, SE Electrica SA as guarantor by which the Lender makes available to the
Borrower a non-committing multi-product credit facility up to a maximum value of RON
170 mn. for issuing bank guarantees valid for 6 months minus 15 days from the date of the
contract, respectively 2 August 2022.
– On 25 March 2022, was signed the Credit Facility Agreement no. WB/C/379 concluded
by DEER and ING by which the Lender makes available to the Borrower a non-committing
credit facility up to a maximum value of RON 220 mn. for the issuance of bank guarantees
valid for 12 months from the date of the contract, respectively 25 March 2023.
– On 15 April 2022, Credit Agreement no. 20220416018 concluded by EFSA and BCR, SE
Electrica SA as guarantor, whereby the Creditor provides the Borrower with a multi-prod-
uct credit facility up to the value of RON 220 mn., as follows: an Overdraft facility valid until
14 April 2023 and a Facility for Guarantee Instruments valid until 15 April 2024.
– On 13 May 2022 was signed the Additional Act no. 1 to the Credit Facility Agreement no.
WB/C/379 concluded by DEER and ING by which the Lender makes available to the Borrower
an overdraft sublimit of up to RON 50 mn. from the total facility amount of RON 220 mn.
– On 19 May 2022, was signed the Credit Agreement no. GRIM/43778-CSG concluded by
EFSA and UniCredit Bank SA having ELSA as Guarantor, by which the Lender makes avail-
able to the Borrower a multi-product credit facility up to the value of RON 220 mn. for a
period of one year for overdraft, respectively 19 May 2023 and for issuing bank guarantees
valid for two years from the date of the contract, respectively 19 May 2024 and by the ad-
ditional act no. 1 to the Credit Agreement no. GRIM/43778-CSG signed on 15 June 2022 the
credit facility increased from RON 220 mn. to RON 300 mn.
– On 26 May 2022, was signed the Credit Facility Agreement no. 20 concluded by DEER and
Raiffeisen Bank by which the Lender makes available to the Borrower a non-committing
revolving credit facility up to a maximum value of RON 220 mn. valid for 12 months from
the date of the contract, respectively 26 May 2023.
– On 31 May 2022, was signed the Additional Act no. 4 to the Credit Facility Agreement no.
201910080129 concluded by EFSA and BCR which extends the validity of overdraft limit of
RON 165 mn. until 31 May 2023 and for issuing bank guarantees until 7 October 2023.
– On 29 June 2022, was signed FX Hedging Agreement no. WB/C/1840 by and between
DEER and ING Bank NV acting through its branch office ING Bank Amesterdam, Bucharest
Branch through which parties enter into and become bound by foreign exchange hedging
transactions for a secured amount of EUR 39 mn.
– On 30 June 2022, was signed the Additional Act no. 4 to the Loan Agreement no. 2406PJ/30
June 2020, concluded by DEER and Intesa Sanpaolo Bank, which removes the noncash char-
acter, converts the facility from RON to EUR and extends the duration for which the amount
of EUR 27.3 mn. which can be borrowed by EFSA under the contract for 12 months, respec-
tively 28 June 2023.
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– On 01 August 2022, was signed the Additional Act no. 1/11673879 to the Loan Agreement
no. 11673879/02 February 2022 concluded by EFSA and Banca Transilvania, SE Electrica SA
as co-debtor, which extends the validity of the ceiling of RON 190 mn. until 31 August 2022.
– On 03 August 2022, was signed the Additional Act no. 1/03 August 2022 to the Loan
Agreement no. 17/8130/2022 dated 04 February 2022 concluded by EFSA and BRD
GROUPE SOCIETE GENERALE SA, SE Electrica SA as co-debtor, which extends the validity
of the ceiling of RON 220 mn. until 03 February 2023.
– On 03 August 2022, additional Act no. 1 to the Credit Facility Agreement no. WB/C/14 dat-
ed 18 February 2022, concluded by EFSA and ING Bank NV, SE Electrica SA as guarantor,
which eliminates the possibility of using the Credit Facility for the purpose of issuing guar-
antee instruments, and the date of the final repayment, respectively, the drawing period will
not be later than 16 September 2022.
– On 29 August 2022, EFSA concluded with Banca Transilvania, SE Electrica SA as co-debt-
or, the additional no. 2 to the Loan Agreement no. 11673879/02 February 2022, extending
the validity of the RON 190 mn. ceiling until 30 January 2023 and waives the limit of bank
guarantees.
– On 06 September 2022, EFSA concluded with ALPHA BANK ROMANIA SA, SE Electrica
SA as guarantor, Loan Agreement no. 350, in the amount of EUR 60 mn., through which the
Creditor provides the Borrower with a revocable, revolving credit line facility, valid until 06
September 2023.
– On 15 September 2022, EFSA concluded with ING Bank NV, SE Electrica SA as guarantor,
the additional no. 2 to the Loan Agreement no. WB/C/14 dated 18 February 2022, through
which the date of final repayment, respectively the drawing period will not be later than 17
October 2022.
– On 17 October 2022, EFSA concluded with ING Bank NV, SE Electrica SA as guarantor,
the additional no. 3 to the Loan Agreement no. WB/C/14 dated 18 February 2022, through
which the Facility is denominated in EUR, the possibility of using the facility in RON is elim-
inated, and the date of final repayment will not be later than 17 February 2023.
– On 26 October 2022, EFSA concluded with Raiffeisen Bank SA, SE Electrica SA as guaran-
tor, the additional no. 1 to the Loan Agreement no. 56 dated 26 October 2021, extending the
validity of Overdraft limit until 29 January 2023, and the validity of the Facility for issuing
letters of guarantee until 31 December 2024.
– On 13 December 2022, was signed the Additional Act no. 3 to the Loan Agreement no.
10091385 dated 16 December 2020 concluded by DEER and Banca Transilvania, which ex-
tends the validity of the Overdraft limit until 13 January 2023, and the validity of the Facility
for issuing letters of guarantee until 14 December 2023.
– On 22 December 2022, DEER concluded with EXIMBANK, SE Electrica SA as guarantor, the
Loan Agreement no. 1218, in amount of RON 250 mn., through which the Creditor provides
the Borrower with a credit for financing the current activity and liquidity deficit for a period
of 24 months, respectively 20 December 2024.
– On 23 December 2022, was signed the Additional Act no. 5 to the Loan Agreement no.
GRIM/75912/2017 dated 19 July 2017 concluded by SE Electrica SA, ELECTRICA SERV and
UniCredit Bank SA, extending the validity of Credit until 30 December 2030, and the valid-
ity of the Facility for issuing letters of guarantee until 31 December 2023.
– On 24 December 2022, was signed the Additional act no. 1 to the Loan Agreement no. 61
dated 24 December 2021, concluded by EFSA with Raiffeisen Bank SA, SE Electrica SA as
guarantor, extending the validity of Overdraft limit until 24 December 2023, and the validity
of the Facility for issuing letters of guarantee until 24 December 2024.
– On 27 December 2022, was signed the Credit Facility Agreement no. 165 concluded by
EFSA and BNP PARIBAS, SE Electrica SA as guarantor, by which the Lender makes avail-
able to the Borrower a non-committed credit facility up to a maximum value of RON 240
mn. for the issuance of bank guarantees valid for 12 months from the date of the contract
respectively 22 December 2023.
– On 30 December 2022, was signed the Loan Agreement no. FA 8376 for working capital
and issuance of bank guarantees concluded by SE Electrica SA as Borrower and Vista Bank,
by which the Lender makes available to the Borrower a non-committed credit facility of
RON 100 mn. for a period of 18 months, respectively 29 June 2024.
Intragroup Loans
– On 21 January 2022, was signed the Additional Act no. 1 to the Intragroup Loan Agreement
no. 87/23 December 2021 concluded by SE Electrica SA with EFSA, which extends the
duration for which the amount of RON 130 mn. which can be borrowed by EFSA under the
Contract until 23 April 2022.
– On 18 April 2022, SE Electrica SA concluded with EFSA a Framework Contract for issuing
corporate guarantees in the form of parental guarantee type (PCG), valid until 31 December
2026, through which ELSA will issue corporate guarantees in the form of Parental Guarantee
(PCG) in favour of EFSA, within the limits of the corporate approvals granted by the com-
petent bodies within ELSA.
– On 21 April 2022, was signed the Additional Act no. 2 to the Intragroup Loan Agreement no.
87/23 December 2021 concluded by SE Electrica SA with EFSA, which extends the duration
for which the amount of RON 130 mn. which can be borrowed by EFSA under the Contract
until 23 May 2022.
– On 23 May 2022, was signed the Additional Act no. 3 to the Intragroup Loan Agreement no.
87/23 December 2021 concluded by SE Electrica SA with EFSA, which changes the amount
to RON 60 mn. and extends the validity until 07 June 2022.
– On 14 June 2022, was signed a short-term Loan Agreement no. 40 concluded by SE
Electrica SA and New Trend Energy SRL up to the value of RON 2.1 mn. until 13 June 2023.
– On 15 July 2022, was signed a short-term Loan Agreement no. 46 concluded by SE Electrica
SA and Societatea Electrica Productie Energie SA up to the value of EUR 9.5 mn. until 14
July 2023 in order to acquire EEV1 shares.
– On 27 September 2022, SE Electrica SA concluded with Sunwind Energy SRL, the Loan
Agreement no. 63, on a short-term basis, in amount of RON 1.2 mn., valid until 25 September
2023, in order to finance the costs that are the responsibility of SE Electrica SA.
– On 11 October 2022, SE Electrica SA concluded with New Trend Energy SRL the Additional
act no. 1 to the Loan Agreement no. 40 dated 14 June 2022, for a new loan in amount of
RON 0.35 mn., valid until 13 June 2023.
– On 27 October 2022, SE Electrica SA concluded with Green Energy Consultancy &
Investments SRL, the Loan Agreement no. 68, on a short-term basis, in amount of RON
66.5 mn., valid until 26 October 2023, to finance the costs that are the responsibility of SE
Electrica SA.
– On 09 November 2022, SE Electrica SA concluded with Sunwind Energy SRL, the Loan
Agreement no. 73, on a short-term basis, in amount of RON 147.3 mn., valid until 27 October
2023, to finance the investments for the completion and operation of the photovoltaic
plant “Satu Mare 2” (Botiz).
1.2.2 Litigations with significant impact on the financial performance
Case no. 3889/2/2018
On 22 November 2022, The High Court of Cassation and Justice rejected the appeal declared
by ELSA against civil decision no. 707/2019, pronounced by the Bucharest Court of Appeal in file no.
3889/2/2018.
The file no. 3889/2/2018 has as object the annulment of the Competition Council Decision no.
77/20 December 2017, and in the alternative, the reduction of the fine established for ELSA up to the
minimum legal level of 0.5% of ELSA’s turnover, by re-individualizing the alleged anti-competitive act,
with the retention and full capitalization of all mitigating circumstances applicable to ELSA.
By the Decision of the Competition Council no. 77/20 December 2017 was found the breach-
ing of the provisions of art. 5 par. (1) of the Competition Law no. 21/1996 and art. 101 par. (1) TFEU by
several companies which have sold meters and related measuring equipment for electricity in Romania,
in the procedures for the award of supply contracts in the period from 27 November 2008 to 30
September 2015 and by Electrica, as a facilitator, in the period from 24 November 2010 to 30 September
2015.
The sanction applied to Electrica consists in a fine amounting to 10,800,984.04 lei, represent-
ing 2.98% of the total turnover achieved in the financial year 2016. In determining the amount of the
fine, it was taken into account that (i) Electrica cooperated fully and effectively with the Competition
Council Public during the investigation procedure, outside the scope of the leniency policy and be-
yond the legal duty to cooperate, and (ii) it is for the very first time when the authority retains the role
of facilitator for a company organizing public procurement procedures. On the merits of the case that
.
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was the subject of file 3889/2/2018, by Sentence no. 707/25 February 2019, the Bucharest Court of
Appeal rejected the annulment action as unfounded.
The file was finally resolved by rejecting the appeal declared by ELSA against the above
Sentence.
Case no. 887/90/2013
On 6 April 2022, the final updated consolidated table of the debts owed by Oltchim S.A. was
published in IPB no. 6100, updated as a result of (i) the distributions made on account of the receiva-
bles, (ii) the issued court decisions (iii) the decision of the European Tribunal of Justice in Luxembourg,
pronounced on 15 December 2021, in case T565/19 which remained final. In the final consolidated
table, updated as indicated above, Electrica is registered with the amount of RON 116,058,538, repre-
senting the secured claim, with the right to vote.
Electrica’s receivable was modified because of the decision of the European Tribunal of
Justice in Luxembourg, pronounced on 15 December 2021, in case T565/19, a decision that partially
annulled the Decision of the European Commission no. C (2018) 8592 final, dated 17 December 2018,
which established a series of measures regarding the recovery by Romania of the state aid granted to
Oltchim SA, in violation of art.108 paragraph 3 of the TFEU, through some companies, including
Electrica. In its ruling, the European court annulled several measures to recover state aid established
by the European Commission, including Measure 3, which also refers to the total amount of RON
554,959,671.97 (RON 45,106,237.96 representing the secured debt and the amount of RON
509,853,434.01 representing the unsecured debt), considered state aid with which Electrica was list-
ed in the table of debts.
The decision is final.
File no 371/33/2017
On 28 March 2022, the dispute between DEER and D.G.R.F.P. Cluj Napoca - A.J.F.P. Maramures
and ANAF which is the subject of file no. 371/33/2017, was definitively resolved by the High Court of
Cassation and Justice, by admitting the appeal declared by DEER against the civil sentence no. 163 of
8 July 2019, pronounced by the Cluj Court of Appeal, the partial annulment of the appealed sentence
and the annulment of Decision no. 275 of 31 October 2016 regarding the settlement of the DEER ap-
peal, of the Taxation Decision no. F-MM 180 of 30 March 2016 (total amount RON 32,295,033) and of
the Fiscal Inspection Report no. F-MM 160 of 30 March 2016 and for the additional profit tax for 2009
and related accessories, maintaining the other provisions of the appealed sentence and rejecting the
appeals declared by the defendants D.G.R.F.P. Cluj-Napoca - Maramures County Administration of
Public Finance and the National Agency for Fiscal Administration (ANAF) against the same sentence,
as unfounded. We mention the fact that, by the decision of 8 July 2019, the court admitted in part the
action filed by the plaintiff Societatea de Distributie a Energiei Electrice Transilvania Nord SA (currently
DEER), in contradiction with the defendants D.G.R.F.P. Cluj Napoca and ANAF, partially annulled
Decision no. 275/31 October 2016 regarding the settlement of the appeal, with the consequence of
partially admitting the appeal, partially annulled the Tax Decision no. F-MM 180 of 30 March 2016 and
the Fiscal Inspection Report no. F-MM 160 of 30 March 2016, respectively regarding the additional
payment obligations established in charge of the plaintiff, consisting of VAT for the period 01 December
2009 – 31 August 2015 and their ancillary obligations, respectively interest/increase of delay and pen-
alties related to VAT, maintaining, for the rest, the contested acts, including regarding the additional
payment obligations consisting in profit tax for the period 01 January 2009 – 31 December 2014 and
its ancillary obligations, respectively interest/increase of delay and penalties related to the profit tax.
CORPORATE IMAGE
In 2022, Electrica climbed to the 7 place in the ranking of the most valuable Romanian brands,
with a market value estimated at EUR 203 mn., an increase of 24.5% compared to the previous year.
It is the highest position occupied so far by Electrica.
In terms of transparency, Electrica has shown its openness to the various stakeholders by
publishing, in the last six years, sustainability reports, which contain detailed information on all com-
panies in the group. They can be found on the company’s website and have been the basis of reports
https://www.electrica.ro/en/investors/results-and-reports/
sustainability
on
sustainability-reports/
issues:
CERTIFICATIONS
In November 2022, Electrica S.A. obtained from the certification body SRAC CERT affiliated
IQNet the recertification of the integrated Management System quality – Environment – SSM in ac-
cordance with the requirements of international reference standards SR EN ISO 9001:2015, SR EN ISO
14001:2015 and SR ISO 45001:2018 as well as the certification of the information Security Management
System in accordance with the requirements of the international standard SR EN ISO/IEC 27001:2018.
The validity of the certificates is October 2025.
In 2022, FISE also passed the audit of the external certification body for the recertification of
the Quality - Environment - SSM Integrated Management System implemented according to the re-
quirements of the reference standards ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018, successful-
ly completing it through obtaining certification.
During 2022, the companies DEER and EFSA completed annual surveillance audits of the
Quality - Environment - SSM Integrated Management System implemented according to the require-
ments of the reference standards ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018, audits carried
out by the external certification body SRAC Cert. No major non-conformities were identified.
1.2.3 Distribution segment
For the distribution segment, the significant changes in the Romanian legislation were de-
tailed at Appendix 3.1.1. Based on these changes, the expected effects refer to:
– GEO no. 27/2022 regarding the measures applicable to final customers in the electricity
and natural gas market between 1 April 2022 and 31 March 2023: i) to cover the additional
costs related to network losses for 2021, ANRE amends the regulated tariffs, with appli-
cability starting with 1 April 2022, and the resulting tariffs do not change between 1 April
2022 and 31 March 2023; ii) the additional costs financed from bank loans made during
the GEO period to cover the network losses are capitalized, with a duration of 5 years and
RRR = 50% x RRR RP4; iii) the electricity costs purchased for network losses after the date
of entry into force of the GEO will be recognized in the regulated tariffs, according to the
ANRE methodologies; iv) the transmission and distribution tariffs will be modified accord-
ing to the costs registered until 31 March 2023, in a period of up to 5 years, after 31 March
2023; v) producers in the portfolio of the Romanian state, have the obligation to respond
in 5 working days with partial or total sales offers, energy purchase requests addressed by
TSO and DSO, individually or in aggregate, directly or through dedicated platforms in the
organized market.
– ANRE requested through a written address to the distribution operators the transmission
of the data for monitoring the simulation of the application of binomial tariffs for the year
2022, with a deadline of 31 March 2023.
– GEO no. 119/2022 for the amendment and completion of GEO no. 27/2022 regarding the
measures applicable to end customers in the electricity and natural gas market in the pe-
riod 1 April 2022—31 March 2023, as well as for the modification and completion of some
normative acts in the field of energy - in force starting from 1 September 2022: (i) the ad-
ditional costs with the purchase of electricity, made between 1 January 2022 and 31 August
2023, in order to cover the NL, compared to the costs included in the regulated tariffs (and
not only the loans), are capitalized quarterly, RRR = 50% of the RRR applicable to each
periods; (ii) electricity producers have the obligation to sell electricity available for delivery
until 31 December 2022, through direct negotiated contracts starting on 1 September 2022,
only to electricity suppliers that have final customers in their portfolio, intended exclusively
for consumption to them, DO, TSO and consumers who have benefited from the provisions
of GEO nr. 81/2019; GEO no. 119/2022 was approved and amended by Law 357/2022.
– GEO no. 153/2022 for the amendment and completion of GEO no. 27/2022 regarding the
measures applicable to final customers in the electricity and natural gas market in the
period 1 April 2022-31 March 2023, as well as for the amendment and completion of some
normative acts in the field of energy and the amendment of the GEO no. 119/2022 for
amending and supplementing the GEO no. 27/2022 regarding the measures applicable
to final customers in the electricity and natural gas market in the period 1 April 2022-
31 March 2023, as well as for the modification and completion of some normative acts
in the field of energy: (i) in the period 1 January 2023-31 March 2025 the mechanism
for the centralized purchase of electricity is established; (ii) OPCOM is designated as the
sole purchaser, it buys the electricity from the planned producers and sells the purchased
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electricity to the electricity suppliers who have contracts concluded with end customers,
the electricity transport and system operator and the electricity distribution operators, for
covering the own technological consumption of the networks operated by them. DO can
buy from OPCOM through an annual/monthly mechanism 75% of the amount of NL fore-
casted and validated by ANRE at the price of 450 RON/MWh, and producers can sell to
OPCOM through an annual/monthly mechanism 80% of the amount produced forecasted
and validated by ANRE and Transelectrica at the price of 450 RON/MWh.
– Proposal to modify the Investment Procedure, considering the recognition of DO invest-
ments in energy storage and production for control and NL: (i) inclusion in the category of
justifiable investments of energy production installations from renewable sources for NL
supply and control consumption from the station; (ii) the inclusion in the category of nec-
essary investments of electricity storage facilities; (iii) the possibility for DO to own storage
facilities, by way of exception from the provisions of the Energy Law (art. 46^1 para. (1)),
only with prior approval by ANRE; (iv) establishing the method of calculating the economic
efficiency of investments in production/storage, to be recognized by ANRE.
1.2.4 Supply segment
The regulatory framework has undergone significant changes over the past decade, including
the liberalization of electricity and natural gas markets, the separation of supply and distribution ac-
tivities, the implementation of the support scheme for renewable energy, the support of electricity
prosumers and the capping of prices to final customers.
In 2022 the electricity market was completely liberalized for all categories of customers and
the price was established by suppliers through free market mechanisms, both for universal service
offers and for the offers related to the competitive market.
Regulated market
Starting with 1 November 2021, against the background of the increase in the price of energy
and natural gas on the international and national markets, the energy crisis, as well as the effects
caused by these increases in the use of population, in Romania, a series of support schemes have
been applied to consumers of electricity and gas, by establishing compensation and capping schemes
between 1 November 2021 and 31 March 2025.
Competitive market
Transactions on the competitive wholesale market are transparent, public, centralized and
non-discriminatory. Participants on the wholesale market can trade electricity based on bilateral con-
tracts concluded on dedicated markets.
The following support mechanisms were implemented:
y compensation of domestic consumers for part of the electricity bill (1 November 2021 to 31
.
March 2022);
y price ceiling for domestic and non-domestic consumers (1 November 2021 – 31 March 2025);
y exemption of several types of consumers from paying regulatory tariffs and other taxes/
contributions (1 November 2021 to 31 January 2022).
The compensated amounts will be received from the National Agency for Payments and
Social Inspection (“ANPIS”) for domestic consumers and from the Ministry of Energy for non-domes-
tic consumers.
During the year 2022, a series of legislative changes were made, with a significant impact on
the electricity supply activity, as follows:
y Eliminating the capped price for electricity for domestic customers with consumption over
255 KWh/month and limiting the application of the capped price for non-domestic cus-
tomers (limiting the quantities to which the capped price is applied, as well as the types of
customers to whom the capping is applied prices);
y Limiting the average purchase rate considered for determining the amounts to be recov-
ered from the state budget to 1,300 RON/MWh; with the exception of the purchase intend-
ed for supply as a last resort, where this limitation does not apply;
y The obligation to store underground natural gas of a minimum stock of natural gas at the
level of 30% of the amount of natural gas required for the consumption of final customers
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from their own portfolio/own consumption;
y The obligation of natural gas producers to sell at the price of 150 RON/MWh the quantities
necessary to supply domestic customers/heat energy producers;
y Between 1 January 2023 and 31 March 2025, the Centralized Electricity Purchase Mechanism
(MACEE) is established;
y The mechanism provides - OPCOM, as the sole purchaser, buys electricity from producers
(electricity producers with an installed power equal to or greater than 10 MW) and sells
the purchased electricity to electricity suppliers who have contracts with end customers,
to the operator of the electric energy transport system and to the operators of the electric
energy distribution system to cover their own technological consumption; the price paid
by OPCOM to energy producers, for the quantities of electricity sold, is 450 RON/MWh,
and the selling price of OPCOM to economic operators is also 450 RON/MWh (OPCOM has
the right to charge market participants tariffs/commissions at the level of costs recorded
through the organization of the centralized mechanism for purchasing electricity). In order
to carry out the transactions, OPCOM will organize a monthly annual purchase procedure,
as well as an additional monthly purchase procedure, for the quantities of electricity to be
delivered in the following month; the annual and monthly quantities of electric energy are
firm obligations of the electricity producers and economic operators for all disconnection
intervals every month (contracts are concluded by signing, within a maximum of 3 working
days).
Green certificates
Electricity suppliers have the legal obligation to purchase green certificates from renewable
energy producers, based on the annual targets or quotas established by law, which apply to the
amount of electricity purchased and supplied to final consumers. The cost of green certificates is
billed to final consumers separately from electricity tariffs.
The impact of the increase in energy prices
After the total liberalization of the electricity market from 1 January 2021 for all types of con-
sumers, the international context of energy markets characterized by an imbalance between demand
and supply at the European level, combined with the energy policies developed both at the EU level
and at the national level, it 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 certificates, and of internal factors, such as the very high share of energy traded on the day-
ahead market (DAM). The entire energy sector was affected by the increase in the price of
electricity.
The difficult conditions mentioned above led to an increase in operating expenses, mainly for
the purchase of energy for NL and for the supply activity. The unstable economic environment led to
a decrease in the financial performance for the year 2021, but during the year 2022 the financial per-
formance improved significantly, due to the security measures for the purchase of electricity for the
supply segment and for the distribution segment that benefits from the capitalization of additional
costs with its own technological consumption, but without significant difficulties in collecting receiv-
ables and, consequently, paying off debts.
Due to the recent changes in the world energy market, including the EU, each member state
of the European Union must modify its legislative framework of the energy sector in order to protect
the interests of civil society, on the one hand, and on the other hand to ensure a balance and adequate
functionality on the local energy market by supporting energy suppliers.
1.3. Subsequent events to the balance sheet date
Below are the relevant events that took place at the Group level in the period between the
2022 financial year closing and the date of the present report.
– On 20 January 2023, the Ministry of Energy, as the concessionaire, amended the conces-
sion agreement with the Electrica Group for the distribution segment to reflect that, in the
event of early termination of the concession agreement, for any reason, the concessionaire
would reimburse the Group the amount the current cost of purchasing electricity for own
.
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technological consumption compared to the costs included in the regulated tariffs.
– On 27 January 2023, Electrica’s Board of Directors decided to establish of a new consulta-
tive committee within its structure, the Climate Governance and Public Affairs committee.
– On 6 February 2023, Electrica has closed the acquisition of the project company Green
Energy Consultancy & Investments S.R.L, having as main object of activity the production
of energy from photovoltaic sources (ready-to-build project).
– On 27 February 2023, at the recommendation of the Nomination and Remuneration
Committee, the Board of Directors decided to extend the duration of the mandate of
Mr. Alexandru-Aurelian Chirita as interim CEO until 30 April 2023 (inclusively), under the
same conditions as well as to extend the duration of the mandate of Mr. Stefan-Alexandru
Frangulea as interim CFO for a period of 2 years, until 27 February 2025 (inclusively), under
the same conditions.
– On 7 March 2023 the company published the Convening of the Ordinary General Meeting of
Shareholders and Extraordinary General Meeting of Shareholders of Societatea Energetica
Electrica S.A. that will be held on 27 April 2023.
– On 7 March 2023, the company published the individual and consolidated financial state-
ments as at and for the year 2022 prepared in accordance with Order of Ministry of Public
Finance 2844/2016, the Board of Directors’ Report for FY 2022 related to the above, as well
as the related auditor reports. These are submitted for the approval of the Ordinary General
Meeting of Shareholders of Electrica on 27 April 2023.
– During the meeting held on 14 March 2023, the Board of Directors decided, at the recom-
mendation of the Nomination and Remuneration Committee, the appointment of Ms. Ioana
- Andreea Lambru, Romanian citizen, as Chief Business Development Officer starting with
15 March 2023, for a four-year period.
Transactions with related parties
In 2023, until 21 March 2023, ELSA published 8 announcements, according to art. 108 of Law
no. 24/2017, reporting transactions concluded between EFSA – OPCOM, DEER - OPCOM, DEER –
EFSA, EFSA - Transelectrica, DEER - Hidroelectrica in this period, whose cumulated value in the case
of each announcement case exceeds the threshold of 5% of ELSA’s net assets, calculated on the basis
of Electrica’s latest available individual financial statements.
On 31 January 2023 ELSA published the Auditor’s report regarding the transactions reported
in H2 2022 according to Art. 108 Law 24/2017 (R).
All these announcements and auditor’s reports can be found on ELSA’s website, at this ad-
dress: https://www.electrica.ro/en/investors/results-and-reports/current-reports-art-108/.
For more details, please see chapter 3.4 in the current report.
Treasury aspects
.
Loans related to third-parties
Additional act no. 2 to the Loan Agreement no. 56, dated 26 October 2021, which extends
the validity of the overdraft until 28 April 2023 and the validity of the facility for issuing
bank guarantees until 31 December 2024.
– On 30 January 2023, EFSA concluded with Banca Transilvania, SE Electrica SA as co-debtor,
the Additional Act no.3 to the Loan Agreement no.11673879/02 February 2022, in amount
of RON 190 mn., which extends the validity of the facility until 30 January 2024 and chang-
es the commercial conditions.
– On 03 February 2023, EFSA concluded with BRD the Additional Act no.2 to the Loan
Agreement no. 17/8130/2022 dated 04 February 2022, SE Electrica SA as co-debtor, in
amount of RON 220 mn., which extends the validity until 05 March 2023.
– On 07 February 2023 was signed the Additional Act no. 4 to the Loan Agreement no. 111
dated 16 April 2019, for credit line and issuance of bank guarantees, in amount of RON 160
mn., between SE Electrica SA, EFSA, SERV and BNP PARIBAS, which modifies the com-
mercial conditions.
– On 17 February 2023, EFSA concluded with BNP Paribas, SE Electrica SA acting as guar-
antor, the Additional Act no. 1 to the Loan Agreement no. 148 dated 24 December 2021,
for issuing bank guarantees, in amount of RON 220 mn., which modifies the commercial
conditions and validity of the bank guarantees.
– On 17 February 2023, EFSA signed with ING Bank, SE Electrica SA acting as guarantor,
the Additional Act no. 4 to the Loan Agreement no. WB/C/14 dated 18 February 2022, in
amount of EUR 34.3 mn., which extends the validity until 16 March 2024.
– On 20 February 2023, was signed the Credit Facility Agreement no. 49183, concluded by
DEER and Garanti BBVA, SE Electrica SA as guarantor, a non-cash facility for the issuance
of bank guarantee in amount of RON 103 mn. and validity 20 February 2025.
– On 27 February 2023, was signed the Additional Act no. 6 to the Credit facility agreement
no. 3189 dated 28 January 2020, in amount of RON 210 mn., concluded by SE Electrica SA
and ING Bank, withing the cash pooling structure, which modifies the commercial condi-
tions and establishes the automatic renewal of the facility. At the same time, additional acts
for the intraday credit limit, within the cash-pooling structure, were concluded between
DERR, EFSA, SERV, EEV1, SE Electrica SA and ING Bank, regarding the automatic renewal.
– On 03 March 2023, was signed the Additional Act no.3 to the Loan Agreement no.
17/8130/2022 dated 04 February 2022, concluded by EFSA and BRD, SE Electrica SA as
co-debtor (corporate guarantee), in amount of RON 220 mn., which extends the validity
until 02 February 2024.
– On 13 March 2023, was signed the Additional Act no.5 to the multi-product Credit Facility
Agreement no. 201910080129, for overdraft and issuance of bank guarantee letters, con-
cluded by EFSA and BCR, which increases the value of the overdraft limit up to RON 165
mn..
– On 17 March 2023, was signed the Loan Agreement no. 53747, concluded by DEER and
BERD, SE Electrica SA as guarantor, in amount of RON 180 mn., for working capital.
Legislation
.
– On 09 January 2023, was signed the Additional Act no. 2 to the Loan Agreement no.
2022012502 concluded by DEER and BCR which extends the validity of overdraft limit of
RON 220 mn. and the validity for issuing bank guarantees until 25 January 2024.
– On 18 January 2023, was signed the Additional Act no. 4 to the Loan Agreement no.
10091385 dated 16 December 2020 concluded by DEER and Banca Transilvania, which
extends the validity of Overdraft limit until 01 February 2024, and the validity of the Facility
for issuing letters of guarantee until 01 February 2025.
– On 23 January 2023, was signed the Additional Act no. 1 to the Loan Agreement no.350
dated 06 September 2022 concluded by EFSA and Alpha Bank Romania, SE Electrica SA
as guarantor, in amount of EUR 60 mn., through which is added the movable mortgage
over receivables.
– On 27 January 2023, was signed the Additional Act no.5 to the Credit facility agreement
no. 3189 dated 28 January 2020, in amount of RON 210 mn., concluded by SE Electrica SA
and ING Bank, withing the cash pooling structure, extending the validity until 27 February
2023. At the same time, additional acts for the intraday credit limit, within the cash-pooling
structure, were concluded between DERR, EFSA, SERV, EEV1, SE Electrica SA and ING
Bank, with validity until 27 February 2023.
– On 27 January 2023, EFSA concluded with Raiffeien Bank, SE Electrica SA as guarantor, the
The legislative changes with significant impact in the activity of the Electrica Group and pub-
lished in the period between the closure of the financial year 2022 and the date of this report are
presented in Appendix A.3.2..
.
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2 Electrica Group
38
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2022 Directors’ Report
2022 Directors’ Report
2.1. Organizational structure
The Electrica Group is one of the main distributors and suppliers of electricity on the
Romanian market.
The main activity segments of the Group consist of the distribution of electricity to users,
the supply of electricity to domestic and non-domestic consumers, the segment of services related
to external distribution networks as well as the segment regarding the production of electricity
from renewable sources.
Currently, the Group includes the parent company of the Group, Societatea Energetica
Electrica SA (“ELSA”) and the following subsidiaries and associated entities:
– Distributie Energie Electrica Romania S.A. („DEER”) resulted from the merger throu-
gh absorption of the three distribution subsidiaries Societatea de Distributie a Energiei
Electrice Muntenia Nord (“SDMN”), Societatea de Distributie a Energiei Electrice Transil-
vania Sud (“SDTS”) and Societatea de Distributie a Energiei Electrice Transilvania Nord
(“SDTN”), the last one being the absorbing company. DEER is the main electricity suppli-
er in Transilvania Nord area (Cluj, Maramures, Satu Mare, Salaj, Bihor and Bistrita Nasaud
counties), Transilvania Sud area (Brasov, Alba, Sibiu, Mures, Harghita and Covasna coun-
ties) and Muntenia Nord area (Prahova, Buzau, Dambovita, Braila, Galati and Vrancea
counties), ensuring the service of network users by operating the installations that work
at 0.4 kV to 110 kV (power lines, substations and transformation stations). DEER holds ex-
clusive distribution licenses for the aforementioned regions, which have a validity period
until 2027, with the possibility of extension for a period of 25 years;
– Electrica Furnizare S.A. („EFSA”), company whose main activity is the supply of elec-
tricity to final consumers. EFSA holds an electricity supply license that covers the entire
territory of Romania, which was renewed in 2021 for a period of 10 years, and a license for
carrying out the activity of natural gas supply, valid until 2022. In view the expansion of
the economic activities of Electrica Furnizare S.A. (EFSA) in Hungary, the electricity tra-
ding license was granted by the Hungarian Energy and Public Utilities Regulatory Autho-
rity (MEKH) for Electrica Furnizare, by Decision no. H879/2022. Also, the Group holds a
natural gas supply license valid until 2032.
– Electrica Serv S.A. („SERV”) starting on 30 November 2020, the company absorbed Ser-
vicii Energetice Muntenia SA („SEM”), following a merger process. SERV provides repair
services and other related services to third parties and various services to the companies
in the group (car rental, building rental, etc.).
– Electrica Productie Energie S.A. („EPE”), company established in 2021, with the pur-
pose of acquisition and development of electricity generation projects from renewable
sources, respectively the operation of energy generation capacities, combined with the
development and operation of independent storage solutions that the company intends
to develop future. On 31 March 2022, upon the recommendation of the Strategy and Cor-
porate Governance Committee, BoD ELSA decided to reposition Electrica Energie Verde
1 SRL (EEV1) within the Group by concluding a transaction between EFSA, as the seller
and sole shareholder of EEV1, and Electrica Production Energie S.A. (EPE), as a buyer. The
actual transaction took place on 15 July 2022, completed by completing the legal forma-
lities at the Trade Registry Office on 21 July 2022.
– Sunwind Energy S.R.L. („SWE”) is developing the photovoltaic project “Satu Mare 2”
with a designed installed capacity of 27 MW, located near Satu Mare and became subsidy
on 21 March 2022 as a result of ELSA owning 60% of shares.
– New Trend Energy S.R.L. („NTE”) develops the photovoltaic project „Satu Mare 3”, with
a designed capacity of 59 MW, located near Satu Mare and became subsidy on 27 May
2022 as a result of ELSA owning 60% of shares.
– Green Energy Consultancy & Investments S.R.L. („GEC&I”) develops the photovoltaic
.
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project „Vulturu” with a design capacity of 12 MWp DC (peak power at the panels level)
and 9.75 MW AC (evacuating power in the network) located in the Vulturu village area,
Vrancea county and became subsidy on 06 September 2022 as a result of ELSA owning
75% of shares. On 06 February 2023, ELSA bought the remaining shares up to 100%.
Table 4. ELSA’s subsidiaries
Subsidiary
Activity
Electricity distribution in
geographical areas Transilvania
Nord, Transilvania Sud and
Muntenia Nord
Electricity and natural gas
supply
Services in the energy
sector (maintenance, repairs,
construction)
Sole
registration
code
Head
Office
% shareholding as at
31 December 2022
14476722
Cluj-
Napoca
99.99999929%
28909028
Bucuresti
99.9998444099934%
17329505
Bucuresti
99.99998095%
Production of electricity
44854129
Bucuresti
99.9920%
Production of electricity
19157481
Bucuresti
100%*
Electricity generation
42910478
Constanta
Electricity generation
42921590
Constanta
Electricity generation
29172101
Prahova
60%
60%
75%
Distributie Energie
Electrica Romania S.A.
(„DEER”)
Electrica Furnizare S.A.
(“EFSA”)
Electrica Serv S.A.
(“SERV”)
Electrica Productie
Energie S.A (“EPE”)
Electrica Energie Verde
1 SRL* („EEV1” – former
Long Bridge Milenium
SRL)
Sunwind Energy S.R.L.
(“SWE”)
New Trend Energy S.R.L.
(“NTE”)
Green Energy
Consultancy &
Investments S.R.L.
(“GEC&I”)
Source: Electrica
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary EPE
DISTRIBUŢIE ENERGIE
ELECTRICĂ ROMÂNIA S.A.
Electricity distribution in geographical
areas Transilvania Nord, Transilvania Sud
and Muntenia Nord
Head office: Cluj-Napoca
ELECTRICA
FURNIZARE S.A.
Electricity and natural gas supply
Head office: Bucharest
.
FISE ELECTRICA
SERV S.A.
Energy services company
Head office: Bucharest
99,9%2
99,9%2
99,9%2
ELECTRICA S.A.
Head office: Bucharest
99,9%2
3
%
0
10
ELECTRICA PRODUCŢIE
ENERGIE S.A.
Production of electricity
Head office: Bucharest
ELECTRICA
ENERGIE VERDE 1 S.R.L4
Production of electricity
Head office: Bucharest
.
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Table 5. ELSA’s associates
2.2. Mission, vision, values
2022 Directors’ Report
2022 Directors’ Report
Associate
Activity
Sole
registration
code
Head Office
% shareholding as
at 31 December
2022
Electrica Group substantiates its future business development by adapting to the market
context and highlighting the specific elements of its companies.
Crucea Power Park
S.R.L. (“CPP”)
Foton Power Energy
S.R.L. (“FPE”)
Source: Electrica
Production of electricity
25242042
Constanta
Production of electricity
43652555
Constanta
30%
30%
MISSION
– Crucea Power Park S.R.L. („CPP”) develops the wind project “Crucea Est”, with a desig-
ned 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.
– Foton Power Energy S.R.L. („FPE”) develops the photovoltaic project “Bihor 1”, with a
designed installed capacity of 77.5 MW, located near Oradea city.
Table 6. Long term investments owned by ELSA
Company
Activity
Financial brokerage
activities, exclusively
insurance activities
and pension funds (risk
management through
derivative products on the
energy market)
CCP.RO
Bucharest S.A.
(„CCP.RO”)
Source: Electrica
Sole
registration
code
Head
Office
% shareholding as at 31
December 2022
17777754
Bucuresti
8.06%
– On 8 December 2022, the effective subscription was made in the amount of RON 7 mn.,
equivalent to 8.06% of the share capital of the company CPP.RO Bucharest S.A. after the
increase of the share capital, CCP.RO thus becoming a financial investment owned by
ELSA for the long term.
Energy – anywhere, anytime, for
anyone! We bring energy where
people materialize their dreams.
VISION
Integrated leader in the energy sector, a
significant contributor to the sustainable
energy transition process for customers,
the environment and communities
VALUES
(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26) – we are the partner you can
rely on, now and in the future.
(cid:25)(cid:24)(cid:23)(cid:22)(cid:21)(cid:27)(cid:21)(cid:20)(cid:19)(cid:21)(cid:26) – we build with skill.
We are proud of the role our work
gives us within society.
.
.
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(cid:18)(cid:17)(cid:16)(cid:21)(cid:27)(cid:15)(cid:26)– we are always careful with the
safety of our employees, collaborators
and the communities in which we work.
(cid:18)(cid:29)(cid:28)(cid:27)(cid:17)(cid:14)(cid:20)(cid:17)(cid:13)(cid:14)(cid:12)(cid:14)(cid:27)(cid:15)(cid:26) – our solutions are
long term and friendly for the
enviroment as well as for the people.
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2022 Directors’ Report
2022 Directors’ Report
2.3. Key elements of the 2019 – 2023 Corporate
Strategy
The Corporate Strategy 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, strengthening its position in the market while
expanding into complementary segments, within a culture of ethics, integrity and sustainability.
Governance and investor relations remain priorities for the Group, aiming the constant im-
provement and the implementation of best practices in corporate governance and investor relations
areas.
For the 2019-2023 period, the Group’s strategic objectives were updated in 2022 and repre-
sent the main directions to which the current activities are aligned:
– Increase in market value Electrica SA - sustainable increase in the price of electricity sha-
re and inclusion in relevant market indices (local and international);
– Business expansion in other complementary segments – electricity production, electricity
storage and international expansion for production and supply areas;
– Maximization of performance in managed infrastructure – streamlining the business in the
area of electricity distribution for the current regulatory period (RP4) and RP5 preparati-
on, while optimizing the cost structure;
– Integrated leader of energy services and solutions - market strategy revised in the dy-
namic context of the energy sector and capitalization of client portfolio through sales of
energy services with added value;
– Agilization and digital transformation of the business – increased capacity to adapt and
react to the context of the sector, digital transformation of the business and capitalization
of all synergies in the group.
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 ac-
tivites, 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 dynamic of the
labor market. Thus, the HR strategy aims to ensure staff 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 manage-
ment and employee evaluation.
Also, an important role will be played by the optimization of the IT&C support functions and
and alignment with industry-specific trends and solutions. 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 prosu-
mers etc. are provided in the distribution area. In the supply area, the development of a custo-
mer-friendly interface, the automation of contracting, reporting, and invoicing processes and data
exchange with all Romanian distributors are critical elements supported by IT&C in order to provide
strategic advantages to the Group’s business segments.
The improvement of the corporate governance framework is continued, closely following
the Corporate Governance Action Plan established with EBRD starting with 2014. It was approved
the establishment of the Climate Governance and public Policy Committee to prepare the framework
for the implementation of initiatives to help meet the EU’s zero greenhouse gas emissions target by
2050 and ensure the long-term resilience of the Group’s companies, from the perspective of the
potential structural changes in the business environment resulting from climate change.
Distribution segment
In the distribution segment, the organizational transformation process, started since 2017,
has been developed and implemented, through the operationalized initiatives, measures aiming the
efficiency and continuous improvement of the activity.
Moreover, at the end of 2019 the implementation of the newly approved strategy at the
Group level was initiated - through the perspective of the megatrends that mark the energy industry
(decarbonisation, decentralization, digitalization), which reveals a significant transformation pro-
cess, accelerated internationally, but initiated nationally, also. The economic context at national
level, which brings additional pressure on the regulated activities, and the strategic priorities assu-
med in the field of energy urgent the need for transformation also at the level of electricity distribu-
tion 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 mer-
ger of the three distribution operators. The latter, achieved at the end of 2020, through the propo-
sed 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 organizati-
on 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 im-
pact 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 1st January 2022, of the new unified target organi-
zation chart, through which all structures in the area of strategic activities (asset management,
energy management, integration program management, IT&C, strategic project management),
.
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2022 Directors’ Report
2022 Directors’ Report
financial and support were reunited under a unique coordination at the level of the company resul-
ting 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.
The geopolitical crisis of 2022, generated by the invasion of Ukraine by Russia, which led to
the sharp increase in energy prices both in Romania and in other European countries, brought into
attention the need to reduce own technological consumption, streamlining operational costs and
providing sources of financing for future investments.
In the same context, in response to the difficulties and disruptions in the global energy mar-
ket, the European Commission developed in March 2022 the REPowerEU Plan for energy saving,
clean energy production and diversification of energy sources, supported by financial and legal
measures to build the new infrastructure and energy system Europe needs. Following the policies
developed at the European Union level, for the next period, an increase in production from renewa-
ble sources is expected, including the number of prosumers, the development of electric transport,
the introduction of flexibility services, which make it necessary to increase the investments for mo-
dernization, automation and digitalization of distribution networks.
For financing investments in the distribution segment, both own sources and European fun-
ding programs will be used, which are opportunities for modernizing networks and transforming
them into smart networks, this will be reflected both in improving network resilience and in increa-
sing operational efficiency.
Supply segment
In 2022, the strategy of the previous year was preserved, the company focused on increa-
sing the profitability of the client portfolio by developing specific measures to increase customer
satisfaction through portfolio restructuring and through competitive and dynamic purchasing stra-
tegies in the context of a volatile and unpredictable energy market. The traditional electricity supply
offer has also been complemented with combined electricity – gas and value-added services
packages.
In 2022, EFSA continued to implement the measures identified to transform the company
into an organization capable of successfully responding to current and future energy market challen-
ges including improving the financial situation, improving the NPS, defining a competitive trade
program, improving positioning and transforming the organization into a supple and agile one.
Thus, during 2022, the evaluations continued at the level of each organizational entity in
order to identify new necessary measures to improve the activity.
.
Also, within the priority measures of modernization and adaptation of internal information
systems during 2022 was made the preparation of the transition to the SAP ISU system, as well as
the preparation of data migration, so that in 2023-2024 the implementation of the SAP ISU system
was carried out.
Services segment
After the completion of the merger between the SERV and SEM subsidiaries on 30 November
2020, it was necessary the developing of a new plan of measures for operational optimization, or-
ganizational and strategic repositioning of the integrated company, Electrica Serv SA. The propo-
sed measures are a complex and detailed response based on the currently crisis situation of the
company, in terms of losses suffered in 2020 and 2021. The plan contains an in-depth multicriteria
analysis of the company’s activities and highlights the underying causes of the deteriorating finan-
cial situation. The measures included in the recovery plan aim at aligning costs with revenues, retur-
ning the company to positive financial results and staff restructuring, with the ultimate goal of in-
creasing labor productivity by eliminating production flow dysfunctions and redundancies in the
decision-making process. The recovery plan also overviews the strategic repositioning of the
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company by developing and consolidating new activities that will serve both the companies within
the Group and companies outside it.
The main directions for the development of the SERV subsidiary for the following period are:
y restoring the operational staff structure and redefining priorities on business lines;
y reduction of general administration expenses, production costs, material, service and la-
bor costs;
y continue to implement the plan for the recovery of unused assets;
y significantly improving the way assets are managed, by renting or selling “non-essen-
tial”/”non-core” assets;
y continue the development with EFSA of projects for the execution of new activities: In-
stallation of B2B/B2C photovoltaic plants, reactive energy compensation, electricity sup-
ply stations, smart metering solutions;
y creation of a structure of qualified personnel for the construction works installation of
photovoltaic power plants,
y reducing additional labor costs by distributing existing staff correctly and efficiently;
y efficiency of maintenance works and compliance with the conditions imposed so that the
result leads to “zero penalties”.
Ethics remains a priority for the organization, as a preliminary requirement for the sustaina-
ble development of the Electrica Group. On medium term, it is desired the development of an ethics
culture within Electrica Group, by moving from the reactive stage to the integrity stage, by interna-
lizing the ethical standards and the values of the organization, understanding the ethics role as a
value enhancing factor and providing a permanent internal control system which involves the entire
company’s personnel.
The CSR activites 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 IT&C support functions,
they will have an increasingly important role for the base business lines; IT&C takes over the respon-
sibility 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 inter-
face, the automation of contracting, reporting, and invoicing processes and data exchange with all
Romanian distributors are critical elements supported by IT&C it is an activator of competitive
advantages.
2.4. Outlook
The first quarter of 2022 was under the influence of public health events (COVID-19 pande-
mic declared by the WHO on 11 March 2020) and the impact of these events on the economic and
social environment. Starting with 9 March 2022, Romania is no longer on alert due to COVID 19, so
the restrictions in the alert state later became recommendations.
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 peri-
od and for addressing the challenges on 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 internatio-
nal trade are affected, all these elements influencing the energy demand, the consumers’ behavior,
.
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2022 Directors’ Report
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as well as the measures taken by the authorities, both for the energy sector and for the economic
environment in general.
The current strategy of the Electrica Group is built on a set of trends and assumptions, and
the acceleration of digitalization is one of its objectives. 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 in-
ternational context of the energy markets, the following trends are expected to characterize on
medium and long term the local electricity market:
– Competition between players on the electricity supply market in terms of diversifying
the portfolio of products offered to customers with a focus on the value-added products
offered (especially energy efficiency) and digital services offered (mobile applications,
invoices and online payments, expanding customer service through chat solutions);
– Customers whose current supplier can no longer provide the electricity and/or contrac-
ted natural gas (bankruptcy, loss of license granted by ANRE, etc.), will be ensured the
delivery of energy by the supplier of last resort in accordance with the legal provisions.
– 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 operatio-
nal costs and efficiency based on comparative analysis between DSOs. An element that
affects and will continue to significantly affect the profitability of distribution companies
is the increase in the purchase price of NL, a situation which was partially regulated by
the entry into force of: (i) Government Emergency Ordinance no. 118/2021 regarding the
establishment of a compensation scheme for the consumption of electricity and natural
gas for the cold season 2021-2022, (ii)Government Emergency Ordinance no. 27/2022 on
the measures applicable to final customers in the electricity and natural gas market be-
tween 1 April 2022 and 31 March 2023, as well as for the modification and completion of
some normative acts in the energy field, (iii) EMERGENCY ORDINANCE no. 119/2022 for
the amendment and completion of GEO no. 27/2022 regarding the measures applicable
to end customers in the electricity and natural gas market in the period April 1, 2022—
March 31, 2023, as well as for the modification and completion of some normative acts
in the field of energy, (iv) EMERGENCY ORDINANCE no. 153/2022 for the amendment
and completion of GEO no. 27/2022 and the amendment of GEO no. 119/2022, as well as
for the modification and completion of some normative acts in the field of energy, ANRE
approved by ANRE Order no. 129/2022 Methodological norms for the recognition in tariffs
of additional costs with the purchase of electricity to cover own technological consump-
tion compared to the costs included in the regulated tariffs;
– Regulation (EU) 2022/1854, regarding an emergency intervention to address the problem
of high energy prices, provides for a maximum threshold of 180 Euro/MWh for solar, nu-
clear, hydro, wind and lignite production, incomes above this threshold will be collected
by the state;
– Electricity distributed generation technologies will determine the distribution operators to
adapt their processes and strategies regarding the upgrade and development of the ne-
twork 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 distributi-
on infrastructure. The recent high price for electricity will increase the interest of consu-
mers to independently produce some of the energy consumed, which is an acceleration of
trends in this regard. Significantly reducing the costs of photovoltaic technologies is a de-
velopment opportunity for smaller scale generation projects, especially in the home area;
– On the long term, full 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 bet-
ter informed and involved in decision-making process, as active participants. The smart
metering implementation pace depends on the implementation calendar adopted at na-
tional level;
– The development of the transmission and distribution infrastructure and long-distance in-
terconnection 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.
Table 7. The key drivers of changes in the electricity market
Key drivers
Description
GDP evolution
and industry
structure
Demographic
evolution and
technology
development
International geo-
political context
Changes in
regulatory
framework
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 also be influenced by energy efficiency policies.
In contrast with the demographic decline recorded at EU and Romanian level, the
electricity consumption is positively impacted by the changes in the consumer
behaviour and the increase in urbanization. For example, the massive increase in
the number of connected devices and implicitly, in a less accelerated manner, in the
electricity consumption, maintains the increasing trend of consumption.
Russia’s invasion of Ukraine has massively disrupted Europe and global energy markets,
prompting the urgent need to identify a plan to stop the EU’s dependence on imports
of fossil fuels from Russia.
REPower EU is the EU’s response plan to this context, a plan for the period 2022-2030.
The REPower EU plan sets out a series of measures to rapidly reduce energy and
accelerate the green transition while increasing the resilience of the EU energy system.
The plan targets 4 areas: Saving, diversifying sources, accelerating the shift to clean
energy, investment and reform.
Approved schemes to support customers in the payment of electricity/gas bills, with
initial application between 1 November 2021 – 31 March 2022, which granted price
caps, compensation for household customers and exemptions for SMEs, subsequently
extended for the period 1 April 2022 - 31 March 2025, which capped the prices applicable
to final customers, involve the ex post recovery by suppliers of the amounts related to
these schemes, risking affecting the supply activity in case of delays in settlement of
amounts incurred by suppliers or their complete non-recovery if the costs recorded in
the balancing market exceed by more than 5% the acquisition costs or if the average
purchase price exceeds the threshold of 1,300 RON/MWh.
Also, during 2022, the new performance Standard for the electricity/natural gas supply
activity entered into force, which will apply more demanding requirements regarding
the quality of the supply service and the responsibility toward the customers, including
through the obligation to automatically pay compensation to all categories of clients,
in case of non-compliance with the established indicators.
Starting with 1 May 2022, the new rules for the sale of electricity produced by
prosumers enter into force, respectively quantitative compensation for customers with
installed power up to 200 kW and financial compensation for customers with installed
power between 200 and 400 kW, which will generate a new demand flow for this
customer segment, but also important changes to the billing information system for
this category of clients.
Impact on
GDP evolution
and industry
structure
Electricity
consumption
Electricity
prices
Electricity
prices
.
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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, base of regulated assets, own consumption
technological, operating and maintenance costs, dynamic distribution tariffs starting
with 2020). The methodological norms approved by ANRE in October 2022 allow the
capitalization of the additional cost with NL compared to the price recognized in the
tariffs.
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.
Energy is an indispensable resource for both the population and the economic
operators. Thus, the sharp increase in energy prices is reflected on the dynamics of
consumer prices, respectively on the generalized increase in inflation rates.
The transactions concluded on the centralized platforms exceeded the threshold
of 2.500 RON/MWh for the AN product and 4.000 RON/MWh for the short-term
products related to the winter period, and on the DAM the weighted average price
doubled compared to the beginning of 2022. The distribution operators purchase
purchased energy for NL at a price four times higher than the ex-ante approved price
in the distribution tariffs. In the period 1 January 2023-31 March 2025, the mechanism
for the centralized purchase of electricity is established, and OPCOM is designated as
the sole purchaser.
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.
Renewable energy is the cheapest and cleanest energy available and can be generated
domestically, reducing our need for energy imports. Energy efficiency and the use of
renewable energy sources can enable industry to reduce the impact of market evolution.
Energy saving is the cheapest, safest and cleanest way to reduce the repercussions of
the trend in the energy market. In addition to energy efficiency measures, individual
actions have a positive impact on energy bills (consumption and price level).
Electricity
prices and
inflation rate
Electricity
prices and
consumption
Electricity
prices and
consumption,
regulatory
framework
The evolution of
the electricity
price in the
market
Technological
development
Increase in
environmental
awareness
Source: Electrica
2.5. Key factors, directions and significant market
trends affecting the operational results of Electrica
Group
.
Considering the strategic elements defined for 2019-2023 and in the special context in
which the energy market is located, the company analyzes the strategic options and constantly
updates its actions in order to face the difficult period we are going through. Efficiency measures
were taken, including through restructuring and transformation programs of the Group’s divisions,
staff training and development programs were carried out, business models are being made more
efficient and new business segments are being developed, to improve both the quality services
offered, as well as financial performance. In 2023 a new corporate strategy will be approved and the
most important assumptions considered for the strategy are the following:
y The European Union maintains the objectives regarding the reduction of greenhouse gas
emissions and the production of green energy;
y The European energy market will receive new regulations, which, most likely, will be aimed
at reducing the dependence of the price of electricity on the price of fossil fuels. The vol-
atility of 2022 and the distrust of market actors will slow down the uniform application of
the new provisions;
y Romanian GDP will have a upward and stable evolution in the medium term, even if some
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slowdown is possible in the near future;
y Romania will maintain its commitment to achieve the objectives of the European Green
Pact, with an emphasis on reducing greenhouse gas emissions (55% reduction compared
to 1990 to 2030) and increasing the production of electricity from renewable sources
(40% until 2030);
y The energy mix in Romania changes significantly in the medium and long term, mainly by
increasing the production capacity of electricity from renewable sources;
y “Democratization of energy” determines important changes in the mode of transport and
distribution of electricity;
y The energy market will continue to register a production deficit both against the back-
ground of the accelerated increase in demand (caused by the electrification of transport
and, partially, heating systems), as well as due to the environmental limitations to which
energy production (European, regional, national) has engaged;
y The supply segment knows little predictable developments, with very frequent changes
in incidental legislation, which (at least until now) diminishes competition and relativizes
any planning scenario;
y Geopolitical developments in the region will remain with a maximum manifestation in
2022, but we do not exclude the possibility of escalations;
y Financial markets will allow access to advantageous financing sources to support compa-
nies’ investment programs, but the involvement of companies in assuming ESG practices
will have a determined role in the success of financing.
Based on the new directions and objectives established in the 2021 Group strategy, the IT&C
activities within the group were reviewed and re-focused on the key areas of business support.
Subsequently, the structure and projects in the subsidiaries were re-reviewed and accelerated to
achieve the optimal level of support for electricity distribution and supply activities, including auto-
mation projects, digitization, friendly and simplified interface with external and internal customers.
Emerging technologies, with an impact in particular on the resilience of IT&C services, are con-
stantly evaluated and monitored in the Group and tested in pilot mode in Electrica SA. Last but not
least, the subject of Cyber Security and alignment with NIS requirements are monitored and conso-
lidated results at Group level.
In the distribution segment, the focus is on operational efficiency, by reducing technologi-
cal and commercial losses, optimizing internal processes, ensuring an optimal level of resources
used, on user orientation and ensuring their satisfaction, by improving the network access and the
quality of service, on development of smart grid technologies and cost recovery. Increasing the
operational performance will lead to a positive impact on the users’ experience, ensuring continu-
ous supply security, at high quality and high standard interactions with our staff. In parallel, exploi-
ting the significant optimization potential and reducing losses by streamlining the distribution ope-
rators’ activities are key factors in the optimal allocation of resources, so important in this regula-
tory period.
One of the main factors influencing the strategic decisions for the Distribution area is repre-
sented by the trend of energy market prices which negatively impacts in a significant way the cost
of energy acquisition for network losses and for which there are no premises for comeback, with a
significant negative impact over profitability if the method of capitalizing on the additional costs of
the procurement of electricity for the NL or the mechanism for the centralized procurement by
OPCOM of energy for the NL does not lead to the improvement of the results.
An important factor is the alignment of strategic decisions with the 10-year development
plan to be developed by DEER and approved by ANRE, after public consultation with all stakehol-
ders, and that will include both investment works for the production of energy from renewable so-
urces for NL and the power consumption from the station or for the development of electricity
storage facilities and the way to integrate flexibility services.
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The year 2023 is decisive representing the reference year in which distribution operators
will submit to ANRE approval the data for substantiating the projection of revenues and profitability
for the fifth regulatory period 2024-2028.
The supply segment will focus on diversifying the activity through offers and services adap-
ted to customers’ needs, on operational efficiency through optimized processes for the sale and
purchase of electricity and on customer orientation and maximizing satisfaction. The aim is to incre-
ase the natural gas supply segment, to offer value-added solutions (products and services) and to
digitize specific operations and processes.
Please note that other factors that are not available at the report date (eg. legislation and regulatory
provisions under disscusions etc.) or not presented above, or not considered by the Group may occur and
may have a significant impact on the implementation and evolution of the Group’s strategy.
The regulatory framework has undergone significant changes over the past decade, inclu-
ding the liberalization of electricity and natural gas markets, the separation of supply and distribu-
tion activities, the implementation of the support scheme for renewable energy, the support of
electricity prosumers and the capping of prices to final customers.
In 2022 the electricity market was completely liberalized for all categories of customers and
the price was established by suppliers through free market mechanisms, both for universal service
offers and for the offers related to the competitive market.
In terms of the last resort supply of electricity and natural gas, a monthly rotation system
was introduced for the SoLR nomination that automatically takes over customers from all parts of
the country. For this purpose, the SoLR list is established according to market share, each SoLR in
the list being nominated one at a time, monthly, to automatically take over customers who remain
without a supplier. In 2022, EFSA was the last-resort supplier nominated for electricity in February,
March, July and December, and for natural gas it was the last-resort supplier nominated in September
2022.
The development by ANRE of the online platform for changing the electricity and natural
gas supplier (POSF) helps the Romanian energy market to achieve the objective stipulated by the
European legislation regarding the change of supplier in 24 hours, starting with 2026.
As regards the legislation related to prosumers, the amendment of the threshold of electri-
city installed in the renewable energy power plants belonging to prosumers, from 100 kW to 400
kW on-the-spot consumption and the introduction of quantitative compensation has led to the in-
crease in the number of prosumers in 2022 and we estimate a continuous development in this
segment.
Between 1 November 2021 and 31 March 2025, in the context of increasing prices on the
electricity and natural gas markets at international and national level, as well as the effects caused
by these increases for the Romanian population, will be applied, through the effect of GEO no.
118/2021 with subsequent amendments and completions and GEO no. 27/2022 with the amend-
ments and completions a series of support schemes for electricity/natural gas customers. Given the
way in which these schemes are implemented and the mechanism for settlement of amounts gran-
ted as support to customers, ex post from the state budget to electricity suppliers, they are likely to
generate constraints in terms of cash flow, as well as uncertainties regarding the full recovery of the
respective amounts by the suppliers.
In this context, EFSA is reviewing its medium and long term strategy such as to manage
responsibly and in a sustainable manner the impact of these measures on the company’s activitities,
in this legal framework that has successive and high impact changes lately.
Evolution of purchase prices
y 2022 was a year characterized by a steep increase in prices for both electricity and natu-
ral gas, with historical trading highs.
y There have been recorded increase over 130%, from 550 RON/Mwh energy trading price
in DAM in 2021 to over 1.300 RON/Mwh trading prices in DAM in 2022. A similar increase
was also recorded in the trading prices in term markets.
y As a result of the coupling of markets in the region, the wholesale electricity market trad-
ing prices aligned with those in the region, being directly influenced by the increase in
natural gas trading price amid the conflict in Ukraine.
y The main casues that favored the increase of prices:
y The fluctuation in the trading prices of carbon allowances, having reached a historical
maximum price of about 100 EUR/certificate in August 2022;
y The increase in the price of natural gas from 500-600 RON/MWh in 2021 to 1,200-1,300
RON/MWh in 2022, with a direct impact on the increase in the production cost of power
plants using natural gas as fuel;
y Lack of investments in new production capacities;
y Acute liquidity shortage on electricity and natural gas markets, as a result of legislative
changes and the reintroduction of bilateral contracts negotiated directly since Septem-
ber 2022, with a direct impact on the transparency of transactions on markets;
y Introduction of a mechanism for overtaxation of revenues from the trading of electricity
and natural gas.
The impact on customers
The impact on customers in the dynamic internal and international context:
y Accelerating and optimizing the implemented digitalization and developing synergies
with the national platform of change supplier, by adapting and homogenizing the pro-
cesses for optimizing the relationship with customers;
y Adapting to the internal context created by the liberalization of energy prices, as well as
to the international one, causing supply fluctuations;
y Context influenced by the support measures granted both to domestic consumers and to
economic agents;
y Maximizing the results obtained from the development of the partnership relationships in
the dynamic context created by liberalization;
y Modernization of several customer service centers including Bucharest, Jibou.
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3 Electrica on the capital markets
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3 Electrica on the capital
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3.1. Ownership structure
Until July 2014, the Romanian State, through the Ministry of Economy, Energy and Business
Environment, was the sole shareholder of ELSA. As of 4 July 2014, after the Initial Public Offering, the
Company’s shares are listed on the Bucharest Stock Exchange (BSE – ticker EL), and the Global
Depositary Receipts are listed on the London Stock Exchange (LSE – ticker ELSA).
Subsequently, a secondary public offer took place, which 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.
As of 31 December 2022, the ownership structure according to the Central Depository recor-
ds (Romanian: Depozitarul Central) is presented below.
Table 8. Ownership structure
Shareholder
Number of shares
Stake held
(% of the share capital)
Percent of voting
rights (%)
The Romanian State, through the
Ministry 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
169,046,299
48.7948%
49.7850%
17,355,272
6,890,593
2,164,816
131,170,892
19,815,725
5.0096%
1.9890%
0.6249%
37.8621%
5.7198%
5.1112%
-
0,6375%
38.6305%
5.8358%
346,443,597
100.0000%
100.0000%
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 depo-
sitary 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 depo-
sitary bank for these securities.
Following the stabilization process after the June 2014 IPO, ELSA owns 6,890,593 of its sha-
res, representing 1.989% of the total share capital at 31 December 2022, with suspended voting ri-
ghts, which does not entitle ELSA the right to receive dividends.
Figure 21: Ownership structure as of 31 December 2022
(cid:27)(cid:23)(cid:30)(cid:20)(cid:26)(cid:27)(cid:23)(cid:25)
At the end of 2022, ELSA’s shares were owned by a total of 11,951 shareholders, of which 257
legal entities and 11,694 individuals from 22 countries. 91.12% of the total number of shares (315,674,667
shares) were owned by investors with residence in Romania. Thus, foreign shareholders held 8.88%
of the share capital (30,768,930 shares), the largest weight being represented by European citizens.
Shareholders in the United Kingdom and Ireland held 5.30% of share capital, while those in the USA
held 1.02%, in this category being included also the GDRs holders.
3.2 Shares evolution on BSE and Global depository
receipts (GDRs) evolution on LSE
3.2.1 BSE shares
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 evo-
lution of the companies listed on BSE’s regulated market having as main activity energy and related
utilities).
Between 4 July 2014 - 31 December 2022, ELSA’s shares recorded a minimum price of RON
6.10 (29 September 2022) and a maximum price of RON 14.96 (12 May 2017), therefore the weighted
average price was RON 11.6.
The gross dividends per share granted by ELSA in this period reached a cumulative value of
RON 5.6817. Thus, the aggregate yield generated by ELSA’s shares (along with dividends) from the
IPO and until the end of 2022 was 25.20%, of which -26.45% from share evolution and +51.65% from
dividend yield.
From the IPO dated 4 July 2014 until the end of 2021, ELSA shares attracted RON 4.07 bn.
liquidity on BSE, with a daily average of RON 1.9 mn. During this period of about 9 years, 349.36 mn
ELSA shares have been traded (including DEAL transactions), representing 100.8% of the share ca-
pital and 102.9% of the voting rights (total shares without ELSA’s own shares). Thus, the average
daily turnover during this period on BSE was of 162,949 shares.
The gross dividend per share granted by ELSA in 2022 (for 2021) was RON 0.45, below those
granted in the previous years, with a yield of 5.2% (computed at the ex-date closing price from 24
May 2022).
During 2022, ELSA shares attracted a liquidity of RON 144.8 mn. on BSE, with a daily average
of RON 0.6 mn., dropping by 33% compared to 2021, the fourteenth in top trading data on BSE. The
volume of shares traded was 17.33 mn, dropping by 1.8% compared to 2021, so the daily average vo-
lume was of 68,762 shares. The total volume of shares traded in 2022 accounted for 5.0% of the share
capital.
.
.
(cid:22)(cid:30)(cid:20)(cid:24)(cid:26)(cid:23)(cid:25)
The Romanian State
through the Ministry of Energy
Individuals
Other legal entities
EBRD, UK
Electrica SA
Bank of New York Mellon (DRS - LSE)
In order to support the liquidity of its listed shares, ELSA concluded at the end of 2022 two
Market Making services for Issuer agreements, with SSIF BRK Financial Group S.A. and WOOD &
Company Financial Services, a.s. Praga, for two years, starting 1 January 2023, with the main purpose
of accessing the FTSE Russell international indices.
Thus, in January 2023 (the first month of activity of the two liquidity providers), Electrica
shares met the liquidity criteria, recording a median monthly volume of 78,705 shares, 3% above the
minimum threshold, while the capitalization criteria was easily met, by substantially exceeding the
minimum thresholds for free-float (+75%) and total shares (+115%).
In January 2023, Electrica shares registered a total liquidity of RON 12 mn., the 9th highest in
the market, with 1.43 mn. shares traded, with an average daily turnover of 71,465 shares, 4% above
the average turnover from 2022.
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(cid:31)(cid:30)(cid:29)(cid:28)(cid:27)(cid:26)(cid:25)
(cid:24)(cid:30)(cid:26)(cid:23)(cid:26)(cid:31)(cid:25)
(cid:22)(cid:30)(cid:31)(cid:31)(cid:26)(cid:29)(cid:25)
(cid:21)(cid:20)(cid:30)(cid:23)(cid:29)(cid:28)(cid:24)(cid:25)
Source: Central Depository, Electrica
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3.2.2 Global Depositary Receipts (GDRs) on the LSE:
Figure 22: Evolution of the adjusted closing price of ELSA’s shares vs BET-TR index during 2022 and
January 2023
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The GDRs’ weight in ELSA’s total share capital diminished during the period following the
Initial Public Offering, reaching a level of 0.62% at the end of 2022, compared to 10.17% at 4 July
2014.
The maximum price reached by the GDRs was USD 15.3, in September 2014 and the mini-
mum price was USD 5.25 on 9 November 2022. Subsequently, the GDRs’ price followed a fluctuating
trend. During 2022 the trend was a downward one, ending 2022 at a price of USD 5.90, dropping by
34% compared to the end of 2021 (USD 9.00).
In the period since the IPO and until the end of 2022, 12.7 mn. GDRs have been traded, out
of which 55,452 GDRs in 2022. In January 2023, 1,000 GDRs were traded.
A summary of the previous mentioned aspects is found in following table.
Table 9. BSE Shares and Global Depositary Receipts (GDRs) on LSE
Indicator
4 Jul 2014 -
31 Dec 2022
2022
2021
Variation
2022 vs 2021
Bucharest Stock Exchange
Total liquidity (RON)
Average daily liquidity
(RON)
Turnover (no. shares)
Average daily turnover (no.
shares)
Market cap. - end of period
(RON)
Minimum price (RON)
Maximum price (RON)
Average price (RON)
Price at the end of period
(RON)
ELSA Share price
performance (%)
BET performance (%)
BET-NG performance (%)
Dividend(s)
ELSA’s Dividend(s)
yield1 (%)
BET-TR Dividend(s)
yield2 (%)
ELSA’s Adjusted price
performance (%)3
BET-TR performance (%)
London Stock Exchange
ELSA’s GDRs liquidity
(USD)
ELSA’s GDRs turnover (no.
of GDRs)
GDRs price performance
(%)
4,069,591,167
144,828,599
217,148,556
1,898,130
574,717
349,362,690
17,327,927
861,701
17,645,021
162,949
68,762
70,019.92
2,802,728,700
2,802,728,700
3,478,293,714
6.10
14.96
11.65
8.09
-26.5%
66.30%
20.80%
5.6817
51.65%
129.80%
25.20%
196.10%
6.10
11.02
8.36
8.09
-19.4%
-10.70%
-4.98%
0.45
4.48%
8.85%
-14.94%
-1.85%
9.80
14.10
12.31
10.04
-20.00%
33.20%
-29.41%
0.73
5.82%
6.80%
-14.18%
40.00%
162,596,021
427,357
443,931
12,487,482
55,452
35,878
-56.81%
-34.44%
-28.00%
-33.33%
-33.33%
-1.8%
-1.8%
-19.4%
-37.8%
-21.8%
-32.1%
-19.4%
-
-
-
-38.4%
-22.9%
30.1%
-
-
-3.7%
54.6%
-
1 Computed at the previous periods’ last day close price (for comparability)
2 Adjusted at ex-date with the annual value of the dividend/share
3 Computed together with dividend(s) granted during the analyzed period
.
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EL: -13.55%
BET-TR: 2.15%
10.00
5.00
0.00
-5.00
-10.00
-15.00
-20.00
-25.00
-30.00
-35.00
-40.00
ia n.-2 2
fe b.-2 2
m ar.-2 2
a pr.-2 2
m ai-2 2
iu n.-2 2
iul.-2 2
a u g.-2 2
se pt.-2 2
o ct.-2 2
n o v.-2 2
d e c.-2 2
ia n.-2 3
BET-TR
Electrica adjusted price with dividends
Source: BSE, Electrica
During 2022, Electrica’s share price was negatively impacted, especially, among others, by
the “absorption” by its distribution and supply subsidiaries of the inflated prices on the energy mar-
ket, with an impact on the quarterly financial results from the first half of the year, which were felt on
the stock market through a sharp drop to almost -35% of the adjusted price of ELSA, with 23 percen-
tage points below the level of the BET-TR index, also affected by several external factors. Later, after
the implementation of measures for faster collection by electricity suppliers of the subsidies granted
by the State to compensate for price differences on the energy market, as well as legislative changes
regarding the treatment of additional costs with the purchase of energy to cover technological los-
ses (NL) by the distribution companies, Electrica recorded a significant improvement in the financial
results at Group level, and these were felt in the share price through an improvement of more than 21
percentage points, up to -13.55% at the end of January 2023, faster than the market (BET-TR), which
recovered by about 13 percentage points from the end of September 2022 to the end of January
2023, when it reached +2.15%, compared to the level at the beginning of 2022, as can be seen in the
two charts.
.
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Figure 23: Monthly trading volume and weighted average monthly closing price of shares on BSE (in RON)
and GDRs on LSE (in USD) during 2022 and January 2023
2022 a score of 10 on Vektor – investor communication indicator for companies listed on the stock
exchange.
2022 Directors’ Report
2022 Directors’ Report
3,008,775
3,500,000
3,000,000
2,500,000
2,000,000
1,495,713
1,471,084
1,500,000
1,000,000
500,000
-
12.00
11.00
10.00
2,512,179
2,252,989
1,862,760
9.00
8.42
1,429,127
8.00
943,533
7.00
6.67
822,771
797,172
785,761
732,200
642,990
147,144
0
25,672
0
5,760 2,880
400
3,208 14,440
0
22,304
0
4,000
ia n.-2 2
fe b.-2 2
m ar.-2 2
a pr.-2 2
m ai-2 2
iu n.-2 2
iul.-2 2
a u g.-2 2
se pt.-2 2
o ct.-2 2
n o v.-2 2
d e c.-2 2
ia n.-2 3
6.00
5.00
BSE - Shares - Monthly volume
LSE - GDRs - Monthly volume (shares equiv.)
BSE - Shares - Average monthly closing price (RON)
LSE - GDRs - Average monthly closing price (USD)
Source: BSE, LSE, Electrica
3.3. Investor relations (IR)
As every year, in 2022 ELSA’s management team continued to be involved in activities for
investors and analysts.
During the year 2022, four teleconferences were organized to present the annual, quarterly
and half-yearly financial results of the Group. The events have been streamed live through webcasts,
both the supporting documents and the webconference recordings can be accessed on the com-
pany’s website, under the section Investors > Results and Reports.
In ELSA 2019-2023 strategy, updated in April 2022, one of Electrica’s strategic objectives is
to increase the market value, and in this sense, Electrica aims for a 10% better share yield in 2022-
2026 than the one delivered in the period 2014-2021 (ca. 7%) as well as an evolution of the share
price by 5% above the comparable group in the period 2022-2025.
In order to achieve these goals, the company proposed to increase its liquidity in order to
enter the FTSE Russell international indices. In order to implement some measures to boost the inte-
rest of investors and the liquidity of Electrica shares, in order to reach the criteria for inclusion in the
FTSE Russell international index series, with a positive impact on the market value of Electrica SA,
our company concluded at the end of 2022 a contract with two market makers with experience and
results on the Romanian market.
Another strategic objective for the period 2019-2023, updated in April 2022, is the increase
in market value. In order to achieve this goal, we proposed in the IR strategy, among other things,
increasing the presence and activity in the capital market. For this purpose, a partnership was signed
with BURSA DE VALORI BUCURESTI S.A., for the period December 2022-December 2024, to incre-
ase the company’s visibility, attract investors and analysts, giving them access to the tools and analy-
zes that the BSE Research Hub makes available to partners, through the online portal, www.bvbre-
search.ro. It contains fundamental analysis and market information about issuers listed on the BSE as
well as shareholders’ access to global ESG trends that are defining in the current evolution of the
capital markets. Currently, 11 brokers, BSE partners produce analysis reports, which include an initia-
tion report and quarterly or half-yearly updates.
3.4. Related parties transactions
ELSA has the obligation to report the significant transactions concluded by ELSA or its sub-
sidiaries with related parties, 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 2022, there were two references: on
31 December 2021 - RON 206,175,420 and on 30 June 2022 – RON 199,059,726).
The 44 announcements related to these type of transactions, out of which 34 announce-
ments published by ELSA in 2022 and 10 announcements published until 21 March 2023 can be found
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 May 2022, can be accessed on the company’s website
Among the conferences that took place during 2022 and were attended by ELSA’s represen-
under section https://www.electrica.ro/en/investors/results-and-reports/current-reports-art-108/ .
tatives, we mention:
y 3 March 2022, WOOD Conference (online) – Romania Investor Day
y 15-16 September 2022, WOOD Conference (Bucharest) – Romania Investor Day
In 2022 ELSA continued to be 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 anouncements on the platforms
of the Bucharest Stock Exchange (BSE), the London Stock Exchange (LSE), the Financial Supervisory
Authority (ASF and FCA), as well as on ELSA’s website. All these documents can be accessed on the
company’s website, under Investors section > Results and Reports.
All the actions taken during 2022, 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 also in
ELSA’s dividends are distributed from the annual net distributable profit based on the annual
individual audited financial statements, and/or from other items of equity (e.g. retained earnings) set
up at the level of the Company, 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. The company will pay all dividends in
RON.
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.
In selecting a certain dividend pay-out ratio according to the dividend policy, the Board of
Directors takes into consideration the following:
y Reducing the fluctuations in dividend yield from one period to the next, as well as the ab-
.
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solute dividend per share value;
y Electrica’s investment needs and opportunities;
y Contributions of non-monetary items to net reported profit;
y Financial resources available for dividends payment as well as Electrica’s indebtedness;
y Dividend yield comparable to other listed companies in the industry or related sectors.
The dividend distribution rate from the distributable profit of the Electrica group subsidiaries
will be consistent with the dividend policy in force. The dividends paid by the Group’s subsidiaries to
ELSA in year N (related to year N-1 results) are recorded as finance income in ELSA’s individual finan-
cial 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).
The payment of dividends is subject to the general provisions on prescription (by reference
also to the incidence of the provisions of art. 2554 of the Civil Code regarding the extension of the
term). Thus, the payment of dividends that are not claimed within three years from the approved
date of their payment will be prescribed and they can be kept by the Company.
3.6. Dividend distribution
The dividends distributed1 by ELSA fluctuated in the period 2014 - 2021, between RON 152.8
mn. and RON 291.6 mn., and the dividend payout ratio2 was 96% in 2014, 100% each year between
2015-2017, 87% in 2018 (RON 35.57 mn. was distributed to “Others reserves”), 100% in 2019, 87.5% in
2020.
The dividend payout ratio for 2021 was 50% (RON 152.9 mn. was distributed to “Others
reserves”).
Figure 24: Gross dividends distributed (2014-2021) (RON mn.)
244.7
291.6
251.4
245.4
247.5
246.1
247.9
152.8
2014
2015
2016
2017
2018
2019
2020
2021
Source: Electrica
.
6.1%
Figure 25: Gross dividend per share (RON) and dividend yield (%)
6.9%
6.8%
6.9%
7.3%
5.2%
6.0%
5.2%
0.7217
0.8600
0.7415
0.7237
0.73
0.7248
0.73
0.45
2014
2015
2016
2017
2018
2019
2020
2021
Source: Electrica
The yield of the dividend paid in 2022, for the 2021 results, recorded a level of 5.2%, the gross
dividend per share paid in 2022 being RON 0.45. The dividend yield (%) is calculated as Gross divi-
dend per share/Closing share price on BSE at ex-date.
1 The dividends refer to each financial year indicated and are paid in the following year.
2 The dividend distribution rate is calculated as gross dividends/Net profit distributable on dividends, where Net profit dis-
tributable on dividends is net profit according to ELSA’s individual financial statements, except for mandatory distributions
to legal reserves.
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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 2014-2021.
More details about dividends and their distribution can be found on the website: https://
www.electrica.ro/en/investors/shares-and-shareholders/dividende_en/ .
3.7. Own shares
In July 2014, ELSA bought back for price stabilization purposes, 5,206,593 ordinary shares
and 421,000 Global Depositary Receipts, equivalent of 1,684,000 shares. The total amount paid for
acquiring the shares and Global Depositary Receipts was RON 75.4 mn. There were no changes in the
number of the treasury shares until the date of the report.
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4 Corporate Governance in ELSA
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ELSA confers a great importance to the principles of good corporate governance, conside-
ring corporate governance a key element for the sustainable business growth and for the enhance-
ment of long-term value for shareholders.
ELSA constantly develops and adapts its corporate governance practices and model, both
at standalone, as well as at Group level, so that it can align with the increasingly rigorous capital
market requirements and with the best practices in corporate governance at European level, and also
for creating opportunities and increase competitiveness.
The corporate governance represents the set of principles standing at the basis of the gover-
nance 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 mecha-
nisms 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 organiza-
tions 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, attributi-
ons and responsibilities of the management and supervisory structures of the company, as well as
those of the committees constituted to support these structures to fulfil 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 conclu-
ded 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 4.9.
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 we-
bsite at the following address: http://www.bvb.ro/Regulations/LegalFramework/BvbRegulations.
In order to ensure high standards of corporate governance, transparency and business inte-
grity, 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, the chapter 6 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
compliance with the provisions of the CGC issued by the BSE is presented annually in the Declaration
on Corporate Governance “apply or explain” in Chapter 4.8. 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.
ELSA CGC is also a guide on business conduct and corporate governance matters for the
management and for the employees of ELSA, as well as for other stakeholders, and provides infor-
mation 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 2022 the following corporate documents have been revised and published on
Electrica’s website: Remuneration Policy for Directors and Executive Managers – on 6 May 2022, the
Code of Ethics and Professional Conduct – on 1 January 2022, Policy on Organizing and Running the
General Meetings of Shareholders – on 17 August 2022, and the Articles of Association – on 12 October
2022.
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 sanctio-
ning 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 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 com-
pany. 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 awa-
reness of all persons who possess inside information regarding the obligations, restrictions and sanc-
tions 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 enti-
tled 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 conduc-
ting 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 acti-
vity of the company.
4.2. General Meeting of ELSA’s Shareholders
The General Meeting of Shareholders (“GMS”) is the main corporate governance body of
ELSA, deciding on the items as outlined in the Articles of Association. The convening, functioning,
voting method, as well as other provisions regarding the GMS are detailed in ELSA’s Articles of
Association, which is available in electronic format on ELSA’s website https://www.electrica.ro/en/
the-group/about/constitutive-act/.
Starting with 1 February 2020, ELSA has in place a policy on organizing and conducting the
general meetings of shareholders of the company, which presents in detail aspects of interest for
investors regarding the way of organizing and carrying out the GMS. It was updated in August 2022,
it is extended by the introduction of electronic vote. The policy is available on the company’s websi-
te, under the section Investors > Corporate Governance > Corporate Policies > Policy on Organizing
and Running the General Meetings of Shareholders.
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ELSA’s ordinary general meeting of the shareholders (OGMS) has the following main duties:
a. to appoint and revoke the members of the Board and establish the level of their remune-
ration and other rights according to the legal provisions;
b. to establish the income and expenses budget, to set out the activity schedule;
c. to establish the income and expenses budget consolidated at the group level;
d. to discuss, approve or amend the annual financial statements according to the reports
submitted by the Board and the financial auditors;
e. to approve the profit distribution according to the law and to establish the dividend;
f. to decide on the management activity of the directors and on the discharge of liability, in
accordance with the law;
g. to decide to file legal actions against the directors, managers as well as financial auditors
for damages they caused to the Company by breaching their obligations towards the
Company;
h. to decide on mortgaging or leasing or closing of one or more units of the company;
i. to appoint and revokes the financial auditor and to set the minimum term of the financial
audit contract;
j. approves the Remuneration Policy for Directors and Managers (appointed by the board
of directors);
k. approves the Remuneration Report for Directors and Managers (appointed by the board
of directors);
l. approves the overall limit of all Managers’ (appointed by the board of directors) remune-
ration and remuneration of Board members;
m.
to carry out any other duties set out by the law.
ELSA’s extraordinary general meeting of the shareholders (EGMS) shall decide on the following:
a. withdrawal of the preference right of shareholders upon subscription of new shares issued
by the Company;
b. contracting any type of loans, debts or obligations representing a loan, as well as creating
real or personal security related to these loans, in each case in accordance with the com-
petence limits provided in Annex 1 to the Articles of Association;
c. operations regarding the acquisition, alienation, exchange or creation of encumbrances
over fixed assets of the Company whose value exceeds, individually or cumulated, during
any financial year, 20% of the total fixed assets, less receivables and rentals of tangible as-
sets, for a period of more than one year, whose individual or cumulative value compared to
the same co-contractor or persons involved or acting in concert exceeds 20% of the total
value of fixed assets, less receivables at the date of conclusion of the legal act, as well as
associations over a period of more than one year, exceeding the same value;
d. leases of tangible assets for periods longer than one year, whose individual or cumulated
value towards the same co-contractor or involved persons or with whom it acts in concert
exceeds 20% of the fixed assets value, less receivables at the time of entering in the rele-
vant operation, as well as joint ventures in excess of the same value and with a duration of
over one year;
e. approving investment projects in which the Company will be involved in accordance with
the competence limits provided in Annex 1 to these Articles of Association, other than the
ones provided in the annual investment plan of the Company;
f. approving the issuance and admission to trading on a regulated market or on a multilateral
trading facility of shares, depositary certificates, allotment rights or other similar financial
instruments; approving the competencies delegated to the Board;
g. changing the legal form;
h. relocation of the registered office;
i. changing the main or secondary business objects;
j. increasing the share capital, as well as decreasing the share capital, according to the law;
k. the merger or the separation;
l. the dissolution of the Company;
m.
carrying out any bond issuance, as per the provisions of art. 10 of the Articles of Asso-
ciation, or conversion of a category of bonds in a different category or in shares;
n. approving the conversion of preferential and nominative shares from one category to ano-
ther, according to the law;
o. any other amendment to the Articles of Association;
p. approval of the eligibility and independence criteria with respect to the Board members;
q. approval of the corporate governance strategy of the Company, including the corporate
governance action plan;
r. donations within the limits of the competence provided in Appendix 1 to these Articles of
Association; and
s. approves granting of intragroup loans with a value of more than EUR 50 mn. per operation;
t. any other decision that requires the approval of the extraordinary general meeting of the
shareholders.
The OGMS is convened at least once a year, within a maximum of four months from the end
of the financial year. Except for this situation, OGMS and EGMS are convened as many times as nee-
ded, being convened by ELSA’s Board of Directors whenever necessary for the activity of Electrica
Group. The GMS may be convened also, upon the request of shareholders representing, individually
or cumulatively, at least 5% of the share capital. In this case, the general meeting of the shareholders
shall be convened by the Board of Directors within no more than 30 days and shall meet within no
more than 60 days from the date of receiving the request.
4.3. Shareholders’ rights
The rights of all ELSA’s shareholders, independent of their holdings, are protected according
to the relevant legislation. Shareholders have, amongst other rights provided under the company’s
Articles of Association and the laws and regulations in force, the right to obtain information about
ELSA’s operations and results, regarding the exercise of voting rights and the voting results in the
GMS.
Shareholders have also the right to participate and vote in the GMS, as well as to receive di-
vidends. 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 capi-
tal, 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 reso-
lution 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 sharehol-
ders, (ii) the right to elect the management bodies, (iii) the right to participate to the profit
distribution, as well as (iv) other rights provided by these Articles of Association and by
the legal provisions;
– The acquisition of the property right over a share by a person, directly or indirectly, has
as effect the obtainment of the capacity of shareholder of the company together with all
rights and obligations deriving from this capacity, in accordance with the law and the Ar-
ticles of Association;
– The rights and obligations deriving from the shares are transferred to the new acquirers
together with the shares;
– When a nominative share becomes the property of several persons, the transfer shall be
registered only if they appoint a sole representative for exercising the rights derived from
the shares;
– The obligations of the company are secured by its social patrimony, and the liability of the
shareholders is limited to the subscribed share capital;
– The shareholder that has, in a certain operation, either personally or as representative of
another person, an interest contrary to the interest of the company, must refrain from de-
liberations regarding the respective operation.
The exercise of the rights by the holders of the depositary certificates1 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, proporti-
onally to their holdings of deposit certificates and taking into account the conversion rate
between underlying shares and the deposit certificates;
– The holder of the depositary certificates issued based on the underlying shares has the
1 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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2022 Directors’ Report
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capacity of 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 depositary
certificates is fully responsible for informing the holders of the depositary certificates in a
correct, complete and timely manner, observing the provisions of the issuance documents
of the depositary certificates, about the documents and the informative materials related
to a general meeting of shareholders, as made available to the shareholders by the Com-
pany.
– 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 sha-
res 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 which have the right to take
part and to vote in the general meeting of the shareholders of the Company and any re-
gistration 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 pro-
visions 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 with at least 15 working days to the deadline
for submitting the power of attorney related to the vote.
Transfer of shares
The shares are indivisible. The company shall recognize a sole owner per each share, subject
to the provisions of article 11 paragraph (4) from Articles of Association.
The partial or total transfer of shares between the shareholders or to third parties shall be
carried out according to the terms and procedure provided by the applicable legal provisions, inclu-
ding the capital markets legislation.
.
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 respon-
sibilities are established under the Articles of Association and the Charter (organization and functi-
oning 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-year mandate, out of which four must
meet the criteria of independence provided by the Articles of Association.
During 2022, the Board of Directors’ structure has undergone changes, as follows:
– At the beginning of the year, the BoD consisted of the following members: Mr. Iulian Cris-
tian Bosoanca – Chairman, Mr. George Cristodorescu, Mr. Radu Mircea Florescu, Mr. Gicu
Iorga, Mr. Adrian-Florin Lotrean, Mr. Dragos-Valentin Neacsu and Mr. Ion-Cosmin Petrescu;
– The members of the Board re-elected Mr. Iulian Cristian Bosoanca as Chairman of the BoD
starting with 01 January 2022 and until 31 December 2022;
Table 10. Members of the BoD in 2022
No
Name
Term of office (until
27 April 2025)
Status
Starting date of the
first mandate
1.
2.
Mr. Iulian Cristian Bosoanca
4 years
Mr. George Cristodorescu
4 years
3.
Mr. Radu Mircea Florescu
4 years
Chairman, non-executive
director
non-executive director,
independent
non-executive director,
independent
29 April 2020
28 April 2021
7 February 2019
4.
Mr. Gicu Iorga
4 years
non-executive director
1 May 2017
5.
6.
7.
Mr. Adrian-Florin Lotrean
4 years
Mr. Dragos-Valentin Neacsu
4 years
non-executive director,
independent
non-executive director,
independent
28 April 2021
28 April 2021
Mr. Ion-Cosmin Petrescu
4 years
non-executive director
28 April 2021
Source: Electrica
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More details on the Board members’ biographies can be found on the Group’s website in the
section Investors > Corporate Governance > Board of Directors.
Below are presented the most relevant aspects regarding the professional experience of
the BoD members.
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2
2
0
2
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N
N
A
71
72
73
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ELECTRICA S.A. - DIRECTORS' REPORT 2022
Dragos-Valentin Neacsu
Non-executive Director
(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, coo-
peration of UQAM and McGill Canadian univer-
sities, together with Academy of Economic
Studies in Bucharest and holds a BA in Civil
Engineering
Technical University
Bucharest (1989).
from
Dragos- Valentin Neacsu is a non-executive, in-
dependent director since 28 April 2021, Chair of
the Climate Governance and Public Policy
Committee and member of the Audit and Risk
Committee.
Mr. Neacsu has an extensive professional expe-
rience in the field of investment management
and financial markets, currently holding the po-
sition of independent member of the Board,
member of the Audit Committee and Chairman
of the Appeals Commission of the Bucharest
Stock Exchange S.A., as well as the position of
independent member of the Board of Directors
at Depozitarul Central S.A. Mr. Neacsu is also
the CEO of the GS1 Romania Association, part
of a global network of 115 not-for-profit organi-
zations, with an activity focused on elaborating
and promotion of coding systems, serialization
and traceability in business communication.
Until October 2019, Mr. Neacsu held the positi-
on of Chief Executive Officer, Chairman of the
Board of SAI Erste Asset Management SA, pre-
viously 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 posi-
tion 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 instituti-
ons (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.
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ELECTRICA S.A. - DIRECTORS' REPORT 2022
2022 Directors’ Report
Ion-Cosmin Petrescu
Non-executive Director
Ion-Cosmin Petrescu is a non-executive director
since 28 April 2021, member of the Nomination and
Remuneration Committee.
Mr. Cosmin Petrescu holds an 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.
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 demonstrated his
competences in business process optimisation
(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 of the Audit and Risk
Committee, as well as their Chairs, are independent directors.
The consultative committees’ members are elected for a period of one year. Changes in the
composition of the committees during this period may intervene with the vacancy of a Board posi-
tion. The organization, duties and responsibilities of each committee are set under ELSA’s Articles of
Association, respectively in the committee Charters and in the Company’s Corporate Governance
Code.
The composition of the committees during 2022, as it follows:
01 January – 31 December 2022
Nomination and Remuneration Committee:
– Mr. Adrian-Florin Lotrean – Chairman;
– Mr. Radu Mircea Florescu – Member;
– Mr. Ion Cosmin Petrescu – Member
Audit and Risk Committee:
– Mr. Radu Mircea Florescu - Chairman;
– Mr. Dragos-Valentin Neacsu – Member;
– Mr. Iulian Cristian Bosoanca – Member.
Strategy and Corporate Governance Committee:
– 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:
– Mr. Adrian-Florin Lotrean – Chairman;
– Mr. Radu Mircea Florescu – Member;
– Mr. Ion Cosmin Petrescu – Member.
Audit and Risk Committee:
– Mr. Radu Mircea Florescu - Chairman;
– Mr. Dragos-Valentin Neacsu – Member;
– Mr. Iulian Cristian Bosoanca – Member.
Strategy and Corporate Governance Committee:
– Mr. Gicu Iorga - Chairman;
– Mr. George Cristodorescu– Member;
– Mr. Adrian-Florin Lotrean – Member.
Climate Governance and Public Policy Committee:
– Mr. Dragos-Valentin Neacsu – Chairman;
– Mr. George Cristodorescu – Member;
– Mr. Iulian Cristian Bosoanca – Member.
.
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According to the available information, there is no agreement, understanding or family rela-
tion between the directors of the company and another person who may have contributed to their
appointment as directors.
As of 31 December 2022, among the BoD members, Mr. Dragos-Valentin Neacsu holds a
number of 50 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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4.5. The activity of ELSA’s Board of Directors and of its
consultative committees in 2022
In 2022, the Board of Directors met 55 times; of these, 25 meetings were organized with the
physical presence of the members, 5 were held by conference call, in accordance with Art. 18 para.
20 of the company’s Articles of Association and 25 meetings were organized electronically.
Nelow are presented the Board members’ attendance (in person, by conference call, or by
e-mail) in the meetings of the Board of Directors and its committees in 2022.
Table 11. Participation of the BoD members at the meetings and of the committees in 2022
Name
The Board of
Directors
(no. of meetings
55)
The Audit and
Risk Committee
(no. of meetings
- 28)
Iulian Cristian Bosoanca
George Cristodorescu
Radu Mircea Florescu
Gicu Iorga
Adrian-Florin Lotrean
Dragos-Valentin Neacsu
Ion-Cosmin Petrescu
Source: Electrica
55
47
51
53
55
54
55
28
-
28
-
-
28
-
Evaluation of the Board of Directors
The Nomination
and Remuneration
Committee
(no. of meetings
- 26)
-
-
23
-
26
-
26
The Strategy
and Corporate
Governance
Committee (no. of
meetings - 33)
-
28
-
32
33
-
-
The Board evaluates annually its activity and that of its consultative Committees to identify
areas of improvement, and to increase its efficiency. The purpose of the evaluation is to provide
members 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.
According to the established mechanism, the evaluation is conducted either with the sup-
port of a consultant or by self-evaluation.
The Board of Directors decided, in accordance with good corporate governance practices,
to evaluate the activity carried out and its functioning during 2022, with the support of an external
consultant with international experience, specialized in the evaluation of management teams and
boards of directors from listed companies.
Following the evaluation, the consultant submitted to the Board of Directors a detailed re-
port with the analysis of the outcome of the evaluation process.
The Nomination and Remuneration Committee
The Nomination and Remuneration Committee consists of three non-executive BoD mem-
bers, two of its members are independent.
The role of the Committee is to propose candidates for the BoD, to develop and propose to
the Board the selection procedure of candidates for the executive managers’ positions and other
management positions, to recommend the Board candidates for these positions, to formulate pro-
posals on the managers’ and other management positions’ remuneration.
The Committee has the following responsibilities concerning nomination matters:
– recommends to the Board a nomination policy, including a target Board profile, the pro-
cess and principles to be considered by the shareholders when proposing candidates for
company’s directors, and advises the Board regarding the nomination of interim directors
in accordance with the policy;
– reviews the implementation of the nomination policy, submits a report to the Board on its
implementation and presents a summary of this report in the Directors’ Report;
– advises the Board on the appointment and dismissal of the Chief Executive Officer, makes
recommendations on the appointment and dismissal of the company’s executive manage-
ment team after consulting with the Chief Executive Officer, and makes proposals on the
appointment and dismissal of subsidiaries’ board of directors members in accordance with
the Group Governance Policy;
– recommends to the Board policies in the human resources field, including those covering
recruitment and dismissal, talent management and development and succession planning
across the company and its subsidiaries (the Group);
– recommends to the Board a succession policy, both for the members of the board and for
the executive team;
– supervises the process of annual evaluation of the effectiveness of the Council and its ad-
visory committees;
– periodically assesses the size, composition and Committee’s structure and makes recom-
mendations to the Board with regard to any changes;
– advises the Board on continuous skill development programmes for Board members and
executive management;
– oversees the nomination process of the appointment of subsidiaries’ CEOs and executive
managers according to the nomination and remuneration policy.
The Committee has the following duties regarding remuneration:
– advises the Board in relation to the remuneration, incentive and compensation policies of
Previously, the Board of Directors has self-evaluated its activity for the year 2021, using a
the company;
questionnaire, internally developed, discussed and agreed by the Board members.
.
The members of the Board who contributed to the evaluation are: Mr. Iulian Cristian Bosoanca -
Chairman of the BoD, Mr. George Cristodorescu, Mr. Radu Mircea Florescu, Mr. Gicu Iorga, Mr. Adrian-
Florin Lotrean, Mr. Dragos Neacsu and Mr. Ion-Cosmin Petrescu.
The evaluation process focused on the following 11 dimensions relevant to the activity of the
Board of Directors and the market context of Electrica SA:
– Composition and expertise of the BoD;
– Quality of information and materials;
– Agenda and Board meetings;
– Board coordination;
– BoD committees;
– Interactions between the BoD and the Executive team;
– Dynamics of the interactions and processes;
– Performance management;
– Strategic Management and Risk Management;
– Innovation and digitalization;
– Sustainability;
.
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– advises the Board regarding the periodic review of the remuneration policy for Board
members and executive managers;
– advises the Board in relation to the remuneration of the CEO and other executive man-
agers, including the main remuneration components, annual and long term performance
objectives and regarding evaluation methodology;
– makes recommendations to the Board on the remuneration of subsidiaries’ board mem-
bers and the general limits of remuneration for subsidiaries’ executive management;
– monitors compensation trends within areas relevant to the Group;
– oversees the remuneration process of the subsidiaries’ chief executive officer and exec-
utive managers according to the nomination and remuneration policy at the Group level;
– verifies at least once a year the number of mandates held in other companies by the mem-
bers of the Board and by the executive managers, in order to evaluate their independence;
– oversees the annual evaluation process of the Board of Directors’ activity.
The Nomination and Remuneration Committee met 26 times during 2022, among the main
aspects on which the activity of the Committee focused, were the following:
– Analysis of ELSA executive managers’ KPIs achievement for 2021 and establishing of the
KPIs for 2022, along with the revision of performance evaluation methodologies, Short
Term and Long Term;
.
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– Supervising the evaluation process of the Board of Directors’ activity during 2022;
– Endorsing the proposals regarding the nomination of the subsidiaries’ Board members;
– Revision the Remuneration Policy for the Company’s Directors and Executive managers;
The Audit and Risk Committee
The Committee is composed of three non-executive BoD members, two of them being inde-
pendent. The Committee’s composition provided the necessary expertise in finance and risk man-
agement, according to legal requirements.
The main role of the Committee is to support the Board in fulfilling its duties of verifying the
efficiency of company’s financial reporting, internal control and risk management. While fulfilling this
role, the Committee advises the Board regarding the assessment of the annual report and annual fi-
nancial statements, whether the documents are accurate, balanced and comprehensive and provide
all the necessary information for the shareholders’ evaluation of the financial performance.
The Committee has the following duties in terms of financial reporting:
– examines and monitors the financial reporting process, the integrity of annual and inter-
im financial statements, at standalone and consolidated levels, or of disclosures made by
ELSA and its subsidiaries;
– reviews press releases announcing financial or operational results related to or derived
from such financial statements, as well as any financial information or earning guidance, to
be provided to financial analysts or rating agencies, by analyzing the fairness and adequa-
cy of the content and presentation of such statements or information;
– regularly reviews the adequacy of the Group’s accounting policies;
– reviewes the financial forecast policy of the Company and recommends, to approval, to-
wards Board of Directors.
– reviews and advises the Board on whether the content of the annual report, taken as a
whole, represents a fair, balanced and understandable account for shareholders and pro-
vides them with the information necessary to assess the Company’s performance.
Regarding the audit and internal control matters, the Committee has the following
responsibilities:
– endorses, for the Board’s approval, the annual plan at Group level, based on the annual risk
assessment, as well as any significant changes to the plan and receives periodic reports on
activities, important findings and follow-up of internal audit reports;
– periodically reviews the charter and internal audit manual and submits them to the Board,
for approval;
– advises the Board on the appointment, dismissal and remuneration of the Head of Internal
Audit Department;
– monitors the adequacy, effectiveness and independence of the internal audit function;
– makes recommendations to the Board on the appointment, rotation or dismissal of the
.
company’s external auditor;
– reviews the plan, activity and findings of the external auditor;
– assesses the independence and objectivity of the external auditor and monitors the com-
pliance with relevant ethical and professional guidance, including the requirements on the
rotation of audit partners;
– monitors the application of the legal standards and generally accepted internal audit
standards;
– endorses the internal audit reports, the recommendations made by the internal auditors
and the plans of measures for the implementation of the recommendations;
– performs any other activities established by the Board and the law;
– regularly reviews the adequacy of the key internal control policies, including fraud detec-
tion and bribe prevention policies;
– reviews the operations between affiliated parties in accordance with a policy drafted by
the Committee and approved by the Board;
– analyzes the annual report prepared by the Internal Audit Department and/or Risk Man-
agement, which evaluates the effectiveness of the internal control system within the Group.
.
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The Committee has the following responsibilities concerning risk management matters:
– reviews regularly the main risks facing the company and the Group, recommending to the
Board adequate policies for risks identification, mapping, management and mitigation;
– monitors the main categories of risks that are recorded annually in the management re-
port in order to reduce them and to evaluate the efficiency of the risk management system
within the Group;
– makes recommendations to the Board on financing methods, including proposals for con-
tracting any type of loans and securities associated with these loans;
– makes recommendations to the Board regarding major economic transactions within the
authority of the General Meeting of Shareholders and assesses the associated risks regard-
ing such transactions.
The Audit and Risk Committee met 28 times during 2022, among the main aspects on
which the activity of the Committee focused, being the following:
– Analysis of the financial statements of ELSA at standalone and consolidated level for the
financial year of 2021, as well as the financial statements of company’s subsidiaries for the
financial year of 2021, together with the financial auditor report and recommendations,
issued during the auditing process;
– ELSA’s budget execution, the consolidated budget execution and the quarterly financial
results;
– Monitoring of the internal audit plan for 2022 and analysis of its achievement, as well as
the reports submitted by the Internal Audit Department, proposing recommendations;
– Monitoring the implementation of the recommendations made by the internal audit de-
partment;
The internal audit activity is carried out by a structurally separate organizational unit (the in-
ternal audit department), within the Company. To ensure the fulfilment of its main functions, it reports
functionally to the BoD through the Audit and Risk Committee and administratively to the CEO.
The Strategy and Corporate Governance Committee
The Committee is composed of three non-executive BoD members, holding the necessary
expertise in performing the committee’s specific duties, two of them being independent.
The Committee has the following duties in terms of strategy:
– makes proposals to the Board on the development of the medium-term strategic plan,
makes recommendations on the strategic direction, priorities and long term objectives of
ELSA and its subsidiaries;
– reviews management proposals on the Group’s consolidated annual budget, subsidiaries’
annual budgets, investment plans of the Group companies and makes relevant recommen-
dations 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 competiveness and technological advances;
– periodically reviews the overall strategic planning process, including the process of devel-
oping the medium-term strategic plan, makes recommendations on the issues that can be
improved in strategic planning and provides feedback to the executive management;
– makes recommendations to the Board regarding the proposed acquisitions, divestments,
investment projects, joint-ventures and collaboration projects, especially assessing their
alignment with the Group’s strategy;
– performs any other activities or assume responsibilities regarding strategic matters which
may be delegated periodically to the Committee by the Board.
Regarding the tasks of the Committee on restructuring, they mainly relate to the
following:
– reviews and makes recommendations to the Board with respect to the development and
implementation of the Group’s overall restructuring plans and objectives, including any
decision regarding the conduct or efficiency of core businesses;
– regularly reviews the organizational structure and chart of the company, and makes re-
commendations to the Board in this regard;
.
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– performs any other activities or responsibilities on restructuring matters as may be peri-
odically delegated to the Committee by the Board.
Also, the Committee has duties in terms of corporate governance:
– oversees and monitors the company’s compliance with legal and contractual obligations
on corporate governance, as well as other applicable corporate governance principles and
makes recommendations to the Board;
– regularly reviews the company’s Corporate Governance Code, the Charter of the Board
of Directors and the company’s Articles of Association and makes recommendations to
the Board on relevant amendments to the company’s corporate governance policy and
documentation;
– submits the Group Governance Policy to the Board for approval and regularly reviews it
thereafter;
– reviews the company’s Delegation of Authorities policy and the company’s Delegation of
Authority standard in order to ensure that the delegation of authorities to management
allows for effective and efficient decision-making process, and makes recommendations
to the Board in this respect;
– reviews the company’s policy for corporate social responsibility and stakeholder engage-
ment, and makes recommendations to the Board in this regard;
– makes recommendations to the Board on improving the quality of information flows to the
Board, including the improvement of reports sent, key performance indicators presented
to them, and guidelines for preparing Board documents and presentations;
– drafts reports or materials related to corporate governance, upon the Board request.
During the year 2022, the Committee met 33 times, among the main aspects on which the
activity of the Committee focused, being the following:
– Analysis of the opportunities and the efficiency of investments in different renewable pro-
duction capacities and participation in various competitive processes in this regard;
– Endorsement of the amendments to the ELSA’s Articles of Association;
– Revision of the Internal Standard Delegation of the Authority and of the Regulation of
Organization and Functioning of SE Electrica SA;
– Endorsement of the reorganization process of the Company’s personnel structure;
– Endorsement of the Revenue and Expenditure Budget for the year 2022;
– Endorsement of the revision of the Electrica Group Strategy for 2019-2023.
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 applica-
ble legal provisions.
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.
During the meeting held on 3 January 2022, ELSA’s Board of Directors decided to appoint
Mr. Stefan-Alexandru Frangulea, as interim Chief Financial Officer, starting with 4 January 2022 and
until 31 December 2022 (inclusive), mandate extended during the meeting held on 29 December
2022 until 28 February 2023 (inclusive).
During the meeting held on 15 April 2022, ELSA’s Board of Directors took note of the notice
of resignation from the mandate submitted by Mr. Stefan-Ionut Pascu, considering the effective ter-
mination date of the mandate contract as 30 April 2022.
During the meeting held on 5 May 2022, ELSA’s Board of Directors decided to revoke Ms.
Georgeta Corina Popescu from the position of Chief Executive Officer, starting on 16 May 2022. At
the same time, the Board of Directors decided to appoint Mr. Chirita Alexandru-Aurelian, as interim
Chief Executive Officer, starting on 17 May 2022, mandate extended during the meeting held on
16 August 2022 until 31 December 2022, subsequently, during the meeting held on 29 December
2022, took place the extension of the mandate granted until 28 February 2023 (inclusive).
During the meeting held on 27 February 2023, at the recommendation of the Nomination
and Remuneration Committee, the Board of Directors decided to extend the duration of the mandate
of Mr. Alexandru-Aurelian Chirita as interim CEO until 30 April 2023 (inclusively), under the same
conditions as well as to extend the duration of the mandate of Mr. Stefan-Alexandru Frangulea as
interim CFO for a period of 2 years, until 27 February 2025 (inclusively), under the same conditions.
Following these changes, during 2022, ELSA’s executive directors, appointed under the
terms of office, are presented in the table below.
Table 12. ELSA’s Executive management during 2022
Name
Function
The Executive Manager’s mandate
Georgeta Corina Popescu*
Chief Executive Officer
1 February 2019 – 16 May 2022
Alexandru-Aurelian Chirita
Chief Executive Officer
17 May 2022 – 30 April 2023
.
.
.
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A
C
R
T
C
E
L
E
2
2
0
2
T
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O
P
E
R
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A
U
N
N
A
84
Mihai Darie
Chief Financial Officer
3 January 2018 – 3 January 2022
Stefan Alexandru Frangulea
Chief Financial Officer
4 January 2022 – 27 February 2025
Livioara Sujdea
Chief Distribution Officer
Stefan Ionut Pascu
Chief Corporate Development
Officer
1 February 2017 – 31 January 2021, the
mandate being renewed for a period of
4 years, respectively 1 February 2021 - 31
January 2025
1 October 2021 – 31 December 2021,
the mandate was renewed for a period of
12 months, respectively 1 January 2022 –
30 April 2022
Mircea Toma Modran
Chief IT & C Officer
1 June 2019 - 1 June 2023
Source: Electrica
*Termination without cause of the mandate agreement.
.
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L
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2
2
0
2
T
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O
P
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R
L
A
U
N
N
A
85
2022 Directors’ Report
More details on the in place executive managers’ biographies can be found on ELSA’s web-
site in the section
https://www.electrica.ro/en/investors/corporate-governance/board-of-directors/.
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.
.
.
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A
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C
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L
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2
2
0
2
T
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P
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R
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A
U
N
N
A
86
Alexandru Chirita is a professional with a sub-
stantial experience in the legal and energy
fields. He earned his Bachelor’s degree from the
Law School at the University of Bucharest in
2008, and subsequently dedicated nearly a
decade to practicing law. Throughout his ca-
reer, Mr. Chirita has amassed comprehensive ex-
pertise in consultancy on various legal matters,
encompassing corporate law, commercial trans-
actions, and litigation. His profound under-
standing of legal frameworks, coupled with his
aptitude for devising and executing effective
in
legal strategies, has been
achieving organizational objectives.
instrumental
Mr. Chirita’s multidisciplinary background is ev-
ident in his academic accomplishments. He
holds a Master’s degree in Law and European
Governance from the National School of
Political and Administrative Studies (SNSPA), a
Master’s degree in European Union Law, and a
Bachelor’s degree in Law from the Faculty of
Law at the University of Bucharest. He is cur-
rently pursuing a Doctorate in Administrative
Sciences at SNSPA.
As an active member of the professional com-
munity, Mr. Chirita participates in several organ-
izations, such as The International Association
of Privacy Professionals, the European Law
Institute, the United Nations Association of
Romania
the Romanian
Arbitration Institute.
(ANUROM), and
Before joining Electrica, he held the positions of
Legal Manager and Data Protection Manager at
Hidroelectrica. In these capacities, he formulat-
ed and executed legal and data protection
strategies, ensuring compliance with regulatory
mandates, managing litigation and disputes,
and supervising contract negotiations. His legal
acumen and experience have proven invaluable
in his role as CEO of Electrica, a position he has
held since May 2022.
87
With an experience of over 22 years in energy
field started Ms. Livioara Sujdea activity started
as a Design Engineer at Electrica, subsequently
occupying various top management positions,
including Deputy General Manager and member
of the Board of Directors at E.ON Moldova
Distributie, E.ON Gas Distributie, E.ON
Distributie România, Director of Operation and
Maintenance at Delgaz Grid and Deputy General
Manager and member of the Board of Directors
at E.ON Energie.
Livioara Şujdea graduated
the Technical
University “Gheorghe Asachi” of Iaşi – 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 specializa-
tion in General Management at the University of
Sheffield U.K. and a Strategic Management and
the Chartered
Leadership Degree
Management Institute London, U.K.
from
Starting with February 1st, 2017, Ms. Livioara
Şujdea has taken over the position of Chief
Distribution Officer, for a period of 4 years.
Following the reconfirmation in office, Ms.
Șujdea’s second term began on 1 February 2021,
for a period of 4 years.
88
89
Starting from March 15, 2023, Mrs. Ioana-Andreea
Lambru took over the position of Business
Development Executive Officer, for a period of
4 years.
Mrs. Lambru graduated from the Faculty of
International Financial-Banking Relations at the
Romanian American University.
With more than 10 years of experience in
government and public administration, Mrs.
Ioana Andreea Lambru held the position of
President of the Supervisory Board of the
Hidroelectrica company for the last 6 years.
Starting on June 1st, 2019, Mr. Mircea-Toma
Modran has taken over the position of Chief
Information Officer within Electrica SA, for a
4 years’s term.
Mr. Mircea-Toma Modran has 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 of Business Administration degree. He
has also attended postgraduate programs at
Humber College and the Niagara Institute
from Canada, and the Ashridge-Hult and
Edinburgh Universities from UK.
With more than 30 years of professional ex-
perience, he has served for 20 years in top
management positions for Romanian and fo-
reign, private and state owned, listed compa-
nies, operating in energy and utilities, oil and
gas, chemical, aeronautics and information
technology, fulfilling a wide range of respon-
sibilities, from the classic IT and industrial au-
tomation to direct coordination of operatio-
nal divisions with strategic impact on financi-
al results.
90
91
4.7. Remuneration of the Directors and of the
Executive Managers with mandate agreements
4.8. Statement regarding the corporate governance
“Comply or Explain”
2022 Directors’ Report
2022 Directors’ Report
At the Electrica Ordinary General meeting of shareholders (OGMS) on 20 April 2022, the
remuneration Policy for Directors and Executive Directors was approved, without any changes to
the remuneration limits previously established by the GMS for Directors and Executive Directors.
The amendments cover the additions made as a result of the new legislative provisions, in order to
present in a transparent manner the elements of fixed and variable remuneration, including financial
and non-financial benefits, in any form, which are granted to the directors.
Also, in developing the remuneration policy, good practices used internationally and natio-
nally for similar ELSA companies were taken into account, as identified after the listing of the
company.
Starting with 2022, the Company has prepared and published the remuneration Report for
Directors and Executive Directors 2021, in accordance with the provisions of Law 24/2017 on issuers
of Financial instruments and market operations. The report was awarded at the Electrica ordinary
General meeting of shareholders (OGMS) on 20 April (https://www.electrica.ro/en/investors/gene-
ral-meetings-of-shareholders/2022-gms/general-meeting-of-shareholders-as-of-20-april-2022/),
with the aim of presenting an overview of the remuneration and benefits granted and/or owed
during the last financial year, to the managers individually, including new recruits and former mana-
gers in accordance with the Company’s remuneration Policy.
The remuneration policy for directors and executives is reviewed annually by the CNR and
describes the main pillars of remuneration, as well as the terms, conditions and non-financial bene-
fits approved by ELSA’s corporate bodies.
The remuneration policy has the following objectives:
– setting clear remuneration thresholds and guidelines;
– establishing the remuneration structure;
– ensuring the correlation between the remuneration levels within ELSA.
.
.
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The present Statement reflects ELSA’s status of compliance with the new BSE Corporate
Governance Code as of 28 February 2023.
Note: considering the fact that there are no mentions for “Reason for non-compliance”, the
corresponding column has been removed from the table below.
Table 13. ELSA’s compliance with the provisions of the BSE Corporate Governance Code
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
Responsibilities
No.
Sec-
tion A
A.1.
All companies must have an internal Board
regulation which includes the terms of reference/
responsibilities of the Board and the key
management functions of the company, and
which applies, among other things, the General
Principles of this Section.
YES
A.2.
Provisions for the management of conflict
of interest should be included in the Board
regulation.
YES
The company had elaborated ever since February
2015 ELSA’s Corporate Governance Code (ELSA’s
CGC) that included the Articles of Association
of the Company, the rules of organization and
functioning of the BoD and of 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 in order
to detail the responsibilities of the Board, of
its committees and of the management team,
taking into account the recommendations made
in the Evaluation Report of the Board’s activity
in the previous year.
In 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.
The last update of ELSA’s CGC took place in
July 2020, and the last update of the Articles of
Association was on 12 October 2022.
Such provisions are mentioned in ELSA’s CGC,
in the Articles of Association, in the Code of
Ethics and Professional Conduct, and in the BoD
organization and functioning regulation.
The current version of the Code of Ethics and
Professional Conduct entered
into force on
1 January 2022 and is available on the company’s
website in the section Investors -> Corporate
Governance -> Corporate policies and other
documents
A.3.
The Board of Directors must consist of at least
five members.
YES
ELSA’s BoD consists of seven members since 14
December 2015.
.
.
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93
No.
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
No.
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
2022 Directors’ Report
2022 Directors’ Report
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
independent. Each
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;
A.4.2. is not an employee of the company or a
company controlled by it and has not held such
a position for the past five (5) years; A.4.3. does
not and did not receive additional remuneration
or other advantages from the company or from
a company controlled by it, other than those
corresponding to the quality of a non-executive
director; A.4.4. is not or has not been an employee
or has not had a contractual relationship, during
the previous year, with a significant shareholder
of the company, shareholder who controls more
than 10% of voting rights or with a company
controlled by him; A.4.5. does not have and
did not have in the previous year a business or
professional relationship with the company or
with a company controlled by it, either directly
or as a customer, partner, shareholder, member
of the Board/Administrator, General Manger/
Executive Director or employee of a company if,
by its substantial nature, this report may affect
its objectivity; A.4.6. is not and has not been
for the last three years the external or internal
auditor or partner or associate employee of the
current external financial or internal auditor of
the company or a company controlled by it; A.4.7.
is not the general manager/executive director
of another company where another general
manger/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.
relatively
permanent
Other
professional
commitments and obligations of a Board
member, including executive and non-executive
Board positions in companies and not-for-profit
institutions, must be disclosed to shareholders
and potential investors before appointment and
during his/her term of office.
Any member of the Board should submit to the
Board information on any relationship with a
shareholder who holds, directly or indirectly,
shares representing more than 5% of all voting
rights.
The corporate governance statement will inform
whether an evaluation of the Board has taken
place under the leadership of the chair or the
nomination committee and, if so, will summarize
the key measures and changes 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.
The corporate governance statement must
contain information on the number of meetings
of the Board and committees during the last year,
directors’ attendance (in person or absent) and
a report of the Board and committees on their
activities.
YES
YES
A.8.
A.9.
A. 10.
The corporate governance statement must
contain information on the exact number of the
independent members of the Board of Directors.
YES
A. 11.
Sec-
tion B
B.1.
The Board of Premium Companies must set
up a nomination committee of non-executive
lead the procedure of
members that will
nomination of new members to the Board and
will make recommendations to the Board on the
appointment and the revocation of the Chief
Executive Officer and the management team.
The majority of the members of the nomination
committee must be independent.
Risk management and internal control system
The Board must set up an audit committee in which
at least one member must be an independent
non-executive director. A majority of members,
including the chairman, must have proven that
they are adequately qualified relevant to the
functions and responsibilities of the committee.
At least one memberof the audit committee must
have proven and appropriate audit or accounting
experience. In the case of Premium Companies,
the audit committee must consist of at least three
members and the majority of the audit committee
must be independent.
YES
YES
B.2.
The chairman of the audit committee must be an
independent non-executive member.
YES
This provision was applied starting with 2015, the
BoD carrying out an annual assessment process
of its activity with the support of an external
consultant (in 2015, 2017, 2020 and 2022), or
using a self-assessment questionnaire (in 2016,
2018, 2019 and 2021)
More details are provided in the 2015-2017 Annual
Reports in chapters 6.1 and 6.2, for 2018 and 2019,
2020, 2021 and 2022 in chapter 4.5.
Details regarding the compliance with this
provision are presented in the Annual Report,
in the Corporate governance chapter. For 2022,
please see chapter 4.5.
Four out of seven members of the BoD are
independent and this is specified in the Annual
Report. More details are provided in the Annual
Reports for 2021 in chapter 4.4.
On ELSA’s website, in the section Investors >
Corporate Governance > Board of Directors,
it
is specified exactly which members are
independent.
the existence of
The Articles of Association and ELSA’s CGC
highlight
this committee
(Nomination and Remuneration Committee -
NRC), its members and responsibilities. The NRC
composition is reviewed annually, in accordance
with the NRC organization and functioning
regulation (Charter) and at the beginning of each
new mandate of a new member of the BoD. In
May 2021, its structure was revised according to
the changes that occurred in the board structure.
According to the NRC’s Charter, in December 2021
the current structure of the NRC was established,
two of the members being independent, and
in December 2022 the decision was made to
maintain the same structure until December
2023. Details regarding the NRC structure are
presented in chapter 4.4.
the existence of
The Articles of Association and ELSA’s CGC
highlight
this committee
(Audit and Risk Committee - ARC), its structure
and responsibilities.
The ARC structure is reviewed annually, according
to ARC Charter and at the beginning of each new
mandate of the BoD.
In May 2021, its structure was revised according to
changes in the BoD structure. In accordance with
the ARC Charter, the current composition of the
ARC was voted in December 2021, in which two of
the members are independent, and in December
2022 the decision was made to maintain the
same structure until December 2023. Details are
presented in chapter 4.4.
On the 6 May 2021 and subsequently, on 15
December 2021 and on 20 December 2022, Mr.
Radu Mircea Florescu, independent non-executive
board member was elected and respectively
re-elected as Chairman of the Audit and Risk
Committee.
YES
to
All the members of ELSA’s BoD are non-
executive. According
the Articles of
Association, at least four out of seven members
must be independent. The independence criteria
stipulated in the Articles of Association are
similar and even more restrictive than those in
the BSE’s Corporate Governance Code. Currently,
four out of seven members are independent. All
independent members submitted a declaration of
independence, at the time of their appointment
by the OGMS.
The professional background of the proposed
candidates, as well as of the current Board
members are available on ELSA’s website in the
Investors > General Meeting of Shareholders
section. Their biographies contain all the relevant
information requested by this provision of the
Code. The updated biographies of each member
of the Board are presented 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 into a relation
with a shareholder who directly or indirectly
holds shares representing more than 5% of all
voting rights, he/she promptly informed the
entire Board.
YES
YES
A.4.
A.5.
A.6.
A.7.
The company should appoint a Board secretary
responsible for supporting the Board’s work.
YES
The company has established the General
Secretary Department, which
is directly
subordinated to the Board of Directors.
.
.
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2
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2
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N
A
95
.
.
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N
N
A
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No.
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
No.
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
2022 Directors’ Report
2022 Directors’ Report
B.3.
Among its responsibilities, the audit committee
must carry out an annual assessment of the
internal control system.
YES
the
the
review
adequacy
(ARC) has
internal control
to
regulation,
organization
the Audit
the
and
According
and
functioning
following
Risk Committee
issues:
responsibilities on
and
regularly
(i)
implementation of key internal control policies,
including fraud detection and bribery prevention
policies; (ii) 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
Internal Audit Department and/or
Risk Management Department assessing the
effectiveness of the internal control system within
the Group.
the
The assessment must consider the effectiveness
and purpose of the internal audit function, the
adequacy of risk management and
internal
control reports submitted to the audit committee
of the Board, the promptness and effectiveness
with which the executive 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.
The audit committee must assess conflicts of
interests in connection with the transactions of
the company and its subsidiaries with related
parties.
audit
The
the
committee must
effectiveness of the internal control system and
risk management system.
assess
YES
YES
YES
Such
reports are annually presented. The
assessment report for 2022 specified in the CGC
was presented and discussed by the Audit and
Risk Committee in the meeting on 28 February
2023.
The assessment is carried out annually. The
assessment report for 2022 specified in the CGC
will be presented and discussed by the Audit
and Risk Committee during at its meeting on 24
March 2023.
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
reduction;
(ii) annual analysis of a management 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 2022 was presented
and discussed by the Audit and Risk Committee
at its meeting on 27 February 2023.
Details regarding the ARC activity for year 2022
are presented in chapter 4.5 of the Annual Report.
B.7.
The audit committee must monitor the application
of legal standards and generally accepted internal
audit standards. The audit committee must
receive and assess the reports of the internal
audit team.
YES
the
has
ARC
audit
internal
following
The
responsibilities on
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 findings and
follow up of internal audit reports;
(ii) advising the Board on the appointment,
revocation and 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) or ad-hoc
reports to be submitted to the Board afterwards.
YES
ARC reports periodically to the BoD.
B.4.
B.5.
B.6.
.
.
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A
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B.9.
No shareholder may be granted preferential
treatment over other shareholders with regards
to transactions and agreements concluded by
the company with shareholders and their related
parties.
YES
Provisions on this matter are included in ELSA’s
CGC and in the Policy on Transactions with
Related Parties.
B. 10.
The Board must adopt a policy to ensure that
any transaction of the company with any of the
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 latest financial
report), is approved by the Board following a
mandatory opinion of the Board’s audit committee
and fairly disclosed to shareholders and potential
investors, to the extent that these transactions fall
under the category of events subject to reporting
requirements.
YES
The Policy regarding the transactions with
Related Parties, has been updated in July 2020
and covers all the required aspects.
B. 11.
Internal audits must be carried out by a separate
structural division (internal audit department)
within the company or by hiring an independent
third-party entity.
YES
The internal audit is carried out by the Internal
Audit Department, a structurally separate entity.
B. 12.
Sec-
tion C
C.1.
In order to ensure the performance of the main
functions of the internal audit department, it
must report functionally to the Board through
the audit committee. For administrative purposes
and within the framework of management’s
obligations to monitor and reduce risks it must
report directly to the chief executive officer.
Fair rewards and motivation
The company must publish on its website the
remuneration policy, and include in its annual report
a statement of the remuneration policy during
the annual period under review. The remuneration
policy must be formulated in such a way as to
allow shareholders to understand the principles
and arguments underlying the remuneration of
the members of the Board and the CEO, as well
as the members of the Management Board in
two-tier board systems. It should describe how
the process is managed and decision-making on
remuneration, detail the components of executive
management remuneration (such as salaries,
annual bonus, long term incentives related to
the value of shares, benefits in kind, pensions,
and others) and describe the purpose, principles
and assumptions underlying each component
(including general performance criteria for any
form of variable remuneration). In addition, the
remuneration policy must specify the duration
of the executive manager’s contract and the
notice period provided for in the contract as well
as any compensation for revocation without just
cause. The remuneration report must present
the implementation of the remuneration policy
for the persons identified in the remuneration
policy during the annual period under review.
Any essential change in the remuneration policy
must be published in a timely manner on the
company’s website.
Sec-
tion D
Building value through investors’ relations
YES
Internal Audit Department
The
reports
functionally to the BoD through the ARC, while
administratively reports to the CEO.
YES
In accordance with Law 24/2017, as amended and
subsequently supplemented by Law no. 158/2020
(Art.92 ^ 1),on 28 April 2021, ELSA GMS approved
the updated Remuneration Policy for Directors
and Executive Managers, in which all the aspects
stipulated by this statement are detailed. This
policy was subsequently updated and approved
by the OGMS on 20 April 2022.
The Remuneration Policy for Directors and
Executive Managers is available on ELSA website,
under
Investors > Corporate Governance >
Corporate Policies and other documents.
the
In previous years,
implementation of the Remuneration Policy were
presented in the annual report. For the year 2021
ELSA has prepared a report on the remuneration
of the administrators and executive directors
to be submitted to the consultative vote of the
ELSA GMS, according to the applicable legislative
provisions. Also, for 2022, this report will be
submitted for the consultative vote of the OGMS
on 27 April 2023.
related
issues
to
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Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
of
the procedures
general meetings
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
regarding
of association,
the
shareholders.
D.1.2. Professional CVs of members of the
company’s management bodies, other professional
commitments of the board members, including
executive and non-executive positions on board of
directors of companies or non-profit institutions
D.1.3.
reports
(quarterly, semi - annual and annual reports);
D.1.4. Information related to general meetings of
shareholders; D.1.5. Information on corporate events;
D.1.6. The name and contact details of a
to provide
person who should be able
relevant
request;
information
D.1.7. Corporate presentations (e.g.
investors
presentations, quarterly results presentations,
etc.), financial statements (quarterly, semi -
annual, annual), audit reports and annual reports.
periodic
Current
upon
and
YES
The company has both an Investor Relations
department and a section dedicated to Investor
Relations on its website (in both Romanian and
English). All relevant information for investors is
published under the Investors section on ELSA’s
website.
Electrica was appreciated
the second
consecutive year in 2022 with the maximum
grade in the Vektor evaluation, Vektor being the
indicator of the communication with investors for
listed companies
for
The company will have a policy on the annual
distribution of dividends or other benefits to
shareholders, proposed by the CEO or the
Management Board and adopted by the Board, in
the form of a set of guidelines that the company
intends to follow regarding the distribution of net
profit. The principles of the annual distribution
policy to shareholders will be published on the
company’s website.
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 actual results
may differ significantly from the forecasts initially
presented. The forecast policy will determine the
frequency, period envisaged and the 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.
YES
The BoD last revised the Dividends Policy at its
meeting on 24 May 2022. It is published on ELSA’s
website, in the Investors > Corporate Governance
> Corporate Policies and other documents section.
YES
The BoD last revised the Forecasts Policy in its
meeting on 14 February 2018. It is published
on ELSA website, in the Investors > Corporate
Governance > Corporate Policies and other
documents section.
D.1.
D.2.
D.3.
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D.4.
The rules of general meetings of shareholders
should not limit the participation of shareholders
in general meetings and the exercise of their
rights. Changes to the rules will take effect at the
earliest, starting with the next general meeting of
shareholders
YES
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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 Meetings of Shareholders, available from
the beginning of 2020 and in its nmost updated
form from August 2020, in electronic form on
ELSA website in the section Investors > Corporate
Governance > Corporate Policies and other
documents.
Also,
rules of general meetings of
the
shareholders are mentioned in each convening
notice, published in accordance with the legal and
statutory requirements approximately 45 days
before each meeting.
Additionally, to falicitate the non-discriminatory
participation of all shareholders to the GMS
meetings,
Electrica
implemented, starting with 2022, a platform for
participating and voting online for the GMS (for
the shareholders that are present in the meeting
room or remotely, through electronic means),
system already used in June and October 2022.
remotely,,
including
No.
D.5.
D.6.
D.7.
D.8.
D.9.
Provisions of the BSE Corporate
Governance Code
Compliance
YES/NO/
PARTIALLY
Other remarks
The external auditors should attend the general
meetings of shareholders when their reports are
presented.
YES
External auditors attend each OGMS in which
the financial situations and annual reports are
approved.
The Board will present to the annual general
meeting of shareholders a brief assessment of
the systems of internal control and significant
risks management, as well as opinions on issues
subject to the decision of the general meeting.
YES
The directors’ annual report, presented to the
annual general meeting of shareholders together
with the financial statements, contains the BoD’s
assessments on the systems of internal controls
and significant risk management.
As a practice, all the documents subject of the
GSM approval are endorsed by the BoD; this is
clearly stated in the documents presented to the
shareholders.
Any professional, consultant, expert or financial
analyst may attend the shareholders’ meeting
on the bases of a prior invitation from the Board.
Accredited journalists may also attend the general
meeting of shareholders, unless the Chair of the
Board decides otherwise.
The quarterly and semi-annual financial reports
will include information in both Romanian and
English on key factors influencing changes in
sales levels, operating profit, net profit and other
relevant financial indicators, both from quarter to
quarter as well as from one year to another.
A company will hold at least two meetings/
investors
teleconferences with analysts and
each year. The information presented on these
occasions will be published
investor
relations section of the company’s website at the
date of the meetings/teleconferences.
in the
D. 10.
If a company supports different forms of
artistic and cultural expression, sport activities,
educational or scientific activities, and considers
that their impact on the innovative character
and competitiveness of the company part of its
mission and development strategy, it will publish
the policy regarding its activity in this area.
Source: Electrica
YES
In this respect, the agreement of the shareholders
present at the General Meetings was requested
each time it was the case.
YES
YES
YES
The quarterly and half-yearly financial reports
can be consulted on the company›s website in the
section Investors> Results and Reports> Financial
results and fulfil all the requirements.
ELSA organizes quarterly teleconferences with
analysts and investors and publishes presentations
and audio recordings of the teleconference
on the ELSA website, in the section Investors >
Results and Reports > Presentations and other
information.
Information regarding the CSR activities can be
found online on the company’s website, in the
CSR section.
The projects and activities supported each year
are presented in ELSA’s annual Sustainability
Reports, available on the ELSA website, in the
section CSR > Non-financial Reporting.
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4.9. 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 cul-
ture of integrity and compliance, adopting best practices regarding corporate governance and incor-
porating the sustainability principles at Group level.
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As for the development of a culture of integrity and compliance at Electrica Group level, in
and approved at the ordinary General meeting of shareholders (OGMS), presenting transparently the
line with the EBRD standards, the year 2022 meant maintaining the compliance framework from an
elements of fixed and variable remuneration, including financial and non-financial benefits, in any
ethical perspective and updating it in accordance with the evolutions of the social and legal context
form, that may be granted to Directors.
in which the organization operates, through concerted actions on the following main directions:
– maintaining the organizational structures dedicated to ethics and compliance;
The last policy review was approved at the ordinary General meeting of shareholders (OGMS)
Electrica on 20 April 2022, without any changes to the remuneration limits previously established by
– adopting The Policy of preventing, combating and sanctioning any form of harassment in
the GMS for directors and executive directors.
the workplace;
– monitoring the compliance in relation to the framework defined by the Code of Ethics and
Professional Conduct and subsequent policies and procedures.
Starting with 2022, the Company has prepared and published the remuneration Report for
Directors and Executive Directors 2021, in accordance with the provisions of Law 24/2017 on issuers
of Financial instruments and market operations. The Report was approved at the ordinary General
Having mainly a preventive role in relation to the risks to which the organization is exposed,
meeting of shareholders (OGMS) Electrica on 20 April (https://www.electrica.ro/en/investors/re-
compliance adds value to each business, but in order to be effective, the compliance framework must
sults-and-reports/), with the aim of presenting an overview of the remuneration and benefits gran-
be adapted to the organization transformations and to be aligned permanently with legislative chan-
ted and/or owed during the last financial year, to the managers individually, including the newly re-
ges, external environment trends and business ethics’ best practices.
cruited and former managers in accordance with the Company’s Policy.
The information and awareness activities regarding the provisions of the compliance fra-
For details regarding the remuneration of the Board members and of the executive manage-
mework from the ethical perspective of the organization’s staff were carried out exclusively through
ment of ELSA, please see chapter 4.7.
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.
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.
Advisory Committees of the Board of Directors
In order to increase the effectiveness of its activity, ELSA’s Board of Directors has estab-
lished the following committees with advisory role: the Nomination and Remuneration Committee,
the Audit and Risk Committee and the Strategy and Corporate Governance Committee. For details,
please see chapter 4.5.
Internal Control and Audit Framework
During 2022, the documentation governing the internal audit activity at Electrica Group level
approved in November 2019 was maintained and applied. This documentation was approved in its
first version by the BoD at the beginning of 2015 and includes the Internal Audit Charter, the Audit
Manual and the Auditor’s Code of Ethics, its last update dating from 2019. The documents are avai-
lable on ELSA’s website in the section The group > Internal Audit. For details about the internal audit
please see chapter 4. 10. and for more details on the internal control, please see chapter 6. 10.
ELSA’s Articles of Association
EBRD guidelines were included in the Articles of Association of ELSA adopted on 4 July
.
For details about ELSA’s Board of Directors, its members and the election of its members,
2014.
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 and executive management. In this respect, the Profile
of the Board of Directors and the Policy for recruiting and nomination of the candidates for executive
management were elaborated.
The remuneration policy for directors and executives of ELSA (Policy) is reviewed periodi-
cally by the nomination and remuneration Committee and describes the main pillars of remuneration
as well as the terms, conditions and non-financial benefits approved by ELSA’s corporate bodies.
In 2022, ELSA’s Articles of Association were updated according to ELSA Board of Directors’
decisions from 12 October 2022. All versions of the ELSA Articles of Association adopted since the
listing of the company are available on its website in the section The group > About > Articles of
Association.
Clear lines of competence and responsibility
To define the reporting system and to set responsibilities and competences at the level of the
group and its’ companies, ELSA and its subsidiaries carried out projects for processes’ mapping both
in distribution and in supply areas, benefiting from external consultancy in this regard. In the context
of the 2018 – 2020 organizational transformation, the applicable procedural framework, and the do-
As a result of the change of the European and national legal framework, according to the
cumentation of the Quality – Environment - OHS Integrated Management Systems implemented at
European Directive no. 828/2017, transposed into national legislation by Law no. 24/2017, as it was
each Group company level have been fully revised, maintaining their certifications in accordance
subsequently amended and supplemented by Law no. 158/2020 (Art.92^1). The Policy was revised
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with ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 following the audit performed during 2020
social and environmental risks (methodology) and its application for the categories of works/works
by the SRAC CERT certification body, IQNet affiliate.
included in the CAPEX Plan 2021-2023.
Code of Conduct
Social, environmental and SSM risks, as well as mitigation measures are included in DEER
technical projects for investment works, a methodology being developed to ensure a unitary approach
EBRD requirements are covered by the Code of Ethics and professional Conduct. Regarding
across all technical projects.
the Whistleblowing Policy, it has been updated and is available on the company’s website.
During 2022, follow-up actions were carried out in relation to the provisions of the Code at
group level, after it was disseminated and implemented in its new version within the Group.
Compliance with BSE Corporate Governance Code
On 4 January 2016, the new BSE Corporate Governance Code entered into force and, on this
occasion, ELSA published on 8 January 2016 the “Corporate Governance Code Apply or Explain”
statement according to the new provisions. ELSA publishes the updated statement yearly and re-
ports promptly to the capital market any update of its compliance.
On its turn, ELSA adopted its own Corporate Governance Code since the beginning of 2015,
its last update being approved by the BoD on 23 June 2020. This version, as well as the policies and
other corporate documents referred to by the Corporate Governance Code of ELSA are available on
the company’s website in the Investors > Corporate Governance section (https://www.electrica.ro/
Environmental impact studies
Continue to implement the legal requirements in the field of environment regarding the
impact assessment for the investment projects included in the CAPEX Plan. If DEER is to develop and
implement impact assessments under national legislation for investment projects targeting certain
installations, which are not initially foreseen (including cutting protected tree species), they must be
developed according to EU standards.
The EBRD will be informed about the environmental impact studies related to investment
projects carried out at the level of DEER by sending the post link on their website.
The inclusion in the Electrica Group’s Annual Sustainability Report of a summary of
environmental impact studies with reference to non-technical summaries for CAPEX investment
projects posted on DEER’s website.
No Environmental impact Studies were required under Law 292/2018 Annex 5E for the
en/investors/corporate-governance/). For details, please consider chapters 4.8 and 4.1.
development of the distribution infrastructure included in DEER Investment Plan until now.
At the same time, at the level of the Electrica Group, a Market Abuse Policy was developed,
Permits
adopted by all subsidiaries.
DEER will ensure that it obtains all necessary authorizations/certificates from the Ministry of
Culture, as well as environmental ones from local authorities with competence in the field, according
The Environmental and Social Action Plan (ESAP)
to the Urban planning Certificate for the investment projects carried out.
During 2022 the Environmental and Social Action Plan was updated by SAP as part of the
Loan Agreement signed by DEER with EBRD and guaranteed by Electrica S.A. for financing DEER’s
CAPEX Plan 2021 – 2023. The revised ESAP includes the following actions, their status of implemen-
tation being also mentioned in the following section.
All the necessary authorizations/certificates according to the Urban planning Certificate were
obtained for all the investment projects included in the CAPEX Plan at DEER level.
Obtaining the building permit is conditioned by obtaining all the approvals required in the
Urban planning Certificate.
Organogram of EHS management structure and update certification
Stunting environmental and social requirements
Develop an organogram presenting the EHS management structure from Group-level mana-
gement, to County-level implementation within DEER. Make this accessible on the Group intranet
portal, alongside the existing E&S Policy, under their management systems page and shared with all
staff.
Environmental management plans for the works must be developed by contractors before
starting work, based on the risk assessments carried out at the level of Electrica group and the
specific instructions of the group companies. These plans must be stunned by the contractor (general
contractor) to all sub-contractors.
During 2022, DEER’s organizational structure provided the OSH Department with OSH offi-
ces at the level of each area, as well as quality Management and Environment Service.
Technical projects including the section on social, environmental and SSM risks and measures
to reduce them are part of the contract signed with contractors and are binding on them and their
It is necessary to obtain certification of the environmental management system in accordan-
subcontractors.
ce with the ISO14001 standard, following the integration of the systems of the 3 DSOs that have
Ensuring the accommodation of workers
merged.
Certification of DEER’s environmental management system in accordance with ISO 14001:2015
Check the accommodation conditions provided to workers who cannot return home daily
(where relevant), ensuring it at an adequate level of quality and in accordance with the EBRD/IFC
was obtained in April 2021. The company has maintained its certification according to the require-
guidelines.
ments of the ISO 14001:2015 and ISO 45001:2018 reference standards, granted by the external certi-
fication body SRAC Cert.
Project-Specific Risk Assessments
Development and implementation of a standardized instrument for the assessment of
The accommodation conditions for its staff are checked and controlled at the time of the
accommodation, and DEER will review the procedure on the SSM line control to include the check of
the accommodation conditions in the control actions for the contracted investment works.
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Gender-based violence and harassment Policy (GBVH)
PCBs
Update the Code of Ethics and Professional Conduct to include a gender-based violence and
Continuation at DEER level of the program to eliminate PCBs (polychlorinated biphenyls)
harassment Policy (GBVH Policy) aligned with international best practices.
from electrical installations in operation, the deadline for complete disposal being 2028, with annual
The policy on preventing, combating and sanctioning any forms of harassment in the
reporting to the EBRD.
workplace was adopted by ELSA and DEER, being being in the process of adoption at the level of the
The process of removing PCBs (polychlorinated biphenyls) from electrical installations in
other companies within the Electrica Group. The Code of Ethics and Professional Conduct has been
operation continued throughout 2022, which ensures the company’s comfort in implementing the
updated to include references to this new policy.
Restructuring with reduced personnel
The company will develop and maintain provisions on personnel reduction (collective/
individual redundancies) in the collective Labour Agreement and will plan restructuring initiatives in
alignment with the EBRD guidelines in the field, so as to minimize the social and economic impact
national disposal program within the set deadline (2028), according to GD 1497/2008. A total of 351
pieces were removed from operation in 2022, thus reaching a total of 1489 pieces of PCB capacitors
in operation at the end of 2022. The process is monitored annually based on reports, the results being
published in the Sustainability Report of the Electrica Group.
Health and Safety System and Policy
of staff reductions, if necessary. These initiatives will be designed in accordance with good practice
Maintaining the certification of the SSO Management System according to ISO 45001:2018
and in compliance with national law. The Company shall inform the Bank of any major restructuring
for DEER. Revision of OSH policy
(more than 500 affected employees) and shall submit a plan for tarting/reducing the impact at
least 1 month before the CIM is terminated. Restructuring programs that will affect more than 100
employees, but less than 500 employees will be presented in the Annual Report.
The certification of the occupational safety and health management system in accordance
with the ISO 45001:2018 standard was maintained at DEER level in 2022, without any major non-
conformities from the external certification body SRAC CERT. The policy statement was revised to
The provisions on restructuring/reorganization with reduced staff at group level are included
capture the integrated approach following the merger of the OD since the first quarter of 2021.
in the collective labor contract signed with the trade unions and renegotiated every two years.
In 2022 the Policy statement on the integrated System quality, Environment, Health and
Given the evolution of financial and operational performance recorded in recent years, but
Safety at work was approved according to HCM 03/02 February 2022.
also the transformations and trends in the energy sector, in the first part of 2022 a reorganization
plan was developed as a necessary and appropriate measure of adaptation to the current market
context, strongly affected by the energy market crisis and, subsequently, by external events in the
new geopolitical context that indirectly affect the national economic context. These measures have
led to the simplification of hierarchical structures and the reduction of a number of 32 positions
(mainly management), by abolishing for reasons not related to the employee’s person and a number
of 19 employees have left the organization following the collective dismissal process.
Analysis of greenhouse gas emissions
Elaboration of a study on greenhouse gas emissions (GHG) at the level of the operations of the
Electrica Group and identification of areas with potential to reduce emissions, with the publication of
the results in the Sustainability Report of the Electrica Group for 2021. Annual overview of the state
of implementation of the measures and progress made in reducing emissions in the Sustainability
Report.
The project on determining the level of greenhouse gas emissions (GHG) for the activities
of the Electrica Group and identifying areas with potential to reduce emissions has been developed
at the level of each company in the group and its implementation will be started at the beginning of
2023. The results were published in the Sustainability Report of the Electrica Group for year 2021.
At DEER level, the carbon Footprint Action Plan for 2023 has been developed.
Energy management
Asbestos
Carrying out a study on asbestos-containing materials for the targeted transformation stations
(by the CAPEX Plan) and developing an asbestos management plan for the locations included in the
CAPEX Plan, in order to facilitate a comprehensive investigation, DEER must also ensure that, all
electrical equipment is insulated and safe during the study. Waste management procedures during
investment works documented by environmental management plans during work should include
preventive measures/approaches to situations where asbestos is identified during work and should
comply with the asbestos Management Plan. Maintain a plan to assess and eliminate asbestos risk.
DEER continued to monitor the state of degradation of the asbestos-cement coating for the
posts, transformation stations and administrative buildings, being replaced with other materials by
third-party companies during the restoration/modernization works.
Community Health & Safety
After the implementation of the CAPEX Plan, the distribution infrastructure must be inspected
periodically to verify that the equipment is properly installed and that the elements that ensure the
protection of the community (for example, when electrocution) are functional/applied as part of the
infrastructure maintenance plan. Any unprotected equipment that could cause damage to the local
community must be reported and repaired/replaced.
During the implementation of the maintenance Plan, DEER teams constantly check the
distribution infrastructure to ensure that the equipment is properly installed and that the elements
Implementation and certification of the Energy Management System, in accordance with the
that ensure the protection of the community (for example, when it comes to electrocution) are
requirements of ISO 50001 standard at the level of the Electrica Group.
functional/applied. Any situation where it is found that there is unprotected equipment that could
The implementation of the Energy Management System at DEER level is foreseen after
the completion of the organizational transformation project following the merger of distribution
operators, so that the certification will be obtained in 2024.
cause damage to local communities is immediately remedied.
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Working at Height and Lockout/Grounding Instruction
Land Acquisition Framework
Ensuring that the SSM documentation providing rules for the voltage removal and ensuring the
If it will be necessary to purchase land for the implementation of the CAPEX Program, a
working area for electricity distribution networks and installations complies with the regulations in force
document will be developed to define the Land acquisition Framework (LAF), which will present the
at national level. Completion of the electrical separation and working at height instruction/instructions.
Electrica policy on fair compensation and compliance of the procurement process with the relevant
The SSM instructions on the de-voltage and the provision of the working area for networks
and distribution installations, as well as on working at height, are in force and comply with national
regulations.
Visual Impacts
Assessing the visual impact for new networks in the design phase and establishing mitigation
national legislation and RP5. It will ensure compliance with this framework for installations part of
the CAPEX program.
No new land surveys were required for the development of the distribution infrastructure
that is the subject of the Investment Plan so far.
Bird death monitoring
measures, e.g. moving lines underground, changing routes by taking into account local communities’
Develop and implement a system for monitoring mortality among birds due to their collision
perception of their construction (through environmental and social management plans) in compliance
with LEA, providing annual estimates of mortality. The monitoring will be done by on-site trips with
with national legislation in this field.
search on the ground.
At the design stage DEER adopts technical solutions taking into account the visual impact of
DEER has developed an instruction on bird mortality monitoring based on SCADA system
its future distribution installations (replacement of overhead power lines with underground cables),
alerts and field trips to identify carcasses, which is under approval.
in accordance with the applicable legal provisions, especially at the community level.
Emergency Preparedness and Response
According to Annex 1 of the DEER-I-5-PS-6.1.2 Instruction for 2022, the “Register for
monitoring the mortality of birds following interaction with electrical installations” was developed.
Checking the emergency plans and ensuring the endowment of all locations with extinguishers
Avoiding and mitigating against bird deaths
within the validity term, in accordance with the provisions of the legislation in force.
The continuation of the replacement of the lines with classical (uninsulated) conductor with
For all locations owned by DEER, there are defined fire prevention plans. Preventive
twisted (insulated) conductors, within the investment projects carried out in areas with significant
measures are implemented and consist of: Control of compliance with legal regulations by own
activity of birds, defined by the relevant NGOs and environmental authorities. It will continue
authorized personnel; regular entry for all categories of employees, in accordance with the approved
the installation of stork nests on the low and medium voltage LEA poles and the installation of
annual training programs; evacuation and intervention exercises in case of emergency situations;
electoinsulating sheaths to protect all these species that have their habitats in DEER activity areas.
maintenance of fire prevention and extinguishing equipment and facilities for each location with
Mapping sensitive areas from a biodiversity perspective. If necessary, bird markers shall be used and
authorized providers; maintenance of unobstructed access on evacuation routes; additional actions
the risk of electric shock of birds shall be reduced by a suitable design of the insulation of electrical
to prevent fires for the hot and cold season.
Noise monitoring
Monitoring the noise level for areas with high sensitivity (residential, hospitals, schools) that
claim the noise level generated by DEER equipment and establishing and implementing mitigation/
reduction measures, if necessary (if measurements indicate overruns of the legislated level).
installations. It will be considered for all new or modernized LEA to have safety elements that will
lead to the avoidance of mortality among birds.
In the design phase for new networks or the modernization of existing electrical networks,
DEER adopts technical solutions designed to ensure the protection of biodiversity and considers
the replacement of overhead lines with underground lines, of non-insulated conductors with twisted
conductor, the installation of insulating sheaths. Technical guidelines are being developed to ensure a
.
A new environmental control instruction, including noise monitoring activity for DEER
unified approach to the design of power grids at DEER level, which will include standardized measures
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installations, has been developed and approved at company level.
for bird protection.
In 2022, sonometers were purchased for all regional structures. According to Annex 1.1 of the
DEER –I 3 – PS – 6.1 – F01 instruction for 2023, noise measurements were planned for areas with high
sensitivity.
Electromagnetic Fields
Continue monitoring potential impacts from electromagnetic fields (EMF) from transformer
stations and transmission lines in compliance with National legislation with respect to EMF.
There are studies on electromagnetic fields for the distribution infrastructure of DEER
indicating that they are within the limits of national legislation. DEER analyzes options for including
electromagnetic field measurements for new installations in the commissioning process and for
independent studies.
The procedure for random discoveries (cultural values)
Adoption of a Protocol on random discoveries in order to identify and effectively manage
any discoveries with cultural value that occurred during the implementation of the projects. This
protocol should define the internal communication/escalation chain, the notification of relevant
institutions with regard to discovered objects/sites, the information of the personnel involved in the
projects on the possibility of such discoveries and the way of surrounding the area in order to protect
against destruction or alteration of the discoveries, where necessary. The protocol will be aligned
with the rules for the application of Law 50/1991 on the authorization of construction works.
The accidental Discovery Protocol is part of all DEER contracts as a separate section/clause.
The section/clause of the contract that refers to it will be published on DEER website by the end of
the first quarter of 2022.
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Update Stakeholder Engagement Policy (SEP)
Updating the engagement methods used in accordance with the policy in order to align with
what is actually done and developing the section on complaints and integrity warnings.
In the context of specific legislation transposing EU unbundling directives, DEER is working
toward finalizing its own stakeholder engagement policy involving all relevant departments. The
policy will be published on the company’s website after obtaining all necessary corporate approvals.
Stakeholder Engagement for the 2021-2023 CAPEX Plan
Development of a stakeholder engagement plan dedicated to the CAPEX Program 2021 –
2023 to ensure that all the necessary involvement/consultation activities are carried out during the
implementation of the following projects included in the CAPEX Program financed by the EBRD.
DEER has a stakeholder engagement plan, and the Investment Plan section will be presented
on DEER website.
A unitary mechanism for monitoring complaints/complaints
Development and implementation of a unitary it system at DEER level of registration,
analysis, resolution in their legal framework in accordance with the legal requirements (ANRE). The
complaints registered directly with DEER will be recognized and resolved in accordance with the
regulations in force (ANRE) (between 15 days and 30 days to respond, depending on the nature of
the complaint/complaint).
4.10. Internal audit activity report for 2022
The Internal Audit Department is responsible for conducting risk-based audit missions at
Group companies’ level.
The Internal Audit Squad performs its activity based on an annual audit plan, which is endor-
sed by the Audit and Risk Committee, and subsequently approved by the Board of Directors. The
2022 Audit Plan included assurance and operational missions, as well as ad-hoc audit missions star-
ted after their validation by the Audit and Risk Committee. The Audit Plan is aligned with the risk
register at Group level and prioritizes the main risks identified for the major business areas.
During 2022, assurance audit missions were carried out, as well as various ad-hoc missions
on the most important business activities. The audit missions were performed on major projects or
events within the Group, but also on Treasury activity, Legal activity and Shares Management. 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 2022, the Internal Audit Squad team consisted of four internal auditors, out of
which one has a management role, two have part time work and one with a full-time work starting
with November 2022.
Among the most important audit missions carried out in 2022 are:
1. Evaluation and audit of Treasury activity. The audit report contains 3 findings of which 0 with
The mechanism for monitoring complaints is defined according to the regulations in force
high impact.
and available on DEER website. Records of complaints and complaints are kept and submitted to
2. Evaluation and audit of Legal activity. The audit report issued contains 1 finding with low im-
ANRE regulator upon request or during the performed controls.
pact.
Community Guide to Security
Develop a guide that contains relevant information about the process of electricity
distribution. The guide addresses with priority the local communities served by DEER activity and
presents details regarding: DEER’s emergency procedure for the safe erection of the fallen LEA poles;
the activities of involvement of the interested parties and the mechanism for submitting complaints/
complaints; Determination of the levels of electromagnetic fields in transformer and LEA stations
and its impact on health; risk related to theft of electricity, etc. Consideration will also be given
to the implementation of other mechanisms to raise awareness of the local community about the
safety in the use of electricity energy (through the European Commission’s “Energy saving” program
(“Economie la energie”), for example.
The community guide is included in DEER Communication Strategy and Plan and is intended
to be launched by the end of first quarter 2022.
Ensuring reporting in line with the provisions of the EU Directive on non-financial reporting
and including in the Sustainability Report relevant information on the climate impact produced in
accordance with the Green and Social Taxonomy adopted since 2022.
The Electrica Group publishes its sustainability report annually in accordance with the
provisions of the EU Directive on non-financial reporting and will include starting with 2022 relevant
information in accordance with the Green and Social Taxonomy.
3. Evaluation an audit of Shares Management. The audit report issued doesn`t contain any find-
ings regarding this activity.
4. Three “follow-up” missions were carried out at Group level, which were aimed to identify and
monitor the implementation degree of the audit recommendations related to the issued re-
ports.
5. Based on the procedure for analysing whistleblower complaints, 34 warnings were received
through the whistleblower system. Out of the total number of warnings received during the
year 2022, ELSA Internal Audit Squad analysed 8 warnings received in 2022.
The audit reports are agreed by executive 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 the audit recommendations with the responsible persons, the
Internal Audit Squad works together with the audited structures in order to draw up the action plans
aimed to reduce or eliminate the identified risks.
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5 Operating activity of Electrica in 2022
110
111
5 Operating
activity
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5.1. Operating segments
The operations of each reportable segment are summarized below.
Table 14. Operating segments
Segments
Operations
Electricity and gas supply
Electricity distribution
Electricity generation
External electricity network
services
Headquarters
Source: Electrica
Purchasing and supplying electricity and gas to end consumers (EFSA, includ-
ing the trading and representation activity on the Balancing Market as Balance
Responsible Party – BRP)
Electricity distribution service (include DEER and activity performed by SERV
within distribution segment)
Production of electricity from renewable sources (photovoltaic panels)
Repairs, maintenance, and other services for electricity networks owned by
other distributors (includes Electrica SERV SA activity without the one men-
tioned above for the distribution segment)
Includes corporate services at parent level
The figure below shows the areas covered by the Group subsidiaries and the number of cus-
tomers/users they serve.
Figure 26: The geographical coverage of the companies in the Electrica Group in 2022
Network area of
Transilvania North
1.34 mn users
Network area of
Transilvania South
1.19 mn users
Source: Electrica
Network area
of Muntenia North
1.33 mn users
Electrica Furnizare (EF)
3.5 mn
consumption places
Note: The figure refers to the company’s number of consumption places/users at 31 December 2022
DISTRIBUTION SEGMENT
Electrica Group’s distribution segment, starting with 1st of January 2021 refers to the activity
of DEER (with the following network areas: Transylvania North, Transylvania South and Muntenia
North) and SERV.
The electricity distribution segment is a regulated area of activity, in which operations are
conducted in a geographically limited area in accordance with the concession agreement, the nature
of the services provided, and the specific obligations are stipulated in the license conditions of the
concessionaire operator. Thus, the electricity distribution subsidiary of Electrica Group is the energy
distribution operator in Transylvania North (Cluj, Maramures, Satu Mare, Salaj, Bihor and Bistrita-
Nasaud counties), Transylvania South (Brasov, Alba, Sibiu, Mures, Harghita and Covasna counties)
and Muntenia North (Prahova, Buzau, Dambovita, Braila, Galati and Vrancea counties), operating
electrical installation with voltages between 0.4 kV and 110 kV.
DEER holds the exclusive electricity distribution license in these regions of network areas
valid for the next seven years with an extension clause for another 25 years. Within its service for
distribution activity, SERV provides maintenance, repair and various services to group companies
(car rental, rental of buildings etc.) as well as repairs and other related services to third parties.
The specific distribution tariffs are determined and approved by ANRE based on the “tariff
basket cap” method as set out in ANRE Order no. 169/18 September 2018 regarding the approval of
the tariff setting methodology for the electricity distribution service (applicable in the fourth regula-
tory period 2019 - 2023), with subsequent amendments, and respectively GEO no. 1/15 January 2020
and ANRE Order no. 75/6 May 2020 regarding the establishment of RRR applied to the approval of
tariffs for the electricity distribution service.
The regulatory method “tariff basket cap” aims to avoid significant fluctuations in the tariffs
applied to the users for electricity distribution. The model for determining the regulated income is
based on the principle of remunerating in tariffs the justifiable costs recorded by the distribution
system operator, the main source of profit of the distribution company being the rate of return
of capital invested in the distribution activity.
The tariffs are adjusted annually, taking into account the operational performance achieved,
the quantities of electricity distributed, the quantities and the purchase price of electricity needed to
cover network losses (NL), controllable and noncontrollable costs, the change in reactive energy
revenues from forecasted values, the depreciation and carrying out expected capitalizable expenses,
the changes in actual gross profit from other activities compared to the forecasted one, as well as
the corrections in previous periods carried out according to the methodology.
On 31 December 2022, the Group was in a deficit position, estimated at about RON 357 mn.
(representing corrections related to the year 2022), which will be recovered through the distribution
tariffs of the following years.
The current regulatory period (the fourth regulatory period – RP4) began on 1 January 2019
and will end on 31 December 2023. The rules on RAB and distribution tariffs determination are ex-
pected to remain unchanged until the end of 2023. ANRE sets the annual level of distribution tariffs
in RON per MWh for each distribution company, respectively on each network area in case of a
merged DSO and for each voltage level (high, medium and low). The invoiced tariffs are summed up
according to the related voltage level (e.g., the medium voltage tariff includes the high voltage tariff,
and the low voltage tariff includes the high voltage and medium voltage tariff).
ANRE determines the regulated annual income required for each year of the regulatory pe-
riod based on projections submitted by distribution operators in accordance with the methodology
requirements, at the beginning of the regulatory period.
The electricity distribution tariffs approved by ANRE starting with 1 April 2022 are as follows
(RON/MWh):
Table 15. The electricity distribution tariffs approved by ANRE starting with 1 April 2022
Tariff
(RON/MWh)
MN
TN
TS
Source: ANRE
ANRE Order no.
28/23 March 2023
SUPPLY SEGMENT
Applicable starting with 1 April 2022
High
Voltage
23.35
23.77
24.63
Medium
Voltage
56.70
57.49
54.52
Low
Voltage
175.26
144.73
158.84
Electrica Group operates on the electricity supply segment through its subsidiary, EFSA,
both on the regulated electricity market (as SoLR), and on the competitive market, at a national
level. EFSA holds an electricity supply license that covers the entire Romanian territory, extented in
2021 with 10 years. Additionally, holds a license for supplying natural gas, valid until 2032.
The electricity market is split between the regulated market (through suppliers of last resort)
and the competitive market. On both markets, electricity can be sold/purchased wholesale or
retail.
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Last resort supliers market
Currently, EFSA is a supplier of last resort for approximately 2 mn. customers with 1.8 mn
consumption places.
Competitive market
In 2022, the trading on the wholesale competitive market is transparent, public, centralized
and non-discriminatory and takes place on OPCOM platforms; prices can be freely negotiated by the
parties on the competitive retail market. The participants on the wholesale market can trade electric-
ity based on bilateral contracts concluded on the markets managed by OPCOM or on the spot mar-
kets also managed by OPCOM.
BRP Electrica - Balance Responsible Party
The activity of representation in the Balancing Market as the Balance Responsible Party
(BRP) took place within EFSA.
Starting with 1 April 2018, the client portfolio is diversified, consisting of producers (hydro,
thermal, wind, photovoltaic, biogas, biomass), suppliers and distribution operators, ensuring the bal-
ancing service of over 23% of total electricity consumption from Romania.
The distribution companies within Electrica Group have delegated their responsibility to BRP
EFSA.
The Balancing Market, a component of the wholesale energy market, is a market for which
each licensee must either assume the balancing responsibility or transfer the balancing responsibility
to a BRP. By transferring the responsibility to a balance responsible party, there is the advantage of
aggregating imbalances, in the sense of reducing costs on the Balancing Market compared to the
situation where the producer/supplier/distributor would be itself a Balance Responsible Party.
ENERGY SERVICES SEGMENT
The Group’s portfolio also includes the energy services segment (equipment maintenance,
repairs and other additional services related to the network), performed almost entirely for the dis-
tribution 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.
Electrica Serv will multiply the efforts to develop the market for “green energy” generation
solutions – photovoltaic power plants and reactive energy compensators – by strengthening the
partnership with Electrica Furnizare in finding solutions and opportunities for efficiency for custom-
ers, by mounting photovoltaic panels and reactive energy compensators, intelligent lighting solu-
tions, backup power, smart metering.
The main objectives of the SERV for the next period are:
– Expanding the activity on the service market outside ELSA group and consolidating in
the business lines the new activities simultaneously with reactivating the old activities for
which there is accumulated experience;
– Adapting the business and staff structure to streamline the activity and compensate for
the losses suffered in the last fiscal years;
– Strengthening the current financial situation and reinvesting resources for the company’s
development in new directions of development.
ELECTRICITY PRODUCTION
For the production segment, the development of the projects already purchased is contin-
ued in order to reach the ready to build stage, namely:
– Final development regarding the final authorization process necessary to start the con-
struction;
– Start planning activities for the construction phase for projects that will reach the ready to
build stage in the first part of 2023.
In addition to the above-mentioned issues, activities are continued on:
– Acquisitions of new projects regarding the production of electricity from renewable sourc-
es and/or the conclusion of partnerships through the acquisition of majority shareholdings
in RES projects (already developed by potential partners);
– Start of project development activities for: production from renewable sources, natural
gas production, energy storage in batteries, hydrogen production and storage projects;
– Start planning activities for the operation of EPE subsidiary, phered in line with the devel-
opment and implementation schedule of energy generation and storage projects.
Green certificates
Producers of electricity from renewable energy sources (RES) have the right, according to
Law no. 220/2008, to receive a certain number of green certificates, depending on the technology
used (for example: Hydraulics, wind, solar, geothermal, biomass, wind energy, bioliquids, biogas), for
each MWh produced and delivered in the network and for a certain period of time, depending on the
degree of novelty of the group/power plant.
Stanesti photovoltaic Park has the right to receive, starting with February 2013, for a period
of 15 (fifteen) years, 6 (six) green certificates for each MWh of electricity produced and delivered in
the grid, of which, for the period 1 July 2013 - 31 December 2020, according to Law 23/2014 and Law
184/2018, 2 (two) green certificates were postponed from trading, to be recovered in equal monthly
installments starting with 1 January 2021 until 31 December 2030.
The green certificates issued by Transelectrica for the production carried out by the Stanesti
photovoltaic park, during the validity period of the accreditation decision issued by ANRE, can be
traded, according to GEO 24/2017, until 31 March 2032, respectively, after the expiry of the validity
period of the accreditation decision (31 January 2028 in the case of Stanesti photovoltaic park).
The valorization of the green certificates during 2022 was carried out on the spot market
(PCSCV) and on the combined market (PCE-ESRE-CV). For the period of 12 (twelve) months ended
on 30 December 2022, the trading of green certificates was made at the price of RON 144.6598/GC
(2021: RON 142.2107/GC) on all markets as a result of the excess of GC offered for sale compared to
the acquisition obligations of economic operators.
5.2. Fixed assets
5.2.1 Tangible assets – summarize key aspects of their location and main
characteristics
The number of users and volume of installations as of 31 December 2022 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 quanti-
fied as follows:
Table 16. Number of users and volume of installations as of 31 December 2022
Geographical coverage
Number of users, of which:
high voltage (HV – 110 Kv)
medium voltage (MV)
low voltage (LV)
Overhead power lines length, out of
which:
high voltage (HV – 110 Kv)
medium voltage (MV)
low voltage (LV)
out of which connections
UM
km²
no.
no.
no.
no.
km
km
km
km
km
TN
34.162
1.343.903
35
4.398
1.339.470
53.147
2.191
11.847
39.109
18.316
MN
TS
DEER (Total)
28.962
34.072
97.196
1.334.610
39
4.434
1.330.137
59.641
2.146
12.641
44.854
24.378
1.196.729
46
3.086
1.193.597
46.045
3.149
10.517
32.379
17.592
3.875.242
120
11.918
3.863.204
158.833
7.486
35.005
116.342
60.286
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UM
TN
MN
TS
DEER (Total)
km
km
km
km
km
MVA
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:
MVA
in HV/MV power stations
in MV/MV power stations
MVA
Switching stations/Transformer stations MVA
No. of substations, out of which:
HV/MT power stations
MT/MT power stations
Number of switching stations and
transformer stations
pcs
pcs
pcs
pcs
MVA
17.770
37
4.324
13.409
7.895
6.299
3.760
3.712
48
2.539
121
92
29
9.388
12.424
17
3.551
8.857
2.416
8.817
5.802
5.452
350
3.015
213
125
88
10.623
13.131
63
3.709
9.359
3.088
6.842
4.152
4.146
6
2.689
105
101
4
9.686
43.325
117
11.584
31.625
13.399
21.958
13.714
13.310
404
8.244
439
318
121
29.697
Source: Electrica
5.2.2 Tangible assets – summarize key aspects of their attrition
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 installa-
tions 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.
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 attrition of the installations can be assessed as
follows:
Table 17. Degree of attrition of the installations
High voltage power lines (110 kV) Underground power lines
Medium voltage power lines
Low voltage power lines
Substations
Transformers
Source: Electrica
Overhead power lines
Underground power lines
Overhead power lines
Underground power lines
Overhead power lines
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%
68%
63%
73%
48%
65%
75%
95%
8%
TS
50%
75%
65%
60%
75%
68%
60%
50%
75%
20%
85%
12%
The lands on which the existing electrical distribution networks are located at the entry into
force of Law 13/2007 are and remain the public property of the state.
In general, electric distribution networks are developed on public land of the state (public
roads, land of the UAT) and partly on private land (those that serve mainly the user who owns the
property) for the location of transformative posts and/or individual bransings.
In most cases the location of new distribution networks/installations is made in compliance
with the urban regulations of the area. It is intended that the delimitation of the operator/user instal-
lations to be carried out at the limit of the private domain, with access from the public road.
Maintenance of tangible assets, modernization and development of new assets is carried out
on the basis of the annual maintenance plans and annual investment plans approved by ANRE.
The annual investment plans are approved both as a total value cap, with a minimum re-
quired level, to be achieved, at the value of the annual depreciation, as well as detailed covering
every investment goal.
The annual maintenance plans are valorically approved by ANRE and must be carried out in
the amount of at least 95%.
5.2.3 Investments
The investments at 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 in-
stalling smart network infrastructure systems, such as SCADA, SAD, electricity measurement sys-
tems etc., in order to improve the energetic and operational efficiency, to improve the network flex-
ibility, 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 fol-
lowing 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 maintain-
ing a solid capital structure.
Thus, those categories of capital expenses that contribute to the development of a profitable
and sustainable distribution activity, as well as to the creation of the conditions of access to the elec-
tricity distribution network for the consumers and electricity producers, in accordance with market
requirements, are prioritized, based in particular on:
– distribution automation by integrating of the installation in SCADA, SAD, DMS etc.;
– modernizing the equipment from the 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 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.
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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):
Table 18. Investment program approved by ANRE for 2019-2023 (RON mn.)
Commissioning program approved by ANRE for the period 2019 - 2023 (RON mn.)
2019
190
200
200
590
2020
175
190
190
555
2021
170
170
160
500
2022
160
170
160
490
2023
160
160
165
485
Total
855
890
875
2,620
SDTN
SDTS
SDMN
Total
Source: ANRE
In 2022, Electrica Group companies realized the following investments, compared to the
planned values.
Table 19. Investments planned 2022 vs achieved 2022 (RON mn.)
Electrica Group subsidiary (RON mn.)
Planned 2022
Achieved 2022
DEER, TN area
DEER, TS area
DEER, MN area
EFSA
SERV
ELSA
Total
Source: Electrica
218.8
242.2
228.0
47.2
3.6
10.6
750.5
191.4
198.2
196.8
10.4
1.8
2.2
600.8
At Electrica Group level, in 2022, the consolidated CAPEX plan was achieved at a rate of
80,1% compared to the plan approved by the Board of Directors of ELSA in April 2022, and for the
distribution subsidiary DEER, the average degree of achievement is of 85.1% compared to the ap-
proved plan.
The synthetic structure of investments achieved (CAPEX) by the distribution subsidiary in
2022 is presented in the table below (for details of the most important investments see Appendix 2).
Table 20. The synthetic structure of investments achieved by distribution subsidiary in 2022
(RON mn.)
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)
Connections (additional to the plan)
Other categories, out of which:
Endowment, Independent equipment (including vehicles &
IT)
Studies and projects for the coming years
Total
Source: Electrica
Total
141
93
48
384
108
74
67
135
62
54
8
586
The main investments of the Electrica Group were focused in 2022 on improving the quality
of the distribution service, as well as on increasing the energy and operational efficiency.
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Figure 27: The structure of CAPEX achievements
for distribution operator within the Group, in 2022 (RON mn.)
Endowment, independent
equipment (incl. vehicles & IT)
RON 54 mn
9%
Studies and projects
for the coming years
RON 8 mn
1%
Energy efficiency/NL
RON 93 mn
16%
Connections
(additional to the
plan)
RON 135 mn
23%
Operational efficiency
RON 48 mn
8%
Continuity of supply
RON 108 mn
19%
Legal obligations
(network extention/
reinforcement)
RON 67 mn
11%
Source: Electrica
Energy quality
RON 74 mn
13%
The approved plan of investments to be commissioned in 2022 for Societatea Distributie
Energie Electrica (DEER), the distribution company within Electrica group, was in total amount of
RON 587.1 mn., this value also including investments carried forward, for the year 2021 (RON 28.6
mn.).
The total value of the investments carried out and commissioned in 2022 by DEER is RON
478.9 mn. representing an average percentage of 82% compared to the total planned value.
From the total of RON 478.9 mn. investments carried out and commissioned, RON 398.9 mn.
are related to 2022 plan, RON 66.1 mn. are additional works from legal obligations and RON 13.9 mn.
represent investments carried forward from 2021 plan.
Table 21. PIF plan vs achieved 2022 (RON mn.)
DEER (RON mn.)
Total 2022 plan
Total achieved 2022
MN area
TS area
TN area
Total DEER
Source: Electrica
189.4
205.8
191.9
587.1
153.0
146.8
179.1
478.9
Total percentage of
achievement %
81%
71%
93%
82%
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As a result of investments made during 2014-2022, the value of the Regulated Assets Base
of the Group’s distribution operators has progressively changed, with an increasing evolution, and is
as follows:
Table 22. RAB evolution 2014-2022 (RON mn.)
RAB (RON mn)
20141
20192
20203
20214
20225
2015
1,420
1,377
1,543
2016
1,519
1,388
1,581
2017
1,624
1,475
1,679
2018
1,728
1,521
1,769
1,331
1,333
1,486
4,150
4,340
4,488
4,779
5,019
5,460
5,764
1,856
1,691
1,913
1,952
1,778
2,035
2,200
1,847
2,098
5,967
2,102
1,896
2,158
6,156
SDTN
SDTS
SDMN
Total
Source: Electrica
5.2.4 Aspects of ownership of tangible assets
The operation of assets is realized:
i) under the concession contract, by which the Concendent (Ministry of Energy) has trans-
mitted to the concessionaire (distribution operator) the right and obligation to operate the activities
and service of electricity distribution;
ii) based on the distribution license - Ordin ANRE 73/2014 - regarding the approval of the
general conditions associated with the licenses for the provision of the electricity distribution service.
During the period of validity of the license, the license holder has the exclusive right to pro-
vide the electricity distribution service, under the conditions of the regulations in force, in the area
defined under the specific conditions associated with the license, using the electrical distribution
network that it holds as owner or with any other legal title, provided under the specific conditions
associated with the license, in compliance with the provisions of the concession contract concluded
with the contracting authority.
In order to ensure the normal functioning of the distribution network that it operates, the li-
cense holder has the right to exercise, under the conditions of the Law, the rights provided by the law
for the holders of licenses on land and public or private property of other natural or legal persons
and on the activities carried out by natural and legal persons in the vicinity of the components of the
electrical distribution network, as well as the right of access to public utilities.
Obligations of the distribution license holder:
y The obligation to allow the use of the electrical distribution network;
y Ensuring the connection to public interest electricity networks;
At the request of any natural or legal person, the license holder is obliged to provide access
to the distribution network provided under the specific conditions associated with the license, in
order to make a new connection or to modify an existing connection.
y Development of the electrical distribution network.
The license holder is obliged to carry out planning and development works of the distribu-
tion electrical networks, under conditions of technical and economic efficiency, according to the
provisions of the law and in compliance with the technical regulations in force.
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5.3. Procurement
The acquisition activity at the level of ELSA and its subsidiaries is carried out in accordance with
the legal provisions in force, as well as its own procedures and regulations as the case may be, aiming
to cover the needs of goods, services and works for the smooth running of the Group’s activities.
In the case of distribution subsidiary DEER, the sectoral procurement legislation is observed,
mainly Law no. 99/2016 on sector acquisitions and GD no. 394/2016 approving the methodological
norms for the application of the provisions regarding the award of the sectoral contract/framework
agreement of Law no. 99/2016 on sector acquisitions.
In some cases, the acquisitions are carried out and centralized by delegating the coordina-
tion of the acquisition to a group company, with the primary objective of reducing costs, optimizing
the acquisition and ensuring a unitary policy within the Group. From the acquisitions made centrally,
we mention the D&O insurance services and the acquisition of services for determining the carbon
footprint at Electrica Group level for 2022.
5.4. Sales activity
Electrica Group’s revenues are influenced mainly by the distribution and supply segments.
The contribution of the distribution segment to the total revenues was of 18.1% in 2022, while the
contribution of the supply segment was of 81.8%.
The Group’s distribution operators (one operator from 1 January 2021) are natural monopo-
lies 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
2021 ANRE report for performance indicators’ monitoring.
Figure 28: Market share of distribution segment in 2021
DEER TN,
12.72%
DEER TS,
14.01%
DEER MN,
13.16%
Others, 60.11%
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1 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.
2 The values estimated as of 31 December 2019 may suffer corrections/changes, following ANRE’s analysis process.
3 The values estimated as of 31 December 2020 may suffer corrections/changes following ANRE’s analysis process.
4 The values estimated as of 31 December 2021 may suffer corrections/changes following ANRE’s analysis process.
5 The estimated values for RP4 may suffer corrections/changes, following ANRE’s analysis process.
Source: ANRE Report for performance indicators’ monitoring 2021
Regarding the supply segment, although it holds a strong position on the electricity supply
market, EFSA is facing growing competition on its market.
The figures below shows Electrica market shares for the supply activity as of 30 September
2022 (based on the quantities supplied):
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Figure 29: Last Resort suppliers market, 2022
Figure 30: Competitive Market, 2022
ENEL2
26.91%
E.ON
Energie
Romania
17.61%
Electrica
Furnizare
30.53%
Tinmar
Energy
5.89%
CEZ Vanzare
19.06%
ENEL2
21.28%
Electrica
Furnizare
12.82%
E.ON Energie
Romania
8.98%
CEZ Vanzare
5.30%
Tinmar Energy
6.21%
Hidroelectrica
8.58%
Engie Romania
4.82%
Others
32.01%
Source: ANRE monthly report (September 2022)
Source: ANRE monthly report, September 2022
Note: Others category includes suppliers whose individual
market shares are below 4%
Figure 31: Volume of electricity supplied on the
retail market (TWh)
Figure 32: Evolution in number of costumers (th)
8.5
3.7
9.2
4.4
4.9
4.9
9.3
4.2
5.1
9.4
5.6
3.8
2018
2019
2020
2021
8.6
5.4
2.4
0.9
2022
Serviciul Universal
Concurentiala
Serviciul Furnizor Ultima Instanta
3,541
253
3,553
269
3,583
314
3,288
3,284
3,269
3,510
1,556
1,953
2018
2019
2020
2021
3,498
1,645
1,817
36
2022
Serviciul Universal
Concurentiala
Serviciul Furnizor Ultima Instanta
Source: Electrica
Source: Electrica
Figure 33: Customers by electricity supplied volume,
2022
Figure 34: Customers by revenues, 2022
Casnici -
serviciul
universal
35.57%
Non-casnici -
serviciul
universal
4.71%
Source: Electrica
Non-casnici -
piata
concurentiala
41.63%
Casnici -
serviciul
universal
39.21%
Non-casnici -
piata
concurentiala
36.15%
Casnici - piata concurentiala
18.10%
Non-casnici -
serviciul universal
6.20%
Source: Electrica
Casnici - piata concurentiala
18.44%
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 market position provides an in-
herent advantage to have 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 pe-
riod, proving that the economic sectors impacted by the pandemic, despite they generate significant
exposures, they cannot represent systemic dangers to the entire company’ s portfolio.
However, certain consumers, as hospitals, ambulance stations, schools, kindergarten and
nurseries, air and air or maritime traffic services are considered to have a 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 in the Balancing Market as the Balance Responsible Party (BRP)
is carried out by Electrica Furnizare SA based on the electricity supply license no. 2279/04 August
2021.
BRP EFSA’s client portfolio is diversified, consisting of producers (hydro, thermal, wind, pho-
tovoltaic, biogas, biomass), suppliers and distribution operators.
At the end of 2022, about 108 licensed participants have delegated their responsibility to
BRP EFSA, out of which:
y 11 suppliers, representing 10.19% out of total BRP;
y 5 distribution operators, representing 4.63% out of total BRP, and
y 92 producers, representing 85.19% out of total BRP;
compared to the end of 2021, when about 96 licensed participants were registered.
In 2022, the average number of customers was about 106, larger than the average of 2021
(97) 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 in-
tervals with unique price do not allow compensations, and those with dual price are reduced.
In 2022 out of a number of 35,040 intervals, a dual price was applied on a number of 2,899
intervals (8.27%) resulting in a degree of compensation of approximately 51%.
In 2022, because of internal compensations of imbalances, within BRP EFSA, it was resulted
an improvement of surplus and deficit prices by 48.14 RON/Mwh compared to the imbalance prices
calculated by OTS/OPCOM.
Year 2022
OPCOM Average surplus price
866.75
BRP EFSA Average surplus price
914.72
OPCOM Average deficit price
BRP EFSA Average deficit price
1,057.39
1,009.25
Electrica Furnizare SA, through BRP service has been acting on the Intraday market starting
with February 2021 in order to buy/sell electricy quantity not transacted on DAM (Day Ahead Market).
For 2022, the results for the trades in IM (Intraday Market) are the followings:
y Buy – quantity of 51,189.43 MWh at an average price of 1,427.94 RON/MWh;
y Sell - quantity of 47,565.08 MWh at an average price of 1,310.22 RON/MWh.
Out of total traded of 103,504.80 MWh (at an average price of 1,387.80 RON/MWh) on Buy
in IM-OPCOM, EFSA traded a quantity of 51,189.43 MWh, representing approx. 49%. Out of the total
traded of 138,392.78 MWh (at an average price of 1,306.21 RON/MWh) on Sell in IM-OPCOM, EFSA
traded a quantity of 47,565.08 MW, representing approx. 34%.
.
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5.5. Personnel
On 31 December 2022, Electrica Group had 7,911 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.
Table 23. Number of employees evolution 2022 - 2019
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
Source: Electrica
2022*
6,555
2,211
2,262
2,082
469
816
0
71
7,911
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
*According to the modified reporting methodology to INS, the employees number from 31 December 2022 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 cus-
tomers, 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 2022, approximately 72% of the Group’s employees represent directly
productive staff, and 28% represent indirectly productive staff, including technical, economic, social
and administrative personnel.
Table 24. Group’s employment by age, 2022-2020
Age category
31 December 2022
31 December 2021
31 December 2020
under 18
.
18-30
31-40
41-50
51-60
over 60 years old
Total
Source: Electrica
0.00%
5.1%
14.7%
34.3%
43.3%
2.6%
100%
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 2022, about 98% of the Group’s employees are union members and their
employment conditions are governed by the Collective Labor Agreement, which will expire on 17 May
2024 for ELSA and between February- June 2024 for the Group’s subsidiaries.
The Electrica Group did not face union actions in 2022.
In 2022, on the Services segment of the Group, a voluntary leave program took place (51
departures), continuing the processes of identifying the personnel with expertise in order to ensure
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the performance and efficiency of the activities at the level required by the regulatory authorities
and the energy market.
In the first part of 2022, the reorganization plan of S.E. Electrica S.A. was implemented in-
cluding organizational measures that took into account the resizing and redefinition of the staffing
scheme, as well its organization and operation model, for adapting to the current conditions of the
Company’s activity on the energy market, streamlining the activity, improving the organization’s per-
formance and consolidating medium and long-term results. These measures led to the simplification
of hierarchical structures and the reduction of a number of 32 positions (mainly middle manage-
ment), through employment contract termination for reasons unrelated to the employee, and a num-
ber of 19 employees left the organization following the collective dismissal process. One of the stra-
tegic objectives is education and training to ensure the necessary quality staff, with the expected
result of building an internal professional training system, which addresses the main skills needed by
employees, to increase and maintain organizational capabilities and to support performance. During
2022, the training program in the dual education system continued, within the Distribution Subsidiary,
targeting High School classes with an energetic profile.
The Group is involved in the life of the communities in which it operates, supporting children
of families with modest material possibilities to remain in the education system, and at the same
time, forming a solid base of young electricians who will be able in the future to join the distribution
company, depending on the workforce need.
Both ELSA and its subsidiaries prepared and updated policies, procedures and internal reg-
ulations that contain provisions regarding employment, non-discrimination, occupational health and
safety, employer and employees’ rights and obligations, the procedure for solving the employees’
complaints, the labor discipline, disciplinary sanctions and deviations, rules regarding the disciplinary
procedure, criteria and procedures for the professional evaluation of employees, succession and final
provisions.
Also, the improvement and continuous development of the performance management sys-
tem contributes to the achievement of Electrica Group key objectives, set for the 2019-2023 period
(Improving operational performance to continuously increase the quality of customer service and
Increasing performance and strengthening the sustainability of economic results).
By adopting the human resources strategy, the Group aims to ensure the qualified resources
necessary to support the initiatives for the next period, in the conditions of an accentuated dynamics
of the labor market.
Another desideratum, established by the strategic objective regarding the modernization, is
the increase of the employees’ trust in the employer and the creation of a suitable working environ-
ment for collaboration and obtaining the envisaged performances. Thus, in order to improve the in-
teractions of the Electrica Group employees with the human resources departments, to increase the
employee retention and to improve the perception on the organizational culture.
.
Also, in order to improve the employer’s image and the continuation of the pandemic con-
text during 2022, the hybrid („work from home/office”) system was implemented within the Electrica
Group, complying with the internally defined processes, regarding workplace safety and human re-
sources activity management.
The organizational culture modernization, having as central elements „excellence” and „safe-
ty”, is one of the strategic objectives, and one of the projects in this area carried out at the Group
level is represented by the training of agents, with the role of supporting organizational changes and
subsequent optimization of business processes. This program aims to promote opening to the new
challenges and to encourage employees to propose solutions to solve the problems they face at
work. Lean agents are employees who not only accept the change, but contribute to identification of
the solutions and support their implementation.
Another objective of major interest is the performance management, as a coherent system
that evaluates as objectively as possible the activity of the employees, in close correlation with the
system of compensations and benefits and the professional development one.
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In 2022, it was continued the methodological and conceptual framework for the application
of international best practices was developed to increase the maturity of the performance manage-
ment system within Electrica, which considers the continuous improvement of the employee evalua-
tion process and the development of the necessary tools to build a solid performance-based system.
At the level of the entire Group, the 360-degree evaluation process was carried out, with the aim of
developing a culture of feedback within the organization.
The training programs carried out at the Electrica Group level considered both the constant
evolution and the improvement of the Group employees’ skills. The company’s management sup-
ports the principle of development through continuous training by involving employees in these
programs, thus supporting them to effectively address their professional challenges.
HEALTH AND SAFETY AT WORK
In 2022, all the companies of the Electrica Group maintained their Integrated Quality-
Environment Management System certification, which ensures the compliance of the companies
with the legal requirements in the field of occupational health and safety and with those of the SR
ISO 45001:2018 referential. There is thus a guarantee that services and processes are provided and
carried out in safe conditions for the company’s own staff and contractors, as well as for
customers.
The work accidents situation and specific indicators at Electrica Group level
In 2022 there were 2 fatal accidents at Electrica Group.
The total number of work-related accidents in the Group was 5, of which 2 were fatal.
The complex of complementary causes and contributing factors that led to the occurrence
of each of these accidents was analysed at DEER level by the legally constituted committees, and the
investigation files include the measures to prevent similar situations that need to be implemented
by the company. Two of the work accidents recorded at group level were caused by the materializa-
tion of the risk of electrocution (1 fatality), two were caused by the materialization of the risk of fall-
ing from height (1 fatality), and one was caused by a physical aggression.
An occupational health and safety event occurred due to the health condition of the staff,
without being classified as a work-related accident, resulting in the death of a DEER employee due
to pathological causes.
The frequency index (FI), expressed as the number of accidents per 1,000 employees is for
2022 at Electrica Group level 0.66‰, registering a small increase compared to 2021 due to the sen-
sitive reduction of the number of staff at the group level.
Figure 35: Frequency index 2020-2022
Frequency Index
0.75
0.63
0.78
0.66
2021
2022
Group
National
0.66
0.40
2020
Source: Electrica
IF is a statistical indicator recommended by the International Labour Organization (ILO)
through the Resolution on Statistics of Occupational Injuries adopted in October 1998 as it correlates
the number of accidents with the number of workers, increasing the comparability of organisation’s
performance in the field of OSH and eliminating distortions caused by the size of these organisations
(number of employees in each organisation).
Starting with 2020 and continuing in the following years, the IF for Electrica Group has been
consistently below the national value of the indicator and well below the level recorded for the indus-
try in which it operates.
Aspects regarding the employees health
The Electrica Group’s field of activity does not involve a risk of developing diseases caused
exclusively by working conditions, so no occupational diseases have been recorded in 2022 or in
previous years.
Prevention, monitoring and occupational health insurance at Electrica Group level was car-
ried out by doctors with specialisation in occupational medicine through dedicated service contracts
and was followed up at ELSA level for the portfolio companies through reports.
Actions to improve safety and health of employees at work place
A sustained effort on the part of the OSH teams at the level of each company within the
Group required throughout 2022 to ensure the monitoring of the OSH activity, the main actions de-
fined and managed being:
– the establishment of Occupational Safety and Health Committees;
– carrying out an assessment of the risks of injury and occupational illness for all existing
workplaces and drawing up the Prevention and Protection Plan;
– regular occupational health and safety, fire safety and civil protection training every six
months, as well as additional training; training of new employees, in accordance with the
instructions in force, by means of general introductory and job-specific training;
– signing Occupational Safety and Health agreements with each contractor involved in pro-
viding services to the company;
– carrying out internal checks on occupational safety and health and fire safety. The controls
focused on compliance with specific legislation and internal regulations in this area;
– monitoring the state of health of employees, for which contracts for occupational health
services were concluded. On the basis of these contracts, medical examinations were car-
ried out on recruitment and regular medical check-ups.
In 2022 the total number of SSM - SU training hours reached 313,295, compared to 315,295
SSM - SU training hours in 2021, the decrease being due to staff reductions.
1999, represents the total number of OSH controls carried out at the level of the Electrica
Group with its own personnel, to identify deficiencies that could generate risks for the safety and
health at work of employees, these controls being followed by immediate treatment of the non-com-
pliances found.
Although during the reference period there were numerous controls by the Territorial Labour
Inspectorates and Emergency Situations Inspectorates, no sanctions were imposed on any of the
Group companies.
5.6. Environmental considerations
The year 2022 meant for the Electrica Group environmental protection expenses amounting
to RON 20.2 mn., increase compared to previous year. This expenditure was mainly aimed at the pre-
vention and protection against forest fires, the collection and disposal of waste, the reduction of
emissions into the atmosphere, the protection and conservation of flora and fauna species, the pro-
tection and recovery of land, etc.
At the level of the Electrica Group, we strive to have a detailed picture of the forms of impact
our activities have on the environment and to identify optimal solutions for their management. In
2022 a first CO₂ - equivalent GHG assessment exercise was launched for 2021. In this study, all the
activities of the group companies were analyzed, and the result shows that an important source of
GHG emissions is the own technological consumption (NL) in the distribution networks (the results
are presented in the Sustainability Report for 2021).
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
127
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
126
2022 Directors’ Report
2022 Directors’ Report
At the Group’ distribution operator DEER level in 2022 continued the program of elimination
of PCBs (polychlorinated biphenyls) from electrical installations in operation within the legal dead-
line set at national level - year 2028 (cf. GD no. 1497/2008) - total elimination of them.
Figure 36: PCB capacitors in operation at the end of 2022 compared to 2021
1,489
1,756
2022
2021
Source: Electrica
For responsible waste management and the safe disposal of the generated waste, a unified
process has been defined and implemented at the level of Electrica Group, governed by the princi-
ples of selective collection and recycling – when its requirements are met - or destruction with au-
thorised operators.
Figure 37: Waste processing
3,283
4,675
218
Recycling
Incineration
Final Storage
Temporary
Storage
Source: Electrica
76,123
67,947
Following external certification/supervisory audits carried out by the certification body
SRAC Cert, companies within Electrica Group obtained or maintained in 2022 the certifications for
their Integrated Management Systems Quality – Environment –SSM 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 SR EN ISO 14001:2015.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
128
5.7. Research and development activities
Electrica Group is promoting technological innovation by participating in research and de-
velopment projects financed/co-financed through European funds, which aims to empower the resil-
ience of energy systems with an increasingly complex structure but also more vulnerable to
cyber-attacks.
Thus, with the integration of an increasing number of distributed generation sources in the
distribution network increases the role of intelligent technologies as well in network operation by
remote monitoring, control, or operation and even more by network self-healing implementation.
The growing number of cyber security incidents in the energy system as well as the need for
shielding against a variety of threats require novel and holistic solutions that employ cutting edge
technologies to detect and mitigate threats, ensuring compliance with the latest cyber security
standards.
In this context, Electrica participates in the European project ELECTRON - resilient and self-
healed EleCTRical power Nanogrid, financed by the EU, which addresses the need to protect the
distribution network against a variety of threats, ranging from cyberattacks, dynamic and evolving
Advanced Persistent Threats (APT), and privacy violations, to electricity disturbances.
The project aims at delivering a new-generation EPES (Electrical Power and Energy System)
platform, capable of empowering the resilience of energy systems through risk assessment, anomaly
detection and prevention, failure mitigation and energy restoration, and personnel training.
The project is carried out by a consortium of 34 organizations (companies, universities, etc.),
coordinated by Intrasoft International, Belgium, with a duration of 36 months starting from October
2021.
Electrica achievements:
y Use case 4 defining - Proactive islanding, that fulfills an efficient detection of cyber threats:
addressing and mitigating cyber-attacks in the Romanian Energy Chain - in the 1st year of
the project;
y Implementation of Security and confidentiality requirements for users according to the
legislation - in the 2nd year of the project;
y Analysis of the opportunity to implement the platforms proposed in the project - in the
2nd year of the project;
y Vulnerability and impact analysis: estimating the severity of a vulnerability on a certain
asset - in the 2nd year of the project;
y Threat level and types of attackers - in the 2nd year of the project;
y Testing of ELECTRON components - Use case at 4 enterprise level to ensure increased
resistance of the energy system, while ensuring business continuity and critical operations
of the energy community - in the 2nd year of the project.
5.8. Significant aspects regarding the impact on the
recognition of financial assets as a result of the
amendment of the concession agreements – S-IFRS-EU
Distribution segment
Financial asset recognition from amendment of concession agreements with Ministry of
Energy
On 20 January 2023, the Ministry of Energy as concessionaire amended the concession
agreement with the Group for the distribution segment to reflect that in case of early termination of
the concession agreement, for any reasons, the cocessionaire would reimburse to the Group the
value of actual costs with the purchase of electricity for own technological consumption compared
to the costs included in the regulated tariffs.
The amendments to the concession agreements have been agreed with the Ministry of
Energy before 31 December 2022, however the addendums were issued on 20 January 2023. All
facts and circumstances were available as of 31 December 2022, therefore Group accounted for
these amendments as a subsequent adjusting event for the year ended 31 December 2022 and rec-
ognised a financial asset.
Based on the concession contracts amendments, the additional cost of purchasing electric-
ity for covering the own technological consumption of the distribution operators, carried out starting
with 1 January 2022, as in art.III from GEO 119/2022 (actual costs with the purchase of electricity for
own technological consumption (“NL”) coverage compared to the costs included in the regulated
tariffs) are recognised as financial asset as part of the concession agreement. Such amounts are
guaranteed by the concession agreement which is enforceable by law. The operator has an uncondi-
tional contractual right to receive cash or another financial asset from or at the direction of the grant-
or; the grantor has no discretion to avoid payments in case of early termination of the concession
agreements.
.
.
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C
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L
E
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2
0
2
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O
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U
N
N
A
129
2022 Directors’ Report
2022 Directors’ Report
5.9. Significant aspects of the impact of subsidies on
the capitalization of additional costs related to
technological consumption (NL) – S-OMFP 2844/2016
Distribution segment
Having regard to the following aspects concerning the recent legislative changes in the en-
ergy sector concerning the recognition in tariffs of the additional costs of the purchase of electricity
to cover their technological consumption compared to the costs included in the regulated tariffs,
introduced by:
y ANRE order no. 129/2022 for the approval of the methodological norms regarding the
recognition in tariffs of the additional costs with the acquisition of electricity to cover the
own technological consumption compared to the costs included in the regulated tariffs;
y Emergency Ordinance no. 119/2022 amending and supplementing the Government Emer-
gency Ordinance no. 27/2022 on the measures applicable to final customers in the elec-
tricity and natural gas market during 1 April 2022-31 March 2023, as well as amending and
supplementing some normative acts in the field of energy, approved and amended by Law
no. 357/2022;
y Transposing the provisions of the normative acts from the primary and secondary legis-
lation into the financial accounting area by order no. 3900/2022 regarding the approval
of accounting specifications in the application of the provisions of art. III of Government
Emergency Ordinance no. 119/2022 amending and supplementing Government Emergen-
cy Ordinance no. 27/2022 on the measures applicable to final customers in the electricity
and natural gas market between 1 April 2022-31 March 2023, as well as for the modification
and completion of some normative acts in the field of energy.
Starting with September 2022, it is allowed to capitalize, recognize and report additional
costs related to the own technological consumption (NL) of distribution operators.
5.10. Principle of business continuity – substantiation
and working hypothesis
The going concern principle implies that the entity continues its normal operations without
going into liquidation or significantly reducing its activity.
The consolidated financial statements have been prepared on a going concern basis. In mak-
ing this judgement, management considers ongoing performance and access to financial resources.
The Group has prepared a forecast which includes the following assumptions:
– A continuation of the support scheme until 31 March 2025 as per current legislation, but
with a more stable flow of subsidy claims repayment compared to last year as the mech-
anism has been operationally improved;
– Use of confirmed financing facilities up to RON 4,028.4 mn., including overdraft limits
amounting to RON 2,743.5 mn. and long-term loans amounting to RON 1,284.8 mn;
– Use of yet uncovered facilities in the amount of RON 283.0 mn. and non-recourse factor-
ing limits for subsidy repayment claims under the support scheme in the amount of RON
350.0 mn., which will be drawn during the forecast period;
– The Group has also obtained GSM approval to carry out one or more bond issues up to
RON 900.0 mn. in the period 2022-2023, mainly for the development of green energy
generation projects. Depending on the market context, a first issue of up to RON 450.0
mn. is envisaged in the second part of 2023, and until it is used in the operationalization
of green energy generation projects, the respective amounts attracted may be used as a
liquidity buffer, at Group level.
.
.
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A
C
R
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2
0
2
T
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A
U
N
N
A
130
At the date of publication of these consolidated financial statements, the regulatory position
may be subject to further change and there may be additional laws that could have a negative im-
pact on the Group’s operating cash flows in the forecast period. Given the current market uncertain-
ties, the Group is closely monitoring the market environment and is continuously analysing oppor-
tunities to optimise debt and increase bank overdrafts and long-term loans. Considering the Group’s
importance as both supplier and distributor of electricity for the Romanian market with a market
share of 40.7% (according to the latest available ANRE 2021 report for the distribution segment) on
electricity distribution and 17.72% (according to the most recent ANRE October 2022 report for the
supply segment) on the electricity supply market and the fact that the main shareholder of Electrica
SA is the Romanian State, the management believes that sufficient financing will be available to
cover any financing requirements that may result from these uncertainties and that the Group will be
able to meet its obligations as they fall due.
Based on the above forecasts and other information, considering the measures already im-
plemented and the risk mitigation strategies that may arise due to the unstable economic environ-
ment, the Board of Directors has, at the time of approval of the consolidated financial statements,
reasonable expectations that the Group has adequate resources to continue its operations for the
foreseeable future. Accordingly, management continues to prepare the consolidated financial state-
ments on a going concern basis.
.
.
I
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A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
131
6 Electrica financial reporting for 2022
132
133
6 Electrica financial
reporting for 2022
2022 Directors’ Report
2022 Directors’ Report
The overview of the company’s consolidated financials in chapters 6.1, 6.2. and 6.3 is based
on the consolidated financial statements that have been prepared in accordance with the International
Financial Reporting Standards (“IFRS”) adopted by the European Union (“IFRS-EU”). These consoli-
dated financial statements are presented in RON, which is the functional currency of all companies
within the Group.
The overview of the company’s consolidated financials in chapters 6.4, 6.5 and 6.6 is in ac-
cordance with the Order of the Ministry of Public Finance no. 2844/2016 adopted by the European
Union (“IFRS-EU”). These consolidated financial statements are presented in RON, which is the func-
tional currency of all companies within the Group.
6.1. Consolidated statement of the financial position
– S-IFRS-EU
The following table presents the consolidated statement of the financial position.
Table 25. Consolidated statement of the financial position 2022-2020 (RON. mn)
31
December
2022
31
December
2021
Variation
2022/2021
abs
31
December
2020
ASSETS
Non-current assets
Intangible assets related to concession agreements
Goodwill
Other intangible assets
Property, plant and equipment
Investments in associates
Other investments
Financial assets related to concession arrangements –
non current portion
Deferred tax assets
Other non-current assets
Right of use assets
Total non-current assets
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
Restricted cash
Subsidies receivables
Inventories
Prepayments
Financial assets related to concession arrangements –
current portion
Current income tax receivable
Assets held for sale
Total current assets
5,675.9
12.0
12.9
499.4
18.8
7.0
761.3
30.2
2.4
52.2
7,072.0
2,466.0
127.3
334.9
-
1,280.8
114.0
13.9
190.3
24.0
0.2
4,551.3
5,514.6
-
9.0
505.4
25.8
-
-
83.5
1.7
20.9
6,160.9
1,344.6
48.6
221.8
-
-
73.0
5.0
-
23.8
5.4
1,722.2
161.3
12.0
3.9
(6.0)
(7.0)
7.0
761.3
(53.4)
0.7
31.2
911.0
1,121.4
78.7
113.1
-
1,280.8
41.0
8.8
190.3
0.2
(5.1)
2,829.2
5,455.2
-
7.2
508.1
-
-
-
19.7
1.2
27.1
6,018.5
1,029.8
32.5
570.9
320.0
-
70.1
2.8
-
1.8
15.5
2,043.4
.
.
I
A
S
A
C
R
T
C
E
L
E
Legal reserves
Retained earnings
Total equity attributable to shareholders of the
Company
Non-controlling interests
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
December
2022
429.6
1,353.9
31
December
2021
408.4
950.2
Variation
2022/2021
abs
21.2
403.7
31
December
2020
392.3
1,759.6
5,367.8
4,953.6
(0.5)
-
5,367.2
4,953.6
414.2
(0.5)
413.7
5,760.3
-
5,760.3
34.5
212.6
117.3
72.4
647.2
1,083.9
19.2
2,571.0
1,407.1
867.5
24.8
114.2
53.7
1.1
113.5
5,172.2
12.1
161.9
149.2
32.7
118.8
474.7
9.4
627.4
891.3
271.3
9.7
101.1
34.9
-
509.7
2,454.9
22.4
50.6
(32.0)
39.7
528.4
609.2
9.8
1,943.6
515.8
596.3
15.1
13.1
18.8
1.1
(396.2)
2,717.3
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
Total liabilities
6,256.1
2,929.6
3,326.5
2,301.5
Total equity and liabilities
11,623.3
7,883.1
3,740.2
8,061.8
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
The materiality threshold established internally at the Group level for analysis of main indicators (presented
below) is worth RON 68.1 mn., representing 5% of EBITDA.
Non-current assets
.
The non-current assets increased with RON 911.0 mn. in 2022, or 14.8%, from RON 6,160.9
mn. as of 31 December 2021, to RON 7,072.0 mn. at 31 December 2022, this variation being the cu-
mulated effect of:
– Increase with RON 161.3 mn. of network investments made by distribution subsidiaries
(most relevant values of investments and put into function are presented in Appendix 2);
– Positive impact in amount of RON 761.3 mn. from the initial recognition of financial assets
related to concession arrangements – non current portion;
.
I
A
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A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
134
Total assets
EQUITY AND
LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserves
Revaluation reserve
11,623.3
7,883.1
3,740.2
8,061.8
Current assets
3,464.4
103.0
(75.4)
92.1
3,464.4
103.0
(75.4)
102.8
-
-
-
(10.7)
3,464.4
103.0
(75.4)
116.4
In 2022, current assets increased by RON 2,829.2 mn. compared to 2021, or 164%, from RON
1,722.2 mn. to RON 4,551.3 mn., this evolution being mainly from:
– value of cash and cash equivalents increased with RON 113.1 mn. mainly as a result of the
increase in call deposits from RON 53.9 mn. in 2021 to RON 193.2 mn. in 2022;
– trade receivables have increased with RON 1,121.4 mn. in 2022, mainly due to the supply
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
135
segment corellated with the increase in sales;
Revaluation reserves
2022 Directors’ Report
2022 Directors’ Report
– subsidies receivables registered in 2022 in amount of RON 1,280.8 mn.;
– other receivables increased with RON 78.7 mn., from RON 48.6 mn. in 2021 to RON 127.3
mn. in 2022.
– initial recognition of financial assets related to concession arrangements – current portion
in amount of RON 190.3 mn..
Trade receivables`
Trade receivables increased by RON 1,121.4 mn. or 83.4% during 2022, to RON 2,466.0 mn.,
from RON 1,344.6 mn. as at 31 December 2021. This variation is generated by increase of sales espe-
cially in the supply segment.
Cash and cash equivalents
Cash and cash equivalents include cash balances, call deposits and bank accounts.
The reconciliation between the opening balance and the closing balance of the revaluation
reserve is presented below:
Table 28. Revaluation reserves 2022-2020 (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
2022
102.8
-
(10.7)
-
92.1
2021
116.4
-
(13.5)
-
102.8
2020
87.7
43.8
(7.2)
(7.9)
116.4
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Their value increased by RON 113.1 mn. in 2022, or 51.0%, reaching RON 334.9 mn., from RON
Legal reserves
221.8 mn. in 2021.
Cash and cash equivalents comprise cash balances, call deposits and deposits with matur-
ities 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.
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 de-
ductible for income tax purposes and are not distributable.
Table 26. Cash and cash equivalents 2022-2020
Table 29. Legal reserves 2022-2020 (RON mn.)
(RON mn.)
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
31 December
2022
141.7
193.2
0.0
31 December
2021
167.8
53.9
0.1
31 December
2020
179.4
391.5
0.1
334.9
-
334.9
221.8
(627.4)
(405.6)
570.9
(165.0)
406.0
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Share capital and share premium
The issued share capital in nominal terms consists of 346,443,597 ordinary shares at 31
December 2022 and 2021 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 rec-
ognized as “Pre-paid capital contributions in kind from shareholders”.
There were no changes in the number of shares in 2022.
Table 27. Number of shares 2022 - 2020
.
.
I
A
S
A
C
R
T
C
E
L
E
2022
346,443,597
-
346,443,597
Number of ordinary shares
2021
346,443,597
-
2020
345,939,929
-
346,443,597
346,443,597
Number of shares at 1 January
Shares issued during the year
Number of shares at 31
December
Source: Electrica
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
136
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
Set-up of legal reserves
Balance at 31 December 2022
Legal reserves
371.8
20.4
392.3
16.1
408.4
21.2
429.6
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Non-current liabilities
The non-current liabilities have considerably increased from RON 474.7 mn. as per 31
December 2021 to the value of RON 1,083.9 mn. as per 31 December 2022.
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 2022 mainly to finance the group investments.
.
Current liabilities
In 2022, the current liabilities increased by RON 2,717.3 mn., to RON 5,172.2 mn., from RON
2,454.9 mn. at the end of 2021, mainly because 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 396.2 mn., following
the fulfillment of financial covenants in 2022 (in 2021 not all of them were achieved), therefore the
long-term portion was reclassed for the long-term loans from this category.
Overdrafts
The overdrafts considerably increased in 2022 by RON 1,943.6 mn., reaching RON 2,571.0
mn., from RON 627.4 mn. at the end of 2021, as the Group has prefinanced the support scheme ac-
cording to OUG 27/OUG 119 and had to cover its current activities financing needs.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
137
2022 Directors’ Report
2022 Directors’ Report
Trade payables
As of 31 December 2022, the trade payables increased by approx. RON 515.8 mn., to RON
1,407.1 mn., from RON 891.3 mn. at 31 December 2021, mainly due to increase of suppliers’ balances
following the changes on the electricity market. Electricity suppliers are mainly state-owned electric-
ity producers.
Other payables
As of 31 December 2022, other payables increased by RON 596.3 mn., to RON 867.5 mn.,
from RON 271.3 mn. at 31 December 2021, of which the VAT to be paid increased in 2022 up to RON
565 mn. from RON 134 mn. in 2021. Also, in other liabilities are included guarantees from customers
related to electricity supply.
6.2. Consolidated statement of profit
or loss – S-IFRS-EU
The following table presents the consolidated statement of profit or loss of Electrica Group
for 2022, 2021 and 2020.
Table 30. Consolidated statement of profit or loss (RON mn.)
2022
2021
Variation
2022/2021
2020
Revenue
Other income
Electricity and natural gas purchased
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
10,009.9
3,792.5
(10,506.8)
(593.5)
(823.4)
(88.2)
(496.2)
(112.3)
(353.0)
828.9
7,178.9
195.8
(5,694.7)
(485.8)
(802.7)
(102.4)
(480.8)
(70.6)
(343.2)
(605.5)
2,831.0
3,596.7
(4,812.1)
(107.7)
(20.7)
14.1
(15.4)
(41.7)
(9.8)
1,434.4
6,501.1
165.4
(3,905.7)
(676.0)
(774.5)
(104.6)
(490.9)
62.2
(325.1)
451.9
Gain from bargain purchase of
subsidiaries*
-
-
-
7.5
Finance income
Finance costs
Net finance cost
Profit before tax
Income tax expense
Profit for the year
9.7
(174.7)
(165.0)
663.9
(105.1)
558.8
2.6
(29.5)
(26.9)
(632.4)
79.5
(552.9)
7.1
(145.2)
(138.1)
1,296.3
(184.6)
1,111.7
9.7
(26.7)
(17.1)
442.3
(54.8)
387.5
Earnings per share
Basic and diluted earnings per share
(RON)
1.65
(1.63)
-
1.14
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
*the value is included in EBIT, is separated only for disclosure purposes
The materiality threshold established internally at the Group level for analysis of main indicators (presented
below) is worth RON 68.1 mn., representing 5% of EBITDA.
Key financial indicators for 2022 and their y-o-y evolution:
– Revenues: RON 10,009.9 mn., an increase of RON 2,831.0 mn., or 39.4%;
– EBITDA: profit RON 1,325.2 mn., an increase of RON 1,453.2 mn.;
– EBIT: profit RON 828.9 mn., increase by RON 1,434.4 mn.;
– EBT: profit RON 663.9 mn., an increase of RON 1,296.3 mn.;
– Net result: profit of RON 558.8 mn., increase with RON 1,111.7 mn.
Revenues and other income
In 2022, Electrica recorded total revenues (including other revenues) of RON 13,802.4 mn.,
increasing by RON 6,427.8 mn. or 87.2%, from RON 7,374.6 mn. in 2021; the variation is generated
mainly by the revenues’ evolution, and the other operating income.
Revenues
Figure 38: Revenue for 2022/Q4 2022 and comparative information (RON mn.)
6,501
557
7,179
582
5,944
6,597
2,161
151
2,010
10,010
609
9,401
2,765
160
2,605
2020
2021
Q4 2021
2022
Q4 2022
Revenues excl Green Certificates
Green Certificates Revenues
Source: Electrica
The revenues increased by RON 2,831.0 mn., or 39.4%, being the net effect of the following
main factors:
– increase of RON 2,411.7 mn. on the supply segment;
– RON 427.7 mn. increase of the distribution segment’s revenues;
– decrease with RON 16.5 mn. of revenues from energy services;
– increase of RON 8,2 mn. on production of energy segment.
Income from initial recognition of financial assets
On the distribution segment the additional cost of purchasing electricity for covering the
own technological consumption of the distribution operators (actual costs with the purchase of
electricity for own technological consumption (“NL”) coverage compared to the costs included
in the regulated tariffs) are recognised as financial asset as part of the concession agreement. Such
amounts are guaranteed by the concession agreement which is enforceable by law. The resulting
financial assets are presented at the fair value determined as the net present value of the additional
costs incurred with the purchase of electricity.
On 31 December 2022, the total value of additional costs with the purchase of electricity
incurred between 01 January 2022 and 31 December 2022, in amount of RON 951.6 mn., were recog-
nized as financial asset, as specified in the additional act to the concession contract concluded with
the Ministry of Energy on 20 January 2023.
Electricity and natural gas purchased
In 2022, the expense for electricity purchased increased by RON 4,812.1 mn., or 84.5%, to
RON 10,506.8 mn., from RON 5,694.7 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).
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
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R
L
A
U
N
N
A
139
.
.
I
A
S
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L
E
2
2
0
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L
A
U
N
N
A
138
The table below presents the structure of the electricity purchased expenses for the indicat-
Figure 40: EBIT and EBIT margin for 2022/Q4 2022 and comparative information (RON mn. and %)
2022 Directors’ Report
2022 Directors’ Report
ed periods:
Table 31. Electricity and natural gas purchased 2022-2020 (RON mn.)
(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
Total electricity and natural
gas purchased
Source: Electrica
Construction costs
2022
1,987.2
7,613.1
297.4
609.1
2021
1,087.1
3,750.0
275.9
581.7
Variation
2021/2022
900.1
3,863.1
21.5
27.4
2020
694.0
2,377.2
277.3
557.2
10,506.8
5,694.7
4,812.1
3,905.7
In 2022, the network construction costs related to concession arrangements increased by
RON 107.7 mn., or 22.2%, to RON 593.5 mn., from RON 485.8 mn. recorded in 2021, being correlated
with the evolution of the investments recognizable in RAB realized in 2022, which were at a bigger
level compared to 2021.
EBITDA and EBITDA margin
Figure 39: EBITDA and EBITDA margin for 2022/Q4 2022 and comparative information (RON mn. and %)
14.7%
953
-1.8%
13.2%
1,325
8.0%
247
(128)
(602)
-27.8%
2020
2021
Q4 2021
2022
Q4 2022
EBITDA
EBITDA Margin
.
Source: Electrica
Operating profit
The Group EBIT increased by approx. RON 1,434.4 mn. y-o-y, adding to the EBIT evolution
mainly the favorable impact of the initial recognition of financial assets rising from concession agree-
ments amendments capitalization of NL in amount of RON 951.6 mn..
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
140
7.1%
459
-8.4%
8.3%
829
3.5%
97
(606)
(721)
-33.4%
2020
2021
Q4 2021
2022
Q4 2022
EBIT
EBIT Margin
Source: Electrica
Net finance cost
The net finance cost (loss) at group level increased by RON 138.1 mn. in 2022 compared to
2021, 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 profit of RON 663.9 mn. in 2022, compared with the gross
loss of RON 632.4 mn. in 2021, following the factors mentioned above.
Income tax expense
The tax on income was an expense of RON 105.1 mn. in 2022, generated by the incurred gross
profit.
Net result for the year
As a result of the above-described factors, in 2022, the net result is a profit of RON 558.8
mn., representing an increase of RON 1,111.7 mn. compared to RON 552.9 mn. (loss) in 2021.
Figure 41: Net profit and Net profit margin for 2022/Q4 2022 and comparative information (RON mn. and
%)
6.0%
388
-7.7%
5.6%
559
0.9%
25
(553)
(625)
-28.9%
2020
2021
Q4 2021
2022
Q4 2022
Net Result
Net Result Margin
Source: Electrica
.
.
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2
2
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N
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141
2022 Directors’ Report
2022 Directors’ Report
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142
6.3. Consolidated cash flow statement – S-IFRS-EU
The following table presents the consolidated statement of cash flows of Electrica Group for
2022, 2021 and 2020.
Table 32. Consolidated cash flow statement (RON mn.)
2022
2021
Variation
2022/2021
2020
558.8
(552.9)
1,111.7
387.5
19.9
476.5
21.1
459.7
(1.2)
16.5
(951.6)
-
(951.6)
(3.9)
3.9
27.9
463.1
-
0.6
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
Other income from initial recognition of
financial assets rising from concession
agreements amendments
Impairment of property, plant and equipment
and intangible assets, net
Loss on disposal of property, plant and
equipment and intangible assets
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
(0.0)
(0.4)
-
112.3
-
18.8
165.0
(4.4)
-
105.1
500.1
2.7
-
70.6
0.6
15.7
26.9
5.1
-
(79.5)
(34.0)
Changes in:
Trade receivables
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Employee benefits
Deferred revenue
Subsidies receivables
(1,286.7)
(138.3)
(391.4)
(22.9)
(8.8)
(41.0)
494.6
722.4
(6.5)
15.1
(1,280.8)
(2.2)
(2.9)
274.8
32.5
3.2
4.0
-
(3.0)
(0.3)
-
41.7
(0.6)
3.1
138.1
(9.4)
-
184.6
534.1
(895.3)
(115.4)
(6.6)
(38.1)
219.8
689.9
(9.6)
11.1
(1,280.8)
2.4
(62.2)
(0.2)
(0.3)
17.1
-
(7.5)
54.8
882.9
(87.2)
3.8
0.6
4.3
(76.0)
(2.3)
14.7
(1.3)
-
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
143
Cash generated from operating activities
(1,030.0)
(138.9)
(891.1)
739.5
2022 Directors’ Report
2022 Directors’ Report
2022
2021
Variation
2022/2021
Interest paid
Income tax paid
(149.4)
(1.2)
(24.1)
(31.4)
(125.3)
30.1
2020
(19.9)
(51.7)
Net cash from operating activities
(1,180.6)
(194.4)
(986.2)
667.9
Cash flows from investing activities
Payments for purchases of property, plant
and equipment
Payments for network construction related
to concession agreements
Payments for purchase of other intangible
assets
Proceeds from sale of property, plant and
equipment
Proceeds from deposits with maturity of 3
months or longer
Interest received
Restricted cash
Net cash effect from gain of control over the
acquired subsidiary
Payment for acquisition of associated
Payment for acquisition of subsidiaries
(8.3)
(10.5)
2.2
(6.7)
(537.8)
(483.9)
(54.0)
(638.0)
(7.8)
(6.3)
(1.5)
(0.9)
-
1.1
1.5
-
1.8
320.0
(320.0)
-
(25.8)
-
-
25.8
(4.5)
(2.2)
5.0
66.4
9.0
-
5.6
-
(8.0)
0.6
-
2.8
-
-
(0.0)
(4.5)
Net cash used in investing activities
(554.9)
(203.2)
(351.7)
(568.9)
Cash flows from financing activities
Proceeds from long term bank borrowings
Proceeds from overdrafts
Repayment of long term bank loans
Payment of lease liabilities
Dividends paid
217.6
1,900.4
(92.9)
(24.2)
(152.3)
234.7
-
(385.9)
(15.2)
(247.6)
(17.1)
1,900.4
292.9
(8.9)
95.3
354.3
-
(29.1)
(29.3)
(245.8)
Net cash from/(used in) financing activities
1,848.6
(414.0)
2,262.6
50.1
Net (decrease)/increase in cash and cash
equivalents
113.1
(811.5)
Cash and cash equivalents at 1 January
(405.6)
406.0
Overdrafts used for cash management
purposes
627.4
-
Cash and cash equivalents at 31 December
334.9
(405.6)
924.6
(811.5)
627.4
740.5
149.1
256.9
-
406.0
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
The materiality threshold established internally at the Group level for analysis of main indicators (presented
below) is worth RON 68.1 mn., representing 5% of EBITDA.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
144
In 2022, the net increase in cash and cash equivalents amounted to RON 113.1 mn.
The net cash generated by the operating activity was loss of RON (1,180.6) mn. The net profit
of the period was RON 558.8 mn.; the main net profit’s adjustments for non-monetary elements
were: eliminating the NL additional costs amounting to RON 951.6 mn., adding the depreciation and
amortization of RON 496.2 mn., eliminating the impact of the impairment of trade receivables of
RON 112.3 mn., adding the income tax of RON 105.1 mn. and the net finance cost of RON 165.0 mn.
Changes in working capital had a negative effect, of RON 1,030.0 mn., the most significant
impact being generated by the negative change in trade and other receivables, in the amount of
RON 1,425.1 mn., in trade and other payables of RON 1,210.6 mn. (out of which, the change in employ-
ee benefits of RON 6.5 mn., having a negative impact) and in subsidies receivables in amount of RON
1,280.8 mn.. Income tax paid and interest paid amounted to RON 150.6 mn.
For the investment activity, the cash used was of RON 554.9 mn., the most significant values
being related to the payments for the construction and rehabilitation of RON 537.8 mn., these being
increased y-o-y with RON 54.0 mn..
The financing activity generated a decrease in cash and cash equivalents of RON 2,262.6
mn., the main factors being the proceeds from long term bank borrowings of RON 217.6 mn., pro-
ceeds from overdrafts of RON 1,900.4 mn., reimbursement of loans of RON 92.9 mn. and the divi-
dends paid to the shareholders, of RON 152.3 mn.
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 loss of RON (194.4) 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 impair-
ment of trade receivables of RON 70.6 mn, adding the income tax of RON 79.5 mn and the net fi-
nance cost of RON 26.9 mn.
Changes in working capital had a negative effect, of RON 138.9 mn, the most significant im-
pact 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 agree-
ments 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 414.0 mn,
the main factors being the proceeds from long term bank borrowings of RON 234.7 mn, reimburse-
ment of loans of RON 385.9 mn and the dividends paid to the shareholders, of RON 247.6 mn.
6.4. Consolidated statement of the financial
position - S-OMFP 2844/2016
The following table presents the consolidated statement of the financial position.
Tabel 33. Consolidated statement of the financial position 2022-2020 (RON. mn)
31 December
2022
31 December 2021
Variation 2022/2021
abs
31
December
2020
ASSETS
Non-current assets
Intangible assets related to concession
agreements
Intangible assets related to NL
capitalization
Goodwill
Other intangible assets
Property, plant and equipment
5,675.9
5,514.6
951.6
12.0
12.9
499.4
-
-
9.0
505.4
161.3
951.6
12.0
3.9
(6.0)
5,455.2
-
-
7.2
508.1
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
145
2022 Directors’ Report
2022 Directors’ Report
Investments in associates
Other investments
Deferred tax assets
Other non-current assets
Right of use assets
Total non-current assets
Current assets
Trade receivables
Other receivables
Cash and cash equivalents
Restricted cash
Subsidies receivables
Inventories
Prepayments
Current income tax receivable
Assets held for sale
Total current assets
31 December
2022
31 December 2021
Variation 2022/2021
abs
18.8
7.0
30.2
2.4
52.2
7,262.3
2,466.0
127.3
334.9
-
1,280.8
114.0
13.9
24.0
0.2
4,361.1
25.8
-
83.5
1.7
20.9
6,160.9
1,344.6
48.6
221.8
-
-
73.0
5.0
23.8
5.4
1,722.2
(7.0)
7.0
(53.4)
0.7
31.2
1,101.4
1,121.4
78.7
113.1
-
1,280.8
41.0
8.8
0.2
(5.1)
2,638.8
31
December
2020
-
-
19.7
1.2
27.1
6,018.5
1,029.8
32.5
570.9
320.0
-
70.1
2.8
1.8
15.5
2,043.4
Total assets
11,623.3
7,883.1
3,740.2
8,061.8
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserves
Revaluation reserve
Legal reserves
Retained earnings
Total equity attributable to
shareholders of the Company
Non-controlling interests
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
3,464.4
103.0
(75.4)
92.1
429.6
1,353.9
5,367.8
(0.5)
5,367.2
34.5
212.6
117.3
72.4
647.2
1,083.9
19.2
2,571.0
1,407.1
867.5
24.8
114.2
53.7
1.1
3,464.4
103.0
(75.4)
102.8
408.4
950.2
4,953.6
-
4,953.6
12.1
161.9
149.2
32.7
118.8
474.7
9.4
627.4
891.3
271.3
9.7
101.1
34.9
-
-
-
-
(10.7)
21.2
403.7
414.2
(0.5)
413.7
22.4
50.6
(32.0)
39.7
528.4
609.2
9.8
1,943.6
515.8
596.3
15.1
13.1
18.8
1.1
3,464.4
103.0
(75.4)
116.4
392.3
1,759.6
5,760.3
-
5,760.3
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
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
146
31 December
2022
31 December 2021
Variation 2022/2021
abs
Current portion of long-term bank
borrowings
Total current liabilities
113.5
5,172.2
509.7
2,454.9
(396.2)
2,717.3
31
December
2020
378.6
1,528.8
Total liabilities
6,256.1
2,929.6
3,326.5
2,301.5
Total equity and liabilities
11,623.3
7,883.1
3,740.2
8,061.8
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
The materiality threshold established internally at the Group level for analysis of main indicators (presented
below) is worth RON 68.1 mn., representing 5% of EBITDA.
Non-current assets
The non-current assets increased with RON 1,101.4 mn. in 2022, or 17.9%, from RON 6,160.9
mn. as of 31 December 2021, to RON 7,262.3 mn. at 31 December 2022, this variation being the cumu-
lated effect of:
– Increase with RON 161.3 mn. of network investments made by distribution subsidiaries
(most relevant values of investments and put into function are presented in Appendix 2);
– Positive impact in amount of RON 951.6 mn. from de capitalization of additional costs with
own technological consumption;
Current assets
In 2022, current assets increased by RON 2,638.8 mn. compared to 2021, or 153.2%, from
RON 1,722.2 mn. to RON 4,361.1 mn., this evolution being mainly from:
– Value of cash and cash equivalents increased with RON 113.1 mn. mainly as a result of the
increase in call deposits from RON 53.9 mn. in 2021 to RON 193.2 mn. in 2022;
– trade receivables have increased with RON 1,121.4 mn. in 2022, mainly due to the supply
segment corellated with the increase in sales;
– subsidies receivables registered in 2022 in amount of RON 1,280.8 mn.;
– other receivables increased with RON 78.7 mn., from RON 48.6 mn. in 2021 to RON 127.3
mn. in 2022.
Trade receivables
Trade receivables increased by RON 1,121.4 mn. or 83.4% during 2022, to RON 2,466.0 mn.,
from RON 1,344.6 mn. as at 31 December 2021. This variation is generated by increase of sales espe-
cially in the supply segment.
.
Cash and cash equivalents
Cash and cash equivalents include cash balances, call deposits and bank accounts.
Their value increased by RON 113.1 mn. in 2022, or 51.0%, reaching RON 334.9 mn., from RON
221.8 mn. in 2021.
Cash and cash equivalents comprise cash balances, call deposits and deposits with matur-
ities 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.
Tabel 34. Cash and cash equivalents 2022-2020
(RON mn.)
Bank current accounts
Call deposits
Cash in hand
Total cash and cash equivalents in the
consolidated statement of financial
position
31 December 2022
141.7
193.2
0.0
31 December 2021
167.8
53.9
0.1
31 December 2020
179.4
391.5
0.1
334.9
221.8
570.9
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
147
2022 Directors’ Report
2022 Directors’ Report
(RON mn.)
Overdrafts used for cash management
purposes
Total cash and cash equivalents in the
consolidated statement of cash flows
31 December 2022
-
334.9
31 December 2021
31 December 2020
(627.4)
(405.6)
(165.0)
406.0
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Set-up of legal reserves
Balance at 31 December 2021
Set-up of legal reserves
Balance at 31 December 2022
Legal reserves
16.1
408.4
21.2
429.6
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Share capital and share premium
Non-current liabilities
The issued share capital in nominal terms consists of 346,443,597 ordinary shares at 31
December 2022 and 2021 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 rec-
ognized as “Pre-paid capital contributions in kind from shareholders”.
There were no changes in the number of shares in 2022.
Tabel 35. Number of shares 2022 - 2020
2022
Number of ordinary shares
2021
2020
346,443,597
346,443,597
345,939,929
-
346,443,597
-
-
346,443,597
346,443,597
Number of shares at 1
January
Shares issued during the
year
Number of shares at 31
December
Source: Electrica
Revaluation reserves
The non-current liabilities have considerably increased from RON 474.7 mn. as per 31
December 2021 to the value of RON 1,083.9 mn. as per 31 December 2022.
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 2022 mainly to finance the group investments.
Current liabilities
In 2022, the current liabilities increased by RON 2,717.3 mn., to RON 5,172.2 mn., from RON
2,454.9 mn. at the end of 2021, mainly because 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 396.2 mn., following
the fulfillment of financial covenants in 2022 (in 2021 not all of them were achieved), therefore the
long-term portion was reclassed for the long-term loans from this category.
Overdrafts
The overdrafts considerably increased in 2022 by RON 1,943.6 mn., reaching RON 2,571.0
mn., from RON 627.4 mn. at the end of 2021, as the Group has prefinanced the support scheme ac-
cording to OUG 27/OUG 119 and had to cover its current activities financing needs.
The reconciliation between the opening balance and the closing balance of the revaluation
Trade payables
reserve is presented below:
Tabel 36. Revaluation reserves 2022-2020 (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
2022
102.8
-
(10.7)
-
92.1
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
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 de-
ductible for income tax purposes and are not distributable.
Tabel 37. Legal reserves 2022-2020 (RON mn.)
Balance at 1 January 2020
Set-up of legal reserves
Balance at 31 December 2020
Legal reserves
371.8
20.4
392.3
As of 31 December 2022, the trade payables increased by approx. RON 515.8 mn., to RON
1,407.1 mn., from RON 891.3 mn. at 31 December 2021, mainly due to increase of suppliers’ balances
following the changes on the electricity market. Electricity suppliers are mainly state-owned electric-
ity producers.
Other payables
As of 31 December 2022, other payables increased by RON 596.3 mn., to RON 867.5 mn.,
from RON 271.3 mn. at 31 December 2021, of which the VAT to be paid increased in 2022 up to RON
565 mn. from RON 134 mn. in 2021. Also, in other liabilities are included guarantees from customers
related to electricity supply.
6.5. Consolidated statement of profit or loss - S-OMFP
2844/2016
The following table presents the consolidated statement of profit or loss of Electrica Group
for 2022, 2021 and 2020.
Tabel 38. Consolidated statement of profit or loss (RON mn.)
2022
2021
Variation
2022/2021
2020
Revenue
Other income
Capitalised costs of intangible non-current assets
Electricity and natural gas purchased
10,009.9
2,841.0
989.3
(10,506.8)
7,178.9
195.8
-
(5,694.7)
2,831.0
2,645.2
989.3
(4,812.1)
6,501.1
165.4
-
(3,905.7)
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
148
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
149
2022 Directors’ Report
2022 Directors’ Report
2022
2021
Variation
2022/2021
2020
The revenues increased by RON 2,831.0 mn., or 39.4%, being the net effect of the following
main factors:
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
(593.5)
(823.4)
(88.2)
(534.0)
(485.8)
(802.7)
(102.4)
(480.8)
(107.7)
(20.7)
14.2
(53.2)
(676.0)
(774.5)
(104.6)
(490.9)
(112.3)
(70.6)
(41.7)
62.2
(353.0)
828.9
(343.2)
(605.5)
(9.8)
1,434.4
(325.1)
451.9
Gain from bargain purchase of subsidiaries*
-
-
-
7.5
Finance income
Finance costs
Net finance cost
Profit before tax
Income tax expense
Profit for the year
9.7
(174.7)
(165.0)
663.9
(105.1)
558.8
2.6
(29.5)
(26.9)
(632.4)
79.5
(552.9)
7.1
(145.2)
(138.1)
1,296.3
(184.6)
1,111.7
9.7
(26.7)
(17.1)
442.3
(54.8)
387.5
Earnings per share
Basic and diluted earnings per share (RON)
1.65
(1.63)
-
1.14
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
*the value is included in EBIT, is separated only for disclosure purposes
The materiality threshold established internally at the Group level for analysis of main indicators (presented
below) is worth RON 68.1 mn., representing 5% of EBITDA.
Key financial indicators for 2022 and their y-o-y evolution:
– Revenues: RON 10,009.9 mn., an increase of RON 2,831.0 mn., or 39.4%;
– EBITDA: profit RON 1,362.9 mn., an increase of RON 1,490.9 mn.;
– EBIT: profit RON 828.9 mn., increase by RON 1,434.4 mn.;
– EBT: profit RON 663.9 mn., an increase of RON 1,296.3 mn.;
– Net result: profit of RON 558.8 mn., increase with RON 1,111.7 mn.
Revenues and other income
In 2022, Electrica recorded total revenues (including other income) of RON 12,850.9 mn.,
increasing by RON 5,476.2 mn. or 74.3%, from RON 7,374.6 mn. in 2021; the variation is generated
mainly by the revenues’ evolution, and the other operating income.
.
– increase of RON 2,411.7 mn. on the supply segment;
– RON 427.7 mn. increase of the distribution segment’s revenues;
– decrease with RON 16.5 mn. of revenues from energy services;
– increase of RON 8,2 mn. on production of energy segment.
Income from the production of intangible assets
On the distribution segment of the capitalization of additional costs with the purchase of
electricity in the amount of RON 989.3 mn. (between the purchase price of electricity for own tech-
nological consumption versus the ex-ante purchase price recognized by ANRE in the related regulat-
ed tariffs 2022), realized in 2022, in order to cover own technological consumption (NL).
The capitalization of the additional cost with the purchase of electricity made in 2022 in
order to cover NL compared to the costs included in the approved tariffs for 2022 is provided by
GEO 119/2022, for the modification and completion of GEO no. 27/2022, and ANRE Order no.
129/2022 approving the Methodological Norms regarding the recognition in tariffs of additional
costs with the purchase of electricity to cover own technological consumption compared to the
costs included in the regulated tariffs published in MO 1019/19 October 2022.
The capitalized costs are amortized over a period of 5 years from the date of capitalization
and are remunerated with 50% of the regulated rate of return (RRR) approved by ANRE, applicable
during the amortization period of those costs. These are recognized as a distinct component in the
regulated tariffs, called the component related to additional costs with NL.
During 2022, the additional expenses for actual energy costs as compared with the ex-ante
ANRE prices recognised in distribution tariffs are capitalised as intangible assets. These costs will be
recuperated in tariffs in 5 years.
The capitalised costs with own technological consumption are recognized for each network
distribution area, the first asset being recorded on 30 September 2022 and the second one on 31
December 2022, is summarized below.
Tabel 39. NL - intangible assets 2022 (RON mn.)
Network
distribution areas
Muntenia Nord area
Transilvania Nord
area
Transilvania Sud
area
Total
Source: Electrica
Intangible asset 01
Jan-30 Sep 2022
(gross value)
302.4
Intangible asset 01
Oct-31 Dec 2022
(gross value)
87.3
258.5
193.9
754.8
84.3
62.8
234.5
Amortisation during
2022
15.1
12.9
9.7
37.7
Net carrying
amount at 31
December 2022
374.6
329.9
247.0
951.6
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
150
Revenues
Figure 43: Revenue for 2022/Q4 2022 and comparative information (RON mn.)
6,501
557
7,179
582
5,944
6,597
2,161
151
2,010
10,010
609
9,401
2,765
160
2,605
2020
2021
Q4 2021
2022
Q4 2022
Revenues excl Green Certificates
Green Certificates Revenues
Source: Electrica
Also, from the point of view of the financial treatment applicable to the difference from NL,
it was published in MOf no. 1023 of 20 October 2022 OMFP no. 3900/19 October 2022, which brings
accounting clarifications to the accounting regulations in force, supplementing OMFP 1802/2014 as
well as OMFP 2844/2016, thus the difference from NL will be reflected by the capitalization of some
(intangible) assets in the form of intangible assets, in correspondence with other incomes (incomes
from the production of intangible assets).
Electricity and natural gas purchased
In 2022, the expense for electricity purchased increased by RON 4,812.1 mn., or 84.5%, to
RON 10,506.8 mn., from RON 5,694.7 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).
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
151
The table below presents the structure of the electricity purchased expenses for the indicat-
Figure 45: EBIT and EBIT margin for 2022/Q4 2022 and comparative information (RON mn. and %)
2022 Directors’ Report
2022 Directors’ Report
ed periods:
Tabel 40. Electricity and natural gas purchased 2022-2020 (RON mn.)
(RON mn)
2022
2021
Variation
2021/2022
2020
Electricity purchased to cover network losses
1,987.2
1,087.1
900.1
694.0
Electricity and natural gas purchased for supply
7,613.1
3,750.0
3,863.1
2,377.2
Transmission and system services related to
supply activities
Green certificates
297.4
609.1
275.9
581.7
21.5
27.4
277.3
557.2
7.1%
459
-8.4%
8.3%
829
3.5%
97
(606)
(721)
-33.4%
2020
2021
Q4 2021
2022
Q4 2022
Total electricity and natural gas purchased
10,506.8
5,694.7
4,812.1
3,905.7
EBIT
EBIT Margin
Source: Electrica
Construction costs
Source: Electrica
Net finance cost
In 2022, the network construction costs related to concession arrangements increased by
RON 107.7 mn., or 22.2%, to RON 593.5 mn., from RON 485.8 mn. recorded in 2021, being correlated
with the evolution of the investments recognizable in RAB realized in 2022, which were at a bigger
level compared to 2021.
The net finance cost (loss) at group level increased by RON 138.1 mn. in 2022 compared to
2021, as a result of the increase in external financing, but also from the reduction in finance income,
following the deposits’ decrease.
EBITDA and EBITDA margin
Profit before tax
Figure 44: EBITDA and EBITDA margin for 2022/Q4 2022 and comparative information (RON mn. and %)
The Group has registered a gross profit of RON 663.9 mn. in 2022, compared with the gross
14.7%
953
-1.8%
(128)
13.6%
1,363
9.4%
259
(602)
(602)
-27.8%
2020
2021
Q4 2021
2022
Q4 2022
EBITDA
EBITDA Margin
.
Source: Electrica
Operating profit
The Group EBIT increased by approx. RON 1,434.4 mn. y-o-y, adding to the EBIT evolution
mainly the favorable impact of the capitalization of NL in amount of RON 989.3 mn..
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
152
loss of RON 632.4 mn. in 2021, following the factors mentioned above.
Income tax expense
The tax on income was an expense of RON 105.1 mn. in 2022, generated by the incurred gross
profit.
Net result for the year
As a result of the above-described factors, in 2022, the net result is a profit of RON 558.8
mn., representing an increase of RON 1,111.7 mn. compared to RON 552.9 mn. (loss) in 2021.
Figure 46: Net profit and Net profit margin for 2022/Q4 2022 and comparative information (RON mn. and %)
6.0%
388
-7.7%
5.6%
559
0.9%
25
(553)
(625)
-28.9%
2020
2021
Q4 2021
2022
Q4 2022
Net Result
Net Result Margin
Source: Electrica
.
.
I
A
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153
2022 Directors’ Report
2022 Directors’ Report
)
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154
6.6. Consolidated cash flow statement - S-OMFP
2844/2016
The following table presents the consolidated statement of cash flows of Electrica Group for
2022, 2021 and 2020.
Tabel 41. Consolidated cash flow statement (RON mn.)
2022
2021
Variation
2022/2021
2020
558.8
(552.9)
1,111.7
387.5
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
Capitalised costs of intangible non-current
assets
Impairment of property, plant and
equipment and intangible assets, net
Loss on disposal of property, plant and
equipment and intangible assets
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
Changes in:
Trade receivables
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Employee benefits
Deferred revenue
Subsidies receivables
19.9
514.2
(989.3)
(0.0)
(0.4)
-
112.3
-
18.8
165.0
(4.4)
-
105.1
500.1
(1,286.7)
(138.3)
(8.8)
(41.0)
494.6
722.4
(6.5)
15.1
(1,280.8)
21.1
459.7
-
(3.9)
2.7
-
70.6
0.6
15.7
26.9
5.1
-
(79.5)
(34.0)
(391.4)
(22.9)
(2.2)
(2.9)
274.8
32.5
3.2
4.0
-
Cash generated from operating activities
(1,030.0)
(138.9)
Interest paid
Income tax paid
(149.4)
(1.2)
(24.1)
(31.4)
(1.2)
54.5
(989.3)
3.9
(3.0)
-
41.7
(0.6)
3.1
138.1
(9.4)
-
184.6
534.1
(895.3)
(115.4)
(6.6)
(38.1)
219.8
689.9
(9.6)
11.1
(1,280.8)
(891.1)
(125.3)
30.1
27.9
463.1
-
0.6
(0.3)
2.4
(62.2)
(0.2)
(0.3)
17.1
-
(7.5)
54.8
882.9
(87.2)
3.8
0.6
4.3
(76.0)
(2.3)
14.7
(1.3)
-
739.5
(19.9)
(51.7)
Net cash from operating activities
(1,180.6)
(194.4)
(986.2)
667.9
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
155
2022 Directors’ Report
2022 Directors’ Report
Cash flows from investing activities
Payments for purchases of property, plant
and equipment
Payments for network construction related
to concession agreements
Payments for purchase of other intangible
assets
Proceeds from sale of property, plant and
equipment
Proceeds from deposits with maturity of 3
months or longer
Interest received
Restricted cash
Net cash effect from gain of control over
the acquired subsidiary
Payment for acquisition of associated
Payment for acquisition of subsidiaries
2022
2021
Variation
2022/2021
2020
(8.3)
(10.5)
2.2
(6.7)
(537.8)
(483.9)
(54.0)
(638.0)
(7.8)
(6.3)
(1.5)
(0.9)
-
1.1
1.5
-
1.8
320.0
(320.0)
-
(25.8)
-
-
25.8
(4.5)
(2.2)
5.0
66.4
9.0
-
5.6
-
(8.0)
0.6
-
2.8
-
-
(0.0)
(4.5)
Net cash used in investing activities
(554.9)
(203.2)
(351.7)
(568.9)
Cash flows from financing activities
Proceeds from long term bank borrowings
217.6
Proceeds from overdrafts
Repayment of long term bank loans
Payment of lease liabilities
Dividends paid
1,900.4
(92.9)
(24.2)
(152.3)
234.7
-
(385.9)
(15.2)
(247.6)
(17.1)
1,900.4
292.9
(8.9)
95.3
354.3
-
(29.1)
(29.3)
(245.8)
Net cash from/(used in) financing
activities
1,848.6
(414.0)
2,262.6
50.1
RON 1,425.1 mn., in trade and other payables of RON 1,210.6 mn. (out of which, the change in employ-
ee benefits of RON 6.5 mn., having a negative impact) and in subsidies receivables in amount of RON
1,280.8 mn.. Income tax paid and interest paid amounted to RON 150.6 mn.
For the investment activity, the cash used was of RON 554.9 mn., the most significant values
being related to the payments for the construction and rehabilitation of RON 537.8 mn., these being
increased y-o-y with RON 54.0 mn..
The financing activity generated a decrease in cash and cash equivalents of RON 2,262.6
mn., the main factors being the proceeds from long term bank borrowings of RON 217.6 mn., pro-
ceeds from overdrafts of RON 1,900.4 mn., reimbursement of loans of RON 92.9 mn. and the divi-
dends paid to the shareholders, of RON 152.3 mn.
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 loss of RON (194.4) 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 impair-
ment of trade receivables of RON 70.6 mn, adding the income tax of RON 79.5 mn and the net fi-
nance cost of RON 26.9 mn.
Changes in working capital had a negative effect, of RON 138.9 mn, the most significant im-
pact 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 agree-
ments 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 414.0 mn,
the main factors being the proceeds from long term bank borrowings of RON 234.7 mn, reimburse-
ment of loans of RON 385.9 mn and the dividends paid to the shareholders, of RON 247.6 mn.
6.7. Separate statement of the financial position
2844/2016
Financial information selected from company’s separate statement of financial position.
Tabel 42. Separate statement of the financial position (RON mn.)
.
31
December
2022
31
December
2021
Variation
2022/2021
31 December
2020
.
I
A
S
A
C
R
T
C
E
L
E
Net (decrease)/increase in cash and cash
equivalents
113.1
.
Cash and cash equivalents at 1 January
(405.6)
(811.5)
406.0
Overdrafts used for cash management
purposes
627.4
-
924.6
(811.5)
627.4
149.1
256.9
-
Cash and cash equivalents at 31
December
334.9
(405.6)
740.5
406.0
ASSETS
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
.
I
A
S
A
C
R
T
C
E
L
E
The materiality threshold established internally at the Group level for analysis of main indicators
(presented below) is worth RON 68.1 mn., representing 5% of EBITDA.
In 2022, the net increase in cash and cash equivalents amounted to RON 113.1 mn.
The net cash generated by the operating activity was loss of RON (1,180.6) mn. The net profit
of the period was RON 558.8 mn.; the main net profit’s adjustments for non-monetary elements
were: eliminating the NL additional costs amounting to RON 989.3 mn., adding the depreciation and
amortization of RON 534.1 mn., eliminating the impact of the impairment of trade receivables of RON
112.3 mn., adding the income tax of RON 105.1 mn. and the net finance cost of RON 165.0 mn.
Changes in working capital had a negative effect, of RON 1,030.0 mn., the most significant
impact being generated by the negative change in trade and other receivables, in the amount of
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investments in associates
Other investments
Loans granted to subsidiaries – long term
Right of use assets
Total non-current assets
98.9
0.1
100.1
0.1
2,298.1
2,285.2
18.8
7.0
25.8
-
1,276.3
1,276.3
0.3
0.5
3,699.6
3,688.0
(1.1)
0.0
12.9
(7.0)
7.0
-
(0.2)
11.6
96.9
0.3
2,284.9
-
-
1,030.0
1.4
3,413.5
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
156
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
157
2022 Directors’ Report
2022 Directors’ Report
31
December
2022
31
December
2021
Variation
2022/2021
31 December
2020
31
December
2022
31
December
2021
Variation
2022/2021
31 December
2020
Current assets
Cash and cash equivalents
Deposits with 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
105.6
5.8
99.9
-
-
0.8
501.5
-
1.0
0.3
45.0
654.3
-
-
0.9
584.8
-
0.8
0.3
30.0
622.5
-
-
(0.1)
(83.3)
-
0.3
-
15.0
31.8
193.5
-
320.0
0.4
180.8
-
0.4
-
-
695.1
TOTAL ASSETS
4,353.8
4,310.5
43.4
4,108.6
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserve
Revaluation reserves
Legal reserves
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Bank borrowings – long term
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
3,464.4
3,464.4
103.1
(75.4)
11.8
229.4
224.1
38.9
103.1
(75.4)
12.4
228.2
71.2
319.6
3,996.4
4,123.5
100
0.0
1.1
101.2
207.8
0.2
4.7
36.5
0.2
5.8
1.0
-
0.1
1.1
1.2
120.5
0.4
4.0
44.0
0.4
12.2
4.2
-
-
-
(0.6)
1.3
152.9
(280.7)
(127.1)
100
(0.1)
-
100.0
87.3
(0.2)
0.7
(7.5)
(0.2)
(6.3)
(3.2)
3,464.4
103.1
(75.4)
12.6
212.0
35.6
297.0
4,049.3
-
0.5
1.5
2.0
-
1.0
7.2
36.0
0.2
7.2
5.8
Total current liabilities
256.3
185.8
70.5
Total liabilities
357.5
186.9
170.5
57.3
59.3
Total equity and liabilities
4,353.8
4,310.5
43.4
4,108.6
Source: Separate financial statements of ELSA as of 31 December 2022
The materiality threshold established internally at individual level is worth RON 8.0 mn.,
representing a quarter of the gross profit.
Non-current assets
On 31 December 2022, as compared to 31 December 2021, fixed assets increased with RON
11.6 mn., from RON 3,688.0 mn. to RON 3,699.6 mn.
At the end of 2022, 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. The increase registered in 2022 in the
amount of RON 12.9 mn. is due to the investments in subsidiaries.
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 elec-
tricity from renewable resources. The sale – purchases agreements mention that at 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. By the end of 31
December 2022, two of the project companies were acquired by 60% of shares, therefore they are
accounted as subsidiaries, the other ones are as follows below.
The cost of investment, at the acquisition date, total value of RON 18.8 mn. are detailed
below:
Acquisition date
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
Crucea Power Park
S.R.L.
Foton Power Energy
S.R.L.
31 July 2021
30%
(0.2)
(0.07)
12.6
12.5
31 December 2021
30%
(0.007)
(0.002)
6.3
6.3
Cash-pooling receivables comprise the receivable of Electrica SA as at 31 December 2022 as
cash pool leader in the cash-pooling system set up at Group level. The decrease in 2022 is due to li-
quidity requirements of subsidiaries included in the cash pooling scheme by the Company.
Cash, restricted cash and short-term investments
As of 31 December 2022, the cash and cash equivalents increased by RON 99.9 mn., to RON
105.6 mn. from RON 5.7 mn. on 31 December 2021.
Tabel 43. Cash, restricted cash and short-term investments 2022-2020 (RON mn.)
(RON mn)
31 December 2022
31 December 2021
31 December 2020
Bank current accounts
Call deposits
3.6
102.0
3.0
2.7
18.4
175.1
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
159
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
158
2022 Directors’ Report
2022 Directors’ Report
(RON mn)
31 December 2022
31 December 2021
31 December 2020
Total cash and cash equivalents in the
separate statement of financial position
and in the separate statement of cash
flow
105.6
5.7
193.5
Source: Separate financial statements of ELSA as of 31 December 2022
Value of cash and cash equivalents increased with RON 99.9 mn. due to the increase of short
term deposits and cask at banks.
Tabel 44. Loans granted to subsidiaries 2022-2020 (RON mn.)
(RON mn)
31 December 2022 31 December 2021
DEER (long term loan granted) *
EFSA
EPE
NTE
GECI
SWE
Total loans granted to subsidiaries
1,276.3
-
41.6
2.4
0.4
0.6
1,321.4
1,276.3
30.0
-
-
-
-
1,306.3
31 December
2020
1,030.0
-
-
-
-
-
1,030.0
Source: Separate financial statements of ELSA as of 31 December 2022
(*)Starting with 31 December 2020 the three distribution companies merged into one single distribution company named
Distributie Energie Electrica Romania S.A. („DEER”)
Share Capital
The issued share capital in nominal terms consists of 346,443,597 ordinary shares as at 31
December 2022 (346,443,597 ordinary shares as of 31 December 2021) 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 as-
sets, 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 2022, 2021 and 2020 (from previous
years’ profits) were as follows:
Tabel 45. Dividends 2022-2020 (RON mn.)
(RON mn)
Dividends distributed
2022
152.8
2021
247.8
2020
246.1
Source: Separate financial statements of ELSA as of 31 December 2022
On 20 April 2022, the General Meeting of Shareholders of ELSA approved the distribution of
dividends in the amount of RON 152.8 mn, legal reserves in amount of RON 16.1 mn. and other re-
serves in amount of RON 152.9 mn. The value of dividends per share distributed to the shareholders
of the Company were: RON 0.4500 per share (2021: RON 0.7248 per share).
Out of the dividends distributed by the Company of RON 152.8 mn (2021: RON 247.8 mn.) the
dividends paid were RON 152.4 mn. (2021: RON 247.6 mn.), the difference representing dividends
uncollected by the shareholders.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
160
Provisions
Tabel 46. Provisions (RON mn.)
(RON mn.)
Litigations and other risks
Balance at 1 January 2022
Provisions made
Provisions utilised
Provisions reversed
Balance at 31 December 2022
4.2
0.3
(1.9)
(1.6)
1.0
Source: Separate financial statements of ELSA as of 31 December 2022
The provisions in amount of RON 1.0 mn. as at 31 December 2022 (31 December 2021: RON
4.2 mn.) refer mainly to the benefits granted upon the termination of executive managers’
contracts.
6.8. Separate statement of profit or loss 2844/2016
Financial information selected from the company’s separate statement of profit or loss.
Tabel 47. Separate statement of profit or loss (RON mn.)
2022
2021
Variation
2022/2021
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
-
5.2
(30.2)
(1.6)
0.1
0.0
-
3.2
(18.5)
(41.8)
78.3
(12.4)
(0.0)
65.9
24.0
0.3
24.3
2020
3.3
14.5
(31.8)
(13.1)
98.6
-
4.4
9.1
0.7
0.0
(3.8)
(10.0)
-
1.6
1.9
13.8
(299.4)
(12.2)
-
-
(2.5)
(23.9)
35.1
260.3
(0.1)
-
-
0.8
(39.2)
(2.3)
0.1
3.8
-
1.6
(20.4)
(55.6)
377.7
(0.3)
(0)
377.4
(311.6)
260.2
321.8
0.0
321.8
(297.7)
295.3
0.2
3.1
(297.5)
298.4
.
.
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L
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Earnings per share
0.07
0.95
(0.88)
0.88
Source: Separate financial statements of ELSA as of 31 December 2022
The materiality threshold established internally at individual level is worth RON 8.0 mn.,
representing a quarter of the gross profit.
2
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2
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N
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2022 Directors’ Report
Employee benefits
In 2022, employee benefits decreased by RON 9.1 mn. to RON 30.2 mn. from RON 39.2 mn.
in 2021. The variation is the result of the reorganization that took place in March and April, resulting
in a decreasing number of employees.
Profit/(loss) before financing result
As a result of the above-mentioned factors, ELSA recorded in 2022 a loss before financing
result in amount of RON 41.8 mn., while in 2021 it recorded a loss amounting RON 55.6 mn.
Net finance income
Net finance income has decreased in 2022 from RON 377.4 mn. to RON 65.9 mn. The de-
crease is from the dividends received in 2021 in amount of RON 329.5 mn. with no corresponding in
2022. The finance income is in amount of RON 78.3 mn. and represents the interest income received
from the subsidiaries.
Net finance income is negatively impacted with finance expense amounting RON 12.4 mn.
representing interest expense related to loans.
Profit before tax
In 2022, profit before tax decreased by RON 297.7 mn. or 92.5% to RON 24.0 mn. from RON
321.8 mn. in 2021.
Income tax benefit/(expense)
In 2022, the company recorded income tax benefit amounting RON 0.3 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 2022 net profit recorded a decrease of RON
297.5 mn. compared to 2021, to RON 24.3 mn. from RON 321.8 mn.
6.9. Separate cash flow statement 2844/2016
Financial information selected from the cash flow statement of the company.
Tabel 48. Separate cash flow statement (RON mn.)
Indicator
2022
2021
Variation
2022/2021
2020
24.3
321.8
(297.5)
298.4
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation
Amortization
1.0
0.6
1.1
1.2
(3.8)
3.1
0.5
0.1
Impairment of property, plant and equipment, net
(0.0)
Loss/(Gain) from the disposal of tangible assets
Reversal of impairmaint of assers held for sale
Reversal of impairment of trade and other
receivables, net
-
-
(0.1)
Net finance income
(65.9)
(377.4)
Changes in employee benefits obligations
Changes in provisions, net
Income tax expense/(benefit)
(5.0)
(3.2)
(0.3)
5.1
(1.6)
(0.0)
(48.5)
(50.2)
(0.1)
(0.6)
3.8
(3.1)
(0.5)
(0.0)
311.6
(10.0)
(1.6)
(0.2)
1.7
11.2
1.9
10.0
0.6
-
(98.6)
(260.2)
(0.4)
2.5
(3.1)
(37.7)
.
.
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A
162
Indicator
2022
2021
Variation
2022/2021
Changes in:
Trade receivables
Other receivables
Trade payables
Other payables
Employee benefits
Cash generated/(used in) from operating
activities
Interest paid
Net cash from/(used in) operating activities
Cash flows from investing activities
Payments for purchases of property, plant and
equipment
Payments for purchases of intangible assets
Proceeds from the sale of property, plant and
equipment
Proceeds from deposits with 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 shares in entities
Payments for acquisition of subsidiaries
Restricted cash
Interest earned
Dividends received
Net cash from investing activities
Cash flows from financing activities
Proceeds from overdrafts
Dividends paid
Loans granted
Payment of lease liabilities
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Reclassification of overdrafts previously presented
as cash and cash equivalents
Cash and cash equivalents at 31 December
0.2
(0.5)
0.4
0.8
0.1
(47.5)
(12.2)
(59.7)
(1.9)
(0.2)
1.2
-
81.3
(151.0)
135.9
(0.0)
(7.0)
(4.4)
-
72.1
-
126.0
87.3
(153.2)
100.0
(0.6)
33.6
99.9
(114.8)
120.5
105.6
(0.4)
3.0
(2.9)
0.3
(0.3)
(50.5)
(0.2)
(50.7)
(4.8)
-
0.0
-
(393.6)
(336.3)
60.0
(25.8)
-
(0.1)
320.0
42.2
329.5
(8.9)
-
(247.6)
-
(1.0)
(248.6)
(308.3)
193.5
-
(114.8)
0.7
(3.5)
3.3
0.5
0.4
3.0
(12.1)
(9.0)
3.0
(0.2)
1.2
-
474.9
185.3
75.9
25.8
(7.0)
(4.3)
(320.0)
29.9
(329.5)
135.0
87.3
94.5
100.0
0.4
282.2
408.1
(308.3)
120.5
220.4
2020
103.2
4.3
1.8
(0.4)
1.9
73.1
(0.0)
73.1
(4.0)
(0.0)
0.2
66.4
(132.2)
-
-
-
-
-
-
41.4
215.0
186.8
-
(245.8)
-
(0.9)
(246.7)
13.2
180.3
-
193.5
Source: Separate financial statements of ELSA as of 31 December 2022
The materiality threshold established internally at individual level is worth RON 8.0 mn., representing a quarter
of the gross profit.
In 2022, the net increase in cash and cash equivalents amounted to RON 99.9 mn.
The net cash generated by the operating activity was RON (47.5) mn. The net profit of the
period was RON 24.3 mn.; the main adjustments for non-monetary elements of net profit were: the
addition of depreciation of tangible and intangible assets in the amount of RON 1.6 mn., the decrease
of the impact generated by the employee benefits amounting to RON 5.0 mn., decrease of the change
in provisions of RON 3.2 mn., the impact of value adjustments for commercial receivables and the im-
pact of the income tax were insignificant. It was deducted from the net financial result of RON 65.9 mn.
.
.
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2022 Directors’ Report
Changes in working capital had a favorable effect of RON 1.0 mn., the impact being generat-
ed by the positive impact of the trade payables and other payables in the amount of RON 1.3 mn. (of
which, positive impact of RON 0.1 mn. from the change in employee benefits) diminished by the
negative impact of trade receivables and other receivables, in the amount of RON 0.3 mn.
In 2022, the interest paid was RON 12.1 mn. higher than in 2021, representing mainly the in-
terest related to the overdraft facility under the cash pooling system. Increase from RON 0.2 mn. at
RON 12.2 mn. in 2022 was due to the higher value of the uses compared to the previous period, but
also to the increase of the ROBOR rate.
For the investment activity was used cash in the amount of RON 126.0 mn., the highest val-
ues being related to the interest collected in the amount of RON 72.1 mn., loans granted to affiliated
entities in the amount of RON 151.0 mn., receipts related to loans granted to subsidiaries in the
amount of RON 136.0 mn. of net receipts from deposits in the amount of RON 66.5 mn. and the im-
pact of the cash pooling activity, resulting in a reduction of RON 132.2 mn.
In 2022, the value of loans granted to subsidiaries was RON 151.0 mn., with RON 185.3 mn.
less than the previous period. At the same time, the proceeds from loans granted to subsidiaries in-
creased by RON 75.9 mn. compared to the previous period, mainly due to the full reimbursement of
the intra-group contract contracted by EFSA during 2021.
The value of the interest collected was RON 72.1 mn., as a result of the new loans granted to
subsidiaries in 2022, the higher value of the uses by subsidiaries in the Cash pooling structure, as well
as the increase of the ROBOR rate.
Compared to 2021, this year no restricted cash was recorded and no dividends were collect-
ed from subsidiaries, which closed the financial year 2021 with a loss.
The financing activity generated an increase in cash and cash equivalents of RON 33.6 mn.,
mainly from loans received in the amount of RON 100.0 mn. representing the credit facility for work-
ing capital and issuing bank letters with Vista Bank contract this year and the amounts collected in
overdrafts of RON 87.3 mn., reduced impact of dividends paid to shareholders in the amount of RON
153.2 mn. (the value of the gross dividend for one share decreased from RON 0.73/share for divi-
dends for 2020 to RON 0.45/share for dividends for 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 net amount of RON 0.7 mn, reducing the varia-
tion 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 0.4 mn, the most significant im-
pact being generated by the restricted cash of RON 320.0 mn, positive change in trade and other
receivables, in the amount of RON 2.5 mn, and in trade and other payables of RON 2.9 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 of RON 9.0 mn, the most significant values
being related to the dividends received in amount of RON 329.5 mn, to the loans granted to affiliates
in amount of RON 336.3 mn, to interest received in amount of RON 42.2 mn, but also to the payments
for purchases of shares in subsidiares in amount of RON 25.8 mn, but also cash received from loans
given to subsidiares 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. and restricted cash in amount
of RON 320 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.
.
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164
6.10. Risk management
For the Electrica Group, year 2022, from a risk management perspective was one of con-
solidation of previous year’s initiatives and new projects, initiated on the basis of internal needs
or at the request of third parties.
Thus, as a new project developed and completed in 2022, we mention obtaining certification
for the implementation of ISO 27001 standard at ELSA level. An important component of this certi-
fication was the alignment of the risk management system with the provisions of the certification
standard. From this perspective, the general framework has been adapted to the requirements for
identifying the resources, threats and vulnerabilities that society can encounter in all activities that
rely on information technology. At the same time obtaining this certification for Electrica, the chang-
es made within the risk management system were stunned at the group level to allow replication of
the certification for each company.
This year, the consultancy project developed by the risk management team for a representa-
tive entity in the energy industry in Romania was successfully completed and delivered within the
stipulated deadline.
Regarding of strengthening the risk management system at the Group level, the risk man-
agement procedure was updated and implemented at the group level. These changes allow conduct-
ing risk analyzes at an aggregate level and easily extracting relevant information to report. These
analyzes aim to understand the nature of the risks identified by linking mitigation and monitoring
measures with the risk profile and risk appetite.
Since 2022, an internal project (ESG Project) has been initiated within the Group to imple-
ment the requirements of the new European regulations in terms of sustainability – ESG (Environmental,
Social and Governance). Risk analysis from the perspective of ESG scenarios as well as the monitor-
ing of the exposures generated by the group through the current activity become extremely import-
ant from the perspective of a way of making business sustainable and sustainable. Compliance with
this new reporting requirements will underpin the reform of risk assessment for any organization in
order to access funding and projects.
The challenges of 2022 were multiple from the perspective of risk management, in the sense
that the materialization of risks such as liquidity, regulation, market (especially the price of electricity
purchased for own technological consumption), operational (it systems, or electricity thefts) they
had multiple causes and unpredictable effects.
From the perspective of the applicable legal provisions in force in conjunction with the ap-
proach imposed by the internal requirements regarding credit and counterparty risk management,
the Business Partner knowledge Policy has been developed and implemented, thus ensuring the
necessary conditions to know the business partners, be they customers or suppliers, in order to mit-
igate possible risks of reputation or credit and counterparty.
The acceptance of business partners is made only by applying the measures of knowledge
of the client according to the legislation in the field and the internal procedure on combating and
preventing money laundering and terrorist financing. Also, specialized platforms for verifying busi-
ness partners are used in the realization of the client knowledge activity.
RISK FACTORS
The Group’s activity, performance, reputation, financial situation and market value of its
shares can be affected by a number of factors of both internal and external nature. These factors can
lead to the materialization of risks that negatively influence the Group’s activity and performance.
Such factors may particularly influence the risks described below that the Group has identified and
for which it seeks to manage them.
Risk factors should be viewed from both inside and outside, the latter being harder to control
but both having implications for the manifestation and materialization of risks.
.
.
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Risk factors can be from the following categories:
Technical risk management
2022 Directors’ Report
2022 Directors’ Report
– Macroeconomic and energy industry-specific risks: Global and regional economic condi-
tions, respectively the economic context at national and regional international level that
may negatively influence the Group’s activity. These factors can be: inflation, recession,
changes in fiscal and monetary policy, tighter lending, higher interest rates, new or rising
tariffs, currency fluctuations, raw material price (electricity, natural gas), etc.
– Risks arising from political events, war and/or other international disputes, international
sanctions, natural disasters, industrial accidents, etc. all of which may cause interruptions
in the Group’s activities. Such events, as outlined above, may damage or disrupt the inter-
national economic context and the global/regional economy and may negatively influence
the activity of both the Group and the other counterparties (contractual partners). At the
same time, the interruption of the activity due to the above mentioned causes can gen-
erate significant expenses and substantial recovery time, which negatively influence the
activity and financial results.
– Regulatory risks, respectively legislative changes with short time to adapt to new re-
quirements but with significant implications especially the market and counterparty/credit
risk area. Regulatory risks may arise as a consequence of international events (e.g. Rus-
sia-Ukraine War) that triggers a series of unpredictable market developments, but also
restrictions and sanctions at international level that are also reflected at regional and local
level.
– Technical risks caused by inadequate network sizing in relation to energy demand, mean-
ing the impossibility of ensuring network maintenance and energy supply to customers,
which can negatively and significantly affect the Group’s business.
– Strategic risks and ensuring the financing of projects within the group can be influenced
both by internal factors, by keeping a high rating that maintains an attractive share price
and implicitly the attention of investors, but also external factors, respectively the difficul-
ty of accessing markets in order to raise capital (availability of capital for financing).
Also as a factor of strategic risk is perceived the volatility of the stock price as a conse-
quence of the company not meeting the expectations regarding profitability, its growth and dividend
granting. Thus, the share price can drop significantly, with an impact on investor confidence and
reputational implications.
MANAGEMENT OF NON-FINANCIAL RISKS
Operational risk management
Operational risk is the largest category of non-financial risks to occur across all entities in the
group. The most important and common sub-categories of operational risk are those in the it area
(including cyber and security), risks related to the execution of processes and/or procedures and/or
work tasks, but also risks caused in the relationship with customers and/or business processes and/
or practices. For these identified risks, measures to mitigate these risks are established at the level of
each entity of the Group and periodic assessments to monitor and control them permanently.
Compliance risk management
The compliance risk, which includes the legal risk, respectively of the legislative changes, is
manifested at the level of each entity in the Electrica Group. In 2022, the legislative risk reached
higher exposures than in previous years due to legislative changes determined by the international
context, with direct implications for the activity of all energy companies.
Strategic risk management
Strategic risk has implications for the entire group due to changes at the organizational and
governance level that took place in 2022 within some entities of the Group, but also regarding the
market context and adaptation to its requirements. The Group’s entities aim to adopt strategies that
ensure adequate market positioning and flexibility that ensure timely recalibration in order to achieve
the proposed objectives.
The technical risk is manifested at the level of certain entities of the Group and refers to en-
suring the appropriate grid size in relation to the energy demand, ensuring its proper functioning and
implicitly ensuring continuity in the electricity supply. At the group level there is a permanent con-
cern regarding the exposure to this technical risk and the implementation of measures to mitigate it,
the direct implications being customer satisfaction and also the reputation at the group level.
Risks and uncertainties present as of 31 December 2022 and issues concerning the main risks
and uncertainties that could affect the Group’s business and its liquidity are presented in the table
below.
Tabel 49. Risks and uncertainties as of 31 December 2022
Risk description
Ukraine Crysis
Mitigation risk actions
• On February 24, 2022, Russia invaded Ukraine,
marking a sharp escalation of the Russian-Ukrainian
war that began in 2014 with Russia’s annexation of
the Crimea peninsula. The invasion generated on the
one hand a refugee crisis with the fastest growth
in Europe since the Second World War, and on the
other hand a global food crisis. At the same time, at
the regional level, a resource crisis was created due
to the imposition of a series of restrictions on the
international level, Russia being an important player
in the natural gas market in Europe.
• The Electrica Group does not own subsidiaries and
affiliated entities on the territory of Ukraine, nor does
it have any other relevant exposures in the countries
directly involved in this conflict. From an operational
point of view, the purchases of energy and natural
gas are mainly made from the domestic market,
availability, provenance and delivery of resources
could be influenced by the dynamics of the conflict
from region.
Market risk
• Market risk represents the risk that the change in
energy and natural gas prices, the reference interest
rate, such as share prices, interest rates or exchange
rates, will affect the Group’s income or the value of
its holdings. In 2022, the inflation rate in Romania
recorded a spectacular increase, registering at Q3
2022 the 15.9% rate and for Q4 2022 it is forecast
16.5%. At the same time, the inflation of energy
goods prices recorded in Q3 2022 the value of 35.7%
following a forecast on a slightly downward trend at
Q4 2022 of 29.9%. The forecast for 2023 is high.
Source:
mobile.aspx
https://www.bnr.ro/Proiectii-BNR-22694-
Credit and counterparty risk
• The management’s opinion is that these risks have
already materialized on the market of natural gas,
electricity and petroleum products. Mitigation of the
impact was possible in the supply activity through
the compensation and capping measures established
at the national level. In the distribution activity, the
directly felt impact was visible through the price at
which the electricity related to own technological
consumption (NL) could be purchased. These
negative influences can be maintained in the next
period due to market volatility and possible future
regulations with a direct impact on the Group’s
activity.
• At the
level of the supply activity there are
implemented policies, procedures and tools for
mitigating market risks to manage and control
exposures on the electricity and natural gas market.
With this scope, internal projects were started to
review the hedging strategy, improving the ability
to forecast the demand. There was taken into
consideration the adequacy to the reality imposed by
the specific markets during this period: the decrease
in consumption combined with the increase in
purchase prices.
• Another significant risk factor in this area comes from
the lack of production capacities to compensate
for extreme scenarios: extremely low temperatures,
drought, lack of working fronts for coal, unavailability
of primary resources for renewable energy (wind,
sun).
• The company envisages in 2023 obtaining the
certification for the implementation of ISO 50001
energy management systems in order to improve the
services offered and efficiently manage resources.
.
.
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167
.
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O
P
E
R
L
A
U
N
N
A
166
2022 Directors’ Report
2022 Directors’ Report
Risk description
Mitigation risk actions
• Credit risk represents the risk of financial losses when
a counterparty/client does not meet its contractual
obligations to pay invoices when they are due.
Liquidity risk
• Liquidity risk represents the risk that the Group will
not be able to meet its financial obligations when
they are due.
Conformity (Legal) risk
• The energy and natural gas markets are regulated by
local and European legislation.
• These regulations may be modified or interpreted
differently by the local authorities and may affect the
operational profit margins of the Group.
• This risk is also supported by the legislative history
of recent years, which contains a series of laws that
significantly changed energy and natural gas prices,
capping elements, etc.
Operational risk
• The management monitors and examines the current
exposure, credit limits and counterparty ratings,
established provisions.
• The current market context implies a significant
pressure on the ability of counterparties in the energy
market to ensure delivery on time or to pay related
compensations.
• The Group’s approach to liquidity management
consists in ensuring a sufficient level of liquidity for
the payment of due obligations, both under normal
conditions and under stress conditions, through the
treasury management system through cash pooling
and accessing a varied range of credit lines of the
type overdraft.
• Also, the pre-financing of the support scheme for the
segmental supply involves a liquidity risk, including
the financing of the NL price that will be recovered
through future tariffs.
• The group carefully monitors, through the treasury
structures, the impact and effects on the companies’
activity and financial results and has adequate
resources to continue its operational activity.
• The group makes efforts to optimize operational
efficiency in accordance with current and future
regulations.
• The impact of these regulations is close to the
maximum range used
in the evaluation with
immediate consequences in profitability at the group
level
• The Group may record direct or indirect losses
resulting from a wide range of factors associated
with processes, service providers, technology and
infrastructure, and from external factors, such as
legal requirements and generally
regulatory or
accepted standards regarding the best practices in
the field.
• Violation or failure of security and information
technology systems may entail the risk of financial
loss, interruption of operations or damage to the
Group’s reputation.
• The group have
implemented an operational
monitoring system, documented by policies and
procedures, which ensures the escalation and
remediation of potential operational problems.
• In order to implement the best practices in the field,
at the Group level, SE Electrica S.A. obtained in 2022
the certification for implementation the certification
procedures on the 27001 standard: Information
Technology, Security Techniques,
Information
Security Management Systems. The extension of the
certification is further analyzed at the level of the
other entities in the group.
Source: Electrica
FINANCIAL RISK MANAGEMENT
The Group is exposed to the following risks resulting from the use of financial instruments:
credit risk, liquidity risk and market risk.
These risks are further explained and detailed.
Credit risk
Credit risk is the risk that the Group will register a financial loss if a customer or counterparty
to a financial instrument fails to meet its contractual obligations, and arises principally from the
Group’s receivables from customers, cash and cash equivalents, restricted cash and bank deposits.
The Group’s exposure to credit risk is mainly influenced by the individual characteristics of
each customer. In the past, the Group had a high credit risk mainly from State-owned companies.
Cash and bank deposits are placed in financial institutions that are considered to have to
have 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 difficul-
ties in their industries due to specific changes in circumstances in their industry sector. The Group
has set up a policy regarding risk management and it has taken into account the insurance of the
trade receivables. Also the electricity supply contracts include termination clauses in certain
circumstances.
The Group establishes an allowance for impairment that represents the amount of expected
credit losses, calculated based on the expected loss rates.
Impairment
The following table provides information on the exposure to credit risk and expected credit
losses for trade receivables as of 31 December 2022, 2021 and 2020.
Table 50. Credit risk and expected credit losses for trade receivables as of 31 December 2022
(RON mn)
31 December 2022
Expected
credit loss rates
(“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
Neither past due
nor impaired
Past due 1-30
days
Past due 31-60
days
Past due 61-90
days
Past due more
than 90 days
Total
3%
4%
16%
35%
95%
1,951.7
(60.3)
1,891.3
491.0
(19.3)
471.6
66.4
(10.5)
55.9
27.3
(9.7)
17.6
582.4
(552.9)
29.5
3,118.7
(652.7)
2,452.4
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
No
No
No
No
Yes
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
169
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
168
Table 51. Credit risk and expected credit losses for trade receivables as of 31 December 2021
Exposure to liquidity risk
(RON mn)
31 December 2021
Expected credit
loss rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
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.
Table 53. Contractual maturities of financial liabilities (RON mn.) – S-IFRS-EU
2022 Directors’ Report
2022 Directors’ Report
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
(16.6)
1,063.5
228.5
36.7
(10.6)
(5.3)
15.4
(5.9)
217.9
31.4
9.5
No
No
No
No
964.7
(942.4)
22.3
Yes
2,325.4
(980.8)
1,344.6
Source: Consolidated financial statements of Electrica Group as of 31 December 2021
Table 52. Credit risk and expected credit losses for trade receivables as of 31 December 2020
(RON mn)
31 December 2020
Expected credit
loss rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
Neither past due
nor impaired
Past due 1-30 days
Past due 31-60
days
Past due 61-90
days
Past due more
than 90 days
Total
2%
1%
12%
33%
99%
812.9
(13.1)
799.8
163.4
49.0
(2.3)
(5.8)
161.1
43.2
17.5
(5.7)
11.8
No
No
No
No
936.6
(922.7)
13.9
Yes
1,979.4
(949.6)
1,029.8
Source: Consolidated financial statements of Electrica Group as of 31 December 2020
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting the obligations
associated with its financial liabilities that are settled by transferring cash or another financial asset.
The Group’s liquidity management policy is to maintain, as far as possible, sufficient liquidity to meet
its obligations when they are due, under both normal and stressed conditions, to avoid unacceptable
losses.
The Group aims to maintain the level of its cash and cash equivalents at an amount 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 facilities.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
170
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than 5
years
(RON mn)
Financial
liabilities
31 December
2022
Bank
overdrafts
Long
term bank
borrowings
Trade
payables
Financial
assets related
to concession
agreements
(RON mn)
Financial
liabilities
31 December
2022
Bank
overdrafts
Long
term bank
borrowings
Trade
payables
Total
2,571.0
2,571.0
2,571.0
Lease liability
53.7
53.7
760.7
760.7
19.2
113.5
-
10.8
-
10.7
354.5
200.5
1,407.1
1,407.1
1,407.1
-
-
951.6
951.6
190.3
190.3
570.9
Total
5,744.1
5,744.1
4,301.1
555.6
782.1
105.2
31 December
2021
Bank
overdrafts
Lease liability
Long
term bank
borrowings
Trade
payables
Total
627.4
21.5
627.4
21.5
627.4
9.4
628.5
628.5
509.7
891.3
891.3
891.3
-
4.9
27.5
-
-
5.1
82.4
-
2,168.8
2,168.8
2,037.9
32.3
87.4
-
2.2
8.9
-
11.1
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Table 54. Contractual maturities of financial liabilities (RON mn.) - S-OMFP2844/2016
.
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than 5
years
2,571.0
2,571.0
2,571.0
Lease liability
53.7
53.7
760.7
760.7
19.2
113.5
-
10.8
-
10.7
354.5
200.5
1,407.1
1,407.1
1,407.1
-
-
4,792.5
4,792.5
4,110.9
365.3
211.2
105.2
-
13.0
92.2
-
-
-
13.0
92.2
-
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
171
2022 Directors’ Report
2022 Directors’ Report
(RON mn)
Financial
liabilities
31 December
2021
Bank
overdrafts
Lease liability
Long
term bank
borrowings
Trade
payables
Total
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than 5
years
627.4
21.5
627.4
21.5
627.4
9.4
628.5
628.5
509.7
891.3
891.3
891.3
-
4.9
27.5
-
-
5.1
82.4
-
2,168.8
2,168.8
2,037.9
32.3
87.4
-
2.2
8.9
-
11.1
Sensitivity analysis
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.
Table 57. Sensitivity analysis
(RON mn)
Effect
31 December 2022
EUR (5% movement)
31 December 2021
EUR (5% movement)
Profit before tax
Strengthening
Weakening
(1.0)
(0.9)
1.0
0.9
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
Exposure to interest rate risk
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 param-
eters, 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 liabili-
ties 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 transac-
tions as far as practically possible. The Group does not use derivative or hedging instruments.
Exposure to currency risk
The summary of quantitative information on the Group’s exposure to currency risk is given
below.
Table 55. Exposure to currency risk 2022-2020
(RON mn)
31 December 2022
Denominated EUR
31 December 2021
Denominated EUR
31 December 2020
Denominated EUR
Cash and cash equivalents
Lease liability
Net statement of
financial position
exposure
0.3
(21.0)
(20.7)
0.8
(19.1)
(18.3)
3.3
(24.4)
(21.1)
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
The interest rate profile of the Group’s interest-bearing financial instruments is presented
below.
Table 58. Fixed-rate and variable-rate instruments – S-IFRS-EU
(RON mn)
31 December 2022
31 December 2021
31 December 2020
Fixed-rate instruments
Financial assets
Call deposits
Financial assets
Financial liabilities
Long-term bank
borrowings
Lease liability
Total
Variable-rate
instruments
Financial liabilities
Lease liability
Long-term bank
borrowings
Bank overdrafts
Total
193.2
951.6
(651.8)
(37.4)
(455.6)
(16.3)
(109.0)
(2,571.0)
(2,696.3)
53.9
-
(418.9)
(8.3)
(373.3)
(13.3)
(209.6)
(627.4)
(850.3)
391.5
-
(728.9)
(9.1)
(346.5)
(18.6)
(49.9)
(165.0)
(233.5)
The following significant exchange rates have been applied during the year.
Source: Consolidated financial statements of Electrica Group as of 31 December 2022 and 31 December 2021
Table 56. Average rate and year-end spot rate
Tabel 59. Fixed-rate and variable-rate instruments – S-OMFP 2844/2016
EUR/RON
Average rate
Year-end spot rate
2022
4.9315
2021
4.9204
2022
4.9474
2021
4.9481
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
(RON mn)
Fixed-rate instruments
Financial assets
Call deposits
Financial liabilities
31 December 2022
31 December 2021
31 December 2020
193.2
53.9
391.5
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
173
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
172
2022 Directors’ Report
2022 Directors’ Report
(RON mn)
Long-term bank
borrowings
Lease liability
Total
Variable-rate
instruments
Financial liabilities
Lease liability
Long-term bank
borrowings
Bank overdrafts
Total
31 December 2022
31 December 2021
31 December 2020
(651.8)
(37.4)
(495.9)
(16.3)
(109.0)
(2,571.0)
(2,696.3)
(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)
Source: Consolidated financial statements of Electrica Group as of 31 December 2022 and 31 December 2021
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.
Table 60. Cash flow sensitivity analysis for variable-rate instruments
(RON mn)
Profit before tax
50 bp increase
50 bp decrease
31 December 2022
Variable-rate instruments
31 December 2021
Variable-rate instruments
(13.5)
(4.3)
13.5
4.3
Source: Consolidated financial statements of Electrica Group as of 31 December 2022
6.11. Description of the main features of internal control
and risk management systems in relation to the
financial reporting process
.
The internal control represents all measures, procedures and policies adopted by ELSA man-
agement and their implementation by the employees, regarding the organizational structure, applied
procedures, methods, techniques and instruments, for the purpose of implementation of company
strategy and objectives. The internal control includes all control forms performed at company level,
such as preventive financial control, internal and managerial control, compliance control.
The internal control activity represents a way of analysis of ELSA activities, of adopting and
applying the internal management, also associated with the knowledge activity, which allows the
Company’s management to coordinate the activities within the organization in an efficient manner.
In this respect, through the internal control the monitoring and verification is carried out, in
accordance with the legislation in force and the specific procedures, in compliance with the legal
framework that regulates the activities carried out in the checked entities, according to the approved
control objectives and themes.
Through internal control, the Company’s management ascertains the deviations resulting
from the established objectives, analyzes the causes and orders the corrective or preventive mea-
sures that are required.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
174
The internal control and the risk management systems have the following main goals:
– protecting organizational resources against losses due to waste, negligence, abuses, fraud
etc.;
– compliance with the applicable legislation and the internal regulations;
– the reliability of financial reporting (accuracy, completeness and correctness of the infor-
mation);
– ensuring an environment based on identifying, understanding and controlling risks, envi-
ronment which will contribute to achieving the organizational goals;
– efficient and effective business operations and use of resources;
– applying the BoD and executive management resolutions and follow-up.
The achievement of these goals was performed in 2022 as follows:
– in order to ensure internal compliance with the competition and state aid rules, several
training and practical verification sessions were conducted;
– clear definition and responsibilities segregation for each person involved in the organiza-
tional process; segregation of duties regarding the carrying out the operations among the
personnel, so that the approval, control and registration duties are adequately assigned to
different persons (as per the Company’s organizational chart);
– elaboration, update and implementation of regulations, policies, procedures, forms etc;
– the existence of a Guide for Accounting Policies, elaborated in accordance with the re-
quirements of the legislation in force, approved by the Board of Directors;
– the existence of a schedule and a well-defined process regarding the elaboration of ac-
counting and financial information in accordance with the reporting requirements (finan-
cial reports, including financial statements, annual and interim reports, budget etc) and
their appropriate verification and approval by the Board of Directors, for 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 efficient internal control system. It consists of the commitment towards integrity and
ethical values (for this purpose, a series of policies on zero tolerance towards corruption,
anti-fraud and anti-money-laundering, avoidance and fighting against conflicts of interest,
gifts policy, protocol expenses, and forbidding facilitating payments, transparency and the
involvement of stakeholders), as well as organizational measures (policies on the delega-
tion of authority and responsibilities);
– Evaluation of risks – Generally, all processes are within the scope of the internal control
system. An identification process is carried out regarding major or critical risks, related to
particular activities for stimulating internal control methods;
– Control activities meant to reduce the risks – Control activities have different forms (man-
agerial control, general control, preventive financial control, etc.) and they are implement-
ed and carried out with the purpose of reducing significant operational and compliance
risks;
– Information and communication – Information helps all other components of the internal
control system by communicating to employees their responsibilities for controling and
providing information in an adequate and timely manner, so that all employees may be
able to fulfill their duties. Internal communication occurs by means of disseminating in-
formation to all levels, while the external one implies the dissemination of information to
external parties, in accordance with the requirements and expectations;
– Monitoring activities – the Audit and Risk Committee together with the Internal Audit
Department assess the efficiency and the effective implementation of the internal control
system.
The Company’s management monitors the functioning of internal controls by means of peri-
odical analyzes; for instance, the execution of the budget, the monitoring of security incidents, inter-
nal and external audit reports and internal control reports.
Deficiencies in the implementation or functioning of internal controls are documented into
the internal control reports, respectively in internal audit reports and briefing notes, and they are
presented to the management, with the purpose of issuing the corrective actions.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
175
7 Statements
176
177
7 Statements
Appendix 1 – Litigations
7 Statements
Based on the best available information, we confirm that the consolidated financial state-
ments reviewed and audited for the period ended 31 December 2022 prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (“IFRS-EU”), provi-
des an accurate and real image regarding the Electrica Group’s financial position, the financial per-
formance and the cash flows, as required by the applicable accounting standards, and that this
Report, prepared in accordance with art. 63 of the law no. 24/2017 on issuers of financial instruments
and market operations and to annex no. 15 to ASF Regulation no. 5/2018 for the period ended 31
December 2022, comprises accurate and real information regarding the Group’s development and
performance.
Based on the best available information, we confirm that the consolidated financial state-
ments reviewed and audited for the period ended 31 December 2022 prepared in accordance with
OMFP 2844/2016 for the approval of the Accounting Regulations in accordance with the International
Financial Reporting Standards adopted by the European Union with subsequent changes, provides
an accurate and real image regarding the Electrica Group’s financial position, the financial perfor-
mance and the cash flows, as required by the applicable accounting standards, and that this Report,
prepared in accordance with art. 63 of the law no. 24/2017 on issuers of financial instruments and
market operations and to annex no. 15 to ASF Regulation no. 5/2018 for the period ended 31 December
2022, comprises accurate and real
information regarding the Group’s development and
performance.
Chair of the Board of Directors,
Iulian Cristian BOSOANCA
Chief Executive Officer,
Alexandru-Aurelian CHIRITA
Chief Financial Officer,
Stefan Alexandru FRANGULEA
Appendix 1 – Litigations
A.1.1 Electrica Group litigations in 2022:
A.1.1.1 Disputes with ANRE
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
1
2
3
4
5
6
7
8
9
10
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
Plaintiff: ELSA,
DEER
Defendant:
ANRE
434/2/2019
Plaintiff: ELSA,
DEER
Defendant:
ANRE
435/2/2019
Plaintiff: ELSA,
DEER
Defendant:
ANRE
436/2/2019
Cancellation of ANRE’s President Order no. 146/2014
regarding the establishment of the regulated rate of
return considered to the approval of the tariffs for the
electricity distribution service provided by concession-
ary DSOs starting with 1st January 2015 and the abro-
gation of Art. 122 of the Tariff Setting Methodology for
Electricity Distribution Service, approved by the ANRE
Order no. 72/2013.
High Court of
Cassation and
Justice
Appeal – finally dis-
missed on 31 March
2022.
Cancellation of ANRE Order no. 155/2014 regarding the
approval of the specific tariffs for the electricity distri-
bution service and the price for the reactive energy for
DEER (former SDTN).
Bucharest
Court of Appeal
Cancellation of ANRE Order no. 156/2014 regarding the
approval of the specific tariffs for the electricity distri-
bution service and the price for the reactive energy for
DEER (former SDTS).
Bucharest
Court of Appeal
The Court dismissed
the case on merits.
Appealable within 15
days from it’s com-
munication.
The Court dismissed
the case on merits.
Appealable within 15
days from it’s com-
munication.
Action for partial annulment (regarding the special tar-
iffs) of the administrative act – ANRE Order 171/2015.
High Court of
Cassation and
Justice
ELSA’s action was
definitively
dis-
missed
Action for partial annulment (regarding the special
tariffs) of the administrative act – ANRE Order. No.
172/2015.
High Court of
Cassation and
Justice
ELSA’s action was
definitively
dis-
missed
Action for partial annulment of ANRE Order no. 169/2018
regarding the approval of the Tariff Setting Methodolo-
gy for the Electricity Distribution Service.
High Court of
Cassation and
Justice
Action for the annulment of the ANRE Order no.
168/2018 regarding the regulatory rate of return and
obliging ANRE to issue a new order.
Bucharest
Court of Appeal
Case dismissed on
merits, a recourse
was filed, in course
of settlement.
Suspended until de
final settlement of
case no. 541/36/2018
of
the Bucharest
Court of Appeal.
Legal action for annulment of ANRE Order 197/2018 re-
garding the approval of the specific tariffs for the elec-
tricity distribution service and the price for the reactive
electric energy for DEER (former SDMN).
Bucharest
Court of Appeal
In course of settle-
ment.
Legal action for annulment of ANRE Order 199/2018 re-
garding the approval of the specific tariffs for the elec-
tricity distribution service and the price for the reactive
energy for DEER former SDTS).
High Court of
Cassation and
Justice
On 9 June 2020, the
court rejected the
action as unfounded.
An appeal was filed,
deliberation pend-
ing.
Legal action for annulment of ANRE Order 198/2018 re-
garding the approval of the specific tariffs for the elec-
tricity distribution service and the price for the reactive
energy for DEER former SDTN).
Bucharest
Court of Appeal
In course of settle-
ment.
.
.
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2
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178
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179
Appendix 1 – Litigations
Crt.
no.
Parties/Case
file number
Subject matter
Court
Case status
Plaintiff: DEER
Defendant:
ANRE
184/2/2015
Contentious administrative litigation – Cancellation of
ANRE Order no. 146/2014 regarding the setting of the
regulated rate of return applied at the approval of the
tariffs for the electricity distribution service provided by
the DSOs starting with 1st January 2015 and the abroga-
tion of art. 122 of the tariff setting methodology for the
electricity distribution service, approved by the ANRE
order no. 72/2013.
Bucharest
Court of Appeal
On 29 April 2022,
the Court dismissed
the case. Appealable
within 15 days from
it’s communication.
Plaintiff: DEER
Defendant:
ANRE
309/2/2020
Judicial action on the cancellation of documents issued
by regulatory authorities – Order no. 227/2019 regard-
ing the approval of the tariffs for the electricity distri-
bution service and the price for the reactive energy for
DEER (former SDMN).
Bucharest
Court of Appeal
In course of settle-
ment.
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
Plaintiff: DEER
Defendant:
ANRE
303/2/2020
Plaintiff: DEER
Defendant:
ANRE
53/2/2022
Plaintiff: DEER
Defendant:
ANRE
6176/2/2022
Cancellation of ANRE Order no. 146/2014 regarding the
establishment of the regulated rate of return applied to
the approval of the tariffs for the electricity distribution
service provided by the DSOs from 1st January 2015 and
the abrogation of Art. 122 of the Tariff Setting Methodol-
ogy for Electricity Distribution Service, approved by the
ANRE Order no. 72/2013.
High Court of
Cassation and
Justice
2022,
Appeal – On 24
March
the
Court dismissed the
appeal as unfound-
ed. Final.
Action for the cancellation of ANRE’s President Order
no. 228/2019 regarding the approval of the of the spe-
cific tariffs for the electricity distribution service and the
price for the reactive energy for DEER (former SDTN).
High Court of
Cassation and
Justice
Case dismissed on
merits, an appeal
was filed, in course
of settlement.
Cancellation of the ANRE’s President Order no. 156/2014
regarding the approval of the specific tariffs for the
electricity distribution service and the price for the re-
active energy for DEER (former SDTS).
Bucharest
Court of Appeal
un-
Suspended
til
the settlement
of the case file no.
208/2/2015.
Cancellation of the ANRE’s President Order no. 146/2014
regarding the establishment of the regulated rate of re-
turn applied to the approval of the tariffs for the elec-
tricity distribution service provided by DSOs from 1st
January 2015 and the abrogation of Art. 122 of the Tariff
Pricing Methodology for Electricity Distribution Service,
approved by the ANRE Order no. 72/2013.
Bucharest
Court of Appeal
Cancellation of the ANRE’s President Order no.
229/2019 regarding the approval of the specific tariffs
for the electricity distribution service and the price for
the reactive energy for DEER (former SDTS).
Bucharest Co-
urt of Appeal
Cancellation of the ANRE’s President Order no. 119/2021
regarding the approval of the specific tariffs for the
electricity distribution service and the price for the re-
active energy for DEER.
Bucharest Co-
urt of Appeal
A reinstatement re-
quest was filed. At-
tached to case no.
184/2/2015. On 29
April 2022, the Court
dismissed the case.
Appealable within 15
days from its com-
munication.
Suspended on 02
November 2022. Ap-
15
pealable within
days from its com-
munication.
Suspended
un-
til the final settle-
ment of case no.
6176/2/2022.
Action for partial annulment of ANRE Order no. 169/2018
regarding the approval of the Tariff Setting Methodolo-
gy for the Electricity Distribution Service.
Bucharest Co-
urt of Appeal
In course of settle-
ment.
11
12
13
14
15
16
17
18
19
Source: Electrica
Appendix 1 – Litigations
A.1.1.2 Fiscal matter disputes
Crt.
no.
Parties/Case file
number
Object
Court
Case status
1
2
3
Plaintiff: ELSA
Defendant: NAFA
17237/299/2017
Plaintiff: ELSA
Defendant: NAFA
9131/2/2017
Plaintiff: ELSA
Defendant: NAFA -
DGAMC
25091/299/2018
Plaintiff: ELSA
Defendant: NAFA -
DGAMC
4
2444/2/2021
1. Suspension of forced execution initiat-
ed by NAFA-DGAMC in the enforcement
file no. 13267221 under the enforceable
order no. 13725/3 May 2017 and of the
no. 13739/3 May 2017;
2. Cancellation of the enforcement or-
der no. 13725/3 May 2017, of the no.
61/90/1/2017/263129 (which also bears
the No. 13739/3 May 2017) issued by
NAFA-DGAMC for the amount of RON
39,248,818 and all subsequent execu-
tion orders issued in connection with
the forced execution of the amount of
RON 39,248,818 in the execution file no.
13267221.
Annulment of the tax decisions issued
by NAFA and communicated to the
company by address no. 665/17 March
2017, new accessories amounting to
RON 39,053,522.
Appeal to execution and suspension of
forced execution - cancellation of the
enforcement order no. 13566/22 June
2018 and the notice 13567/22 June 2018,
issued in the execution file no.13267221
/61/90/1/2018/278530, amounting to
RON 10,024,825 (representing the par-
tial fine from the Competition Council).
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
judicial work, respectively by: a) Deci-
sion no. 1078/17 April 2015 issued by the
Bucharest Court of Appeal in case no.
5433/2/2013; b) Decision no. 5154/26
June 2017 issued by Bucharest District
1 Court in case no. 51817/299/2016*; c)
Decision no. 624/06 March 2015 issued
by the Bucharest Court of Appeal in
case no. 7614/2/2013; Obligation of
NAFA to draw up those acts or admin-
istrative correction operations which:
- to reflect Electrica’s right to the re-
imbursement 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 object of
the reimbursement made by NAFA on
22 September 2020, arising from the
annulment of the fiscal decision in case
mentioned in item 1 above, let. a); 2. Ob-
ligation of NAFA to pay the legal inter-
ests related to the period 12 December
2016 – 21 September 2020, calculated
in a percentage of 0.02%/day of delay
for the debt amount of RON 18,687,515
reimbursed on 22 September 2020, in
total amount of RON 5,161,491.64; 3. Es-
tablishing a 15 days term from the deci-
sion so that NAFA-DGAMC to settle the
fiscal file as indicated above, imposing
late penalties of RON 1,000/day of delay
for exceeding this term, due to Electrica
by DGAMC.
District 1
Court
Action admitted on merits. The Decis-
sion was appealed
High Court
of Cassation
and Justice
Action admitted on merits. NAFA filed
an appeal, definitively dismissed on 23
March 2022.
District 1
Court
Suspended until the settlement of
case no. 3889/2/2018.
Bucharest
Court of Ap-
peal
In course of settlement.
.
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Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
Object
Court
Case status
Plaintiff: DEER
Defendant: NAFA -
DGAMC
359/2/2021 (former
1018/2/2016*)
Cancellation of administrative act – De-
cision no. 462/23 November 2015, liti-
gation 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/pen-
alties and late fees related to income tax
+ RON 2,163,296 interests/penalties and
delay fees related to the VAT).
Bucharest
Court of Ap-
peal - retrial
The court of first instance rejected
the action as unfounded. The plain-
tiff filed an appeal, admitted by the
court, which quashes the contested
decisions and, re-judging, partially ad-
mits the action. Partially annuls Deci-
sion no.462/23 November 2015 issued
by A.N.A.F–DGSC, regarding point 3.
Obliges the defendant A.N.A.F–DGSC
to settle on the merits the claim regard-
ing the amount of RON 10,091,323. It
sends for retrial to the same court the
request regarding the other fiscal ob-
ligations retained by the fiscal body,
amounting RON 13,886,492. Final (file
no. 1018/2/2016*). In retrial, case no.
1018/2/2016* was registered with a
new number, 359/2/2021 - in course
of settlement.
DGAMG-ANAF rejected by Solution
Decision no. 154/02 July 2020, the
appeal regarding the amount of RON
10,091,323 (Point 3 of Decision no.
462/2015) reason for which an action
for annulment was filed on 22 Decem-
ber 2020 (file no. 641/42/2020).
Plaintiff: DEER
Defendant: DGAMC
– NAFA
641/42/2020
Plaintiff: DEER
Defendant: Galati
City Hall - DITVL
Galati
263/42/2020
Annulment of the administrative act of
the Settlement Decision 154/02 July
2020 for the amount of RON 10,091,323
(point 3 of the Decision no. 462/23 No-
vember 2015)
Cancellation of administrative docu-
ments issued by the fiscal bodies within
the Galati City Hall - DITVL Galati, re-
spectively Fiscal inspection report, tax-
ation decision and decision to resolve
the appeal. According to the Fiscal In-
spection Report, the control team de-
termined an additional tax on buildings,
together with the related accessories, in
a total amount of RON 24.831.293, for
the 2012-2015 period.
Ploiesti Court
of Appeal
In course of settlement.
High Court
of Cassation
and Justice
On merits, the Court dismissed the
case as unfounded, a recourse was
filed, in course of settlement.
5
6
7
Plaintiff: EL SERV
Defendant: NAFA
8
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 fiscal loss of
the Company was diminished; RON
7,563,561 established as additional VAT
for payment by the refusal to deduct the
VAT + related accessories.
High Court
of Cassation
and Justice
By decision 2145/2019 dated 03 July
2019, the court admits the request.
Partially annuls Decision no. 22/18
January 2018 regarding the settle-
ment of the appeal, Taxation Decision
no. F-MC 305/30 May 2017, The pro-
vision regarding the measures estab-
lished by the fiscal inspection bodies
no. 115046/30 May 2017 and RIF no.
F-MC 177/30 May 2017, regarding
the amount of RON 7,264,463 VAT
with the related accessories, illegally
retained as non-deductible, respec-
tively regarding the amount of RON
37,083,657 with which the fiscal loss
was illegally diminished. In the case,
an appeal was filed by both parties,
in course of settlement. The court ad-
mits the recourse filed by the parties
and, rejudging the case, rejected the
summons filed by FISE Electrica Serv
SA. Final.
.
.
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10
Plaintiff: EL SERV
Defendant: NAFA
31945/3/2018
Cancellation of administrative deci-
sion no. 221/19 July 2017 - cancellation
of penalties related to the decision no.
305/2017 from above, RON 118,215.
Plaintiff: DEER
Defendant: MFP-
NAFA – DGRFP Cluj
– AJFP Maramures
371/33/2017
Appeal of tax decision no. F-MM-
180/2016 regarding additional tax and
VAT, as well as interest/late payment in-
creases and late payment penalties. Pre-
liminary administrative procedures were
conducted in 2017, prior to the case fil-
ing. Amount: RON 32,295,033.
Bucharest
Court
Suspended until the final settlement
of the case no. 5786/2/2018.
High Court
of Cassation
and Justice
Decision dated 28 March 2022: admits
DEER’s recourse and dismisses the
other recourses. Final.
2
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Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
Plaintiff: EFSA
Defendant: NAFA –
DGAMC
11
8709/2/2018
Source: Electrica
Object
Court
Case status
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
Bucharest
Court of Ap-
peal
In course of settlement.
A.1.1.3 Other significant litigations (with a value higher than
EUR 500 thousand)
Crt.
no.
Parties/Case file
number
Object
Court
Case status
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 under 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 con-
clusions mentioned in the Conclu-
sion 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 first instance rejects the ex-
ception of the prescription of the mate-
rial right to action as unreasonable and
the action as unfounded.
Both parties have appealed, dismissed as
unfounded. Both parties filed an appeal.
Hidroelectrica’s appeal was rejected. The
ELSA appeal was admitted, the case be-
ing sent for retrial to the Bucharest Court
of Appeal. In the retrial, the court admits
ELSA appeal, changes the appealed sen-
tence in the sense that it admits the ex-
ception of the prescription of the materi-
al right to action and rejects the action as
prescribed. With appeal within 30 days
from the communication. Definitively
settled.
Bankruptcy, registering to the list
of creditors for the amount of RON
2,591,163
Bucharest Tri-
bunal
Ongoing procedure.
Bankruptcy, registering to the list
of creditors in amount of RON
3,826,035.
Braila Court
Ongoing procedure.
Bankruptcy, remaining amount to
be recovered – RON 116,058.538.
Valcea Court
Ongoing procedure.
The amount is registered in the definitive
table of receivables updated following
the fact that the Decision EU Tribunal
from Luxemburg, establishing that Olt-
chim S.A. benefited from illegal state aid
from a numberof Romanian companies,
including ELECTRICA S.A, became de-
finitive.
Bankruptcy, registering to the list
of creditors in amount of RON
2,917,266.
Alba Iulia Court
of Appeal
The procedure was closed on 12 Decem-
ber 2022, the decision being appealed
by DEER, in course of settlement.
Insolvency proceedings. Amount
RON 37,088,830.
Bucharest Court
Ongoing reorganization procedure. On
03 February 2021, the Debtor’s reorga-
nization plan was confirmed, according
to which unsecured receivables do not
participate in distributions. ELSA’s ap-
peal against the sentence confirming the
reorganization plan was definitively dis-
missed.
Bankruptcy.
6,027,537.
Amount:
RON
Bucharest Court Ongoing procedure
Insolvency proceedings. Amount:
RON 11,354,912.
Iasi Court
Ongoing procedure. The judicial adminis-
trator filed a banckrupcy request.
1
2
3
4
5
6
7
8
Plaintiff: SPEEH Hi-
droelectrica S.A.
Defendant: ELSA
13268/3/2015*
Creditor: ELSA
Debtor: Petprod
S.A.
47478/3/2012/a1
Creditor: ELSA
Debtor: CET Braila
S.A.
2712/113/2013
Creditor: ELSA,
AAAS, BCR SA and
others
Debtor: Oltchim
S.A.
887/90/2013
Creditor: ELSA
Debtor: Romenergy
Industry SRL
2088/107/2016
Creditor: ELSA
Debtor: Transener-
go Com S.A.
1372/3/2017
Creditor: ELSA
Debtor: Electra
Management &
Supply SRL
41095/3/2016
Creditor: ELSA
Debtor: Fidelis En-
ergy SRL
3052/99/2017
.
.
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10
11
12
13
14
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Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
Object
Court
Case status
Plaintiff: ELSA
Defendant: Com-
petition Council
3889/2/2018
Administrative litigation - annul-
ment of Competition Council De-
cision no. 77/20 December 2017,
by which an ELSA charge is set
through a fine of RON 10,800,984
and, in the subsidiary, the reduction
of the fine set up to the legal min-
imum of 0.5% of ELSA’s turnover,
by re-individualizing the alleged
anticompetitive facts, with the re-
tention and full use of all mitigating
circumstances applicable to ELSA.
High Court of
Cassation and
Justice
The court dismissed ELSA’s action as
unfounded; ELSA filed an appeal, defini-
tively dismissed.
Plaintiff: ELSA De-
fendant: EL SERV
39968/3/2018
Action for damages - request pay-
ment 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 admitted the action
and ordered the payment of the legal in-
terest calculated for the period 20 No-
vember 2015-22 May 2018. EL SERV filed
an appeal, dismissed as unfunded. EL
SERV filled a recourse, definitively dis-
missed on 17 May 2022.
Plaintiff: ELSA
Defendant: Elite
Insurance Company
44380/3/2018
Claims - request for equivalent val-
ue of the insurance policy issued to
guarantee the obligations of Tran-
senergo Com S.A., in the amount of
RON 4,000,000.
Bucharest Court
Suspended based on art. 307 Civil Pro-
cedure Code.
Claims – RON 4,000,000 (ELSA)
and RON 97,350 and the bearing of
any damage related to the non-ful-
filment of its obligation (Transener-
go Com) – regarding the insurance
policy issued to guarantee the
payment obligations of Trasenergo
Com
Bucharest Court
of Appeal
The court rejected the request as un-
founded, and Transenergo Com request
as directed against a person without
passive procedural capacity. With appeal
within 30 days from communication.
ELSA filed an appeal.
The court ordered the termination of the
case, based on art. 75 of Law no. 85/2014.
ELSA has filed a request for registration
at the credit table in the bankruptcy file
of Silver Broker de Asigurare-Reasigura-
re SRL, case no. 37068/3/2021.
To this file was connected the case no.
3474/299/2020.
Plaintiff: ELSA
Transenergo Com
S.A.
Defendant: Silver
Broker de Asigu-
rare-Reasigurare
SRL (former Zurich
Broker de Asigurare
Reasigurare SRL)
3310/3/2020
Plaintiff: ELSA
Defendant: Silver
Broker de Asigu-
rare-Reasigurare
SRL (former Zurich
Broker de Asigurare
Reasigurare SRL)
37068/3/2021
Plaintiff: ELSA
Defendant: former
directors and admi-
nistrators of ELSA
35729/3/2019
Claims - claim for damages calcu-
lated as a result of the control of
the Court of Accounts, amounting
RON 322,835,121.
Bucharest Court
Suspended untill the final settlement of
case 2229/2/2017.
Plaintiff: VIR Com-
pany International
S.R.L.
Defendant: DEER
15
7507/105/2017
Claims - the amount requested by
VIR Company International SRL
consists of:
- EUR 5,000,000, damage caused
by delayed issuance of the connec-
tion certificate for the photovoltaic
plant located in Valea Calugareas-
ca 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 technological tests pe-
riod.
In addition, it requires to DEER to
pay the penalty interest of 5.75%/
year for all the amounts of money
claimed and court costs.
Prahova Court
The court rejects the exceptions of in-
admissibility and lack of object of the
introductory request invoked by the
defendant, as unfounded. Dismisses the
introductory request as unfounded. Ac-
cepts in part the request made by the
defendant regarding the payment of
court costs and obliges the plaintiff to
the defendant to pay the court costs,
respectively to pay the sum of RON
50,000 representing a reduced attor-
ney’s fee. Appealable within 15 days from
communication. On 07 July 2022, the
court partially admitted the request to
increase the expert’s fee for the amount
of RON 13,100 and obliges the plaintiff to
pay this amount to the expert. With ap-
peal within 15 days from the notification
of the decision.
.
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Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
Object
Court
Case status
16
17
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 reorganization plan
was confirmed, according to which un-
secured receivables do not participate
in distributions. The Debit represents the
accumulated 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, represent-
ing 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.
18
Plaintiff: Tutu Daniel
and Tudori Ionel
Dedendant: DEER
180/233/2020*
Claims - equivalent value of land re-
lated to the Galati Center Transfor-
mation Station – RON 2,500,000.
Galati Court
The court of first instance partially ad-
mitted the request to compel the de-
fendants to pay the plaintiffs the sum of
EUR 241,600 as compensation for the
lack of use of the income. Obliges the
defendants to pay to the plaintiffs the
legal interest regarding the damages es-
tablished from the moment of the final
stay until the actual payment.
It finalizes the experts’ fee in the amount
of RON 1,600 for expert Bogatu Mirela
Dorina and the amount of RON 1,500
for expert Grecu Iulian and obliges the
plaintiffs to pay the expert Bogatu Mirela
Dorina the amount of RON 600 - the dif-
ference between the expert’s fee and to
expert Grecu Iulian the amount of 500. It
obliges the defendants to pay the defen-
dant Tutu Daniel the sum of RON 38,605
and the plaintiff Tudori Ionel the sum of
RON 12,000 as court costs. The appeal
was filed.
Action in “Obligation to do” admin-
istrative litigation. Sinaia City Hall
requests:
-mainly: obliging MN to comply
with LCD 113/2015 in the sense of
executing the works regarding
the underground location of the
technical-municipal networks for
the project “Energy efficiency and
lighting extension of the historic
area - Sinaia”
- in the alternative: in case MN will
not execute the works in due time
and the City Hall will execute the
works in our name and on our be-
half, MN will be obliged to pay RON
7,659,402.72 + VAT (RON 9,101,192);
- updating the amount requested
in subsidiary with the inflation rate
and legal interest.
Prahova Court
The Court dismissed the case on merits.
Appealable within 15 days from it’s com-
munication.
Plaintiff: DEER
Defendant: Romen-
ergy Industry S.A.
20
2088/107/2016
21
22
23
Plaintiff: Asirom
Vienna Insurance
Group S.A.
Defendant: DEER
439/111/2017
Plaintiff: Energo
Proiect SRL
Defendant: DEER,
DEER – Oradea
Subsidiary
374/1285/2018
Plaintiff: DEER
Defendant: ELSA
4469/62/2018
Bankruptcy
9,224,595.51.
-
amount: RON
Alba Iulia Court
of Appeal
The court of first instance admitted the
request to close the bankruptcy proce-
dure. The debit represents the accumu-
lated receivables as a result of the dis-
tribution subsidiaries merger. The appeal
was filed, in course of settlement.
Recourse claims –
for RON
2,842,347, representing the com-
pensation paid by the plaintiff to
the insured company SC Ciocorom
SRL following a fire that occurred
on 7 March 2013. DEER (former
SDTN) fault is invoked for the over-
voltage after a power outage.
Oradea Court of
Appeal
Case dismissed on merits. Appeal in
course of settlement.
Claims of RON 2,387,357.
Cluj Court of
Appeal
Claims according to the Courts of
Account findings – RON 8,951,811
Brasov Court
On merits and in the appeal, the case
was dismissed. The Court admits the ap-
peal declared by the plaintiff ENERGO
PROIECT S.R.L., cancels the decision and
sends the case to a new trial, the same
court. Appeal for retrial.
First instance. The High Court of Cas-
sation and Justice solved the negative
competence conflict between Brasov
Court and Bucharest Court, the case
being in course of settlement at Brasov
Court.
.
.
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2
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N
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185
Bankruptcy - application for regis-
tration at the credit table with the
amount of 4,000,000 RON
Bucharest Tri-
bunal
ELSA submitted a request for reinstate-
ment within the deadline (admitted) and
registration at the credit table, currently
being resolved by the judicial liquidator.
19
Plaintiff: Sinaia City
Hall
Defendant: DEER
3719/105/2020**
Object
Court
Case status
Crt.
no.
Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
Plaintiff: DEER
Defendant: direc-
tors and managers
342/62/2020*
Plaintiff: EL SERV
Defendant: National
Leasing IFN S.A.
18711/3/2010
Plaintiff: EL SERV
Defendant: Servicii
Energetice Banat
S.A.
8776/30/2013
(joint with cu
2982/30/2014)
Plaintiff: EL SERV
Defendant: SEO
2570/63/2014
Plaintiff: EL SERV
Defendant: SED
8785/118/2014
Plaintiff: EL SERV
Defendant: SE Mol-
dova
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**
Plaintiff: EL SERV
Defendant: direc-
tors and adminis-
trators 2013-2014
35815/3/2019
Plaintiff: EL SERV
Defendant: direc-
tors and adminis-
trators 2010-2014
35828/3/2019
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: Hidromeca-
nica S.A.
3836/62/2009
Creditor: EFSA
Debtor: Nitramonia
S.A.
1183/62/2004
.
.
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186
Claims against the former general
managers of the company, as a re-
sult of the non-fulfillment of some
measures ordered by the Court of
Accounts for the amount of RON
8,951,812.
Bankruptcy – amount admit-
ted to the list of creditors: RON
21,663,983.27 (guaranteed RON
17,580,203.48 and unsecured RON
4,083,779.79).
Brasov Court
Suspended untill the final settlement of
case no. 4469/62/2018.
Bucharest Court
The insolvency procedure was closed. Fi-
nal solution.
Bankruptcy
- amount admit-
ted to the list of creditors RON
72,180,439.68.
Timis Court
Ongoing proceedings.
Bankruptcy
- amount admit-
ted to the list of creditors RON
26,533,446.
Bankruptcy
- amount admit-
ted to the list of creditors: RON
15,130,315.27.
Bankruptcy – amount: admit-
ted to the list of creditors RON
73,708,082.90.
Dolj Court
Ongoing proceedings.
Constanta Court Ongoing proceedings.
Bacau Court
Ongoing proceedings.
Claims – EUR 655,164, equivalent of
RON 3,210,305.75.
Bucharest Court Ongoing proceedings.
The case was suspended on 12 June 2019
until the jurisdiction was established in
case 3O 266/2017 registered with the
Karlsruhe Court and declined in favor of
the Mannheim Court.
The court dismissed the action as pre-
scribed, ordering the plaintiff to pay the
judicial costs. Appeal suspended, con-
sidering the death of the respondent
Popescu Romeo; steps have been initi-
ated to identify the heirs. Case reinstat-
ed, appeal dismissed as unfounded. A
recourse was filed.
The court dismissed the action as it has
been modifed and specified, as pre-
scribed. Orders the plaintiff to pay the
judicial costs. An appeal was filed, dis-
missed as unfounded. A recourse will be
filed.
Bucharest Court
of Appeal
Bucharest Court
of Appeal
Galati Court
Ongoing proceedings.
Braila Court
Case closed, the Decision being final on
27 April 2022.
Alba Court
Ongoing proceedings.
Alba Court
Ongoing proceedings.
Brasov Court
Case closed, the decision being final on
13 April 2021.
Brasov Court
Ongoing proceedings.
Action in attracting the liability
of directors and administrators -
measure II.7 of Decision no. 13/27
December 2016 issued by the Ro-
manian Court of Accounts– RON
7,165,549 + legal interest of RON
4,485,340.29.
Action in attracting the liability
of directors and administrators -
measure II.8 of Decision no.13/27
December 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.
Bankruptcy – registering to the list
of creditors for the amount of RON
2,547,551.
Insolvency proceedings - register-
ing to the list of creditors for the
amount of RON 1,851,392.
Bankruptcy - registering to the list
of creditors for the amount of RON
20,711,588.
Bankruptcy - registering to the list
of creditors for the amount of RON
9,314,176.
Bankruptcy - registering to the list
of creditors for the amount of RON
4,792,026.
Bankruptcy - registering to the list
of creditors for the amount of RON
2,321,847
Appendix 1 – Litigations
Parties/Case file
number
Creditor: EFSA
Debtor: Remin S.A.
32/100/2009
Creditor: EFSA
Debtor: Oltchim
S.A.
887/90/2013
Creditor: EFSA
Debtor: Energon
Power and Gas
S.R.L.
53/1285/2017
Creditor: EFSA
Debtor: CUG S.A.
2145/1285/2005
Creditor: EFSA
Debtor: Colterm
4657/30/2021
Plaintiff: EFSA
Defendant: ELSA
6665/3/2019
Plaintiff: EFSA
Defendant: natural
persons
Called in guarantee:
ELSA
35647/3/2019
Plaintiff: UAT Targu
Secuiesc
Defendant: EFSA
886/119/2022
Reclamant:EDPR
Romania SRL
Parat: EFSA
19662/3/2022
Plaintiff: EL SERV
Defendant: ENEL
DISTRIBUTIE
MUNTENIA S.A.
4233/2/2020
(former no.
24088/3/2015)
Plaintiff: Ivan Laura
Ionela
Ivan Cornel Ionut
Ivan Vladimir Mihai
Defendant: EL
SERV
34705/3/2015
Plaintiff: Cazacu
Maria
Defendant: DEER
7212/200/2020
40
41
42
43
44
45
46
47
48
49
50
51
Object
Court
Case status
Insolvency proceedings - register-
ing to the list of creditors for the
amount of RON 71,443,402.
Bankruptcy - registering to the list
of creditors for the amount of RON
21,349,705.
Timisoara Court Ongoing proceedings.
Valcea Court
Ongoing proceedings.
Insolvency proceedings - register-
ing 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.
Timis Court
Ongoing proceedings.
Inslovency - registered to the list
of creditors for the amount of RON
2,520,449.97
Claims: request of payment reard-
ing the invoices paid without sup-
porting documents, as it has been
stated by the Court of Account –
RON 7,025,632.
High Court of
Cassation and
Justice
The First Instance court dismissedthe
claim of EFSA . The Decision has been
appealed and dismissed by the Court.
EFSA filed a recourse, in course of set-
tlement.
Dismisses as prescribed the action filed
by the plaintiff EFSA. and dismisses as
objectless the waranty claims issued by
the defendants, two former directors
and one former general manager, against
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 appeal, dismissed as
unfounded. Against the Decision a re-
course was filed, canceled by the Court.
Final.
Claims – RON 2,718,151.15
Covasna Tribu-
nal
In course of settlement.
Claims – RON 7,128,509
Bucharest Tri-
bunal
In course of settlement.
Claims. Late payment penalties
regarting the litigation with Auto-
courier S.R.L. in amount of RON
the
3,068,929.67 according
Agreement no. 1055/2002 as well
as delay penalties for the main
debt of RON 5,605,351.26 calcu-
lated after 30 June 2015 untill the
entire payment of the main debt.
to
High Court of
Cassation and
Justice.
Case admitted in retrial on merits. The
appeal filed by Enel against the decision
favorable to SEM was dismissed. E-Dis-
tributie filed an appeal, dismissed as un-
founded. Final.
Civil liability - work accident result-
ing in employee death (amount of
compensation claims – EUR 3 mn.).
Bucharest Court
Case suspended according to art. 413
alin. 1 par. 1 Civil Procedure Code. (crimi-
nal case ongoing).
Liability of the principal for the act
of the defendant- work accident
resulting in death of an AISE em-
ployee (amount of compensation
claimed: EUR 510,000)
Buzau Court
In course of settlement.
.
.
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Claims – EUR 1.277.435,25 license
+ EUR 2.650.855,68 maintenance –
RON equivalent 19,321,005.11
Bucharest Court
of Appeal
Claims according to art. 155 of
Companies Law no. 31/1990 for the
amount of RON 7,128,509.
High Court of
Cassation and
Justice
Appendix 1 – Litigations
Crt.
no.
Parties/Case file
number
Object
Court
Case status
A.1.1.4 Litigations against the Romanian Court of Accounts
Appendix 1 – Litigations
52
Plaintiff: Pricopie
Stefan
Defendant: DEER
12807/231/2019
Faulty killing (art.192 NCP) - third
party electric shock (amount of
damages claimed: EUR 500,000)
Galati Court of
Appeal
Plaintiff: DEER –
Defendant: COS
Targoviste
1906/120/2013
Insolvency – banckrupcy – total
amount: RON 5,589,482.51 out of
which RON 1,357,789.92 – amount
at the list of creditors and RON
4,231,692.59 - current receivables.
Dambovita
Court
Claims: RON 4,343,437
High Court of
Cassation and
Justice
In appeal, on 24 June 2022, the Court
admits the appeal declared by the civil
party Pricopi Stefan. Partially abolishes
the criminal sentence no. 160/11 Febru-
ary 2022 of the Focsani District Court,
removing the provisions regarding the
acquittal of the defendant, in retrial: it
orders the termination of the criminal
proceedings initiated against the defen-
dant DEER. - Focsani Branch, for com-
mitting the crime of culpable homicide.
Maintains the other provisions of the ap-
pealed criminal sentence. Definitive.
the
Ongoing procedure. From
to-
tal receivables, the amount of RON
3,255,350.39 represents the current re-
ceivables, for which a payment request
was formulated which is the object of the
file 2478/120/2021, admitted on merits;
the decission is final, the current receiv-
ables being recoverd.
On the merits, the court admitted the
exception of inadmissibility. The solu-
tion was confirmed in the appealed. A
recourse was filed by DEER, definitively
dismissed on 17 May 2022.
Claims – contractual liability: RON
2,009,233
High Court of
Cassation and
Justice
Case dismissed on merits. Appeal par-
tially admitted with reference to retrial
end 3 request. Recourse in course of set-
tlement.
Insolvency – registration at the list
of creditors for the amount of RON
26,283,220.67
Ploiesti Court of
Appeal
The court admitted the request to
close the insolvency procedure. Defini-
tive. Amount fully recovered. Appeal in
course of settlement.
Claims – contractual liability – RON
2,851,297.30
Covasna Court
In course of settlement.
Claims - the plaintiff requests mor-
al damages in the amount of EUR
500,000 thousand and RON 370
material damages as a result of
the bodily injury by electric shock
committed on 12 August 2020.
Bistrita Nasaud
Tribunal
In course of settlement.
Claims – contractual liability – RON
– 2,553,038.40.
Bucharest Tri-
bunal
In course of settlement.
53
54
55
56
57
58
59
.
Plaintiff: DEER
Defendant: 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
Plaintiff: Rebrean
Gheorghe
Defendant: DEER
1635/112/2022
Plaintiff: DEER
Defendant: Electric
Planners SRL
25660/3/2022
Source: Electrica
.
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Crt.
no.
Parties/Case file
number
Object
Court
Case status
Plaintiff: ELSA
Defendant: Roma-
nian Court of Ac-
counts
2268/2/2014*
Suspension and cancellation of the ad-
ministrative act: Decision no. 3/14 Jan-
uary 2014 and the Resolution no. 23/17
March 2014.
High Court
of Cassation
and Justice
First court: the claim is partly admit-
ted, partially cancels the Resolution
no. 23 of 17 March 2014 regarding
the items 1 and 5 and the Decision
no. 3/14 January 2014 regarding
the items 4 and 8. Dismisses, as un-
grounded the claim regarding items
2, 3 and 4 in the Resolution no. 23/17
March 2014 and items 5, 6 and 7 in the
Decision no 3/14 January 2014. Re-
jects the request to suspend the ex-
ecution of Decision no. 3/14 January
2014, as unfounded. ELSA and CCR
filed an appeal, both being admit-
ted. The court partly admits ELSA’s
request and sent the case for retrial
to the first instance, regarding the an-
nulment of point 5 of the Decision no.
23/17 March 2014, related to point 8
of the Decision no. 3/14 January 2014.
Retrial phase: On first instance, the
court rejected the plaintiff’s request
for annulment of point 5 of the Reso-
lution no. 23/17 March 2014, with cor-
respondent in point 8 of the Decision
no. 3/14 January 2014 issued by the
defendant. With appeal within 15 days
from its communication. ELSA has
appealed the case, which was finally
dismissed on 25 March 2022.
Partial annulment of Decision no. 12/27
December 2016, issued by the director
of the 2nd Direction from the IVth De-
partment of the Romanian Court of Ac-
counts, regarding the faults from point 1
to 8, with the consequence of dismissing
the actions from point 1, 3 to 9 inclusive,
imposed to ELSA by the disputed Deci-
sion; the partial annulment of the con-
clusion 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 car-
rying 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
Decision no. 12 until final settlement of
the present dispute.
Administrative litigation for annulment
of Decision no. 38/9 October 2018, the
annulment of the conclusion by which
the appeal imposed by Decision no. 12/1
of 27 December 2016 was dismissed, the
revocation of the Decision no. 12/1 and
the cessation of any CCR control act.
Bucharest
Court of Ap-
peal
In course of settlement.
High Court
of Cassation
and Justice
The court of first instance dismissed
the action as inadmissible. ELSA filed
an appeal, finally dismissed on 26 May
2022.
Litigations with the Romanian Court of
Accounts for the annulment of the ad-
ministrative act – Decision no. 11/27 Feb-
ruary 2017.
Bucharest
Court of Ap-
peal
In course of settlement.
Suspension and annulment of the mea-
sures imposed by the Decision of Pra-
hova Court of Accounts no. 45/2016,
following the Control Report of the Pra-
hova Court of Accounts no. 6618/11 No-
vember 2016.
Prahova
Court
Deliberation pending.
Plaintiff: ELSA
Defendant: Roma-
nian Court of Ac-
counts
2229/2/2017
Plaintiff: ELSA
Defendant: Roma-
nian Court of Ac-
counts
7780/2/2018
Plaintiff: EL SERV
Defendant: Roma-
nian Court of Ac-
counts
2098/2/2017
Plaintiff: DEER
Defendant: Roma-
nian Court of Ac-
counts
Intervenient: SERV
1677/105/2017
1
2
3
4
5
Source: Electrica
.
.
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Appendix 1 – Litigations
A.1.1.5 Other litigations with significant impact
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Plaintiff: Nicules-
cu 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 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: Lo-
cal Council of
Oradea City,
RCS&RDS
3340/111/2015
Cancellation of Oradea LCD no.
108/17 February 2014 regarding the
organization of the public auction
for the concession of the 100,000
sqm land area, in order to realize
an underground sewerage for the
placement of electronic and electri-
cal communications networks.
Bihor Court
Plaintiff: Delalina
S.R.L.
Defendant:
DEER
910/111/2016
The obligation to issue technical per-
mit for connection in the favour of
SC Delalina SRL.
Bihor Court
Plaintiff: Carei
City and others
Defendant:
DEER
15600/211/2016*
Claims - it is requested to grant com-
pensation in the form of material and
moral damages, caused, by inter-
rupting the supply of electricity to
the consumers, in the Carei munici-
pality, during 31 December 2014-02
January 2015.
Cluj Special-
ized Court
In first instance, the plaintiff’s action was
partly admitted, it is acknowledged the right
to reparative measures by equivalent for
the land of 1,402 sqm located in Valenii de
Munte, 129, Boulevard. Nicolae Iorga (cur-
rently no. 131), Prahova County.
The Plaintiff and Valenii de Munte Town Hall
filed an appeal. The Plaintiff’s appeal was
admitted and the case was sent for retrial
to the first instance. In the retrial, the first
instance court admitted the right of the
plaintiff to compensatory measures under
the law regarding some measures for com-
pleting the restitution process of the build-
ings taken over abusively, for the land with
an area of 1,402 sqm. Definitive.
At the request of RCS-RDS, the case was
suspended until the case file 2414/2/2016
was settled with Delalina SRL, a file that is
in the role of the Bucharest Court of Appeal.
The file no. 2414/2/2016 was definitively
solved on 22 March 2021, without a request
for reinstatement being formulated, follow-
ing to be ascertained by the court the expi-
ration of the request, DEER no longer hav-
ing an interest in supporting the request for
summons. Lapse term 28 March 2023
The case file was suspended until the set-
tlement of the case file no. 2414/2/2016
with Delalina SRL, case file on the lawsuit
of the Bucharest Court of Appeal. The file
2414/2/2016 was definitively resolved on 22
March 2021, without being formulated by
the plaintiff request for reinstatement, rea-
son for which on 24 February 2022 the Satu
Mare Court found the expiration of the re-
quest for summons, the solution being final.
On 21 April 2021, the court rejects the ac-
tion of a plaintiff as a result of admitting the
exception of lack of capacity to use, rejects
the exception of lack of active procedural
quality of plaintiffs, invoked by defendants,
rejects the exception of lack of passive pro-
cedural quality of defendant DEER, rejects
the exception of lack of procedural quality
liabilities of the defendant Electrica Furniza-
re SA and admits in part the action in con-
tradiction with the defendant ELECTRICA
FURNIZARE SA. Dismisses as unfounded the
request for formal proceedings by the appli-
cants in the preceding paragraph in contra-
diction with DEER. Obliges the defendant
ELECTRICA FURNIZARE S.A., to pay the
moral damages in favor of the plaintiffs in
a differentiated way, in the amount of RON
500 for some of the plaintiffs, RON 750 and
RON 1,000 for other plaintiffs, rejecting at
the same time the moral damages for other
plaintiffs. Appeal filed by Electrica Furniza-
re. In appeal, the court rejects, as unfound-
ed, the main appeal declared by the appel-
lant Electrica Furnizare SA and rejects, as
unfounded, the incidental appeal declared
by the respondents TN, and MC. Recourse
definitively dismissed. Definitely settled at
20 January 2023
1
2
3
4
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Appendix 1 – Litigations
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Plaintiff: Delalina
S.R.L., Foto Dis-
tributie S.R.L.
Defendant:
DEER, ANRE,
Romanian Gov-
ernment, Minis-
try of Economy,
Commerce and
Relationships
with the Busi-
ness Environ-
ment, Ministry
of Energy, Banat
Enel Distribution,
Muntenia Enel
Distribution,
Dobrogea Enel
Distribution
2414/2/2016
Plaintiff: Delalina
S.R.L., Foto Dis-
tributie S.R.L.
Defendant:
ANRE
Intervener: DEER
4013/2/2016
Cancellation of administrative acts
(Order 73/2014, Concession agree-
ments).
High Court of
Cassation and
Justice
The cancellation of the ANRE deci-
sion on refusal to give licenses for
electricity distribution.
Court of Ap-
peal Bucharest
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.
Timisoara
Court of Ap-
peal
5
6
7
First court has rejected the exceptions and
the action filed by the plaintiffs, which have
initiated an appeal; On 22 March 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 rejected as unfound-
ed the appeals filedby E-Distributie Munte-
nia SA (former Enel Distributie Muntenia),
E-Distributie Banat SA (former Enel Dis-
tributie Banat) si E-Distributie Dobrogea SA
(former Enel Distributie Dobrogea). Dismiss-
es, as unfounded, the cross - appeal brought
by the appellant - defendant Ministry of
Economy, Entrepreneurship and Tourism
(Ministry of Economy) and the cross - ap-
peal filed by the Ministry of Energy against
the same sentence. Final.
The file was suspended on 03 April 2017 un-
til the settlement of the file 2414/2/2016. The
file 2414/2/2016 was definitively resolved on
22 March 2021, without being formulated by
the plaintiffs request for reinstatement, rea-
son for which on 30 March 2022 the Bucha-
rest Court of Appeal found the expiration of
the request for summons in judgment, the
solution being final.
The first court admits the exception of the
lack of active procedural quality of ELSA
and dismisses the action. ELSA filed an ap-
peal, dismissed as unfounded. ELSA filled an
appeal, admitted by court, which sends the
case for retrial to Caras Severin Court. Retri-
al – the appeal was dismissed as unfounded.
ELSA filed a recourse, definitively dismissed
by the Court.
Plaintiff: E-Dis-
tributie Banat
Defendant: ELSA
8
12857/3/2019
(i) ELSA’s compliance with the ob-
ligation of not to do regarding the
share capital and the AoA of the
EDB and the termination of abusive
actions consisting of the requests
addressed to the ONRC to change
the structure of the share capital
and the articles of association of the
EDB by increasing the share capital
with the value of the land in the Cer-
tificates of attestation of the prop-
erty right 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, consequent-
ly, 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 owned by
ELSA based on CADP on the used
land from EDB; (iii) As against to the
abusive actions taken in the EDB’s
opinion, ELSA’s obligation to pay
the damages whose existence and
amount will be proved by the dead-
line provided by law.
Bucharest
Court of Ap-
peal
Case dismissed on merits; appeal definitive-
ly dismissed by the court.
9
Plaintiff: ELSA,
SAPE
Defendant:
E-Distributie
Banat
949/39/2019
Action for the annulment of Share-
holders resolution 5/06 Decem-
ber 2018 (share capital increase for
SAPE).
Timisoara
Court of Ap-
peal
Case dismissed on merits; an appeal was
filed, in course of settlement.
At this case was connected the case no.
988/30/2019.
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Appendix 1 – Litigations
Crt.
no.
Parties/Case
file number
Object
Court
Case status
Bacau Court of
Appeal
The action was definitively dismissed on
merits on 04 April 2022.
1. obliging the defendant to leave
us in full ownership and posses-
sion 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 the tabular status with the
real legal situation of the building,
respectively the cancellation of the
property right of the tabular own-
er Targu Neamt City and the reg-
istration of the property right of
the Energy Company 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 documents 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 inappro-
priate entries made in it, in order to
agree on the tabular status with the
real legal situation of the building,
respectively the cancellation of the
property right of the tabular own-
er 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.
Bacau Court of
Appeal
1.obliging the defendants to leave
us in full ownership and posses-
sion of the land surfaces that over-
lap with the land located in 1, Aleea
street, Videle, Teleorman
FRE
county, for which we hold CADP.
2. the delimitation of the above-men-
tioned properties, by establishing
the boundary
line according to
the property deeds of the parties;
3. rectification of the entries in the
land book and registration of the
property right of the plaintiff ELSA
on this area of land
Videle Court
Appeal against Decision no. 1177 / 13
November 2020 of the ANARC Pres-
ident. It was requested the partial
annulment of the ANCOM decision
and the complete rejection of the
Telekom Romania request.
Bucharest
Court of Ap-
peal
The court of first instance partially annuls
the Decision of the Local Council of Bicaz
no. 94/25 August 2016, respectively re-
garding the surface of 10,524 sqm of urban
land 3, Bicaz, Energiei street (former Plant),
located at the last position of the table in
the Annex to HCL no. 94/25 August 2016,
following the admission of the exception of
illegality, invoked by the plaintiff. 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, Energiei
street, Neamt County (former Uzinei), in
the sense of deleting the property right of
the defendant Bicaz city, as a result of the
partial annulment of HCL no. 94/25 August
2016, regarding this land. Rejects as un-
founded the applicant’s request to order 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, Neamt County (former Uzinei), in
the sense of registering the ELSA property
right over the above mentioned land. ELSA
filed an appeal, dismissed by the court. The
decision was appealed, the recourse being
definitively dismissed on 09 January 2023.
Admits in part the request for summons
and consequently: establishes the land line
boundary of the plaintiff’s property (ELSA)
on the current boundarylines, outlined on
the situation plan related to the completion
of the expert report, with the coordinates in-
dicated by the expert, land delimited 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 eliminate any virtual overlap be-
tween the land belonging to the plaintiff,
with the boundary line as previously estab-
lished, and the land registered in this land
book. Dismisses the action as unfounded.
Appealable within 30 days from it’s commu-
nication. Definitively settled.
Action dismissed on the merits. With appeal
within 15 days from communication.
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
Action dismissed on the merits. With appeal
within 15 days from communication.
Plaintiff: ELSA
Defendant: UAT
Targu Neamt
10
122/321/2020
Plaintiff: ELSA
Defendant: UAT
Bicaz
11
91/188/2020
12
13
14
Plaintiff: ELSA
Defendant:
Videle City,
through Mayor
948/335/2020
Plaintiff: DEER
Defendant: AN-
ARC (ANCOM)
andTelekom Ro-
mania Communi-
cations SA
7407/2/2020
Plaintiff: Valenii
de Munte City
Hall
Defendant:
DEER
2848/105/2020
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Appendix 1 – Litigations
Crt.
no.
15
Parties/Case
file number
Plaintiff : ELSA
and the subsid-
iaries
Defendant:
Romanian
Government
3781/2/2020
Object
Court
Case status
Annulment of 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 ap-
peal, admitted by the court on 27 June 2022.
The court annuls the Government Decision
no. 1041/2003 on some measures to regu-
late the facilities granted to pensioners in
the electricity sector. Final.
16
Plaintiff: Grup 4
Instalatii
Defen-
dant: DEER
375/1285/2021
17
Plaintiff: ELSA
Defendant: Kau-
fland Romania
SCS, Deva City,
through the
Mayor and Deva
City Council
156/221/2021
The obligation of DEER to recog-
nize, to respect the property right
of G4Installatii regarding the build-
ings located in Cluj Napoca, 28A, Ilie
Macelaru Street and 2, Uzinei Elec-
trice 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, build-
ing 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 registra-
tions in the sense of: the annulment
of the tabulation conclusions by
which the DEER property right was
registered, the deregistration of the
land book property right, the regis-
tration 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 mu-
nicipality, 1, Dorobanti street, Huned-
oara county, as follows: (a) Kaufland
Romania 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
Municipality - land areas: (i) 2 sqm
(part of the “Playground for chil-
dren”), 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 over-
laps to the SW with the land owned
by Electrica; 2. the delimitation of
the above-mentioned properties,
by establishing the boundary line
according to the property deeds of
the parties; 3. rectification of the en-
tries in the land book regarding the
above-mentioned land areas, in the
sense of eliminating the inappropri-
ate entries made, in order to recon-
cile the tabular status with the real
legal situation of the real estate, re-
spectively of the cancellation of the
property right tabular owners and
the registration of the property right
of the applicant ELSA over these
land areas.
Cluj Tribunal
The court admits the exception of the ma-
terial incompetence of the Cluj Specialized
Tribunal, an exception invoked ex officio and
consequently declines the competence to
resolve the request for summons in favor of
the Cluj Tribunal-Civil Section. Case admit-
ted in part. Appealable within 30 days from
it’s communication.
Hunedoara Tri-
bunal
Action admitted in part. ELSA filed an ap-
peal, debating pending on the lack of mate-
rial competence of the court.
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Appendix 1 – Litigations
Crt.
no.
Parties/Case
file number
Object
Court
Case status
18
Plaintiff: ELSA
Defendant: UAT
Chisineu Cris
2143/210/2020
Plaintiff: Alexan-
dra Borislavschi
Defendant: ELSA
19
ARB - 5670
1. obliging the defendant to leave
us in full ownership and posses-
sion 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 Chisineu Cris,
63, Infratirii 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, located in Chisineu Cris, 63, In-
fratirii 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 inappropri-
ate entries made, in order to rec-
oncile the tabular status with the
real legal situation 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 RON
166,738, representing the percent-
age of 55% of the OAVT package,
in accordance with the provisions of
Annex 3 to the mandate contract no.
42/10 August 2015. 2. Obligation of
the defendant to pay to the plaintiff
damages for non-execution of the
obligation to pay the percentage of
55% of the OAVT package. 3. Obli-
gation of the defendant to pay the
amount of RON 11,973, representing
the annual variable remuneration for
2018. 4. Obligation of the defendant
to pay the amount of RON 24,756,
representing the annual variable re-
muneration related to 2019. 5. Up-
dating the amounts provided in the
preceding
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 pack-
age by the defendant. 6. Obligation
of the defendant to pay the expens-
es incurred by the request for arbi-
tration.
Timisoara
Court of Ap-
peal
Case dismissed on merits and in appeal. It
was filed a recourse, definitively dismissed
by the court.
Vienna Inter-
national Arbi-
tral Centre
Solved by transaction, on 07 February 2022
20
Creditor: Euroto-
tal Comp SRL
Debtor: DEER
1221/1285/2022
Source: Electrica
Insolvency – RON 1,255,000
Cluj Court of
Appeal
The amount has been entirely paid on 3 Jan-
uary 2023 and the creditor waived the trail
of the insolvency request, subsequently fil-
ing a recourse. Term for recourse: 11 April
2023.
Appendix 2 – Details of the main investments of Electrica Group during 2022
Appendix 2 – Details of the main
investments of Electrica Group
during 2022
In 2022 the most significant investments of Electrica Group are the following:
DESCRIPTION
Value
(RON mn)
MUNTENIA NORD
Modernization and SCADA integration of the 110/20/6 kV Buzau Est substation
Modernization of 20kV OHL by replacement of insulation and conductors (20kV OHL Urleasca
- SR Ramnicelu, 20kV OHL Lacu Sarat - SRPD 1-4, 20kV OHL Romanu - T. Vladimirescu and 20
kV OHL Gropeni - Tichilesti)
Modernization of distribution network in Zidari neighbourhood, Rm. Sarat, locality, Buzau
County
Integration of “industrial & commercial consumers” from SDEE MN area in automatic meter
reading systems
Modernization of distribution network in Foltesti locality, PTA 7054 CAP, PTA 7052 no. 6, PTA
7051 VA, PTA 7055 Moara and PTA 7056 CFR area, Galati County
Voltage level improvement for consumers in Dambovita County, commune Odobesti, Ziduri,
Crovu, Brancoveanu, Miulesti localities.
20 kV OHL modernization by replacing 20 kV OHL insulation and conductors Faurei-Faurei,
Braila County
Modernization of Substation 20/6kV Grup Scolar Sinaia
Modernization of distribution network in the area of PTA 0343 Pogonele and PTA 0108
Pogonele locality, Buzau County
Modernization of 0.4kV OHL and consumer connections from Movila Miresii locality
Installation and/or modernization of security access systems consisting of: anti-intrusion,
access control systems and closed-circuit television, at the units within SR Ploiesti, 16
objectives
Voltage level improvement for consumers supplied from LV OHL in Valeni locality, Dambovita
County
Creating the coexistence conditions with the existing electrical networks, requested for
obtaining the location permit for the Galati ring road, between Brailei street (DN25) and Calea
Prutului Street (E87), Galati municipality
Increasing the power supply reliability of consumers supplied from OHL 20 KV Plopu – loop
between OHL 20 KV Plopu and OHL 20 KV Pleasa 2, Prahova County
Voltage level improvement, commune Tartasesti, localities Baldana, Tartasesti, Gulia,
Dambovita County
Modernization of the heating installation in administrative headquarters with the dispatching
office of SR Buzau
Voltage level improvement for consumers in commune Contesti - villages Contesti, Savesti,
Crangasi, Mereni, Calugareni, Boteni
Modernization of electricity distribution network and connections in Sihlea locality, Vrancea
county
Modernization of electricity distribution network in Jorasti locality, Vanatori commune
Vrancea county
Voltage level improvement PTA 5008 CIA, PTA 5184 IRE, PTZ 5136 CTA, in Gaesti locality, DN
7 area, Dambovita County
Modernization and integration in SCADA of the 110/MV Zatna substation, Braila County
6.89
4.64
4.30
4.07
3.42
3.24
2.83
2.56
2.46
2.28
2.07
2.04
1.95
1.85
1.79
1.76
1.63
1.57
1.52
1.45
1.41
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Appendix 2 – Details of the main investments of Electrica Group during 2022
Appendix 2 – Details of the main investments of Electrica Group during 2022
DESCRIPTION
Value
(RON mn)
DESCRIPTION
Value
(RON mn)
Installation of security, access control, video surveillance, fire detection and signaling systems
for 12 facilities: COR MT JT Valeni headquarters; 20kV Mihai Bravu substation + COR MT JT
Ploiesti; PE Mizil; 20kV Sinaia + PE Sinaia substation; 20kV Slanic + PE Slanic substation; PE
Boldesti; 110kV Floresti substation (system update) + PL Floresti + Floresti Central Warehouse;
110kV Tatarani substation (system update) + PL Tatarani; 110kV Urlati + PL Urlati substation;
Baltesti 110kV substation (system update); 110kV East Ploiesti substation (system update);
connection pole of 110kV Crang substation; Route of connection cable channel to Movila Vulpii
substation
Modernization of 110 kV substations: Filesti, SNG, Tecuci, Ionasesti, replacing 4 pcs. 110/6 kV
power transformers
Voltage level improvement for users in Racari, PT 6156, 6061, 6060,6129,6222,6062, area
Dambovita County
Upgrade and integration in SCADA of secondary circuits related to substations within DEER
SA - SDEE Galati - 13 substations
Installation of security, access control, video surveillance, fire detection and signaling systems
for 8 facilities in SROR Galati: COR MV LV Mun. /Ext. Galati; COR MVLV Tecuci; PL Pechea; PL
Tg. Bujor; Wearhouse 03GL; Abator 110/20 kv substation and Antrepozit 20/6 kV connection
Station, Bujoru 110/20 kV substation; Foltesti 110/20/6kV substation
Modernization of LV distribution network in Matca locality, Galati County, area of PTA 4207
Matca 2 si PTA 4206 Matca, stage 1
Voltage level improvement in localities: Odaia Turcului, Cretulesti, Poroinica, Putul cu Salcie,
Salcioara, from Matasaru commune, Dambovita County
Increasing the power supply reliability of consumers supplied from 20 KV OHL Plavia,
Iordacheanu feeder and 20 kV OHL Mizil, Fantanele feeder
SOC (Security Operations Center) implementation and standardization of Security
Technologies used (SOC DEER)
Modernization of distribution network and connections in Podul Lacului locality, Poiana Cristei
commune, Vrancea County
Installation of security, access control, video surveillance, fire detection and signaling systems
for 8 facilities in 3 sites SROR Braila: Operational distribution Center MV/LV Braila Exterior-
Working Point Insuratei; 110/20 kv Faurei Substation; 110/20 kv Romanu Substation
Modernization of 110 kV substations: Km 221- replacement of 110/6kV power transformer
(Trafo 2), Spiru Haret- replacement of 110/6kV power transformer (Trafo 3), SRPA 1A Lacu
Rezii- replacement of 110/6kV power transformer (Trafo 2)
Modernization of distribution network and voltage improvement in PTA 5447 nr 1 si PTA 5449
area, Cismele locality, Smardan commune
Modernization of UGC 20KV Focsani
Modernization of Energy Meter Box of residential buildings supplied from PTZ 0078 - PTZ
0106, Milcovului street, Campina City, Prahova County
Voltage level improvement in Salciile village, Prahova County
TRANSILVANIA SUD
Modernization of LV network commune Apoldu de Jos, Sibiu County
Modernization of LV OHL and connections in Hodac locality, Mures County
MV network decentralization in Vladeni, Principala street (PT 8 CFR Vladeni - in consumer
management) and connections modernization, systematization and securing in Vladeni
locality, Brasov County
Voltage level improvement and modernization of LV OHL and connections in Deda locality,
Mures County
Security of supply and voltage level improving of 20 kV network in Regin, Mures County
Modernization of 0.4 kV OHL Blaj, on streets: Eroilor (partially), Fabricii, Locomotivei,
Fochistilor, Ceferistilor, Dr. V. Suciu, I.M. Klein, Gh. Sincai and A. Muresanu, Blaj municipality,
Alba County- stages 1,2 and 4
Modernization of OHL 20 kV Baita locality, Alba County - Stage 1
Decentralization of the MV network in the area “Pompe Apa”, switchover to 20 kV of the MV
network, Sanpetru locality, Brasov County
Voltage level improvement and modernization of LV OHL in Saulia de Campie, Mures County
Spare supply for 20 kV busbars construction- Sanpaul substation, Mures County
Modernization of 20 kV distribution network Sovata – Oras2, Sovata locality, Mures County
Voltage level improvement and connections securing in Vatava locality, Mures County
1.37
1.36
1.34
1.19
1.20
1.17
1.16
1.08
1.08
1.07
1.05
1.05
1.04
1.03
1.03
1.00
5.36
3.45
2.09
1.69
1.78
1.90
1.66
3.89
1.62
2.73
1.48
1.25
Voltage level improvements in PTA 9 Harman area, Domnitorilor neighborhood, Brasov
County
Decentralization of MV OHL, conductors’ replacement for LV OHL, modernization of
connections, Daisoara locality, Brasov County
Integration of CEM 110 kV Mures substations in the SCADA DMS system of S.C. FDEE Electrica
Distributie Transilvania Sud S.A.
Increasing the capacity of 20 kV distribution network, Drumul Poienii-Schei area, Brasov city
Modernization of 0.4 kV distribution network in Dumbraveni locality, Sibiu County
Modernization of 20kV UGC in Brasov City, streets: Ioan Eliade Radulescu, Dimitrie Anghel,
Abatorului, Grigore Ureche, Nicolae Pop, Independentei
Voltage level improvement and LV OHL modernization in Bucerdea Granoasa, Alba County
Upgrade of SCADA DMS DEER System - UOR Transilvania Sud
Voltage level improvement and 0.4 kV OHL modernization in Salciua de Jos village, Alba
County
Site Clearance works for the achievement of the objective - Reducing carbon emissions in the
City of Cugir, based on the sustainable urban mobility plan, Alba County - City Hall of the City
of Cugir
Works to increase the network capacity, upstream of the connection point in the Stupini
station (for the Milk Processing Factory), Brasov County
Modernization of 20kV distribution network in the area of 110/20 kV Barabant substation,
Alba Iulia Municipality, Alba County
Increasing the power supply reliability of 20kV network in Triaj neighbourhood, Sanpetreu
commune and voltage level increasing in area Oneves, Brasov County
Modernization of 0.4 kV OHL in central area of Reghin City, PT 14, 55/15, 71, 65 area, Mures
County
Modernization of 0.4 kV distribution network and connection on streets Budiului, Bega,
Mestecanisului, Tg. Mures city, Mures County
The integration of the reclosers from SROR Mures, Mures county, into the existing remote-
control system of SDEE TS
Voltage level improvement in OHL Ojdula, Covasna County
Modernization of UGC 20 kV (Zizin Substation– PT 53.27.02 Cosmos, UGC 20 kV PT 53.27.02
Cosmos-PT 53.27.05; UGC 20 kV st. Zizin - PT 53.25.01 Orizont 3000 – UGC 20 kV PT 53.25.01
Orizont 3000-PT 53.25.02; UGC 20 kV PT 53.25.18-PT 53.25.03), related to Minerva, Neptun,
Apollo, Saturn, Calea Bucuresti, Zorilor, Ciprian Porumbescu, Muncitorilor streets, Brasov
Municipality, Brasov County
Modernization of 0.4 kV network and connections in the area Piata Onesti and Str. Mioritei,
Targu Mures Municipality, Mures County
Modernization of urban networks (changing 0.4KV OHL to UGC) on streets: 1 Decembrie,
Puskas Tivadar, Ciucului, jud. Covasna Sf Gheorghe Municipality, Covasna County
Voltage level improvement and modernization of 0.4 kV OHL and connections in Valea Barni
and Barbesti, Alba County
Modernization of 0.4 kV distribution network in Alma Vii village, Mosna commune, Sibiu
County
Modernization of 0.4 kV distribution network, Barghis commune, Sibiu County
Voltage level improvement and modernization of 20kV and 0.4 kV OHL and connections in
Sangiorgiu de Mures and Cotus localities, Mures County, Volume I - Cotus and Tofalau villages
TRANSILVANIA NORD
Modernization of LV OHL and connections in Rus locality, PTA1 and PTA2 area, Maramures
County
Switchover to 20 kV of substations PA 1, PA 2 and PA 6 Baia Mare
Modernization of SCADA communication remote-controlled equipment Baia Mare Branch
Modernization of low voltage OHL and connections in the area PT 1, PT 2, PT 3, PT 4, PT 6
Berinta, Maramures County
Modernization of 20 kV OHL Alesd-Fasca
Power injection in the South and West areas of Biharia locality, Bihor County
Increasing the power supply reliability in area Paleu, Bihor County
Modernization of LV OHL Tulca
Modernization of LV OHL and power injection in Cubulcut locality, Bihor County
1.50
1.88
1.27
3.57
3.06
2.87
2.83
2.82
2.11
2.08
1.93
1.76
1.70
1.64
1.54
1.47
1.46
1.37
1.26
1.17
1.10
1.01
1.00
1.00
1.02
2.87
1.02
1.82
1.98
1.68
1.52
1.60
1.28
.
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I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
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P
E
R
L
A
U
N
N
A
196
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S
A
C
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L
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2
2
0
2
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A
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N
N
A
197
Appendix 2 – Details of the main investments of Electrica Group during 2022
Appendix 2 – Details of the main investments of Electrica Group during 2022
DESCRIPTION
Modernization of low voltage networks in Baia Mare municipality, historical centre, stage 2
Modernization of 20 kV OHL Leordina, Volume 1
Modernization of the Sarmasag 110/20 KV substation
Modernization of MV OHL Juc Geaca between R Gadalin and R Geaca
Increasing the power supply reliability in Floresti, Cluj County, vol. 5, Modernization of Abator
Fider and construction of Cimitir and Polygon Fiders
Increasing the power supply reliability in Floresti locality, Cluj County- Vol.6 Modernization of
Iazuri Fiders
Systematization of 20 KV UGC D1, D2, D3 exit from Gherla Substation and increasing the
reliability of consumers supply by mounting a new secondary substation PTAB, Gradinarilor
street, Gherla locality, Cluj County
Systematization of feeders exit from 110/20/10 KV Campului Substation and modernization of
feeders Manastur 9, Manastur 10 and UAC Manastur neighborhood, Cluj-Napoca Municipality,
Cluj County
PTA relocation and 0.4 kV OHL modernization including connections in the Valea Calda PTA
area, loc. Valea Calda, Cluj County
Modernization and relocation of PTA Negrilesti, PTA Negrilesti 2, PTA Negrilesti 3 and
modernization of LV OHL and connections in these area, Negrilesti locality
Increasing the power supply reliability, modernization of 20 kV and 0.4 kV UGC in Fabricii
Zalau street area and energy quality improving for consumers supplied from PT Mase Plastice
Extension of public distribution network in Poienile de sub Munte locality, Cornatea area,
Maramures County
Extension of public distribution network in Grosii Tiblesului locality, Valea Tiblesului (Bradului)
area, Maramures County
Development of Intelligent Measurement Systems SMI Cluj - stage 2 Gherla 2022
Intelligent Measurement System 2021 DEER Cluj-rural regional structure
Value
(RON mn)
1.58
1.15
3.90
2.14
1.71
1.28
1.66
1.14
1.00
1.02
1.19
1.42
1.05
1.96
2.64
During 2022, the largest transfers from tangible assets in progress to tangible assets, representing
mainly commissioning of investments, are the following:
DESCRIPTION
Value
(RON mn)
MUNTENIA NORD
Modernization and integration in SCADA of the 110/20/6 kV Buzau Est substation
Modernization of 20kV OHL by replacement of insulation and conductors (20kV OHL Urleasca
- SR Ramnicelu, 20kV OHL Lacu Sarat - SRPD 1-4, 20kV OHL Romanu - T. Vladimirescu and 20
kV OHL Gropeni - Tichilesti)
Voltage level improvement for consumers supplied from LV OHL in Valeni locality, Dambovita
County
Modernization of distribution network in the area of PTA 7054 CAP, PTA 7052 no. 6, PTA 7051
VA, PTA 7055 Moara and PTA 7056 CFR, Foltesti locality, Galati County
Modernization of distribution network in the area of Zidari neighbourhood, Rm. Sarat, locality,
Buzau County
Modernization of 20 kV OHL Faurei - Faurei by replacing insulation and conductors, Braila
County
Installation and/or modernization of security access systems consisting of anti-intrusion,
access control systems and closed-circuit television, for 16 objectives within SR Ploiesti
Modernization of 0.4kV OHL and consumer connections from Movila Miresii locality
Modernization of distribution network in the area of PTA 0343 Pogonele and PTA 0108
Pogonele locality, Buzau County
Modernization of electricity distribution network in Jorasti locality, Vanatori commune Vrancea
county
Voltage level improvement for consumers in commune Contesti - villages Contesti, Savesti,
Crangasi, Mereni, Calugareni, Boteni
Modernization of the heating installation in the administrative headquarters with dispatching
office of SR Buzau
Installation and/or modernization of security systems consisting of: anti-burglary, access
control and closed-circuit television, at units within SR Braila - 17 objectives
Increasing the power supply reliability of consumers supplied from 20 KV OHL Plopu – loop
between 20 KV OHL Plopu and 20 KV OHL Pleasa 2, Prahova County
7.24
4.31
3.93
3.67
3.51
2.20
2.10
2.07
2.07
1.93
1.85
1.79
1.68
1.59
DESCRIPTION
Value
(RON mn)
Installation of security, access control, video surveillance, fire detection and signaling systems
for 12 facilities: COR MT JT Valeni headquarters; 20kV Mihai Bravu substation + COR MT JT
Ploiesti; PE Mizil; 20kV Sinaia + PE Sinaia substation; 20kV Slanic + PE Slanic substation; PE
Boldesti; 110kV Floresti substation (system update) + PL Floresti + Floresti Central Warehouse;
110kV Tatarani substation (system update) + PL Tatarani; 110kV Urlati + PL Urlati substation;
Baltesti 110kV substation (system update); 110kV East Ploiesti substation (system update);
connection pole of 110kV Crang substation; Route of connection cable channel to Movila Vulpii
substation
Modernization of electricity distribution network and connections in Sihlea locality, Vrancea
county
Voltage level improvement, Dambovita County, commune Tartasesti, localities Baldana,
Tartasesti, Gulia
Upgrade and integration in SCADA of secondary circuits related to substations within DEER SA
- SDEE Galati - 13 substations
Modernization of distribution network and connections Podul Lacului Locality, Poiana Cristei
commune, Vrancea County
Modernization of Substation 20/6kV Grup Scolar Sinaia
Modernization of Energy Meter Boxes in residential buildings, supplied from PTZ 0078 - PTZ
0106 Milcovului street, Campina City, Prahova County
Voltage level improvement Dragodana commune, Dragodana, Straosti, Burduca, Cuparu
localities, Dambovita County
Installation of security, access control, video surveillance, fire detection and signaling systems
for 8 facilities in SROR Galati: COR MV LV Mun. /Ext. Galati; COR MVLV Tecuci; PL Pechea; PL
Tg. Bujor; Wearhouse 03GL; Abator 110/20 kV substation and Antrepozit 20/6 kV connection
Station, Bujoru 110/20 kV substation; Foltesti 110/20/6kV substation
SOC (Security Operations Center) implementation and standardization of Security
Technologies used (SOC DEER)
Integration of “industrial & commercial consumers” from MN area in automatic meter reading
systems AMR
TRANSILVANIA SUD
Voltage level improvement and modernization of LV OHL and connections in Deda locality,
Mures County
Decentralization of the MV network in the area “Pompe Apa”, switchover to 20 kV of the MV
network, Sanpetru locality, Brasov County
Modernization of the 0.4 kV network, Hipodrom 1, 2, 3 area, Sibiu municipality, Sibiu County
Reconstruction, modernization of PA Textila Prejmer, Brasov County
MV network decentralization in Vladeni, Principala street (PT 8 CFR Vladeni - in consumer
management) and connections modernization, systematization and securing in Vladeni locality,
Brasov County
Modernization of 0.4 kV OHL and connections PT 1 Vidacut, Odorheiu Secuiesc, PL Cristuru
Secuiesc localities, Harghita County
Integration of CEM 110 kV Mures substations in the SCADA DMS system of S.C. FDEE Electrica
Distributie Transilvania Sud S.A.
Modernization of LV network in Apoldu de Jos commune, Sibiu County
Increasing the capacity of 20 kV distribution network, Drumul Poienii-Schei area, Brasov city
Modernization of 20kV UGC in Brasov City, streets: Ioan Eliade Radulescu, Dimitrie Anghel,
Abatorului, Grigore Ureche, Nicolae Pop, Independentei
Voltage level improvement and LV OHL modernization in Bucerdea Granoasa, Alba County
Voltage level improvement and 0.4 kV OHL modernization in Salciua de Jos village, Alba
County
Modernization of 0.4 kV OHL Blaj, on streets: Eroilor (partially), Fabricii, Locomotivei,
Fochistilor, Ceferistilor, Dr. V. Suciu, I.M. Klein, Gh. Sincai and A. Muresanu, Blaj municipality,
Alba County- stages 1,2 and 4
Modernization of 0.4 kV distribution network in Dumbraveni locality, Sibiu County
Power supply of residential buildings in Sibiu city, Calea Surii Mici Street, Sibiu County; estate
developer SC Solid Investment S.R.L.
Modernization of 0.4 kV distribution network, Buzd village, Brateiu commune, Sibiu County
Increasing the power supply reliability of 20kV network in Triaj neighbourhood, Sanpetreu
commune and voltage level increasing in Oneves area, Brasov County
1.46
1.40
1.37
1.20
1.20
1.19
1.15
1.13
1.08
1.08
1.60
1.73
4.03
4.22
0.98
1.5
0.66
1.63
6.10
3.56
3.02
2.70
2.04
1.91
1.89
1.82
1.82
1.79
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A
198
Appendix 2 – Details of the main investments of Electrica Group during 2022
Appendix 2 – Details of the main investments of Electrica Group during 2022
DESCRIPTION
Value
(RON mn)
DESCRIPTION
Value
(RON mn)
Modernization of 20kV distribution network in the area of 110/20 kV Barabant substation, Alba
Iulia Municipality, Alba County
Power supply reliability increasing the and voltage level improvement of 20 kV distribution
network in Reghin, Mures county
Site clearance to achieve the objective - Reducing carbon emissions in the City of Cugir, based
on the sustainable urban mobility plan, Alba County - City Council of Cugir City
Works to increase the network capacity upstream of the connection point in the Stupini station
(for the Milk Processing Factory), Brasov County
Modernization of OHL 20 kV loc. Baita, Alba County - Stage 1
Voltage level improvement and modernization of LV OHL in Saulia de Campie, Mures county
20 kV network modernization Sovata – Oras2, Sovata locality, Mures County
Modernization of 0.4 kV distribution network and connection on streets Budiului, Bega,
Mestecanisului, Tg. Mures city, Mures County
Modernization of 0.4 kV OHL in central area of Reghin City, PT 14, 55/15, 71, 65 area, Mures
County
Replacement of 20 kV capacitor bank in 110/20 kV Ludus substation, Mures County
Modernization of UGC 20 kV (Zizin substation– PT 53.27.02 Cosmos, UGC 20 kV PT 53.27.02
Cosmos-PT 53.27.05; UGC 20 kV st. Zizin - PT 53.25.01 Orizont 3000 – UGC 20 kV PT 53.25.01
Orizont 3000-PT 53.25.02; UGC 20 kV PT 53.25.18-PT 53.25.03), related to Minerva, Neptun,
Apollo, Saturn, Calea Bucuresti, Zorilor, Ciprian Porumbescu, Muncitorilor streets, Brasov
Municipality, Brasov County
Voltage level improvement in OHL Ojdula, Covasna County
Modernization of 0.4 kV network and connections in the area Piata Onesti and Str. Mioritei,
Targu Mures Municipality, Mures County
Modernization of urban networks (changing 0.4KV OHL to UGC) on streets: 1 Decembrie,
Puskas Tivadar, Ciucului, jud. Covasna Sf Gheorghe Municipality, Covasna County
Modernization of LV OHL and connections in Hodac locality, Mures county
Voltage level improvement and connections securing in Vatava locality, jud. Mures
Voltage level improvement and modernization of 0.4 kV OHL and connections in Valea Barni
and Barbesti, Alba County
Modernization of 0.4 kV distribution network in Alma Vii village, Mosna commune, Sibiu
County
TRANSILVANIA NORD
Construction of MV UGC to increase energy supply security for consumers supplied from 110/6
kV CET 1 substation - SDG 6 kV, Oradea Municipality, Bihor County
Integrated security, monitoring and intervention system for substations within SDEE TN area
Modernization of 110/20/6 kV Prundu Bargaului substation
Modernization of low voltage OHL and connections in the area PT 1, PT 2, PT 3, PT 4, PT 6
Berinta, Maramures County
Modernization of the 110/20 kV Nistru substation
Modernization of 110kV SM2 substation and construction of 20 kV busbar
Intelligent Measurement System 2021 DEER Cluj-rural regional structure
Development of Intelligent Measurement Systems SMI Cluj - stage 2 Gherla 2022
Development of Intelligent Measurement Systems SMI Cluj – Dej vol.2A
Systematization of 20 KV UGC D1, D2, D3 exits from Gherla Substation and supply quality
improvement for consumers by mounting a new secondary substation PTAB, Gradinarilor
street, Gherla locality, Cluj County
Network decentralization and power injection in Spicului street, Cluj Napoca municipality, Cluj
County
Modernization of MV OHL Juc Geaca between R Gadalin and R Geaca
Modernization of pole mounted substations, SDEETN – Cluj napoca Branch, Cluj County,
Volume 2
Modernization of the Sarmasag 110/20 KV substation
Modernization of switching equipment related to MV OHL for the Cluj-Napoca Electric Energy
Distribution Branch, Cluj County
Network decentralization and power injection in Feleacu commune, Sub Coman area
1.79
1.78
1.77
1.77
1.70
1.69
1.68
1.64
1.64
1.56
1.48
1.46
1.41
1.34
1.34
1.26
1.18
1.02
3.33
3.13
3.11
2.65
2.60
2.56
4.16
2.07
1.33
2.30
2.46
2.20
1.95
1.65
2.78
1.11
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E
2
2
0
2
T
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O
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R
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A
U
N
N
A
200
Modernization of MV UGC in order to increase reliability of power supply: Iosia-PTZ Wagner
Station; PTAb Protectia Mediului-PTZ 24 ZV; PTAb Colinelor 2-PTAb Gh.Doja 2-PTAb Gh.Pop
de Basesti-STE I
Modernizaton of 20 KV OHL Beius - Budureasa
Modernization of 20 kV OHL Palota - Cheresig
Construction of MV UGC to increase the quality of electricity supply in the Bratca-Valea
Crisului area
Modernization of MV UGC in Central area and Iosia area, Oradea Municipality
Increasing the power supply reliability in area Paleu, Bihor County
Systematization of feeders exits from 110/20/10 KV Campului Substation and modernization of
feeders Manastur 9, Manastur 10 and UAC Manastur neighborhood, Cluj-Napoca Municipality,
Cluj County
Power injection in 0.4 kV OHL PTA2 Rachitele towards Agastau, from Rachitele locality, Cluj
County
Switching over 20 kV voltage of PA 1, PA 2 and PA 6 Baia Mare substations
Extension of public distribution network in Poienile de sub Munte locality, Cornatea area,
Maramures County
Modernization of LV network and connections in Preluca Noua, PT 1 and PT3 area
Network decentralization and power injection in Mozart Street, Cluj Napoca municipality, Cluj
County
SAP system upgrade to EHP8 version
Modernization of LV OHL Tulca
Modernization of distribution network in Cluj-Napoca Municipality, 21 Decembrie 1989 Blv area
and adjacent streets, Cluj County
Modernization of SCADA communication remote-controlled equipment Baia Mare Branch
Modernization of LV OHL and connections in Rus locality, PTA1 and PTA2 area, Maramures
County
Sursa: DEER
1.51
1.70
1.47
1.12
1.16
1.57
1.21
1.61
2.90
1.36
1.04
1.04
1.03
1.49
1.05
1.02
1.27
.
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2
2
0
2
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A
201
Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory
framework
A.3.1 - Applicable legal framework compared to 2022
vs 2021:
A.3.1.1 Distribution activity
2021
2022
• Distribution activity
ANRE has issued documents for the regulatory framework
that requires additional efforts from distribution operators
in order to comply with the new requirements:
• Distribution activity
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 1 February 2021;
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.3
ANRE approved Order no. 101/30 September 2021 for
the modification and completion of the Methodology for
establishing the tariffs for the distribution service - in force
since 1 October 2021:
- Network losses (NL) 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.
a) Regulations regarding tariffs:
The distribution rates approved for the year 2022 were
approved by ANRE Order no. 119/24 November 2021,
the regional average tariffs for DEER having the following
increases compared to the tariffs of 2021: MN +8.1%; TN
+10.4%; TS +7.4% - in force from 1 January 2022
As a result of GEO 27/2022, the distribution tariffs for the
year 2022 were modified starting on 1 April 2022 to
cover the additional costs related to the NL from the year
2021. By ANRE Order no. 28/23 March 2022, the regional
average tariffs for DEER were approved, with the following
increases compared to the tariffs of 2021: MN +24%; TN
+17%; TS +20%. This tariff increase will allow the recovery
of the amount of RON 363 mn. (RON 353 mn. recognized
2021 NL loss to which inflation was applied) representing
the difference between the effective average purchase cost
of energy for own technological consumption (NL) and the
ex-ante price established by ANRE related to the year 2021
in the period 1 April 2022-31 December 2022, which will
favorably impact the net result related to the distribution
segment in the remaining period of 2022.
ANRE decision no. 610/2022 regarding the approval of the
model for the publication of costs regarding the operation,
maintenance and development of electric transmission
and distribution networks - in force from 1 May 2022.
OD will publish quarterly on their own internet webpages,
both the realized and the budgeted costs.
ANRE order no. 129/2022 for the approval of the
Methodological Norms for the recognition in tariffs of
additional costs with the purchase of electricity to cover
own technological consumption compared to the costs
included in the regulated tariffs - in force from 19 October
2022
- the quarterly capitalization of the additional costs with NL
compared to the costs included in the regulated tariffs,
- the capital costs related to the year 2022 are recognized
in a distinct component related to the additional cost with
NL applicable starting on 1 April 2023, outside the 7%
limitations imposed for tariff increases.
- the recognized NL price for 2022 will be equal to the
reference price calculated as an average among network
operators, increased by 5%
- the additional cost with NL capitalized in 2023 will be
included in the separate NL component applicable in the
year 2024
MF order no. 3900/2022 regarding the approval of the
Accounting Specifications in application of the provisions
of art. III of the Government Emergency Ordinance no.
119/2022- in force from 20 October 2022
- Connection workings done by users - Fixed assets made
in year t of the connection workings paid by users are
Capitalized amounts are recorded in accounting through
accounting item 208 „Other intangible assets”/distinct
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.
analytical account = 721 „Income from the production of
intangible assets”, as follows:
o on 30 September 2022, for the amounts corresponding
to the period 1 January 2022 – 30 September 2022;
o on 31 December 2022, for the amounts corresponding
to the period 1 October 2022 – 31 December 2022;
o on 31 March 2023, for the amounts corresponding to
the period 1 January 2023 – 31 March 2023;
o on 30 June 2023, for the amounts corresponding to the
period 1 April 2023 – 30 June 2023;
o on 31 August 2023, for the amounts corresponding to
the period 1 July 2023 – 31 August 2023;
The amortization of the amounts corresponding to the
recognized assets is recorded in the accounting starting
with the 1st of the month following each of the periods.
ANRE order no. 98/2022 - for the approval of the
Procedure regarding the substantiation and approval of
the development and investment plans of the transport
and system operator and of the electricity distribution
operators - in force from 12 July 2022
The elaboration of the 10-year development plans of the
investment plans for the period or annually is carried out
on the basis of an internal OR procedure. The 2023-2033
plan is submitted to ANRE until 1 July 2023. The 10-year
development plan considers:
o analyses regarding the evolution of production and
consumption, evaluation of the need for vehicle re-
charging points, of the dispatchable consumption po-
tential in the area;
o studies regarding the digitization and integration of
flexibility services required in RED in the medium and
long term;
o analysis of the measures and programs intended to en-
sure the cyber security of IT systems;
o and includes:
o estimated values regarding the impact of delays or
non-realization of the investments contained in the pre-
vious edition of the development plan;
o the stage of implementation of the new obligations
regarding network digitization, flexibility services, in-
tegration of dispatchable consumption and distributed
production from renewable sources;
o presentation and argumentation of the way of correla-
tion and compliance of the Plan with the medium and
long-term Energy Strategy of Romania and with the
National Plan regarding energy and climate Regulation
(EU) 2018/1999;
- The benefits pursued, in total and by voltage levels, will
reduce the approved costs for each year of the regulatory
period and for the entire period, according to the Tariff
Methodology;
In the situation where the OR does not own or partially
owns motor vehicles, the DSO has the right to request
from ANRE the agreement for the establishment in the
reference year of a regulatory period;
-
- The value of the investment plan from own sources must
be equal to the minimum forecasted depreciation for the
period, and not annually.
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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.
b) N/A
c) Licenses
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 2nd of December 2021:
ANRE order no. 24/2022 regarding the amendment of the
Regulation for granting licenses and authorizations in the
electricity sector, approved by ANRE Order no. 12/2015 –
in force starting from 25 March 2022
DSOs have the obligation to send to ANRE:
a. until 31 December 2021 - information on power lines,
power stations and medium and high voltage substations
- the removal of the legal ban on issuing a single license to
the electricity market operator on the electricity market
in Romania;
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
(technical data according to ANRE Order no. 181/2019);
b. until 31 December 2022 - information on medium and high
voltage power lines, according to ANRE Order no. 115/2021
- including economic attributes;
c. until 31 December 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.
ANRE Decision no. 491/30 March 2022 regarding the
granting of the License to the market operator of the
Romanian Commodity Exchange (BRM) was published.
Draft order regarding the approval of the Regulation for the
granting of licenses and authorizations in the electricity
sector - public consultation - phase II
o renaming the types of licenses granted by ANRE, in ac-
cordance with the provisions of art. 10 para. (2) from
the Energy Law;
o taking over within the regulation of all exceptional situ-
ations provided by law in which it is allowed to provide
some services and activities in the field of electricity
without the license issued by ANRE, in accordance with
the provisions of art. 10 para. (4^2), para. (5), para. (6)
and para. (6^2) from the Energy Law;
o the explicit specification of the situation regarding
modification of the license for the commercial exploita-
tion of the energy capacities by including in its con-
tents some energy capacities over which the applicant
can have a provisional exploitation right, until the date
when the license holder obtains the definitive exploita-
tion right, in the case of the transfer of the right of own-
ership/use of the respective energy capacities.
d) Smart metering regulations (SM):
d) Smart metering regulations (SM):
ANRE decision no. 1315/2022 amending the calendar for
the implementation of smart electricity metering systems
at the national level for the period 2019-2028 approved
by ANRE decision no. 778/2019 – effective from 3 August
2022
- ODCs have the obligation that within a maximum of 18
months from the approval of the decision:
- to update the cost-benefit analyzes for the implementation
of intelligent electricity metering systems, taking into
account the changes from the new European legislative
package transposed into national legislation with an
impact on the structure and level of costs and benefits
involved in the process;
- to re-evaluate the degree of implementation of the smart
electricity metering systems in the concession areas and
to submit to ANRE, if necessary, proposals to modify the
implementation calendar of the smart electricity metering
systems for the concession area, correlated with the results
of cost-benefit analyses
ANRE approved Order no. 94 / 18 August 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
- 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-fulfilment 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 fulfil 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
e) Technical regulations
Network connection
Network connection
ANRE approved the Orders regarding the connection activity:
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:
ANRE issued orders for connection in order to harmonize
with the provisions of GEO no. 143/2021:
i. domestic connection - In the case of domestic customers,
upon commissioning of the completed connection works,
DSO will reimburse the applicant the effective value of
- 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 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 in-
terest - 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 Methodolo-
gy for evaluating the financing conditions of the invest-
ments for the localities’ electrification or the electricity
distribution networks’ extension approved by ANRE Or-
der 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;
- 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
the design and execution of the connection, 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,
at the amount reimbursed to the household customer, being
recognized by ANRE as part of the regulated assets base.
ii. non-domestic connection - In the case of non-domestic
customers, the cost of the connection works, including
those for the design of the connection/connection, is fully
borne by the customers. The assets resulting from the
connection works enter the DSO heritage from the moment
of commissioning, without being recognized by ANRE as
part of the regulated assets base.
iii. Issued orders:
- ANRE order no. 17/02 March 2022 - Order for the
amendment and completion of the Regulation regarding
the connection of users to the public interest electrical
networks, approved by ANRE Order no. 59/2013 in force
starting from 4 March, 2022
- ANRE Order no. 18/02 March 2022 - Order approving the
Procedure for the connection to low-voltage public interest
electricity networks of consumption sites belonging to
domestic customers - in force from 7 March 2022 - repeals
ANRE Order no. 17/2021 domestic customers - in force
from 7 March 2022 - repeals ANRE Order no. 17/2021
- ANRE Order no. 21/09 March 2022 - Order amending and
supplementing the Methodology for establishing the tariffs
for the connection of users to the electricity networks of
public interest, approved by ANRE Order no. 11/2014 - in
force since 11 March 2022
- ANRE Order no. 22/09 March 2022 - Order amending and
supplementing ANRE Order no. 141/2014 approving the
specific tariffs and specific indices used to set the tariffs
for connecting users to the public interest electricity grids
- in force since 11 March 2022
- ANRE Order no. 23/09 March 2022 - Order on the
approval of the average values used by the distribution
operator for the reimbursement to household customers
of the cost of design and execution works of a connection
- in force since 11 March 2022
ANRE Order no. 63/2022 amending ANRE Order no. 95/2018
on the approval of mandatory clauses in contracts for the
provision of services in order to carry out connection
works to electricity networks of public interest - in force
since 31 March 2022
- clarification of the applicability of the Binding Clauses in
conjunction with the amendment of Art. 44, para. (4) of
the Connection Regulation, introduced by ANRE Order no.
160/2020. It introduces the possibility for the approved
economic operator to constitute a guarantee of good
performance of the contract in favour of the RO, through
a guarantee instrument issued by non-banking financial
institutions.
- Contracts for the provision of services for the execution of
connection works to the electricity grids of public interest
concluded before the date of entry into force of the Order
shall be updated by the conclusion by the parties of an
additional act within 30 days from the date of entry into
force of the Order.
ANRE Order no. 137/2021 Order for the approval of the
Procedure for the determination of the available capacity
in the electricity networks for the connection of new
electricity generation facilities - in force since 1 March 2022:
- rules for determining the available capacity in RET/RED at
110 kV voltage level;
- rules for publication of data on available capacities;
- deadlines and periodicity of publication of data on
available capacities by grid operators: monthly from 1 April
2022; bi-monthly from 1 July 2022.
ANRE Order for the purpose of harmonization with the
provisions of the ANRE regulatory framework in which
the legislative amendments of GEO no. 143/2021 were
transposed, namely with the provisions of ANRE Orders
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
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 (ATR) - 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 ATR.
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.
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no. 17/2022, no. 18/2022 and no. 19/2022.
- ANRE Order no. 82/2022 - amending and supplementing
ANRE Order no. 74/2014 approving the framework content
of the technical connection permits - in force from 20 June
2022;
- ANRE Order no. 83/2022 - modification and completion of
ANRE Order no. 5/2014 for the approval of the framework
content of the connection certificates - in force from 20
June 2022;
- ANRE Order no. 105/2022 approving the framework
contracts for connection to the electricity networks of
public interest - will repeal ANRE Order no. 164/2020 - in
force from 5 August 2022.
ANRE Order no. 81/2022
- Order amending and
supplementing the Regulation on the connection of users
to the electricity networks of public interest, approved by
ANRE Order no. 59/2013 - in force from 17 June 2022
- requires the OR to complete the value of the costs of
carrying out the general reinforcement works and the
method of payment to the first user and the other users
respectively, in the connection contract it concludes with
the new user;
introduction of the possibility for the OR to conclude a
contract for the design and/or execution of reinforcement
works for the creation of the technical conditions
necessary for the connection of several consumption and/
or production sites, with a specific certified designer and/
or constructor chosen by the user;
-
- the responsibility of the RO/economic operator to obtain
the agreement/authorisation for the execution of the
connection installation, in the case of the direct conclusion
between the user and the approved economic operator
designated by the user of the contract for the design and/
or execution of the connection installation as such:
o o for the connection installation which will be owned
by the user, the document shall be obtained by the user
or, where appropriate, by the designated approved eco-
nomic operator;
o o for the connection facility which will become the
property of the RO, the document shall be obtained by
the OR.
ANRE Order no. 103/2022 for the approval of the Procedure
for the connection to the electricity grids of public interest
of recharging points for electric vehicles - in force from 4
August 2022
- the connection of a new consumption site, consisting of
one or more recharging points for electric vehicles;
- connection of a new consumption/consumption and
production site with electric vehicle charging points, with/
without storage facilities;
installation of one or more electric vehicle charging points
at an existing consumption site/site of consumption and
production with/without storage facilities.
-
- applies in conjunction with the provisions of the Connection
Regulation, the Domestic Connection Procedure and the
Prosumer Connection Procedure in force.
- establishes, for certain stages or actions in the connection
process, shorter deadlines, similar to those provided for
the connection of prosumers.
- when installing one or more recharging points for electric
vehicles at an existing point of consumption, without
exceeding the approved power, the existing ATR/CfR is
not updated, and no additional work is carried out in the
existing electrical installations upstream of the boundary
point.
- the obligation of the DO to draw up its own procedures,
within 30 days of publication in the Official Gazette, for the
organisation of the connection activity for the categories
of users to whom the document is addressed and to make
available to interested parties all relevant information on
the connection process.
Order no. 133/2022 amending and supplementing some
orders of ANRE in the field of connection to the electricity
grid of public interest users - in force since 21 October 2022
- Connection Regulation: (i) deletion of the provision that
connection facilities financed by non-household final
customers become part of the DO’s assets at the time of
commissioning; (ii) addition of the definition of prosumer
- ATR framework content: (i) deletion of the provision
according to which connection facilities financed by non-
household customers enter into the ownership of the DO
at the time of commissioning; (ii) addition of the categories
of users connected to the LV to whom the TO reimburses
the costs of the design and execution of the connection up
to an average value
- Domestic connection procedure: (i) the categories of
users connected to the LV to which the procedure applies
must be completed and included in the contracting parties
provided for in the framework contracts; (ii) the documents
required for the conclusion of the connection contract
must include the certificate issued to the user by the trade
register no later than 30 days before the date of submission
of the certificate, in the case of users other than domestic
customers; (iii) the connection contract must include
the average value of the connection, excluding VAT; (iv)
inclusion of the obligation for the user or the approved
economic operator designated to design and execute the
connection to obtain the consent/authorisation to carry
out the connection, if the contract for the design and
execution of the connection is concluded directly by the
user with the designated approved economic operator;
(v) the introduction of a maximum limit of 5 years from
the commissioning of the connection for the duration of
the connection contract, linked to the legal provision on
the reimbursement of the actual value of the connection
design and execution works, up to the average value of a
connection.
- Connection procedure for prosumers: (i) inclusion of
the possibility of programming the existing meter at
the delimitation point of a consumption site for the
measurement of electricity in both directions, when
installing renewable energy production facilities in the
user’s facilities; (ii) inclusion of an exemption from the
application of the provisions of the procedure, concerning
the electricity metering units required in the prosumers’
facilities, in the sense of not making the installation of such
equipment conditional on the installation of power to the
user’s facility, given the difficulties for the DOs to purchase
such metering units.
- Connection framework contracts - additions to the
RO obligations in order to comply with the derogatory
provisions of the Connection Procedure for prosumers.
- BRML Order no. 77/2022 for the approval of the official
list of fixed means of measurement subject to legal
metrological control - published in Official Gazette no.
332/5 April 2022 - enters into force within 90 days from
the date of publication in MO (4 July 2022)
- For active and reactive electricity meters the metrological
verification will be done every 15 years.
- ANRE Order no. 124/2022 for the approval of the Rules
for congestion management through the market-based
use by network operators of the flexibility of resources in
the distribution networks and those in the transmission
network, of the Rules applicable to the purchase of
reactive electricity for voltage regulation in stationary
mode by the transmission and system operator and of the
Rules applicable to the purchase of reactive electricity for
voltage regulation in stationary mode by concessionary
distribution operators and for the amendment and
completion of ANRE Order no. 127/2021 for the approval
of the Regulation on terms and conditions for balancing
service providers and frequency stabilisation reserve
providers and the Regulation on terms and conditions for
balancing parties - in force from 19 October, and Art. 1, 3
and 4 shall apply from 1 May 2024
Within 12 months the RO shall prepare and submit to ANRE
a proposal on:
o a technical qualification procedure related to the par-
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
ticipation in congestion management in their networks;
o specifications of the products introduced in short-term
energy tenders for congestion management;
o specifications of the products included in long-term ca-
pacity tenders for congestion management;
o the minimum information to be included in the regis-
ter for flexibility resources, as well as the optional ones,
and the access rules for neighbouring ROs;
o a reasoned choice between organising a common plat-
form for all ROs to purchase electricity for congestion
management or a separate platform for each RO;
o option of whether or not to combine any common plat-
form with the Register for flexibility resources.
- Within 12 months the ROs shall
jointly develop a
methodology to establish how they will operate,
collaborate, share information, and establish the rights and
responsibilities of each during the period in which the OTS
continues to identify and manage grid congestion on the
110 kV grids under the responsibility of the ODs.
- Within 16 months from the date of entry into force of
this Order, the DSO and the OTS shall develop their own
operational procedures for the implementation of the
provisions of Annex 1 to the Order.
Draft Order amending and supplementing the Methodology
for issuing site permits by network operators, approved by
Order of the President of the National Energy Regulatory
Authority no. 25/2016 - public consultation
- the definition of “risk analysis” has been introduced as
technical-economic documentation analysing the impact
of non-compliance with regulated coexistence conditions.
It is drawn up by a quality and extra-judicial technical
expert in the field of technological electrical installations,
who holds a credential/certificate issued by ANRE, or by a
qualified expert in technological risk prevention-reduction.
- clarifications have been made regarding the use of the
favourable site opinion conditional to the issue of the
building permit.
- through the changes made, will allow the use of the
coexistence study prepared during the approval phase of
the urban planning documentation and in the procedure
for issuing the site permit.
Prosumers
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:
ANRE Order no. 15/23 February 2022 - Methodology
for establishing the rules for the trading of electricity
produced in power plants from renewable sources with
an installed electrical power of no more than 400 kW per
place of consumption belonging to prosumers - in force
since 1 May 2022
- 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
- The distribution operators ensure the purchase, installation,
sealing, verification, reading and, if necessary, replacement
of the electricity metering groups located in the users’
installations, according to ANRE regulations.
- Consumers owning electricity generating units from
RES with an installed capacity of 400 kW or less per
consumption site may sell the electricity produced and
delivered to the electricity grid to electricity suppliers with
whom they have concluded electricity supply contracts,
according to ANRE regulations.
- At the request of prosumers producing electricity in
electricity generating units with an installed capacity per
place of consumption:
o up to 200 kW - electricity suppliers with whom they
have electricity supply contracts are obliged to make
a quantitative compensation in the bill of prosumers
between the electricity produced and delivered to the
grid and the electricity consumed and to report in the
bills of prosumers the difference between the quantity
of electricity delivered and consumed, if the amount of
energy produced and delivered to the grid is greater
than the amount of electricity consumed, prosumers
may use the reported amount of electricity for a maxi-
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 OTS, 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-SRE) and
prosumers.
-
mum period of 24 months from the date of the invoice.
o o between 200 kW and 400 kW - electricity suppliers
are obliged to purchase the electricity produced and
delivered at a price equal to the weighted average price
recorded in the PZU in the month in which the energy
was produced and to make the financial adjustment be-
tween the electricity delivered and the electricity con-
sumed from the grid in the bill of the prosumers.
Quantitative compensation for prosumers with installations
up to 200 kW per place of consumption will be granted until
31 December 2030, and after this period these prosumers
can sell the electricity produced under the conditions
provided for prosumers with installed capacities between
200 kW and 400 kW per place of consumption.
ANRE Order no. 19/02 March 2022 Order approving
the Procedure for the connection of consumption and
production sites belonging to prosumers to the electricity
networks of public interest - in force since 7 March 2022 -
repealed ANRE Order no. 15/2021
- harmonisation with the provisions of GEO no. 143/2021
ANRE Order no. 104/2022 amending and supplementing
the Procedure for the connection to the public electricity
networks of consumption and production sites belonging
to prosumers, approved by ANRE Order no. 19/2022 - in
force since 4 August 2022
-
introduction of the provision according to which, as an
exception to the rules laid down in the Procedure that
do not provide for the issuance of ATRs or those that
do not provide for the issuance of ATRs prior to the
construction of the electricity production plant, in the case
of prosumers accessing financing programmes for the
installation of power plants for the production of electricity
from renewable sources, the DSO shall issue ATRs prior
to the construction of the electricity production plant,
in compliance with the provisions of the regulatory acts
specific to the respective financing programmes.
ANRE Order no. 95/2022
- Order amending and
supplementing ANRE Order no. 15/2022 approving the
Methodology for establishing the rules for the trading
of electricity produced in power plants from renewable
sources with an installed electrical power of no more than
400 kW per place of consumption belonging to prosumers
- in force since 1 July 2022.
- clarifies the application of the quantitative compensation
between the electricity consumed and the electricity
produced and delivered to the electricity grid by prosumers
owning electricity production units from renewable energy
sources with an installed electrical power of 200 kW or
less per consumption site, given that, after the approval
of ANRE Order no. 15/2022, GEO no. 27/2022 came into
force, which establishes the billing of electricity consumed
by prosumers in the period 1 April 2022 - 31 March 2023.
Draft Order approving the Methodology for establishing the
rules for quantitative compensation between electricity
produced from renewable sources in mobile units equipped
with electricity generation systems during regenerative
braking and delivered to the national electricity system
and electricity consumed from the national electricity
system by prosumers - public consultation
-
- OD to whose grids mobile units generating electricity
during regenerative braking are connected certifies the
quality of prosumer, in order to apply the mechanism of
quantitative compensation according to legal provisions;
In addition, in order to certify the status of prosumer,
the DSO also verifies compliance with the following
requirements: (i) the main activity of the prosumer -
legal entity is not the production of electricity; (ii) the
electricity produced during the recovery break must come
from renewable energy sources and be delivered to the
NES; (iii) the electricity metering system at the interface
with the NES is realized either with smart meters or with
meters that allow at least remote reading, integrable in
smart electricity metering systems, having communication
systems compatible with those of the concessionaire
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
distribution operator to whose networks the electricity
installations are connected.
- The concessionaire DSO shall carry out monthly meter
reading of electricity from renewable sources produced
and delivered to the SEN/consumed from the SEN, in case
the remote reading of electricity meters is not possible for
technical reasons, it shall be determined on the basis of
historical measured data,
- The concessionaire DSO is obliged to store the collected
measured/determined data, as appropriate, for a period of
at least 36 calendar months.
Distribution service performance standard
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 inter-
vention of the human operator;
b) maximum 180 seconds from receiving the call for
the user to be able to select the option to trans-
fer 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
ANRE Order no. 64/2022 amending and supplementing
the Performance Standard for the electricity distribution
service, approved by ANRE Order no. 46/2021 - in force
from 31 March 2022:
- domestic customers, the index reading period can be
longer than one month, but must not exceed 3 months, for
non-compliance compensation is granted 10 lei
- non-household customers, the index reading period can
be longer than one month, but must not exceed 6 months,
for non-compliance is granted compensation 10 lei
- prosumers, the periodicity of reading the index of the
measurement group is a calendar month - compensation
10 lei regardless of voltage level
- OD does not compensate users whose metering units are
located on their property and who have not allowed DSO
access to read the metering unit index within the interval
specified in the bills issued by the electricity suppliers,
with prior notification/approval no more than three times
to the users.
- The DSO is obliged to provide access to historical
consumption data of users benefiting from smart
metering systems, in accordance with the provisions of the
framework conditions for the implementation schedule of
smart metering systems at national level - if the DO does
not meet the deadlines for a period of one month, it is
obliged to pay the user compensation in the amount of
30 lei to JT.
- change DSO timetable for installation of quality analysers
o Transformer substations monitored according to each
stage include also transformer substations that fully
supply users integrated in smart metering systems.
o by 31 December 2023 will monitor at least 50% of the
number of substations and at least 20% of the number
of transformer substations,
o until 31 December 2025 will monitor at least 75% of the
number of substations and at least 60% of the number
of transformer substations,
o by 31 December 2026 will fully (100%) monitor the
number of substations and at least 80% of the number
of transformer substations,
o from 01 January 2028 will fully (100%) monitor trans-
former substations.
OD have the obligation to submit to ANRE, by 30 June
2022, the implementation programme for monitoring the
continuity and quality of electricity with analysers installed
in electricity stations and transformer substations.
Commercial (Trading) Regulations
Commercial (Trading) 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;
ANRE Order no. 82/2021 amending and supplementing the
Regulation on the supply of electricity to end customers,
approved by ANRE Order no. 235/2019 and repealing ANRE
Order no. 130/2015 approving the Procedure for the supply
of electricity to own consumption sites DSO - in force from 1
July 2021 (except for the provisions of art. I points 25-27, 33
and 34 which enter into force on 1 July 2022):
-
in case of change of electricity supplier, customers can
communicate to the new supplier the self-quoted index
at the date of transmission of the notification of change
of supplier; the supplier has the obligation to retrieve and
- 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 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.
-
transmit to the DSO the index self-quoted by the final
customer; the self-quoted index is taken into account by
the DSO when determining the electricity consumption in
the process of change of supplier;
if the end-customer does not transmit the self-read index,
the DSO is obliged to read the metering equipment index
in the period between the date of transmission of the
supplier change notification and the date of the actual
supplier change;
- The DSO is obliged to create and maintain in the database,
for each place of consumption, for each of the months of
January to December, information on the estimated active
electricity consumption, determined as appropriate, based
on: (i) the electricity consumption recorded at the place
of consumption during the same period of the previous
year or the electricity consumption determined taking into
account the most recent readings made by the OD; (ii) the
specific consumption profile, determined by the DSO for
the respective category of final customer if for the place of
consumption there is no consumption history.
- OD has the obligation to allow free access to the data in
the database to all electricity suppliers and to inform them
on how to access the data;
- until 1 November 2021, the ODs are obliged to make
available to electricity suppliers the consumption data
provided for in the order and to publish on their websites
information on how to access this data;
- from 1 January 2022, in the case of consumption places for
which consumption agreements are concluded, the billing
of the distribution service will be carried out by the DO, on
the basis of these agreements, if for these consumption
places there is no index read by the DO or by the final
customer.
ANRE Order no. 90/2022
- Order amending and
supplementing ANRE Order no. 52/2021 approving the
Methodology for monitoring the system for the promotion
of electricity production from renewable energy sources -
in force since 27 June 2022
- regulating the legal aspects related to data reporting
by electricity suppliers who have concluded/purchase
contracts for electricity produced by prosumers, with
whom they have concluded contracts for the supply of
electricity as final consumers, on the manner and format
of reporting, respectively frequency of data reporting.
ANRE Order no. 91/2022 - Order approving the Regulation
on the last instance supply of electricity - in force from 24
June 2022
- Consumption sites that are not disconnected for non-
payment of electricity consumption/withdrawal and
do not have a supply contract in force/are not in the
portfolio of an FUI, are taken over by the LR (the supplier
with the highest market share in the grid area where the
consumption sites are located);
- within a maximum of 3 working days from the date of
entry into force of the order, each concessionaire DSO shall
communicate to the LR the list of consumption sites in its
network area that are in the situations described above;
- the market shares shall be established and published by
ANRE on the basis of the quantities of electricity delivered,
in the period from 1 September 2021 to 28 February 2022,
to customers in each network area, by each of the suppliers
who are also suppliers of last resort;
- within a maximum of 5 working days from the date of
communication of the designation decision, LR and DSO
concessionaires with whom the supplier does not have
electricity distribution contracts, shall conclude such
contracts.
Compliance Regulation
Annual Report and sanctions
ANRE approved Order no. 97/08 September 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
ANRE Order no. 1/19 January 2022 - Order for the repeal
of ANRE Order no. 32/2016 on the approval of the
Methodology for the preparation of the Annual Report by
licensees in the electricity and thermal energy sector and
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
operators that are part of a vertically integrated economic
operator effective 1 January 2022:
on the amendment of some ANRE orders - in force since 21
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;
in the
implementation of the measures provided
compliance program and monitoring the application of
the compliance programs, respectively of the measures
therein;
-
.
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- eliminates the obligation for licensees to draw up the
Annual Activity Report.
- ANRE Order no. 32/2016 is repealed - the information in
the annexes of the Annual Report Methodology shall be
submitted to ANRE in accordance with the provisions of
other orders.
ANRE Order no. 12/23 February 2022 - Order approving
the Procedure for the establishment and individualization
of fines related to the turnover resulting from the control
activity - in force from 1 March 2022
-
It aims to establish the rules necessary for establishing
and individualizing the contravention penalties related to
turnover provided for in the Law on Electricity and Natural
Gas no. 123/2012, art. 95 para. (2) and (3).
ANRE Order no. 13/23 February 2022 - Order approving the
Procedure for the establishment and individualization of
contraventional sanctions related to turnover, by ANRE’s
Regulatory Committee, following investigation actions - in
force since 28 February 2022.
-
Its purpose is to establish and individualize sanctions in
case of committing the offences provided for in art. 93
para. (1) and art. 194 of the Law on Electricity and Natural
Gas no. 123/2012, with subsequent amendments and
additions, hereinafter referred to as the Law, for which
sanctions are provided from the turnover of the year
preceding the application of the sanction.
ANRE Order no. 100/2022 amending and supplementing
the Regulation on the organisation and conduct of energy
investigation activities regarding the functioning of the
wholesale energy market, approved by ANRE Order no.
25/2017 - in force from 4 August 2022
- application of some of the legal provisions in force and by
the members of the Regulatory Committee of ANRE;
-
- extending the scope of investigations into breaches of
the transparency requirements laid down in the ANRE
regulations as well as in European regulations;
introduction of amendments, clarifications and additions
concerning the competence to establish and individualize
sanctions, depending on the nature and timing of their
occurrence; the draft order also includes provisions for
the situation where, during the investigation action, no
contraventions are found.
ANRE Order no. 101/2022 amending and supplementing the
Procedure for the establishment and individualization of
fines based on turnover, by ANRE’s Regulatory Committee,
following investigative actions, approved by ANRE Order
no. 13/2022 - in force from 4 August 2022
- to complete the Procedure with the situations in which the
Regulatory Committee establishes and individualizes the
sanctions by reference to the turnover of the investigated
legal entity, and for the contraventions for which the
investigation team, as investigating agents, applies the
provisions of art. 12 para. (2) of the OG no. 2/12 July 2001
on the legal regime of contraventions, approved with
amendments and additions by Law no. 180/2002, with
subsequent amendments and additions, proposing to
sanction the investigated market participant with a fine in
relation to its turnover;
- correlation with the provisions of ANRE Order no. 25/2017,
as amended and supplemented.
ANRE Order no. 120/2022 on the amendment and completion
of the Regulation on the detection, notification and
sanctioning of violations of regulations issued in the field
of energy applicable to the investigation activities carried
out by ANRE, approved by ANRE Order no. 62/2013 - in
force from 5 October 2022
- Completion and amendment of the Regulation,
in
accordance with the legal provisions in force, as a result
of the amendments made to the Law, i.e. by Order 25/2017
and Order 13/2022.
ANRE Order no. 143/2022 amending and supplementing the
Regulation on the detection, notification and sanctioning
of violations of regulations issued in the field of energy
applicable to the control activities carried out by ANRE,
approved by ANRE Order no. 62/2013, with subsequent
amendments and additions - in force from 28 December
2022
- amendment and completion of the Regulation provides
that the documents preceding the control action, during
the control action or resulting from the completion of
the control action, such as, but not limited to: the control
warrant, the control notice, the control report, the referral
note, the sanction warrant, the sanction invitation, etc.
can be drawn up and communicated both in written and
electronic format.
f) Primary legislation:
f) Primary legislation:
- On 24 July 2020, Law no. 155/24 July 2020 amending and
supplementing Law 123/10 July 2012 was approved:
- OD have the obligation to ensure the financing and the
realization within 90 days of the connections of non-
household customers with length under 2,500 m;
- On 19 December 2020, Law no. 290/15 December 2020
amending and supplementing Law 123/10 July 2012
entered into force:
o the obligation for the DSO to finance the connection
works for domestic customers and to recover the con-
nection costs through the distribution tariffs, with a
5-year amortization period, in accordance with ANRE
regulations.
Energy Law no. 123/2012 - amended by GEO no. 143/2021 -
in force since 31 December 2021
- new ME tasks: approve the development plans of the OTS
and the DSO in terms of ensuring consistency with the
provisions of the energy strategy and NESCAP 2021-2030;
approve the reliability standard;
- On the wholesale market, directly negotiated bilateral
-
transactions can be concluded at any time;
In the case of the final domestic customer, in order to issue
the regularisation invoice, the DSO is obliged to ensure the
reading of the metering group index at a time interval of
maximum 3 months.
- Each DSO acts as a neutral market facilitator in the
procurement of electricity for the coverage of NL,
according to transparent, non-discriminatory and market-
based procedures, in compliance with ANRE regulations.
- domestic connection - In the case of domestic customers,
upon commissioning of the connection works carried out,
the DSO will reimburse the applicant for the actual 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, at the value reimbursed to
the household customer, being recognised by ANRE as
part of the regulated asset base.
- non-household connection - In the case of non-household
customers, the cost of the connection work, including the
design of the connection/connection, is borne entirely
by them. The assets resulting from the connection works
become part of the assets of the distribution operator
from the moment of commissioning, by the effect of this
law, without being recognized by ANRE as part of the
regulated asset base - if the final customers do not have
SMI, the DSO provides them with individual conventional
meters that accurately measure their actual consumption.
DSO ensures that end customers have the possibility
to easily read their conventional meters, either directly
or indirectly, through an online interface or through
another suitable interface that does not require a physical
connection to the meter.
GEO no. 84/2021 - in force from 6 August 2021
- Repeals the provision of Article 72, paragraph (1) of GEO
Energy Law no. 123/2012 - amended by GEO no. 143/2021
- in force since 31 December 2021, approved and amended
by Law no. 248/2022, in force starting with 25 July 2022,
providing among others:
- the possibility of concluding directly negotiated bilateral
transactions;
- obligation for the DSO to ensure the reading of the
metering group index for domestic end customers at a
maximum interval of 3 months;
- the role of the DSO as a neutral market facilitator in
the purchase of electricity to cover NL, according to
transparent,
and market-based
non-discriminatory
procedures, in compliance with ANRE regulations;
- domestic connection - In the case of domestic customers,
upon commissioning of the connection works carried out,
the DSO will reimburse the applicant the actual value of
the design and execution works of the connection, 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, at the value reimbursed to
the household customer, being recognised by ANRE as
part of the regulated asset base.
- non-household connection - In the case of non-household
customers, the cost of the connection work, including the
design of the connection/connection, is borne entirely by
the customer. The assets resulting from the connection
works:
o between 1 January and 24 July 2022, it enters the dis-
tribution operator’s patrimony from the moment of
commissioning, based on GEO no. 143/2021, without
being recognized by ANRE as part of the regulated as-
set base;
-
o starting with 25 July 2022, it does not enter the pat-
rimony of the distribution operator, based on Law no.
248/2022 and ANRE Order no. 133/2022, they are
transferred only for exploitation to the distribution op-
erator;
in case the final customers do not have SM, DSO provides
them with individual conventional meters that accurately
measure their real consumption. DSO ensures that end
customers can easily read their conventional meters,
either directly or indirectly, through an online interface or
other appropriate interface that does not involve physical
connection to the meter.
- ANRE has the obligation to issue the regulations provided
in the Law within the terms expressly provided from the
date of entry into force of the Law (60 days or 6 months).
Law no. 259/29 October 2021 for the approval of GEO no.
118/2021 on 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
Government Ordinance no. 27/1996 on the granting of
facilities to people living or working in some localities
in the Apuseni Mountains and in the „Danube Delta”
Biosphere Reserve
- For the period 1 November 2021 - 31 March 2022, a support
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
no. 70/2020, according to which the DO and the OTS
ensure the continuity of electricity supply in the alert state.
- The suspension of the provision of services corresponding
to the non-payment of outstanding debts may not take
place earlier than 90 days after the entry into force of GEO
No 84/2021.
-
Law no. 259/29 October 2021 for the approval of GEO
no. 118/2021 on 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 Government Ordinance no. 27/1996 on
the granting of facilities to people living or working
in some localities in the Apuseni Mountains and in the
„Danube Delta” Biosphere Reserve
-
- For the period 1 November 2021 - 31 March 2022 a
support scheme has been established for the payment of
bills related to the consumption of ee and gn for several
categories of final customers.
In order to regularize the amounts related to the support
scheme, the electricity/natural gas distribution operators
have the obligation, in the period April-June 2022, in
addition to the readings established according to the
regulations in force, to carry out the meter index reading
of the final customers who benefited from the support
scheme and to communicate to the electricity/natural gas
suppliers their measurement data.
- Exempting certain categories of small consumers (SMEs,
small and medium-sized enterprises) from the payment of
distribution tariffs, transmission tariffs, green certificates,
contribution for high efficiency cogeneration and excise
duty.
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scheme for the payment of electricity and gas bills has
been established for several categories of final customers.
In order to regularize the amounts related to the support
scheme, the electricity/natural gas distribution operators
have the obligation, in the period April-June 2022, in
addition to the readings established according to the
regulations in force, to carry out the meter index reading
of the final customers who benefited from the support
scheme and to communicate to the electricity/natural gas
suppliers their measurement data.
- Exempting certain categories of small consumers (SMEs,
PFAs) from the payment of distribution tariffs, transmission
tariffs, green certificates, contribution for high-efficiency
cogeneration and excise duties.
Emergency Ordinance no. 3/2022 amending and
supplementing Government Emergency Ordinance no.
118/2021 for domestic customers increases the maximum
consumption limit from 1500 kWh to 1900 kWh (380kWh/
month) - in force from 26 January 2022
- for household customers in the period 1 February 2022
- 31 March 2022 the final invoiced price of electricity is
capped at 0.8 RON/kWh, VAT included, (compared to 1
RON/kWh), of which the energy price component is a
maximum of 0.336 RON/kWh (compared to 0.525 RON/
kWh);
- for non-household customers in the period 1 February
2022 - 31 March 2022 the final invoiced price of electricity
is capped at a maximum of 1 RON/kWh, VAT included, of
which the energy price component is a maximum of 0.525
RON/kWh
- OD have the obligation, during the period April-June 2022,
in addition to the readings established according to the
regulations in force, to carry out meter index readings on
domestic customers and to transmit their measurement
data to the electricity/natural gas suppliers.
Emergency Ordinance no. 27/2022 on measures applicable
to final customers in the electricity and natural gas market
in the period 1 April 2022 - 31 March 2023 - in force since
22 March 2022, approved by Law no. 206/11 July 2022,
amended by GEO no. 192/2022
- to cover the additional costs related to NL 2021, ANRE
modifies the regulated tariffs, applicable from 1 April 2022.
- The resulting tariffs will not change between 1 April 2022
and 31 March 2023.
- additional costs financed from bank loans made during
the period of the GEO to cover the NL are capitalized, with
a duration of 5 years and RRR = 50% x RRR PR4.
- electricity costs purchased for NL after the date of entry
into force of the GEO will be recognized in the regulated
tariffs, according to ANRE methodologies.
- transmission and distribution tariffs will be adjusted to
reflect costs incurred up to 31 March 2023 for a period of
up to 5 years after 31 March 2023.
- the producers in the Romanian state portfolio are obliged
to respond within 5 working days with partial or total sales
offers to the requests for energy purchase addressed by
the OTSs and ODs, individually or in aggregate, directly or
through the dedicated platforms of the organized market.
Failure to comply with the provision shall be sanctioned
with a fine of RON 100.000 ÷ 400.000.
- The provisions of the GEO apply until 31 March 2025.
Emergency Ordinance no.
119/2022 amending and
supplementing GEO no. 27/2022 on the measures
applicable to end customers in the electricity and natural
gas market during the period 1 April 2022-31 March 2023,
as well as amending and supplementing certain regulatory
acts in the field of energy - in force since 1 September 2022.
approved and amended by Law no. 357/16 December 2022
- additional costs for the purchase of electricity, made
between 1 January 2022 and 31 August 2023, to cover the
NL, compared to the costs included in the regulated tariffs
(and not only the loans), are capitalised quarterly, RRR =
50% of the RRR applicable to each period;
- electricity generators are obliged to sell available
electricity with delivery until 31 December 2022, through
direct negotiated contracts starting from 1 September
2022, only to electricity suppliers with end customers in
their portfolio, intended exclusively for their consumption,
OD, OTS and consumers who have benefited from the
provisions of GEO 81/2019.
Emergency Ordinance no.
153/2022 amending and
supplementing Government Emergency Ordinance no.
27/2022 on the measures applicable to end customers in the
electricity and natural gas market during the period 1 April
2022-31 March 2023, as well as amending and supplementing
certain regulatory acts in the field of energy and amending
Government Emergency Ordinance no. 119/2022 amending
and supplementing Government Emergency Ordinance no.
27/2022 on the measures applicable to end customers in
the electricity and natural gas market between 1 April 2022
and 31 March 2023, as well as amending and supplementing
certain regulatory acts in the field of energy - in force since
11 November 2022
- for the period from 1 January 2023 to 31 March 2025, the
centralised electricity purchase mechanism is established
- OPCOM is designated as the single buyer, it buys electricity
from the designated producers and sells the purchased
electricity to electricity suppliers who have contracts with
end customers, electricity transmission system operators
and electricity distribution operators, to cover their own
technological consumption of the networks operated by
them.
- OD can buy from OPCOM by annual/monthly mechanism
75% of the quantity of NL forecast and validated by
ANRE at the price of 450 lei/MWh, and producers can
sell to OPCOM annual/monthly mechanism 80% of the
quantity produced forecast and validated by ANRE and
Transelectrica at the price of 450 lei/MWh.
g) Alignment with the European legislation - EU Regulation
g) Alignment with the European legislation - EU Regulation
no. 943/2019:
15 minutes settlement
no. 943/2019:
N/A
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
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 OTS, 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
ANRE Order no. 128/2021 - Order approving the Rules for
the suspension and restoration of market activities and the
applicable Settlement Rules - in force from 1 October 2022:
- to determine the situations and conditions under which
the OTS can suspend market activities with mitigating
impact on PZU and PI energy market coupling;
identification of the market activities that can be
suspended and the procedure for their suspension and
reinstatement: steps, role and responsibilities of the OTS/
designated electricity market operator/factors involved;
- communication procedure detailing the tasks and actions
-
to be carried out by each party
- suspension during the period of collapse and restoration
from collapse of the SEN of all wholesale market contracts
(including transactions concluded on the DAM and IM), and
the sale/purchase to be carried out at a single restoration
price, i.e. the settlement procedure applicable in these
situations and the procedure for making payments and
contesting the settlement.
- the order will apply from 1 October 2022, the date from
which ANRE Order no. 23/2016 is repealed.
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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 DSO 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 (PZU) and IM (PI) energy markets;
identification of the market activities that can be
suspended and of the procedure of their suspension
and restoration: stages, role, and responsibilities TSO /
designated electricity market operator/factors involved;
- the communication procedure detailing the tasks and
ANRE Order no. 65/2022 approving the Regulation on the
organised framework for electricity contracting by large
end customers - in force since 1 April 2022
- expanding market participation by accepting OTS and
ODs, their participation in the market is exclusively for the
purchase of NL;
- application of the regulation inclusive of producers to
whom the measures of GEO No 27/2022 apply;
- use of standard or EFET-type contracts;
- reduction of the average power per settlement interval
from 10 MW to 5 MW, for a better profiling of the final
customers’ offers;
- the possibility for the initiator to choose to vary the
contracted power per settlement interval by a maximum
of 0.5 MW per settlement interval;
- minimum delivery duration of one month;
- the option of full/partial trading of the initiator offer.
ANRE Order no. 73/2022 - amending ANRE Order no.
65/2022 approving the Regulation on the organised
framework for the contracting of electricity by large end
customers - in force since 12 May 2022
- the possibility of introducing initiating offers also by
actions that each party must perform;
producers participating in the market;
- 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(PZU) and IM(PI)), 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 28 August 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, DSO 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 DSO 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.
-
- deletion of the specification that large end-use electricity
customer includes transmission system operator and
distribution system operators that purchase, individually or
in aggregation, electricity to cover their own technological
consumption in the networks they operate, in order
to avoid resale by operators of electricity purchased
on this market, based on the license they hold. They
can participate in the market from the position of final
customer, which, according to the definition in the Energy
Law, is any natural or legal person who buys electricity for
their own consumption.
ANRE Order no. 3/2022 approving the Regulation on the
organization and operation of the online platform for
changing supplier (POSF) and for contracting the supply
of electricity and natural gas - in force since 28 August
2022
- The online platform (POSF) is unique at national level, end
customers and economic operators involved in changing
supplier and contracting supply are obliged to use this
platform exclusively.
Implementation of the platform starts on 28 August 2022.
-
- Duration of the switching process 24 hours
- The customer is obliged to register the self-quoted index
in POSF
- The customer uploads the self-read index at the initiation
of the supplier change process and a second self-read
index at the date of the actual supplier change. If the
end customer does not upload the index at the effective
supplier changeover date, the DSO is obliged to register
in the POSF, within 5 days from the effective supplier
changeover date by the end customer, the index read by
the DSO or provided by the smart metering system.
- The regulation details: the organization and operation
of the POSF, the content of the POSF database, the data
required to create an access account in the POSF, the
rights and obligations of POSF users, the rules on the
conclusion of the supply contract, the actual procedure
for changing supplier.
- ANRE is the administrator and operator of the online
platform for end-customers to change their electricity
and/or gas supplier (POSF).
- During the period between the date of entry into force
of the Order and 28 August 2022, all economic operators
are obliged to comply with any ANRE requests for the
realization and implementation of the POSF.
ANRE Order no. 109/2022 amending and supplementing
ANRE Order no. 3/2022 approving the Regulation on
the organisation and operation of the online platform for
changing the electricity and natural gas supplier and for
contracting the supply of electricity and natural gas - in
force since 24 August 2022
- to change the date of application of the Regulation from
28 August 2022 to 10 October 2022; by way of derogation,
the provisions relating to the registration in the POSF of
the information that ORs and suppliers are obliged to
register in accordance with the Regulation shall apply
from 28 August 2022;
ANRE Order no. 79/2022 - approving the Regulation on
the organization and functioning of the electricity futures
market organized by Bursa Romana de Marfuri S.A. - in
force since 10 June 2022
- This draft order aims to establish an organized framework
for electricity trading on the Electricity Futures Market,
through electronic trading platforms managed by Bursa
Romana de Marfuri S.A (BRM).
ANRE Order 117/2022 for the approval of the Regulation for
the organization and functioning of the forward electricity
contracts market organized by Bursa Romana de Marfuri
S.A. - in force since 1 October 2022, exception art. 2
- repeals Order No. 79/2022, introducing new products for
trading: (i) multiple of a day, i.e. the entire period of at
least 2 consecutive delivery days starting at the earliest on
the second calendar day following the day a transaction
is closed; the product is tradable only with delivery in the
band; (ii) 1 week; the product is tradable only with delivery
in the band; (iii) balance of the month, i.e. the period made
up of the remaining delivery days of a current calendar
month, starting on the second calendar day following the
day a transaction is closed; the product is tradable only
with delivery in the band.
- art. 2 - The BRM shall update, by 1 October 2022, the
implement the
operational procedures necessary to
Regulation
ANRE Order no. 92/2022
- order amending and
supplementing the Regulation on the calculation and
settlement of imbalances of the parties responsible for
balancing - single imbalance price, approved by ANRE
Order no. 213/2020 and amending some ANRE orders - in
force since 1 July 2022.
- new articles on how to allocate additional costs/revenues
-
-
from balancing the system;
it is proposed to reduce from 6 months to 2 months the
period in which the participant can request a reasoned
correction of the settlement from the posting of the
information note for settlement on the dedicated IT
platform;
implementation of the 400 kW installed capacity limit for
prosumers, from which the supplier no longer assumes
responsibility for balancing;
- the order applies from 1 July 2022 in which the calculations
for the settlement of imbalances of the PRE for the delivery
month June 2022 are made.
ANRE Order no. 121/2022 amending some ANRE orders on
the electricity market - in force since 1 October 2022
the balancing party
- ANRE Order no. 127/2021 shall enter into force on the date
of publication and shall apply from 1 October 2023, with
the exception of: (i) for the period 1 May 2023-1 September
2023,
settlement
operator shall, starting from May 2023, perform monthly
simulations for the calculation of the balancing party
imbalance settlement resulting from the application of
the provisions of the Regulation on terms and conditions
for balancing parties (ii) technical amendments to the
Technical Qualification Procedure for the provision of
system services, approved by ANRE Order no. 89/2021,
which apply from the date of entry into force
imbalance
- ANRE Order no. 128/2021 applies from 1 October 2023, to
align with the provisions of ANRE Order no. 127/2021.
Order no. 134/2022 approving the General General Rules
on Organised Electricity Futures Markets - in force from 3
November 2022
- to simplify the organised framework for electricity
contracting, by drawing up a framework regulation with
general provisions, on the basis of which each electricity
market operator will draw up specific rules for the
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organisation and management of its own markets;
- ensure the creation of a general framework with
requirements applicable to all electricity market operators
to ensure transparency and non-discrimination. On the
basis of these general rules, operators shall draw up their
specific conditions of participation.
Regulation (EU) 2022/1854 of 6 October 2022 on emergency
action to tackle high energy prices:
- reduce consumption by a target 5% during peak hours
- 180 Euro/MWh threshold for solar, nuclear, hydro, wind and
lignite production mainly; revenues above this threshold
will be collected by the state
- solidarity mechanism -33% of profits in fiscal year 2022,
if there is an increase of more than 20% compared to the
2018-2021 average
- The funds obtained on the last two points will be redirected
to domestic consumers, companies in difficulty, reduced
tariffs or social aid.
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A.3.1.2 Supply activity
In 2021, with an impact on the electricity and gas supply
In 2022, with an impact on the electricity and gas supply
activity, the following regulations were adopted:
activity, the following regulations were adopted:
2022
2023
a. Primary legislation:
a. Primary legislation:
GEO no. 143/2021 amending the Law on Electricity and
Natural Gas no. 123/2012:
- The ordinance mainly aims at transposing Directive (EU)
2019/944 on the internal electricity market, including
amendments/completions concerning mainly:
- provision of universal service (US): by any supplier in the
competitive market (by providing for the obligation to
make offers for US and provide US on request), only to
household customers;
- electricity supply prices: deletion of the provisions on
regulating/regulating supply prices to final customers;
mention, however, of the possibility of interventions in
price formation to protect vulnerable customers or those
in energy poverty, subject to certain conditions and
notification to the European Commission;
- wholesale electricity market: removal of the obligation for
transactions on this market to be carried out in a public
and centralised manner; the new provisions explicitly
mention “directly negotiated bilateral transactions”;
- obligations (miscellaneous) suppliers: repeal of provisions
on the establishment of single physical contact points at
max. 50 km for universal service customers;
- (miscellaneous) supplier rights:
introduction of the
possibility for suppliers to charge end customers (without
distinction) fees for the termination of fixed-term, fixed-
price supply contracts in case of early termination by the
customer; introduction of the possibility to charge a fee
for changing supplier, except for household customers and
small businesses;
- Change of electricity supplier: introduction of a 24-hour
switching period until 2026 and on any working day;
provision of the right for customers to collectively change
supplier;
- Electricity standard offers/price comparators: extending
suppliers’ obligations to prepare standard offers and
upload them to ANRE’s price comparator to include micro-
enterprises (i.e. enterprises with less than 10 employees
and whose annual turnover and/or annual balance sheet
total does not exceed €2 mn.) with an estimated annual
consumption below 100,000 kWh;
- misleading/unfair commercial practices in the electricity/
natural gas supply activity: maintaining the infringement
ascertained by ANRE only in relation to non-household
customers and eliminating the correlative fine for non-
compliance from the turnover and replacing it with a
lump sum fine; in relation to household customers, the
infringement will be ascertained by the National Authority
for Consumer Protection (ANPC);
- Electricity and gas billing: obligation to issue regularization
invoice for domestic customers once every 3 months
maximum, contravention for non-compliance, sanctioned
with fine;
- prohibition of electricity disconnection:
introduction
of the possibility for ANRE to provide for other cases
of disconnection than those provided for vulnerable
customers;
- offences: return to the definition of a repeated offence
as involving the commission of the same offence at least
twice within 12 consecutive months (compared to at least
twice previously);
- prosumers: introduction of quantitative compensation (as
opposed to exclusively financial compensation previously),
increased power limits.
Law No 226/2021 on the establishment of social protection
measures for vulnerable energy consumers:
- the law came into force on 1 November 2021;
- the financial measures provided for the protection of
GEO no. 118/2021 on the establishment of a compensation
scheme for electricity and natural gas consumption for the
2021-2022 cold season, approved with amendments and
additions by Law no. 259/2021:
- The planned support scheme will be applied for the period
November 2021 - March 2022 and was established in the
context of rising prices on the electricity and natural gas
markets at international level, as well as the effects of
these increases for the Romanian population;
- the following consumer support schemes are provided:
- compensation for household customers if they fall within
the maximum consumption limits set for the entire
period of application (i.e. 1,500 kWh for electricity, 1,000
m3 for natural gas), respectively monthly and within the
reference price of 0.68 lei/kWh for electricity, respectively
125 lei/MWh for natural gas; the amount of compensation
is 0.291 lei/kWh for electricity, respectively 33% of the bill
for natural gas;
- exemption from payment of regulated tariffs, other
contributions and excise duty for SMEs, individual medical
practices and other liberal professions, microenterprises,
licensed natural persons, sole proprietorships, family
enterprises (i.e. regulated
feed-in/withdrawal tariffs,
distribution tariff, system service tariff, transmission
tariff, green certificates, contribution for high efficiency
cogeneration and excise duty - for electricity; transmission
cost, distribution tariff and excise duty - for natural gas);
- capping of the final invoiced price to a maximum of 1 leu/
kWh, of which the electricity price component of max.
0.525 lei/kWh for electricity, respectively a maximum of
0.37 lei/kWh, of which the gas price component of max.
0,250 lei/kWh for natural gas for household customers,
public and private hospitals, public and private educational
establishments
non-governmental
organisations, religious establishments, public and private
social service providers;
nurseries,
and
- suspension of bill payments - on request, only for
vulnerable consumers, for a period of min. 1 month and
max. 6 months;
- Mechanisms are also provided for the settlement of
amounts related to support schemes from the state
budget to electricity and gas suppliers.
GEO no. 2/2022 on the establishment of social protection
measures for employees and other professional categories
in the context of prohibition, suspension or limitation of
economic activities, caused by the epidemiological situation
generated by the spread of SARS-CoV-2 coronavirus, as well
as for the modification and completion of some normative
acts:
- The ordinance provides for amendments and additions to
GEO No 118/2021 as follows:
- extending the scope of the ceiling by including in the
category of beneficiaries also public cultural institutions
and cultural establishments subordinated to central and
local public administration authorities;
- prohibition to disconnect or interrupt, until 30 June 2022,
the electricity supply for non-payment of household
customers;
- provision, in the case of invoices that do not comply with
the legal provisions on the application of support schemes
(compensation, exemption, capping), for their automatic
reissue within a maximum of 15 days from the date of issue.
For invoices already issued, the deadline for their reissue
is 15 days after the entry into force of this GEO, i.e. until 3
February 2022 (inclusive). The execution of the payment
obligation for invoices in the process of being recalculated
is also suspended until new invoices are issued.
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2022
2023
2022
2023
vulnerable consumers are: aid for heating the home during
the cold season, i.e. 1 November - 31 March (max. 500 lei/
month for electricity and 250 lei/month for natural gas);
the energy supplement granted throughout the year (30
lei/month for lighting and 70 lei/month if the only source
of energy used is electricity, and 10 lei/month for natural
gas); the amounts corresponding to both types of aid are
paid directly to suppliers and deducted from the bill;
- the financial protection mentioned above benefits
consumers who meet the income eligibility criteria. Thus,
the average monthly net income up to which heating aid
is granted is 1,386 lei/person, in the case of a family, and
2,053 lei, in the case of a single person.
GEO no. 118/2021 on the establishment of a compensation
scheme for electricity and natural gas consumption for the
2021-2022 cold season, approved with amendments and
additions by Law no. 259/2021:
- The planned support scheme will be applied for the period
November 2021 - March 2022 and was established in the
context of rising prices on the electricity and natural gas
markets at international level, as well as the effects of
these increases for the Romanian population;
- the following consumer support schemes are provided:
- compensation for household customers if they fall within
the maximum consumption limits set for the entire
period of application (i.e. 1,500 kWh for electricity, 1,000
m3 for natural gas), respectively monthly and within the
reference price of 0.68 lei/kWh for electricity, respectively
125 lei/MWh for natural gas; the amount of compensation
is 0.291 lei/kWh for electricity, respectively 33% of the bill
for natural gas;
- exemption from payment of regulated tariffs, other
contributions and excise duty for SMEs, individual medical
practices and other liberal professions, microenterprises,
licensed natural persons, sole proprietorships, family
enterprises (i.e. regulated
feed-in/withdrawal tariffs,
distribution tariff, system service tariff, transmission
tariff, green certificates, contribution for high efficiency
cogeneration and excise duty - for electricity; transmission
cost, distribution tariff and excise duty - for natural gas);
- capping of the final invoiced price to a maximum of 1 leu/
kWh, of which the electricity price component of max.
0.525 lei/kWh for electricity, respectively a maximum of
0.37 lei/kWh, of which the gas price component of max.
0,250 lei/kWh for natural gas for household customers,
public and private hospitals, public and private educational
establishments
non-governmental
organisations, religious establishments, public and private
social service providers;
nurseries,
and
- suspension of bill payments - on request, only for
vulnerable consumers, for a period of min. 1 month and
max. 6 months;
Mechanisms are also provided for the settlement of amounts
related to support schemes from the state budget to
electricity and gas suppliers.
Joint Order of the Minister of Labour and Social Protection
(no. 1.155/25 November 2021), the Minister of Energy (no.
1.240/25 November 2021) and the Minister of Finance (no.
1.480/26 November 2021) approving the procedure for the
settlement of the amounts related to the compensation
scheme regulated by GEO no.118/2021:
- clarifications are provided on the application of support
schemes and the settlement of the related amounts to
suppliers;
- compensation scheme for household customers: the
documents to be submitted by suppliers for settlement
and the related deadlines are provided;
- the scheme for exempting non-household customers
from the payment of regulated tariffs, excise duties,
contributions, etc. - the following are provided for: the
documents to be submitted by suppliers for settlement;
a model application and affidavit; the fact that the benefit
will be granted from the month of application (except for
applications submitted in December, for which the benefit
GEO no. 3/2022 amending and supplementing GEO no.
118/2021:
- the following amendments and additions to GEO no.
118/2021 are provided for, with application from 1 February
to 31 March 2022:
increasing the consumption margin for compensation
from 300 kWh/month (+10%) to 500 kWh/month (+10%)
for electricity and from 200 mc/month to 300 mc/month
for natural gas;
-
- change the price cap for household customers (from 1 leu/
kWh to 0.8 lei/kWh for electricity and from 0.37 lei/kWh
to 0.31 lei/kWh for natural gas) and introduce a price cap
for all non-household customers (1 leu/kWh for electricity
and 0.37 lei/kWh for natural gas);
- the cap still concerns both the final price and the
electricity/natural gas purchase component: for household
customers - 0.8 lei/kWh final price for electricity, of which
0.336 lei/kWh electricity price component; 0.31 lei/kWh
final price for natural gas, of which 0.200 lei/kWh natural
gas price component; for non-household customers: 1
leu/kWh final price for electricity, of which 0.525 lei/kWh
electricity price component; 0.37 lei/kWh final price for
natural gas, of which 0.250 lei/kWh gas price component;
- recovery of the capped amounts will be made according
to the thresholds indicated above, in conjunction with
the period of application: from 1 November 2021 to 31
January 2022, by the difference between the average
monthly purchase price and the threshold of 525 lei/MWh
for electricity and 250 lei/MWh for natural gas. From 1
February, recovery will be made: for household customers
- by the difference between the average monthly purchase
price and the threshold of 336 lei/MWh for electricity and
200 lei/MWh for natural gas; for non-household customers
- by the difference between the average monthly purchase
price and the threshold of 525 lei for electricity and 250
lei/MWh for natural gas.
GEO no. 27/2022 on the measures applicable to final
customers in the electricity and natural gas market during
the period 1 April 2022-31 March 2023, as well as for the
amendment and completion of some normative acts in the
field of energy:
- the period of application of the support (capping) scheme
is 1 year, i.e. 1 April 2022 - 31 March 2023.
- for electricity the final invoiced price is: maximum 0.68
lei/kWh (VAT included) for household customers with an
average monthly consumption (at the place of consumption
in 2021) less than or equal to 100 kWh, maximum 0.8 lei/
kWh (VAT included) for household customers with an
average monthly consumption between 100 kWh and
300 kWh inclusive, maximum 1 leu/kWh (VAT included)
for non-household customers (household customers are
included according to the average monthly consumption
in 2021, the capped prices will apply for the whole period
regardless of the quantity consumed. In the case of
household customers who were not initially included in the
cap but whose consumption in 2022 is included, suppliers
issue regularisation invoices in February 2023 using the
capped price for the period in which they consumed).
- for natural gas the final price invoiced is: maximum 0.31
lei/kWh (VAT included) for domestic customers, maximum
0.37 lei/kWh (VAT included) for non-household customers
whose annual consumption of natural gas in 2021 at the
place of consumption is no more than 50,000 MWh and
for thermal energy producers;
- Customers connected after 1 January 2022 will be billed
with a ceiling: domestic electricity customers at 0.68 lei/
kWh (with minimum ceiling), domestic gas customers at
0.31 lei/kWh (category ceiling), non-household electricity
customers at 1 leu/kWh (category ceiling) and non-
household gas customers at 0.37 lei/kWh (regardless of
consumption);
- customers who do not fall under the cap will have
monthly adjustable prices, the variable being a correction
component for the purchase price, so that the cost of
will be granted from November); the fact that, when
changing supplier, the compensation is made pro rata;
- capping - it is stipulated that: the subscription (the
countervalue of the subscription services) is not included
in the capped final invoiced price (1 leu/kWh for electricity,
0.37 lei/kWh for natural gas); the average price in the
settlement formula refers to the quantities purchased
by each supplier; the difference for settlement will be
calculated monthly, followed, at the end of the application
period, by a regularisation.
GEO no. 130/2021 on some fiscal-budgetary measures,
extension of some deadlines, as well as for the amendment
of some normative acts:
- The ordinance provides for amendments and additions to
GEO No 118/2021 and Law No 259/2021 as follows:
- settlement to suppliers of the amounts related to the
capping: the average price for all ongoing contracts with
delivery during the period of application of the scheme will
be taken into account; the purchase for last resort supply
will be analysed separately for customers in the portfolio of
an RUF, so that the quantity of additional energy purchased
is highlighted; the supporting documents on the basis of
which the compensation/discharge to suppliers will be
made will be those relating to the quantities and prices
of the ongoing purchase contracts with delivery during
the period of application of the scheme, respectively the
quantity of electricity/natural gas delivered to cover the
consumption of customers with capped prices, in the
portfolio for the period of application.
GD no. 1077/2021 for the approval of the Preventive Action
Plan on measures to guarantee the security of natural gas
supply in Romania:
- there are no substantial new elements compared to the
previous Plan;
- the particular obligation of suppliers remains to guarantee
continuity of gas supply to protected customers in the
three cases of gas supply crisis foreseen, i.e. household
customers, SMEs and providers of essential social services,
heat producers, who cannot operate with other fuels
and who supply heating to the protected customers
mentioned; they cannot be interrupted in practice.
With regard to legislation related to the energy sector, in the
context of the COVID-19 pandemic, the government decided
to successively extend the state of alert initially established
in 2020 (by Decision no. 394/2020), by 30 days, as follows:
starting 13 January 2021, by GD no. 3/2021; starting 12
February 2021, by GD no. 35/2021; starting 14 March 2021, by
GD no. 293/2021; starting 13 April 2021, by GD no. 432/2021;
as from 13 May 2021, by means of GD no. 531/2021; as from
12 June 2021, by means of GD no. 636/2021; as from 12 July
2021, by means of GD no. 730/2021; as from 11 August 2021,
by means of GD no. 826/2021; as from 10 September 2021,
by means of GD no. 932/2021; from 10 October 2021, by GD
No 1090/2021; from 9 November 2021, by GD No 1183/2021;
from 9 December 2021, by GD No 1242/2021; from 8 January
2022, by GD No 34/2022.
Correlatively, until 6 August 2021, this implied the application
of measures with an impact on the electricity and natural gas
supply activity (i.e. the obligation of electricity and natural
gas transmission and distribution operators to ensure
the continuity of service provision and, in the event of a
disconnection/disconnection reason, the postponement of
this operation until the end of the alert state).
After 6 August 2021, by the entry into force of GEO no.
84/2021, the provisions prohibiting the disconnection of
electricity and natural gas end customers during the alert
state were removed. As regards the suspension of supply
in case of non-payment of outstanding debts, according to
GEO no. 84/2021 this measure cannot be taken earlier than
90 days after the entry into force of GEO no. 84/2021.
the purchase (with PE within 5%) is passed on to the end
customers. The exception is only the first two months of
the application period, when the price is not adjustable. At
the request of final customers, suppliers may also conclude
supply contracts under conditions other than those laid
down in the article referring to uncapped customers.
- the subscription is included in the cap; if the price in the
current contracts with end customers is lower than the
capped price, the contract price applies.
- the supply component is 73 lei/MWh for the electricity
supply activity and 12 lei/MWh for the natural gas supply
activity and for the customers taken over in the last resort
it is 80 lei/MWh for the electricity supply activity and 13.5
lei/MWh for the natural gas supply activity (the GEO sets
the value of the supply component, without specifying
that it is a maximum).
- for the purchase of electricity and natural gas, the monthly
imbalance must not exceed 5% of the value of the energy
delivered monthly to the end customers in the portfolio,
which exceeds this threshold will not be recognized and
settled; the purchase made for supply in last resort does
not have balancing costs limited to 5%; the obligation to
establish between 1 April and 31 October 2022 storage
deposits of at least 30% of the quantity of natural gas
required for the consumption of end customers in its
portfolio appears
- the recovery of the capping amounts is fully realized under
the condition of respecting the limit of 5% of the cost with
imbalances; the losses registered from the application of
the support scheme in the period 1 November 2021 - 31
March 2022 can also be recovered (a supply cost of 73
lei/MWh is accepted and we have the limit of the cost
with imbalances at 5% of the purchase cost) - for the
recovery to be at a high level it is necessary to invoice all
the consumption, including in the SoLR regime, until the
beginning of May.
- the supplier has the obligation to notify the customers
about the changes resulting from the application of the
provisions of the GEO with the first invoice sent after the
entry into force (the fine is between RON 100 th. and RON
400 th.).
- Fines: between 1-5% of turnover for non-compliance with
the cap and cost limits; between RON 20 th. and RON
400 th. for non-compliance with the provisions for supply
as a last resort; between RON 100 th. and 400 RON th.
if we do not inform end customers, if we do not keep
differentiated/segmented monthly customer records, if we
do not identify customers for the application of the cap or
if we do not submit the documents requested by ANRE.
GEO no. 42/2022 amending and supplementing Government
Emergency Ordinance no. 27/2022 on the measures
applicable to end customers in the electricity and natural
gas market between 1 April 2022 and 31 March 2023, as well
as amending and supplementing certain regulatory acts in
the field of energy:
- the deadline for submission of documents for the recovery
of amounts capped by the application of GEO 118/2021 is
extended from 15 May to 15 July 2022
- ANRE publishes reporting templates for the settlement
of the capped amounts, templates that are to be filled in
for each category of customers benefiting from the cap
(average unit costs must be calculated for both regulated
network tariffs and charges); a fine of 50 thousand lei has
been introduced for failure to comply with the instructions
for uploading the templates and for failure to comply with
the deadlines for rectifying the data uploaded on the IT
platform and for resubmitting claims/statements for
settlement;
in the category of non-household natural gas customers
who benefit from the cap are also thermal energy
producers without exception.
-
Law no. 206/2022 for the approval of Government
Emergency Ordinance no. 27/2022 on measures applicable
to end customers in the electricity and natural gas market
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
2023
2022
2023
between 1 April 2022 and 31 March 2023, as well as for the
amendment and completion of some normative acts in the
field of energy
- The main new elements are the following:
- a single invoice form will be introduced, drawn up by joint
Order of ANRE and ANPC;
- final electricity customers, who do not benefit from
capping, are charged the minimum price between the
price in the current supply contract and the final price
resulting from the application of the GEO.
- final gas customers are charged the minimum of the
contract price, the final capped price and the price
resulting from the application of the GEO.
GEO no. 112/2022 on the establishment of some measures
to stimulate investments financed by non-reimbursable
external funds in the field of energy efficiency, renewable
energy resources for large enterprises and small and
medium enterprises, green energy from renewable sources
for local public authorities, as well as some measures in the
field of smart specialization, and for the modification and
completion of some normative acts
- regulates
framework
the general
for establishing
energy efficiency/renewable energy measures for large
enterprises and SMEs with funding from non-reimbursable
external funds allocated under the Large Infrastructure
Operational Programme;
- amends and completes GEO 27/2022 with provisions on
the elaboration and approval by ANRE in consultation with
ANPC of the mandatory minimum content of natural gas/
electricity bills so that the bills contain correct, transparent,
clear,
information,
which will allow household customers to adjust their
own consumption and compare the commercial supply
conditions, i.e. suppliers are obliged to implement in the
information system the provisions on the unit bill starting
with consumption in April 2023.
legible and easy to understand
Law no. 248/2022 approving Government Emergency
Ordinance no. 143/2021 amending and supplementing the
Electricity and Natural Gas Law no. 123/2012 and amending
some normative acts
Approves GEO 143/2022 with amendments and additions
regarding:
- definition of renewable energy, definition of economic
efficiency, definition of prosumer (completed with mobile
unit equipped with electricity generation systems during
regenerative braking);
- ANRE’s obligations to promote the comparator, provide
access to an application programming interface (API) for
software developers, publish aggregated data within 30
days;
- generators are obliged to trade at least 40% of their annual
electricity production through contracts on electricity
markets other than DAM, PI and PE (except for generation
capacities commissioned after 1 June 2020);
- the supplier has the obligation to ensure at least 40% of
the electricity necessary to cover the consumption of the
final customers in the portfolio from its own production
or through the purchase by forward contracts on the
electricity markets, other than DAM, PI and PE;
- prosumers, natural and legal persons and local public
administration authorities
that own power plants
producing energy from renewable sources are exempted
from the obligation of annual and quarterly purchase
of green certificates for their own final consumption;
prosumers can also request quantitative compensation of
regenerative energy resulting from regenerative braking;
iin the case of household customers, authorised natural
persons, sole proprietorships, family businesses and
public institutions connecting to the low voltage grid, the
distribution operator will reimburse the applicant within
5 years, the actual cost of the design and execution of
the connection, up to an average value of a connection,
established according to a methodology approved by
ANRE, the recovery of the costs of connection of household
-
-
customers is made with accelerated depreciation over a
period of 5 years, through distribution tariffs;
In the case of non-household customers, the value of the
connection work is borne in full by them, the resulting
assets do not become the property of the distribution
operator but are only transferred to the operator for
exploitation;
GEO no. 119/2022 - Emergency Ordinance amending and
supplementing Government Emergency Ordinance no.
27/2022 on the measures applicable to end customers in
the electricity and natural gas market between 1 April 2022
and 31 March 2023, as well as amending and supplementing
certain regulatory acts in the field of energy
- the period of application of the support (capping) scheme
is 1 September 2022-31 August 2023,
in
- the final capped invoiced price for electricity is: maximum
0.68 lei/kWh, (VAT included) for household customers
whose average monthly consumption at the place of
consumption in 2021 was between 0-100 kWh inclusive;
maximum 0.80 lei/kWh (VAT included) for household
customers whose average monthly consumption at the
place of consumption in 2021 was between 100.01-300
kWh - for a monthly consumption which is maximum 255
kWh; maximum 1 leu/kWh (VAT included) for 85% of the
average monthly consumption at the place of consumption
in 2021 for small and medium-sized enterprises (SMEs),
industry, public
the
economic operators
institutions; maximum 1 leu/kWh (VAT included) for
the full consumption of public and private hospitals,
public and private education units, nurseries, public and
private social service providers. In order to benefit from
the facilities provided for by this GEO, starting from 1
September 2022, the above-mentioned non-household
customers are obliged to submit to their electricity
supplier a request accompanied by a declaration on their
own responsibility, within a maximum of 30 days from the
date of entry into force of this GEO. Beneficiaries who
fall within the provisions of the GEO and who have not
submitted their application accompanied by a declaration
on their own responsibility in September 2022, as well as
those established after 1 September 2022, shall benefit
from the provisions of this GEO starting from the 1st of the
month following their submission to the supplier.
food
- the final capped invoiced price for natural gas is: maximum
0.31 lei/kWh (VAT included) for household customers
(also applies to consumption sites of household customers
connected from 1 January 2022 or for household customers
who have no history with the supplier in 2021, based on
monthly consumption); maximum 0.37 lei/kWh (VAT
included) for non-household customers whose annual
consumption of natural gas in 2021 at the consumption site
is 50,000 MWh, as well as in the case of thermal energy
producers (also applies to the consumption places of non-
household customers connected as of 1 January 2022);
- the values and tranches foreseen for the capping scheme
may be modified by Government decision, depending
on the developments on the domestic and international
electricity and natural gas markets and on the geopolitical
developments in Romania’s neighbourhood;
- the electricity and gas supply component is 73 lei/MWh
for electricity supply and 12 lei/MWh for gas supply;
- the amounts of compensation for each supplier shall
be determined by ANRE within 30 days from the date
of receipt of the settlement requests submitted and
registered with ANPIS (domestic customers) and ME (non-
domestic customers) respectively, and copied to ANRE;
- the maximum value of the weighted average electricity
price at which ANRE calculates the amounts to be settled
from the state budget for electricity suppliers is 1,300 lei/
MWh;
- Starting from 1 September 2022, during the period of
application of the provisions of this Emergency Ordinance,
electricity generators, aggregated electricity generating
entities, traders, suppliers carrying out trading activities
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
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2022
2023
and aggregators trading quantities of electricity and/
or natural gas on the wholesale market shall pay a
contribution to the Energy Transition Fund calculated
according to the methodology of this GEO;
- bilateral contracts concluded on the wholesale market by
direct negotiation are reported to ANRE by the contracting
parties within 2 working days from the date of conclusion;
- the successive sale of quantities of electricity or natural
gas by traders and/or suppliers with trading activities, with
the deliberate aim of increasing the price, is sanctioned by
ANRE with a fine of 5% of the turnover;
GEO no. 153/2022 - Emergency Ordinance for amending
and supplementing Government Emergency Ordinance no.
27/2022 on the measures applicable to end customers in the
electricity and natural gas market between 1 April 2022 and
31 March 2023, as well as for amending and supplementing
certain regulatory acts in the field of energy and amending
Government Emergency Ordinance no. 119/2022 amending
and supplementing Government Emergency Ordinance No.
27/2022 on the measures applicable to final customers in
the electricity and natural gas market between 1 April 2022
and 31 March 2023, as well as amending and supplementing
certain regulatory acts in the field of energy
- for the period from 1 January 2023 to 31 March 2025,
the centralised electricity purchase mechanism shall be
established
- The mechanism provides - OPCOM, as the single buyer,
buys electricity from producers (electricity producers
with an installed capacity of 10 MW or more) and sells
the purchased electricity to electricity suppliers that have
contracts with end customers, electricity transmission and
system operators and electricity distribution operators to
cover their own technological consumption; the price paid
by OPCOM to electricity producers for the quantities of
electricity sold by them is 450 lei/MWh and the OPCOM
sales price to economic operators is also 450 lei/MWh
(OPCOM has the right to charge market participants
tariffs/commissions at the level of the costs incurred
through the organisation of the centralised electricity
purchase mechanism); OPCOM organises an annual
purchase procedure and an additional purchase procedure
each month for the quantities of electricity to be delivered
in the following month; the annual and monthly quantities
of electricity are binding obligations of the electricity
producers and economic operators and are distributed
evenly over all the settlement intervals of each month (the
contracts are concluded by signing within a maximum of
3 working days).
GEO no. 163/2022 - Emergency Ordinance for the completion
of the legal framework for the promotion of the use of energy
from renewable sources, as well as for the modification and
completion of some normative acts
- completes the legal framework established by Law no.
220/2008, by laying down rules on: financial support for
electricity from renewable sources, self-consumption of
this type of electricity, the use of energy from renewable
sources in the heating and cooling and transport sectors,
regional cooperation between Romania and Member
States and third countries, guarantees of origin for
energy from renewable sources, applicable administrative
procedures, regulations and codes,
information and
training of both relevant stakeholders and consumers on
the practical, including technical and financial, aspects
of the development and use of energy from renewable
sources, sustainability and greenhouse gas emission
reduction criteria for biofuels, bioliquids and biomass
fuels. Defines new notions: prosumers acting collectively,
renewable energy community, etc.
- the central public administration authorities and ANRE
may apply taxes and tariffs to renewable energy
consumers in one or more of the following cases: if self-
produced renewable electricity is effectively supported
through support schemes, as of 1 December 2026, if the
installed capacity of the prosumers’ power plants exceeds
8% of the total installed capacity of the national electricity
generation capacity or
if self-produced renewable
electricity is produced in installations with a total installed
capacity of electricity above 30 kW.
GEO no. 166/2022 - Emergency Ordinance on some measures
for granting support to vulnerable categories of people to
compensate for the price of energy, partly supported by
non-reimbursable external funds
- people with low incomes (pensioners of the public pension
system whose monthly income is less than or equal to RON
2,000, people with serious, severe or medium disability,
whose own monthly income is less than or equal to RON
2,000 and other categories) will receive from the state this
year an aid of RON 1,400, money that they can use to pay
bills or debts for electricity, centralized thermal energy,
gas, gasoline, firewood and others. The support for paying
energy bills will be RON 1,400, which will be granted in
two equal instalments of RON 700 each, in February and
September 2023.
Law no. 357/2022 - Law on the approval of Government
Emergency Ordinance no. 119/2022 for the modification
and completion of Government Emergency Ordinance no.
27/2022 on the measures applicable to final customers in
the electricity and natural gas market between 1 April 2022
and 31 March 2023, as well as for the modification and
completion of some normative acts in the field of energy
- GEO no. 119/2022 is approved for the modification and
completion of GEO no. 27/2022 with some amendments;
the electricity price cap is extended until 31 March 2025;
- the final capped invoiced price of electricity supplied to
household customers between 1 January 2023 and 31
March 2025 is:
o 0.68 lei/kWh, VAT included, for consumption during the
period 1 January 2023 - 31 March 2025 by the follow-
ing categories of customers: a) household customers
whose monthly consumption is between 0 and 100kWh
inclusive; b) household customers who use medical
devices, appliances or equipment necessary for treat-
ments, based on an application and a declaration on
their own responsibility submitted in writing to Electri-
ca Furnizare S.A., and the capped final invoiced price
will be applied from the date of the fifth of the month
following the month in which the mentioned documents
have been submitted, c) domestic customers who have
at least 3 children under 18 years of age, respectively 26
years of age, in case they follow a form of education, on
the basis of a request and a declaration on their own re-
sponsibility submitted in writing to Electrica Furnizare
S.A., following that the final invoiced price will be ap-
plied from the date of the fifth of the month following
the month in which the mentioned documents were
submitted, d) single-parent families, who have at least
one child under 18 years of age, respectively 26 years of
age in case the child is attending a form of education,
on the basis of an application and a declaration on their
own responsibility submitted in writing to Electrica Fur-
nizare S.A., the final billed price will apply from the first
day of the month following the one in which the men-
tioned documents were submitted.
o 0.80 lei/kWh, VAT included, for consumption during
the period 1 January 2023 - 31 March 2025 by house-
hold customers whose monthly consumption at the
place of consumption is between 100.01 and 255 kWh.
Electricity consumption between 255 and 300 kWh/
month is invoiced at a price of 1.3 lei/kWh, VAT includ-
ed. If consumption exceeds 300 kWh/month, the entire
consumption is invoiced at the price of 1.3 lei/kWh, VAT
included.
o 1.3 lei/kWh, VAT included, for household consumers not
covered above.
the ceilings for electricity prices applicable to non-household
final customers are:
o maximum 1 leu/kWh, for 85% of the average monthly
consumption at the place of consumption (application
.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
2023
2022
2023
and affidavit of the legal representative) for: SMEs, Re-
gional Operators (Law no. 51/2006), Bucharest Metro
Transport Company “Metrorex” - S.A., as well as air-
ports, which are under the subordination/coordination
or authority of the Ministry of Transport and Infrastruc-
ture, economic operators in the field of food industry,
identified by CAEN code 10, as well as those in the field
of agriculture and fishing, identified by CAEN codes 01
and 03, local public authorities and institutions, decon-
centrated public services of ministries and other central
bodies, companies and commercial companies of coun-
ty, municipal or local interest, autonomous companies
and all public and private entities providing a public
service, national research and development institutes;
o maximum 1 leu/kWh, for the full consumption of pub-
lic and private hospitals, public and private education
units, nurseries and public and private providers of
social services as listed in the Nomenclature of Social
Services;
o maximum 1 leu/kWh, VAT included, for 85% of the
monthly consumption made at the place of consump-
tion of public institutions, other than those mentioned
above, as well as for places of consumption belonging
to officially recognized cults in Romania;
o non-household customers who do not fall into one of
the above categories pay a price capped at a maximum
of 1.3 lei/kWh, including VAT.
- As regards the price of natural gas to non-household
customers, the beneficiaries of the price capped at a
maximum of 0.37 lei/kWh, including VAT, include non-
household customers in industrial parks regulated by
Law no. 186/2013, as well as those in closed distribution
systems defined under Law no. 123/2012. In addition, the
consumption limit of 50,000 MWh will refer to the year
prior to the current year (not to 2021); for consumption
places of non-household customers connected after 1
January 2022, the cap will apply only within the limit of an
annual consumption of no more than 50,000 MWh.
- the principle is maintained that, when billing electricity
and natural gas, suppliers must apply the lower of (i) the
maximum capped final price, (ii) the contract price or (iii)
the final price calculated in accordance with the provisions
of Articles 5 and 6, only in the case of natural gas.
GEO no. 192/2022 - Emergency Ordinance amending and
supplementing Government Emergency Ordinance no.
27/2022 on the measures applicable to end customers in
the electricity and natural gas market between 1 April 2022
and 31 March 2023, as well as amending and supplementing
certain regulatory acts in the field of energy
- the final invoiced price for electricity of maximum 0.68
lei/kWh is applied to household customers whose place
of consumption is inhabited by persons who use medical
devices, appliances or equipment supplied from the
electricity grid, necessary for medical treatment on the
basis of a confirmation from the medical specialist and
a request submitted to the supplier; for January 2023,
instead of the medical confirmation, a declaration on own
responsibility is submitted; the final invoiced price capped
is applied from the date of the fifth of the month following
the month in which the documents mentioned above were
submitted;
- the capping also applies to places of consumption used
on the basis of a rental contract, the following documents
must be submitted to the supplier by the household
customer: the application for the application of the capped
price, the copy of the rental contract, the tenant’s affidavit
that he/she falls into one of the categories benefiting from
the capping or the medical confirmation, as the case may
be.
- The electricity cap applies to all consumption points of
a household customer according to the consumption at
each of them.
- the annual and monthly centralised purchasing
mechanisms (MACEE) are modified with regard to the
.
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b. Secondary legislation:
b. Secondary legislation:
During the reporting period, changes and additions to the
regulatory framework were made in the following areas of
activity and regulation:
During the reporting period, changes and additions to the
regulatory framework were made in the following areas of
activity and regulation:
transmission of forecasts and quantities purchased,
guarantees, payments, etc.
Liberalisation of the electricity market
ANRE Order no. 5/2021 amending ANRE Order no. 171/2020
approving the conditions for the supply of electricity
by suppliers of last resort (FUI) and amending and
supplementing the Framework Contract for the supply of
electricity to household customers of FUI, approved by
ANRE Order no. 88/2015:
- contains provisions on the commercial discount that the
FUI can grant to household customers who choose a
competitive supply contract. This discount, equal to the
difference between the price in the universal service offer
applicable during the period 1 January to 30 June 2021
and the price in the lowest competitive offer valid on 20
January 2021, applies for the period from 1 January 2021
until at least 30 June 2021;
- new obligations have been introduced for the FUI to
inform household customers in its portfolio:
- by 30 June 2021, together with each bill issued: an
information on the elimination of regulated tariffs, as well
as a bid selection form, in the form established by ANRE,
containing the competitive offer with the lowest value,
an alternative competitive offer and the universal service
offer, offers applicable in the first half of 2021, as well as
the amount of the commercial discount granted and the
period of application, if applicable;
- from 1 May to 30 June 2021, monthly: a competitive offer
and a universal service offer, applicable from 1 July 2021;
in the second half of 2021, with each bill issued: information
on the elimination of regulated tariffs.
-
ANRE Order no. 6/2021 amending the Regulation on the
designation of electricity FUIs approved by ANRE Order no.
188/2020:
- the definition of non-household customers supplied under
the last resort (UI) regime has been modified to include
customers who are supplied because they do not have
supply from any other source, as well as those who request
supply under the UI regime.
Electricity/natural gas retail market - trade regulations
Electricity/natural gas retail market - trade regulations
.
ANRE Order no. 82/2021 and no. 91/2021 amending and
supplementing the Regulation on the supply of electricity
to final customers:
- the changes/completions are applicable, as a general rule,
from 1 July 2021, and, by exception (e.g. new provisions
on the resolution of customer bill complaints, payment
of compensation due under the Performance Standard),
from 1 January 2022;
- The changes mainly concern: the content and publication
of the offer and the supply contract (it must include all
the price elements and be published, cumulatively, in the
ANRE Price Comparator, on the website and at the single
point of contact), the method of determining consumption
for billing purposes in the absence of the read/auto index
(the estimation of consumption by the supplier on the
basis of the most recent readings or the consumption of
the previous similar period being allowed only until the
end of 2021, thereafter it will be carried out exclusively
on the basis of the consumption agreement issued by
the distributor and concluded with the final customer
by the supplier), the conclusion of the supply contract -
necessary documents (i.e.g. the property deed is no longer
mandatory, being replaced by an affidavit of entitlement
ANRE Order no. 64/2022 - amending and supplementing
the Performance Standard for the electricity distribution
service, approved by Order no. 46/2021 of the President of
the National Energy Regulatory Authority.
- the reading interval of the metering group index is set by
contract and can be longer than one month, but must not
exceed 3 months for household customers and 6 months
for non-household end customers, for consumers it is one
calendar month, for users benefiting from smart metering
systems OD is obliged to provide access to historical
consumption data (failure to comply with these deadlines
leads to the payment of compensation);
- sets a timetable for monitoring substations and transformer
points - final implementation deadline is 01 January 2028
ANRE Order no. 131/2022 - Order approving the Performance
Standard for the natural gas distribution service
-
is established: the level of general performance indicators
for the following activities (i.e. registration and settlement
of complaints/claims/requests
from users regarding
the gas distribution service, access/contracting of the
gas distribution service, compliance with the conditions
for delivery/take-back of gas; connection to the gas
distribution system; restoration of land and/or property
.
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to the place of consumption), settlement of customer
complaints about bills and termination of the supply
contract for non-payment of bills (without mandatory
disconnection of the place of consumption), completion
of the mandatory content of the disconnection notice.
ANRE Order no. 83/2021 approving the Performance
Standard for the electricity/natural gas supply activity:
- The regulation is common for electricity and natural gas,
replaces the existing standards for the two areas and is
applicable from 1 January 2022, except for the provisions
on the indicator for call centre call handling (applicable
from 1 July 2023 and from 1 January 2024 for compensation
payments);
- 11 quality-assured indicators are established for response
times to requests related to: transmission of supply offer;
conclusion of supply contract; amendment/completion of
supply contract; invoices; interruption/limitation of supply
at the place of consumption, if any, ordered by the supplier;
resumption of supply at the place of consumption, whose
interruption/limitation has been ordered by the supplier,
subject to the scope of activity of the network operator;
transmission of the reply received from the network
operator; the process of changing supplier; supply activity
other than those expressly provided for; the time taken
to answer a telephone call made through the call centre
service;
- for each quality indicator, ANRE has established a
guaranteed level that suppliers are obliged to respect
and for which suppliers will automatically/justifiably pay
compensation to all categories of final customers;
-
- a way for ANRE to evaluate the activity carried out by
suppliers is introduced, through a scoring system based
on the degree of compliance with the guaranteed levels
of quality indicators, which will be made public through
ANRE’s Price Comparator;
in conclusion, compared to the current standards: the scope
of automatic payment of compensation to all categories
of customers has been extended, more guaranteed
quality indicators have been introduced (11 compared
to 8 for electricity and 4 for natural gas, respectively, at
present), the levels of compensation for natural gas have
been doubled/tripled, the method of classifying suppliers
according to the level of compliance with the guaranteed
quality indicators has been introduced.
ANRE Order No 138/2021 on the amendment of some ANRE
orders:
- certain provisions are amended, i.e. certain deadlines for
entry into force of the performance standards for the
electricity/natural gas supply activity are extended, as
follows:
- change of the deadline for sending to the final customer
the answer to the complaints about the electricity bill - 15
working days (instead of 5 working days previously);
- change of the deadline for sending to the final customer
the answer to the complaints about the gas bill - 15 working
days (instead of 15 calendar days previously);
- the extension until 1 July 2022 (instead of 1 January 2022)
of the deadline for the entry into force of some of the
amendments made to the Regulation on the supply of
electricity to final customers by ANRE Order No 82/2021;
most importantly, those relating to the automatic payment
of compensation to all categories of affected customers
(not only those benefiting from universal service);
- extension of the deadline for the entry into force of the
new Performance Standard for the electricity/natural gas
supply activity (approved by ANRE Order no. 83/2021)
until 1 July 2022 (compared to the deadline initially
foreseen of 1 January 2022).
ANRE Order no. 139/2021 amending and supplementing the
Framework Contract for the distribution of natural gas and
the related General Conditions (ANRE Order no. 78/2020),
as well as the Regulation for the supply of natural gas to end
customers (ANRE Order no. 29/2016):
- contains
modifications/completions
concerning:
.
.
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affected by the execution of works on the gas distribution
system objectives; the interruption/limitation/resumption
of the natural gas distribution service), the compensations
that the distribution operators are obliged to pay in
case of non-compliance with their obligations under
this Order; the specific performance indicators of the
distribution operators’ activities; the way of reporting by
the distribution operators of the information on the quality
and performance of their activities; the way of evaluating
the activities of the distribution operators.
documents required for the conclusion of the supply
contract (e.g. replacement of the copy of the document
proving the ownership or use of the space with a
declaration on own responsibility); management of
distribution contracts concluded between the supplier
and the distribution operator - DSO (elimination of the
obligation to conclude additional acts for extension or
modification); consumption measurement (introduction
of the obligation for the DSO to read the meter at the
beginning and end of the supply contract, including
when changing the supplier, introduction of a Framework
Format of the data transmitted by the DSO to the supplier
for the settlement of gas consumption to final customers,
invoicing of distribution services to be carried out on
the basis of the quantities determined, in order, on the
basis of the reading carried out by the DSO, self-reading
transmitted by customers).
N/A
Online platform for changing electricity and gas supplier
(POSF)
ANRE Order no. 3/2022 approving the Regulation on the
organization and operation of the online platform for
changing the electricity and gas supplier and for contracting
the supply of electricity and natural gas:
- application deadline - 28 August 2022;
-
initiated in order to achieve the objective set by the
European legislation on the change of supplier within 24
hours, starting from 2026;
- ANRE is the administrator and operator of the platform
where data will be uploaded by end customers, suppliers,
network operators, aggregators, etc. (including the
standard offers of suppliers), which will mediate the
process of changing supplier through the necessary
administrative and technical steps and through which
customers will be able to contract a new supplier;
- The regulation also details the rules on the conclusion of
the supply contract, i.e. the actual procedure for changing
the supplier, which will replace the current procedure.
ANRE Order no. 109/2022 - amending and supplementing
the Order of the President of the National Energy
Regulatory Authority no. 3/2022 approving the Regulation
on the organisation and functioning of the online platform
for changing the electricity and natural gas supplier and for
contracting the supply of electricity and natural gas
- ANRE order no. 3/2022 comes into force on 28 August
2022, but applies from 10 October 2022, with some
exceptions (suppliers’ point of view, presented in point 4
below);
- Thus, the deadline for the preparation/testing of the POSF
.
platform has been extended until 10 October 2022;
- until this date (10 October 2022), requests for change
of supplier shall be solved according to Ord. ANRE
234/2019 - Procedure for the change of electricity/natural
gas supplier by the final customer, with subsequent
amendments and additions. After this date, Ord. ANRE no.
234/2019 is repealed.
- Supplier obligations (art. 26, art. 27 lit. a, b, c, e, k, l, m,
n) apply from 28 August 2022 and include: supplier
obligations related to registration in POSF, organisation
of activity for POSF, testing, connection with POSF,
registration of standard offers in the comparator, including
provision of related contracts, migration to POSF of
all necessary information to become operational on 10
October 2022.
.
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Supply of last resort
Supply of last resort
ANRE Order no. 125/2021 amending and supplementing the
Regulation on the last resort supply of natural gas (approved
by ANRE Order no. 173/2020):
- contains amendments and additions concerning:
- Designation of suppliers of last resort (SFR): at least 5
SFRs, with a combined market share, in terms of number
of final customers and quantities of natural gas sold, of at
least 70% (compared to at least 3 SFRs previously, without
other associated conditions);
- renouncing the status of UIF, upon request - the new
cumulative conditions for UIFs designated on the basis
of availability and eligibility (such as Electrica Furnizare)
are: after at least 1 year from the date of designation (as
before); at the date from which they wish to renounce, not
to have customers taken over under the UI regime (new
condition); with prior notification to ANRE at least 60 days
before (compared to 45 days previously);
- duration of supply under the UI regime: min. 12 months
from the date of takeover for small customers, i.e. with an
annual consumption less than or equal to 28,000 MWh
(compared to 3 months previously);
- Pricing for the supply of UI: obligation to maintain
unchanged, for a period of at least 3 months from the
date of takeover, the value of the supply and transport
components (compared to the monthly pricing with all its
components); exception - the situation where the values
of the mentioned components become lower;
- criteria for setting the FUI for automatic customer takeover:
the „lowest cost” criterion; the takeover capacity criterion,
by verifying that the number of end customers to be taken
over does not exceed 30% of the number of customers
in the supplier’s own portfolio; the takeover availability
criterion, if the supplier does not meet the previous
criterion (as opposed to the „lowest cost” criterion only).
ANRE decisions on the termination of the applicability of
certain decisions designating suppliers as suppliers of last
resort of natural gas, respectively designating suppliers as
suppliers of last resort of natural gas:
- the termination of the applicability of the decisions of
designation as suppliers of last resort of natural gas, at
the request of the respective suppliers to renounce to
this quality: CEZ Vanzare (from 02 January 2022) - ANRE
Decision no. 2233/2021, CIS Gaz (from 14 December 2021)
- ANRE Decision no. 2234/2021;
- new designated natural gas UIFs (according to the new
rules established by ANRE Order no. 125/2021): E.ON
Energie Romania - ANRE Decision no. 2237/2021, OMV
Petrom - ANRE Decision no. 2238/2021, both starting from
15 December 2021;
ANRE Order no. 91/2022 - for the approval of the Regulation
on the last instance supply of electricity
- The Regulation for the designation of the last instance
suppliers of electricity - Ord. ANRE no. 188/2020, the
Regulation on the taking over by suppliers of last resort
of consumption places of final customers who have not
ensured the supply of electricity from any other source -
Ord. ANRE no. 242/2020 and the Framework Contract for
the supply of electricity to final customers taken over by
the supplier of last resort.
-
- the introduction of the obligation for the SoLR with
the largest market share in a network area to take over
consumption places which, at the date of entry into force
of ANRE Order No 91/2022, do not have a supply contract
and are not disconnected;
introduction of an alternative system for nominating
SoLRs that automatically takes over customers on a
monthly rotation basis. Thus, for this purpose, the list of
the SoLRs is established in descending order of market
share, each SoLR in the list being nominated in turn, on a
monthly basis, to automatically take over customers who
are without a supplier in that month. For periods when
no support measures are imposed by primary legislation,
the nomination system implies the obligation for the SoLR
to transmit the last resort price at least 7 days before the
month for which the nomination is made, so that the SoLR
Nomination List is known, within a timeframe that allows
the transmission of the takeover request;
- the introduction of automatic takeover by the nominated
SoLR of non-household customers with a power approved
by the technical connection notice/connection certificate
of no more than 1 MVA, in the event of termination of the
electricity supply contract by the current supplier;
- Limiting the period of time a customer can be in the
portfolio of an SoLR to 12 months for household and
non-household customers up to 1 MVA and 6 months for
non-household customers above 1 MVA. 30 days prior to
the date of termination of the contractual relationship,
the SoLR shall notify customers of the termination of the
electricity supply, or, if applicable, the extension of the
supply period, specifying the period for which it will supply
electricity. If, at the end of the period, customers have not
succeeded in concluding a contract on the competitive
market, they may continue to benefit from the services of
an SoLR if they so request.
ANRE Order no. 110/2022 - amending and supplementing
the Regulation on the last resort supply of natural gas,
approved by Order of the President of the National Energy
Regulatory Authority no. 173/2020
.
- Electrica Furnizare FUI of natural gas in continuation.
-
.
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-
in order to ensure the supply under the LR regime to final
customers who do not have supply from any other source,
ANRE shall designate a number of at least 7 SoLRs, whose
cumulative market share, calculated for the competitive
market by the equal weight of the number of consumption
places of final customers and the quantity of natural gas
sold to them in the last 12 months, shall be at least 70%.
The shares on the competitive market of the suppliers
designated as SoLR at the time of the analysis shall be
taken into account, except for those for which a decision
has been issued stating the termination of the applicability
of the SoLR designation decision;
if a supplier has been designated as an SoLR by selection
based on availability and eligibility, it may resign from the
SoLR status, upon request, if the following cumulative
conditions are met: a) at least 1 year has passed since the
date of designation, b) at the date it wishes to resign, it
does not have in its portfolio any clients taken over in the
SoLR;
if a supplier has been designated as an SoLR by selection
based on eligibility and capability, it may renounce the
SoLR status, upon request, if the following cumulative
conditions are met: a) at least 1 year has passed since
the date of designation, b) the list of designated SoLRs
contains at least 7 suppliers whose cumulative market
share is at least 70%, c) at the date it wishes to renounce,
it does not have in its portfolio customers taken over in
the SoLR;
- For consumption sites with an annual consumption less
than or equal to 28,000 MWh, the SoLR shall decide at
its discretion whether to extend the period for ensuring
the supply of natural gas under the LR regime to the
consumption sites of customers taken over after the
minimum period has been reached and shall notify the
customers taken over at least 30 days before the end of the
supply of natural gas under the LR regime. The notification
may contain attached an offer to supply natural gas on a
competitive basis;
- the activity of supplying natural gas under the LR regime
for final customers whose consumption places are
automatically taken over is carried out in compliance with
the framework contract for the supply of gas under the
LR regime:
- a) without the need to sign the contract with the SoLR,
for the consumption site with an annual consumption less
than or equal to 28,000 MWh; if the taken-over customer
requests the SoLR to sign and send the contract for the
supply of natural gas under the LR regime concluded with
the SoLR, the SoLR is obliged to send it to the customer
within a maximum of 5 working days;
- b) on the basis of a supply contract concluded and signed
with the SoLR, for the place of consumption with an
annual consumption of more than 28,000 MWh; during
the period between the date of takeover by the SoLR
and the date of signing of the LR contract, between the
customer taken over and the SoLR, the SoLR is allowed
to provide the activity of supply of natural gas under LR
for the places of consumption of the customer taken over
without the existence of a contract signed with the latter,
in compliance with the framework contract for the supply
of natural gas under LR;
- The SoLR has the right to ask the final customer with an
annual consumption of more than 28,000 MWh to provide
a financial guarantee, after the date of transmission of
the takeover information/after receipt of the customer’s
request for takeover under the LR regime; The amount
of the financial guarantee is set by order and must be
provided within 5 working days from the date of receipt of
the request. The client may be given the option of opting
for payment in advance.
- termination of the obligation to supply natural gas under
the LR regime: on the date from which the contract for
the supply of natural gas under the competitive regime
concluded by the customer taken over with a competitive
supplier takes effect, on the expiry of the duration provided
for the situations under Article 24 para. (2) (i.e. minimum
12 months from the date of takeover, one month from the
date of takeover, date of termination of the suspension of
the NG supply licence of the FA, duration established by
ANRE, etc.), in case of non-payment of invoices, in case
of non-constitution of the financial guarantee (for final
customers with annual consumption higher than 28,000
MWh)/non-payment of the advance invoice/daily invoice,
in case of disagreement on the resumption by the SoLR,
in case of non conclusion of the SoLR contract (when this
obligation exists);
- throughout the period of application of the provisions of
the support scheme, the SoLR does not transmit the values
of the price components for the supply of gas under the
LR regime for the following calendar month (CU_ach-FUI_
estimated, CU_fz-FUI_estimated, CU_tr-FUI);
- by derogation, for the period of application of the
provisions of the support scheme, ANRE establishes and
publishes on the website the SoLR ranking in ascending
order of market share for the last month, calculated by
the equal weighting of the number of consumption places
of final customers and the quantity of natural gas sold to
.
.
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-
them. Starting from September 2022, each SoLR will be
allocated one calendar month, in order of ranking;
iin the event of any of the above (i.e. FA loses supplier
status, suspension of FA licence, etc.) during the period
of application of the provisions of the support scheme,
the consumption places will be taken over by an SoLR
nominated by ANRE from the SoLRs designated on
the basis of: a) the criterion of the month of allocation,
b) the criterion of the takeover capacity, by verifying
the fulfilment of the condition that the total number of
consumption places taken over should not be higher than
30% of the number of consumption places of the final
customers in their own portfolio, which ensure the supply
of natural gas in a competitive regime, c) the criterion of
the takeover availability;
- The SoLR that has the obligation to take over, at the
request of the final customer, the consumption site with
an annual consumption of more than 28,000 MWh is the
SoLR of the respective calendar month, established by
ANRE through the SoLR Classification;
- The SoLR nominated to automatically take over the
consumption place with an annual consumption less than
or equal to 28,000 MWh is the SoLR of the respective
calendar month established by ANRE through the SoLR
ranking. By exception, in the case where the supply
contract has been terminated due to unilateral termination
by the customer, it is taken over on request by the SoLR of
the respective calendar month;
- for customers with an annual consumption of more than
28,000 MWh, in case of termination of the contract with
the FA/SoLR, if the final customer does not find a supplier,
the customer has the right to request any SoLR among
those designated by ANRE to ensure the supply under the
LR regime.
Wholesale electricity/natural gas market
Wholesale electricity/natural gas market
ANRE Order no. 7/2021 approving the Regulation on the
organized framework for trading of standardized products
on the centralized natural gas markets administered by
Bursa Romana de Marfuri S.A.:
- the Regulation contains trading rules for centralised
markets for short, medium and long-term products and
medium and long-term flexible products.
ANRE Order no. 26/2021 amending ANRE Order no. 65/2020
amending and supplementing certain ANRE orders:
-
in application of the provisions of the EU Regulation No
943/2019 on the internal electricity market (concerning
the over-the-counter trading of energy), the long-term
supply contract has been redefined as any contract with
a delivery period of one month or more (compared to one
year under the previous regulation);
- the above contracts are concluded in compliance with
competition law and reported in accordance with the
EU Regulation on Wholesale Energy Market Integrity and
Transparency (REMIT).
ANRE Order no. 27/2021 amending and supplementing some
ANRE orders:
-
In implementing the European rules on the 15-minute
settlement interval, nine regulations establishing trading
rules on centralised forward electricity markets have been
amended, in which the reference to the duration of one
hour is replaced by a reference to the duration of the
settlement interval, and the duration of the settlement
interval is one hour until 1 July 2021 and 15 minutes from 1
July 2021.
ANRE Order no. 33/2021 amending and supplementing
ANRE Order no. 213/2020 approving the Regulation on
the calculation and settlement of imbalances of the parties
responsible for balancing - single imbalance price:
- The new rules apply from 1 June 2021;
- the calculation method for determining the imbalance
and the payment obligations/collection rights used in
the imbalance price formula is replaced by the values for
ANRE Order no. 4/2022 amending and supplementing ANRE
Order no. 143/2020 on the obligation to offer natural gas on
centralized markets to natural gas producers whose annual
production in the previous year exceeds 3,000,000 MWh:
- the quantitative allocation for tender for each of the
standardised products for the period from 1 January to 31
December 2022 has been adjusted.
ANRE Order no. 65/2022 - for the approval of the Regulation
on the organized framework for electricity contracting by
large end customers
- simplification of the organised electricity contracting
framework for large end customers (with an annual
consumption of more than 70,000 MWh) established by
ANRE Order no. 55/2012: elimination of the obligation
to use the framework contract, extension of market
participation by accepting OTS and OD exclusively for
the purchase of NL, reduction of the average power per
settlement interval from 10 MW to 5 MW, the possibility
for the initiator to opt for the variation of the contracted
power per settlement interval with a maximum of 0.5 MW
per settlement interval, minimum delivery duration of one
month, elimination of the public negotiation phase.
ANRE Order no. 66/2022 - for the approval of the
Methodology for determining the level of minimum natural
gas stocks that holders of natural gas supply licenses are
obliged to build up between April 2022 and October 2022
- the quantities of natural gas representing the minimum
stocks to be stored by each supplier in the period April
2022 - October 2022 represent at least 30% of the quantity
of natural gas required for the consumption of final
customers in its own portfolio for the period 1 November
2022 - 31 March 2023 (reporting templates are established
with the quantity broken down by each month and
category of consumers and monitoring templates with the
level of fulfilment of the natural gas storage obligation).
ANRE Order no. 73/2022 amending the Regulation on the
organised framework for electricity contracting by large
these exchanges received by the TSOs from the European
platform; the way in which the electricity produced by
generation capacities/electricity storage facilities that are
in the trial period is remunerated is modified.
ANRE Order no. 37/2014 for the repeal of the Regulation on
the organization and functioning of the electricity Day-ahead
Market (PZU), respecting the price coupling mechanism of
the markets and amending some normative acts regulating
the electricity PZU:
- The repeal takes effect from 17 June 2021 and comes in
the context of the implementation of harmonised rules
at European level with a view to single day-ahead market
coupling.
ANRE Order no. 30/2021 on the modification and completion
of the Methodology for the regularization of the differences
between allocations and quantities of natural gas distributed
approved by ANRE Order no. 16/2020:
- The new rules apply in the balancing process of the natural
gas system and regulate the situation where a distribution
operator does not transmit to a network user the differences
between the allocation and the quantities distributed 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 to be applied
in case the distribution contract is terminated during the
gas year in question.
ANRE Order no. 96/2021 amending and supplementing the
Regulation on the calculation and settlement of imbalances
of balancing parties - single imbalance price, approved by
ANRE Order no. 213/2020:
The changes concern the following updates: the method of
determining imbalance; the formulas for determining the
initial deficit and surplus prices; the deadlines for the trans-
mission by Transelectrica of preliminary and final data on
the settlement of unintentional exchanges; the formulas for
determining costs/revenues and the actual costs for balanc-
ing energy.
end customers, approved by Order of the President of the
National Energy Regulatory Authority no. 65/2022
- the possibility of introducing initiating offers also by the
producers participating in the market.
- deletion of the clarification that large end-use customers
of electricity include transmission system operators and
distribution system operators that purchase electricity
individually or
in aggregation to cover their own
technological consumption, they can participate in the
market as end-use customers.
ANRE Order no. 72/2022 approving the Regulation on
natural gas storage in the natural gas transmission system
- The regulation covers: the methods of natural gas storage
(storage of natural gas in the natural gas transmission
system, in the natural gas transmission pipeline, in ring
pressure distribution systems and in above ground metallic
tanks), the calculation of the energy of natural gas in the
transmission pipelines related to ST and the monitoring of
ST.
ANRE Order no. 79/2022 - for the approval of the Regulation
for the organization and functioning of the forward
electricity contracts market, organized by Bursa Romana
de Marfuri - S.A.
- establishes the organized framework for electricity trading
on the forward electricity contracts market, through
electronic trading platforms managed by Bursa Romana
de Marfuri - S.A. (simple competitive trading mechanism
- for the launch of trading of the standard product, the
participant submits to the BRM an initiating order, double
competitive trading mechanism - the launch of trading
of the standard products is also initiated by the BRM so
that there are available for trading at any time consecutive
forward contracts for: the first 6 calendar months, the first
5 calendar quarters, the first 3 calendar semesters, the first
2 calendar years).
ANRE Order no. 92/2022 - amending and supplementing the
Regulation on the calculation and settlement of imbalances
of balancing parties - single imbalance price, approved by
Order of the President of the National Energy Regulatory
Authority no. 213/2020, and amending some orders of the
President of the National Energy Regulatory Authority
-
redistribution has been reintroduced, i.e. the rules for
calculating the additional costs/revenues from balancing
the system, how to allocate their value to each balancing
party (PRE) and issues related to the information note on
settlement, billing and payments are provided.
- reduction from 6 months to 2 months of the period in which
the participant can request, with a reasoned justification,
the correction of the settlement, from the posting on
the dedicated IT platform of the information note for
settlement, which will lead to an increase in the degree of
accountability of the participants in the balancing market.
ANRE Order no. 117/2022 - Order for the approval of the
Regulation for the organization and functioning of the
forward electricity contracts market, organized by Bursa
Romana de Marfuri - S.A.
- The Regulation establishes the framework for the trading
of electricity on the electricity futures market, through
electronic trading platforms managed by the Romanian
Commodities Exchange Company - S.A.
- BRM organizes trading sessions for standard products in
terms of the following features: daily delivery profile (in-
band delivery, peak load delivery, off-peak load delivery),
average power per contract settlement interval of 0.1 MW
or multiple of 0.1 MW, electricity delivery period (multiple
of day, 1 week, balance of the month - i.e. the period made
up of the remaining delivery days within a calendar month
in progress, starting on the second calendar day following
the day of the conclusion of a transaction, 1 month, 1
quarter, 1 semester, 1 calendar year).
- Repeals ANRE Order No 79/2022
ANRE Order no. 121/2022 - Order amending some orders of
the President of the National Energy Regulatory Authority
on the electricity market
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- modification of ANRE Order no. 127/2021 by: changing the
deadline for the application of the Order from 1 October
2022 to 1 October 2023; extending the deadline for
changing the configuration of the existing PE platform, as
required by the Regulation on terms and conditions for
balancing service providers and frequency stabilisation
reserve providers, from 9 months to 1 year and 6 months;
deletion of some definitions (RFP, DO connector and
adjustment required) and deletion of the term daily offer
and replacement with balancing energy offer; modification
of the parameters of the variable characteristics of the
balancing energy offer for the standard RRFm product;
replacement of the term system services with balancing
services;
- amendment of ANRE Order No 128/2021 by extending the
application deadline from 1 October 2022 to 1 October
2023.
ANRE Order no. 134/2022 - Order for the approval of the
General Rules on organised electricity forward markets
- the general rules on organised forward electricity markets
are approved. The organised forward electricity market
comprises the following segments: standardised forward
products market, flexible forward products market,
electricity derivatives market settled by physical delivery.
- electricity market operators shall draw up/update
their own specific regulations for the organisation and
management of the markets and submit them to ANRE for
approval within 90 days from the date of entry into force
of this Order.
ANRE Order no. 138/2022 - Order supplementing the
Order of the President of the National Energy Regulatory
Authority no. 143/2020 on the obligation to offer natural
gas on centralized markets to natural gas producers whose
annual production in the previous year exceeds 3,000,000
MWh
- ANRE Order no. 143/2020 is supplemented: with the
periods for which the quantities of natural gas are
determined, namely 1 January 2023 - 31 December 2023
and 1 January 2024 - 31 December 2024; with clarifications
on the application of the provisions of Article 12 of GEO
no. 27/2022, in accordance with Annex no. 5 thereto. The
quantitative share allocated for tendering purposes for
each of the products is as follows (for the period 1 January
2023 - 31 December 2023): Clu = 35%, Ctrim = 20%, Csem
= 5%, Csez = 25%, Can = 15%.
Renewable energy sources, green certificates, prosumers
Renewable energy sources. green certificates. Consumers
ANRE Order no. 9/2021 on the establishment of the
ANRE Order no. 14/2022 on the establishment of the
mandatory green certificates purchase quota for 2020:
mandatory green certificates purchase quota for 2021:
- The quota was set at 0.45074 hp/MWh (compared to
0.45061 hp/MWh estimated quota for 2020 and 0.433548
hp/MWh mandatory quota for 2019).
ANRE Order no. 15/2021 approving the Procedure for the
connection to the public interest electricity networks of
consumption and production sites belonging to prosumers
owning renewable energy production plants with an installed
capacity of 100 kW or less per consumption site:
- the mandatory quota for 2021 has been set at 0.449792
hp/MWh (compared to 0.4505 hp/MWh estimated quota
for 2021 and 0.45074 hp/MWh mandatory quota for 2020).
ANRE Order no. 15/2022 for the approval of the Methodology
for establishing the rules for the marketing of electricity
produced in power plants from renewable sources with an
installed electrical power not exceeding 400 kW per place
of consumption belonging to prosumer:
- the regulation is relevant for the electricity supplier as he
can carry out, on behalf of the consumer, the procedures
related to the connection, i.e. the transmission of the
connection request, the transmission of the notification
of the connection work to the distribution operator, the
transmission of the request for the certification of the
quality of prosumer.
ANRE Order no. 50/2021 for the approval of the rules for
the marketing of electricity produced in renewable energy
power plants with an installed electrical power of up to 100
kW belonging to prosumers:
- shall enter into force on 1 May 2022 and repeals ANRE
Order no. 50/2021 approving the rules for the trading
of electricity produced in power plants from renewable
sources with an installed electrical power of up to 100 kW
belonging to prosumers
- suppliers must notify prosumers with whom they already
have contracts (with P<100kW) about the change in the
applicable legal framework and the possibility to benefit
from the quantitative compensation mechanism on
request; at the request of prosumers, suppliers must send
signed contracts within 10 days;
- The new rules are applicable from 1 July 2021;
-
it is introduced, compared to the previous division into
individual consumers and corporate consumers, the
division into individual consumers with max. 27 kW
installed capacity, respectively individual consumers over
- for the application on demand of the quantitative
compensation mechanism,
installed electrical
power of the power plant producing electricity from
renewable sources shall not exceed 200 kW per place
of consumption; the quantitative compensation shall be
the
27 kW and max. 100 kW and corporate consumers max.
100 kW, in the application of the provisions concerning:
determination of the quantity of electricity that benefits
from the special applicable price, transmission of
measurement data by invoice or according to the sale-
purchase contract concluded with the supplier and
regularization in the invoice or between invoices.
ANRE Order no. 52/2021 approving the Methodology for
monitoring the system for the promotion of electricity
production from renewable energy sources:
- The new Methodology is applicable from 1 July 2021;
-
is taken over from the Rules for the trading of electricity
produced by prosumers and supplemented, both in terms
of transmission methods and content, the obligation of
suppliers to submit monthly to ANRE information on sale-
purchase contracts concluded with prosumers.
ANRE Order no. 131/2021 on the establishment of the
estimated mandatory quota for the purchase of green
certificates for 2022:
- estimated quota value - 0.5014313 green certificates/MWh
(compared to 0.4505 green certificates/MWh estimated
quota for 2021)
ANRE Order no. 117/2021 approving the rules for reducing
the estimated average annual impact of green certificates
(GC) in the final electricity consumer’s bill:
- the calculation algorithm aims at maintaining the average
impact of CV in the final consumer bill at the legally
foreseen value of 14,5 euro/MWh, as long as the CV
surplus in the CV market is percentage higher or remains
at the average value registered in the last 3 years. If the CV
surplus in the CV market, expressed as a percentage, falls
below the average value over the last 3 years, the average
impact of CV in the final consumer bill will be reduced.
ANRE Order no. 137/2021 approving the Procedure for the
determination of the available capacity in the electricity
networks for the connection of new electricity generation
facilities:
- This initiative was initiated in the context of the objectives
assumed at European level through the European Green
Deal and the „Fit for 55” package, to which Romania must
align itself and which requires, inter alia, the construction
of new electricity production facilities. It is therefore
necessary to determine, in particular if no reinforcements
are made to the electricity grids, the capacity available in
the electricity grids;
- are established: rules for determining the available
capacities in the transmission and distribution systems at
110 kV voltage level; rules for the transparent and regular
publication by the transmission system operator of data
on available capacities in the transmission and distribution
systems at 110 kV voltage level; deadlines and frequency
of publication of data on available capacities by system
operators (i.i.e. monthly from 1 April 2022; bimonthly from
1 July 2022; weekly from 1 October 2022).
-
made at the price of active electricity, and any surplus
shall be carried forward for a maximum of 24 months -
after this period, the unused quantity shall enter into the
financial regularization process.
- for
the application on demand of
the financial
regularization mechanism, the installed electrical power
of the power plant producing electricity from renewable
sources is more than 200 kW, but not more than 400
kW per consumption site; for financial compensation, the
reference is the weighted average price recorded on the
market for the following day for the month in which the
electricity in question was produced and delivered.
ANRE Order no. 90/2022- on the modification and
completion of the Order of the President of the National
Energy Regulatory Authority no. 52/2021 for the approval
of the Monitoring Methodology of the system for the
promotion of electricity production from renewable energy
sources
- determines the mode, format and frequency of data
reporting:
information on electricity sale-purchase
contracts concluded with prosumers owning renewable
energy power plants, i.e. the amount of electricity
benefiting from quantitative compensation (Pi< 200
kW), information on electricity sale-purchase contracts
concluded with prosumers owning renewable energy
power plants, i.e. the quantity of electricity benefiting from
financial balancing (Pi 200 kW and 400 kW), information
on directly negotiated bilateral electricity sale-purchase
contracts concluded with prosumers.
ANRE Order no. 94/2022 - amending some orders of the
President of the National Energy Regulatory Authority in
the field of promotion of electricity from renewable energy
sources
- modification of the threshold of installed electric power
in power plants from renewable energy sources belonging
to prosumers, from 100 kW to 400 kW per consumption
place (modification of ANRE Order no. 179/2018)
- amend the Regulation on the organization and functioning
of the green certificates market - ANRE Order no. 77/2017,
in order to specify the two main categories of economic
operators participating in the green certificates market,
accredited producers of electricity from renewable energy
sources and economic operators with the obligation to
purchase green certificates.
ANRE Order no. 95/2022 - amending and supplementing the
Order of the President of the National Energy Regulatory
Authority no. 15/2022 approving the Methodology for
establishing the rules for the sale of electricity produced
in power plants from renewable sources with an installed
electrical power of no more than 400 kW per place of
consumption belonging to prosumers
- amends ANRE Order no. 15/2022 in order to clarify the
average purchase price of energy produced and delivered
by consumers, in accordance with the provisions of GEO
27/2022, with subsequent amendments and additions,
the billing method and the elements highlighted in the
invoices;
- for energy consumed by consumers as customers, we
have clarifications regarding the final price charged;
- for the sale-purchase contract of electricity produced
in renewable energy power plants with an installed
electrical capacity of not more than 200 kW per place
of consumption and delivered to the electricity grid - the
contract price is the price of active electricity used by the
electricity supplier in the supply contract concluded with
the consumer as a consumer, during the billing period,
established according to the methodology;
- for the sale-purchase contract of electricity produced
in power plants from renewable energy sources with an
installed electrical power of more than 200 kW, but not
more than 400 kW per consumption site and delivered
to the electricity grid - the contract price is equal to the
weighted average price recorded on the market for the
following day in the month in which the electricity was
.
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produced and delivered to the electricity grid, published
by OPCOM.
ANRE Order no. 96/2022 - for the approval of the
Methodology for establishing the mandatory annual quota
for the purchase of green certificates
- methodology establishes: how to calculate the estimated
annual mandatory quota of green certificates for the
following year, how to calculate the number of green
certificates for the non-fulfilment of the estimated annual
mandatory quota of green certificates, for each quarter
of analysis, by economic operators with the obligation to
purchase green certificates, how to calculate the mandatory
annual quota of green certificates for the analysis year,
how to calculate the number of green certificates related
to the non-fulfilment of the mandatory quota of green
certificates for the analysis year by economic operators
with green certificate purchasing obligation.
- provisions have been introduced to exempt from the
legal quarterly and annual obligation to purchase green
certificates for prosumers and producers who own
renewable electricity production units
increasing the period for reporting errors in reporting the
quantities of electricity billed/supplied from 15 working
days to 18 working days from the date of the decision.
-
ANRE Order no. 118/2022
- Order amending and
supplementing the Methodology for establishing the
mandatory annual quota for the purchase of green
certificates, approved by Order of the President of the
National Energy Regulatory Authority no. 96/2022
- provisions have been introduced exempting from the
quarterly and annual
legal obligation to purchase
green certificates prosumers and producers who own
renewable electricity production units for their own final
consumption, supplied at the place of production from
renewable electricity production;
- the way of collecting the data needed to establish the
estimated annual mandatory green certificate purchase
quota/annual mandatory green certificate purchase quota
and the degree of non-compliance with the legal quarterly/
annual green certificate purchase obligations has been
specified, with the establishment of reporting templates
applicable in general, but also with the establishment of
specific reporting templates for the third quarter of the
2022 analysis year and for the 2022 analysis year.
ANRE Order no. 141/2022 - Order on the establishment of
the estimated mandatory quota for the purchase of green
certificates for 2023
- the estimated mandatory green certificates purchase
fee for economic operators who have the obligation to
purchase green certificates for the year 2023 is set at
0.4943963 green certificates/MWh.
with subsequent amendments and additions, according to
which, after the 2020-2021 extraction cycle, natural gas
storage will no longer be a regulated activity;
- Therefore, as of 1 April 2021, tariffs for underground gas
storage service are no longer regulated by ANRE, but set
by storage operators, and access to storage facilities (i.e.
the related conditions) will be negotiated between storage
operators and users.
ANRE Order no. 111/2021 amending ANRE Order no. 123/2017
approving the contribution for high efficiency cogeneration:
- The new contribution, valid from 1 November 2021, is
reflected in the final price of electricity and is approximately
50% higher than the previously applicable amount (i.e.
0.02554 lei/kWh from 0.01712 lei/kWh).
ANRE Orders no. 118-123/2021 approving the specific tariffs
for the electricity distribution service and the price for
reactive electricity:
- The new tariffs are applicable from 1 January 2022;
- Low voltage tariffs for Distributie Energie Electrica
Romania are 10% to 14% higher than in 2021.
ANRE Order no. 124/2021 approving the average tariff for
the electricity transmission service, the components of the
transmission tariff for the introduction of electricity into the
grid (T_G) and for the extraction of electricity from the grid
(T_L), the tariff for the system service and the regulated
price for reactive electricity, charged by Transelectrica:
- the new values are applicable from 1 January 2022;
- the average tariff for electricity transmission service is up
16.6% compared to 2021.
ANRE Order no. 143/2021 approving the tariffs and financial
contributions charged by the National Energy Regulatory
Authority in 2022:
-
- the amount of the annual contribution for supply licensees
will be 0.1% of turnover for electricity (compared to 0.2% in
2021), respectively 0.056 lei/MWH for natural gas;
in the context of the application of the support schemes
for customers to pay energy bills, approved by GEO no.
118/2021, approved with amendments and additions by
Law no. 259/2021, clarifications are provided regarding
the determination of turnover as the basis for calculating
the financial contribution due to ANRE, namely the net
turnover, without including the value of green certificates
and the value of the cogeneration contribution invoiced to
final customers.
.
Regulated tariffs and other taxes/fees
Regulated tariffs and other taxes/fees
ANRE Order no. 10/2021 amending ANRE Order no. 214/2020
approving the average tariff for the transmission service, the
components of the transmission tariff for the introduction
of electricity into the grid (TG) and for the extraction of
electricity from the grid (TL), the tariff for the system service
and the regulated price for reactive electricity, charged by
Transelectrica S.A.:
- the new tariff values are applicable from 1 March 2021;
- transmission tariff - component of electricity feed-in - TG =
1.3 RON/MWh (same level as above);
- transmission tariff - component of electricity extraction
from the grid - TL = 19.22 RON/MWh (same level as above);
- system service charge = 10.82 RON/MWh (9.5% reduction
from previous level).
ANRE Orders no. 27 - 31/2022 - for the modification of the
Annex to ANRE Orders no. 118 - 123/2021 on the approval
of the specific tariffs for the electricity distribution service
and the price for reactive electricity, for Delgaz Grid - S.A/
Societatea Distributie Energie Electrica Romania - S.A/
Societatea Distributie Energie Oltenia - S.A/Societatea
E-Distributie Banat - S.A/Societatea E-Distributie Dobrogea
- S.A./Societatea E-Distributie Muntenia - S.A.
- The new tariffs are applicable from 1 April 2022;
- Low voltage tariffs
for Electrica Romania Energy
Distribution are 17%- 25% higher than in the first quarter of
2022 (there were increases for all categories, respectively
the lowest of 9.1% at IT - Transilvania Nord and the highest
of 30.2% at MT-Muntenia Nord).
ANRE Order no. 21/2021 repealing ANRE Order no. 14/2019
approving the Methodology for setting regulated tariffs for
the provision of underground gas storage services:
- The order aims to implement the amendments made in
2020 to the Electricity and Natural Gas Law no. 123/2012,
ANRE Order no. 33/2022- for the modification of Annex
no. 1 to the Order of the President of the National Energy
Regulatory Authority no. 124/2021 on the approval of the
average tariff for the electricity transmission service, the
components of the transmission tariff for the introduction
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of electricity into the grid (TG) and for the extraction
of electricity from the grid (TL), the tariff for the system
service and the regulated price for reactive electricity,
charged by the National Electricity Transmission Company
“Transelectrica” - S.A.
- the new tariffs are applicable from 1 April 2022; the average
tariff for the electricity transmission service is higher by
17.3%, the transmission tariff - the component for feeding
electricity into the grid is higher by 69.8% (TG is - 2.53
RON/MWh), the transmission tariff - the component for
withdrawing electricity from the grid is higher by 13.8%
(TL is - 25.57 RON/MWh) compared to the first quarter
of 2022.
ANRE Order no. 67/2022 - on the application in April 2022
of the provisions of Article 23 of the Methodology for
determining and monitoring the contribution for high-
efficiency cogeneration, approved by the Order of the
President of the National Energy Regulatory Authority no.
117/2013
- During April 2022, ANRE shall analyse the amount of the
contribution for cogeneration, and if it varies by more
than +/- 2.5% compared to the value in force, by 30 April
2022, the new value of the contribution for 2022 shall be
approved by ANRE order.
ANRE Order no. 69/2022 amending the Order of the
President of the National Energy Regulatory Authority no.
123/2017 on the approval of the contribution for efficient
cogeneration and of some provisions on its billing
- Starting from 1 May, the contribution for efficient
cogeneration is 0.02044 RON/kWh, excluding VAT.
ANRE Order no. 130/2022 - Order amending the Order of
the President of the National Energy Regulatory Authority
no. 123/2017 on the approval of the contribution for efficient
cogeneration and of some provisions on its billing
- Starting from 1 November 2022, the contribution for
efficient cogeneration is 0.00333 RON/kWh, excluding
VAT, with a percentage decrease of 83% compared to the
previous value, i.e. a decrease of 0.01711 RON/KWh.
ANRE Order no. 140/2022 - Order approving the tariffs and
financial contributions charged by the National Energy
Regulatory Authority in 2023
- for the holders of the electricity supply license, the
annual bonus contribution is established on the basis of a
percentage rate of 0.1% applied to the turnover achieved
by them in 2022 from the commercial activities covered
by the electricity supply license, but not less than RON
3,125. The basis for calculating the financial contribution
levied by ANRE is the net turnover, defined and calculated
in accordance with the accounting regulations in force,
which includes the revenues recorded from the activity
of electricity supply - including those corresponding
to green certificates and the contribution of efficient
cogeneration, to which is added the revenues recorded
from the application of the measures of the compensation
scheme for electricity consumption and those related to
the compensation granted for the implementation of the
measures applicable to final customers in the electricity
market.
- the annual tariff for carrying out activities in the natural
gas sector on the basis of a license - Supply of natural gas
is 0.168 RON/MWh.
ANRE Order no. 139/2022 - Order approving the tariffs
charged by the Designated Electricity Market Operator
- the tariffs charged by OPCOM for the services rendered
for the performance of activities in 2023 are approved:
Management tariff - category A participants - 21,574
RON/participant/year, Management tariff - category B
participants – 35,956 RON/participant/year, Trading tariff
- 0.48 RON/MWh.
ANRE Order no. 142/2022 - Order amending the Order of
the President of the National Energy Regulatory Authority
no. 123/2017 on the approval of the contribution for efficient
cogeneration and of some provisions on its billing.
- from 1 January 2023 the contribution for efficient
.
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under the licence, including reference to the electricity
market(s) in which he intends to participate).
Smart metering systems (SMI) for electricity
ANRE Order no. 94/2021 on the amendment and completion
of the Framework Conditions for the implementation
schedule of smart metering systems at national level
approved by ANRE Order no. 177/2018 and on the
amendment of ANRE Order no. 88/2015 for the approval
of the framework contracts for the supply of electricity to
household and non-household customers of suppliers of last
resort, of the general conditions for the supply of electricity
to final customers of suppliers of last resort, of the model
electricity bill and the model electricity consumption
agreement, used by suppliers of last resort:
- The amendments and additions with an impact on the
activity of suppliers, applicable from 1 January 2022,
concern the following aspects: the processing of personal
data, collected and transited through the SMI (i.e. on the
basis of the customer’s consent, the obtaining of which is
the obligation of the supplier for contracts with included
regulated services); informing users about the integration
of the place of consumption in the SMI (which, for SoLR
customers will be carried out by the SoLR by sending an
annex, part of the supply contract); billing of energy at
the place of consumption/production and consumption
integrated into the SMI (which, for SoLR customers, will
be carried out by the SoLR exclusively on the basis of
data recorded by the SMI, with one exception); billing of
the energy distribution service for places of consumption
registered in the SMI (which will be carried out exclusively
on the basis of measurement data recorded by the SMI).
Unbundling in the gas sector
ANRE Order no. 93/2021 amending the Regulation on the
accounting separation of activities carried out by natural
gas licensees approved by ANRE Order no. 21/2020:
- of interest are the provisions relating to the activity of
last resort supply of natural gas (unregulated activity
under the current ANRE regulations, in force from 2020),
in relation to which the obligation to keep separate
accounting records and to submit related reports to ANRE
is conditional on its realization at regulated prices.
cogeneration is approved at the amount of 0.00 RON/
kWh.
ANRE Order no. 144/2022 - Order approving the tariff for
the acquisition of system services for the transmission and
system operator National Power Transmission Company
“Transelectrica” - S.A.
- the tariff for the purchase of system services charged by
the National Power Transmission Company “Transelectrica”
- S.A., valid from 1 January 2023 is 7.73 RON/MWh.
Investigations on the energy market
Investigations on the energy market
ANRE Order no. 22/2021 amending and supplementing
the Regulation on the organization and conduct of energy
investigation activities regarding the functioning of the
wholesale energy market, approved by ANRE Order no.
25/2017:
- the amendments to the Regulation concern, among
other things, the procedure for resolving complaints/
submissions, the provision of data, information and
documents requested by ANRE, the rights of members of
the investigation team in relation to market participants.
ANRE Order no. 143/2022 - Order amending and
supplementing the Regulation for the detection, notification
and sanctioning of violations of regulations issued in the field
of energy applicable to the control activities carried out by
the National Energy Regulatory Authority, approved by the
Order of the President of the National Energy Regulatory
Authority no. 62/2013
-
inspection control actions are carried out on the basis
of the annual control programme, unannounced control
action is carried out without prior notification of the
persons, etc.
Authorisations and licences
ANRE Order no. 24/2021 amending and supplementing
some ANRE orders:
- amendments to the Conditions of validity associated
with the natural gas supply licence were approved: e.g.
obligation to notify ANRE, within 5 working days, for
any changes in the name, registered office or contact
details; elimination of the obligation to notify ANRE on
decisions to change/constitute/disband the main or
secondary office(s), single points of contact, regional/
local information points; completion of the methods
of communication with or transmission of information
to ANRE (e.g. including magnetic support - CD/DVD/
memory stick transmitted/displayed at ANRE’s registry;
by uploading on ANRE’s website, etc.).
ANRE Order no. 42/2021 on the approval of the framework
conditions of validity associated with the license for the
activity of natural gas trader:
- the rights and obligations of the holders of the natural
gas trader license are established, with the mention that
the trader license is absolutely necessary only in case of
carrying out this activity exclusively, otherwise, the natural
gas supply license also allows the carrying out of the
trading activity.
ANRE Orders no. 103 and 112 of 2021 amending and
supplementing
the granting of
the Regulation on
establishment authorizations and licenses in the natural gas
sector (approved by ANRE Order no. 199/2020):
- the procedure for withdrawing a licence on request is
modified in order to make it easier (i.e. reasoned request
and confirmation of fulfilment of obligations to ANRE,
plus, for the gas supply licence, no longer carrying out the
activity of supplying natural gas at the time of submitting
the request). As regards the supply licence, the possibility
of withdrawing the licence on request becomes practically
inoperable.
ANRE Order no. 115/2021 on the amendment of the
Regulation for granting licenses and authorizations in the
electricity sector (approved by ANRE Order no. 12/2015):
- the procedure for the withdrawal of the license at the
initiative of the licensee is made more difficult by making
it conditional, in addition to the confirmation of the
fulfilment of the obligations to ANRE, on the requirement
that the applicant holding a license for the electricity
supply activity no longer carries out the electricity supply
activity for which it holds the license at the time of the
application;
is completed, inter alia, the documentation to be submitted
by the applicant for a licence for the aggregation activity
(e.g. with the description of the business he will carry out
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
A.3.2. Changes to the legal framework in 2022/2023 up
to the date of approval of the financial statements
The following are the relevant legislative changes that took place at Group level in the peri-
od between the end of the financial year 2021 and the date of the published report, respectively in
the period between the end of the financial year 2022 and the date of this report.
A.3.2.1. Distribution segment
2022
2023
Regulations regarding tariffs:
ANRE Order no. 6/2023 for completing the Procedure
regarding the substantiation and approval of TSO and DSO
investment plans, approved by ANRE Order no. 98/2022 -
effective from 13 February 2023
The amendment proposals consider the recognition of DO
investments in energy storage and production for internal
consumption from stations and NL:
- the inclusion in the category of justifiable investments of
energy production facilities from renewable sources for NL
supply and internal consumption from the stations;
- the inclusion of electricity storage facilities in the category
of necessary investments;
- the possibility for DO to own storage facilities, by way of
exception from the provisions of the Energy Law (art. 46^1
par. (1)), only with prior approval by ANRE;
- establishing the method of calculating the economic
efficiency of investments in production/storage, with a
view to recognition by ANRE (Annex no. 8).
ANRE order no. 1/2023 for the modification and completion
of some orders of the president of the National Energy
Regulatory Authority effective from 17 January 2023
- Methodology for the evaluation of investments in projects
of common interest (PCI) approved by ANRE Order no.
139/2015 is amended as follows:
o expanding the scope of the Methodology for DO invest-
ments (in addition to TSOs)
o granting a 1% RRR incentive for PCI
o expanding the scope of the type of PCI from electrical
transmission networks, to: a) electrical electrical trans-
mission and distribution networks; b) offshore net-
works for energy from renewable sources; c) projects
that integrate innovative technical solutions and that,
although they have low capital costs, involve significant
operating costs.
- The methodology for establishing the distribution tariffs
- is modified and provides for the granting of the RRR
incentive of 2% for investments from EU funds only if they
have not benefited from the PCI incentive
- The project was developed as a result of ANRE’s
obligation to present to ACER, until 24 January 2023,
the methodology and criteria used for the evaluation of
investments, in the sense of alignment with Regulation
(EU) 2022/869:
- energy infrastructure projects and high risk assessment
- the specific risks to which offshore networks for energy
from renewable sources are exposed
Draft Order regarding the modification and completion of
ANRE orders - public consultation
-
- Energy technical norm regarding the determination of
own technological consumption in public interest electric
networks - NTE 013/16/00, approved by ANRE Order no.
26/2016
it is stipulated that the determination of the quotas
assigned to the producers and the transport operator
from the amount of NL related to the additional transit of
electricity from the 110 kV electrical networks, should be
carried out by the DSO
2022
2023
- The methodology for establishing tariffs for the electricity
distribution service, approved by ANRE Order no. 169/2018
- DSO recovers from the TSO the counter value of the
amount of NL related to the additional transit of electricity,
for the quotas assigned to producers and TSOs.
- the amount of NL related to the additional transit of
electricity from the 110 kV electrical networks, determined
according to ANRE regulations, is taken into account in
the annual correction of the regulated NL at the request of
the operator, by reducing the amount of NL realized.
- the revenues recorded from the recovery from the TSO
of the counter value of the amount of NL related to the
additional transit of electricity from the 110 kV electrical
networks are not taken into account when determining the
corrections of the regulated income.
- The methodology for establishing tariffs for the electricity
transmission service, approved by ANRE Order no. 171/2019
- the costs recorded in the year t-2 corresponding to the
amount of NL related to the additional transit of electricity
from the 110 kV electrical networks of the DSO, for the
quotas assigned to the producers and TSOs, are included
in the regulated income of the year t of the TSO.
- TSO will recover through Tg the costs related to the quotas
assigned to the producers from the stipulated costs.
Technical regulations - Network connection
ANRE Order no. 3/2023 regarding the approval of the
Technical Norm “Technical requirements for connection to
public interest electrical networks for electricity storage
facilities and the notification procedure for connecting
electricity storage facilities” - effective from 20 March
2023
The norm was developed by the TSO, it establishes technical
requirements for connected storage facilities:
-
individually to the public electricity network, classified in
categories A, B, C and D similarly to electricity production
facilities;
- within the electricity production sites;
- within the places of electricity consumption.
ANRE Order no. 4/2023 for the modification and completion
of some orders of the president of the National Energy
Regulatory Authority in the field of connecting users to
the public interest electrical network - effective from 3
February 2023
the modification and completion of the following regulations,
in the sense of including the possibility for household
customers, PFA, individual businesses, family businesses
and public institutions whose places of consumption are
connected to LV, as well as prosumers, to purchase the
measuring group or the fully equipped protection and
measuring block, including the meter in compliance with
the technical specifications made available by DSO/TSO:
Connection Regulation
- The procedure regarding the connection to LV networks of
household customers - ANRE Order no. 18/2022
- Connection framework contracts - ANRE Order no.
105/2022
- The procedure regarding the connection to the networks
of prosumers - ANRE Order no. 19/2022
The DSO/TSO is obliged to reimburse the user the value of
these equipments at the terms established in the connection
contracts; reimbursement is made on the basis of supporting
documents presented by the user, without being limited to:
tax invoice, compliance certificates, warranty certificates,
etc.
- the obligation of the DSO to install the meter is maintained,
the deadlines in force stipulated in the connection
contracts being maintained.
Draft order for the amendment and completion of ANRE
President’s Order no. 239/2019 for the approval of the
Technical Technical Norm regarding the delimitation of
protection and safety zones related to energy capacities
- public consultation
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
2023
2022
2023
- clarifications regarding the use of the formula for
calculating the size of the safety zone Z(sig), established
in point 2.3 of Annex no. 6 from Norm;
- the restriction regarding the application of the provisions
of the Norm in the regulated passage corridor of the LEA,
respectively in the area located between the limit of the
safety zone and the limit of the regulated passage corridor,
and their application only in the safety zone of the LEA,
whose width is calculated with formula from point 2.3 of
Annex no. 6 from Norm;
- the conditions under which the risk analysis will be required
were specified, depending on the positioning of the
objectives in relation to the safety zone and respectively
in the area located between the limit of the safety zone
and the limit of the standard passageway;
- provisions were established regarding the placement of
photovoltaic panels on the roof of buildings.
Draft Order regarding the modification and completion of
the Methodology for data exchange between the transport
operator and the system, distribution operators and
significant network users approved by ANRE Order no.
233/2019 – public consultation
- the introduction of electricity storage facilities connected
individually to the electrical network, with a response
in providing active power distinctly from electricity
production facilities;
- detailing the relevant system users who are the subject of
information transmission to DO and TSO;
- detailing the method of transmitting data from relevant
-
system users, directly and indirectly, to DO and TSO.
In addition to the draft order from phase I and in
accordance with the provisions of the norm for connecting
storage facilities, it is necessary to specify:
o communication path, redundancy and data exchange
for storage facilities. These storage facilities can be
linked to the electricity production facility or can be
operated independently.
o how the scheduled and planned data exchange is car-
ried out until the provisions of ANRE Order no. 127/2021,
with subsequent amendments and additions.
Draft Order for the amendment and completion of ANRE
Order no. 102/2015 for the approval of the Regulation
on the establishment of solutions for connecting users to
electric networks of public interest - public consultation
- addition to the list of situations in which the connection
solution is determined by the solution sheet:
o of consumption places owned by authorized natural
person users, individual businesses, family businesses
and public institutions that connect to the low voltage
network, regardless of the requested power;
o of the places of consumption and production belong-
ing to prosumers who own electricity production units
from renewable sources with an installed power of no
more than 400 kW per place of consumption;
o of the local public authorities that have the capacity to
produce electricity from renewable sources made, par-
tially or totally, from structural funds, and that benefit
from the suppliers with whom they have an electricity
supply contract, on request, from the financial regular-
ization service .
- the introduction of the provision according to which the
solution study must also contain connection options with
the operational limitation of the maximum power that can
be discharged into the network in the situations/operation
regimes with N-1 elements in operation that have the
effect of overloading the network and, consequently,
the impossibility of the network elements remaining in
operation and of the network as a whole to function for an
unlimited time under these conditions.
- the introduction of the provision according to which in
the solution sheet or, as the case may be, in the solution
study, it must be highlighted whether in the connection
solution electrical networks were considered for which
strengthening works were executed or are being executed
to create the technical conditions necessary to connect
several production/consumption and production sites
(general strengthening works), financed by users who
benefit from the same strengthening works and whose
utility installations are energized before the user’s own
utility installations. It is also provided that, in this case, the
data on which the participation quotas due to the users
who financed the strengthening works are calculated are
to be specified in the solution sheet or, as the case may be,
in the solution study.
- elimination of the phrase dispatchable/non-dispatchable
with regard to generating units/power plants considering
the provisions of ANRE Order no. 127/2021.
Draft Order for the modification and completion of the
Methodology for establishing user connection rates to
public interest electrical networks, approved by ANRE
Order no. 11/2014 – public consultation
-
- completion of the list of normative acts, with ANRE Order
no. 105/2022, where the two types of strengthening works
are defined: specific and general;
if general strengthening works are needed to connect a
production site or a consumption and production site, the
calculation method currently provided in the Methodology
is maintained. Thus, the users will bear the costs of the
general strengthening works established on the basis of
the general estimate, but no more than a calculation value,
established taking into account the power approved for
discharge into the network for the respective place of
production/consumption and production, as well as the
specific rates approved by ANRE.
Draft order for the amendment and completion of ANRE
Order no. 95/2018 regarding the approval of the man-
datory clauses in the contracts for the provision of ser-
vices in order to carry out the connection works to the
electric grids of public interest - public consultation
- the proposed amendment refers to the price that DSO/
TSO pays to the economic operator certified by ANRE for
the provision of services for connection works to public
interest electrical networks;
- the provision according to which the price of the contract,
initially estimated, is fixed is replaced by a provision that
orders the updating of this price, corresponding to the
effective consideration of the services performed for the
realization of the connection installation. The price of
the contract, initially estimated, represents the costs for
making the connection installation established by the
DSO/TSO through the connection tariff or, if the contract
is concluded by the DSO/TSO with a specific designer
and/or certified builder, chosen by the user, the price is the
agreed following the negotiation between the economic
operator and the user.
- the price update will be carried out through an addendum
-
to the contract.
it is proposed to include a provision according to which
the provisions of the order should apply including to users
for whom, on the date of entry into force of the order,
DSO/TSO have concluded contracts for the provision
of services in order to carry out connection works to
the public interest electrical networks, but for which the
installations connection were not put into operation.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
2023
2022
2023
Licenses
Draft Order regarding the approval of the Regulation for
the authorization of electricians in the field of electrical
respectively of project verifiers and
installations,
quality technical and extrajudicial experts in the field of
technological electrical installations – public consultation
- the proof of the qualifications of an authorized electrician
in the field of electrical installations, an authorized project
verifier or a quality technical expert and authorized
extrajudicial
in the field of technological electrical
installations will be achieved by the issuance by the
competent authority of an identity document, a nominal
and non-transferable document;
- the method of submission of documents by applicants
will be realized by uploading them on the ANRE portal
or in the PCUe platform and eliminating the possibility of
submitting them directly to the ANRE registry or by post;
-
- modification of the procedure
for
for organizing the
examination
the authorization of electricians,
respectively the interview for the authorization of project
verifiers, as well as quality technical and extrajudicial
experts in the field of technological electrical installations;
it is proposed to facilitate obtaining the qualification of
licensed electrician, by completing the list of acceptable
professional qualifications (CPA) with a new qualification
(CPA 4.1) which is applicable to qualified workers in the
field of energy, electrotechnical, electromechanical or
electrical installations for constructions, having also the
diploma baccalaureate in a field other than these.
Commercial Regulations
ANRE Order no. 5/2023 for the approval of the Regulation
for the supply of electricity to final customers - effective
from 6 February 2023
- the need to correlate the provisions of the Electricity
Supply Regulation to final customers with the provisions
of Law no. 123/2012 of electricity and natural gas, as
amended and supplemented by GEO no. 143/2021, and
Annex 1 to Directive (EU) 2019/944.
- elimination of the provisions that refer to the activity of the
DO in the relationship with the supplier and its obligations
regarding its own activity
- detailing the way in which DO ensures unrestricted, free
and guaranteed access to the information in the database
regarding the places of consumption connected to the
electrical distribution network in the license area;
- the introduction of the notion of an active client, the
quality of an active client is certified, by the DSO/TSO, for:
- participation in flexibility or energy efficiency programs, to
which the customer’s place of consumption is connected;
- the production of electricity, by the DSO/TSO to which the
place of consumption and production is connected;
- elimination of the obligation to conclude the consumption
agreement by the customer at the conclusion of the
electricity supply contract;
- the customer’s possibility to ask the supplier to change
the monthly values from the consumption agreement for a
determined period, these being applied by the DO and the
supplier starting with the 1st of the month following the
one in which he received the new values;
- the consumption data from the consumption agreement
can be modified by the DO at any time during the execution
of the electricity supply contract, including the data from
the consumption agreement modified by the customer, in
order to adapt to the actual consumption achieved;
- DO has the obligation to verify the necessity of changing
the data related to the consumption convention with the
same frequency with which the reading of the index of
the measurement group takes place. If the DO modifies
the data in the consumption agreement, it transmits the
modified values to the supplier;
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- the introduction of the obligation of the DO to ensure the
reading of the index of the measurement group at a time
interval of maximum 3 months in the case of places of
consumption belonging to household customers, except
for those integrated in the SMI;
in the event that the DO has not performed the reading
within the time frame established by the legal provisions in
force, in order to issue the regularization invoice, the latest
self-read index and communicated by the client is used
after the most recent index read and communicated by
the DO. The regularization period cannot be longer than
3 years;
- elimination of the conditions for concluding the distribution
contract directly by the end customer; specifying that the
conclusion of the distribution contract must be carried
out by the final customer with the DO only if the place
of consumption has several suppliers at the same time or
is the subject of participation in the aggregation by an
independent aggregator;
ANRE Order no. 13/2023 for approval the contract - frame-
work for the provision of electricity in the universal ser-
vice regime, the general conditions for the provision of
electricity in the universal service regime and the in-
voice model applicable to household customers – it has
not yet been published in the MO
Through the draft order, the following was proposed:
1. the contract - universal service electricity supply
framework - regulates the way in which the contracts in
force are applied under the conditions of entry into force of
the order and also provides that the price from the universal
service offer is applied for a period of minimum 3 months.
Provisions with impact on DO:
- the reading interval of the index of the measurement
group is at most 3 months;
- regularization of electricity consumption is done for a
maximum of 3 months and is included in the first invoice
issued after reading the index by the distribution operator
(DO);
-
- the compensations and punitive
- communication through the invoice of the time interval for
reading the index of the measurement group by the DO
representative;
invoicing based on the data established by the electricity
consumption convention for the invoicing periods in which
the index of the measurement group is not read and the
household customer does not transmit the self-read index;
interest that the
household customer is entitled to receive for the supplier’s
non-compliance with the obligations set forth in the
Performance Standard for the activity of electricity supply
and for the distribution operator’s non-compliance with the
performance indicators provided for in the Performance
Standard for the electricity distribution service, in force.
2. the general conditions for the provision of electricity in
the universal service regime - are proposed to be approved
separately from the framework contract, so that they can
be published on the supplier’s website and do not require
printing and physical attachment.
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3. the invoice model applicable to household customers -
the invoices issued for electricity consumption registered
starting from 1 April 2023 must comply with the Invoice
Model in Annex 3 which contains the information provided
in the Regulation, respectively information from the invoice
and information from the annex to the invoice.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
2022
2023
2022
2023
Electricity market functioning
Electricity market functioning
ANRE order 3/2022 approval of the Regulation on the
organization and functioning of the online platform for
switching suppliers (POSF) and for contracting the supply
of electricity and natural gas – in force starting with 28
August 2022
- The online platform (POSF) is unique at national level,
the end customers and economic operators involved in
switching suppliers and contracting the supply are obliged
to use this platform exclusively.
Implementation of the platform starting with 28 August
2022.
-
- Duration of the supplier change process 24 hours
- The client is obliged to register the self-read index in POSF
- The customer loads the self-read index at the initiation
of the supplier change process and a second self-read
index at the date of the actual supplier change. If the
final customer does not load the index on the date of the
actual supplier change, the OD is required to record in the
POSF, within 5 days from the date of the actual supplier
change by the final customer, the index read by the OD or
provided by the smart measurement system.
- The regulation details: The organization and operation
of POSF, the content of the POSF database, the data
necessary for the creation of the access account in POSF,
the rights and obligations of POSF users, the rules on the
conclusion of the supply contract, the effective procedure
for changing the provider.
- ANRE is the administrator and operator of the Online
Platform for the change by the final customer of the
electricity and/or natural gas supplier (POSF)
- During the period between the date of entry into force
of the order and 28 August 2022, all economic operators
are obliged to comply with any ANRE requests for the
implementation and implementation of POSF.
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ANRE Order no. 12/2023 for the approval of the Regulation
regarding the organized framework for trading on the
organized future electricity markets administered by the
Electric Energy and Natural Gas Market Operator OPCOM
S.A., which aims to simplify the organized framework for
trading electricity on the markets organized by future
electricity, through the trading platforms managed by S.C.
OPCOM S.A. – it has not yet been published in the MO
This draft order provided rules that refer to:
- the types of products that can be traded on the
standardized and flexible term product markets;
- the method of establishing offers for the sale or purchase
of electricity;
- the way of organizing auctions/trading sessions;
- the way of establishing transactions and contracting the
traded energy;
- the way of managing and publishing information on
participants, offers and concluded transactions.
Draft Order for the approval of the Regulation on the
organization and operation of the organized electricity
market, administered by the Romanian Stock Exchange -
S.A. – public consultation
It provides rules that refer to:
Introduction of a chapter on organized market segments
-
- The introduction of new products, namely flexible products
and products derived from the field of electricity, settled
by physical delivery
- Description of the trading mechanisms used
- Expanding market transparency information
-
Introduction of requirements regarding the use of a
liquidity provider
Upon entry into force of the order, ANRE Order no. 117/2022
for the approval of the Regulation on the organization
and operation of the electricity futures contract market
organized by the company Romanian Stock Exchange
S.A., and within 30 days of approval, BRM publishes the
operational procedures according to the Regulation entered
into force.
Draft Order regarding the repeal of ANRE Order no. 97/2013
for the approval of the rules regarding the purchase
of electricity to cover own technological consumption
related to electrical networks - public consultation
Considering the fact that the provisions included in the ANRE
Order no. 97/2013, regarding the acquisition by TSOs and
DSOs for NL coverage related to the electrical networks they
operate, were taken over within ANRE Orders no. 213/2020,
respectively no. 127/2021, with subsequent amendments and
additions, it is proposed to repeal ANRE Order no. 97/2013,
with subsequent amendments and additions.
Draft Order for the approval of the Methodology for
monitoring the wholesale electricity market - public
consultation phase II
- updating the Methodology for monitoring the wholesale
electricity market, approved by ANRE Order no. 67/2018.
- the restructuring of the old methodology by updating the
methodological principles that are the basis of the activity
of monitoring the wholesale electricity market, with the
requirements of the regulatory framework in force.
- proposes ways to evaluate the
level of efficiency,
transparency and competition on the wholesale electricity
market, to evaluate the behavior of PAN participants and to
identify those practices or behaviors that raise suspicions
of market abuse or violation of competition principles.
- updating the system of indicators used in the monitoring
activity in accordance with the appearance of new
components of the wholesale energy market and the
correlation with the current regulatory framework.
Draft Order for the approval of the Methodology for
monitoring the retail electricity market - public consultation
phase II
- updating the Methodology for monitoring the electricity
retail market, approved by ANRE Order no. 167/2019.
- the restructuring of the old methodology by updating
the methodological principles that are the basis of the
activity of monitoring the retail electricity market with
the requirements of the regulatory framework in force
and, considering the multitude of changes, issuing a new
methodology.
- the system of indicators proposed by this project takes
over a part of the indicators provided in ANRE Order no.
205/2018 regarding the approval of the Methodology
for monitoring the electricity market for end customers
served by last resort suppliers, which is repealed.
- the method of collecting data and information related to
the monitoring of the retail electricity market is similar to
that related to the wholesale market, respectively through
a set of monitoring templates uploaded monthly by market
participants on the ANRE portal.
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Appendix 3 – Applicable regulatory framework
Appendix 3 – Applicable regulatory framework
A.3.2.2. Supply segment
2022
2023
2022
2023
GEO no. 2/2022 on the establishment of social protection
measures for employees and other professional categories
in the context of prohibition, suspension or limitation of
economic activities, caused by the epidemiological situation
generated by the spread of SARS-CoV-2 coronavirus, as well
as for the modification and completion of some normative
acts:
- The ordinance provides for amendments and additions to
Law no. 5/2023 - Law on the modification and completion of
Law no. 220/2008 on the establishment of the system for
the promotion of energy production from renewable energy
sources.
- modifies and completes Law no. 220/2008 regarding
the trading of green certificates after the expiry of the
accreditation period, the recovery of green certificates
issued unduly, etc.
GEO No 118/2021 as follows:
- extension of the scope of application of the ceiling by
including in the category of beneficiaries also public cultural
institutions and cultural establishments subordinated to
central and local public administration authorities;
- the prohibition to disconnect or interrupt, until 30 June
2022, the electricity supply for non-payment of household
customers;
- provision, in the case of invoices that do not comply with
the legal provisions on the application of support schemes
(compensation, exemption, capping), for their automatic
reissue within 15 days from the date of issue. For invoices
already issued, the deadline for their reissue is 15 days
after the entry into force of this GEO, i.e. until 3 February
2022 (inclusive). The execution of the payment obligation
for invoices in the process of being recalculated is also
suspended until new invoices are issued.
GEO no. 3/2022 amending and supplementing GEO no.
118/2021:
- the following amendments and additions to GEO no.
118/2021 are provided for, with application from 1 February
to 31 March 2022:
o increasing the consumption margin for compensa-
tion from 300 kWh/month (+10%) to 500 kWh/month
(+10%) for electricity and from 200 mc/month to 300
mc/month for natural gas;
o change the price cap for household customers (from
1 leu/kWh to 0.8 lei/kWh for electricity and from 0.37
lei/kWh to 0.31 lei/kWh for natural gas) and introduce
a price cap for all non-household customers (1 leu/kWh
for electricity and 0.37 lei/kWh for natural gas);
o the cap still concerns both the final price and the elec-
tricity/natural gas purchase component: for household
customers - 0.8 lei/kWh final price for electricity, of
which 0.336 lei/kWh electricity price component; 0.31
lei/kWh final price for natural gas, of which 0.200 lei/
kWh natural gas price component; for non-household
customers: 1 leu/kWh final price for electricity, of which
0.525 lei/kWh electricity price component; 0.37 lei/
kWh final price for natural gas, of which 0.250 lei/kWh
gas price component;
o recovery of the capped amounts will be made accord-
ing to the thresholds indicated above, in conjunction
with the period of application: from 1 November 2021
to 31 January 2022, by the difference between the av-
erage monthly purchase price and the threshold of
525 lei/MWh for electricity and 250 lei/MWh for nat-
ural gas. From 1 February, recovery will be made: for
household customers - by the difference between the
average monthly purchase price and the threshold of
336 lei/MWh for electricity and 200 lei/MWh for natural
gas; for non-household customers - by the difference
between the average monthly purchase price and the
threshold of RON 525 for electricity and 250 lei/MWh
for natural gas.
ANRE Order no. 1/2022 for the repeal of ANRE Order no.
32/2016 on the approval of the Methodology for the
preparation of the Annual Report by licensees in the
electricity and heat sector: the obligation for licensees
(including suppliers) to prepare and submit to ANRE an
Law no. 15/2023 - Law on the approval of Government
Emergency Ordinance no. 3/2022 for the modification
and completion of Government Emergency Ordinance no.
118/2021 on 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
Government Ordinance no. 27/1996 on the granting of
facilities to persons living or working in some localities in
the Apuseni Mountains and in the “Danube Delta” Biosphere
Reserve
- - GEO no. 3/2022 is approved.
ANRE Order no. 3/2023 - Order for the approval of the
Technical Standard on the technical requirements for
connection to the electricity grids of public interest for
electricity storage facilities and the notification procedure
for the connection of electricity storage facilities
- enter into force on 20 January 2023.
- establishes the procedure and stages of the notification
process for the connection of storage facilities, as well
as the content of the tests for verifying the compliance
of storage facilities with the technical requirements for
connection to the electricity grids of public interest.
- The technical connection requirements apply to: new
electricity storage facilities individually connected; new
electricity storage facilities installed in an existing or new
production site; new electricity storage facilities installed
in an existing or new consumption site.
ANRE order no. 4/2023 – order for amending and completing
some orders of the President of the National regulatory
Authority for Energy in the field of connection of users to
the electricity network of public interest.
- Amend and supplement the following normative acts:
Regulation on the connection of users to electrical
networks of public interest (approved by ANRE order
no. 59/2013), the framework of the technical connection
notices (approved by ANRE order no. 74/2014). Procedure
on connection to the public interest low voltage power
networks of the consumption places belonging to
household customers (approved by ANRE order no.
18/2022), procedure on connection to the public interest
power networks of the consumption and production sites
belonging to prosumators (approved by ANRE order no.
19/2022), Framework contracts for connection to public
interest electricity networks (approved by ANRE order no.
105/2022).
ANRE order no. 5/2023 — order for the approval of the
Regulation for the supply of electricity to final customers, as
well as for the modification and completion of some orders
of ANRE President:
-
it enters into force on 6 February 2023 (with the addition
of provisions that have other dates of application);
- The Regulation for the supply of electricity to final
customers is approved;
- The framework contract for the provision of the
electricity distribution service concluded between the
concessionaire distribution operator and the supplier
(approved by ANRE order no. 90/2015) is amended/
completed. The methodology for setting tariffs for the
electricity distribution service by operators other than
concessionaire distribution operators (approved by ANRE
annual report on the activities covered by the license has
been removed.
ANRE Order no. 3/2022 approving the Regulation on the
organization and operation of the online platform for
changing the electricity and gas supplier and for contracting
the supply of electricity and natural gas:
- application deadline - 28 August 2022;
-
initiated in order to achieve the objective set by the
European legislation of changing supplier within 24 hours,
starting from 2026;
- ANRE is the administrator and operator of the platform
where data will be uploaded by end customers, suppliers,
network operators, aggregators, etc. (including the
standard offers of suppliers), which will mediate the
process of changing supplier through the necessary
administrative and technical steps and through which
customers will be able to contract a new supplier;
- The regulation also details the rules on the conclusion of
the supply contract, i.e. the actual procedure for changing
the supplier, which will replace the current procedure.
ANRE Order no. 4/2022 amending and supplementing ANRE
Order no. 143/2020 on the obligation to offer natural gas on
centralized markets to natural gas producers whose annual
production in the previous year exceeds 3,000,000 MWh:
- the quantitative allocation for tender for each of the
standardised products for the period from 1 January to
31 December 2022 has been adjusted. In the context of
the COVID-19 pandemic, the government has decided to
successively extend the state of alert initially instituted
in 2022 from 8 January 2022, by GD no. 34/2022; from 7
February 2022, by GD no. 171/2022.
order no. 102/2016);
- The ANRE order no. 235/2019 for the approval of the
Regulation for the supply of electricity to final customers
is repealed, ANRE order no. 171/2020 for the approval of
the conditions for the supply of electricity by the suppliers
of last resort, ANRE order no. 181/2018 for the approval
of the procedure regarding the financial guarantees
regime established by the final customers at the disposal
of the electricity suppliers and for the amendment of the
Regulation for the supply of electricity to final customers,
ANRE order no. 85/2015 for the approval of the tripartite
framework convention concluded between the supplier,
The network operator and the final customer, holder of
the network contract and the multi-party framework
agreement concluded between the final customer,
suppliers and the network operator, ANRE order no.
96/2015 for the approval of the Regulation on the activity
of informing the final customers of electricity and natural
gas;
- By the Regulation for the supply of electricity to final
customers, new notions regarding the supply contract with
dynamic prices (binding offer/contract with dynamic prices
for EFSA) and active customers with new obligations for
the supplier were introduced (conditioning the existence
of supply contract for both the place of consumption and
the place of consumption and production);
- The main provisions amended/supplemented by the new
regulation are:
o At the vulnerable customer, they included among the
facilities granted and the payment of the invoice, upon
request, for a period of minimum 3 months (submission
to the supplier with whom he has a check of medical
documents for people who need to keep alive by elec-
trical appliances to ensure continuity in supply);
o the acceptance of household customers has been ex-
tended with new categories;
o To the standard offers for non-households, the defi-
nition of micro-enterprise in L123 (categorization by
consumption not by turnover/no. employees). The ob-
ligation to display standard offers at single points of
contact has disappeared. In the information in the of-
fer, the unit value of taxes/fees/taxes/contributions will
be included. It is no longer mandatory to pass into the
offer the main conditions of the contract, but new ele-
ments are introduced, to be included in the offer;
o The supply of a place of consumption can be made
by several suppliers without being conditioned by the
power of 1 MW.
o the minimum elements of the tripartite/multi-party
convention are specified without a framework conven-
tion being imposed;
o in the contract will be passed the same as in the offer
the unit value of taxes/fees/taxes/contributions. A new
price element appears - the final billed price = supply
price + all taxes, taxes... unit). At the conclusion of the
contract, the supplier’s website must contain links to
POSF;
o when invoicing, explicit mentions of normative acts in-
cident during the period of application (i.e. capping)
appear. For all household customers (including eligible
– competitive household) and SoLR customers, the bill-
ing period is monthly. For all household customers, for
the consumption achieved starting with 1 April 2023,
the invoice model for SU is observed. All invoices for
the consumption registered starting 1 April will contain
a minimum set of information. New terms for payment
installment.
ANRE order no. 9/2023 — order on establishing the
mandatory quota for the purchase of green certificates for
2022
- The mandatory quota for 2022 was set at the level of
0.4934314 GC/MWh (compared to 0.5014313 GC/MWh
the estimated quota for 2022 and 0.449792 GC/MWh the
mandatory quota for 2021);
.
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Appendix 3 – Applicable regulatory framework
2022 Directors’ Report
2022
2023
it shall enter into force on 1 march 2023.
-
ANRE order no. 10/2023 — Order for approval of the
methodology for determining the level of the minimum
natural gas stock that holders of natural gas supply licenses
have the obligation to set up in underground storage
warehouses
- The methodology for determining the level of the minimum
natural gas stock that the holders of the a supply licenses
are approved Natural gas is required to establish it in
underground storage warehouses - natural gas suppliers,
for the quantities delivered to final customers (PET direct
client) who have opted for the purchase of natural gas
directly from natural gas producers, fulfill their obligation
to establish the minimum natural gas stock by:
o storage of natural gas in its own name, by concluding
contracts for underground storage of natural gas with
one of the holders of the license to operate the under-
ground storage systems of natural gas; and/or
o conclusion, by may 31 of each year, of sale-purchase
contracts covering quantities of natural gas from un-
derground storage of natural gas stored by another
natural gas supplier; and/or
o signing mandate contracts with another supplier, in or-
der to store natural gas.
Appendix 4 – Corporate
Governance
A.4.1. The Board of Directors of ELSA’s subsidiaries
All the Boards of Directors of ELSA’s subsidiaries were composed of non-executive directors
(5 members in the case of DEER and EFSA and 3 members in the case of FISE and EPE) and the
composition of these were as follows:
The distribution subsidiary DEER – 1 January 2022 – date of the report
1 January –
23 June
24 June –
27 June
28 June –
30 June
1 July –
5 July
6 July –
20 December
21 December
22 December
– 30 June
2023
Stefan
Alexandru
Frangulea
Stefan
Alexandru
Frangulea
Stefan
Alexandru
Frangulea
Stefan
Alexandru
Frangulea
Stefan
Alexandru
Frangulea
Mirela Dimbean
Creta
Maria Cristina
Manda
Ligia Costin
Maria Cristina
Manda
Ligia Costin
Stefan Valeriu
Ivan – Chair
Anna-Maria
Vasile - Chair
Andrei–Gabriel
Benghea–
Malaies
Anna-Maria
Vasile - Chair
Anna-Maria
Vasile - Chair
Andrei–Gabriel
Benghea–
Malaies
Andrei–Gabriel
Benghea–
Malaies
Niculina –
Cristina Somlea
Niculina –
Cristina Somlea
Stefan Valeriu
Ivan – Chair
Niculina –
Cristina Somlea
Oana
Babagianu
Oana
Babagianu
Oana
Babagianu
Constantin
Cristian Olaru
Ligia Costin
Stefan Valeriu
Ivan – Chair
starting with 31
January 2022
Source: Electrica
The end date of the mandates of DEER’s directors at the date of this report is 30 June 2023.
The supply subsidiary EFSA – 1 January 2022 – date of the report
1 January –
3 January
4 January –
3 February
Georgeta Corina
Popescu – Chair
Georgeta Corina
Popescu – Chair
3 February –
29 April
Stefan-Ionut
Pascu -Chair
starting with 8
February 2022
30 April –
12 May
13 May –
16 May
17 May –
30 April 2023
Razvan Tudor
Mihai Ioanitescu
Mihai Ioanitescu
– Chair starting
with 20 May
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Stefan Ionut
Pascu
Razvan Tudor
Mihai Ioanitescu
Maria Patrascoiu
.
Mihai Darie
Stefan Ionut
Pascu
Razvan Tudor
Razvan Tudor
Mihai Ioanitescu
Mircea Toma
Modran
Mircea Toma
Modran
Mihai Ioanitescu
Source: Electrica
The end date of the mandates of EFSA’s directors at the date of this report is 30 April 2023.
The energy services subsidiary SERV – 1 January 2022 – date of the report
1 January –
3 January
4 January –
4 May
5 May –
16 May
17 May –
14 November
Georgeta Corina
Popescu - Chair
Georgeta Corina
Popescu - Chair
Georgeta Corina
Popescu - Chair
Elena Stancu
15 November-
30 April 2023
Alexandru – Aurelian
Chirita - Chair
Alexandru
– Costin
Dumitrescu
Liviu Mitroi
Adrian – Marian
Marin
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2022 Directors’ Report
2022 Directors’ Report
1 January –
3 January
4 January –
4 May
5 May –
16 May
Mihai Darie
Irina Clima
Irina Clima
Irina Clima
Stefan Ionut Pascu
Stefan Ionut Pascu
Source: Electrica
17 May –
14 November
Bogdan Costas -
Chair
Mihnea Barbulescu Mihnea Barbulescu
15 November-
30 April 2023
Bogdan Costas
The end dates of the mandates of SERV’s directors at the date of this report is 30 April 2023.
The electricity production subsidiary EPE – 1 January 2022 – date of the report
1 January -
2 January
3 January
4 January –
16 May
17 May –
30 August
23 September –
31 October
1 November –
30 April 2023
Georgeta Corina
Popescu – Chair
Georgeta Corina
Popescu – Chair
Georgeta Corina
Popescu – Chair
Alina Camelia
Mustatea – Chair
starting with 27
May
Alina Camelia
Mustatea
Mihai Darie
Mihai Darie
Mihai Ioanitescu Mihai Ioanitescu Mihai Ioanitescu
Alexandru
– Aurelian
Chirita - Chair
starting with 07
November
Alina Camelia
Mustatea
Mircea Toma
Modran
Source: Electrica
Mihai Ioanitescu Razvan Tudor
Razvan Tudor
Razvan Tudor
Mihai Ioanitescu
The end date of the mandates of EPE’s directors at the date of this report is 30 April 2023.
A.4.2. Executive management of ELSA’s subsidiaries
The tables below show the subsidiaries’ executive managers with delegated management
duties by Board of Directors of ELSA subsidiaries in 2022, as well as until the date of this report, as
follows:
The distribution subsidiary DEER – until the date of the report
Name
Period
(day month year)
Function
Raluca Florentina
Dumitriu
Dragos Eduard Staicu
Dragos Eduard Staicu
Lucian Penes
Diana Moldovan
Gabriela Dobrescu
Mariana Monica
Radulescu
Alexandru Nine
Raduta Marius Petrescu
Ilie Marin
Vasile Claudiu Tudose
Moraru Robert
Gheorghe Gabriel
Margin Gabriel Adrian
Source: Electrica
01 January 2022-
31 January 2022
01 January 2022-
31 January 2023
01 February 2022-
03 July 2022
04 July 2022-
present
01 January 2022-
31 January 2023
01 January 2022-
31 January 2023
01 January 2022-
31 July 2022
01 January 2022-
06 October 2022
01 January 2022-
31 August 2022
01 January 2022-
31 August 2022
01 January 2022-
31 August 2022
01 February 2023
present
01 February 2023
present
01 February 2023
present
Financial Division
Manager
Integration Division
Manager
Financial Division
Manager
Financial Division
Manager
Business Support Division
Manager
Asset Management
Division Manager
Procurement Operations
Manager
TS Power Construction
Unit Manager
MN Network Operations
Unit Manager
MN Power Construction
Unit Manager
TN Power Construction
Unit Manager
Commercial Division
Manager
Strategy and Planning
Manager
Technical Division
Manager
Mandate until the date
(for acting executive
managers at the date of
the report)
(day month year)
03 July 2026
31 January 2025
31 January 2025
31 January 2025
Mandate until the date
(for acting executive
managers at the date of
the report)
(day month year)
Name
Period
(day month year)
Function
Niculae Havrilet
01 January 2022-28 March
2022
General Manager
.
Mandate until the date
(for acting executive
managers at the date of
the report)
(day month year)
The supply subsidiary EFSA – until the date of the report
Name
Period
(day month year)
Function
Darius-Dumitru Mesca
1 October 2019 - present General Manager
30 September 2023
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Mihaela Rodica Suciu
05 April 2022-present
General Manager
05 October 2026
Radulescu-Claudiu Daniel
Mihaela Rodica Suciu
Valentin Branescu
Valentin Branescu
Sinan Mustafa
Sinan Mustafa
Vasile Farcas
Raul Toma
01 January 2022
04 April 2022
suspended
01 January 2022-
31 January 2023
30 September 2022-
31 December 2022
01 January 2022- 31
January 2023
15 October 2022-
31 January 2023
01 January 2022-
31 January 2023
01 January 2022-
14 October 2022
Network Development
Manager
31 December 2024
Silvia-Cristina Macedon
Deputy General Manager
Network Development
Manager
Deputy General Manager
Energy Management
Manager
Network Operations
Manager
Energy Management
Manager
Paul-Ferdoschi
20 May 2022 – present
Corina-Cristina Drumeanu
16 October 2019 –
14 May 2022
Mihai Beu
20 May 2022 – present
Bogdan-Ionu
Vlad
15 December 2020 – 23
February 2022
ț
Ruxandra-Madalina Rusu
20 May 2022 – present
Viorel Pintea
6 October 2021 –
14 June 2022
10 March 2020 –
31 March 2022
and
20 May 2022 – present
13 April 2020 –
29 March 2022
Deputy General Manager
Interim
31 December 2023
Sales Division Manager
Sales Division Manager -
Interim
Portfoliu Management
Division Manager
Portfoliu Management
Division Manager –
Interim
Financial Division
Manager
Financial Division
Manager – Interim
Operations Division
Manager
30 June 2023
30 June 2023
30 June 2023
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2022 Directors’ Report
2022 Directors’ Report
Name
Period
(day month year)
Function
Simona-Mihaela Covaliu
Ciocan
15 June 2022 –
09 October 2022
George-Marian Fertu
13 October 2022 - present
Cristian-Eugen Radu
Source: Electrica
1 March 2020 –
31 March 2022
Operations Division
Manager – Interim
Operations Division
Manager – Interim
Marketing Division
Manager Interim
The energy services subsidiary SERV – until the date of the report
Name
Period
(day month year)
Function
Mandate until the date
(for acting executive
managers at the date of
the report)
(day month year)
30 June 2023
Mandate until the date
(for acting executive
managers at the date of
the report)
(day month year)
Florian Velicu
17 July 2021 –
18 October 2022
General Manager
Calin Ionel Dobra
18 October 2022 - present General Manager
19 May 2023
Ioana Lavinia Panu
01 September 2021-
04 April 2022
Eugenia Agliceru
12 April 2022 –
02 August 2022
Florica Cocari
03 August 2022 - present
Vasile Ionel Bujorel
Oprean
01 December
2017-present
Source: Electrica
Financial Manager
Financial Manager with
delegated attribution on
the basis of an individual
labor agreement
Financial Manager with
delegated attribution on
the basis of an individual
labor agreement
Property Management
and Product Development
Manager
16 December 2023
The electricity production subsidiary EPE – until the 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.
A.4.3. Number of shares owned by the managers of
Electrica Group
As of 31 December 2022 and 28 February 2023, none of the CEOs or directors of the com-
panies in office at the time held shares in ELSA.
According to information held by ELSA, there is no contract, understanding or family relati-
onship 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 capa-
city to fulfil their work-related duties within the Group.
A.4.4. General Meetings of Shareholders of ELSA
subsidiaries
Corporate approvals at GMS/BoD level in the case of ELSA’s subsidiaries are regulated throu-
gh their articles of association, as well as through the implemented corporate policies.
ELSA, as majority shareholder of its subsidiaries, voted in their GMS in 2022 on various to-
pics, amongst which the most important are related to:
– revenue and expenses budgets, financial statements, financial part of the individual annual
investment plan, profit appropriation;
– increases in the share capital with land plots in the case of DEER and EFSA (in case of
EFSA a completion of the increase in the share capital initiated in the year 2021);
– changing the name of DEER subsidiaries and amending their secondary object of activity
in concordance with the secondary objects of activity of DEER;
– documents regarding: Remuneration Policy for non-executive Directors, Methodology for
establishing and evaluating short-term performance indicators applicable to non-executi-
ve Directors, Performance Indicators 2022 for non-executive Directors, Mandate contract
for a non-executive director at the level of each subsidiary, as well as the Manual regarding
the unbundling obligation applicable at the group level, in the case of DEER;
– general debt limit in case of DEER, EFSA and EPE;
– the total ceiling of short-term financing that can be contracted by EFSA during the finan-
cial year 2022 from banking institutions for financing its current activity, with the guaran-
tee of ELSA;
– the total ceiling of medium and long term financing that can be contracted by DEER
during the financial year 2022 from banking institutions to cover the additional costs re-
lated to own technological consumption as well as to finance the working capital and the
investment projects, with the guarantee of ELSA (which will not be real guarantee);
– contracting by DEER of short-term financing, intended for financing working capital nee-
ds, without ELSA guarantees;
– the sale (in the case of EFSA) and the purchase (in the case of EPE) of 100% of the shares
held by EFSA in EEV1;
– prior approval for concluding the contract for “subscription - SAP software licenses”, pur-
suant to art. 12 para. (3) letter i of the AoA of the Company, in the case of EFSA;
– appointment of the directors in the Board of Directors of the subsidiaries.
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, imple-
mentation 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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Appendix 4 – Corporate Governance
Appendix 4 – Corporate Governance
Appendix 5 - Table list
Tabel 36. Revaluation reserves 2022-2020 (RON mn.) ..........................................................................148
Tabel 37. Legal reserves 2022-2020 (RON mn.) .........................................................................................148
Table 1. Company details ........................................................................................................................................... 18
Tabel 38. Consolidated statement of profit or loss (RON mn.) ..........................................................149
Table 2. Key financial data for 2022 - 2020 – IFRS-EU ............................................................................ 19
Tabel 39. NL - intangible assets 2022 (RON mn.) ..................................................................................... 151
Table 3. Key financial data for 2022 - 2020 – S-OMFP 2844/2016 ................................................... 21
Tabel 40. Electricity and natural gas purchased 2022-2020 (RON mn.) .....................................152
Table 4. ELSA’s subsidiaries .................................................................................................................................... 41
Tabel 41. Consolidated cash flow statement (RON mn.) ........................................................................155
Table 5. ELSA’s associates ....................................................................................................................................... 42
Tabel 42. Separate statement of the financial position (RON mn.) .................................................157
Table 6. Long term investments owned by ELSA ...................................................................................... 42
Tabel 43. Cash, restricted cash and short-term investments 2022-2020 (RON mn.) ...........159
Table 7. The key drivers of changes in the electricity market ............................................................. 49
Tabel 44. Loans granted to subsidiaries 2022-2020 (RON mn.) ......................................................160
Table 8. Ownership structure .................................................................................................................................56
Tabel 45. Dividends 2022-2020 (RON mn.)..................................................................................................160
Table 9. BSE Shares and Global Depositary Receipts (GDRs) on LSE ............................................58
Tabel 46. Provisions (RON mn.) ........................................................................................................................... 161
Table 10. Members of the BoD in 2022 ............................................................................................................. 71
Tabel 47. Separate statement of profit or loss (RON mn.) .................................................................... 161
Table 11. Participation of the BoD members at the meetings and
of the committees in 2022 ..................................................................................................................................... 80
Table 12. ELSA’s Executive management during 2022 .............................................................................85
Table 13. ELSA’s compliance with the provisions of the BSE
Corporate Governance Code .................................................................................................................................93
Table 14. Operating segments ............................................................................................................................... 112
Table 15. The electricity distribution tariffs approved by ANRE starting with 1 April 2022 .. 113
Table 16. Number of users and volume of installations as of 31 December 2022..................... 115
Table 17. Degree of attrition of the installations .......................................................................................... 116
Table 18. Investment program approved by ANRE for 2019-2023 (RON mn.) .......................... 118
Table 19. Investments planned 2022 vs achieved 2022 (RON mn.) ................................................. 118
Table 20. The synthetic structure of investments achieved by distribution
subsidiary in 2022 (RON mn.) .............................................................................................................................. 118
Tabel 48. Separate cash flow statement (RON mn.) ................................................................................162
Tabel 49. Risks and uncertainties as of 31 December 2022 .................................................................167
Table 50. Credit risk and expected credit losses for trade receivables
as of 31 December 2022 ...........................................................................................................................................169
Table 51. Credit risk and expected credit losses for trade receivables
as of 31 December 2021 ............................................................................................................................................170
Table 52. Credit risk and expected credit losses for trade receivables
as of 31 December 2020 ..........................................................................................................................................170
Table 53. Contractual maturities of financial liabilities (RON mn.) – S-IFRS-EU ...................... 171
Table 54. Contractual maturities of financial liabilities (RON mn.) - S-OMFP2844/2016 .... 171
Table 55. Exposure to currency risk 2022-2020 .........................................................................................172
Table 56. Average rate and year-end spot rate ...........................................................................................172
Table 57. Sensitivity analysis ..................................................................................................................................173
Table 21. PIF plan vs achieved 2022 (RON mn.) ......................................................................................... 119
Table 58. Fixed-rate and variable-rate instruments – S-IFRS-EU ......................................................173
Table 22. RAB evolution 2014-2022 (RON mn.) .........................................................................................120
Tabel 59. Fixed-rate and variable-rate instruments – S-OMFP 2844/2016 ..................................173
Table 23. Number of employees evolution 2022 - 2019 .........................................................................124
Table 60. Cash flow sensitivity analysis for variable-rate instruments ...........................................174
Table 24. Group’s employment by age, 2022-2020 .................................................................................124
The distribution subsidiary DEER – 1 January 2022 – date of the report .....................................251
Table 25. Consolidated statement of the financial position 2022-2020 (RON. mn) ..............134
The supply subsidiary EFSA – 1 January 2022 – date of the report ................................................251
Table 26. Cash and cash equivalents 2022-2020 .....................................................................................136
The energy services subsidiary SERV – 1 January 2022 – date of the report ............................251
Table 27. Number of shares 2022 - 2020 ........................................................................................................136
The electricity production subsidiary EPE – 1 January 2022 – date of the report ................. 252
Table 28. Revaluation reserves 2022-2020 (RON mn.) ..........................................................................137
The distribution subsidiary DEER – until the date of the report ...................................................... 252
Table 29. Legal reserves 2022-2020 (RON mn.) ........................................................................................137
The supply subsidiary EFSA – until the date of the report ................................................................. 253
Table 30. Consolidated statement of profit or loss (RON mn.) .........................................................138
The energy services subsidiary SERV – until the date of the report ............................................. 254
Table 31. Electricity and natural gas purchased 2022-2020 (RON mn.) .......................................140
Table 32. Consolidated cash flow statement (RON mn.) .......................................................................143
Tabel 33. Consolidated statement of the financial position 2022-2020 (RON. mn) ..............145
Tabel 34. Cash and cash equivalents 2022-2020 .....................................................................................147
Tabel 35. Number of shares 2022 - 2020 .......................................................................................................148
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Appendix 4 – Corporate Governance
Appendix 4 – Corporate Governance
Appendix 6 - Figure list
Figure 34: Customers by revenues, 2022 .......................................................................................................122
Figure 35: Frequency index 2020-2022 ..........................................................................................................126
Figure 1: Consolidated revenue of Electrica Group (RON mn.) .......................................................... 20
Figure 36: PCB capacitors in operation at the end of 2022 compared to 2021 .......................128
Figure 2: EBITDA (RON mn.) and EBITDA margin (%) - S-IFRS-EU ................................................ 20
Figure 37: Waste processing .................................................................................................................................128
Figure 3: Consolidated net profit (RON mn.) ............................................................................................... 20
Figure 38: Revenue for 2022/Q4 2022 and comparative information (RON mn.) .................139
Figure 4: Net debt/(cash) (RON mn.) .............................................................................................................. 20
Figure 5: Consolidated revenue of Electrica Group (RON mn.) ........................................................ 21
Figure 6: EBITDA (RON mn.) and EBITDA margin (%) - S-OMFP 2844/2016 .......................... 21
Figure 7: Consolidated net profit (RON mn.) ................................................................................................22
Figure 8: Net debt/(cash) (RON mn.) ...............................................................................................................22
Figure 9: Romanian electricity distribution map .........................................................................................22
Figure 10: Evolution of the number of users (mn.) ....................................................................................23
Figure 11: Quantity distributed (TWh) ...............................................................................................................23
Figure 12: Revenues - distribution segment (RON mn.) ..........................................................................23
Figure 13: EBITDA – distribution segment (RON mn.) - S-IFRS-EU .................................................23
Figure 14: EBITDA – distribution segment (RON mn.) - S-OMFP 2844/2016 .............................24
Figure 15: Net Profit – distribution segment (RON mn.) .........................................................................24
Figure 16: Net debt/(Cash) – distribution segment (RON mn.) ..........................................................24
Figure 17: Revenues - supply segment (RON mn.) ....................................................................................25
Figure 18: EBITDA - supply segment (RON mn.) ........................................................................................25
Figure 19: Net profit - supply segment (RON mn.) ....................................................................................25
Figure 20: Net debt/(Cash) - supply segment .............................................................................................25
Figure 21: Ownership structure as of 31 December 2022 .......................................................................56
Figure 22: Evolution of the adjusted closing price of ELSA’s shares vs
BET-TR index during 2022 and January 2023 ............................................................................................59
Figure 23: Monthly trading volume and weighted average monthly closing price of
shares on BSE (in RON) and GDRs on LSE (in USD) during 2022 and January 2023 ......... 60
.
Figure 39: EBITDA and EBITDA margin for 2022/Q4 2022 and comparative
information (RON mn. and %) .............................................................................................................................140
Figure 40: EBIT and EBIT margin for 2022/Q4 2022 and comparative
information (RON mn. and %) .............................................................................................................................. 141
Figure 41: Net profit and Net profit margin for 2022/Q4 2022 and comparative
information (RON mn. and %) .............................................................................................................................. 141
Figure 42: Analysis of net regulated result –OMFP 1802/2014 – OMFP 2844/2016 -
IFRS-EU - for distribution segment 2022 (RON mn.) .............................................................................142
Figure 43: Revenue for 2022/Q4 2022 and comparative information (RON mn.) .................150
Figure 44: EBITDA and EBITDA margin for 2022/Q4 2022 and comparative
information (RON mn. and %) ..............................................................................................................................152
Figure 45: EBIT and EBIT margin for 2022/Q4 2022 and comparative
information (RON mn. and %) ..............................................................................................................................153
Figure 46: Net profit and Net profit margin for 2022/Q4 2022 and
comparative information (RON mn. and %) ....................................................................................................... 153
Figure 47: Analysis of net regulated result –OMFP 1802/2014 – OMFP 2844/2016 -
for distribution segment 2022 (RON mn.) ....................................................................................................154
.
Figure 24: Gross dividends distributed (2014-2021) (RON mn.) ........................................................62
Figure 25: Gross dividend per share (RON) and dividend yield (%) ................................................62
Figure 26: The geographical coverage of the companies in the Electrica Group in 2022 .. 112
Figure 27: The structure of CAPEX achievements for distribution operator within the
Group, in 2022 (RON mn.) ...................................................................................................................................... 119
Figure 28: Market share of distribution segment in 2021 ...................................................................... 121
Figure 29: Last Resort suppliers market, 2022 ..........................................................................................122
Figure 30: Competitive Market, 2022 ...............................................................................................................122
Figure 31: Volume of electricity supplied on the retail market (TWh) ...........................................122
Figure 32: Evolution in number of costumers (th) .................................................................................122
Figure 33: Customers by electricity supplied volume, 2022................................................................122
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Glossary
Glossary
ANRE
Romanian Energy Regulatory Authority
ASF
BPS
BoD
BRP
BSE
BTA
CAPEX
CGC
CMC
Romanian Financial Supervisory Authority (Autoritatea de Supraveghere Financiara)
Basis points
Board of Directors
Balance Responsible Party
Bucharest Stock Exchange
Business Transfer Agreement
Capital Expenditure
Corporate Governance Code
Competitive Market Component
CMBC (EA/CN)
Centralized Market for Bilateral Contracts (Extended Auction/Continuous Negotiation)
CMNG-AN
CMNG-PA
Centralized Market for Bilateral Natural Gas Contracts – Auction and Negotiation
Centralized Market for Bilateral Natural Gas Contracts – Public Auction
CMNG – OTC
Centralized Market for Bilateral Natural Gas Contracts – OTC
CMUS
CNTEE
CSR
DAM
DAM-NG
DEER
DSO
DMS
EEA
EBIT
Centralized Market for Universal Service
The National Transmission System Operator
Corporate Social Responsibility
Day Ahead Market
Day Ahead Market – Natural Gas
Distributie Energie Electrica Romania
Distribution System Operator
Distribution Management System
European Economic Area
Earnings before interest and tax
EBITDA
Earnings before interest, tax, depreciation and amortization
EDN
EGMS
EFSA
ELSA
ERM
EU
EUR
FCA
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 Kingdom
FPM-LT
Medium and Long-Term Flexible Products Market
GC
GDP
GDR
GEO
GMS
HV
IAS
IFRIC
IFRS
IM-NG
IMS
IPO
IR
Green Certificates
Gross Domestic Product
Global Depositary Receipts
Government Emergency Ordinance
General Meeting of Shareholders
High Voltage
International Accounting Standard
International Financial Reporting Interpretations Committee
International Financial Reporting Standard
Intraday Market for Natural Gas
Integrated Management System
Initial Public Offering
Investor Relations
Glossary
ISIN
KPI
kV
LOC
LR
LSH
LV
MV
MVA
MWh
MKP
NAFA
NES
NL
NRC
OMPF
OGMS
OHS
OHSAS
OPCOM
PCB
RAB
RM
RON
RRR
SAD
SAPE
SCADA
SDEE
SDMN
SDTN
SDTS
SED
SEM
SEO
SoLR
SPO
TWh
TSO
UM
US
USD
VAT
International Securities Identification Number
Key Performance Indicators
KiloVolt
Land Ownership Certificate
Last Resort
Labor safety and health
Low Voltage
Medium Voltage
Mega Volt Ampere
MegaWatt hour
Management Key Position
National Agency for Fiscal Administration
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
Romanian Gas and Electricity market operator
Polychlorinated Biphenylsor
Regulated Asset Base
Retail Market
Romanian monetary unit
Regulated Rate of Return
Distribution Automation System
Societatea de Administrare a Participatiilor in Energie
Supervisory Control And Data Acquisition
Societatea de Distributie a Energiei Electrice SA
Societatea de Distributie a Energiei Electrice Muntenia Nord SA
Societatea de Distributie a Energiei Electrice Transilvania Nord SA
Societatea de Distributie a Energiei Electrice Transilvania Sud SA
Servicii Energetice Dobrogea SA
Servicii Energetice Muntenia SA
Servicii Energetice Oltenia SA
Supplier of last resort
Secondary Public Offering
TeraWatt hour
Transmission and system operator
Unit of Measurement
Universal Service
United States Dollar
Value Added Tax
Note: The figures presented in this document are rounded based on the round to nearest method; as a result,
rounding differences may appear.
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Explanations Regarding the Differences
between Consolidated Financial Statements
OMFP 2844/2016 vs IFRS-EU
262
263
Glossary
Glossary
Electrica 2021 Annual Report con-
tains the Annual Consolidated Financial
Statements of Electrica as of and for the
financial year ended on December 31,
2022, prepared in accordance with OMFP
no. 2844/2016, for the approval of the
Accounting Regulations in accordance
with the International Financial Reporting
Standards adopted by the European
Union with subsequent changes and the
Financial
Consolidated
Annual
Statements of Electrica as of and for the
financial year ended on 31 December
2022, prepared in accordance with the
International
Reporting
Standards adopted by the European
Union with subsequent amendments
(IFRS-EU).
Financial
Until 31 December 2021, the con-
solidated financial statements prepared
in accordance with OMFP no. 2844/2016
were equivalent to IFRS-EU.
Starting from December 31, 2022,
according to the Order of the Ministry of
Public Finances (OMFP) no. 3900/2022,
a new clause was provided regarding the
regulatory accounts to cover the addi-
tional expenses of the network losses
(„NL”) for the actual energy costs com-
pared to the ANRE ex-ante prices recog-
nized in the distribution tariffs, by consti-
tuting intangible assets for these addi-
tional expenses. This amendment to the
financial regulations of OMFP 2900/2022,
was decided as a result of the context of
electricity prices from 2022, which de-
issue for the
termined that ANRE
Distribution Operators a new methodol-
ogy regarding additional costs with NL
during the period 1 January 2022 – 31
August 2023. The calculation of the cap-
italized amounts is carried out in compli-
ance with the legislation specific to the
entities that are the subject of GEO
119/2022, with subsequent additions and
changes. According to ANRE regula-
tions, the capitalized costs as intangible
assets are recorded in the accounting re-
cord and therefore in the annual financial
statements according to the instructions
issued by the Ministry of Finance. ANRE
will determine the recognized annual
amounts of capitalized costs based on
the recognized quantities and prices for
NL.
Thus, within the consolidated an-
nual financial statements for the year
2022, prepared in accordance with OMFP
no. 2844/2016, for the approval of the
Accounting Regulations in accordance
with the International Financial Reporting
Standards adopted by the European
Union with subsequent amendments,
the Group recorded intangible assets in
the amount of 951.6 million RON, in cor-
respondence with income from the pro-
duction of
in the
amount of 989.3 million RON and amor-
tization related to intangible assets con-
stituted until 31Dec2022 in the amount
of 37.3 million RON. The revenues from
the production of intangible assets rep-
resent the additional network losses
(own technological consumption) calcu-
lated as the difference between the net
cost with the purchase and the cost of
NL included in the regulatory tariff, for
the period 1 January 1 -31 December
2022.
intangible assets
In the set of consolidated financial
statements according to IFRS-EU, these
expenses have another applicable finan-
cial treatment, based on the amendment
of the concession contracts regarding
the recognition of additional costs (actu-
al costs vs recognized ex-ante in the tar-
iffs) with the purchase of electricity to
cover NL for the distribution segment.
On 20 January 2023, the Ministry of
Energy, as the concedent, amended the
concession contract with the Electrica
Group for the distribution segment to re-
flect that, in the event of early termina-
tion of the concession contract, for any
reason, the new concessionaire would
reimburse the Group the amount the
current cost of purchasing electricity for
own technological consumption com-
pared to the costs included in the regu-
lated tariffs. Based on the changes in the
concession contracts, the additional cost
of purchasing electricity to cover the dis-
tribution operators’ own technological
consumption is recognized as a finan-
cial asset (guaranteed asset) as part of
the concession contract. These amounts
are guaranteed by the concession con-
tract that was fined based on the legal
provisions. The resulting financial assets
are presented in the consolidated finan-
cial statements at the fair value deter-
mined as the net present value of the ad-
ditional costs with the purchase of elec-
tricity borne by the distribution subsidi-
ary for NL.
Financial
Thus, within the consolidated an-
nual financial statements for the year
2022, drawn up in accordance with the
International
Reporting
Standards adopted by the European
Union with subsequent amendments
(IFRS-EU), the Group recorded both a fi-
nancial asset and corresponding income
from the initial recognition of fixed as-
sets financial related to the concession
agreements in the amount of 951.6 mil-
lion RON, representing the value that
has to be recovered regarding the addi-
tional NL calculated as the difference be-
tween the net cost with the purchase of
the energy for NL and the NL cost in-
cluded in the regulatory tariff by ANRE,
for the period 1 January – 31 December
2022, as specified in the additional act to
the concession contract concluded be-
tween the distribution subsidiary of the
Group (Distributie Energie Electrica
Romania SA „DEER”) with the Ministry of
Energy. Because all the facts and circum-
stances were available on 31 December
2022, the Group accounted for these
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changes as an event the subsequent ad-
justment for the year ended 31 December
2022 and recognized a financial asset for
the value of the additional NL to be
recovered.
In conclusion, both on IFRS-EU
and on OMFP 2844/2016 the Group rec-
ognizes related assets/revenues as a re-
sult of the additional difference of NL for
the distribution subsidiary, the net im-
pact in the profit of the period being the
same in both sets of consolidated annual
financial statements, while in the finan-
cial position of the Group, according to
OMFP 2844/2016 is recognized as an in-
tangible asset and according to IFRS-EU
is regognized as a financial asset (divid-
ed into long-term/short-term according
to the recovery of additional costs with
NL in tariffs), both assets having the
same net value reflected in the state-
ments consolidated annual financial
statements, thus the values are compa-
rable on both sets for the main financial
indicators of the Electrica Group.
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2022 Separate Financial Statements
266
267
2022 Separate Financial Statements
2022 Separate Financial Statements
2022 Separate
Financial Statements
SOCIETATEA ENERGETICA ELECTRICA S.A.
Separate Financial Statements
as at and for the year ended
31 December 2022
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
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Content
SEPARATE STATEMENT OF FINANCIAL POSITION .................................................................270
SEPARATE STATEMENT OF PROFIT OR LOSS ..............................................................................272
SEPARATE STATEMENT OF COMPREHENSIVE INCOME .....................................................273
SEPARATE STATEMENT OF CHANGES IN EQUITY ....................................................................274
SEPARATE STATEMENT OF CASH FLOWS ......................................................................................276
NOTES TO THE SEPARATE FINANCIAL STATEMENTS ...........................................................278
Basis of preparation .....................................................................................................................................278
1 Reporting entity and general information .......................................................................................278
2 Basis of accounting .................................................................................................................................281
3 Functional and presentation currency ...........................................................................................281
4 Use of judgements and estimates ....................................................................................................281
Accounting policies ......................................................................................................................................282
5 Basis of measurement ...........................................................................................................................282
6 Significant accounting policies .........................................................................................................282
7 Adoption of new and revised standards and interpretations .................................................291
Performance for the year ..........................................................................................................................292
8 Other income and operating expenses ...........................................................................................292
9 Net finance income .................................................................................................................................293
10 Earnings per share .................................................................................................................................293
11 Short-term employee benefits ...........................................................................................................293
Employee benefits ........................................................................................................................................294
12 Post-employment and other long-term employee benefits ..................................................294
13 Employee benefit expenses ...............................................................................................................296
Long-term bank loans .................................................................................................................................296
14 Bank borrowings and overdrafts ......................................................................................................296
Income tax .........................................................................................................................................................297
15 Income tax .................................................................................................................................................297
Assets ...................................................................................................................................................................298
16 Trade receivables ....................................................................................................................................298
17 Other receivables....................................................................................................................................300
18 Cash and cash equivalents .................................................................................................................300
19 Property, plant and equipment .........................................................................................................301
20 Intangible assets ....................................................................................................................................303
21 Investments in subsidiaries ................................................................................................................303
22 Investments in associates ...................................................................................................................305
23 Loans granted to subsidiaries ...........................................................................................................306
Equity and liabilities .....................................................................................................................................309
24 Capital and reserves .............................................................................................................................309
25 Trade payables ........................................................................................................................................311
26 Other payables .......................................................................................................................................311
27 Provisions ..................................................................................................................................................311
Financial instruments ..................................................................................................................................311
28 Financial instruments - fair values and risk management .....................................................311
Other information ..........................................................................................................................................315
29 Related parties .......................................................................................................................................315
30 Contingencies .........................................................................................................................................318
31 Commitments ..........................................................................................................................................319
32 Subsequent events................................................................................................................................320
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SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
Note
31 December
2022
31 December
2021
Note
31 December
2022
31 December
2021
98,939,502
100,057,480
Lease liability – long term
Liabilities
Non-current liabilities
19
20
21
22
1
23
18
16
17
23
24
24
24
24
24
24
24
ASSETS
Non-current assets
Property, plant and
equipment
Intangible assets
Investments in
subsidiaries
Investments in associates
Other investments
Loans granted to
subsidiaries – long term
Right of use assets
Total non-current assets
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Prepayments
Loans granted to
subsidiaries – short term
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
.
Treasury shares reserve
Pre-paid capital
contributions in kind from
shareholders
Revaluation reserves
Legal reserves
Other reserves
Retained earnings
Total equity
(Continued on next page)
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126,189
53,676
2,298,128,361
2,285,224,715
18,821,421
25,809,696
7,000,000
-
1,276,325,000
1,276,325,000
248,087
488,370
3,699,588,560
3,687,958,937
105,631,939
5,757,972
795,526
501,493,067
925,873
584,765,644
1,023,678
765,483
45,034,523
279,655
654,258,388
30,000,000
279,655
622,494,627
4,353,846,948
4,310,453,564
3,464,435,970
3,464,435,970
103,049,177
103,049,177
(75,372,435)
(75,372,435)
7,366
7,366
11,806,704
12,397,647
229,435,101
228,156,226
224,105,807
38,908,798
71,213,362
319,621,087
3,996,376,488
4,123,508,400
12
14
18
25
26
11,12
27
Employee benefits
Long-term bank
borrowings
Total non-current
liabilities
Current liabilities
Bank overdrafts
Lease liability – short term
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Total current liabilities
Total liabilities
Total equity and
liabilities
54,049
1,095,651
100,000,000
118,456
1,050,299
-
101,149,700
1,168,755
207,830,772
215,561
4,744,726
36,474,707
173,187
5,840,131
1,041,676
256,320,760
357,470,460
120,541,354
394,818
4,034,356
44,022,468
384,578
12,160,721
4,238,114
185,776,409
186,945,164
4,353,846,948
4,310,453,564
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
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271
SEPARATE STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
2022
2021
5,179,621
808,081
Note
2022
2021
(30,156,958)
(39,239,650)
Profit for the year
24,304,885
321,819,884
(1,586,304)
(2,274,344)
Other comprehensive income
101,380
70,195
Items that will not be reclassified to profit or loss
Re-measurements of the defined benefit liability
4,840
3,804,893
Tax related to re-measurements of the defined benefit liability
12
15
1,621,494
269,825
(259,439)
(43,172)
3,196,438
1,580,149
Other comprehensive income, net of tax
1,362,055
226,653
(18,538,612)
(20,389,544)
(41,799,595)
(55,640,220)
78,298,886
377,682,973
(12,440,801)
(262,543)
65,858,085
377,420,430
(13,044)
(3,498)
24,045,446
321,776,712
259,439
43,172
24,304,885
321,819,884
0.07
0.95
Total comprehensive income
25,666,940
322,046,537
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
.
.
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273
The accompanying notes are an integral part of these separate financial statements.
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
Other income
Employee benefits
Depreciation and
amortization
Reversal of impairment
of trade and other
receivables, net
Reversal of impairment/
(Impairment) of property,
plant and equipment, net
Change in provisions
for legal cases and non-
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Other operating expenses
Loss before finance result
Finance income
Finance costs
Net finance income
Share of results of
associates
Profit before tax
Income tax benefit
Profit for the year
.
Earnings per share
Basic and diluted earnings
per share (RON)
Note
8
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272
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
SEPARATE STATEMENT OF CHANGES IN EQUITY
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u
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e
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l
3
2
0
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h
c
r
a
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7
0
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275
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
Note
2022
2021
Note
2022
2021
Cash flows from
operating activities
Profit for the year
Adjustments for:
Depreciation
Amortisation
Reversal of impairment
of property, plant and
equipment, net
Loss from the disposal of
tangible assets
Loss from investments in
subsidiaries
Reversal of impairment
of trade and other
receivables, net
Impairment of assets held
for sale
Net finance income
Share of loss of associates
Changes in employee
benefits obligations
Changes in provisions, net
Income tax benefit
Changes in:
Trade receivables
Other receivables
Trade payables
Other payables
Employee benefits
Cash flow used in
operating activities
19
20
19
19
21
24,304,885
321,819,884
1,006,439
1,114,306
579,865
1,160,038
(4,840)
(3,804,893)
-
-
3,104,047
73
16,17
(101,380)
(70,195)
9
22
12
27
15
-
492,336
(65,858,085)
(377,420,430)
13,044
3,498
(4,977,943)
5,054,128
(3,196,438)
(259,439)
(1,580,149)
(43,172)
(48,493,892)
(50,170,529)
231,727
(489,743)
428,462
757,931
64,760
(443,724)
2,972,994
(2,874,463)
259,359
(286,961)
(47,500,755)
(50,543,324)
Interest paid
(12,238,993)
(179,011)
Net cash used in
operating activities
(Continued on next page)
(59,739,748)
(50,722,335)
Cash flows from investing
activities
Payments for purchases of
property, plant and equipment
Payments for purchase of
intangible assets
Payments for purchase of interests
in subsidiaries, net
Proceeds from sales of
investments in subsidiaries
Proceeds from the sale of
property, plant and equipment
Proceeds from loans granted to
subsidiaries
Payment for acquisition of
investment in associate
Payment for other long term
investments
Loans granted to subsidiaries
Cash used by subsidiaries under
the cash pooling facility
Interest received
Dividends received
Restricted cash
Net cash (used in)/from investing
activities
Cash flows from financing
activities
Dividends paid
Payment of lease liabilities
Proceeds from overdrafts
Long-term bank borrowings
Net cash used in financing
activities
Net increase in cash and cash
equivalents
Cash and cash equivalents at 1
January
Reclassification of overdrafts
previously presented as cash and
cash equivalents
23,29
9
24
15
18
18
(1,875,869)
(4,829,850)
(166,015)
-
(4,439,771)
(124,990)
-
1,179,434
20
21,001
135,945,985
60,000,000
(13,044)
(25,813,194)
(7,000,000)
-
(150,980,508)
(336,325,000)
81,289,620
(393,576,820)
72,086,815
-
-
42,172,401
329,543,644
320,000,000
126,026,647
(8,932,788)
(153,150,278)
(247,626,657)
(552,172)
(986,422)
87,289,418
100,000,000
-
-
33,587,068
(248,613,079)
.
99,873,967
(308,268,202)
(114,783,382)
193,484,820
120,541,354
-
.
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Cash and cash equivalents at 31
December
The accompanying notes are an integral part of these separate financial statements.
105,631,939
18
(114,783,382)
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
2
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276
Sole
registration
code
Head Office
% shareholding as
at 31 December 2022
% shareholding as at
31 December 2021
CCP.RO
Bucharest S.A.
(CCP.RO)
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
Basis of preparation
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 2022.
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 2022 and 31 December 2021, 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 2022 and 31 December 2021, the Company’s subsidiaries are the following:
Subsidiary
Activity
Distributie Energie
Electrica Romania
S.A. (“DEER”)
Electricity dis-
tribution in geo-
graphical areas
Transilvania Nord,
Transilvania Sud
and Muntenia Nord
Electrica Furnizare
S.A.
Electricity and nat-
ural gas supply
Electrica Serv S.A.
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Electrica Productie
Energie S.A
Electricity gener-
ation
Sunwind Energy
S.R.L.
Electricity gener-
ation
New Trend Energy
S.R.L.
Electricity gener-
ation
Green Energy
Consultancy &
Investments S.R.L.
Servicii Energetice
Oltenia S.A. (in
bankruptcy)
Servicii Energetice
Moldova S.A. (in
bankruptcy)
Servicii Energetice
Banat S.A. (in
bankruptcy)
Servicii Energetice
Dobrogea S.A. (in
bankruptcy)
Electricity gener-
ation
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
.
.
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278
14476722
Cluj-Napoca
99.99999929%
99.99999929%
28909028
Bucuresti
99.9998444099934%
99.9998415011992%
17329505
Bucuresti
99.99998095%
99.99998095%
44854129
Bucuresti
99.9920%
99.9920%
42910478
Constanta
42921590
Constanta
29172101
Prahova
60%
60%
75%
-
-
-
29389861
Craiova
100%
100%
29386768
Bacau
100%
100%
29388211
Timisoara
100%
100%
29388378
Constanta
100%
100%
As at 31 December 2022 and 31 December 2021, the Company’s associates are the following:
Associate
Activity
Crucea Power Park S.R.L.
Sunwind Energy S.R.L.
New Trend Energy S.R.L.
Foton Power Energy S.R.L.
Electricity
generation
Electricity
generation
Electricity
generation
Electricity
generation
Sole
registration
code
Head Office
%
shareholding
as at 31
December
2022
%
shareholding
as at 31
December
2021
25242042
Constanta
30%
42910478
Constanta
42921590
Constanta
-
-
43652555
Constanta
30%
30%
30%
30%
30%
As at 31 December 2022, the Company’s other long term investments are the following:
Company
Activity
Sole registration
code
Head Office
% shareholding
as at 31
December 2022
% shareholding
as at 31
December 2021
Financial bro-
kerage activities,
exclusively insur-
ance activities
and pension
funds (risk
management
through deriv-
ative products
on the energy
market)
17777754
Bucuresti
8.06%
-
Changes in Company structure during 2022
Acquisition of shares in subsidiaries
On 21 March 2022, the Company acquired an additional 30% of the shares and voting inte-
rests in Sunwind Energy S.R.L. As a result, the Company’s equity interest increased from 30% to 60%,
granting control of Sunwind Energy S.R.L. (for further details please see Note 21).
On 27 May 2022, the Company acquired an additional 30% of the shares and voting interests
in New Trend Energy S.R.L.. As a result, the Company’s equity interest increased from 30% to 60%,
granting control of New Trend Energy S.R.L. (for further details please see Note 21).
On 6 September 2022, the Company acquired 75% of Green Energy Consultancy &
Investments S.R.L.’s shares granting control of the entity (for further details please see Note 21).
.
Entering the shareholding structure of CCP.RO
On 8 December 2022, the effective subscription was made in the amount of RON 7.000.000,
equivalent to 8.06% of the share capital of the company CPP.RO Bucharest S.A. after the increase of
the share capital, CCP.RO thus becoming a financial investment owned by Electrica for the long term.
CCP.RO will fulfil the role of central counterparty for the transactions concluded on the markets ser-
ved, respectively on financial instruments markets, including derivative financial instruments, admi-
nistered by the Bucharest Stock Exchange (BSE) and on the markets organized for the trading of
electricity administered by the Romanian Electricity and Gas Market Operator OPCOM (OPCOM)
(significant shareholder of CCP.RO – with 19.06% stake).
The Company’s main activities
Currently, the core business of the Company, according to the Statute is “Activities of busi-
ness 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 mer-
ger of three electricity distribution companies), one electricity and natural gas supplier, five
.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
companies providing services in the energy sector (out of which four are currently in bankruptcy)
and five energy production companies (Electrica Energie Verde 1 SRL in which Electrica SA has an
indirect shareholding of 100% being acquired by Electrica Productie Energie SA), to which two ener-
gy production project companies are being added where the Company doesn’t have control (the
shareholding is 30%).
During 2021 and 2022, Societatea Energetica Electrica SA (“ELSA”) made the following
changes in the subsidiaries and associated entities:
– Electrica Productie Energie (“EPE”), a company founded during 2021, which will handle
the acquisition and development of projects for generating electricity from renewable so-
urces, respectively for capacity operation power generation, cumulated with the develop-
ment and operation of independent storage solutions that the company plans to develop
them in the future;
– Electrica Energie Verde 1 SRL (“EEV1”), an energy production company that owns a park
of photovoltaic panels in Stanesti, Giurgiu County, with an installed capacity of 7.5 MW
(operating capacity being limited to 6.8 MW); the company was acquired in 2020 by Elec-
trica Furnizare S.A. subsidiary, and to which Electrica SA holds an indirect shareholding of
100% of the shares;
– Sunwind Energy SRL, develops the photovoltaic project “Satu Mare 2” with a projected
installed capacity of 27 MW,, located in the vicinity of Satu Mare, with a total estimated
price for 100% of the shares of 1,485,000 EUR and became a subsidiary on 21.03.2022 as
a result of ELSA’s ownership of 60% of the shares;
– New Trend Energy SRL, develops the photovoltaic project “Satu Mare 3”, with a projected
capacity of 59 MW, located in the vicinity of Satu Mare, with a total estimated price for
100% of the solcial parts of 3.245.000 EUR and became a subsidiary on 27.05.2022 as a
result of ELSA’s ownership of 60% of the shares;
– Green Energy Consultancy & Investments SRL, develops the photovoltaic project “Vul-
turu” with an installed capacity of 12 MW (power at the level of the panels) and 9.75 MW
(evacuatable power in network), located in the area of Vulturu commune, Vrancea county;
– 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 village Crucea, jud. Constanta, with an estimated total price for 100%
of the solcial parts of 8.470.000 EUR;
– Foton Power Energy SRL, develops the photovoltaic project “Bihor 1” with a projected in-
stalled capacity of 77.5 MW, located in the vicinity of Oradea, with a total estimated price
for 100% of the solcial parts of 4.262.500 EUR.
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, affecting two of the Company’s
subsidiaries. For the two subsidiaries the unstable economic environment, led to a decrease in finan-
cial performance for 2021, but during 2022 the financial performance has significantly improved, due
to electricity acquisition security measures for the supply segment and for distribution segment has
benefit by capitalisation of additional costs with own technological consumption, also with no signi-
ficant difficulties in receivables collection and consequently payment of debts being noted.
Due to the recent changes in the global energy market, including EU, each EU member state
had to amend legal framework for the energy sector in order to protect the civil society interests on
the one hand and, on the other hand to ensure a proper equilibrium and functionality on the local
energy market by supporting also the utilities energy suppliers. As a result, Romanian Regulatory
Authority for Energy – ANRE (https://www.anre.ro/) has to adopt similar measures through its Order
129/2022 approving Methodological norms regarding the recognition in the tariffs of the additional
costs with the acquisition of electricity for covering the network losses compared to the costs inclu-
ded in the regulated tariffs, carried out between 1 January 2022 – 31 August 2023.
In 2022 the effect of retail prices for electricity was covered as grants received from the state
authorities, as a result of the application of the mechanism of capping the prices for electricity and
natural gas, following the enacting of Ordinances 118/2021 and 119/2022, the electricity prices for
certain categories of households and industrial consumers has been capped to a certain level. The
difference between the capped level and the average acquisition prices in the period to which a mar-
gin has been allowed, is recoverable from the state authorities.
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, se-
curing the prolonging of the cash pooling facility.
Geopolitical tensions
In February 2022 global geopolitical tensions significantly escalated following military inter-
ventions in Ukraine by the Russian Federation. As a result of these escalations, economic uncertain-
ties 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 these separate financial statements, manage-
ment is unable to reliably estimate the effects on the Groups financial outlook and cannot exclude
adverse consequence on the business, operations, and financial position. 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 judgements used in these financial statements remain
appropriate.
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 proce-
dure 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 standar-
ds. The consolidated financial statements of Electrica Group prepared in accordance with International
Financial Reporting Standards as adopted by EU will be published at least 30 days before the GSM
scheduled on 28 April 2023.
These separate financial statements were authorized for issue by the Board of Directors on
07 March 2023 and will be submitted for shareholders’ approval in the general meeting scheduled on
28 April 2023.
Details of the Company’s accounting policies are included in Note 6. The Company has con-
sistently 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 func-
tional 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 esti-
mates are prospectively recognised.
.
.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
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 se-
parate financial statements is included below:
y Note 6 h) – estimates regarding the useful lives of property, plant and equipment;
y Note 19 – assumptions regarding the revalued amount of property, plant and equipment;
y Note 21 – assumptions and estimates regarding the valuation of shareholdings in the sub-
sidiaries;
y Note 15 - assumptions regarding the recognition of deferred tax asset;
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:
y Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
y Level 2: inputs other than quoted prices included in Level 1 that are observable for the as-
set or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
y Level 3: inputs for the asset or liability that are not based on observable market data (un-
observable inputs).
If the inputs used to measure the fair value of an asset or a liability are categorised into di-
fferent 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.
under the support scheme amounting to RON 350,000 thousand which will be drawn
during the forecast period;
y Also, the Group obtained the approval of the GSM to perform one or more bond issuance
within a ceiling of up to 900,000 thousand RON in the period 2022-2023, mainly for the
development of green energy generation projects. Depending on market context, a first
issuance of up to RON 650,000 thousand in the second part of 2023 is envisaged, and
until its use in the operationalization of green energy production projects, the respective
amounts attracted will be able to be used as a liquidity buffer at the Group level.
At the date of issuance of these consolidated financial statements the regulatory position
may be further amended and there may be further laws enacted which could adversely impact the
Groups operating cash flows during the forecast period. Given the current market uncertainties, the
Group is closely monitoring the market context and is continuously analysing the opportunities for
optimisation of debt and increase of bank overdrafts and long-term loans. In light of the importance
of the Group as the supplier and distributed of electricity on the Romanian market, having 40.7 %
(according to the latest ANRE report 2021 for the distribution segment) as market share on the elec-
tricity distribution and 17.72 % (according to the latest ANRE report October 2022 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 availa-
ble to cover any financing requirements arising from market 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 imple-
mented 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 state-
ments, 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 accoun-
ting in preparing the consolidated financial statements.
The Company recognises transfers between levels of the fair value hierarchy at the end of
(b) Revenue
the reporting period during which the change has occurred.
Further information about the assumptions used in measuring fair values is included in
y Note 19: Property, plant and equipment.
y Note 28: Financial instruments - fair values and risk management.
Accounting policies
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 pre-
sented in these separate financial statements. The new amendments to existing standards that are
effective starting with 1 January 2022 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 ma-
king this judgement management considers current trading performance and access to finance re-
sources. The Company depends upon the trading and cash generation of its subsidiaries, that have
been included in the Groups consolidated forecast which includes the following assumptions:
y A continuation of the support scheme until 31 March 2025 according to the applicable
legislation but with a more stable flow of repayments of the reimbursement requests for
subsidies as compared with last year, as the mechanism has been operationally improved;
y The utilization of confirmed debt facilities up to a limit of RON 4,948,373 thousand, in-
cluding RON thousand 2,891,660 thousand overdraft limits (out of which RON 2,571,037
thousand used until 31.12.2022) and RON 2,056,713 thousand long term loans limit (out of
which RON 760,713 thousand long term loans used until 31.12.2022);
y The utilization of not yet confirmed facilities amounting to RON 283,000 thousand and
limits for factoring without recourse for the requests for reimbursement for the subsidies
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 ex-
pected 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:
y interest income;
y interest expense;
y dividend income;
y the foreign currency gain or loss on financial assets and financial liabilities;
y 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.
.
.
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E
L
E
2
2
0
2
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O
P
E
R
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A
U
N
N
A
283
.
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S
A
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L
E
2
2
0
2
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L
A
U
N
N
A
282
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Monetary assets and liabilities denominated in foreign currencies are translated to the func-
tional 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. 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:
y 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;
y temporary differences resulting from investments in subsidiaries, associates and jointly
controlled entities, to the extent that the Company can exercise control over the reversal
.
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284
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 availa-
ble 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 tem-
porary 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 condi-
tion necessary for their intended use.
After initial recognition, land and buildings are measured at revalued amounts less any accu-
mulated depreciation and any accumulated impairment losses since the most recent valuation.
The Company used the fair value as deemed cost for the tangible assets for the opening of
the financial 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 equip-
ment 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.
.
.
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285
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
The estimated useful lives of property, plant and equipment are as follows:
Loans and receivables
Category
Useful lives (years)
Buildings
Equipment
Vehicles, furniture and office equipment
40-60
4-12
3-10
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 in-
terest method. The amortised cost is reduced by impairment losses.
Loans and receivables comprise trade receivables, cash and cash equivalents and bank
The depreciation methods, useful lives and residual values are reviewed at each reporting
deposits.
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 resi-
dual values using the straight-line method over their estimated useful lives, and is recognised in pro-
fit or loss.
The estimated useful lives of software and licenses are 3-5 years.
Amortisation method, useful lives and residual values are reviewed at each reporting date
and adjusted if appropriate.
(j) Financial instruments
Financial assets and financial liabilities are recognised in the Company’s statement of finan-
cial 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.
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 ma-
turities 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 inte-
rest method or at fair value through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business com-
bination, (ii) held-for-trading, or (iii) designated as at fair value, are measured subsequently at amor-
tised cost using the effective interest method. The effective interest method is a method of calcula-
ting the amortised cost of a financial liability and of allocating interest expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the financial liability,
or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Other financial liabilities include trade payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue
of ordinary shares, net of any tax effects, are recognized as a deduction from equity.
(i) Financial assets
Repurchase and reissue of ordinary shares (treasury shares)
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 requ-
ire delivery of assets within the time frame established by regulation or convention in the marketpla-
ce. 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 deter-
mined in that foreign currency and translated at the spot rate at the end of each reporting period.
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 inco-
me. 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, ge-
neral 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.
.
.
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286
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A
287
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
i) Significant increase in credit risk
(n) Capital contributions in kind from shareholders
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 pro-
ceedings. 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 as-
sets, 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 con-
tractual 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 recogni-
zes a collateralized borrowing for the proceeds received.
(l) Revaluation reserves
The difference between the revalued amount and the net carrying amount of property, plant
and equipment is recognized as revaluation reserve included in equity.
If an asset’s carrying amount is increased as a result of a revaluation, the increase is recogni-
zed 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 recog-
nised 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.
.
.
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288
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 ex-
pected 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 pu-
blicly. 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.
(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:
.
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289
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
y the lease term has changed or there is a significant event or change in circumstances re-
sulting 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;
y 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 re-
vised discount rate is used);
y 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 mod-
ified 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 reco-
gnised 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 state-
ments 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 separate
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 construc-
tive 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 ex-
cess 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 liabili-
ties 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 alloca-
ted 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 reco-
verable 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 2022, which provide additional infor-
mation about conditions prevailing at the reporting date (adjusting events) are reflected in the sepa-
rate 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:
y 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),
y Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Oner-
ous 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),
y 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 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 amend-
ments to the existing standards were issued by IASB and adopted by the EU and which are not yet
effective:
y 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),
y Amendments to IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 –
Comparative Information, adopted by the EU on 8 September 2022 (effective for annual
periods beginning on or after 1 January 2023),
y Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting
Policies adopted by the EU on 2 March 2022 (effective for annual periods beginning on or
after 1 January 2023),
y Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting
Policies adopted by the EU on 2 March 2022 (effective for annual periods beginning on or
after 1 January 2023),
y Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”
– Definition of Accounting Estimates adopted by the EU on 2 March 2022 (effective for
annual periods beginning on or after 1 January 2023),
y Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities aris-
ing from a Single Transaction adopted by the EU on 11 August 2022 (effective for annual
.
.
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290
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
periods beginning on or after 1 January 2023).
9 Net finance income
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 ad-
opted 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 pu-
blication of these consolidated financial statements (the effective dates stated below is for IFRS as
issued by IASB):
y 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,
y 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),
y Amendments to IAS 1 “Presentation of Financial Statements” - Non-current Liabilities with
Covenants (effective for annual periods beginning on or after 1 January 2024),
y Amendments to IFRS 16 “Leases” - Lease Liability in a Sale and Leaseback (effective for
annual periods beginning on or after 1 January 2024),
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.
Performance for the year
8 Other income and operating expenses
(a) Other income
2022
2021
Revenues from disposal of assets
Rental income
Revenues from penalties
Other
Total
(b) Other operating expenses
370,774
626,807
2,183,897
1,998,143
5,179,621
2022
2021
Repair and maintenance expenses
Legal assistance and consulting
fees
Insurance premiums
Other taxes and duties
Consumables
Travel and transportation expenses
Postage and telecommunication
Donations and sponsorships
Losses from disposal of assets
Other third party services
Other
Total
1,363,711
1,279,169
713,938
707,159
449,849
155,015
61,355
12,357
-
12,967,398
828,661
18,538,612
-
282,214
-
525,867
808,081
487,714
1,867,407
574,058
478,089
399,128
111,330
95,976
50,000
3,104,047
11,972,370
1,249,425
20,389,544
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
292
Dividends income
Interest income
Other finance income
Total finance income
Interest expense
Interest cost for employee benefits
(Note 12)
Foreign exchange losses, net
Total finance costs
Net finance income
2022
2021
-
78,074,759
224,127
78,298,886
(12,238,993)
(181,714)
(20,094)
(12,440,801)
65,858,085
329,543,644
47,504,909
634,420
377,682,973
(179,011)
(48,814)
(34,718)
(262,543)
377,420,430
In 2021 the Company collected the entire amount of the total income of RON 329,543,644
received as dividends from its subsidiaries.
10 Earnings per share
The calculation of basic and diluted earnings per share is based on the following profit attri-
butable to shareholders and weighted-average number of ordinary shares outstanding:
Profit attributable to shareholders
Profit for the year attributable to
the shareholders of the Company
Profit attributable to the
shareholders of the Company
Number of ordinary shares (in number of shares)
24,304,885
24,304,885
321,819,884
321,819,884
2022
2021
2022
2021
Number of ordinary shares at 31
December
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.
339,553,004
339,553,004
Basic and diluted earnings per
share (RON)
11 Short-term employee benefits
2022
2021
0.07
0.95
.
Personnel payables
Current portion of defined benefit
liability and other long-term
employee benefits
Social security charges
Tax on salaries
Total
31 December
2022
31 December
2021
4,974,791
127,203
607,823
130,314
5,840,131
5,979,013
5,150,498
787,241
243,969
12,160,721
Details related to employee benefit expenses are presented in Note 12.
– 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 gran-
ted to employers for creating new jobs.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
293
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Employee benefits
12 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 bonu-
ses. The post-employment and other long-term employee benefits are stipulated in the Collective
Labour Contract.
In 2022 and 2021, 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
2022
31 December
2021
Defined benefit liability
Other long-term employee benefits
Total
- Current portion*
- Non-current portion
*included in Personnel payables in Note 11
(i) Movement in the defined benefit liability and other long-term employee benefits
506,110
716,743
1,222,853
127,202
1,095,651
5,599,583
601,214
6,200,797
5,150,498
1,050,299
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
2022
2021
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Interest cost
Included in other comprehensive
income
Re-measurements gain
- Actuarial gain
Other
Benefits paid
Balance at 31 December
Other long-term employee
benefits
Balance at 1 January
Included in profit or loss
Current service cost
Actuarial gain
Interest cost
Other
Benefits paid
Balance at 31 December
5,599,583
73,919
-
153,412
227,331
691,940
107,066
5,054,128
22,832
5,184,026
(1,621,494)
(269,825)
(3,699,310)
506,110
(6,558)
5,599,583
2022
2021
601,214
45,335
161,519
28,302
(119,627)
716,743
809,724
72,968
(268,743)
25,982
(38,717)
601,214
Defined benefits refer to the retirement bonuses granted according to the seniority within
the Company and other long-term benefits refer to the jubilee bonuses granted for seniority.
(ii) Actuarial assumptions
The following are the main actuarial assumptions at the respective reporting date:
(a) Macroeconomic assumptions:
y inflation. The actuary used information from the National Commission for Strategy and
Prognosis:
Year
2022
2023
2024
2025
2026+
Valuation date
31 December 2022
13.9%
7.5%
4.9%
3%
2.5%
Valuation date
31 December 2021
5.9%
3.2%
3.0%
2.8%
2.5%
y 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 8.1% for the year 2022
(2021: 5%);
y taxes and social charges are those in force as at the reporting date.
(b) Company specific assumptions:
y Starting with 2023 the gross salaries’ growth was forecasted at the inflation level;
y employees’ turnover: based on historical data;
y 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
No. of gross monthly base salaries
Seniority
20 years
30 years
35 years
40 years
45 years
31 December
2022
1
2
3
4
5
31 December
2021
1
2
3
4
5
Retirement bonuses based on years of service in the Company
No. of gross monthly base salaries
Seniority
Between 8 and 10 years
Between 10 and 25 years
More than 25 years
Termination benefits
31 December
2022
2
3
4
31 December
2021
2
3
4
.
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
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:
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
295
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
294
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
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.
Sensitivity analysis
Significant actuarial assumptions for the determination of the benefit obligation are the dis-
count 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.
Discount rate
Salary growth
Retirement age
Increase by 1%
Decrease by 1%
2022
(73,009)
86,944
2021
(79,994)
91,879
2022
73,009
(86,944)
2021
79,994
(91,879)
Increase by 1 year
2021
93,596
2022
6,828
Decrease by 1 year
2021
(93,596)
2022
(6,828)
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 me-
thod 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.
13 Employee benefit expenses
Average number of employees
Number of employees at 31
December
.
.
I
A
S
A
C
R
T
C
E
L
E
Wages and salaries
Social security contributions
Meal tickets
Termination benefit for labour/
mandate contracts
Total
2022
2022
72
78
25,026,080
749,695
357,755
4,023,428
30,156,958
2021
104
2021
109
31,429,153
784,372
442,500
6,583,625
Lender
Balance at 31 December
2022
Balance at 31 December
2021
Vista Bank
Total
Less: current portion of the long-term bank
borrowings
Less: accumulated interest
Total long-term borrowings, net of current portion
100,000,000
100,000,000
-
-
100,000,000
-
-
-
-
-
On 30 December 2022, the Company concluded a contract for a line of credit for working ca-
pital and for the issuance of Bank Guarantee Letters granted by Vista Bank for a period of 18 months.
The main provisions are: Maximum credit amount: 100,000 thousand RON; Interest rate: ROBOR 3M
+2.95 % p.a.; full refund at maturity. On 31 December 2022, the balance of the loan is 100,000,000
RON.
As at 31 December 2022, 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 2022 is of RON 207,830,772 (31 December 2021: 120,541,354) (for further details please see
Note 23).
Income tax
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 assess-
ment 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
2022
259,439
259,439
2021
(43,172)
(43,172)
(ii) Amounts recognised in other comprehensive income
Before tax
2022
Tax benefit
Net of tax
Before tax
2021
Tax benefit
Net of tax
Re-
measurement
of defined
benefit
liability
Total
1,621,494
(259,439)
1,362,055
269,825
(43,172)
226,653
1,621,494
(259,439)
1,362,055
269,825
(43,172)
226,653
(iii) Reconciliation of effective tax rate
.
.
I
A
S
A
C
R
T
C
E
L
E
39,239,650
2022
2021
The number or employees at 31 December 2022 includes also the 5 employees with mandate
agreements. Termination benefits represent compensation payments for management in case of
mandate contracts termination. Management remuneration is presented within Note 29 – Related
parties.
Long-term bank loans
14 Bank borrowings and overdrafts
As at 31 December 2022, respectively 31 December 2021, the long-term bank borrowings are
presented as follows:
Profit before tax
Tax using
Company’s
domestic tax rate
Non-deductible
expenses
Non-taxable income
Deductible legal
reserve
24,045,446
3,847,271
2,079,113
(1,700,300)
(207,048)
16%
9%
-7%
-1%
321,776,712
51,484,274
9,640,583
(54,761,824)
(2,574,214)
16%
3%
-17%
-1%
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
296
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
297
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Recognition of tax
effect of previously
unrecognised tax
losses
Other tax effects
Total benefit related
to income tax
2022
-18%
(4,386,877)
0%
-1%
108,402
(259,439)
2021
-1%
0%
0%
(3,831,991)
-
(43,172)
For 2021 non-taxable income represents dividend income in amount of RON 329,543,644.
Movement in deferred tax balances
Net balance
at 1 January
2022
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2022
Net
Deferred tax
assets
Deferred tax
liabilities
3,739,542
(93,354)
-
3,646,188
-
3,646,188
(2,275,574)
929,265
259,439
(1,086,870)
(1,086,870)
(1,463,968)
(1,095,350)
-
(2,559,318)
(2,559,318)
-
-
-
(259,439)
259,439
-
(3,646,188)
3,646,188
Net balance
at 1 January
2021
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2021
Net
Deferred tax
assets
Deferred tax
liabilities
3,681,453
58,089
-
3,739,542
-
3,739,542
(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
2022
Property,
plant and
equipment
Employee
benefits
Tax loss
carried
forward
Tax (assets)/
liabilities
2021
Property,
plant and
equipment
Employee
benefits
Tax loss
carried
forward
Tax (assets)/
liabilities
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
Assets
16 Trade receivables
2022
2021
337,136,289
356,623,017
31 December
2022
31 December
2021
Trade receivables, gross
Loss allowance
Total trade receivables, net
Receivables from related parties are presented in Note 29.
161,471,282
(160,675,756)
795,526
582,938,825
(582,012,952)
925,873
Trade receivables, gross, comprise:
Electricity receivables from
clients in litigation, insolvency
or bankruptcy (mainly Oltchim,
Transenergo)
Late payment penalties from
clients in litigation, insolvency or
bankruptcy (Oltchim)
Other
Total trade receivables, gross
31 December
2022
31 December
2021
134,521,414
493,474,169
26,506,303
443,565
161,471,282
88,968,313
496,343
582,938,825
The reconciliation between the opening balances and the closing balances of the impairment
for trade receivables is as follows:
Loss allowance
Balance as at 1 January
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
Balance as at 31 December
2022
582,012,952
-
(421,235,816)
(101,380)
160,675,756
2021
582,083,147
2,220
-
(72,415)
582,012,952
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 ban-
kruptcy 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.
As of 2021, the balance of receivables with Oltchim was RON 518,938,151, bad debt allowance
was also at the same amount.
By decision of the European Court in Luxembourg pronounced on 15 December 2021 (final
decision being applicable as of 21 March 2022), in case T565/19, it was partially cancelled the
European Commission Decision no. C (2018) 8592 from 2018, which established a series of measures
regarding the recovery by Romania of the State aid granted to Oltchim S.A. By its decision, the
European court cancelled a series of the measures, including the amounts considered state aid with
which Electrica was registered in the table of receivables. Following the decision, the company re-
mained registered in the table of receivables with the amount of RON 116,058,538.
Following the evolution of the bankruptcy process, on 06 April 2022, the updated table of
receivables was published in BPI Tabel Oltchim, which still recognizes only the guaranteed receiva-
bles, which in the case of the company the estimated amount that remains to be recovered from the
sales of assets of Oltchim SA in the completion of the bankruptcy process is RON 116,058,538 (inclu-
ding VAT), comprised of the base in the amount of RON 98,725,847 and respectively the VAT in the
amount of RON 17,332,691.
Considering the events above, as of 31 December 2022 a part of the receivable for Oltchim
in amount of RON 420,212,304 was written off as it was not recognised in the final bankruptcy table.
The bad debt allowance was also adjusted with the same amount. As of 31 December 2022, the ba-
lance of receivables with Oltchim is RON 98,725,847 bad debt allowance being at the same amount.
Also, in 2022, receivables for TERMOFICARE 2000 SA in amount of RON 1,100,903 were
written off as a result of closing the insolvency procedure of the debtor and removing it from the
Trade Register. The bad debt allowance was also adjusted with the same amount.
Loss allowances are determined according to IFRS 9 “Financial instruments” based on “ex-
pected credit loss” model. A significant part of the loss allowances refers to clients in litigation, insol-
vency or bankruptcy procedures, many of them being older than five years. The Company will dere-
cognize these receivables together with the related allowances after the finalization of the
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
299
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
298
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Interest receivable represents mainly interest to be received from related parties for the
Disposals
(302,732)
bankruptcy process. These receivables were treated separately in computing the allowance accor-
ding to IFRS 9.
17 Other receivables
Cash-pooling receivables
Interest receivable
Other receivables
Bad debt allowance
Total other receivables, net
31 December
2022
31 December
2021
477,646,009
22,365,439
10,740,216
(9,258,597)
501,493,067
567,621,644
18,319,302
9,870,962
(11,046,264)
584,765,644
Cash-pooling receivables comprises the receivable of Electrica SA as at 31 December 2022
as cash pool leader in the two cash-pooling systems set up at Group level (Note 23 and Note 29).
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
2022
2021
Balance as at 1 January
Loss allowance recognized
Loss allowance used
Decrease in loss allowance
Balance as at 31 December
11,046,264
-
-
(1,787,667)
9,258,597
11,046,264
-
-
-
11,046,264
In 2022, the allowance related to Electrica Serv S.A. in amount of RON 1,787,667, represen-
ting a legal interest, was reversed as a result of favorable court decision. The related receivables, in
amount of RON 2,183,897 was cashed.
18 Cash and cash equivalents
Bank current accounts
Call deposits
Total cash and cash equivalents in
the separate statement of financial
position
Overdrafts used for cash
management purposes
Total cash and cash equivalents
in the separate statement of cash
flow
31 December 2022
31 December 2021
3,614,591
102,017,348
105,631,939
3,042,170
2,715,802
5,757,972
-
(120,541,354)
105,631,939
(114,783,382)
As at 31 December 2022, call deposits amount consists mainly of Vista Bank overnight depo-
sit in amount of RON 99,650,000, related to long term loan whithdrawn for the issuance of Bank
Guarantee Letters (please see note 14).
In the normal course of business, the Company enters into short-term credit facility with the
aim of financing operational needs. Until 31 December 2021, credit facility amounting to RON
120,541,354 was presented as part of cash and cash equivalents. Following the volatility in electricity
prices started in 2021 and continued in 2022, this credit facility have no longer fluctuated from nega-
tive to 0 balance, remained negative for the entire year 2022, thus the management of the Company
presented this overdraft for the year ended 31 December 2022 in financing activity, and reclassified
the opening balance previously presented as cash and cash equivalents. (for further details please
see transfer presented in Cash Flow statement).
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
300
19 Property, plant and equipment
The reconciliation between the initial balance and the final balance of property, plant and
equipment in 2022 and 2021: was as follows:
Land and land
improvement
Buildings
Equipment
Vehicles,
furniture
and office
equipment
Construction in
progress
Total
69,682,986
27,006,291
26,434,743
1,174,998
2,134,443
126,433,461
-
-
-
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
December 2021
Additions
Transfer from
construction in
progress
69,380,254
27,006,291
17,319,173
1,219,214
6,417,307
121,342,239
-
-
-
-
437,586
602,928
1,117,263
2,157,777
-
8,709
-
8,709
Disposals
(2,251,504)
(4,840)
(1,361,004)
-
(8,709)
(3,626,057)
67,128,750
27,001,451
16,395,755
1,830,851
7,525,861
119,882,668
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
.
371,864
461,729
172,846
-
(1,343,194)
(4,840)
-
-
-
-
-
-
1,006,439
(1,343,194)
(4,840)
2,644,395
15,552,271
612,055
2,134,443
20,943,164
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
301
At 1 January 2021
69,682,986
25,100,783
69,380,254
24,728,920
1,282,819
885,437
876,707
780,005
-
96,943,295
4,282,864
100,057,480
67,128,750
24,357,056
843,484
1,218,796
5,391,418
98,939,504
As at 31 December 2022, 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
-
-
-
-
-
-
-
-
-
-
-
-
Gross carrying
amount
Balance at 1
January 2021
Additions
Reclassification
to assets held to
sale
Balance at 31
December 2022
Accumulated
depreciation
and impairment
losses
Balance at
1 January 2021
Depreciation
Accumulated
depreciation of
disposals
Reversal of
impairment of
property, plant
and equipment,
net
Reclassification
to assets held for
sale
Balance at
31 December
2021
Depreciation
Accumulated
depreciation of
disposals
Impairment of
property, plant
and equipment
Balance at
31 December
2022
Net carrying
amounts
At 31 December
2021
At 31 December
2022
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
title deeds and the land and buildings acquired in 2020 from the subsidiary Servicii Energetice
Muntenia S.A..
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 accumu-
lated 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.
The company’s management does not consider that a new revaluation is necessary as at 31
December 2022, considering that there is no significant volatility of the main categories of fixed as-
sets owned (land and buildings) between the fair value and the existing accounting value, the last
revaluation being performed as at 31 December 2020.
The following table shows the valuation techniques used in measuring fair values (Level 3),
as well as the significant unobservable inputs used.
Significant
unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
• Adjustment for
liquidity, location,
size.
The estimated fair value would
increase/(decrease) if:
• Adjustment for liquidity,
location or size would be
lower/(higher).
• Adjustment for
liquidity, location,
size.
• Adjustment for liquidity,
location or size would be
lower/(higher).
• Occupancy rates
• Occupancy rates were higher/
(lower)
• Yield rates were lower/
(higher)
• Annual rent per sqm was
higher/(lower)
(90%)
• Yield rates
(between 9% and
10%)
• Annual rent per
sqm (between 2
and 10 EUR/sqm),
depending on
location;
Category
Valuation technique
Land
Market approach
The fair value is estimated based on
selling price per square meter of land
of similar characteristics (i.e. ownership,
legal limitations, financing and selling
conditions, location, physical and
economical 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, location, physical and
economical properties, and best use).,
adjusted liquidity, location, size etc.
The DCF method
The valuation model based on the DCF
method estimates the present value
of net cash flows to be generated by a
building taking into account occupancy
rate and annual rent. The discount rate
estimation considers, inter alia, the
quality of a building and its location.
20 Intangible assets
Intangible assets include mainly licenses and costs of implementation of the accounting sys-
tem SAP and licenses for various software, as follows:
Software and licenses
Total
Gross carrying amount
Balance at 1 January 2021
Disposals
Balance at 31 December 2021
Additions
Disposals
Balance at 31 December 2022
Accumulated depreciation and
impairment losses
Balance at 1 January 2021
Amortisation
Accumulated amortization of
disposals
Balance at 31 December 2021
Amortisation
Accumulated amortization of
disposals
Balance at 31 December 2022
Net carrying amounts
At 1 January 2021
At 31 December 2021
At 31 December 2022
3,822,679
(1,023,055)
2,799,624
166,015
(1,004,634)
1,961,005
3,549,799
219,204
(1,023,055)
2,745,948
93,502
(1,004,634)
1,834,816
272,880
53,676
126,189
3,822,679
(1,023,055)
2,799,624
166,015
(1,004,634)
1,961,005
3,549,799
219,204
(1,023,055)
2,745,948
93,502
(1,004,634)
1,834,816
272,880
53,676
126,189
21 Investments in subsidiaries
The investments in subsidiaries are presented as follows:
31 December
2022
31 December
2021
Gross value
Impairment
Net
Gross value
Impairment
Net
1,741,959,406
227,181,073
-
-
1,741,959,406
1,741,663,327
227,181,073
226,001,553
-
-
1,741,663,327
226,001,553
481,803,770
(164,368,925)
317,434,846
481,803,770 (164,368,925)
317,434,845
82,033,220
(82,033,220)
106,162,492
(106,162,492)
43,761,094
(43,761,094)
23,822,124
(23,822,124)
-
-
-
-
82,033,220
(82,033,220)
106,162,492
(106,162,492)
43,761,094
(43,761,094)
23,822,124
(23,822,124)
-
-
-
-
124,990
4,393,567
5,588,029
-
-
-
124,990
124,990
4,393,567
5,588,029
-
-
-
-
-
124,990
-
-
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Serv S.A.
Servicii Energetice
Oltenia S.A.
(in bankruptcy)
Servicii Energetice
Moldova S.A.
(in bankruptcy)
Servicii Energetice
Banat S.A.
(in bankruptcy )
Servicii Energetice
Dobrogea S.A.
(in bankruptcy)
Electrica Energie
Productie S.A.
Sunwind Energy
S.R.L.
New Trend Energy
S.R.L.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
303
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
302
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
31 December
2022
31 December
2021
Gross value
Impairment
Net
Gross value
Impairment
Net
Green Energy
Consultancy &
Investments S.R.L.
Total
1,446,450
-
1,446,450
-
-
-
2,718,276,215
(420,147,855)
2,298,128,361 2,705,372,570 (420,147,855) 2,285,224,715
Changes in Company’s subsidiaries structure in 2022
On 21 March 2022, Societatea Electrica SA acquired an additional 30% of the shares and vo-
ting interests in Sunwind Energy S.R.L.. As a result, the Company’s equity interest increased from
30% to 60%, granting control of Sunwind Energy S.R.L..
On 27 May 2022, Electrica SA acquired an additional 30% of the shares and voting interests
in New Trend Energy S.R.L.. As a result, the Company’s equity interest increased from 30% to 60%,
granting control of New Trend Energy S.R.L..
On 6 September 2022, Electrica SA acquired 75% of Green Energy Consultancy & Investments
S.R.L. shares granting control of the entity.
Changes in Company’s subsidiaries structure in 2021
The main economic and financial indicators achieved by the Company’s subsidiaries on
31.12.2021
The main economic and financial indicators achieved by the Company’s subsidiaries as at 31
December 2021 (the last financial year for which the statutory financial statements were approved)
are as follows:
Indicators
Share capital
Total equity
Non-current
assets
Current assets
Current liabilities
Provisions
Deferred
revenue
Non-current
liabilities
Distributie
Energie Electrica
Romania S.A.
Electrica Serv
S.A.
Electrica
Furnizare S.A.
Electrica
Energie
Productie S.A.
1,405,204,790
4,680,176,853
9,094,564,601
52,495,780
373,934,733
314,726,485
63,091,960
(332,775,768)
109,505,690
767,311,582
1,570,371,538
161,499,798
2,070,631,645
117,731,151
27,833,427
12,374,950
18,620,597
1,299,671,935
1,672,361,560
47,086,434
2,990,270
1,395,082,144
-
32,731,035
125,000
123,514
2,080
121,739
305
-
-
-
Establishment of a new Subsidiary
22 Investments in associates
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, cumula-
ted with the development and operation of independent storage solutions that it intends to develop
in the near future.
Movements in investments
During 2022 Electrica SA has increased its investments in subsidiaries, by in kind contributi-
on to its share capital as follows: Electrica Furnizare S.A. by one plot of land in surface of 1,408 sqm
for which it held property deeds with the amount of RON 1,179,520 and Distributie Energie Electrica
Romania S.A. by one plot of land in surface of 352 sqm for which it held property deeds with the
amount of RON 293,099. 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.
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 sqm 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.
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..
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 assess-
ment of the recoverable value of the investment in Electrica Serv S.A.. As of 31 December 2022, 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 2021, 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 Electrica Furnizare SA, management has assessed the reco-
verability 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. On 31 December 2022, the financial performance has been
highly improved, therefore there is no indication that the value of investment should be impaired.
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. By the end of 31 December 2022, two of
the project companies were acquired by 60% (please see note 21), therefore they are accounted as
subsidiaries, the other ones 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, to-
talling 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;
– 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 ca-
pacity, 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, respective-
ly 30% of the shares of Foton Power Energy SRL.
Considering the holding percentage of 30%, as at 31 December 2022, the two 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 18,832,565 is detailed as follows:
.
.
I
A
S
A
C
R
T
C
E
L
E
Acquisition date
Percentage
ownership and
voting rights at
acquisition date
Net assets at acquisition date
Company’s share of net assets
Goodwill
Cost of investment at acquisition
date
Crucea Power
Park S.R.L.
31.07.2021
30%
(241,682)
(72,505)
12,572,700
12,500,195
Foton Power
Energy S.R.L.
31.12.2021
30%
(7,016)
(2,105)
6,334,475
6,332,370
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
305
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
304
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Summarised financial information in respect of each of the Company’s associates is set out
2021: 200,000,000);
below:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets at acquisition
date
Loss for the period
Closing net assets 31.12.2022
Closing net assets of associates
31.12.2022
Share in associates %
Company’s share of net assets as
at 31.12.2022
Goodwill
Carrying amount of interest in
associate 31.12.2022
Crucea Power Park S.R.L.
Foton Power Energy S.R.L.
31.12.2022
31.12.2022
8,519,924
1,141,674
(9,885,796)
(43,649)
(267,847)
(245,780)
(22,067)
(267,847)
243,941
35,454
(296,391)
(1,004)
(18,000)
(7,016)
(10,984)
(18,000)
Crucea Power Park S.R.L.
Foton Power Energy S.R.L.
(267,847)
30%
(80,354)
12,572,700
12,492,346
(18,000)
30%
(5,400)
6,334,475
6,329,075
The share loss in amount of RON 13,044 for the period was recognized in the separate state-
ment of profit and loss for the year ended as at 31 December 2022.
23 Loans granted to subsidiaries
i. Loans granted to subsidiaries – long term
Distributie Energie Electrica
Romania S.A.
Total loans granted to subsidiaries
– long term
Loans granted to subsidiaries
31 December
2022
31 December
2021
1,276,325,000
1,276,325,000
1,276,325,000
1,276,325,000
The Company has entered into loan agreements as lender, as follows:
y 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; Re-
imbursement allowed in advance, but not earlier than the 12 months of the period of use.
As at 31 December 2022, the outstanding balance is of RON 150,000,000 (31 December
2021: 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; Re-
imbursement allowed in advance, but not earlier than the 12 months of the period of use.
As at 31 December 2022, the outstanding balance is of RON 200,000,000 (31 December
– 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; Re-
imbursement allowed in advance, but not earlier than the 12 months of the period of use.
As at 31 December 2022, the outstanding balance is of RON 160,000,000 (31 December
2021: RON 160,000,000).
y 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 mon-
ths; Period allowed for disbursements: 12 months; Repayment in full at maturity; Reimbur-
sement allowed in advance, but not earlier than the 12 months of the period of use. As at
31 December 2022, the outstanding balance is of RON 230,000,000 (31 December 2021:
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 mon-
ths; Period allowed for disbursements: 12 months; Repayment in full at maturity; Reimbur-
sement allowed in advance, but not earlier than the 12 months of the period of use. As at
31 December 2022, the outstanding balance is of RON 160,000,000 (31 December 2021:
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 mon-
ths, Period allowed for disbursements: 12 months, Repayment in full at maturity; Reimbur-
sement allowed in advance, but not earlier than the 12 months of the period of use. As at
31 December 2022, the outstanding balance is of RON 130,000,000 (31 December 2021:
RON 130,000,000).
y 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 pur-
pose 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 2022,
the outstanding balance is RON 246,325,000.
ii. Loans granted to subsidiaries – short term
ELectrica Furnizare S.A.
Electrica Energie Productie S.A.
Sunwind Energy S.R.L.
New Trend Energy S.R.L.
Green Energy Consultancy &
Investments S.R.L.
Total loans granted to subsidiaries
– short term
Loans granted to subsidiaries
31 December
2022
31 December
2021
-
41,594,188
600,000
2,400,000
440,335
45,034,523
30,000,000
-
-
-
-
30,000,000
y Short-term loans granted in 2021:
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 %
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
306
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
307
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
per annum, Maturity: 30 days until 23.01.2022 with possibility of extension. As at 31 December 2022,
the outstanding balance is nil (2021: RON 30,000,000).
y Short-term loans granted in 2022:
– Intragroup loan agreement with Electrica Energie Productie S.A. concluded in July 2022.
Main provisions are: maximum loan amount: RON 47,149,714 (EUR 9,541,000), The purpose
of granting this loan is financing the costs for the purchase by Electrica Energie Productie
S.A of 100% of the shares owned by Societatea Electrica Furnizare S.A. in Electrica Energie
Verde 1 SRL, as well as the takeover of the related shareholder loans, Interest rate: ROBOR
3M + 1.16 % per annum, Maturity: 12 months until 14.07.2023, Repayment in full at maturity.
As at 31 December 2022, the outstanding balance is RON 41,594,188.
– Intragroup loan agreement with Sunwind Energy S.R.L. concluded in September 2022.
Main provisions are: maximum loan amount: RON 1,200,000, The purpose of granting this
loan is financing the costs that are the responsibility of ELSA according to the Sale and
Purchase Agreement, Interest rate: ROBOR 3M + 1.16 % per annum, Maturity: 12 months
until 25.09.2023, Repayment in full at maturity. As at 31 December 2022, the outstanding
balance is RON 600,0000.
– Intragroup loan agreement with Sunwind Energy S.R.L. concluded in November 2022.
Main provisions are: maximum loan amount: RON 147,300,000, The purpose of granting
this loan is financing the investment works necessary for the completion and operation of
the “Satu Mare 2” (Botiz) photovoltaic power plant, Interest rate: ROBOR 3M + 1.16 % per
annum, Maturity: 12 months until 27.10.2023, Repayment in full at maturity. As at 31 Decem-
ber 2022, the outstanding balance is nil.
– Intragroup loan agreement with New Trend Energy S.R.L. concluded in June 2022. Main
provisions are: maximum loan amount: RON 2,400,000, The purpose of granting this loan
is financing for the payment of the land set-aside fee and the related bank commissions
and the partial financing of the costs for issuing a Bank Letter of Guarantee having as be-
neficiary the company Distributie Energie Electrica Romania SA, Interest rate: ROBOR 3M
+ 1.16 % per annum, Maturity: 12 months until 13.06.2023, Repayment in full at maturity. As
at 31 December 2022, the outstanding balance is RON 2,400,0000.
– Intragroup loan agreement with Green Energy Consultancy & Investments S.R.L. conclu-
ded in October 2022. Main provisions are: maximum loan amount: RON 66,550,000, The
purpose of granting this loan is financing the costs that are the responsibility of ELSA
according to the Sale and Purchase Agreement and financing the investment works ne-
cessary for the completion and operation of the Vulturu photovoltaic power plant, Interest
rate: ROBOR 3M + 1.16 % per annum, Maturity: 12 months until 26.10.2023, Repayment in
full at maturity. As at 31 December 2022, the outstanding balance is RON 440,335.
iii. Cash pooling system at Group level
On 20 December 2019, between ING Bank N.V., Electrica SA and its subsidiaries were conclu-
ded two agreements for the implementation of two cash pooling schemes, as follows:
y 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 Distri-
butie 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;
y The credit facility offered by the pool leader to each participant is up to the amount of
RON 180,000,000; 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 + 0.5% p.a. The initial due date was 20.12.2020, the convention being automatical-
ly extended at the maturity of the bank facility agreement until 27.02.2023;
y 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;
y 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..
y 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 inte-
grated in the conventions limits applicable for Electrica SERV S.A.
y 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 + 0.5% p.a. The initial due date
was 20.12.2020, the convention being automatically extended at the maturity of the bank
facility agreement until 27.01.2023;
y 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 ac-
count of Electrica SA. In case the current bank accounts of the participants have a nega-
tive 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 2022, the credit facility has an outstanding balance of RON 207,830,772
(31 December 2021: RON 120,541,354). For the amounts drawn/transferred to the cash pooling sys-
tems between Electrica SA and the other participants, please refer to Note 29.
Equity and liabilities
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 2022 (31 December 2021: 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 con-
fer 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 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 no-
minative and dematerialized shares with a nominal value of 10 RON/share.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
309
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
308
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
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 con-
tributions 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:
Balance at 1 January
Release of revaluation reserve to
retained earnings corresponding
to depreciation and disposals of
property, plant and equipment
Balance at 31 December
(d) Legal reserves
2022
12,397,647
(590,943)
2021
12,605,266
(207,619)
11,806,704
12,397,647
The Legal reserves are set up as 5% of the gross profit for the year, until the total legal reser-
ves 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 2022, the legal reserves were in amount of RON 229,435,101 (31 December
2021: RON 228,156,226).
(e) Dividends
The dividends distributed by the Company in 2022 and 2021 (from the statutory profits of
preceding years) were as follows:
Distributed dividends
2022
152,798,852
2021
247,873,693
On 20 April 2022, the General Shareholders Meeting of the Company approved the net dis-
tributable profit of 2021 as follows:
y Dividends to be distributed to shareholders: RON 152,798,852;
y Legal reserve (5% from 2021 pre-tax profit): RON 16,128,587;
y Other reserves: RON 152,892,445.
On 28 April 2021, the General Shareholders Meeting of the Company approved the net dis-
tributable profit of 2020 as follows:
y Dividends to be distributed to shareholders: RON 247,873,693;
y Legal reserve (5% from 2021 pre-tax profit): RON 14,935,950;
y Other reserves: RON 35,568,893.
The total amount of dividends to be distributed to shareholders in 2022 was of RON
152,798,852 (2021: RON 247,873,693). The value of dividends per share distributed to the sharehol-
ders of the Company were: RON 0.45 per share (2021: RON 0.73 per share). When calculating the
dividend per share, the Company’s repurchased own shares (6,890,593 shares) were not considered
as outstanding shares and are deducted from the total number of issued ordinary shares.
Out of the dividends declared by the Company of RON 152,798,852 (2021: RON 247,873,693),
the dividends paid were RON 152,446,574 (2021: RON 247,473,235), the remaining difference repre-
sents dividends uncollected by the shareholders.
25 Trade payables
Suppliers of goods and services
Capital expenditure suppliers
Suppliers – related parties (Note
29)
Total
31 December 2022
31 December 2021
4,368,115
128,823
247,788
4,744,726
3,402,954
464,293
167,109
4,034,356
Payables to related parties are detailed in Note 29.
26 Other payables
31 December 2022
31 December 2021
Current
Non-current
Current
Non-current
Cash-pooling
payables
Dividends payable
VAT under
settlement
Other payables to
the state budget
Other liabilities
Total
33,187,405
1,716,675
-
7,304
1,563,323
36,474,707
-
-
-
-
-
-
41,885,081
1,715,724
18,302
6,659
396,702
44,022,468
-
-
-
-
-
-
Cash-pooling payables comprises the payable of Electrica as at 31 December 2022 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 repre-
sent the dividends uncollected by the shareholders.
In August 2020, the VAT group was established at the Electrica level in accordance with the
provisions of Article 269 (9) of the Tax Code and the rules for its application, National Agency for
Fiscal Administration (“NAFA”) Order No. 3006/2016 on the approval of the Procedure for the imple-
mentation 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 re-
porting and VAT record obligations stipulated by the legal regulations in force for the whole group.
27 Provisions
Balance at 1 January 2022
Provisions recognized
Provisions utilized
Provisions reversed
Balance at 31 December 2022
Litigations and other risks
4,238,114
304,330
(1,872,108)
(1,628,660)
1,041,676
The provisions balance consists of: a) provisions in amount of RON 702,088 as at 31 December
2022 (31 December 2021: RON 2,568,765) referring to the benefits granted upon the termination of
executive directors’ and management key personnel contracts in the form of a non-compete clause
and b) provision in amount of RON 339,589 as at 31 December 2022 (31 December 2021: RON
1,669,351) referring to various litigations.
Financial instruments
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 doesn’t have real Group guarantees, only corporate guarantees disclosed on
note 31 Commitments.
.
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S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
310
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
311
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
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:
y credit risk;
y liquidity risk;
y 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 fi-
nancial 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 compa-
nies (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.
Trade receivables
The Company establishes an allowance for impairment that represents the amount of expec-
ted 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 2022:
Expected loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
31 December 2022
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
0%
0%
0%
0%
708,385
56,677
-
-
-
-
-
-
708,385
56,677
-
-
100%
160,706,221
161,471,282
(160,675,756)
(160,675,756)
30,464
795,526
No
No
No
No
Yes
Allowances for impairment are referring mainly to Oltchim in amount of RON 98,725,847 (31
December 2021: RON 518,938,151), Transenergo Com in amount of RON 37,085,364 (31 December
2021: RON 37,088,264) and to Fidelis Energy in amount of RON 11,220,386 (31 December 2021: 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 2021, is as follows:
Expected 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
0%
0%
0%
843,715
78,107
-
-
-
-
843,715
78,107
-
No
No
No
Expected loss
rates (“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
31 December 2021
Past due 61-90
days
Past due more
than 90 days
Total
Liquidity risk
0%
100%
-
-
-
582,017,003
582,938,825
(582,012,952)
(582,012,952)
4,051
925,873
No
Yes
Liquidity risk is the risk that the Company might encounter difficulty in meeting the obliga-
tions 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 ex-
pected cash inflows on trade receivables together with expected cash outflows on trade and other
payables.
Exposure to liquidity risk
The following table presents the contractual maturities of financial liabilities at the reporting
date. The amounts are gross and undiscounted, and include estimated interest accrued.
Carrying amount
Total
less than 1 year
1-2 years
2-5 years
Contractual cash flows
207,830,772
4,744,726
269,610
212,845,108
207,830,772
4,744,726
269,610
212,845,108
207,830,772
4,744,726
215,561
212,791,059
120,541,354
4,034,356
513,274
125,088,984
120,541,354
4,034,356
513,274
125,088,984
120,541,354
4,034,356
394,818
124,970,528
-
-
54,049
54,049
-
-
62,647
62,647
-
-
-
-
-
-
55,809
55,809
Financial
liabilities
31 December
2022
Bank overdrafts
Trade payables
Lease liability
Total
31 December
2021
Bank overdrafts
Trade payables
Lease liability
Total
(ii) 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 accep-
table 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.
.
.
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S
A
C
R
T
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E
L
E
2
2
0
2
T
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O
P
E
R
L
A
U
N
N
A
313
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
312
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Exposure to currency risk
Cash flow sensitivity analysis for variable-rate instruments
The summary of the quantitative data about the Company’s exposure to currency risk is as
follows:
In RON
Cash and cash equivalents
Lease liability
Net statement of financial position
exposure
31 December 2022
denominated in EUR
31 December 2021
denominated in EUR
263,291
(267,657)
(4,366)
262,918
(509,598)
(246,680)
The following significant exchange rates have been applied during the year:
RON
EUR 1
Average rate
Year-end spot rate
2022
2021
2022
2021
4.9315
4.9204
4.9474
4,9481
Sensitivity analysis
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, especially the interest rates, remain constant and ignores the impact of fore-
casted sales and purchases.
Effect
31 December 2022
EUR (5% movement)
31 December 2021
EUR (5% movement)
Interest rate risk
Profit before tax
Appreciation
Depreciation
(218)
(12,334)
218
12,334
The Company exposures to interest rates on financial assets and financial liabilities are detai-
led 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 inte-
rest rate.
Exposure to interest rate risk
The interest rate profile of the Company’s interest-bearing financial instruments is as follows:
31 December
2022
31 December
2021
Fixed-rate instruments
Financial assets
Call deposits
Variable-rate instruments
Financial assets
Cash pooling receivables (Note 23,
Note 29)
Financial liabilities
Cash pooling payables (Note 23,
Note 29)
Bank overdrafts (Note 18)
Lease liability
Total
102,017,348
102,017,348
2,715,802
2,715,802
477,646,009
567,621,644
(33,187,405)
(207,830,772)
(269,610)
236,358,222
(41,885,081)
(120,541,354)
(513,274)
404,681,935
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.
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.
50 bp increase
50 bp decrease
Profit before tax
1,181,791
2,023,410
(1,181,791)
(2,023,410)
31 December 2022
Variable-rate instruments
31 December 2021
Variable-rate instruments
Other information
29 Related parties
(a) Main shareholders
As at 31 December 2022 and 31 December 2021, 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
Management compensation
5,905,346
6,833,228
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 2022
was in amount of RON 4,569,588 (2021: 3,136,800).
2022
2021
Compensations granted to the members of the Board of Directors were as follows:
Members of Board of Directors
2,537,558
3,887,254
2022
2021
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration po-
licy approved by the General Meeting of Shareholders that took place 20 April 2022, the annual nu-
mber 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 2022 and 2021.
(c) Transactions with the Group companies
(i) Balance of receivables and payables from/ to Group companies:
Trade Receivables/Trade Payables
Receivables from
31 December
2022
31 December
2021
Payables to
31 December 2022
31 December 2021
197,031
474,458
1,784
62,709
-
1,199,088
848
7,828
1,767
-
23,389
222,615
-
-
104,400
-
1,396,967
484,053
247,788
167,109
Distributie Energie
Electrica Romania
S.A.
Electrica Serv S.A.
Electrica Furnizare
S.A.
Electrica Productie
Energie S.A.
Total
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
314
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
315
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
As at 31 December 2022 and 31 December 2021, receivables from electricity distribution subsidiaries include
mainly other services reinvoiced.
Loans granted/interest receivable:
(ii) Transactions with subsidiaries
Sales/Purchases
Loans granted to
31 December
2022
31 December
2021
Interest receivable
from
31 December
2022
31 December
2021
1,276,325,000
1,276,325,000
17,937,449
15,439,712
-
30,000,000
-
30,400
41,594,188
600,000
2,400,000
440,335
-
-
-
-
1,657,848
12,370
102,784
3,753
-
-
-
-
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Energie
Productie S.A.
Sunwind Energy
S.R.L.
New Trend Energy
S.R.L.
Green Energy
Consultancy &
Investments S.R.L.
Total
1,321,359,523
1,306,325,000
19,714,204
15,470,112
Cash-pooling system 31 December 2022:
Amount drawn
by participants
31 December
2022
Amount contributed
to by participants
31 December
2022
Net position
31 December
2022
Interest receivable/
(payable)
31 December
2022
311,393,113
163,250,006
3,002,890
-
477,646,009
-
-
-
(33,187,405)
(33,187,405)
311,393,113
1,859,586
163,250,006
1,018,277
3,002,890
(33,187,405)
444,458,604
17,849
(244,477)
2,651,235
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Energie
Verde 1 S.R.L.
Electrica Serv S.A.
Total
Cash-pooling system 31 December 2021:
Amount drawn
by participants
31 December
2021
Amount contributed
to by participants
31 December
2021
Net position
31 December
2021
Interest receivable/
(payable)
31 December
2021
311,620,794
245,000,000
11,000,850
-
567,621,644
-
-
-
(41,873,420)
(41,873,420)
311,620,794
602,305
245,000,000
540,414
11,000,850
(41,873,420)
525,748,224
24,345
(105,541)
1,061,523
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Energie
Verde 1 S.R.L.
Electrica Serv S.A.
Total
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Serv S.A.
Electrica Energie
Productie S.A.
Total
Sales
in 2022
Sales
in 2021
Purchases
in 2022
Purchases
in 2021
208,879
740,664
185,938
131,742
1,314,408
8,782
3,339
14,471
16,909
-
689,704
27,056
-
434,915
-
-
1,535,408
772,044
902,698
566,657
Reimbursements / Borrowings
Distributie Energie
Electrica Romania
S.A.
Electrica Furnizare
S.A.
Electrica Energie
Productie S.A.
Sunwind Energy
S.R.L.
New Trend Energy
S.R.L.
Green Energy
Consultancy &
Investments S.R.L.
Total
Borrowings granted
in 2022
Borrowings granted
in 2021
Reimbursements in
2022
Reimbursements
in 2021
-
246,325,000
-
-
100,000,000
90,000,000
130,000,000
60,000,000
47,540,173
600,000
2,400,000
440,335
-
-
-
-
5,945,985
-
-
-
-
-
-
-
150,980,508
336,325,000
135,945,985
60,000,000
Interest income for loans
Interest income
2022
Interest income
2021
Distributie Energie Electrica
Romania S.A.
Electrica Furnizare S.A.
Electrica Energie Productie S.A.
Sunwind Energy S.R.L.
New Trend Energy S.R.L.
Green Energy Consultancy &
Investments S.R.L.
Total
Dividends income
Electrica Furnizare S.A.
Distributie Energie Electrica
Romania S.A.
Total
47,972,160
1,406,254
1,711,863
12,370
102,784
3,753
51,209,184
41,127,404
30,400
-
-
-
-
41,157,804
Dividends income
2022
Dividends income
2021
-
-
-
233,293,563
96,250,081
329,543,644
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
316
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
317
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Cash pooling system – interest income/(expense)
Distributie Energie Electrica
Romania S.A.
Electrica Energie Verde 1 S.R.L.
Electrica Serv S.A.
Electrica Furnizare S.A.
Total
Interest income/(expense)
2022
Interest income/(expense)
2021
18,136,075
464,479
(2,553,799)
10,664,680
26,711,435
3,344,942
223,675
(808,125)
1,193,403
3,953,895
(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)
2022
2021
Balance (including VAT)
31 December 2022
31 December 2021
567,684
142,640
710,324
605,644
42,062
647,706
141,921
497
142,418
139,758
910
140,668
Sales
(without VAT)
2022
Balance, gross
(including VAT)
31 December 2022
98,725,847
3,118,411
101,844,258
-
-
-
Allowance
(including VAT)
Balance, net
(98,725,847)
(3,118,411)
(101,844,258)
Sales
(without VAT)
2021
Balance, gross
(including VAT)
31 December 2021
Allowance (including VAT)
Balance, net
-
-
-
518,938,151
3,118,411
522,056,562
(518,938,151)
(3,118,411)
(522,056,562)
-
-
-
-
-
-
30 Contingencies
(a) Contingent Assets
Litigation with National Agency of Fiscal Administration (“NAFA”)
In May 2017, after the revision of Electrica’s tax record, the tax authorities issued an enforce-
ment 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 enfor-
cement 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 enforce-
ment 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.
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. Moreover,
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 re-
cord. Against this decision, NAFA filed an appeal, registered to the High Court of Cassation and
Justice, with the Court term on 23 March 2022, which was finalized in favor of Electrica.
Following this final decision, the Bucharest District 1 Court reinstated another case for which,
on 22 December 2022, annulled the enforceable title for the amount of RON 39,248,818 and of all
subsequent enforcement acts issued in connection with the forced execution and also obliged NAFA
to pay the litigation costs in the amount of RON 19,326. Against this decision, NAFA filed an appeal
on 23 February 2023.
Thus, until 31 December 2022, the 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.
(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 bene-
fits due to low chances of favourable outcomes of those litigations or disputes. The Company does
not present information in the financial statements and did not set-up provisions for items for which
the management assessed as remote the possibility of outflow of economic benefits.
The Company discloses, if the case, information on the most significant items of litigations
or claims for 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 di-
fferent inconsistent sentences were issued by the Courts, or litigations which are in early stages and
no preliminary ruling was issued so far).
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 lia-
bilities 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 com-
pany 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 adequ-
ate reserves were established in the separate financial statements for all the significant fiscal obliga-
tions, however a risk that the tax authorities could take different positions still persists.
(c) Transfer prices
According to the fiscal legislation, the fiscal assessment for a transaction with affiliates is
based on the market 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 2022 and 31 December 2021 are as follows:
Purchase of property, plant and equipment, intangible
assets and other maintenance and repairs services
Purchase of investments
Total
31 December 2022
31 December 2021
-
289,635,733
289,635,733
22,568
60,484,337
60,506,905
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
318
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
319
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in RON, if not otherwise stated)
b) 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 2022 is RON 133,660,068 (31 December 2021: RON 161,394,730). The
maturity of the facility is on 31 December 2030. Also, the Company issued parenting guarantees for
Electrica Furnizare S.A. in total amount of RON 367,234,402.
c) Audit fees
The audit fees for the individual financial statements were in amount of 25 thousand RON,
and during the year 2022, non-audit services fees were in amount of 25 thousand RON (limited revi-
ew of the interim separate financial statements).
32 Subsequent events
Vulturu project
The project of company Green Energy Consultancy & Investments S.R.L, having as main ob-
ject of activity the production of energy from photovoltaic sources, was acquired 100% on 6 February
2023, until 31 December 2022 was acquired 75% (please see note 1). The fair value of the project is
the actual sale price of RON 2,636,214. Green Energy Consultancy & Investments S.R.L. develops the
photovoltaic project “Vulturu”, with a designed installed capacity of 12 MWp DC (peak power at the
panels level) and 9.75 MW AC (authorised power for delivery into the grid), located near Vulturu lo-
cality, Vrancea county. The project is in the “ready-to-build” phase.
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
.
.
.
I
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S
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C
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C
E
L
E
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
320
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
321
NOTES TO THE SEPARATE FINANCIAL STATEMENTSAS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in RON, if not otherwise stated)
Independent Auditor’s Report on
the 2022 Separate Financial Statements
322
323
Independent Auditor’s Report on the 2022 Separate Financial Statements
Independent Auditor’s Report on the 2022 Separate Financial Statements
Deloitte Audit S.R.L.
Clădirea The Mark Tower,
Calea Griviței nr. 82-98,
Sector 1, 010735
București, România
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
www.deloitte.ro
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Separate Financial Statements
Opinion
1. We have audited the separate financial statements of Societatea Energetica Electrica S.A. (“the Company”), with registered
office in Bucharest, District 1, Street Grigore Alexandrescu, No. 9, identified by unique tax registration code 13267221, which
comprise the separate statement of financial position as at December 31, 2022, and the separate statement of
comprehensive income, separate statement of changes in equity and separate statement of cash flows for the year then
ended, including a summary of significant accounting policies and notes to the separate financial statements.
2.
The separate financial statements as at December 31, 2022 are identified as follows:
• Net assets/ Equity
• Net profit for the financial year
RON 3,996,376,488
24,304,885
RON
3.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial
position of the Company as at December 31, 2022, and its separate financial performance and its separate cash flows for the
year then ended in accordance with Order 2844/2016, with subsequent amendments, for the approval of accounting
regulations conforming with International Financial Reporting Standards as adopted by EU.
Key audit matters
Going Concern
How our audit addressed the key audit matter
As presented in Note 6 the separate financial statements have
been prepared on the going concern basis. The key judgement
leading to this conclusion are set out in that note.
We have assessed managements valuation of the going
concern assumption by performing
following
procedures:
the
In particular the subsidiaries of the Company operate in the
electricity distribution and supply industry which is currently
affected by the compensation and ceiling laws on sales to end
customers. The Romanian authorities regulatory position is under
review and there may be further laws enacted which could
adversely impact the subsidiaries of the Company’s operating cash
flows. In the forthcoming twelve months the subsidiaries will need
to obtain additional financing and given the position of the Group
and its significance to the Romanian economy management
expect that all necessary financing will be made available.
The ability of the Company to continue as a going concern is
dependent on the ability of its subsidiaries to continue as a going
concern. The ability of the subsidiaries of the Company
to continue as a going concern is dependent on successful
completion of the new financing and on stabilizing of the
regulatory regime on energy prices as described in note 6, which
provides an appropriate margin to support servicing of the
subsidiaries of the Company and Company’s short and long term
financings.
In view of the significant judgements the application and
disclosures of the basis of the going concern assumption are
considered a Key Audit Matter.
• We have obtained the cash flow forecasts and
critically challenged the management and the Board
of Directors and Audit Committee on the
assumptions used;
• We considered whether at the date of this report
additional information exist from the Romanian
authorities with respect to the capping mechanism;
• We have assessed the Company’s subsidiaries and
Company’s position on the existing debt facilities,
covenant compliance and newly negotiated debt
facilities, during 2023 until the date of this report;
• We considered the Company’s subsidiaries and
Company’s requirements to secure additional
financing in light of its position in the Romanian
market;
• We assessed the adequacy of the disclosure of the
basis of going concern assumption, including the key
judgements adopted;
Basis for Opinion
Other information - Administrator’s Report
4. We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the
European Parliament and the Council (forth named “the Regulation”) and Law 162/2017 (“the Law”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section
of our report. We are independent of the Company in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for
the audit of the financial statements in Romania including the Regulation and the Law and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
5. We draw attention to Note 2 to the separate financial statements which states that Company is the parent company of
Electrica Group and that consolidated financial statements of Electrica Group prepared in accordance with International
Financial Reporting Standards as adopted by EU have not yet been published. Notes 2 to the separate financial statements
explain when consolidated financial statements will be published. Our opinion is not modified in respect of this matter
Key Audit Matters
6.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate
financial statements of the current period. These matters were addressed in the context of our audit of the separate financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
.
.
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324
7.
The administrator is responsible for preparation and presentation of the other information. The other information comprises
the Administrator’s report and the Remuneration Report, but does not include the consolidated and separate financial
statements and our auditor’s report thereon, nor the non-financial information declaration being presented in a separate
report.
.
Our opinion on the separate financial statements does not cover the other information and, unless otherwise explicitly
mentioned in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the separate financial statements for the year ended December 31, 2022, our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
separate financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
With respect to the Administrator’s report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments, for the
approval of accounting regulations conforming with International Financial Reporting Standards as adopted by EU, article no.
20.
With respect to the Remuneration report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Law 24/2017, articles. no. 106 – 107.
On the sole basis of the procedures performed within the audit of the separate financial statements, in our opinion:
a)
the information included in the administrators’ report for the financial year for which the separate financial statements
have been prepared is consistent, in all material respects, with these separate financial statements;
.
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325
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
2
Independent Auditor’s Report on the 2022 Separate Financial Statements
Independent Auditor’s Report on the 2022 Separate Financial Statements
b)
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of Ministry of
Public Finance Order no. 2844/2016, with subsequent amendments, for the approval of accounting regulations
conforming with International Financial Reporting Standards as adopted by EU, article no. 20;
c)
the Remuneration report has been prepared, in all material respects, in accordance with the provisions of Law
24/2017, articles. no. 106 – 107.
Moreover, based on our knowledge and understanding concerning the Company and its environment gained during the audit
on the separate financial statements prepared as at December 31, 2022, we are required to report if we have identified a
material misstatement of this Administrator’s report and Remuneration Report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Separate Financial Statements
13. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
15. From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
8. Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with
Report on Other Legal and Regulatory Requirements
Order 2844/2016, with subsequent amendments, for the approval of accounting regulations conforming with International
Financial Reporting Standards as adopted by EU and for such internal control as management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
16. We have been appointed by the General Assembly of Shareholders on April 28, 2021 to audit the separate financial
statements of Societatea Energetica Electrica S.A. for the financial year ended December 31, 2022. The uninterrupted total
duration of our commitment is 5 years, covering the financial years ended December 31, 2018 and December 31, 2022.
9.
In preparing the separate financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
We confirm that:
10. Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Separate Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these separate financial statements.
12. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
•
•
•
•
Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the separate financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as
a going concern.
Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures,
and whether the separate financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that we issued
the same date we issued and this report. Also, in conducting our audit, we have retained our independence from the
audited entity.
• No non-audit services referred to in Article 5 (1) of EU Regulation No. 537 / 2014 were provided.
The engagement statutory auditor on the audit resulting in this independent auditor’s report is Razvan Ungureanu.
Razvan Ungureanu, Statutory Auditor
For signature, please refer to the original
signed Romanian version.
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under AF 4866
On behalf of:
DELOITTE AUDIT SRL
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under FA 25
The Mark Building, 84-98 and 100-102 Calea Griviței, 9th Floor, District 1
Bucharest, Romania
March 7, 2023
3
4
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326
2022 Consolidated Financial
Statements (OMFP 2844/2016)
328
329
2022 Consolidated Financial Statements (OMFP 2844/2016)
2022 Consolidated Financial Statements (OMFP 2844/2016)
2022 Consolidated
Financial Statements
(OMFP 2844/2016)
SOCIETATEA ENERGETICA ELECTRICA S.A.
Consolidated Financial Statements
as at and for the year ended
31 December 2022
prepared in accordance with
OMFP no. 2844/2016
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330
Content
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (OMFP 2844/2016) ....332
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (OMFP 2844/2016) ................334
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(OMFP 2844/2016)...............................................................................................................................................335
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (OMFP 2844/2016) ......336
CONSOLIDATED STATEMENT OF CASH FLOWS (OMFP 2844/2016) ........................338
CONSOLIDATED STATEMENT OF CASH FLOWS (OMFP 2844/2016) ........................339
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016) .... 340
Basis of preparation .....................................................................................................................................340
1 Reporting entity and general information .....................................................................................340
2 Basis of accounting ................................................................................................................................346
3 Functional and presentation currency ...........................................................................................346
4 Use of judgements and estimates ....................................................................................................346
Accounting policies ......................................................................................................................................348
5 Basis of measurement ...........................................................................................................................348
6 Significant accounting policies .........................................................................................................348
7 Disclosure for the additional set of the consolidated financial statements ......................362
Performance for the year ..........................................................................................................................362
8 Operating segments ...............................................................................................................................362
9 Revenue ......................................................................................................................................................365
10 Electricity and natural gas purchased ...........................................................................................365
11 Other income and expenses ................................................................................................................366
12 Net finance income/(cost) ..................................................................................................................366
13 Earnings/(loss) per share ...................................................................................................................366
Employee benefits ........................................................................................................................................367
14 Short-term employee benefits ..........................................................................................................367
15 Post-employment and other long-term employee benefits .................................................367
16 Employee benefit expenses ..............................................................................................................370
Income taxes ....................................................................................................................................................370
17 Income taxes ............................................................................................................................................370
Assets ...................................................................................................................................................................372
18 Trade receivables ...................................................................................................................................372
19 Other receivables ..................................................................................................................................374
20 Cash and cash equivalents ..............................................................................................................374
21 Inventories .................................................................................................................................................374
22 Property, plant and equipment .......................................................................................................375
23 Intangible assets ...................................................................................................................................378
24 Investments in associates ...................................................................................................................379
Equity and liabilities .....................................................................................................................................381
25 Capital and reserves .............................................................................................................................381
26 Trade payables ......................................................................................................................................382
27 Other payables ......................................................................................................................................382
28 Provisions ................................................................................................................................................383
29 Bank borrowings and overdrafts .....................................................................................................383
Financial instruments ..................................................................................................................................387
30 Financial instruments - fair values and risk management .....................................................387
Other information ..........................................................................................................................................391
31 Acquisition of subsidiaries .................................................................................................................391
32 Related parties .......................................................................................................................................392
33 Contingencies ........................................................................................................................................394
34 Commitments .........................................................................................................................................395
35 Subsequent events ...............................................................................................................................396
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (OMFP 2844/2016)
AS AT 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (OMFP 2844/2016)
AS AT 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
31 December 2022
31 December
2021
Note
31 December 2022
31 December
2021
ASSETS
Non-current assets
Intangible assets
related to concession
arrangements
Intangible assets from
the capitalization of
own technological
consumption
Other intangible assets
Goodwill
Property, plant and
equipment
Investments in associates
Other investments
Deferred tax assets
Other non-current assets
Right of use assets
Total non-current assets
Current assets
Trade receivables
Subsidies receivable
Other receivables
Cash and cash equivalents
Inventories
Prepayments
Current income tax
receivable
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserve
Pre-paid capital
contributions in kind from
shareholders
Revaluation reserve
Legal reserves
Retained earnings
Total equity attributable
to the owners of the
Company
Non-controlling interests
Total equity
(continued on next page)
23
23
23
31
22
24
17
18
11
19
20
21
25
25
25
25
25
25
31
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332
5,675,866
5,514,557
951,557
12,854
12,040
499,390
18,824
7,000
30,180
2,393
52,152
7,262,256
2,466,002
1,280,788
127,253
334,887
113,972
13,874
24,000
280
4,361,056
-
8,983
-
505,419
25,810
-
83,531
1,661
20,945
6,160,906
1,344,619
-
48,600
221,830
72,958
5,034
23,777
5,412
1,722,230
Liabilities
Non-current liabilities
Lease liability – long term
Deferred tax liabilities
Employee benefits
Other payables
Long-term bank
borrowings
Total non-current
liabilities
Current liabilities
Current portion of long-
term bank borrowings
Lease liability – short term
Bank overdrafts
Trade payables
Other payables
Deferred revenue
Employee benefits
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
17
15
27
29
29
29
26
27
14,15
28
34,462
212,555
117,269
72,432
647,193
12,102
161,926
149,177
32,732
118,756
1,083,911
474,693
113,520
19,211
2,571,037
1,407,097
867,536
24,750
114,174
53,701
1,129
5,172,155
6,256,066
Total equity and
liabilities
The accompanying notes are an integral part of these consolidated financial statements.
11,623,312
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
11,623,312
7,883,136
07 March 2023
3,464,436
103,049
(75,372)
3,464,436
103,049
(75,372)
7
92,117
429,583
1,353,942
5,367,762
(516)
5,367,246
7
102,829
408,405
950,228
4,953,582
-
4,953,582
509,733
9,442
627,402
891,335
271,263
9,662
101,102
34,922
-
2,454,861
2,929,554
7,883,136
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333
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, except per share data)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2022
2021
Note
2022
2021
9
11
10
23
16
22,23
18,19
11
12
12
25
17
Revenue
Capitalised costs of intangible
non-current assets
Other income
Electricity and natural gas
purchased
Construction costs related to
concession agreements
Employee benefits
Repairs, maintenance and
materials
Depreciation and amortization
Impairment for trade and other
receivables, net
Other operating expenses
Operating profit/(loss)
Finance income
Finance costs
Net finance cost
Share of results of associates
Profit/(Loss) before tax
Income tax benefit/(expense)
Profit/(Loss) for the year
Profit/(Loss) for the year
attributable to:
–
Company
–
interests
owners of the
non-controlling
Profit/(Loss) for the year
Earnings/(Loss) per share
10,009,896
7,178,864
989,291
2,840,963
-
195,771
(10,506,809)
(5,694,724)
(593,490)
(823,422)
(88,229)
(533,987)
(112,311)
(352,971)
828,931
9,718
(174,713)
(164,995)
(485,813)
(802,676)
(102,356)
(480,830)
(70,616)
(343,147)
(605,527)
2,647
(29,528)
(26,881)
(13)
(3)
663,923
(105,078)
558,845
(632,411)
79,529
(552,882)
558,954
(552,882)
(109)
-
558,845
(552,882)
Profit/(Loss) for the year
558,845
(552,882)
Other comprehensive
income
Items that will not be
reclassified to profit or
loss
Re-measurements of the
defined benefit liability
Tax related to re-
measurements of the
defined benefit liability
Other comprehensive
income/(loss), net of tax
Total comprehensive
income/(loss)
Total comprehensive
income/(loss)
attributable to:
–
Company
owners of the
–
controlling interests
non-
15
17
9,503
(5,891)
(1,479)
(45)
8,024
(5,936)
566,869
(558,818)
566,978
(558,818)
(109)
-
Total comprehensive
income/(loss)
The accompanying notes are an integral part of these consolidated financial statements.
566,869
(558,818)
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
Basic and diluted earnings/(loss)
per share (RON)
The accompanying notes are an integral part of these consolidated financial statements.
1.65
13
(1.63)
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
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337
CONSOLIDATED STATEMENT OF CASH FLOWS (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF CASH FLOWS (OMFP 2844/2016)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2022
2021
Note
2022
2021
Cash flows from operating activities
Profit/(Loss) for the year
558,845
(552,882)
Adjustments for:
Depreciation
Amortisation
Capitalised costs of intangible non-
current assets
Reversal of impairment of property, plant
and equipment and intangible assets, net
(Gain)/Loss on disposal of property, plant
and equipment and intangible assets
Impairment of trade and other
receivables, net
Impairment of assets held for sale
Change in provisions, net
Net finance cost
Changes due to employee benefits
Share of loss of associates
Income tax expense/(benefit)
22
23
23
22,23
22,23
18,19
28
12
14
24
17
Changes in:
Trade receivables
Subsidies receivable
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Provisions and employee benefits
Deferred revenue
19,915
514,203
(989,291)
(5)
(393)
112,311
-
18,779
164,995
(4,358)
13
105,078
500,092
(1,286,734)
(1,280,788)
(138,335)
(8,840)
(41,014)
494,611
722,407
(6,454)
15,088
21,118
459,712
-
(3,942)
2,651
70,616
646
15,684
26,881
5,054
3
(79,529)
(33,988)
(391,401)
-
(22,904)
(2,217)
(2,892)
274,825
32,504
3,166
4,033
Cash used in operating activities
(1,029,967)
(138,874)
Interest paid
Income tax paid
(149,397)
(1,232)
(24,110)
(31,366)
Cash flows from investing
activities
Payments for purchases
of property, plant and
equipment
Payments for network
construction related to
concession agreements
Payments for purchase of
other intangible assets
Proceeds from sale of
property, plant and
equipment
Interest received
Acquisition of investments
in associates
Payments for acquisition
of subsidiaries, net of
cash acquired
Restricted cash
Net cash flow used in
investing activities
Cash flows from financing
activities
Proceeds from long-term
bank borrowings
Proceeds from overdrafts
Repayment of long-term
bank loans
Payment of lease
liabilities
Dividends paid
Net cash generated
from(used in)/ financing
activities
23
24
31
20
29
29
25
(8,295)
(10,490)
(537,782)
(483,808)
(7,829)
(6,306)
614
2,847
(3)
(4,452)
-
(554,900)
217,561
1,900,371
(92,925)
(24,163)
(152,291)
1,469
1,765
(25,813)
-
320,000
(203,183)
234,690
-
(385,851)
(15,226)
(247,615)
1,848,553
(414,002)
113,057
Net increase/(decrease)
in cash and cash
equivalents
Cash and cash equivalents
at 1 January
Reclassification of
overdrafts previously
presented as cash and
cash equivalents
Cash and cash
equivalents at 31
December
The accompanying notes are an integral part of these consolidated financial statements.
(405,572)
334,887
627,402
20
20
20
(811,535)
405,963
-
(405,572)
Net cash flow used in operating activities
(1,180,596)
(194,350)
(Continued on next page)
Chief Executive Officer
Alexandru - Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
The non-cash transactions are disclosed in Note 20.
.
.
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Basis of preparation
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 2022.
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 registra-
tion number J40/7425/2000.
As at 31 December 2022 and 31 December 2021, 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 2022 and 31 December 2021, the Company’s subsidiaries are the following:
Subsidiary
Activity
Sole registration
code
Head Office
% shareholding as at
31 December 2022
% shareholding as at
31 December 2021
Distributie Energie
Electrica Romania
S.A. (“DEER”)
Electricity dis-
tribution in geo-
graphical areas
Transilvania Nord,
Transilvania Sud
and Muntenia Nord
Electrica Furnizare
S.A.
Electricity and nat-
ural gas supply
Electrica Serv S.A.
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Electrica Productie
Energie S.A.
Electricity gener-
ation
Electrica Energie
Verde 1 SRL*
(“EEV1” – formerly
Long Bridge
Milenium SRL)
Electricity gener-
ation
Sunwind Energy
S.R.L.
Electricity gener-
ation
New Trend Energy
S.R.L.
Electricity gener-
ation
14476722
Cluj-Napoca
99.99999929%
99.99999929%
28909028
Bucuresti
99.9998444099934% 99.9998415011992%
17329505
Bucuresti
99.99998095%
99.99998095%
44854129
Bucuresti
99.9920%
99.9920%
19157481
Bucuresti
100%*
100%*
42910478
Constanta
42921590
Constanta
60%
60%
-
-
Green Energy
Consultancy &
Investments S.R.L.
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary Electrica
Productie Energie S.A.
Electricity gener-
ation
29172101
Prahova
75%
-
As at 31 December 2022 and 31 December 2021, the Company’s associates are the following:
Associate
Activity
Sole registration
code
Head Office
% shareholding
as at 31
December 2022
% shareholding
as at 31
December 2021
Crucea Power
Park SRL
Sunwind Energy
SRL
New Trend
Energy SRL
Foton Power
Energy S.R.L.
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
25242042
Constanta
30%
42910478
Constanta
42921590
Constanta
-
-
30%
30%
30%
.
.
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Changes in Group structure during 2022
Acquisition of shares in subsidies
On 21 March 2022, the Group acquired an additional 30% of the shares and voting interests
in Sunwind Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gran-
ting control of Sunwind Energy S.R.L.. (for further details please see Note 31).
On 27 May 2022, the Group acquired an additional 30% of the shares and voting interests in
New Trend Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gran-
ting control of New Trend Energy S.R.L.. (for further details please see Note 31).
On 6 September 2022, Electrica acquired 75% of Green Energy Consultancy & Investments
S.R.L. shares granting control of the entity (for further details please see Note 31).
Group’s main activities
The main activities of the Group include operation and construction of electricity distributi-
on 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 Bistrita Nasaud 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 re-
sulted 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 ope-
rates 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. 3.5 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. In 2022 Electrica Furnizare S.A. was supplier of
last resort (SoLR) nominated for electricity in February, March, July and December. For the natural
gas supply activity, EFSA was SoLR nominated in September 2022. At the same time, Electrica
Furnizare S.A. ensures the supply of electricity for household customers supplied under universal
service regime.
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 five shares sales and purchase agreements in five project companies having
as main activity the production of energy from renewable sources the Group entered on the electri-
city 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 capa-
city limited MW to 6.8). In 2022 the operation of the plant was continuous, with no significant events
leading to production shutdowns, producing in total MWh 10,466 (2021: MWh 9,767). 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
.
.
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43652555
Constanta
30%
30%
The activity in the energy sector is regulated by the Romanian Energy Regulatory Authority.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Some of the main responsibilities of ANRE are to approve prices and tariffs and to issue sub-
stantiation methodologies used to set regulated prices and tariffs.
programme; revenues generated from other operations made by the distribution operator and the
quantity of electricity recovered from recalculations.
Electricity distribution
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 distribu-
tion 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 (related to distribution network); 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 13 May 2020, the regulated rate of return („RRR”) of BAR is 6.39% to which is
added:
– 1% incentive for new investments in RED, approved by ANRE;
– 2% 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 in-
vestments are performed and put into function by operators after 1 February 2021, appro-
ved by ANRE;
– 1% incentive for investments in projects of common interest (PIC), approved by ANRE.
Regarding the costs of electricity purchased for own technological consumption (“NL”):
– 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 an important change in distribution service costs;
– at the justified request of the Distribution Operator, the regulated revenue of year t + 1
may include a cost adjustment of regulated network losses (“NL”) 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.
In 2022, according to the Government’s emergency ordinance (GEO) no. 119/2022, the addi-
tional costs for purchased electricity (determined as the difference between the realized costs and
the costs included in the approved distribution tariffs), made between 1 January 2022 and 31 August
2023, in order to cover the own technological consumption, compared to the costs included in the
tariffs regulated (and not only borrowings), are capitalized quarterly and remunerated with 50% of
the regulated rate of return (RRR) approved by ANRE, applicable during the amortization period of
the respective costs and are recognized as a distinctive component in the regulated tariffs, called the
component related to additional costs with NL. Also, ANRE elaborated the Methodological norms
regarding the recognition in the tariffs of the additional costs with the acquisition of electricity for
covering the network losses compared to the costs included in the regulated tariffs, the purpose of
these norms is to establish the substantiation of additional costs with the purchase of electricity to
cover the NL, as well as the conditions for their recognition in the regulated income, based on which
the distribution tariffs are established.
According to the Government’s Emergency Ordinance (“GEO”) no. 153/2022 during the pe-
riod 1 January 2023 – 31 March 2025 is established the centralized electricity purchasing mechanism,
OPCOM being designated the sole purchaser. The distribution operators (“OD”) will buy from OPCOM
through an annual/monthly mechanism at least 75% of the quantity forecasted and validated by
National Authority for Energy Regulation (“ANRE”) at the price of 450 RON/MWh, and the produ-
cers will sell to OPCOM through annual/monthly mechanism 80% of the quantity forecasted and
validated by ANRE and Transelectrica at the price of 450 RON/MWh.
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 compared to the forecast; the annual change in controllable opera-
ting and maintenance costs, realized and accepted against the forecast; annual change in uncon-
trollable operating and maintenance costs compared to the forecast; changes in revenues from reac-
tive energy compared to the forecast; failure to meet/exceeding the approved investments
The regulator establishes through the regulated income and tariffs for the following year
taking into account the justified corrections presented above, which are added algebraically to the
income for the following year. The group does not recognize assets and liabilities resulting from re-
gulation in relation to these deficits or surpluses, as the differences are recovered or returned throu-
gh the annual tariff changes, except the capitalised costs with own technological consumption. The
difference between the purchase price of electricity for own technological consumption versus the
ex-ante purchase price recognized by ANRE in the related regulated tariffs 2022 related to the pur-
chase of electricity and natural gas, made between 1 January 2022 and 31 August 2023, in order to
cover the own technological consumption (NL) for economic operators for energy transport and
distribution services are capitalised. These are recognized as a distinctive component in the regula-
ted tariffs, named component related to additional network losses costs.
Electricity supply
The regulatory framework has undergone significant changes over the past decade, inclu-
ding the liberalization of electricity and natural gas markets, the separation of supply and distributi-
on activities, the implementation of the support scheme for renewable energy, the support of elec-
tricity prosumers and the capping of prices to final customers.
In 2022 the electricity market was completely liberalized for all categories of customers and
the price was established by suppliers through free market mechanisms, both for universal service
offers and for the offers related to the competitive market.
Regulated market
Starting with 1 November 2021, in the context of the increase in prices for the electricity and
natural gas markets at international and national level, the energy crisis, as well as the effects caused
by these increases among the population, in Romania, a series of support measures for electricity
and natural gas customers have been applied, by establishing compensation and capping schemes
between 1 November 2021 and 31 March 2025.
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 following support mechanisms have been put in place:
– compensation of household consumers for part of the costs incurred by the electricity
invoices (1 November 2021 until 31 March 2022);
– capping the selling price for household and non-household consumers (1 November 2021
– 31 March 2025);
– exemption (1 November 2021 until 31 January 2022) of several types of non-household
consumers from payment of regulated tariffs and other taxes/contributions.
The amounts compensated will be received from the National Agency for Payments and
Social Inspection for household consumers and a from the Ministry of Energy for non-household
consumers. (for further details please refer to Note 18)
Over 2022, several changes have been brought to the legislation, having a significant impact
on the supply of electricity, as follows:
– The withdrawal of the capped price for electricity for household customers with con-
sumption over 255 KWh/month and the limitation of the capped price for non-domestic
customers (limitation of both the quantities and categories of non-domestic customers);
– The limitation of the average purchase price considered for determining the amounts to
be recovered from the state budget to 1,300 RON/MWh; except of the purchase intended
for supply as a last resort, where this limitation does not apply;
– The obligation to store natural gas of a minimum 30% of the natural gas required for the
consumption of final customers from their own portfolio;
– The obligation of natural gas producers to sell at the price of 150 RON/MWh the necessary
.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
quantities to the suppliers of domestic customers/heat energy producers.
– On 1 January 2023 - 31 March 2025, the centralized electricity purchase mechanism (MA-
technological consumption, also with no significant difficulties in receivables collection and con-
sequently payment of debts being noted.
CEE) is established.
– The mechanism provides - OPCOM, as sole acquirer, buys electricity from producers (elec-
tricity producers with an installed power equal to or greater than 10 MW) and sells the
purchased electricity to electricity suppliers that have contracts with final customers, the
transmission system operator electricity and distribution system operators electricity to
cover their own technological consumption; the price paid by OPCOM to electricity pro-
ducers, for the quantities of electricity sold by them is 450 RON/MWh and the sale price
of OPCOM to the economic operators is also 450 RON/MWh (OPCOM has the right to
charge market participants tariffs/commissions at the level of costs recorded by organi-
zing the centralized electricity purchase mechanism); In order to carry out the transac-
tions, OPCOM shall organize an annual procurement procedure as well as an additional
procurement procedure each month for the quantities of electricity to be delivered in the
following month; annual and monthly electricity quantities are firm obligations of electri-
city producers and economic operators and are evenly distributed across all settlement in-
tervals each month (contracts are concluded by signing, within maximum 3 working days).
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 certifica-
tes is invoiced to final consumers separately from the tariffs for electricity.
Electricity generation
Green certificates
In accordance to Law no. 220/2008, electricity producers are entitled by to receive a certain
number of green certificates (“GC”) for each MWh of electricity produced from renewable sources
depending on the renewable energy type used (i.e. hydro, wind, solar, geothermal, biomass, bio-
liquids, biogas) and injected into the network, for a specific period of time, depending also on the
degree of novelty of the group/power plant.
Starting from February 2013, the Stanesti photovoltaic park has the right to receive (the
month from which it started injecting electricity into the network), for a period of 15 (fifteen) years,
6 (six) green certificates for each MWh of electricity produced and delivered to the grid, out of
which, for the period 1 July 2013 – 31 December 2020, according to Law 23/2014 and Law 184/2018,
2 (two) green certificates were postponed from trading. Those two GC postponed from trading are
to be recovered in equal monthly tranches starting from 1 January 2021 until 31 December 2030.
The green certificates issued by Transelectrica for the production made by the Stanesti pho-
tovoltaic park, during the validity period of the accreditation decision issued by ANRE, can be tra-
ded, according to GEO 24/2017, until 31 March 2032, respectively including the period after the ex-
piration of the validity period of the accreditation decision (31 January 2028 in the case of the
Stanesti photovoltaic park).
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 en-
vironment, led to a decrease in financial performance for 2021, but during 2022 the financial perfor-
mance has significantly improved, due to electricity acquisition security measures for the supply
segment and for distribution segment has benefit by capitalisation of additional costs with own
Due to the recent changes in the global energy market, including EU, each EU member state
had to amend legal framework for the energy sector in order to protect the civil society interests on
the one hand and, on the other hand to ensure a proper equilibrium and functionality on the local
energy market by supporting also the utilities energy suppliers.
As a result, for the distribution segment, Romanian Regulatory Authority for Energy – ANRE
(https://www.anre.ro/) has to adopt similar measures through its Order 129/12.10.2022 approving the
Methodological Norms regarding the recognition in the tariffs of the additional costs with the acqu-
isition of electricity for covering the network losses compared to the costs included in the regulated
tariffs, carried out between 1 January 2022 – 31 August 2023.
This change in energy sector has generated a new reporting requirement for an accounting
treatment in place to cover own technological consumption and it was updated in the OMFP
2844/2016 i.e. it now allows the capitalization of such additional costs related to own technological
consumption („CPT”) as intangible asset which has to be depreciated linearly over next 5 years
(please see note 6 and 23).
According to ANRE regulations, the capitalised costs of intangible non-current assets are
recorded in the accounting records and therefore on the annual financial statements according to
OMFP 2844/2016 with the instructions developed by the Ministry of Finance. ANRE will determine
the recognized annual amounts of the capitalized costs based on the quantities and prices recogni-
zed for NL, and by 15 March of the year immediately following the year of capitalization of the addi-
tional costs, ANRE will transmit to the distribution operators the recognized annual amounts of the
capitalized costs for the previous year. The computation of the capitalized amounts is carried out in
compliance with the legislation specific to the entities that are the subject of GEO 119/2022, with
subsequent additions and changes.
The changes brought by OUG 119/2022 are changes the recuperation of the NL by splitting
it in current operating expenses (“OPEX”) and capitalised costs (“CAPEX”), there is a portion of unit
costs recuperated at cost at 450 RON/MWh (ex-ante tariffs) and for the difference above this level
of 450 RON/MWh up to the effective average price, there is a linear depreciation over 5 years stipu-
lated with return at 50% of Regulated Rate of Return (RRR).
For the supply segment, in 2022 the effect of retail prices for electricity was covered as
grants received from the state aithorities, as a result of the application of the mechanism of capping
the prices for electricity and natural gas, following the enacting of Ordinances 118/2021 and 119/2022,
the electricity prices for certain categories of households and industrial consumers has been capped
to a certain level. The difference between the capped level and the average acquisition prices in the
period to which a margin has been allowed, is recoverable from the state authorities.
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 ge-
nerating 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. The Group continues to closely monitor the macroecono-
mic outlook and as additional information will be available, their effects on the activity of Group
companies and over the financial results will be analyzed.
Geopolitical tensions
In February 2022 global geopolitical tensions significantly escalated following military inter-
ventions in Ukraine by the Russian Federation. As a result of these escalations, economic uncertain-
ties 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 these consolidated financial statements, mana-
gement is unable to reliably estimate the effects on the Groups financial outlook and cannot exclude
adverse consequence on the business, operations, and financial position. 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 judgements used in these financial statements remain
appropriate.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
2 Basis of accounting
These annual consolidated financial statements have been prepared in accordance with
OMFP no. 2844/2016. The consolidated financial statements were authorized for issue by the Board
of Directors on 07 March 2023 and will be submitted for shareholders’ approval in the meeting sche-
duled on 28 April 2023.
These consolidated financial statements are not in compliance with IFRS-EU.
This is the first set of the Group’s annual financial statements in which is included the additi-
onal costs with the purchase of electricity made between 1 January 2022 and 31 August 2023, in
order to cover the own technological consumption (NL) for economic operators for energy transport
and distribution services are capitalized quarterly, the first asset being recorded on 30 September
2022. The Order of Ministry of Public Finances (OMFP) no. 3900/2022 was issued and brings additi-
onal accounting specifications to the accounting regulations in force to OMFP no. 2844/2016, which
provided the financial-accounting treatment applied to the not recovered through the tariff additio-
nal costs related to the own technological consumption of the distribution operators (OD).
Except the above new current accounting treatment as issued by Ministry of Finance, the
Group has consistently applied the accounting policies to all periods presented in these consolidated
financial statements. Details of the Group’s accounting policies are included in Note 6.
3 Functional and presentation currency
These consolidated financial statements are presented in Romanian Lei (RON), which is the
functional currency of all Group companies. All amounts have been rounded to the nearest thousand,
unless otherwise indicated.
4 Use of judgements and estimates
In preparing these consolidated financial statements, management has made judgements,
estimates and assumptions that affect the application of the Group’s accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and 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 sig-
nificant 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. 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 speci-
fied 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 distri-
bution 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 dis-
tribution 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 in-
frastructure, to whom it must provide them, and at what price; and
(b) the grantor controls - through ownership, beneficial entitlement or otherwise - any signi-
ficant 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 dis-
tribution. According to the concession contracts, the operators use the assets representing the dis-
tribution network owned by them located in the above-mentioned territory for electricity distributi-
on. 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 ne-
tworks, 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 develo-
pment 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 recog-
nition of revenue based on the separation of construction or upgrade services from operation
services.
The concessionaires act as service suppliers (they build, modernize and maintain the distri-
bution network). 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 re-
sulting 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:
y 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;
y Notes 18 and 30 – 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;
y Notes 28 and 33 – recognition and measurement of provisions and contingencies;
y 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:
y Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities, which
the Group can access;
y Level 2: inputs other than quoted prices included in Level 1 that are observable for the as-
set or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
y Level 3: inputs for the asset or liability that are not based on observable market data (un-
observable 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 enti-
rety in the same level of the fair value hierarchy as the lowest level input that is significant to the
entire measurement.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
The Group recognises transfers between levels of the fair value hierarchy at the end of the
reporting period during which the change has occurred.
available to cover any financing requirements arising from market uncertainty and Group will be able
to meet its obligations as they fall due.
Further information about the assumptions made in measuring fair values is included in the
following notes:
y Note 30 – Financial instruments;
y Note 22 – Property, plant and equipment.
Accounting policies
5 Basis of measurement
Based upon the above projections and other information, given the measures already imple-
mented 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 state-
ments, 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 accoun-
ting in preparing the consolidated financial statements.
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.
(b) Basis of consolidation
(i) Subsidiaries
6 Significant accounting policies
The Group has consistently applied the following accounting policies to all periods presen-
ted in these consolidated financial statements, except for the accounting treatment of capitalization
of additional costs with the purchase of electricity for own technological consumption (NL) for the
distribution subsidiary, as stipulated by OMFP no. 3900/2022 which brings additional accounting
specifications to the accounting regulations in force, OMFP no. 2844/2016.
OMFP no. 3900/2022 is applicable for NL costs that are not recuperated in tariffs, realized
between 01 January 2022 and 31 August 2023, therefore there is no need to have comparative infor-
mation and the Group presents the impact of this amendment in the consolidated financial state-
ments for the year ended 31 December 2022.
Except the above, the new amendments to existing standards that are effective starting with
1 January 2022 do not have a significant impact over the Group’s consolidated financial
statements.
(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:
y A continuation of the support scheme until 31 March 2025 according to the applicable
legislation but with a more stable flow of repayments of the reimbursement requests for
subsidies as compared with last year, as the mechanism has been operationally improved;
y The utilization of confirmed debt facilities up to a limit of RON 4,948,373 thousand, in-
cluding RON thousand 2,891,660 thousand overdraft limits (out of which RON 2,571,037
thousand used until 31.12.2022 - please see Note 29) and RON 2,056,713 thousand long
term loans limit (out of which RON 760,713 thousand long term loans used until 31.12.2022
- please see Note 29);
y The utilization of not yet confirmed facilities amounting to RON 283,000 thousand and
limits for factoring without recourse for the requests for reimbursement for the subsidies
under the support scheme amounting to RON 350,000 thousand which will be drawn
during the forecast period;
y Also, the Group obtained the approval of the GSM to perform one or more bond issuance
within a ceiling of up to 900,000 thousand RON in the period 2022-2023, mainly for the
development of green energy generation projects. Depending on market context, a first
issuance of up to RON 650,000 thousand in the second part of 2023 is envisaged, and
until its use in the operationalization of green energy production projects, the respective
amounts attracted will be able to be used as a liquidity buffer at the Group level.
At the date of issuance of these consolidated financial statements the regulatory position
may be further amended and there may be further laws enacted which could adversely impact the
Groups operating cash flows during the forecast period. Given the current market uncertainties, the
Group is closely monitoring the market context and is continuously analysing the opportunities for
optimisation of debt and increase of bank overdrafts and long-term loans. In light of the importance
of the Group as the supplier and distributed of electricity on the Romanian market, having 40.7 %
(according to the latest ANRE report 2021 for the distribution segment) as market share on the elec-
tricity distribution and 17.72 % (according to the latest ANRE report October 2022 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
.
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Subsidiaries are entities controlled by the Group. The Group controls an entity when it is ex-
posed 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 avai-
lable-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 ac-
counted for as equity transactions. Adjustments to non-controlling interests are based on a propor-
tionate amount of the net assets of the subsidiary.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with equity-accounted investees are eliminated
against the 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) Business combinations
.
Acquisitions of businesses are accounted for using the acquisition method. The considerati-
on transferred in a business combination is measured at fair value, which is calculated as the sum of
the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to
the former owners of the acquiree and the equity interest issued by the Group in exchange for con-
trol of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
(d) Revenue
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 servi-
ces 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
.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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 re-
cent 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 ear-
ned 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 res-
ponsibility 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 reve-
nue 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 ne-
twork. 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.
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 ac-
cordance 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 accoun-
ting policy on recognising revenue on construction contracts, as follows:
y 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
.
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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.
y 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.
y 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.
(e) Other income
Revenues from the subsidies
Revenues from subsidies are recognised in profit or loss on a systematic basis over the peri-
ods in which the Group recognises as expenses the related costs for which the grants are intended
to compensate, as a result of the application of the electricity price cap. These subsidies are recove-
rable from the National Agency for Payments and Social Inspection for household consumers and
from the Ministry of Energy for non-household consumers, as a result of the application of the elec-
tricity and natural gas price ceiling mechanism and are applicable for period 1 November 2021 – 31
March 2025. Starting with April 2022, the revenues from subsidies are recorded as the difference
between the income calculated at the contract price and the income invoiced to the customer at the
capped price.
(f) Repairs and maintenance
Repair and maintenance expense is recorded as the operating expense base on an accrual
basis.
(g) 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 reve-
nue 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 recog-
nised is the net amount of commission earned by the Group.
(h) Finance income and finance costs
The Group’s finance income and finance costs include:
y interest income;
y interest expense;
y foreign currency gains or losses on financial assets and financial liabilities;
y impairment losses recognised on financial assets (other than trade receivables).
Interest income or expense is recognised using the effective interest method.
(i) 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 func-
tional 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.
(j) Employee benefits
(i) Short-term employee benefits
.
.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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.
(k) Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss ex-
cept 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 mea-
sured using tax rates enacted or substantively enacted at the reporting date. Current tax also inclu-
des 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:
y 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;
y temporary differences related to investments in subsidiaries, associates and joint arrange-
ments to the extent that the Group is able to control the timing of the reversal of the tem-
porary differences and it is probable that they will not reverse in the foreseeable future;
and
.
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y 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.
Deferred tax is measured at the tax rates that are expected to be applied to temporary diffe-
rences 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.
In such a circumstance, the Group shall recognise and measure its current or deferred tax
asset or liability 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 pre-
dict 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.
(l) 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.
(m) Inventories
Inventories consist mainly of spare parts that do not meet the recognition criteria for proper-
ty, 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.
.
.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
The cost of inventories is based on the weighted average cost method. The cost of invento-
ries 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”.
(n) 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 accu-
mulated 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 deprecia-
tion and any accumulated impairment losses. Revaluations of land and buildings are made with su-
fficient 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 reva-
lued, 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.
Properties in the course of construction for production, supply or administrative purposes,
or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost
includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with
the Group’s accounting policy. Depreciation of these assets, determined on the same basis as other
property assets, commences when the assets are ready for their intended use.
Spare parts, stand-by and servicing equipment are classified as property, plant and equip-
ment 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.
(o) 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 amorti-
zation and accumulated impairment losses.
(ii) Amortization
The amortization method used is selected on the basis of the expected pattern of consump-
tion 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 fu-
ture economic benefits. The Group determined that the amortization method that reflects appropri-
ately the expected pattern of consumption of the expected future economic benefits is correlated
with the amortisation of the regulated asset base “RAB”.
(p) Connection fees
According to art. 25 paragraph (1) of Law no. 123/2012 on electricity and natural gas, as sub-
sequently amended and supplemented, access to power grids of public interest is a mandatory ser-
vice 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 re-
presenting 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 con-
cession 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 con-
nection 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 owner-
ship of the network operator.
(q) Intangible assets related to the capitalization of own technological consumption
(“NL”)
The difference between the purchase price of electricity for own technological consumption
versus the ex-ante purchase price recognized by ANRE in the related regulated tariffs 2022 related
to the purchase of electricity and natural gas, made between 1 January 2022 and 31 August 2023, in
order to cover the own technological consumption (NL) for economic operators for energy transport
and distribution services are capitalised.
According to ANRE regulations, the capitalised costs of intangible assets are recorded in the
accounting records and therefore on the annual financial statements according to the instructions
developed by the Ministry of Finance. ANRE will determine the recognized annual amounts of the
capitalized costs based on the quantities and prices recognized for NL.
.
.
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(i) Recognition and measurement
The computation of the capitalized amounts is carried out in compliance with the legislation
specific to the entities that are the subject of GEO 119/2022, with subsequent additions and
changes.
According to the legislation in force, the following intangible assets will be created for the NL
difference (in correspondence with “Capitalised costs of intangible non-current assets”:
– The first intangible asset - for the NL cost difference recorded between January 2022 and
September 2022 will be recorded on 30 September 2022;
– The second intangible asset - for the NL cost difference recorded between October 2022
and December 2022 will be recorded on 31 December 2022;
Currently, only the above intangibles are recognized in the financial statements.
In the future, the following additional intangible assets will be recognised in 2023.
– The third intangible asset - for the NL cost difference recorded between January 2023 and
March 2023 will be recorded on 31 March 2023;
– The fourth intangible asset - for the NL cost difference recorded between April 2023 and
June 2023 will be recorded on 30 June 2023;
– The fifth intangible asset - for the NL cost difference recorded between July 2023 and
August 2023 will be recorded on 31 August 2023.
(ii) Amortization
The capitalized costs are amortized through the straight-line method over a period of 5
years from the date of capitalization.
(r) Other intangible assets
(i) Recognition and measurement
Other intangible assets that are acquired by the Group and have finite useful lives are mea-
sured 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.
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 sub-
sequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investee is no longer equity accounted.
(u) 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 requ-
ire delivery of assets within the time frame established by regulation or convention in the marketpla-
ce. 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, 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 deter-
mined in that foreign currency and translated at the spot rate at the end of each reporting period.
(iii) Amortization
Loans and receivables
Amortization is calculated to write off the cost of intangible assets less their estimated resi-
dual values using the straight-line method over their estimated useful lives and is generally recogni-
sed in profit or loss.
The estimated useful lives of software and licenses are 3-5 years.
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 in-
terest method. The amortised cost is reduced by impairment losses. Loans and receivables comprise
trade receivables, cash and cash equivalents and deposits.
Amortization methods, useful lives and residual values are reviewed at each reporting date
Trade receivables
and adjusted if appropriate.
(s) Goodwill
Goodwill is measured as the value of the consideration transferred (fair value) plus the
amount of any non-controlling interest (NCI) plus the fair value of previous equity interests minus the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated im-
pairment losses.
(t) 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.
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 electri-
city delivered and services rendered until the end of the year,but invoiced after the end of the year.
Government grants
Grants that compensate the Group for expenses incurred are recognised in profit or loss as
other income on a systematic basis in the periods in which the expenses are recognised, unless the
conditions for receiving the grant are met after the related expenses have been recognised. In this
case, the grant is recognised when it becomes receivable.
Other receivables from capping schemes:
The compensation of household consumers for part of the costs incurred by the electricity
invoices was applicable between 1 November 2021 until 31 March 2022.
.
.
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356
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
The exemption was applicable between 1 November 2021 until 31 January 2022 for several
types of non-household consumers from payment of regulated tariffs and other taxes/
contributions.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and deposits with maturi-
ties 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 inte-
rest method or at fair value through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business com-
bination, (ii) held-for-trading, or (iii) valued 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 li-
ability 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 pre-
miums or discounts) through the expected life of the financial liability, or (where appropriate) a shor-
ter 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.
(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.
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 fi-
nancial asset is more than 90 days past due unless the Group has reasonable and supportable infor-
mation 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 as-
sets, 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 con-
tractual cash flows that are due to the Group in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at the original effective interest rate.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and rewar-
ds 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 re-
cognises 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.
Repurchase and reissue of ordinary shares (treasury shares)
(v) Revaluation reserve
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 inco-
me. 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 ex-
pected 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 con-
ditions 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
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
358
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 recogni-
sed 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 recog-
nised 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.
(w) 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.
(x) 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.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
359
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(y) Provisions
A provision is recognised if, as a result of a past event, the Group has a present, legal or con-
structive 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 ex-
pected 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 for-
mal restructuring plan, and the restructuring either has commenced or has been announced publicly.
Future operating losses are not provided for.
(z) 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.
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.
(aa) 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 recog-
nises 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 bene-
fits 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 re-
lated right-of-use asset) whenever:
y the lease term has changed or there is a significant event or change in circumstances re-
sulting 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;
y 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 re-
vised discount rate is used);
y 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 mod-
ified 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 com-
mencement date of the lease. The right-of-use assets are presented as a separate line in the conso-
lidated statement of financial position.
(ii) Rental income
Rental income from property, plant and equipment other than investment property is reco-
gnised as Other income. Rental income is recognised on a straight-line basis over the term of the
lease.
(bb) 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.
The results and assets and liabilities of associates are incorporated in these consolidated fi-
nancial statements using the equity method of accounting, except when the investment is classified
as held for sale. 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 asso-
ciate (which includes any long-term interests that, in substance, form part of the Group’s net invest-
ment 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 ex-
cess of the cost of the investment over the Group’s share of the net fair value of the identifiable as-
sets 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.
When necessary, the entire carrying amount of the investment (including goodwill) is tested
for impairment 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 alloca-
ted to any asset, including goodwill that forms part of the carrying amount of the investment. Any
reversal of that impairment loss is recognised to the extent that the recoverable amount of the in-
vestment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment
ceases to be an associate.
(cc) 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 alloca-
ted on a reasonable basis.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
360
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
361
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(dd) Subsequent events
(b) Information about reportable segments
Events occurring after the reporting date 31 December 2022, which provide additional infor-
mation about conditions prevailing at the reporting date (adjusting events) are reflected in the con-
solidated 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 Disclosure for the additional set of the consolidated financial statements
The Company also issues a set of consolidated financial statements prepared in accordance
with IFRS-EU.
Until 31 December 2021, the consolidated financial statements prepared in accordance with
OMFP no. 2844/2016 were equivalent to IFRS-EU. Starting with 31 December 2022, according to
Order of Ministry of Public Finances (OMFP) no. 3900/2022 that has included a new clause related
to the regulatory accounts to cover for own technological consumption network additional expenses
for actual energy costs as compared with the ex-ante ANRE prices recognised in distribution tariffs.
On the additional set of the consolidated financial statement in accordance with IFRS-EU, these ex-
penses have a different accounting treatment (please see the voluntary set of financial statements in
accordance with IFRS-EU).
Performance for the year
8 Operating segments
(a) Basis for segmentation
The following summary describes the operations of each reportable segment:
Reportable segments
Electricity and natural gas supply
Electricity distribution
Electricity generation
External electricity network maintenance
Operations
Buying and supplying electricity and natural gas to
final consumers (includes Electrica Furnizare S.A.)
Operation, maintenance and construction of electricity
networks operated by the Group (includes Distributie
Energie Electrica Romania S.A. and the activity
performed by Electrica Serv S.A within the distribution
network).
Production of electricity from renewable sources
(includes Electrica Energie Verde 1 S.R.L., Electrica
Productie Energie S.A., Sunwind Energy S.R.L., New
Trend Energy S.R.L., Green Energy Consultancy &
Investments S.R.L.).
Repairs, maintenance and other services for electricity
networks owned by other distributors (Electrica Serv
S.A., without the activity performed in the electricity
distribution segment).
The Board of Directors of the Company reviews management reports of each segment.
Segment earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) is used to
measure performance because management believes that such information is one of the most rele-
vant 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 distri-
bution and shared electricity network maintenance services. Inter-segment pricing policy is determi-
ned on an arm’s length basis.
All assets are allocated to reportable segments, except for investments in associates and
deferred tax assets.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
362
Year ended
31 December
2022
Electricity
and natural
gas supply
Electricity
distribution
Electricity
generation
External
electricity
network
mainte-
nance
Total for
reportable
segments
Head-
quarter
8,153,190
1,817,054
14,180
25,472 10,009,896
32,824
1,579,572
7,200
55,612
1,675,208
8,186,014
3,396,626
21,380
81,084
11,685,104
Consolida-
tion elimi-
nations and
adjust-
ments
Consolidat-
ed total
-
10,009,896
(1,675,208)
-
(1,675,208)
10,009,896
-
-
-
2,754,954
159,505
49
42,295
2,956,803
5,180
(121,020)
2,840,963
-
989,291
-
-
989,291
-
-
989,291
315,170
359,377
9,526
(2,399)
681,674
25,603
(43,354)
663,923
(63,168)
(152,049)
(2,482)
11,361
(206,338)
65,857
(24,514)
(164,995)
(12,557)
(506,016)
(2,480)
(11,348)
(532,401)
(1,586)
-
-
-
-
-
5
-
-
(533,987)
5
390,895
1,017,442
14,488
(2,412)
1,420,413
(38,673)
(18,843)
1,362,897
(131,794)
19,177
-
204
(112,413)
102
-
(112,311)
261,099
308,152
8,006
(673)
576,584
25,615
(43,354)
558,845
(102,619)
(661,963)
(171)
(30,055)
(794,808)
(28,614)
9,058
612,664
-
1,342
623,064
2,323
-
-
(823,422)
625,387
4,141,083
9,076,633
146,743
418,940 13,783,399
213,625
(2,373,712)
11,623,312
2,579,678
960,913
5,265
90,557
3,636,413
378
(1,043,536)
2,593,255
148,919
69,826
4,889
5,623
229,257
105,630
-
334,887
2,365,894
1,026,377
16,101
42,313
3,450,685
44,399
(1,033,845)
2,461,239
External
revenues
Inter-segment
revenue
Segment
revenue
Other income
Capitalised
costs of
intangible non-
current assets
Segment
profit/(loss)
before tax
Net finance
income/(cost)
Amortization
and
depreciation
Reversal of
impairment of
property, plant
and equipment
and intangible
assets, net
Adjusted
EBITDA*
(Impairment)/
Reversal of
impairment
of trade
and other
receivables,
net
Segment
profit/(loss)
after tax
Employee
benefits
Capital
expenditure
Segment
assets
Trade
and other
receivables
Cash and cash
equivalents
Trade and
other payables
and short term
employee
benefits
Bank
overdrafts
1,589,801
772,098
-
-
2,361,899
209,138
Lease liability
8,469
33,830
12,088
(983)
53,404
269
Bank
borrowings
-
660,713
-
-
660,713
100,000
-
-
-
2,571,037
53,673
760,713
*Adjusted EBITDA (Earnings before interest, tax, depreciation and amortisation or namely EBITDA) for operating segments
is defined and calculated as segment profit/(loss) before tax of a given operating segment adjusted for i) depreciation,
amortization and impairment/reversal of impairment of property, plant and equipment and intangible assets in the operating
segment, ii) impairment of assets held for sale and iii) net finance income in the operating segment. Moreover, EBITDA is not
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
363
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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.
9 Revenue
2022
2021
Year ended
31 December 2021
Electricity
and nat-
ural gas
supply
Electricity
distribu-
tion
Electricity
genera-
tion
External
electricity
network
mainte-
nance
Total for
reportable
segments
Headquar-
ter
Consolida-
tion elimi-
nations and
adjust-
ments
Consol-
idated
total
External revenues
Inter-segment
revenue
Segment revenue
Segment profit/
(loss) before tax
Net finance income/
(cost)
Amortization and
depreciation
(Impairment)/
Reversal of
impairment of
property, plant and
equipment and
intangible assets, net
Reversal of
impairment of assets
held for sale
Adjusted EBITDA*
Reversal of
impairment/
(Impairment) of trade
and other receivables,
net
Segment profit/(loss)
after tax
Employee benefits
Capital expenditure
Segment assets
Trade and other
receivables
Cash and cash
equivalents
Restricted cash (short
term)
Trade and other
payables and short
term employee
benefits
Bank overdrafts
Lease liability
Bank borrowings
5,741,460
1,389,389
6,024
41,991
7,178,864
30,907
1,341,456
2,949
26,127
1,401,439
5,772,367 2,730,845
8,973
68,118 8,580,303
-
-
-
-
7,178,864
(1,401,439)
-
(1,401,439)
7,178,864
(453,610)
(153,003)
1,544
(17,868)
(622,937)
321,779
(331,253)
(632,411)
336
(73,498)
(738)
850
(73,050)
377,419
(331,250)
(26,881)
(14,228)
(451,945)
(2,290)
(10,092)
(478,555)
(2,275)
-
(480,830)
-
-
-
-
-
-
137
137
3,805
(154)
(154)
(492)
-
-
3,942
(646)
(439,718)
372,440
4,572
(8,609)
(71,315)
(56,678)
(3)
(127,996)
(37,767)
(32,707)
-
(212)
(70,686)
70
-
(70,616)
(389,678)
(139,040)
1,300
(16,033)
(543,451)
321,822
(331,253)
(552,882)
(106,107)
(622,492)
(47)
(34,790)
(763,436)
(39,240)
9,374
500,387
8
1,552
511,321
4,539
-
-
(802,676)
515,860
1,422,316 8,085,802
41,206
417,744 9,967,068
182,509 (2,266,441)
7,883,136
1,216,895
1,057,157
998
85,924 2,360,974
75,106
(1,042,861)
1,393,219
60,231
145,741
2,635
7,466
216,073
5,757
-
221,830
1,380,664
826,256
24,373
27,917
2,259,210
53,551
(1,016,329)
1,296,432
298,602
208,109
3,270
15,147
-
628,489
-
-
-
-
506,711
120,691
2,614
21,031
-
628,489
513
-
-
-
-
627,402
21,544
628,489
*Adjusted EBITDA (Earnings before interest, tax, depreciation and amortisation or namely EBITDA) for operating segments
is defined and calculated as segment profit/(loss) before tax of a given operating segment adjusted for i) depreciation,
amortization and impairment/reversal of impairment of property, plant and equipment and intangible assets in the operating
segment, ii) impairment of assets held for sale and iii) net finance income in the operating segment. 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.
Electricity distribution and supply
Supply of natural gas
Construction revenue related to
concession agreements (Note 23)
Repairs, maintenance and other
services rendered
Proceeds from sale of green
certificates
Re-connection fees
Sales of merchandise
Total
8,991,986
308,515
611,294
87,395
3,741
3,824
3,141
10,009,896
6,517,777
98,503
500,387
59,854
1,138
1,205
-
7,178,864
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 2,694 thousand (2021:
RON 2,081 thousand) being transferred at a point in time (e.g. metering services provided by the
distribution companies, providing periodic data analysis to the customer for certain taxes collected
on behalf of them).
10 Electricity and natural gas purchased
Electricity purchased
Green certificates
purchased
Natural gas purchased
Total
9,886,773
609,107
10,929
2022
2021
4,967,315
581,729
145,680
5,694,724
10,506,809
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.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
365
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
364
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
11 Other income and expenses
(a) Other income
Subsidies related to electricity
supply (note 18)
Rental income
Late payment penalties from
customers
Other
Total
2022
2021
2,687,131
92,486
52,110
9,236
2,840,963
-
93,143
28,356
74,272
195,771
Rental income refers mainly to the subsidies, following by rental of the electricity poles by the distribution
subsidiary to telecom operators.
During 2022, the Group recognized subsidies on the supply segment recognized subsidies
of RON 2,687,131 thousand, out of which RON 1,224,375 thousand outstanding receivable from the
Ministry of Energy following the application of the capping price mechanism for the electricity and
natural gas as approved by Order no. 118/2021 with subsequent amendments and GEO no. 27/2022,
the latter one being amended by GEO no. 119/2022.
(b) Other operating expenses
Profit/(Loss) attributable to shareholders
2022
2021
Profit/(Loss) for the year
attributable to the owners
of the Company
Profit attributable to
shareholders of the
Company
Number of ordinary shares (in number of shares)
558,954
558,954
(552,882)
(552,882)
Number of ordinary shares at
31 December
2022
2021
339,553,004
339,553,004
For the calculation of basic and diluted earnings per share, treasury shares (6,890,593 sha-
res) were not treated as outstanding ordinary shares and were deducted from the number of issued
ordinary shares.
Earnings/(Loss) per share
Basic and diluted earnings/(loss)
per share (RON)
Employee benefits
2022
1.65
14 Short-term employee benefits
2021
(1.63)
2022
2021
31 December 2022
31 December 2021
44,092
43,211
39,697
46,950
56,643
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
Other
Total
*Meter reading expenses have increased during 2022 as a consequence of changes in legislation related to frequency of meter
readings. During 2021 meters were read with a frequency of 2 times per year as compared to 2022 when they are measured
quarterly (according to ANRE, the date between measurement cannot exceed 3 months).
34,929
17,549
39,748
14,632
21,010
30,411
26,718
22,219
15,819
12,205
11,011
93,216
343,147
10,929
47,491
352,971
36,960
18,998
11,680
12 Net finance income/(cost)
Interest income
Other finance income
Total finance income
Interest expense
Interest cost for employee benefits
(Note 15)
Foreign exchange losses, net
Total finance costs
Net finance cost
13 Earnings/(loss) per share
2022
2021
2,847
6,871
9,718
(156,985)
(7,354)
(10,374)
(174,713)
(164,995)
1,765
882
2,647
(24,110)
(5,007)
(411)
(29,528)
(26,881)
The calculation of basic and diluted earnings/(loss) per share has been based on the following
profit attributable to Company’s shareholders and weighted-average number of ordinary shares
outstanding:
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
366
Personnel payables
Current portion of defined benefit
liability and other employee
benefits
Social security charges
Tax on salaries
Total
70,105
11,548
27,301
5,220
114,174
52,419
18,257
25,342
5,084
101,102
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 assis-
tance 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.
In 2022 and 2021, employee benefit obligations were computed by an independent actuary
using the projected unit credit method with benefits calculated proportionally to the period of
service.
.
.
I
A
S
A
C
R
T
C
E
L
E
31 December
2022
31 December
2021
Defined benefit liability
Other long-term employee benefits
Total
- Current portion*
- Non-current portion
*included in Personnel payables in Note 14
41,675
87,762
129,437
12,168
117,269
79,078
88,356
167,434
18,257
149,177
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
367
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(i) Movement in the defined benefit liability and other long-term employee benefits
contracts, as follows:
The following tables shows a reconciliation from the opening balances to the closing balan-
ces for the defined benefit liability and other long-term employee benefits and its components.
There are no plan assets.
Defined benefit liability
2022
2021
Balance at 1 January
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
Other long-term employee
benefits
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Actuarial (gain)/ loss
Interest cost
Other
Benefits paid
Balance at 31 December
79,078
4,893
(23,367)
3,100
(9,503)
(12,526)
41,675
2022
2021
88,356
7,786
(353)
(4,509)
4,256
(7,775)
87,761
68,101
5,158
5,054
2,194
5,891
(7,320)
79,078
86,195
8,285
-
(1,859)
2,814
(7,079)
88,356
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:
y inflation. The actuary used information from the National Commission for Strategy and
Prognosis:
.
Year
.
I
A
S
A
C
R
T
C
E
L
E
2022
2023
2024
2025
2026+
Valuation date
31 December 2022
13.9%
7.5%
4.9%
3%
2.5%
Valuation date
31 December 2021
5.9%
3.2%
3.0%
2.8%
2.5%
y 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 8.1% for the year 2022
(2021: 5%);
y taxes and social charges are those in force as at the reporting date.
b) Group specific assumptions:
y 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;
y Employees’ turnover: based on historical data;
y Jubilee and retirement bonuses granted based on seniority as per the collective labour
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
368
Jubilee bonus based on years of service in the Group
No of gross monthly base salaries
31 December 2022
1
2
3
4
5
31 December 2021
1
2
3
4
5
Retirement bonus based on years of service in the Group
No of gross monthly base salaries
31 December 2022
2
3
4
31 December 2021
2
3
4
Seniority
20 years
30 years
35 years
40 years
45 years
Seniority
Between 8 and 10 years
Between 10 and 25 years
More than 25 years
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 ter-
mination benefits to the employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries No of gross monthly base salaries
1 – 2 years
2 – 5 years
5 – 10 years
10 – 20 years
More than 20 years
31 December 2022
2
3
4
5
8
31 December 2021
2
3
4
5
8
(b) Termination benefits for collective lay-offs at the Group’s initiative
For collective lay-offs, according to the Collective Labour Contracts, the Group pays termi-
nation benefits to the employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries
1 – 3 years
3 – 5 years
5 – 10 years
10 – 20 years
More than 20 years
31 December 2022
3
6
7
11
16
31 December 2021
3
6
7
11
16
The above mentioned stipulations do not apply to employees with individual labour contract
concluded for a determined period. The above stipulations do not apply to employees that obtained
other higher cumulative salary compensation rights, provided by legal regulations regarding the
Group’s reorganization and restructuring. Employees who are re-employed within the Group after
lay-off are not entitled to the above-mentioned benefits.
(iii)Sensitivity analysis
Significant actuarial assumptions for the determination of the benefit obligation are the dis-
count 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.
Discount rate
Increase by 1%
Decrease by 1%
2022
(9,237)
2021
(12,489)
2022
8,611
2021
12,489
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
369
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Increase by 1%
Decrease by 1%
(ii) Amounts recognised in other comprehensive income
Salary growth
9,415
12,957
(10,049)
(12,957)
Retirement age
Increase by 1 year
2021
3,677
2022
812
Decrease by 1 year
2021
(3,677)
2022
(812)
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 me-
thod at the end of the reporting period, which is the same as that applied in calculating the benefit
obligation liability recognized in the statement of financial position.
16 Employee benefit expenses
Average number of employees
Number of employees at 31
December
2022
2022
7,760
7,874
2021
2021
7,919
8,020
Wages and salaries*
Social security contributions
Meal tickets
Termination benefits
Total employees benefits for the
year
Capitalised employee benefit
expenses
Total employees benefits in the
802,676
statement of profit or loss
*Wages and salaries includes also current service cost, defined benefits and other long-term employee benefits.
790,425
20,694
33,187
267
796,137
19,486
33,585
6,135
(52,667)
844,573
855,343
823,422
(21,151)
Management remuneration is disclosed in Note 32 b) Related parties.
Income taxes
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 assess-
ment 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 inter-
pretation 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
Deferred tax expense/(benefit)
Total expense/(benefit) related to
income tax
2022
2021
2,576
102,502
105,078
242
(79,771)
(79,529)
2022
2021
Before tax
Tax expense
Net of tax
Before tax
Tax expense
Net of
Tax
Remeasurement
of defined benefit
liability
Total
9,503
(1,479)
8,024
(5,891)
(45)
(5,936)
9,503
(1,479)
8,024
(5,891)
(45)
(5,936)
(iii) Reconciliation of effective tax rate
2022
2021
Profit/(Loss) before tax
Tax/(Benefit) using Company’s
domestic tax rate
Non-deductible expenses
Non-taxable income
Deduction of legal reserves
Other tax effects
Recognition of tax effect of previously
unrecognised tax losses
Income tax expense/(benefit)
16%
4%
-3%
-1%
0%
-1%
16%
663,923
106,230
28,843
(22,083)
(3,388)
(137)
(4,387)
16%
-7%
3%
0%
0%
1%
105,078
13%
(iv) Movement in deferred tax balances
(632,411)
(101,186)
45,558
(15,878)
(2,574)
(1,607)
(3,842)
(79,529)
Net balance
at 1 January
2022
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2022
Net
Deferred tax
assets
Deferred tax
liabilities
39,838
(2,858)
187,500
20,515
-
-
36,980
208,015
-
-
36,980
208,015
(23,940)
1,360
1,479
(21,101)
(21,101)
(24,732)
(6,198)
(95,972)
89,904
(4,299)
(222)
-
-
-
(30,930)
(30,930)
(6,068)
(6,068)
(4,521)
(4,521)
-
-
-
-
78,395
102,501
1,479
182,375
(62,620)
244,995
-
-
-
-
32,440
(32,440)
78,395
102,501
1,479
182,375
(30,180)
212,555
2022
Property, plant
and equipment
Intangible
assets related
to concession
agreements
Employee
benefits
Impairment
of trade
receivables
Tax loss carried
forward
Other items
Tax liabilities/
(assets) before
set-off
Set off of tax
Net tax
liabilities/
(assets)
As of 31 December 2021, the Group recorded a deferred tax asset in amount of RON 95,972
thousand in relation to the fiscal losses incurred. The Group used RON 89,904 thousand as of 31
December 2022 to partially compensate the 2022 current tax liability.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
370
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
371
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Net balance
at 1 January
2021
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2021
Net
Deferred tax
assets
Deferred tax
liabilities
41,757
(1,919)
171,712
15,788
-
-
39,838
187,500
-
-
39,838
187,500
(22,603)
(1,382)
45
(23,940)
(23,940)
(20,859)
(3,873)
(7,765)
(88,207)
(4,121)
(178)
-
-
-
(24,732)
(24,732)
(95,972)
(95,972)
(4,299)
(4,299)
-
-
-
-
158,121
(79,771)
45
78,395
(148,943)
227,338
65,412
(65,412)
(83,531)
161,926
2021
Property,
plant and
equipment
Intangible
assets related
to concession
agreements
Employee
benefits
Impairment
of trade
receivables
Tax loss
carried
forward
Other items
Tax liabilities/
(assets)
before set-off
Set off of tax
Net tax
liabilities/
(assets)
*see Note 30
(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.
2022
2021
compensation mechanism, part of the receivables due to the subsidiary Electrica Furnizare 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. On 31 December 2022, the amounts estimated to be
received from the Ministry of Energy for non-household consumers are 20,480 thousand RON (31
December 2021: 11,420 thousand RON) and 21,043 thousand RON (31 December 2021: 59,271 thou-
sand RON) from the National Agency for Payments and Social Inspection for household
consumers.
The amounts will be recovered in approx. 40 days after submitting the required documenta-
tion 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”.
Oltchim
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 ban-
kruptcy procedures.
By decision of the European Court in Luxembourg pronounced on 15 December 2021 (final
decision being applicable as of 21 March 2022), in case T565/19, it was partially cancelled the
European Commission Decision no. C (2018) 8592 from 2018, which established a series of measures
regarding the recovery by Romania of the State aid granted to Oltchim S.A. By its decision, the
European court cancelled a series of the measures, including the amounts considered state aid with
which Electrica was registered in the table of receivables.
Following the evolution of the bankruptcy process, on 06 April 2022, the updated table of
receivables was published in BPI Tabel Oltchim, which still recognizes only the guaranteed receiva-
bles, which in the case of Electrica S.A. the estimated amount that remains to be recovered from the
sales of assets of Oltchim SA in the completion of the bankruptcy process is RON 116,058 thousand
(including VAT), comprised of the base in the amount of RON 98,725 thousand and respectively the
VAT in the amount of RON 17,333 thousand. Considering the events above, as of 31 December 2022
a part of the receivable for Oltchim in amount of RON 420,213 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. As of 31 December 2022, the balance of receivables with Oltchim is RON 115,943 thousand
(Electrica S.A. RON 98,725 thousand and Electrica Furnizare S.A. RON 17,218 thousand), bad debt
allowance being at the same amount.
337,136
356,623
The reconciliation between the opening balances and the closing balances of the impairment
Tax losses
Assets
18 Trade receivables
Trade receivables, gross
Bad debt allowance
Total trade receivables, net
31 December 2022
31 December 2021
3,118,691
(652,689)
2,466,002
2,325,477
(980,858)
1,344,619
Trade receivables from related parties are presented in Note 32.
Trade receivables, gross, comprise:
31 December 2022
31 December 2021
Electricity distribution and supply
Late payment penalties receivable
Customers with judicial execution
titles
Repairs, maintenance and other
services
Other
Total trade receivables, gross
Electricity distribution and supply
2,482,266
80,658
347,667
11,850
196,250
3,118,691
1,323,732
81,311
766,109
17,700
136,625
2,325,477
Following the adoption of the Order no. 118/2021 with subsequent amendments and GEO no.
27/2022, the latter one being amended by GEO no. 119/2022, concerning the capping and
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
372
for trade receivables in the form of lifetime expected credit losses is as follows:
Lifetime expected credit losses
2022
2021
Balance as at 1 January
Loss allowance recognized
Decrease in loss allowance
Amounts written off
Balance as at 31 December
980,858
146,203
(34,248)
(440,124)
652,689
949,573
94,400
(22,944)
(40,171)
980,858
The aging of trade receivables is presented in Note 30.
The Group has identified 5 clusters of customers based on shared risk characteristics: 3 se-
parate 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 ban-
kruptcy 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. The
amounts written-off relates to Oltchim (described above).
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 recogni-
tion, thus recording a bad debt allowance in amount of RON 146,926 thousand.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
373
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
19 Other receivables
VAT receivable
Receivables from EU funds
Other receivables
Lifetime expected credit losses
Total other receivables, net
31 December 2022
31 December 2021
13,024
13,932
120,777
(20,480)
127,253
12,566
-
56,158
(20,124)
48,600
Other receivables include mainly guarantees from energy suppliers 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
2022
2021
Balance as at 1 January
Decrease in loss allowance
Balance as at 31 December
20 Cash and cash equivalents
20,124
356
20,480
31 December
2022
31 December
2021
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
141,656
193,219
12
334,887
-
334,887
20,964
(840)
20,124
167,859
53,897
74
221,830
(627,402)
(405,572)
In the normal course of business, the Group enters into short-term credit facility with the aim
of financing operational needs. Until 31 December 2021, overdrafts amounting to RON 627,402 thou-
sand were presented as part of cash and cash equivalents. Following the volatility in electricity prices
started in 2021 and continued in 2022, these overdrafts have no longer fluctuated from negative to
0 balances, remained negative for the entire year 2022, thus the management of the Group presen-
ted these overdrafts for the year ended 31 December 2022 in financing activity, and reclassified the
opening balance previously presented as cash and cash equivalents. (for further details please see
transfer presented in Cash Flow statement).
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 53,106
thousand in 2022 (2021: RON 5,941 thousand)
21 Inventories
As at 31 December 2022 and 31 December 2021, inventories are as follows:
31 December 2022
31 December 2021
Spare parts
Consumables and other materials
Natural gas
Other inventories
Allowance for impairment of
inventories
Total inventories
29,589
53,527
23,319
17,004
(9,467)
113,972
28,569
33,399
5,367
13,938
(8,315)
72,958
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 2022, the remaining quantity of natural gas stored is of MWh 107,427 (31
December 2021: MWh 12,186), amounting to RON 23,280 thousand (31 December 2021: RON 5,367
thousand).
22 Property, plant and equipment
The movements in property, plant and equipment in 2022 and 2021 are as follows:
Land and
land improve-
ments
Buildings
Equipment
Vehicles,
furniture and
office equip-
ment
Construction
in progress
Total
Gross carrying
amount
Balance at 1
January 2021
Additions
Transfer from
construction in
progress
Disposals
Reclassification
from/(to)
assets held for
sale
Balance at
31 December
2021
Reclassification
of opening
assets held for
sale
Balance at
31 December
2021
Additions
Transfer from
construction in
progress
Disposals
Reclassification
from/(to)
assets held for
sale
Acquisition
of subsidiary
(Note 31)
Balance at
31 December
2022
246,075
197,148
98,896
95,336
26,225
663,680
-
-
167
1,257
482
2,001
150
8,368
1,967
(5,225)
9,167
-
(46)
(383)
(7,664)
(503)
(180)
(8,776)
6,769
4,368
(1,914)
-
-
9,223
252,798
202,557
91,801
96,950
29,188
673,294
1,024
4,115
-
-
-
5,139
253,822
206,672
91,801
96,950
29,188
678,433
1,179
85
-
1,133
1,977
2,386
804
269
5,475
9,435
(3,778)
95
(3,276)
(1,093)
(1,844)
(838)
-
25
-
-
-
-
-
(9)
-
(7,060)
-
3,875
3,900
251,835
206,712
94,320
97,185
34,751
684,803
Accumulated depreciation and impairment losses
Balance at 1
January 2021
Depreciation
Accumulated
depreciation of
disposals
-
-
-
5,013
7,532
45,216
8,865
(14)
(4,546)
86,550
18,771
155,550
4,721
(96)
-
-
21,118
(4,656)
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
375
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
374
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Land and
land improve-
ments
Buildings
Equipment
Vehicles,
furniture and
office equip-
ment
Construction
in progress
Total
-
-
-
-
-
-
-
-
-
(3,805)
947
(1,142)
-
-
(137)
(3,942)
-
(195)
13,478
44,588
91,175
18,634
167,875
8,022
7,378
(1,778)
-
-
(5)
-
4,515
(594)
-
-
-
-
-
-
19,915
(2,372)
(5)
-
21,495
50,188
95,096
18,634
185,413
246,075
192,135
53,680
8,786
7,454
508,130
252,798
189,079
47,213
5,775
10,554
505,419
251,835
185,217
44,132
2,089
16,117
499,390
Reversal of
impairment
loss
Reclassification
from assets
held to sale
Balance at
31 December
2021
Depreciation
Accumulated
depreciation of
disposals
Impairment
loss
Reclassification
from/(to)
assets held for
sale
Balance at
31 December
2022
Net carrying
amounts
At 1 January
2021
At 31
December
2021
At 31
December
2022
Tangible assets include mainly land, buildings and equipment.
In 2021, Electrica Serv S.A.’s Board of Directors approved the selling plan of part of the assets and
accordingly, those assets were presented as Assets held for sale, being expected to be sold in the following
period. During 2022, only 2 assets (4 in 2021) were sold in amount RON 1,940 thousand (RON 478 thou-
sand in 2021). In October 2022, Electrica Serv S.A.’s Board of Directors postponed the sale approval of
the remaining assets included in the selling plan, mentioning that it is unlikely that the selling intention
will materialize. Consequently, the Company reclassified the items from assets held for sale to property
plan and equipment.
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 pro-
perties 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.
The following table shows the valuation techniques used in measuring fair values (Level 3), as well
as the significant unobservable inputs used.
Category
Valuation technique
Land and land
improvements
Buildings
Market approach
The fair value is estimated based
on selling price per square meter of
land of similar characteristics (i.e.
ownership, legal limitations, financ-
ing and selling conditions, location,
physical and economical properties
and best use). The market price is
mainly based on recent transac-
tions.
Market approach and discounted
cash-flows (DCF) method
Buildings were evaluated using the
following methods, depending on
the best use and the availability and
credibility of available market infor-
mation:
Market approach
The market approach is based on
the selling price per square meter
for buildings with similar charac-
teristics (i.e. ownership, legal lim-
itations, financing and selling con-
ditions, location, physical and eco-
nomical properties, and best use),
adjusted for liquidity, location, size
etc.
The DCF method
The valuation model based on the
DCF method estimates the present
value of net cash flows to be gen-
erated by a building taking into ac-
count occupancy rate and annual
rent. The discount rate estimation
considers, inter alia, the quality of a
building and its location.
Significant unobservable
inputs
• Adjustment for liquidity,
location, size.
Inter-relationship
between key
unobservable inputs and
fair value measurement
The estimated fair val-
ue would
increase/(de-
crease) if:
• Adjustment for liquidity,
location or size would be
lower/(higher)
• Adjustment for liquidity,
location, size.
Office space rent
• Occupancy
rates (be-
• Adjustment for liquidity,
location or size would be
lower/(higher)
• Occupancy rates were
tween 80% and 90%)
higher/(lower)
• Yield rates (between 7%
• Yield rates were lower/
and 10%)
(higher)
• Annual rent per sqm was
higher/(lower)
• Annual rent per sqm
(between 9 and 19 EUR/
sqm), depending on lo-
cation;
Commercial space rent
• Occupancy
rates (be-
tween 85% and 90%)
rates
• Yield
(between
7.25% and 11.5%)
• Annual rent per sqm (be-
tween 10 and 60 EUR/
sqm), depending on lo-
cation;
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
377
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
376
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
23 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 li-
censes and costs of SAP ERP implementation, customer management and billing system and other
software, as follows:
Intangible
assets related
to concession
agreements
Intangible
assets from
capitalization
Software and
licenses
Intangible
assets in
progress
Total
Gross book
value
Balance at 1
January 2021
Additions
Transfers from
intangible assets
in progress
Disposals
Balance at 31
December 2021
Additions
Transfers from
tangible assets
in progress
Disposals
Balance at 31
December 2022
Accumulated
amortization
and impairment
losses
Balance at 1
January 2021
Amortization
Accumulated
amortization of
disposals
Balance at 31
December 2021
Amortization
Accumulated
amortization of
disposals
Balance at 31
December 2022
Net carrying
amounts
At 1 January
2021
At 31 December
2021
At 31 December
2022
9,631,960
500,387
-
-
10,132,347
-
-
-
-
-
611,294
989,291
-
-
-
188,679
5,730
34
(1,042)
193,401
7,694
2
(1,006)
1,367
576
(34)
9,822,006
506,693
-
-
(1,042)
1,909
10,327,657
140
(2)
-
1,608,419
-
(1,006)
10,743,641
989,291
200,091
2,047
11,935,070
4,176,775
441,015
-
4,617,790
449,987
-
-
-
-
37,734
182,833
4,536
(1,042)
186,327
3,960
-
-
(1,005)
5,067,777
37,734
189,282
-
-
-
-
-
-
-
4,359,608
445,551
(1,042)
4,804,117
491,681
(1,005)
5,294,793
5,455,185
5,514,557
5,675,864
-
-
951,557
5,846
7,074
1,367
5,462,398
1,909
5,523,540
10,809
2,047
6,640,277
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 2022, the Group has recognized construction revenue rela-
ted to the concession agreements of RON 611,294 thousand (2021: RON 500,387 thousand) and
construction costs of RON 593,490 thousand (2021: RON 485,813 thousand).
The main information related to the current concession contracts agreements and the intan-
gible assets amounts recognized for each network distribution area is summarized below:
Network
distribution
areas
Contract
date
Concession
period
(years)
Contract
expiry date
Concession
period
remaining
(years)
Renewal
option
Muntenia
Nord area
Transilvania
Nord area
Transilvania
Sud area
Total
2005
2005
2005
49
49
49
2054
2054
2054
33
33
33
Yes
Yes
Yes
Net
carrying
amount
at 31
December
2022
Net
carrying
amount
at 31
December
2021
1,995,309
1,915,567
1,890,409
1,836,161
1,816,646
1,762,829
5,702,364
5,514,557
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 in-
curred in 2022 refers mainly to:
– Modernization of the current transformer points and stations, current underground and
overhead power lines in amount of RON 139,487 thousand (2021: RON 164,465 thousand);
– Investments related to improvements for electricity distribution network in amount of
RON 79,132 thousand (2021: RON 143,965 thousand).
– Significant construction works of new transformer stations, new underground and over-
head power lines in amount of 2022: RON 148,404 thousand (2021: RON 97,449 thousand);
– Acquisition of own car fleet, including utilities vehicles and specialized vehicles in amount
of RON 58,256 thousand; (2021: RON 63,009 thousand);
– Modernization and inclusion in SCADA (which is an automatic control system which moni-
tors the equipment) of transformers points and stations, in amount of RON 164 thousand
(2021: RON 2,430 thousand);
During 2022, the additional expenses for actual energy costs as compared with the ex-ante
ANRE prices recognised in distribution tariffs are capitalised as intangible assets. These costs will be
recuperated in tariffs in 5 years.
The capitalised costs with own technological consumption are recognized for each network
distribution area, the first asset being recorded on 30 September 2022 and the second one on 31
December 2022, is summarized below:
Network
distribution areas
Muntenia Nord area
Transilvania Nord
area
Transilvania Sud
area
Total
Intangible asset 01
Jan-30 Sep 2022
(gross value)
Intangible asset 01
Oct-31 Dec 2022
(gross value)
Amortisation during
2022
Net carrying
amount at 31
December 2022
302,413
258,513
193,881
754,807
87,321
84,342
62,820
234,483
15,121
12,919
9,694
37,734
374,613
329,937
247,007
951,557
24 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 electri-
city 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. By the end of 31 December 2022, two of the project
companies were acquired by 60% (please see note 31), therefore they are accounted as subsidiaries,
the other ones 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),
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
378
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
379
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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, to-
talling 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.
– 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 ca-
pacity, 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, respective-
ly 30% of the shares of Foton Power Energy SRL.
Considering the holding percentage of 30%, as at 31 December 2022, the 2 entities are ac-
counted 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 18,832 thou-
sand, is detailed as follows:
Acquisition date
Percentage ownership and voting
rights at acquisition date
Net assets at acquisition date
Group’s share of net assets
Goodwill
Cost of investment at acquisition
date
Crucea Power Park S.R.L.
Foton Power Energy
S.R.L.
31.07.2021
31.12.2021
30%
(242)
(73)
12,573
12,500
30%
(7)
(2)
6,334
6,332
Summarised financial information in respect of each of the Group’s associates is set out
below:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Reconciliation to carrying
amounts:
Opening net assets at acquisition
date
Loss for the period
Closing net assets 31.12.2022
Closing net assets of associates
31.12.2022
Group’s share in associates %
Group’s share of net assets as at
31.12.2022
Goodwill
Carrying amount of interest in
associate 31.12.2022
Crucea Power Park S.R.L.
Foton Power Energy
S.R.L.
31.12.2022
8,520
1,142
(9,886)
(44)
(268)
(246)
(22)
(268)
31.12.2022
244
35
(296)
(1)
(18)
(7)
(11)
(18)
Crucea Power Park S.R.L.
Foton Power Energy S.R.L.
(268)
30%
(80)
12,573
12,492
(18)
30%
(5)
6,334
6,329
The share loss in amount of RON 13 thousand for the period was recognized in the consoli-
dated statement of profit and loss for the year ended as at 31 December 2022.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
380
Equity and liabilities
25 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 2022 (31 December 2021: 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 trea-
sury 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.
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 nuthousand, by issuing a nu-
mber 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:
Balance at 1 January
Release of revaluation
reserve to retained
earnings corresponding
to depreciation and
disposals of property,
plant and equipment
Balance as at 31
December
(d) Legal reserves
2022
2021
102,829
116,372
(10,712)
(13,543)
92,117
102,829
Legal reserves are set up as 5% of the gross profit for the year in the statutory individual fi-
nancial statements of the companies within the Group, until the total legal reserves reach 20% of the
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
381
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
paid-up nominal share capital of each company, according to the legislation. These reserves are de-
ductible for income tax purposes and are not distributable.
Balance at 1 January 2021
Set-up of legal reserves
Balance at 31 December 2021
Set-up of legal reserves
Balance at 31 December 2022
(e) Dividends
Legal reserves
392,276
16,129
408,405
21,178
429,583
Romanian companies may distribute dividends from statutory profits, according to the sepa-
rate financial statements prepared in accordance with Romanian accounting regulations.
The dividends declared by the Company in 2022 and 2021 (from the statutory profits of pre-
vious years) are as follows:
Distribution of dividends
2022
2021
To the owners of the Company
Total
152,798
152,798
247,874
247,874
On 20 April 2022 the General Shareholders Meeting of the Company approved dividend dis-
tribution of RON 152,799 thousand (2021: RON 247,874 thousand). The dividend per share distribu-
ted is RON 0.45 per share (2021: RON 0.73 per share). When calculating the dividend per share, the
Company’s repurchased own shares (6,890,593 shares) were not considered as outstanding shares
and are deducted from the total number of issued ordinary shares.
Out of the dividends declared by the Company of RON 152,799 thousand (2021: RON 247,874
thousand), the dividends paid were of RON 152,447 thousand (2021: RON 247,258 thousand) the
remaining difference represents dividends uncollected by the shareholders.
26 Trade payables
Electricity suppliers
Capital expenditure suppliers
Other suppliers
Total
31 December
2022
31 December
2021
970,815
243,715
192,567
1,407,097
619,653
156,546
115,136
891,335
Electricity suppliers are mainly state-owned electricity producers, as detailed in Note 32, but
also other participants to the electricity market.
.
Other suppliers include suppliers of services, materials, consumables, etc.
27 Other payables
VAT payable
Liabilities towards
the State
Other liabilities
Total
31 December 2022
31 December 2021
Current
Non-current
Current
Non-current
565,075
11,733
290,728
867,536
-
-
72,432
72,432
133,833
7,148
130,282
271,263
-
-
32,732
32,732
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.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
382
28 Provisions
Balance at 1 January
2022
Provisions recognized
Provisions utilised
Provisions reversed
Balance at 31 December
2022
Tax related
Other
Total
1,084
-
-
-
1,084
33,838
40,800
(3,021)
(19,000)
52,617
34,922
40,800
(3,021)
(19,000)
53,701
As at 31 December 2022, provisions refer mainly to benefits upon the termination of execu-
tive directors’ mandate contracts in the form of a non-compete clause amounting to RON 1,839
thousand (31 December 2021: RON 3,971 thousand) and for various claims and litigations involving
the Group companies in amount of RON 51,8623 thousand (31 December 2021: RON 30,951
thousand).
For the supply segment, during 2022 the Group set up a provision on the supply segment in
amount of RON 3,880 thousand in relation to a claim with EDPR Romania SRL. Also, starting with
July 2022, from the amendment of the Performance Standard 82/2021, the compensations are cal-
culated daily or weekly and paid to the customers. Thus, for the provision recognized until 30 June
2022, was recorded a reversal in amount of RON 7,947 thousand and an additional provision of RON
6,900 thousand was set up for the period July-December 2022.
For the distribution segment, during 2022 was recorded a provision in amount of RON 24,345 thou-
sand with ANCOM. Through the action formulated in file 7407/2/2020, ANCOM Decision 1177/13.11.2020 which
established the pole rent rates for former SDEE MN, SDEE TN, SDEE TS (actual DEER) was challenged. Decision
1177/13.11.2020 was issued by ANCOM as a result of Telekom Romania’s appeal, dissatisfied with the tariffs char-
ged by former SDEE MN, SDEE TN and SDEE TS (actual DEER), based on the study approved at the Group level.
In 2022, The Court of Appeal of Bucharest rejected the appeal filed by DEER through sentence 2509/2022,
therefore, the Group recorded a provision in this regard, calculated as the difference between the rates in the
contract and those in the ANCOM decision.
29 Bank borrowings and overdrafts
Drawings and repayments of borrowings during the year ended 31 December 2022 were as
follows:
Balance at 1 January
2022
Drawings of
borrowings during
the period, out of
which:
EBRD
Eximbank Romania
Vista Bank
Total drawings
Accumulated
interest
Payment of interest
out of which paid in
2021
Reimbursements,
out of which:
BRD
BRD
BRD
Banca Transilvania
Currency
Interest rate
Maturity year
Amount (RON
thousand)
628,489
.
RON
RON
RON
RON
RON
RON
RON
Floating rate (1.15%
+ interbank rate +
ROBOR spread)
ROBOR 3M+1.65%
ROBOR 3M+2.95%
3,99%
3.85%
3,85%
4.59%
2031
2024
2024
2026
2028
2028
2027
113,451
4,110
100,000
217,561
9,124
28,957
(1,536)
92,925
20,800
11,432
14,286
17,857
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
383
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Unicredit Bank
BCR
Balance at 31
December 2022
Currency
Interest rate
Maturity year
RON
RON
3.85%
ROBOR 3M+1%
2026
2028
Amount (RON
thousand)
9,600
18,950
760,713
As at 31 December 2022, respectively 31 December 2021, the bank borrowings is as follows:
Lender
Borrower
Balance at 31 December
2022
Balance at 31 December
2021
Banca Transilvania
UniCredit Bank
BRD
BRD
BRD
BCR
EBRD
Eximbank Romania
Vista Bank
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Sud
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Nord
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Muntenia Nord S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Nord
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Sud
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Muntenia Nord S.A.)
Distributie Energie
Electrica Romania
Distributie Energie
Electrica Romania
Societatea Energetica
Electrica S.A.
Total
Less: current portion of the long-term bank
borrowings
Less: accumulated interest
Total long-term borrowings, net of current portion
Bank Borrowings description
Investment loan granted by Banca Transilvania
80,367
98,227
38,793
48,498
83,200
104,000
78,571
92,857
62,904
74,342
109,785
202,983
4,110
100,000
760,713
(104,400)
(9,120)
647,193
128,243
82,322
0
0
628,489
(508,197)
(1,536)
118,756
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 in-
vestment 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 2022, the outstanding balance is of RON
80,367 thousand, of which RON 80,357 thousand principal and RON 10 thousand accrued interest.
(Outstanding balance as at 31 December 2021: RON 98,227 thousand)
a) 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 2022, the outstanding balance is of RON 38,793 thousand,
of which RON 38,400 thousand principal and RON 393 thousand accrued interest. (Outstanding ba-
lance as at 31 December 2021: RON 48,498 thousand)
b) 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 distributi-
on 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 2022, the outstanding balance is of RON
83,200 thousand. (Outstanding balance as at 31 December 2021: RON 104,000 thousand)
c) 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 2022, the outstanding
balance is of RON 78,571 thousand. (Outstanding balance as at 31 December 2021: RON 92,857
thousand)
d) 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 31 December 2022, the outstanding
balance is RON 62,904 thousand, of which RON 62,857 thousand principal and RON 47 thousand ac-
crued interest. (Outstanding balance as at 31 December 2021: RON 74,342 thousand)
e) 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 2022, the outstanding balance is RON 109,785 thousand, of which RON 108,961 thousand
principal and RON 824 thousand accrued interest. (Outstanding balance as at 31 December 2021: RON
128,243 thousand)
f) 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, conclu-
ded 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 in-
vestment 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 instalments until 31.07.2031;
Grace period: 24 months. As at 31 December 2022, the outstanding balance is RON 202,983 thousand,
of which RON 195,136 thousand principal and RON 7,847 thousand accrued interest. The loan agree-
ment is guaranteed by Electrica SA.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
385
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
384
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
g) Investment loan granted by the European Investment Bank (“BEI”)
Financial Covenants
On 14 July 2021, Societatea de Distributie Energie Electrica Romania SA, as a borrower, con-
cluded with the European Investment Bank an investment credit contract for the purpose of finan-
cing 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 2022, the outstan-
ding balance is Nil as no withdraw was made from the loan. The loan agreement is guaranteed by
Electrica SA.
The financial covenants specified in the agreements with BRD – Groupe Societe Generale,
Unicredit Bank, Banca Comerciala Romana, European Bank for Reconstruction and Development
and European Investment Bank have been fulfilled as at 31 December 2022.
Pledged Assets
On 31 December 2022, for several overdrafts the Group has pledges (guarantees) for trade
receivables amounts, as specified on contracts.
h) Loan for financing current activity granted by Eximbank Romania
Bank Guarantees
On 22 December 2022, Distributie Energie Electrica Romania S.A., as a borrower, concluded with
Eximbank Romania a credit agreement for a period of 24 months. The main provisions are: Maximum loan
amount: 250,000 thousand RON; Interest rate: ROBOR 3M +1.65 % p.a.; Repayments: 6 equal quarterly instal-
ments; Grace period: 6 months.
On 31 December 2022, the outstanding balance is RON 4,110 thousand. The loan benefits
from a guarantee in the name and account of the state and is guaranteed by Electrica SA.
i) Line of Credit for working capital and for issuing Bank Guarantee Letters granted by Vista
Bank
On 30 December 2022, Societatea Energetica Electrica S.A., as the borrower, concluded a contract for
a line of credit for working capital and for the issuance of Bank Guarantee Letters granted by Vista Bank for a
period of 18 months. The main provisions are: Maximum credit amount: 100,000 thousand RON; Interest rate:
ROBOR 3M +2.95 % p.a.; full refund at maturity. On 31 December 2022, the balance of the loan is 100,000 thou-
sand RON.
Overdrafts
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, BRD – Groupe Societe
Generale S.A., Alpha Bank and UniCredit) with a total overdraft limit of up to RON 2,743,542 thou-
sand (Total overdraft limit as at 31 december 2021: RON 1,830,000 thousand).
The overdraft facilities are used for financing activities. The outstanding balance of the over-
draft facilities as at 31 December 2022 is of RON 2,571,037 thousand (31 December 2021: RON 627,402
thousand).
Lender (overdrafts)
Borrower
Balance at 31 December
2022
Balance at 31 December
2021
ING Bank N.V
Alpha Bank
BCR
BRD
Banca Transilvania
ING Bank N.V
Raiffeisen Bank
UniCredit Bank
BCR
Banca Transilvania
ING Bank N.V
Intesa San Paolo
Raiffeisen Bank
Total overdrafts
Societatea Energetica
Electrica S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
209,138
147,497
227,311
216,570
185,528
169,600
343,001
300,294
208,412
158,965
49,855
135,096
219,770
2,571,037
120,691
-
16,125
-
-
-
282,477
-
-
109,748
-
98,361
-
627,402
The maximum limit of the facility for issuing bank guarantees (credit facility for issuing gu-
arantee instruments and multi-product lines) RON 2,502,000 thousand, of which non-cash uses RON
1,045,153 thousand.
Financial instruments
30 Financial instruments - fair values and risk management
(a) Accounting classifications and fair values
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 inte-
rest 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:
y credit risk;
y liquidity risk;
y 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 receiva-
bles 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 sta-
te-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 2022:
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
387
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
386
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Expected
credit loss rates
(“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
31 December 2022
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
3%
4%
16%
35%
95%
1,951,656
(60,310)
1,891,346
490,985
(19,342)
471,643
66,365
(10,488)
27,259
(9,671)
55,877
17,588
582,426
(552,878)
29,548
3,118,691
(652,689)
2,466,002
No
No
No
No
Yes
The Group performed a sensitivity analysis and a 5% increase in the expected credit loss
rates would not lead a material impact on the results of the Group.
The following table provides information about the exposure to credit risk and expected
credit losses for trade receivables for customers as at 31 December 2021:
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%
1,080,179
(16,615)
1,063,564
228,537
(10,598)
217,939
36,646
(5,317)
31,329
15,428
(5,930)
9,498
964,687
(942,398)
22,289
2,325,477
(980,858)
1,344,619
No
No
No
No
Yes
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 29).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting
date. The amounts are gross and undiscounted.
Financial
liabilities
31 December
2022
Bank
overdrafts
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than 5
years
2,571,037
2,571,037
2,571,037
-
-
-
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than 5
years
53,673
53,673
19,211
10,795
10,645
13,022
760,713
760,713
113,520
354,471
200,505
92,217
1,407,097
1,407,097
1,407,097
-
-
-
4,792,520
4,792,520
4,110,865
365,266
211,150
105,239
627,402
627,402
627,402
21,544
21,544
9,442
-
4,874
-
5,071
-
2,157
628,489
628,489
509,733
27,455
82,372
8,929
891,335
891,335
891,335
-
-
-
2,168,770
2,168,770
2,037,912
32,329
87,443
11,086
Financial
liabilities
Lease liability
Long
term bank
borrowings
Trade
payables
Total
31 December
2021
Bank
overdrafts
Lease liability
Long-
term bank
borrowings
Trade
payables
Total
(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 ob-
jective 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 liabili-
ties 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 transac-
tions 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:
.
31 December 2022
denominated in EUR
in thousands of RON
Cash and cash equivalents
Lease liability
Net statement of financial position
exposure
The following significant exchange rates have been applied during the year:
277
(21,004)
(20,727)
31 December 2021
denominated in EUR
812
(19,118)
(18,306)
.
I
A
S
A
C
R
T
C
E
L
E
RON
EUR 1
Average rate
Year-end spot rate
2022
2021
2022
2021
4.9315
4.9204
4.9474
4.9481
Sensitivity analysis
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.
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
389
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
388
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Effect
31 December 2022
EUR (5% movement)
31 December 2021
EUR (5% movement)
Interest rate risk
Profit before tax
Strengthening
Weakening
Other information
31 Acquisition of subsidiaries
(1,036)
(915)
1,036
915
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.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
31 December 2022
31 December 2021
Fixed-rate instruments
Financial assets
Call deposits
Financial liabilities
Long-term bank borrowings
Lease liability
Variable-rate instruments
Financial liabilities
Lease liability
Long-term bank borrowings
Bank overdrafts
193,219
(651,752)
(37,378)
(495,911)
(16,295)
(108,961)
(2,571,037)
(2,696,293)
53,897
(418,893)
(8,276)
(373,272)
(13,268)
(209,596)
(627,402)
(850,266)
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.
31 December 2022
Variable-rate instruments
31 December 2021
Variable-rate instruments
Profit before tax
50 bp increase
50 bp decrease
(13,481)
(4,251)
13,481
4,251
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
390
On 6 September 2022, Electrica acquired 75% of Green Energy Consultancy & Investments
S.R.L. shares granting control of the entity.
On 21 March 2022 the Group acquired an additional 30% of the shares and voting interests
in Sunwind Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gaining
control of Sunwind Energy S.R.L..
On 27 May 2022 the Group acquired an additional 30% of the shares and voting interests in
New Trend Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gaining
control of New Trend Energy S.R.L..
The Group has concluded that the new purchased subsidiaries represent a business
combination.
Taking control of both New Trend Energy S.R.L. and Sunwind Energy S.R.L. will enable the
Group to develop a portfolio of electricity generation capacities from renewable sources.
A. Consideration transferred
The Consideration transferred for the shares acquired was as follows:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
Cash
Fair value of pre-
existing interest
Consideration
transferred
1,446
-
1,446
802
4,786
5,588
2,204
2,190
4,394
4,452
6,976
11,428
B. Acquisition-related costs
The Group incurred acquisition-related costs of RON 100 thousand relating to external legal
fees and due diligence costs. These costs have been included in “Other operating expenses” in the
condensed consolidated statement of profit or loss.
C. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities
assumed at the date of acquisition:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
239
-
-
1
273
6,095
46
7
163
2,862
20
-
675
8,957
66
8
240
6,421
3,045
9,706
(196)
-
-
(47)
(1)
(1)
(198)
(6,764)
(3,184)
(9,948)
(332)
(8)
(191)
-
(523)
(55)
Property, plant and
equipment
Right of use assets
Trade and other
receivables
Cash and Cash
equivalents
Total assets
Trade and other
payables
Finance lease
liability
Other non-current
liabilities
Other payables
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
391
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Total liabilities
Net assets
(243)
(3)
(7,105)
(684)
(3,376)
(331)
(10,724)
(1,018)
and system services and sale of electricity. Significant purchases and balances are mainly with ener-
gy producers/suppliers, as follows:
D. Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
1,446
5,588
4,394
11,428
(1)
(274)
(132)
(407)
3
1,448
684
5,998
331
1,018
4,593
12,039
Consideration
transferred
NCI, based on
their proportionate
interest in the
recognised amounts
of the assets and
liabilities
Fair value of
identifiable net
assets
Goodwill
The goodwill is attributable mainly to the know-how of the projects and the synergies expec-
ted to be achieved from integrating the companies into the Group’s existing business. The manage-
ment has concluded by assessing internal and external sources, that there is no indication that the
goodwill may be impaired. None of the goodwill recognized is expected to be deductible for tax
purposes.
32 Related parties
(a) Main shareholders
As at 31 December 2022 and 31 December 2021, 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
Executive Management
compensation
2022
2021
34,726
34,429
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:
2022
2021
Members of Board of Directors
3,063
3,992
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration po-
licy approved by the General Meeting of Shareholders that took place on 20 April 2022, 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 2022 and 2021.
(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 in-
fluence in the ordinary course of business, related mainly to the acquisition of electricity, transport
Supplier
OPCOM
Transelectrica
Nuclearelectrica
Hidroelectrica
Complexul Energetic
Oltenia
OMV Petrom SA
SNGN Romgaz SA
Electrocentrale
Bucuresti
ANRE
Transgaz
Others
Total
Purchases (without VAT)
2022
2021
2,727,101
968,470
866,763
581,598
478,813
261,123
197,490
191,862
10,458
8,029
7,768
6,299,475
1,700,630
756,925
512,915
241,722
396,072
-
10,727
34,776
10,320
8,958
7,889
3,680,934
Balance (including VAT)
31 December 2022
23,981
185,856
93,013
42,493
45,257
26,349
7,445
-
14
986
1,168
426,562
31 December 2021
29,203
155,931
43,343
19,711
31,502
-
3,305
-
132
1,226
1,332
285,685
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:
Client
OPCOM
Transelectrica
SNGN Romgaz SA
Hidroelectrica
CN Romarm
CFR Electrificare
Transgaz
CN Remin SA
C.N.C.A.F MINVEST
SA
-Oltchim
CET Braila
Termoelectrica
Others
Total
Client
OPCOM
Transelectrica
SNGN Romgaz SA
Hidroelectrica
CN Romarm
CFR Electrificare
C.N.C.F CFR SA
CNAIR
Municipiul Galati
Sales
(without VAT)
2022
Balance, gross
(including VAT)
Allowance
(including VAT)
31 December 2022
Balance, net
326,640
314,253
86,353
68,716
17,386
10,332
11,580
704
-
-
5
0
127,686
963,655
22,630
112,754
2,253
16,429
648
2,089
764
71,279
26,802
115,943
3,365
1,206
11,277
387,439
-
-
9
-
0
-
0
71,148
26,802
115,943
3,361
1,206
522
218,991
22,630
112,754
2,245
16,429
648
2,089
764
132
-
-
3
-
10,754
168,448
.
Sales
(without VAT)
Balance, gross
(including VAT)
Allowance
(including VAT)
Balance, net
2021
31 December 2021
162,855
92,505
48,099
19,622
14,156
10,410
8,281
6,928
4,568
28,468
27,091
1,664
2,638
1,093
507
701
962
12
-
-
-
-
-
-
(1)
-
(12)
28,468
27,091
1,664
2,638
1,093
507
700
962
-
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
393
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
392
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Client
Transgaz
CN Remin SA
C.N.C.A.F MINVEST
SA
Oltchim
CET Braila
Termoelectrica
National Agency for
Payments and Social
Inspection
Ministry of Energy
Altii
Total
Sales
(without VAT)
Balance, gross
(including VAT)
Allowance
(including VAT)
Balance, net
2021
31 December 2021
2,249
700
-
-
9
-
-
-
32,956
403,338
1,571
71,216
26,802
-
(71,216)
(26,802)
536,156
(536,156)
3,361
1,206
59,271
11,420
2,204
(3,361)
(1,206)
-
-
(536)
776,343
(639,290)
1,571
-
-
-
-
-
59,271
11,420
1,668
137,053
33 Contingencies
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 lia-
bilities 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 inconsisten-
cy 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 con-
trols and litigations with tax authorities. The management of the Group believes that adequate pro-
visions 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 re-
presenting building tax for the period 01.01.2012-31.12.2015 in the total amount of RON 24,831 thou-
sand, 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. The amount of late charges was recalculated to
RON 13,021 thousand between the tax inspection report date and principal debt payment date.
Litigious actions were started in order to challenge the tax inspection report.
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”. At the
same time, for the late penalties in the amount of RON 13,021 thousand, a letter of bank guarantee
was established in the amount of RON 13,021 thousand valid until 10 August 2023, in order to mitiga-
te the associated risks.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
394
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 28, 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 mana-
gement 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 pre-
liminary ruling was issued so far).
34 Commitments
(a) Contractual commitments
Contractual commitments as at 31 December 2022 and 31 December 2021 are as follows:
31 December 2022
31 December 2021
Purchase of electricity
Purchase of green certificates
Purchase of property, plant and
equipment and intangible assets
Purchase of investments
Total
(b) Investment program
802,252
129,246
446,937
289,636
1,668,071
The investment program at Group level approved for the year 2023 is as follows:
2023
Distribution activity
Supply activity
Maintenance activity
Production activity
Other/ shared
Total
3,200,154
132,937
212,930
60,485
3,606,506
848,800
61,200
10,500
343,000
33,500
1,297,000
The capital expenditures actually incurred may differ from the ones planned.
.
(c) Guarantees and pledges
At 31 December 2022 and 31 December 2021, 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 29), 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 29).
At 31 December 2022, the Group has outstanding bank letters of guarantee of RON 952,008
thousand (31 December 2021: RON 1,088,629 thousand) issued in favour of its suppliers.
(d) Audit fees
The audit fees for the consolidated financial statements were in amount of 957 thousand
RON, and during the year 2022, non-audit services fees were in amount of 377 thousand RON (limi-
ted review of the interim consolidated financial statements, verification of the degree of fulfilment of
the financial indicators stipulated in the contract, analysis and verification of transactions reported
according to art. 923 para. 5 of Law no. 24/2017).
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
395
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
35 Subsequent events
Vulturu project
The project company Green Energy Consultancy & Investments S.R.L, having as main object
of activity the production of energy from photovoltaic sources, was acquired 100% on 6 February
2023, until 31 December 2022 was acquired 75% (please see note 1). Green Energy Consultancy &
Investments S.R.L. develops the photovoltaic project “Vulturu”, with a designed installed capacity of
12 MWp DC (peak power at the panels level) and 9.75 MW AC (authorised power for delivery into the
grid), located near Vulturu locality, Vrancea county. The project is in the “ready-to-build” phase.
Concession agreements amendments
On 20 January 2023, the Ministry of Energy as concessionainre amended the concession
agreement with the Group for the distribution segment to reflect that in case of early termination of
the concession agreement, for any reasons, the cocessionaire would reimburse to the Group the
value of actual costs with the purchase of electricity for own technological consumption compared
to the costs included in the regulated tariffs.
The amendments to the concession agreements have been agreed with the Ministry of
Finance before 31 December 2022, however the addendums were issued on 20 January 2023. As all
facts and circumstances were available as of 31 December 2022, the Group accounted for these
amendments as a subsequent adjusting event for the year ended 31 December 2022 and recognised
a intangible assets, which is further detailed in Note 23.
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
07 March 2023
.
.
.
I
A
S
A
C
R
T
C
E
L
E
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
396
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
397
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Independent Auditor’s Report on the
2022 Consolidated Financial Statements
(OMFP 2844/2016)
398
399
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
Deloitte Audit S.R.L.
Clădirea The Mark Tower,
Calea Griviței nr. 82-98,
Sector 1, 010735
București, România
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
www.deloitte.ro
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
SOCIETATEA ENERGETICA ELECTRICA S.A.
Report on the Audit of the Consolidated Financial Statements
Opinion
1. We have audited the consolidated financial statements of SOCIETATEA ENERGETICA ELECTRICA S.A. and its subsidiaries (the
Group), with registered office in Bucharest, District 1, Street Grigore Alexandrescu, No. 9, identified by unique tax registration
code 13267221, which comprise the consolidated statement of financial position as at December 31, 2022, and the
consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement
of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies and notes to the consolidated financial statements.
2.
The consolidated financial statements as at December 31, 2022 are identified as follows:
• Net assets / Equity
• Net profit for the financial year
RON 5,367,246 thousand
RON 558,845 thousand
3.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at December 31, 2022, and its consolidated financial performance and its consolidated cash
flows for the year then ended in accordance with Ministry of Finance Order 2844/2016, with subsequent amendments.
Basis for Opinion
4. We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the
European Parliament and the Council (forth named “the Regulation”) and Law 162/2017 (“the Law”). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section
of our report. We are independent of the Company in accordance with the International Ethics Standards Board for
Accountants’ Code of Ethics for Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for
the audit of the financial statements in Romania including the Regulation and the Law and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
5. We draw attention to Note 7 of the consolidated financial statements, which describes that starting from 2022 the Group
prepares two sets of consolidated financial statements, one under statutory regulations, namely Ministry of Finance Order
2844/2016 with subsequent amendments and one under International Financial Reporting Standards as adopted by the
European Union (“IFRS”). These consolidated financial statements are prepared under OMF 2844/2016 with subsequent
amendments, which differs from IFRS as summarized in Note 7. Consequently, these consolidated financial statements do not
comply with IFRS. Our audit report is not modified in respect of this matter.
Key Audit Matters
6.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key audit matters
How our audit addressed the key audit matter
Capitalized Intangible Asset resulting from technological
consumption losses incurred during 2022
As presented in Note 23 to the consolidated financial
statements, the Group has capitalized as intangible asset
during 2022 the difference between the effective costs
related to the acquisition of electricity and the costs
included ex-ante by the market regulator in the tariffs for
2022, related to technological consumption purposes. The
income recorded following the recognition of the intangible
asset, has been presented as Other income from
production of intangible assets and amounts to RON
989,291 thousand.
The intangible asset is depreciated on a period of 5 years on
a straight line basis.
The change in the local accounting legislation was
introduced starting with September 2022 (MOF 3900/2022)
and permits electricity distributors to recognize regulatory
deferral amounts only for the losses incurred during 2022.
Given that under normal trading circumstances such assets
are not recognized and also the significance of the amounts
recorded as intangible assets we consider this to be a key
audit matter
Going Concern
As presented in Note 6 the consolidated financial
statements have been prepared on the going concern basis.
The key judgement leading to this conclusion are set out in
that note.
In particular the Group operates in the electricity
distribution and supply industry which is currently affected
by the capping laws on sales to end customers. The
Romanian authorities regulatory position is under review
and there may be further laws enacted which could
adversely impact the Group’s operating cash flows. In the
forthcoming twelve months the Group will need to obtain
additional financing and given the position of the Group
and its significance to the Romanian economy management
expects that all necessary financing will be made available.
The ability of the Group to continue as a going concern is
dependent on the successful extension of the existing debt
facilities, drawdown of new financing and 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 financings.
In view of the significant judgements, the application and
disclosures of the basis of the going concern assumption
are considered a Key Audit Matter.
In assessing whether the intangible asset has been properly
recognized in the consolidated financial statements we
performed the following procedures:
• We have obtained the confirmation received by the
Group from the market regulator, confirming the
amount recorded as intangible asset as at December
31, 2022;
• We assessed whether the provisions of MOF
2844/2016 with subsequent amendments have been
properly applied in the consolidated financial
statements;
• We have reviewed the management assessment of the
recoverability of the intangible asset, which is based
upon the regulatory framework for setting future
tariffs;
• We assessed the adequacy of the disclosure in the
consolidated financial statements.
We have assessed managements valuation of the going concern
assumption by performing the following procedures:
• We have obtained the cash flow forecasts and critically
challenged the management and the Board of Directors
and Audit Committee on the assumptions used;
• We considered whether at the date of this report
additional information exist from the Romanian authorities
with respect to the capping mechanism;
• We have assessed the Group’s position on the existing
debt facilities, covenant compliance and newly negotiated
debt facilities, during 2023 until the date of this report;
• We considered the Group’s requirements to secure
additional financing in light of its position in the Romanian
market;
• We assessed the adequacy of the disclosure of the basis of
going concern assumption, including the key judgements
adopted;
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
2
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
400
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
401
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
Key audit matters
How our audit addressed the key audit matter
Valuation of Retail accrued revenue, related to
electricity supplied to households
The Group recognizes at the end of each reporting
period accrued revenue from the energy supply
activity, related to the household population. If the
actual meter readings are not available at the end of
the reporting period, energy supplied to households is
estimated based on internal information related to
historical patterns of consumption. The degree of
estimation uncertainty reduces from one period to
another, however judgement is inherent in the
valuation of the accrued revenue related to the
household population.
Because of the significance of the estimations around
the accrued revenue related to the households and
the inability of relying on the effectiveness of the
controls, we consider the valuation of retail accrued
revenue, related to households a key audit matter.
The group has a number of IT systems across the businesses and we
were not able to rely on the effectiveness of IT controls within the
revenue cycle. The audit procedures adopted were substantive in
nature and included the following:
•
•
•
•
•
Obtaining an understanding of the accounting policies used in
the preparation of the consolidated financial statements, with
respect to revenue recognition;
Testing the reconciliation made by the Group between the
quantity of electricity purchased for supply purposes and the
quantity of electricity delivered from the supply activity;
Testing the acquired electricity for supply purposes through a
combination of direct confirmations received from the
electricity producers and other supporting documents;
Testing the revenues related to electricity supplied to
customers on the free market through a combination of direct
confirmations and other supporting documents;
Testing the revenues related to electricity supplied to all
customers on the universal service by means of independent re-
computation of the revenues, using the tariffs published for
2022; and
•
Performing analytical procedures on all electricity sales.
Other information – Administrator’s Report
7.
The administrators are responsible for preparation and presentation of the other information. The other information
comprises the Administrator’s report and the Remuneration Report, but does not include the consolidated financial
statements and our auditor’s report thereon.
.
Our opinion on the financial statements does not cover the other information and, unless otherwise explicitly mentioned in
our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements for the year ended December 31, 2022, our
responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
With respect to the Administrator’s report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments.
With respect to the Remuneration report, we read it and report if this has been prepared, in all material respects, in
accordance with the provisions of Law 24/2017, articles. no. 106 – 107.
On the sole basis of the procedures performed within the audit of the consolidated financial statements, in our opinion:
a)
b)
the information included in the administrators’ report and the Remuneration report for the financial year for which
the financial statements have been prepared, is consistent, in all material respects, with these financial statements;
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of Ministry
of Public Finance Order no. 2844/2016, with subsequent amendments,;
.
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A
402
c)
the Remuneration report has been prepared, in all material respects, in accordance with the provisions of Law
24/2017, articles. no. 106 – 107.
Moreover, based on our knowledge and understanding concerning the Group and its environment gained during the audit of
the consolidated financial statements prepared as at December 31, 2022, we are required to report if we have identified a
material misstatement of this Administrator’s report and remuneration report. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
8. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with Order 2844/2016, with subsequent amendments and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to
fraud or error.
9.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
10. Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
11. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
12. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's
internal control.
.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a
going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
.
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403
3
4
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (OMFP 2844/2016)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (OMFP 2844/2016)
13. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
14. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
15. From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
16. We have been appointed by the General Assembly of Shareholders April 28, 2021 to audit the consolidated financial
statements of Societatea Energetica Electrica S.A. for the financial year ended December 31, 2022. The uninterrupted total
duration of our commitment is 5 years, covering the financial years ended December 31, 2018 to December 31, 2022.
We confirm that:
• Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that we
issued the same date we issued and this report. Also, in conducting our audit, we have retained our independence from
the audited entity.
• No non-audit services referred to in Article 5 (1) of EU Regulation No. 537/2014 were provided.
The engagement statutory auditor on the audit resulting in this independent auditor’s report is Răzvan Ungureanu.
Răzvan Ungureanu, Statutory Auditor
For signature, please refer to the original
signed Romanian version.
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under AF 4866
On behalf of:
DELOITTE AUDIT SRL
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under FA 25
The Mark Building, 84-98 and 100-102 Calea Griviței, 9th Floor, District 1
Bucharest, Romania
March 7, 2023
5
.
.
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N
N
A
405
.
.
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404
2022 Consolidated Financial
Statements (IFRS-EU)
406
407
2022 Consolidated Financial Statements (IFRS-EU)
2022 Consolidated Financial Statements (IFRS-EU)
2022 Consolidated
Financial Statements
(IFRS-EU)
SOCIETATEA ENERGETICA ELECTRICA S.A.
Consolidated Financial Statements
as at and for the year ended
31 December 2022
prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
.
.
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408
Content
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS-EU) ..........................410
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (IFRS-EU) ......................................412
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS-EU) ..............413
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS-EU) ............................414
CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS-EU) ..............................................416
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU) ...................418
Basis of preparation .....................................................................................................................................418
1 Reporting entity and general information .....................................................................................418
2 Basis of accounting ................................................................................................................................424
3 Functional and presentation currency ...........................................................................................424
4 Use of judgements and estimates ....................................................................................................424
Accounting policies ......................................................................................................................................426
5 Basis of measurement ...........................................................................................................................426
6 Significant accounting policies .........................................................................................................426
7 Adoption of new and revised standards and interpretations .................................................440
Performance for the year ..........................................................................................................................442
8 Operating segments ...............................................................................................................................442
9 Revenue ......................................................................................................................................................445
10 Electricity and natural gas purchased ...........................................................................................445
11 Other income and expenses ................................................................................................................445
12 Net finance cost ......................................................................................................................................446
13 Earnings/(loss) per share ...................................................................................................................446
Employee benefits ........................................................................................................................................447
14 Short-term employee benefits .........................................................................................................447
15 Post-employment and other long-term employee benefits .................................................447
16 Employee benefit expenses ..............................................................................................................450
Income taxes ....................................................................................................................................................450
17 Income taxes ............................................................................................................................................450
Assets ...................................................................................................................................................................452
18 Trade receivables ...................................................................................................................................452
19 Other receivables ..................................................................................................................................454
20 Cash and cash equivalents ..............................................................................................................454
21 Inventories .................................................................................................................................................454
22 Property, plant and equipment ........................................................................................................455
23 Intangible assets ....................................................................................................................................457
24 Investments in associates ...................................................................................................................459
25 Financial assets related to concession arrangements .............................................................460
Equity and liabilities .....................................................................................................................................460
26 Capital and reserves .............................................................................................................................460
27 Trade payables ......................................................................................................................................462
28 Other payables ......................................................................................................................................462
29 Provisions ................................................................................................................................................462
30 Bank borrowings and overdrafts .....................................................................................................463
Financial instruments ..................................................................................................................................466
31 Financial instruments - fair values and risk management ......................................................466
Other information ..........................................................................................................................................470
32 Acquisition of subsidiaries ................................................................................................................470
33 Related parties ......................................................................................................................................472
34 Contingencies ........................................................................................................................................473
35 Commitments .........................................................................................................................................474
36 Subsequent events ..............................................................................................................................475
.
.
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409
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS-EU)
AS AT 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS-EU)
AS AT 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS-EU)
AS AT 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
31 December 2022
31 December
2021
Note
31 December 2022
31 December
2021
Note
31 December 2022
31 December
2021
ASSETS
Non-current assets
Intangible assets related to
concession arrangements
Other intangible assets
Goodwill
Property, plant and
equipment
Investments in associates
Other investments
Financial assets related to
concession arrangements –
non current portion
Deferred tax assets
Other non-current assets
Right of use assets
Total non-current assets
Current assets
Trade receivables
Subsidies receivable
Other receivables
Cash and cash equivalents
Inventories
Prepayments
Financial assets related to
concession arrangements –
current portion
Current income tax receivable
Assets held for sale
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Share capital
Share premium
Treasury shares reserve
Pre-paid capital contributions
in kind from shareholders
Revaluation reserve
Legal reserves
Retained earnings
Total equity attributable to
the owners of the Company
Non-controlling interests
Total equity
(continued on next page)
23
23
32
22
24
25
17
18
11
19
20
21
25
26
26
26
26
26
26
32
5,675,866
5,514,557
12,854
12,040
499,390
18,824
7,000
761,246
30,180
2,393
52,152
7,071,945
2,466,002
1,280,788
127,253
334,887
113,972
13,874
190,311
24,000
280
4,551,367
8,983
-
505,419
25,810
-
-
83,531
1,661
20,945
6,160,906
1,344,619
-
48,600
221,830
72,958
5,034
-
23,777
5,412
1,722,230
11,623,312
7,883,136
3,464,436
103,049
(75,372)
7
92,117
429,583
1,353,942
5,367,762
(516)
5,367,246
3,464,436
103,049
(75,372)
7
102,829
408,405
950,228
4,953,582
-
4,953,582
.
.
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410
Liabilities
Non-current
liabilities
Lease liability –
long term
Deferred tax
liabilities
Employee
benefits
Other payables
Long-term bank
borrowings
Total non-
current
liabilities
Current
liabilities
Current portion
of long-
term bank
borrowings
Lease liability –
short term
Bank overdrafts
Trade payables
Other payables
Deferred
revenue
Employee
benefits
Provisions
Current tax
liabilities
Total current
liabilities
Total liabilities
17
15
28
30
30
30
27
28
14,15
29
Total equity
and liabilities
The accompanying notes are an integral part of these consolidated financial statements.
11,623,312
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
24 March 2023
34,462
212,555
117,269
72,432
647,193
12,102
161,926
149,177
32,732
118,756
1,083,911
474,693
113,520
19,211
2,571,037
1,407,097
867,536
24,750
114,174
53,701
1,129
5,172,155
6,256,066
509,733
9,442
627,402
891,335
271,263
9,662
101,102
34,922
-
2,454,861
2,929,554
7,883,136
.
.
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411
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, except per share data)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2022
2021
Note
2022
2021
Revenue
Other income
Electricity and natural gas
purchased
Construction costs related to
concession agreements
Employee benefits
Repairs, maintenance and materials
Depreciation and amortization
Impairment for trade and other
receivables, net
Other operating expenses
Operating profit/(loss)
Finance income
Finance costs
Net finance costs
Share of results of associates
Profit/(Loss) before tax
Income tax benefit/(expense)
Profit/(Loss) for the year
9
11
10
23
16
22,23
18,19
11
12
12
26
17
Profit/(Loss) for the year attributable
to:
–
–
owners of the Company
non-controlling interests
Profit/(Loss) for the year
.
10,009,896
3,792,520
7,178,864
195,771
(10,506,809)
(5,694,724)
(593,490)
(823,422)
(88,229)
(496,253)
(112,311)
(352,971)
828,931
9,718
(174,713)
(164,995)
(485,813)
(802,676)
(102,356)
(480,830)
(70,616)
(343,147)
(605,527)
2,647
(29,528)
(26,881)
(13)
(3)
663,923
(105,078)
558,845
558,954
(109)
558,845
(632,411)
79,529
(552,882)
(552,882)
-
(552,882)
(1.63)
.
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Earnings/(Loss) per share
Basic and diluted earnings/(loss) per
share (RON)
The accompanying notes are an integral part of these consolidated financial statements.
1.65
13
Profit/(Loss) for the year
558,845
(552,882)
Other comprehensive
income
Items that will not be
reclassified to profit or
loss
Re-measurements of the
defined benefit liability
Tax related to re-
measurements of the
defined benefit liability
Other comprehensive
income/(loss), net of tax
Total comprehensive
income/(loss)
Total comprehensive
income/(loss)
attributable to:
–
Company
owners of the
–
controlling interests
non-
15
17
9,503
(1,479)
(5,891)
(45)
8,024
(5,936)
566,869
(558,818)
566,978
(558,818)
(109)
-
Total comprehensive
income/(loss)
The accompanying notes are an integral part of these consolidated financial statements.
566,869
(558,818)
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
24 March 2023
.
.
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Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
24 March 2023
2
2
0
2
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N
N
A
412
2
2
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2
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R
L
A
U
N
N
A
413
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
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i
CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS-EU)
FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
Note
2022
2021
Note
2022
2021
22
23
25
22,23
22,23
18,19
29
12
14
24
17
Cash flows from operating
activities
Profit/(Loss) for the year
Adjustments for:
Depreciation
Amortisation
Other income from initial
recognition of financial
assets rising from concession
agreements amendments
Reversal of impairment of
property, plant and equipment
and intangible assets, net
(Gain)/Loss on disposal of
property, plant and equipment
and intangible assets
Impairment of trade and other
receivables, net
Impairment of assets held for
sale
Change in provisions, net
Net finance income
Changes due to employee
benefits
Share of loss of associates
Income tax expense/(benefit)
Changes in:
Trade receivables
Subsidies receivable
Other receivables
Prepayments
Inventories
Trade payables
Other payables
Provisions and employee
benefits
Deferred revenue
Cash used in operating
activities
Interest paid
Income tax paid
Net cash flow used in
operating activities
(Continued on next page)
558,845
19,915
476,469
(951,557)
(552,882)
21,118
459,712
-
(5)
(3,942)
(393)
112,311
-
18,779
164,995
(4,358)
13
105,078
500,092
(1,286,734)
(1,280,788)
(138,335)
(8,840)
(41,014)
494,611
722,407
(6,454)
15,088
(1,029,967)
(149,397)
(1,232)
2,651
70,616
646
15,684
26,881
5,054
3
(79,529)
(33,988)
(391,401)
-
(22,904)
(2,217)
(2,892)
274,825
32,504
3,166
4,033
(138,874)
(24,110)
(31,366)
(1,180,596)
(194,350)
Cash flows from investing
activities
Payments for purchases
of property, plant and
equipment
Payments for network
construction related to
concession agreements
Payments for purchase of
other intangible assets
Proceeds from sale of
property, plant and
equipment
Interest received
Acquisition of investments
in associates
Payments for acquisition
of subsidiaries, net of
cash acquired
Restricted cash
Net cash flow used in
investing activities
Cash flows from financing
activities
Proceeds from long-term
bank borrowings
Proceeds from overdrafts
Repayment of long-term
bank loans
Payment of lease
liabilities
Dividends paid
Net cash generated from
(used in)/ financing
activities
23
24
32
20
30
30
26
(8,295)
(10,490)
(537,782)
(483,808)
(7,829)
(6,306)
614
2,847
(3)
(4,452)
-
(554,900)
217,561
1,900,371
(92,925)
(24,163)
(152,291)
1,469
1,765
(25,813)
-
320,000
(203,183)
234,690
-
(385,851)
(15,226)
(247,615)
1,848,553
(414,002)
113,057
Net increase/(decrease)
in cash and cash
equivalents
Cash and cash equivalents
at 1 January
Reclassification of
overdrafts previously
presented as cash and
cash equivalents
Cash and cash
equivalents at 31
December
The accompanying notes are an integral part of these consolidated financial statements.
(405,572)
334,887
627,402
20
20
20
(811,535)
405,963
-
(405,572)
The non-cash transactions are disclosed in Note 20.
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
24 March 2023
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
417
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
416
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022
(All amounts are in THOUSAND RON, if not otherwise stated)
.
.
I
A
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A
C
R
T
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E
L
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0
2
T
R
O
P
E
R
L
A
U
N
N
A
418
Basis of preparation
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 2022.
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 registra-
tion number J40/7425/2000.
As at 31 December 2022 and 31 December 2021, 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 2022 and 31 December 2021, the Company’s subsidiaries are the following:
Subsidiary
Activity
Sole registration
code
Head Office
% shareholding as at
31 December 2022
% shareholding as
at 31 December
2021
Distributie Energie
Electrica Romania
S.A. (“DEER”)
Electricity distribu-
tion in geographical
areas Transilvania
Nord, Transilvania
Sud and Muntenia
Nord
Electrica Furnizare
S.A.
Electricity and nat-
ural gas supply
Electrica Serv S.A.
Services in the en-
ergy sector (main-
tenance, repairs,
construction)
Electrica Produc
Energie S.A.
ie
Electricity gener-
ation
ț
Electrica Energie
Verde 1 SRL*
(“EEV1” – formerly
Long Bridge
Milenium SRL)
Sunwind Energy
S.R.L.
New Trend Energy
S.R.L.
Green Energy
Consultancy &
Investments S.R.L.
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
14476722
Cluj-Napoca
99.99999929%
99.99999929%
28909028
Bucuresti
99.9998444099934% 99.9998415011992%
17329505
Bucuresti
99.99998095%
99.99998095%
44854129
Bucuresti
99.9920%
99.9920%
19157481
Bucuresti
100%*
100%*
42910478
Constanta
42921590
Constanta
29172101
Prahova
60%
60%
75%
-
-
-
*indirect shareholding - Electrica Energie Verde 1 SRL is 100% owned by the subsidiary Electrica
Productie Energie S.A.
As at 31 December 2022 and 31 December 2021, the Company’s associates are the following:
Associate
Activity
Sole registration
code
Head Office
% shareholding
as at 31
December 2022
% shareholding
as at 31
December 2021
Crucea Power
Park SRL
Sunwind Energy
SRL
New Trend
Energy SRL
Foton Power
Energy S.R.L.
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
Electricity gener-
ation
25242042
Constanta
30%
42910478
Constanta
42921590
Constanta
-
-
30%
30%
30%
43652555
Constanta
30%
30%
Changes in Group structure during 2022
Acquisition of shares in subsidies
On 21 March 2022, the Group acquired an additional 30% of the shares and voting interests
in Sunwind Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gran-
ting control of Sunwind Energy S.R.L. (for further details please see Note 32).
On 27 May 2022, the Group acquired an additional 30% of the shares and voting interests in
New Trend Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gran-
ting control of New Trend Energy S.R.L. (for further details please see Note 32).
On 6 September 2022, Electrica acquired 75% of Green Energy Consultancy & Investments
S.R.L. shares granting control of the entity (for further details please see Note 32).
Group’s main activities
The main activities of the Group include operation and construction of electricity distributi-
on 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 Bistrita Nasaud 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 re-
sulted 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 ope-
rates 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. 3.5 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. In 2022 Electrica Furnizare S.A. was supplier of
last resort (SoLR) nominated for electricity in February, March, July and December. For the natural
gas supply activity, EFSA was SoLR nominated in September 2022. At the same time, Electrica
Furnizare S.A. ensures the supply of electricity for household customers supplied under universal
service regime.
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 five shares sales and purchase agreements in five project companies having
as main activity the production of energy from renewable sources the Group entered on the electri-
city 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 capa-
city limited MW to 6.8). In 2022 the operation of the plant was continuous, with no significant events
leading to production shutdowns, producing in total MWh 10,466 (2021: MWh 9,767). 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.
.
.
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L
E
2
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2
T
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A
U
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N
A
419
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(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 substantia-
tion methodologies used to set regulated prices and tariffs.
Electricity distribution
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 distribu-
tion 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 (related to distribution network); 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 13 May 2020, the regulated rate of return („RRR”) of BAR is 6.39% to which is
added:
– 1% incentive for new investments in RED, approved by ANRE;
– 2% 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 in-
vestments are performed and put into function by operators after 1 February 2021, appro-
ved by ANRE;
– 1% incentive for investments in projects of common interest (PIC), approved by ANRE.
Regarding the costs of electricity purchased for own technological consumption (“NL”):
– 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 an important change in distribution service costs;
– at the justified request of the Distribution Operator, the regulated revenue of year t + 1 may
include a cost adjustment of regulated own technological consumption (“NL”) 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.
In 2022, according to the Government’s emergency ordinance (GEO) no. 119/2022, the addi-
tional costs for purchased electricity (determined as the difference between the realized costs and
the costs included in the approved distribution tariffs), made between 1 January 2022 and 31 August
2023, in order to cover the own technological consumption, compared to the costs included in the
tariffs regulated (and not only borrowings), are capitalized quarterly and remunerated with 50% of
the regulated rate of return (RRR) approved by ANRE, applicable during the amortization period of
the respective costs and are recognized as a distinctive component in the regulated tariffs, called the
component related to additional costs with NL. Also, ANRE elaborated the Methodological norms
regarding the recognition in the tariffs of the additional costs with the acquisition of electricity for
covering the own technological consumption compared to the costs included in the regulated tariffs,
the purpose of these norms is to establish the substantiation of additional costs with the purchase of
electricity to cover the NL, as well as the conditions for their recognition in the regulated income,
based on which the distribution tariffs are established.
According to the Government’s Emergency Ordinance (“GEO”) no. 153/2022 during the pe-
riod 1 January 2023 – 31 March 2025 is established the centralized electricity purchasing mechanism,
OPCOM being designated the sole purchaser. The distribution operators (“OD”) will buy from OPCOM
through an annual/monthly mechanism at least 75% of the quantity forecasted and validated by
National Authority for Energy Regulation (“ANRE”) at the price of 450 RON/MWh, and the produ-
cers will sell to OPCOM through annual/monthly mechanism 80% of the quantity forecasted and
validated by ANRE and Transelectrica at the price of 450 RON/MWh.
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 compared to the forecast; the annual change in controllable opera-
ting and maintenance costs, realized and accepted against the forecast; annual change in uncon-
trollable operating and maintenance costs compared to the forecast; changes in revenues from reac-
tive energy compared to the forecast; failure to meet/exceeding the approved investments program-
me; revenues generated from other operations made by the distribution operator and the quantity
of electricity recovered from recalculations.
The regulator establishes through the regulated income and tariffs for the following year
taking into account the justified corrections presented above, which are added algebraically to the
income for the following year. The group does not recognize assets and liabilities resulting from re-
gulation in relation to these deficits or surpluses, as the differences are recovered or returned throu-
gh the annual tariff changes and starting with 2022 the capitalised costs with own technological
consumption. The difference between the purchase price of electricity for own technological con-
sumption versus the ex-ante purchase price recognized by ANRE in the related regulated tariffs 2022
related to the purchase of electricity and natural gas, made between 1 January 2022 and 31 August
2023, in order to cover the own technological consumption (NL) for economic operators for energy
transport and distribution services are capitalised. These are recognized as a distinctive component
in the regulated tariffs, named component related to additional own technological consumption
costs.
Electricity supply
The regulatory framework has undergone significant changes over the past decade, inclu-
ding the liberalization of electricity and natural gas markets, the separation of supply and distributi-
on activities, the implementation of the support scheme for renewable energy, the support of elec-
tricity prosumers and the capping of prices to final customers. In 2022 the electricity market was
completely liberalized for all categories of customers and the price was established by suppliers
through free market mechanisms, both for universal service offers and for the offers related to the
competitive market.
Regulated market
Starting with 1 November 2021, in the context of the increase in prices for the electricity and
natural gas markets at international and national level, the energy crisis, as well as the effects caused
by these increases among the population, in Romania, a series of support measures for electricity
and natural gas customers have been applied, by establishing compensation and capping schemes
between 1 November 2021 and 31 March 2025.
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 following support mechanisms have been put in place:
– compensation of household consumers for part of the costs incurred by the electricity
invoices (1 November 2021 until 31 March 2022);
– capping the selling price for household and non-household consumers (1 November 2021
– 31 March 2025);
– exemption (1 November 2021 until 31 January 2022) of several types of non-household
consumers from payment of regulated tariffs and other taxes/contributions.
The amounts compensated will be received from the National Agency for Payments and
Social Inspection for household consumers and a from the Ministry of Energy for non-household
consumers. (for further details please refer to Note 18)
Over 2022, several changes have been brought to the legislation, having a significant impact
on the supply of electricity, as follows:
– The withdrawal of the capped price for electricity for household customers with con-
sumption over 255 KWh/month and the limitation of the capped price for non-domestic
.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
customers (limitation of both the quantities and categories of non-domestic customers);
– The limitation of the average purchase price considered for determining the amounts to
be recovered from the state budget to 1,300 RON/MWh; except of the purchase intended
for supply as a last resort, where this limitation does not apply;
– The obligation to store natural gas of a minimum 30% of the natural gas required for the
consumption of final customers from their own portfolio;
– The obligation of natural gas producers to sell at the price of 150 RON/MWh the necessary
quantities to the suppliers of domestic customers/heat energy producers.
– On 1 January 2023 - 31 March 2025, the centralized electricity purchase mechanism (MA-
CEE) is established.
– The mechanism provides - OPCOM, as sole acquirer, buys electricity from producers (elec-
tricity producers with an installed power equal to or greater than 10 MW) and sells the
purchased electricity to electricity suppliers that have contracts with final customers, the
transmission system operator electricity and distribution system operators electricity to
cover their own technological consumption; the price paid by OPCOM to electricity pro-
ducers, for the quantities of electricity sold by them is 450 RON/MWh and the sale price
of OPCOM to the economic operators is also 450 RON/MWh (OPCOM has the right to
charge market participants tariffs/commissions at the level of costs recorded by organi-
zing the centralized electricity purchase mechanism); In order to carry out the transac-
tions, OPCOM shall organize an annual procurement procedure as well as an additional
procurement procedure each month for the quantities of electricity to be delivered in the
following month; annual and monthly electricity quantities are firm obligations of electri-
city producers and economic operators and are evenly distributed across all settlement in-
tervals each month (contracts are concluded by signing, within maximum 3 working days).
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 certifica-
tes is invoiced to final consumers separately from the tariffs for electricity.
Electricity generation
Green certificates
In accordance to Law no. 220/2008, electricity producers are entitled by to receive a certain
number of green certificates (“GC”) for each MWh of electricity produced from renewable sources
depending on the renewable energy type used (i.e. hydro, wind, solar, geothermal, biomass, bio-
liquids, biogas) and injected into the network, for a specific period of time, depending also on the
degree of novelty of the group/power plant.
Starting from February 2013, the Stanesti photovoltaic park has the right to receive (the
month from which it started injecting electricity into the network), for a period of 15 (fifteen) years,
6 (six) green certificates for each MWh of electricity produced and delivered to the grid, out of
which, for the period 1 July 2013 – 31 December 2020, according to Law 23/2014 and Law 184/2018,
2 (two) green certificates were postponed from trading. Those two GC postponed from trading are
to be recovered in equal monthly tranches starting from 1 January 2021 until 31 December 2030.
The green certificates issued by Transelectrica for the production made by the Stanesti pho-
tovoltaic park, during the validity period of the accreditation decision issued by ANRE, can be tra-
ded, according to GEO 24/2017, until 31 March 2032, respectively including the period after the ex-
piration of the validity period of the accreditation decision (31 January 2028 in the case of the
Stanesti photovoltaic park).
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 own technological consumption and for supplying activity. The unstable
economic environment, led to a decrease in financial performance for 2021, but during 2022 the fi-
nancial performance has significantly improved, due to electricity acquisition security measures for
the supply segment and for distribution segment has benefit by capitalisation of additional costs
with own technological consumption, also with no significant difficulties in receivables collection and
consequently payment of debts being noted.
Due to the recent changes in the global energy market, including EU, each EU member state
had to amend legal framework for the energy sector in order to protect the civil society interests on
the one hand and, on the other hand to ensure a proper equilibrium and functionality on the local
energy market by supporting also the utilities energy suppliers.
As a result, for the distribution segment, Romanian Regulatory Authority for Energy – ANRE
(https://www.anre.ro/) has to adopt similar measures through its Order 129/12.10.2022 approving the
Methodological Norms regarding the recognition in the tariffs of the additional costs with the acqu-
isition of electricity for covering the own technological consumption (“CPT”) compared to the costs
included in the regulated tariffs, carried out between 1 January 2022 – 31 August 2023.
ANRE will determine the recognized annual amounts of the capitalized costs based on the
quantities and prices recognized for CPT, and by 15 March of the year immediately following the year
of capitalization of the additional costs, ANRE will transmit to the distribution operators the recog-
nized annual amounts of the capitalized costs for the previous year. The computation of the capita-
lized amounts is carried out in compliance with the legislation specific to the entities that are the
subject of GEO 119/2022, with subsequent additions and changes.
The changes brought by GEO 119/2022 are changes the recuperation of the CPT by splitting
it in current operating expenses (“OPEX”) and capitalised costs (“CAPEX”), there is a portion of unit
costs recuperated at cost at 450 RON/MWh (ex-ante tariffs) and for the difference above this level
of 450 RON/MWh up to the effective average price, there is a linear depreciation over 5 years stipu-
lated with return at 50% of Regulated Rate of Return (RRR).
For the supply segment, in 2022 the effect of retail prices for electricity was covered as
grants received from the state authorities, as a result of the application of the mechanism of capping
the prices for electricity and natural gas, following the enacting of Ordinances 118/2021 and 119/2022,
the electricity prices for certain categories of households and industrial consumers has been capped
to a certain level. The difference between the capped level and the average acquisition prices in the
period to which a margin has been allowed, is recoverable from the state authorities.
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 ge-
nerating 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. The Group continues to closely monitor the macroecono-
mic outlook and as additional information will be available, their effects on the activity of Group
companies and over the financial results will be analyzed.
Geopolitical tensions
In February 2022 global geopolitical tensions significantly escalated following military inter-
ventions in Ukraine by the Russian Federation. As a result of these escalations, economic uncertain-
ties 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 these consolidated financial statements, mana-
gement is unable to reliably estimate the effects on the Groups financial outlook and cannot exclude
adverse consequence on the business, operations, and financial position. 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 judgements used in these financial statements remain
appropriate.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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 24
March 2023 and will be submitted for shareholders’ approval in the meeting scheduled on 28 April
2023.
The Company also issues a primary set of the consolidated financial statements prepared in
accordance with OMFP no. 2844/2016 (statutory financial statements). Until 31 December 2021, the
consolidated financial statements prepared in accordance with OMFP no. 2844/2016 were equiva-
lent to IFRS-EU. Starting with 31 December 2022, according to Order of Ministry of Public Finances
(OMFP) no. 3900/2022 that has included a new clause related to the regulatory accounts to capita-
lise the additional expenses for actual energy costs as compared with the ex-ante ANRE prices reco-
gnised in distribution tariffs for own technological consumption network, which are recognised as
intangible assets (please see the primary set of financial statements in accordance with OMFP no.
2844/2016). Also, according to ANRE regulations issued in 2022, the capitalised costs of intangible
non-current assets are recorded in the accounting records on the annual financial statements accor-
ding to the instructions developed by the Ministry of Finance OMFP no. 2844/2016 with subsequent
amendments (Romanian GAAP).
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.
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 sig-
nificant 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 ca-
pacity of an agent in case of transactions as Balancing Responsible Party (“BRP”) and thus recogni-
ses 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 speci-
fied 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 distri-
bution 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 dis-
tribution 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 in-
frastructure, to whom it must provide them, and at what price; and
(b) the grantor controls - through ownership, beneficial entitlement or otherwise - any signi-
ficant 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 dis-
tribution. According to the concession contracts, the operators use the assets representing the dis-
tribution network owned by them located in the above-mentioned territory for electricity distributi-
on. 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 ne-
tworks, 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 develo-
pment 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 recog-
nition of revenue based on the separation of construction or upgrade services from operation
services.
The concessionaires act as service suppliers (they build, modernize and maintain the distri-
bution 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% mar-
gin applied is determined based on the Group’s experience in working with external contractors.
Financial asset recognition from amendment of concession agreements with Ministry of En-
ergy
Based on the concession contracts (mentioned above) amendments, the additional cost of
purchasing electricity for covering the own technological consumption of the distribution operators
(actual costs with the purchase of electricity for own technological consumption (“CPT”) coverage
compared to the costs included in the regulated tariffs) are recognised as financial asset as part of
the concession agreement. Such amounts are guaranteed by the concession agreement which is
enforceable by law. The operator has an unconditional contractual right to receive cash or another
financial asset from or at the direction of the grantor; the grantor has no discretion to avoid pay-
ments in case of early termination of the concession agreements.
(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:
y 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;
y Notes 18 and 32 – 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;
y Notes 29 and 34 – recognition and measurement of provisions and contingencies;
y Note 18 – assumptions and estimates of amounts to be received from the state following
the application of the compensation and capping scheme.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair
values, for both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable
data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based
on the inputs used in the valuation techniques as follows:
y Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities, which
the Group can access;
y Level 2: inputs other than quoted prices included in Level 1 that are observable for the as-
set or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
y Level 3: inputs for the asset or liability that are not based on observable market data (un-
observable 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 enti-
rety 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:
y Note 31 – Financial instruments;
y Note 22 – Property, plant and equipment.
Accounting policies
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 presen-
ted in these consolidated financial statements. The new amendments to existing standards that are
effective starting with 1 January 2022 do not have a significant impact over the Group’s consolida-
ted financial statements.
(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:
y A continuation of the support scheme (detailed in note 1 and 18) until 31 March 2025 ac-
cording to the applicable legislation but with a more stable flow of repayments of the
reimbursement requests for subsidies as compared with last year, as the mechanism has
been operationally improved;
y The utilization of confirmed debt facilities up to a limit of RON 4,948,373 thousand, in-
cluding RON thousand 2,891,660 thousand overdraft limits (out of which RON 2,571,037
thousand used until 31.12.2022 - please see Note 30) and RON 2,056,713 thousand long
term loans limit (out of which RON 760,713 thousand long term loans used until 31.12.2022
- please see Note 30);
y The utilization of not yet confirmed credit facilities amounting to RON 283,000 thousand
and the limits for factoring without recourse for the requests for reimbursement for the
subsidies under the support scheme amounting to RON 350,000 thousand which will be
drawn during the forecast period;
y Also, the Group obtained the approval of the GSM to perform one or more bond issuance
within a ceiling of up to 900,000 thousand RON in the period 2022-2023, mainly for the
development of green energy generation projects. Depending on market context, a first
issuance of up to RON 650,000 thousand in the second part of 2023 is envisaged, and
until its use in the operationalization of green energy production projects, the respective
amounts attracted will be able to be used as a liquidity buffer at the Group level.
At the date of issuance of these consolidated financial statements the regulatory position
may be further amended and there may be further laws enacted which could adversely impact the
Groups operating cash flows during the forecast period. Given the current market uncertainties, the
Group is closely monitoring the market context and is continuously analysing the opportunities for
optimisation of debt and increase of bank overdrafts and long-term loans. In light of the importance
of the Group as the supplier and distributed of electricity on the Romanian market, having 40.7%
(according to the latest published ANRE report dated from 2021 for the distribution segment) as
market share on the electricity distribution and 17.72% (according to the latest ANRE report October
2022 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 market 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 imple-
mented 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 state-
ments, 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 accoun-
ting 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 ex-
posed 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 avai-
lable-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 ac-
counted for as equity transactions. Adjustments to non-controlling interests are based on a propor-
tionate amount of the net assets of the subsidiary.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from
intra-group transactions, are eliminated in preparing the consolidated financial statements.
Unrealized gains arising from transactions with equity-accounted investees are eliminated
against the 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) Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The considerati-
on transferred in a business combination is measured at fair value, which is calculated as the sum of
the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to
.
.
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A
427
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426
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
the former owners of the acquiree and the equity interest issued by the Group in exchange for con-
trol of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
(d) 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 expec-
ted 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 re-
cent 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 ear-
ned 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 res-
ponsibility 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 reve-
nue 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 ne-
twork. 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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428
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 ac-
cordance 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 accoun-
ting policy on recognising revenue on construction contracts, as follows:
y 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.
y 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.
y 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.
(e) Other income
Revenues from the subsidies
Revenues from subsidies are recognised in profit or loss on a systematic basis over the peri-
ods in which the Group recognises as expenses the related costs for which the grants are intended
to compensate, as a result of the application of the electricity price cap. These subsidies are recove-
rable from the National Agency for Payments and Social Inspection for household consumers and
from the Ministry of Energy for non-household consumers, as a result of the application of the elec-
tricity and natural gas price ceiling mechanism and are applicable for period 1 November 2021 – 31
March 2025. Starting with April 2022, the revenues from subsidies are recorded as the difference
between the income calculated at the contract price and the income invoiced to the customer at the
capped price.
.
(f) Repairs and maintenance
Repair and maintenance expense is recorded as the operating expense base on an accrual
basis.
(g) 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 reve-
nue 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 recog-
nised is the net amount of commission earned by the Group.
(h) Finance income and finance costs
The Group’s finance income and finance costs include:
.
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429
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
y interest income;
y interest expense;
y income from financial assets related to concession arrangements;
y foreign currency gains or losses on financial assets and financial liabilities;
y impairment losses recognised on financial assets (other than trade receivables).
Interest income or expense is recognised using the effective interest method.
not expected to be settled wholly within 12 months of the end of the reporting period, then they are
discounted.
(k) Income tax
Income tax expense comprises current and deferred tax. It is recognised in profit or loss ex-
cept to the extent that it relates to a business combination or items recognised directly in equity or
in other comprehensive income.
Income from financial assets is initially recognised at fair value plus or minus transaction
costs that are directly attributable to its acquisition or issue.
(i) Current tax
(i) 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 func-
tional 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.
(j) 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
.
.
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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 mea-
sured using tax rates enacted or substantively enacted at the reporting date. Current tax also inclu-
des 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:
y 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;
y temporary differences related to investments in subsidiaries, associates and joint arrange-
ments to the extent that the Group is able to control the timing of the reversal of the tem-
porary differences and it is probable that they will not reverse in the foreseeable future;
and
y 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.
Deferred tax is measured at the tax rates that are expected to be applied to temporary diffe-
rences 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 pre-
dict 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.
.
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431
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(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.
includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with
the Group’s accounting policy. Depreciation of these assets, determined on the same basis as other
property assets, commences when the assets are ready for their intended use.
(l) 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.
(m) Inventories
Inventories consist mainly of spare parts that do not meet the recognition criteria for proper-
ty, 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 invento-
ries 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”.
(n) 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 accu-
mulated 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 deprecia-
tion 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.
Properties in the course of construction for production, supply or administrative purposes,
or for purposes not yet determined, are carried at cost, less any recognised impairment loss. Cost
.
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Spare parts, stand-by and servicing equipment are classified as property, plant and equip-
ment 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.
(o) 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 amorti-
zation and accumulated impairment losses.
(ii) Amortization
.
The amortization method used is selected on the basis of the expected pattern of consump-
tion 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 fu-
ture economic benefits. The Group determined that the amortization method that reflects appropri-
ately the expected pattern of consumption of the expected future economic benefits is correlated
with the amortisation of the regulated asset base “RAB”.
(p) Connection fees
According to art. 25 paragraph (1) of Law no. 123/2012 on electricity and natural gas, as sub-
sequently amended and supplemented, access to power grids of public interest is a mandatory ser-
vice 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
.
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433
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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 re-
presenting 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 con-
cession 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 con-
nection 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 owner-
ship of the network operator.
(q) Other intangible assets
(i) Recognition and measurement
Other intangible assets that are acquired by the Group and have finite useful lives are mea-
sured 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 resi-
dual values using the straight-line method over their estimated useful lives and is generally recogni-
sed 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.
.
(r) Goodwill
Goodwill is measured as the value of the consideration transferred (fair value) plus the
amount of any non-controlling interest (NCI) plus the fair value of previous equity interests minus the
net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed
(measured in accordance with IFRS 3).
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated im-
pairment losses.
(s) 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 sub-
sequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no
longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.
.
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434
(t) 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.
A financial instrument is any contract that gives rise to both a financial asset of one enterpri-
se and a financial liability or equity shares of another enterprise. For this purpose, a financial asset is
any asset that is (a) cash; (b) a contractual right to receive cash or another financial asset from ano-
ther enterprise; (c) a contractual right to exchange financial instruments with another enterprise
under conditions that are potentially favourable; or (d) an equity share of another enterprise.
(u) 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 requ-
ire delivery of assets within the time frame established by regulation or convention in the marketpla-
ce. 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 deter-
mined 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 in-
terest 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 electri-
city delivered and services rendered until the end of the year but invoiced after the end of the year.
Government grants
Government grants that compensate the Group for operating activities (not related to capi-
tal expenses) are recognised expenses incurred are recognised in profit or loss as other income on a
systematic basis in the periods in which the expenses are recognised, unless the conditions for recei-
ving the grant are met after the related expenses have been recognised. In this case, the grant is
recognised when it becomes receivable.
.
.
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435
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Other receivables from capping schemes:
The compensation of household consumers for part of the costs incurred by the electricity
invoices was applicable between 1 November 2021 until 31 March 2022.
The exemption was applicable between 1 November 2021 until 31 January 2022 for several
types of non-household consumers from payment of regulated tariffs and other taxes/
contributions.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and deposits with maturi-
ties 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.
(x) 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 inco-
me. 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 ex-
pected 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 con-
ditions at the reporting date, including time value of money where appropriate.
Financial assets derived from concession agreement amendments
i) Significant increase in credit risk
Based on the concession contracts amendments between the distribution subsidiary and
Ministry of Energy, the additional cost of purchasing electricity for covering the own technological
consumption of the distribution operators (actual costs with the purchase of electricity for CPT co-
verage compared to the costs included in the regulated tariffs) are recognised in purchase-selling
price in the agreements, until their recuperations in tariffs from the consumers, as stipulated by
ANRE regulations. The financial assets are measured initially at fair value and subsequently at fair
value through P&L (FVTPL) in accordance with IFRS 9.
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 fi-
nancial asset is more than 90 days past due unless the Group has reasonable and supportable infor-
mation to demonstrate that a more lagging default criterion is more appropriate.
(v) Financial liabilities
(ii) Write-off policy
All financial liabilities are measured subsequently at amortised cost using the effective inte-
rest method or at fair value through profit or loss.
Financial liabilities that are not (i) contingent consideration of an acquirer in a business com-
bination, (ii) held-for-trading, or (iii) valued 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 li-
ability 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 pre-
miums or discounts) through the expected life of the financial liability, or (where appropriate) a shor-
ter 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.
(w) 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.
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 as-
sets, 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 con-
tractual cash flows that are due to the Group in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at the original effective interest rate.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and rewar-
ds 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 re-
cognises 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.
(y) 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 recogni-
sed 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.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
436
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
437
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recog-
nised 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.
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 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.
(z) 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.
(aa) 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.
(bb) Provisions
A provision is recognised if, as a result of a past event, the Group has a present, legal or con-
structive 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 ex-
pected 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 for-
mal restructuring plan, and the restructuring either has commenced or has been announced publicly.
Future operating losses are not provided for.
(cc) 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
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 re-
lated right-of-use asset) whenever:
y the lease term has changed or there is a significant event or change in circumstances re-
sulting 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;
y 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 re-
vised discount rate is used);
y 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 mod-
ified 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 com-
mencement date of the lease.
The right-of-use assets are presented as a separate line in the consolidated statement of fi-
nancial position.
(ii) Rental income
Rental income from property, plant and equipment other than investment property is reco-
gnised as Other income. Rental income is recognised on a straight-line basis over the term of the
lease.
ii. the amount of the obligation cannot be measured with sufficient reliability.
(ee) Investment in associates
.
.
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.
(dd) Leases
(i) The Group as lessee
The Group applies IFRS 16 „Leases”.
The Group assesses whether a contract is or contains a lease, at inception of the contract.
The Group 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
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.
The results and assets and liabilities of associates are incorporated in these consolidated fi-
nancial 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 consoli-
dated 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 asso-
ciate (which includes any long-term interests that, in substance, form part of the Group’s net invest-
ment 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.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
438
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
439
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND 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 ex-
cess of the cost of the investment over the Group’s share of the net fair value of the identifiable as-
sets 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 alloca-
ted 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 reco-
verable 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.
(ff) 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 alloca-
ted on a reasonable basis.
(gg) Subsequent events
Events occurring after the reporting date 31 December 2022, which provide additional infor-
mation about conditions prevailing at the reporting date (adjusting events) are reflected in the con-
solidated 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:
y 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),
y Amendments to IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” - Oner-
ous 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),
y Amendments to IFRS 3 “Business Combinations” - Reference to the Conceptual Frame-
work with amendments to IFRS 3 adopted by the EU on 28 June 2021 (effective for annual
periods beginning on or after 1 January 2022),
y 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 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 amend-
ments to the existing standards were issued by IASB and adopted by the EU and which are not yet
effective:
y 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),
y Amendments to IFRS 17 “Insurance contracts” - Initial Application of IFRS 17 and IFRS 9 –
Comparative Information, adopted by the EU on 8 September 2022 (effective for annual
periods beginning on or after 1 January 2023),
y Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting
Policies adopted by the EU on 2 March 2022 (effective for annual periods beginning on or
after 1 January 2023),
y Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”
– Definition of Accounting Estimates adopted by the EU on 2 March 2022 (effective for
annual periods beginning on or after 1 January 2023),
y Amendments to IAS 12 “Income Taxes” - Deferred Tax related to Assets and Liabilities aris-
ing from a Single Transaction adopted by the EU on 11 August 2022 (effective for annual
periods beginning on or after 1 January 2023).
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 stan-
dards 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 ad-
opted 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 pu-
blication of these consolidated financial statements (the effective dates stated below is for IFRS as
issued by IASB):
y 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 endorse-
ment process of this interim standard and to wait for the final standard,
y 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),
y Amendments to IAS 1 “Presentation of Financial Statements” - Non-current Liabilities
with Covenants (effective for annual periods beginning on or after 1 January 2024),
y Amendments to IFRS 16 “Leases” - Lease Liability in a Sale and Leaseback (effective for
annual periods beginning on or after 1 January 2024),
y 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 indefi-
nitely until the research project on the equity method has been concluded).
The International Accounting Standards Board has been currently working on the develop-
ment of a new IFRS international financial reporting standard that will align the current standard
“IFRS 14 Deferral Accounts Related to Regulated Activities” to the new requirements of the energy
market at EU and global level, which is expected to take into account all relevant related subjects,
including the proper treatment of own technological consumption expenses. IASB has redelibera-
ted proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities based on the fee-
dback received on previous variants on Exposure Drafts made available for public comment (https://
www.ifrs.org/projects/work-plan/rate-regulated-activities/#current-stage). As debated in exposure
drafts, until now there is no approved legislation at IASB level. Currently IFRS 14 (originally issued in
January 2014 and applied to an entity’s first annual IFRS financial statements for a period beginning
on or after 1 January 2016) can be applied only when a reporting entity is a IFRS First Time Adopter.
As the Group is not a IFRS First Time Adopter, the management of the Company did not consider
.
.
I
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S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
440
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
441
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
any impact coming out from the application of IFRS 14, further guidance being expected in the
future.
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.
Performance for the year
8 Operating segments
(a) Basis for segmentation
The following summary describes the operations of each reportable segment:
Reportable segments
Electricity and natural gas supply
Electricity distribution
Electricity generation
External electricity network maintenance
Operations
Buying and supplying electricity and natural gas to
final consumers (includes Electrica Furnizare S.A.)
Operation, maintenance and construction of electricity
networks operated by the Group (includes Distributie
Energie Electrica Romania S.A. and the activity
performed by Electrica Serv S.A within the distribution
network).
Production of electricity from renewable sources
(includes Electrica Energie Verde 1 S.R.L., Electrica
Productie Energie S.A., Sunwind Energy S.R.L., New
Trend Energy S.R.L., Green Energy Consultancy &
Investments S.R.L.).
Repairs, maintenance and other services for electricity
networks owned by other distributors (Electrica Serv
S.A., without the activity performed in the electricity
distribution segment).
The Board of Directors of the Company reviews management reports of each segment.
Segment earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA”) is used to
measure performance because management believes that such information is one of the most rele-
vant 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 distri-
bution and shared electricity network maintenance services. Inter-segment pricing policy is determi-
ned on an arm’s length basis.
All assets are allocated to reportable segments, except for investments in associates and
deferred tax assets.
(b) Information about reportable segments
Year Ended
31 Decem-
ber 2022
Electricity
and natural
gas supply
Electricity
production
Electricity
distribution
Electricity
network
maintenance
Total for
reportable
segments
Head-
quarter
8,153,190
14,180
1,817,054
25,472 10,009,896
32,824
7,200
1,579,572
55,612
1,675,208
8,186,014
21,380
3,396,626
81,084
11,685,104
-
-
-
Consolida-
tion elimi-
nations and
adjustments
Consolidat-
ed total
-
10,009,896
(1,675,208)
-
(1,675,208)
10,009,896
2,754,954
49
1,111,062
42,295
3,908,360
5,180
(121,020)
3,792,520
315,170
9,526
359,377
(2,399)
681,674 25,603
(43,354)
663,923
(63,168)
(2,482)
(152,049)
11,361
(206,338) 65,857
(24,514)
(164,995)
(12,557)
(2,480)
(468,282)
(11,348)
(494,667)
(1,586)
-
(496,253)
External
revenues
Inter-
segment
revenue
Segment
revenue
Other
income
Segment
profit (loss)
before tax
Net finance
(cost)/
income
Depreciation
and
amortization
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
442
Year Ended
31 Decem-
ber 2022
Electricity
and natural
gas supply
Electricity
production
Electricity
distribution
Electricity
network
maintenance
Total for
reportable
segments
Head-
quarter
Consolida-
tion elimi-
nations and
adjustments
Consolidat-
ed total
-
-
-
-
-
-
-
-
-
-
-
-
-
5
5
102
378
204
(171)
(673)
5,265
19,177
4,889
8,006
25,615
14,488
(2,412)
90,557
69,826
148,919
951,557
308,152
261,099
951,557
960,913
146,743
979,708
(18,843)
390,895
576,584
(112,311)
558,845
(43,354)
(131,794)
(30,055)
(112,413)
(102,619)
1,325,163
(661,963)
4,141,083
2,579,678
3,636,413
2,593,255
(823,422)
11,623,312
9,076,633
(2,373,712)
(1,043,536)
1,382,679 (38,673)
(794,808) (28,614)
418,940 13,783,399 213,625
Impairment
of property,
plant and
equipment,
net
Impairment
losses
on trade
receivables
and contract
assets, net
EBITDA*
Segment net
profit (loss)
Salaries
and other
employee
benefits
Segment
assets
Trade
and other
receivables
Financial
assets
Cash
and cash
equivalents
Trade
and other
payables,
and short
term
employee
benefits
Bank
overdrafts
Finance
lease
Financing
for network
construction
related to
concession
agreements,
bank loans
and finance
lease
Capital
expenditure
*Adjusted EBITDA (Earnings before interest, tax, depreciation and amortisation or namely EBITDA)
for operating segments is defined and calculated as segment profit/(loss) before tax of a given
operating segment adjusted for i) depreciation, amortization and impairment/reversal of impair-
ment of property, plant and equipment and intangible assets in the operating segment, ii) impair-
ment of assets held for sale and iii) net finance income in the operating segment. 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 signifi-
cantly 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.
3,450,685 44,399
2,361,899 209,138
229,257 105,630
660,713 100,000
(1,033,845)
2,365,894
2,461,239
2,571,037
1,026,377
1,589,801
623,064
334,887
625,387
772,098
760,713
951,557
612,664
660,713
53,404
33,830
53,673
12,088
42,313
8,469
9,058
(983)
5,623
2,323
16,101
1,342
269
-
-
-
-
-
-
-
-
-
-
-
-
Year ended
31 December
2021
Electricity
and natural
gas supply
External
revenues
Inter-segment
revenue
Segment
revenue
5,741,460
30,907
5,772,367
Electricity
distribution
Electricity
generation
External
electricity
network
maintenance
Total for
reportable
segments
Headquar-
ter
Consolida-
tion elimi-
nations and
adjustments
Consolidat-
ed total
1,389,389
1,341,456
6,024
2,949
41,991
7,178,864
26,127
1,401,439
2,730,845
8,973
68,118
8,580,303
-
-
-
-
7,178,864
(1,401,439)
-
(1,401,439)
7,178,864
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
443
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Year ended
31 December
2021
Electricity
and natural
gas supply
Electricity
distribution
Electricity
generation
External
electricity
network
maintenance
Total for
reportable
segments
Headquar-
ter
Consolida-
tion elimi-
nations and
adjustments
Consolidat-
ed total
(453,610)
(153,003)
1,544
(17,868)
(622,937)
321,779
(331,253)
(632,411)
336
(73,498)
(738)
850
(73,050)
377,419
(331,250)
(26,881)
(14,228)
(451,945)
(2,290)
(10,092)
(478,555)
(2,275)
-
-
-
-
-
-
137
137
3,805
(154)
(154)
(492)
-
-
-
(480,830)
3,942
(646)
(439,718)
372,440
4,572
(8,609)
(71,315)
(56,678)
(3)
(127,996)
(37,767)
(32,707)
-
(212)
(70,686)
70
-
(70,616)
(389,678)
(139,040)
1,300
(16,033)
(543,451)
321,822
(331,253)
(552,882)
(106,107)
(622,492)
(47)
(34,790)
(763,436)
(39,240)
9,374
500,387
8
1,552
511,321
4,539
-
-
(802,676)
515,860
1,422,316
8,085,802
41,206
417,744
9,967,068
182,509 (2,266,441)
7,883,136
1,216,895
1,057,157
998
85,924
2,360,974
75,106
(1,042,861)
1,393,219
60,231
145,741
2,635
7,466
216,073
5,757
-
221,830
1,380,664
826,256
24,373
27,917
2,259,210
53,551
(1,016,329)
1,296,432
Segment
profit/(loss)
before tax
Net finance
income/(cost)
Amortization
and
depreciation
(Impairment)/
Reversal of
impairment of
property, plant
and equipment
and intangible
assets, net
Reversal of
impairment of
assets held for
sale
Adjusted
EBITDA*
Reversal of
impairment/
(Impairment) of
trade and other
receivables, net
Segment
profit/(loss)
after tax
Employee
benefits
Capital
expenditure
Segment
assets
Trade and other
receivables
Cash and cash
equivalents
Restricted cash
(short term)
Trade and
other payables
and short term
employee
benefits
Bank overdrafts
Lease liability
Bank
borrowings
.
9 Revenue
Electricity distribution and supply
Supply of natural gas
Construction revenue related to
concession agreements (Note 23)
Repairs, maintenance and other
services rendered
Proceeds from sale of green
certificates
Re-connection fees
Sales of merchandise
Total
2022
2021
8,991,986
308,515
611,294
87,395
3,741
3,824
3,141
10,009,896
6,517,777
98,503
500,387
59,854
1,138
1,205
-
7,178,864
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 2,694 thousand (2021:
RON 2,081 thousand) being transferred at a point in time (e.g. metering services provided by the
distribution companies, providing periodic data analysis to the customer for certain taxes collected
on behalf of them).
10 Electricity and natural gas purchased
Electricity
purchased
Green
certificates
purchased
Natural gas
purchased
Total
2022
2021
9,886,773
4,967,315
609,107
10,929
581,729
145,680
10,506,809
5,694,724
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.
298,602
208,109
3,270
-
15,147
628,489
-
-
-
-
506,711
120,691
2,614
-
21,031
628,489
513
-
-
-
-
627,402
21,544
628,489
11 Other income and expenses
(a) Other income
2022
2021
.
*Adjusted EBITDA (Earnings before interest, tax, depreciation and amortisation or namely EBITDA)
for operating segments is defined and calculated as segment profit/(loss) before tax of a given
operating segment adjusted for i) depreciation, amortization and impairment/reversal of impair-
ment of property, plant and equipment and intangible assets in the operating segment, ii) impair-
ment of assets held for sale and iii) net finance income in the operating segment. 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 signifi-
cantly 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.
Subsidies related to electricity and
natural gas supply (note 18)
Other income from initial
recognition of financial
assets related to concession
arrangements (note 25)
Rental income
Late payment penalties from
customers
Other
Total
2,687,131
951,557
92,486
52,110
9,236
3,792,520
-
-
93,143
28,356
74,272
195,771
Rental income refers mainly to the subsidies, following by rental of the electricity poles by
the distribution subsidiary to telecom operators.
During 2022, the Group recognized subsidies on the supply segment of RON 2,687,131 thou-
sand, out of which RON 1,224,375 thousand are outstanding receivable from the Ministry of Energy
following the application of the capping price mechanism for the electricity and natural gas as appro-
ved by Order no. 118/2021 with subsequent amendments and GEO no. 27/2022, the latter one being
amended by GEO no. 119/2022.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
444
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
445
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
(b) Other operating expenses
2022
2021
44,092
43,211
39,697
46,950
56,643
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
Other
Total
*Meter reading expenses have increased during 2022 as a consequence of changes in legislation
related to frequency of meter readings. During 2021 meters were read with a frequency of 2 times
per year as compared to 2022 when they are measured quarterly (according to ANRE, the date
between measurement cannot exceed 3 months).
34,929
17,549
39,748
14,632
21,010
10,929
47,491
352,971
30,411
26,718
22,219
15,819
12,205
11,011
93,216
343,147
36,960
18,998
11,680
12 Net finance cost
Interest income
Other finance income
Total finance income
Interest expense
Interest cost for employee benefits
(Note 15)
Foreign exchange losses, net
Total finance costs
Net finance cost
13 Earnings/(loss) per share
2022
2021
2,847
6,871
9,718
(156,985)
(7,354)
(10,374)
(174,713)
(164,995)
1,765
882
2,647
(24,110)
(5,007)
(411)
(29,528)
(26,881)
The calculation of basic and diluted earnings/(loss) per share has been based on the following
profit attributable to Company’s shareholders and weighted-average number of ordinary shares
outstanding:
Profit/(Loss) attributable to shareholders
.
Profit/(Loss) for the year
attributable to the owners of the
Company
Profit attributable to shareholders
of the Company
2022
2021
558,954
558,954
(552,882)
(552,882)
Number of ordinary shares (in number of shares)
Number of ordinary shares at
31 December
2022
2021
339,553,004
339,553,004
For the calculation of basic and diluted earnings per share, treasury shares (6,890,593 sha-
res) were not treated as outstanding ordinary shares and were deducted from the number of issued
ordinary shares.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
446
Earnings/(Loss) per share
Basic and diluted earnings/(loss)
per share (RON)
Employee benefits
2022
1.65
14 Short-term employee benefits
2021
(1.63)
Personnel payables
Current portion of defined benefit
liability and other employee
benefits
Social security charges
Tax on salaries
Total
31 December 2022
31 December 2021
70,105
11,548
27,301
5,220
114,174
52,419
18,257
25,342
5,084
101,102
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 assis-
tance 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.
In 2022 and 2021, 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
2022
31 December
2021
Defined benefit liability
Other long-term employee benefits
Total
- Current portion*
- Non-current portion
*included in Personnel payables in Note 14
41,675
87,762
129,437
12,168
117,269
79,078
88,356
167,434
18,257
149,177
(a) 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 balan-
ces for the defined benefit liability and other long-term employee benefits and its components.
There are no plan assets.
Defined benefit liability
2022
2021
Balance at 1 January
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
79,078
4,893
(23,367)
3,100
(9,503)
(12,526)
41,675
68,101
5,158
5,054
2,194
5,891
(7,320)
79,078
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
447
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Defined benefit liability
Other long-term employee
benefits
Balance at 1 January
Included in profit or loss
Current service cost
Past service cost
Actuarial (gain)/ loss
Interest cost
Other
Benefits paid
Balance at 31 December
2022
2022
2021
2021
88,356
7,786
(353)
(4,509)
4,256
(7,775)
87,761
86,195
8,285
-
(1,859)
2,814
(7,079)
88,356
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.
(I) Actuarial assumptions
The following were the main actuarial assumptions at each reporting date:
(a) Macroeconomic assumptions:
y inflation. The actuary used information from the National Commission for Strategy and
Prognosis:
Year
2022
2023
2024
2025
2026+
Valuation date
31 December 2022
13.9%
7.5%
4.9%
3%
2.5%
Valuation date
31 December 2021
5.9%
3.2%
3.0%
2.8%
2.5%
y 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 8.1% for the year 2022
(2021: 5%);
y taxes and social charges are those in force as at the reporting date.
(b) Group specific assumptions:
y 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;
y Employees’ turnover: based on historical data;
y Jubilee and retirement bonuses granted based on seniority as per the collective labour
contracts, as follows:
Seniority
20 years
30 years
35 years
40 years
45 years
Seniority
Between 8 and 10 years
Between 10 and 25 years
More than 25 years
Jubilee bonus based on years of service in the Group
No of gross monthly base salaries
31 December 2022
1
2
3
4
5
31 December 2021
1
2
3
4
5
Retirement bonus based on years of service in the Group
No of gross monthly base salaries
31 December 2022
2
3
4
31 December 2021
2
3
4
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 ter-
mination benefits to the employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries
1 – 2 years
2 – 5 years
5 – 10 years
10 – 20 years
More than 20 years
31 December 2022
2
3
4
5
8
31 December 2021
2
3
4
5
8
(b) Termination benefits for collective lay-offs at the Group’s initiative
For collective lay-offs, according to the Collective Labour Contracts, the Group pays termi-
nation benefits to the employees depending on their period of service, as follows:
Period of service
No of gross monthly base salaries No of gross monthly base salaries
1 – 3 years
3 – 5 years
5 – 10 years
10 – 20 years
More than 20 years
31 December 2022
3
6
7
11
16
31 December 2021
3
6
7
11
16
The above-mentioned stipulations do not apply to employees with individual labour contract
concluded for a determined period. The above stipulations do not apply to employees that obtained
other higher cumulative salary compensation rights, provided by legal regulations regarding the
Group’s reorganization and restructuring. Employees who are re-employed within the Group after
lay-off are not entitled to the above-mentioned benefits.
(ii) Sensitivity analysis
Significant actuarial assumptions for the determination of the benefit obligation are the dis-
count 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.
Discount rate
Salary growth
Retirement age
Increase by 1%
Decrease by 1%
2022
(9,237)
9,415
2021
(12,489)
12,957
2022
8,611
(10,049)
2021
12,489
(12,957)
Increase by 1 year
2021
3,677
2022
812
Decrease by 1 year
2021
(3,677)
2022
(812)
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 me-
thod 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.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
449
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
448
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
16 Employee benefit expenses
Average number of employees
Number of employees at 31
December
2022
2022
7,760
7,874
2021
2021
7,919
8,020
Wages and salaries*
Social security contributions
Meal tickets
Termination benefits
Total employees benefits for the
year
Capitalised employee benefit
expenses
Total employees benefits in the
statement of profit or loss
*Wages and salaries include also current service cost, defined benefits and other long-term em-
ployee benefits.
790,425
20,694
33,187
267
844,573
823,422
(21,151)
855,343
(52,667)
802,676
796,137
19,486
33,585
6,135
Management remuneration is disclosed in Note 33 b) Related parties.
Income taxes
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 assess-
ment 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 inter-
pretation 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
Deferred tax expense/(benefit)
Total expense/(benefit) related to
income tax
2022
2021
2,576
102,502
105,078
242
(79,771)
(79,529)
(ii) Amounts recognised in other comprehensive income
.
.
I
A
S
A
C
R
T
C
E
L
E
2022
Before tax
Tax expense
Net of tax
Before tax
2021
Tax
expense
Net of
Tax
Remeasurement
of defined
benefit liability
Total
9,503
(1,479)
8,024
(5,891)
(45)
(5,936)
9,503
(1,479)
8,024
(5,891)
(45)
(5,936)
Tax/(Benefit)
using
Company’s
domestic tax
rate
Non-deductible
expenses
Non-taxable
income
Deduction of
legal reserves
Other tax effects
Recognition
of tax effect
of previously
unrecognised
tax losses
Income tax
expense/
(benefit)
16%
4%
-3%
-1%
0%
-1%
16%
2022
2021
106,230
16%
(101,186)
28,843
-7%
(22,083)
(3,388)
(137)
3%
0%
0%
(4,387)
1%
45,558
(15,878)
(2,574)
(1,607)
(3,842)
105,078
13%
(79,529)
(iv) Movement in deferred tax balances
Net balance
at 1 January
2022
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2022
Net
Deferred tax
assets
Deferred tax
liabilities
39,838
(2,858)
187,500
20,515
-
-
36,980
208,015
-
-
36,980
208,015
(23,940)
1,360
1,479
(21,101)
(21,101)
(24,732)
(6,198)
(95,972)
89,904
(4,299)
(222)
-
-
-
(30,930)
(30,930)
(6,068)
(6,068)
(4,521)
(4,521)
-
-
-
-
78,395
102,501
1,479
182,375
(62,620)
244,995
32,440
(32,440)
(30,180)
212,555
2022
Property,
plant and
equipment
Intangible
assets related
to concession
agreements
Employee
benefits
Impairment
of trade
receivables
Tax loss
carried
forward
Other items
Tax liabilities/
(assets)
before set-off
Set off of tax
Net tax
liabilities/
(assets)
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
450
(iii) Reconciliation of effective tax rate
2022
2021
As of 31 December 2021, the Group recorded a deferred tax asset in amount of RON 95,972
thousand in relation to the fiscal losses incurred. The Group used RON 89,904 thousand as of 31
December 2022 to partially compensate the 2022 current tax liability.
Profit/(Loss)
before tax
663,923
(632,411)
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
451
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Net balance
at 1 January
2021
Recognised in
profit or loss
Recognised
in other com-
prehensive
income
Balance at 31 December 2021
Net
Deferred tax
assets
Deferred tax
liabilities
41,757
(1,919)
171,712
15,788
-
-
39,838
187,500
-
-
39,838
187,500
(22,603)
(1,382)
45
(23,940)
(23,940)
(20,859)
(3,873)
(7,765)
(88,207)
(4,121)
(178)
-
-
-
(24,732)
(24,732)
(95,972)
(95,972)
(4,299)
(4,299)
-
-
-
-
158,121
(79,771)
45
78,395
(148,943)
227,338
65,412
(65,412)
(83,531)
161,926
2021
Property,
plant and
equipment
Intangible
assets related
to concession
agreements
Employee
benefits
Impairment
of trade
receivables
Tax loss
carried
forward
Other items
Tax liabilities/
(assets)
before set-off
Set off of tax
Net tax
liabilities/
(assets)
*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.
2022
2021
compensation mechanism, part of the receivables due to the subsidiary Electrica Furnizare 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. On 31 December 2022, the amounts estimated to be
received from the Ministry of Energy for non-household consumers are 20,480 thousand RON (31
December 2021: 11,420 thousand RON) and 21,043 thousand RON (31 December 2021: 59,271 thou-
sand RON) from the National Agency for Payments and Social Inspection for household
consumers.
The amounts will be recovered in approx. 40 days after submitting the required documenta-
tion 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”.
Oltchim
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 ban-
kruptcy procedures.
By decision of the European Court in Luxembourg pronounced on 15 December 2021 (final
decision being applicable as of 21 March 2022), in case T565/19, it was partially cancelled the
European Commission Decision no. C (2018) 8592 from 2018, which established a series of measures
regarding the recovery by Romania of the State aid granted to Oltchim S.A. By its decision, the
European court cancelled a series of the measures, including the amounts considered state aid with
which Electrica was registered in the table of receivables.
Following the evolution of the bankruptcy process, on 06 April 2022, the updated table of
receivables was published in BPI Tabel Oltchim, which still recognizes only the guaranteed receiva-
bles, which in the case of Electrica S.A. the estimated amount that remains to be recovered from the
sales of assets of Oltchim SA in the completion of the bankruptcy process is RON 116,058 thousand
(including VAT), comprised of the base in the amount of RON 98,725 thousand and respectively the
VAT in the amount of RON 17,333 thousand. Considering the events above, as of 31 December 2022
a part of the receivable for Oltchim in amount of RON 420,213 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. As of 31 December 2022, the balance of receivables with Oltchim is RON 115,943 thousand
(Electrica S.A. RON 98,725 thousand and Electrica Furnizare S.A. RON 17,218 thousand), bad debt
allowance being at the same amount.
337,136
356,623
The reconciliation between the opening balances and the closing balances of the impairment
Tax losses
Assets
18 Trade receivables
Trade receivables, gross
Bad debt allowance
Total trade receivables, net
31 December 2022
31 December 2021
3,118,691
(652,689)
2,466,002
2,325,477
(980,858)
1,344,619
Trade receivables from related parties are presented in Note 33.
Trade receivables, gross, comprise:
31 December 2022
31 December 2021
Electricity distribution and supply
Late payment penalties receivable
Customers with judicial execution
titles
Repairs, maintenance and other
services
Other
Total trade receivables, gross
Electricity distribution and supply
2,482,266
80,658
347,667
11,850
196,250
3,118,691
1,323,732
81,311
766,109
17,700
136,625
2,325,477
Following the adoption of the Order no. 118/2021 with subsequent amendments and GEO no.
27/2022, the latter one being amended by GEO no. 119/2022, concerning the capping and
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
452
for trade receivables in the form of lifetime expected credit losses is as follows:
Lifetime expected credit losses
2022
2021
Balance as at 1 January
Loss allowance recognized
Decrease in loss allowance
Amounts written off
Balance as at 31 December
980,858
146,203
(34,248)
(440,124)
652,689
949,573
94,400
(22,944)
(40,171)
980,858
The aging of trade receivables is presented in Note 31.
Loss allowances are determined according to IFRS 9 “Financial instruments” based on “ex-
pected 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 ban-
kruptcy 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. The
amounts written-off relates to Oltchim (described above).
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
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
453
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
of its receivables since original recognition, thus recording a bad debt allowance in amount of RON
146,203 thousand.
19 Other receivables
VAT receivable
Receivables from EU funds
Other receivables
Lifetime expected credit losses
Total other receivables, net
31 December 2022
31 December 2021
13,024
13,932
120,777
(20,480)
127,253
12,566
-
56,158
(20,124)
48,600
Other receivables include mainly guarantees from energy suppliers 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
2022
2021
Balance as at 1 January
Increase/Decrease in loss
allowance
Balance as at 31 December
20 Cash and cash equivalents
20,124
356
20,480
31 December
2022
31 December
2021
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
141,656
193,219
12
334,887
-
334,887
20,964
(840)
20,124
167,859
53,897
74
221,830
(627,402)
(405,572)
In the normal course of business, the Group enters into short-term credit facility with the aim
of financing operational needs. Until 31 December 2021, overdrafts amounting to RON 627,402 thou-
sand were presented as part of cash and cash equivalents. Following the volatility in electricity prices
started in 2021 and continued in 2022, these overdrafts have no longer fluctuated from negative to
0 balances, remained negative for the entire year 2022, thus the management of the Group presen-
ted these overdrafts for the year ended 31 December 2022 in financing activity, and reclassified the
opening balance previously presented as cash and cash equivalents. (for further details please see
the transfer presented in Cash Flow statement).
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 53,106
thousand in 2022 (2021: RON 5,941 thousand).
21 Inventories
As at 31 December 2022 and 31 December 2021, inventories are as follows:
Spare parts
Consumables and other materials
Natural gas
Other inventories
31 December 2022
31 December 2021
29,589
53,527
23,319
17,004
28,569
33,399
5,367
13,938
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
454
Allowance for impairment of
inventories
Total inventories
31 December 2022
31 December 2021
(9,467)
113,972
(8,315)
72,958
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 2022, the remaining quantity of natural gas stored is of MWh 107,472 (31
December 2021: MWh 12,186), amounting to RON 23,280 thousand (31 December 2021: RON 5,367
thousand).
22 Property, plant and equipment
The movements in property, plant and equipment in 2022 and 2021 are as follows:
Land and
land improve-
ments
Buildings
Equipment
Vehicles,
furniture and
office equip-
ment
Construction
in progress
Total
Gross carrying
amount
Balance at 1
January 2021
Additions
Transfer from
construction in
progress
Disposals
Reclassification
from/(to)
assets held for
sale
Balance at
31 December
2021
Reclassification
of opening
assets held for
sale
Balance at
31 December
2021
Additions
Transfer from
construction in
progress
Disposals
Acquisition
of subsidiary
(Note 32)
Balance at
31 December
2022
246,075
197,148
98,896
95,336
26,225
663,680
-
-
167
1,257
482
2,001
150
8,368
9,167
1,967
(5,225)
-
(46)
(383)
(7,664)
(503)
(180)
(8,776)
6,769
4,368
(1,914)
-
-
9,223
252,798
202,557
91,801
96,950
29,188
673,294
1,024
4,115
-
-
-
5,139
253,822
206,672
91,801
96,950
29,188
678,433
1,179
85
-
1,133
1,977
2,386
804
269
5,475
9,435
.
(3,778)
95
(3,276)
(1,093)
(1,844)
(838)
(9)
(7,060)
25
-
-
-
3,875
3,900
251,835
206,712
94,320
97,185
34,751
684,803
Accumulated depreciation and impairment losses
Balance at 1
January 2021
Depreciation
Accumulated
depreciation of
disposals
-
-
-
5,013
7,532
45,216
8,865
(14)
(4,546)
86,550
18,771
155,550
4,721
(96)
-
-
21,118
(4,656)
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
455
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Land and
land improve-
ments
Buildings
Equipment
Vehicles,
furniture and
office equip-
ment
Construction
in progress
Total
Category
Valuation technique
Reversal of
impairment
loss
Reclassification
from assets
held to sale
Balance at
31 December
2021
Depreciation
Accumulated
depreciation of
disposals
Impairment
loss
Balance at
31 December
2022
Net carrying
amounts
At 1 January
2021
At 31
December
2021
At 31
December
2022
-
-
-
-
-
-
-
-
(3,805)
947
(1,142)
-
-
(137)
(3,942)
-
(195)
13,478
44,588
91,175
18,634
167,875
8,022
7,378
(1,778)
4,515
(594)
(5)
-
-
-
-
-
19,915
(2,372)
(5)
21,495
50,188
95,096
18,634
185,413
Land and land
improvements
Buildings
246,075
192,135
53,680
8,786
7,454
508,130
252,798
189,079
47,213
5,775
10,554
505,419
251,835
185,217
44,132
2,089
16,117
499,390
Significant unobservable
inputs
• Adjustment for liquidity,
location, size.
Inter-relationship
between key
unobservable inputs and
fair value measurement
The estimated fair
value would increase/
(decrease) if:
• Adjustment for liquidity,
location or size would be
lower/(higher)
• Adjustment for liquidity,
location, size.
Office space rent
• Occupancy rates
• Adjustment for liquidity,
location or size would be
lower/(higher)
• Occupancy rates were
(between 80% and 90%)
• Yield rates (between 7%
higher/(lower)
• Yield rates were lower/
and 10%)
(higher)
• Annual rent per sqm
• Annual rent per sqm was
higher/(lower)
(between 9 and 19 EUR/
sqm), depending on
location;
Commercial space rent
• Occupancy rates
(between 85% and 90%)
• Yield rates (between
7.25% and 11.5%)
• Annual rent per sqm
(between 10 and 60
EUR/sqm), depending
on location;
Market approach
The fair value is estimated based
on selling price per square meter
of land of similar characteristics
(i.e. ownership, legal limitations,
financing and selling conditions,
location, physical and economical
properties and best use). The
market price is mainly based on
recent transactions.
Market approach and discounted
cash-flows (DCF) method
Buildings were evaluated using the
following methods, depending on
the best use and the availability
and credibility of available market
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,
physical
and economical properties, and
best use), adjusted for liquidity,
location, size etc.
The DCF method
The valuation model based on
the DCF method estimates the
present value of net cash flows to
be generated by a building taking
into account occupancy rate and
annual rent. The discount rate
inter alia,
estimation considers,
the quality of a building and its
location.
location,
Tangible assets include mainly land, buildings and equipment.
In 2021, Electrica Serv S.A.’s Board of Directors approved the selling plan of part of the assets
and accordingly, those assets were presented as Assets held for sale, being expected to be sold in
the following period. During 2022, only 2 assets (4 in 2021) were sold in amount RON 1,940 thousand
(RON 478 thousand in 2021). In October 2022, Electrica Serv S.A.’s Board of Directors postponed the
sale approval of the remaining assets included in the selling plan, mentioning that it is unlikely that
the selling intention will materialize. Consequently, the Company reclassified the items from assets
held for sale to property plan and equipment.
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 inde-
pendent 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.
The following table shows the valuation techniques used in measuring fair values (Level 3),
as well as the significant unobservable inputs used.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
456
23 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 li-
censes and costs of SAP ERP implementation, customer management and billing system and other
software, as follows:
Intangible
assets related
to concession
agreements
9,631,960
500,387
-
-
10,132,347
Gross book value
Balance at 1 January
2021
Additions
Transfers from
intangible assets in
progress
Disposals
Balance at 31
December 2021
Software and
licenses
Intangible assets in
progress
Total
188,679
5,730
34
(1,042)
193,401
1,367
576
(34)
-
1,909
9,822,006
506,693
-
(1,042)
10,327,657
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
457
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
2,047
10,945,779
RON 58,256 thousand; (2021: RON 63,009 thousand);
Software and
licenses
Intangible assets in
progress
Total
Intangible
assets related
to concession
agreements
611,294
-
-
10,743,641
4,176,775
441,015
-
4,617,790
449,987
-
7,694
2
(1,006)
200,091
182,833
4,536
(1,042)
186,327
3,960
(1,005)
Additions
Transfers from
tangible assets in
progress
Disposals
Balance at 31
December 2022
Accumulated
amortization and
impairment losses
Balance at 1 January
2021
Amortization
Accumulated
amortization of
disposals
Balance at 31
December 2021
Amortization
Accumulated
amortization of
disposals
Balance at 31
December 2022
Net carrying
amounts
At 1 January 2021
At 31 December
2021
At 31 December
2022
5,067,777
189,282
5,455,185
5,514,557
5,846
7,074
5,675,864
10,809
1,367
1,909
2,047
140
(2)
-
619,128
-
(1,006)
-
-
-
-
-
-
-
4,359,608
445,551
(1,042)
4,804,117
453,947
(1,005)
5,257,059
5,462,398
5,523,540
5,688,720
The Group applies IFRIC 12 for the accounting of the transactions under these concession con-
tracts. (See further details in Notes 4, 6(c) and 6(l)).
For the year ended 31 December 2022, the Group has recognized construction revenue related
to the concession agreements of RON 611,294 thousand (2021: RON 500,387 thousand) and constructi-
on costs of RON 593,490 thousand (2021: RON 485,813 thousand).
The main information related to the current concession contracts agreements and the intangi-
ble assets amounts recognized for each network distribution area is summarized below:
Network
distribution
areas
Contract
Date
Concession
period
(years)
Contract
expiry date
Concession
period
remaining
(years)
Renewal
option
Muntenia
Nord area
Transilvania
Nord area
Transilvania
Sud area
Total
2005
2005
2005
49
49
49
2054
2054
2054
33
33
33
Yes
Yes
Yes
Net
carrying
amount
at 31
December
2022
Net
carrying
amount
at 31
December
2021
1,968,811
1,915,567
1,890,409
1,836,161
1,816,646
1,762,829
5,675,866
5,514,557
The concession contracts can be prolonged for a period up to half of the initial established pe-
riod of 49 years.
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
458
The investments in relation to the development and modernization of the infrastructure in-
curred in 2022 refers mainly to:
– Modernization of the current transformer points and stations, current underground and
overhead power lines in amount of RON 139,487 thousand (2021: RON 164,465 thousand);
– Investments related to improvements for electricity distribution network in amount of RON
79,132 thousand (2021: RON 143,965 thousand).
– Significant construction works of new transformer stations, new underground and overhead
power lines in amount of 2022: RON 148,404 thousand (2021: RON 97,449 thousand);
– Acquisition of own car fleet, including utilities vehicles and specialized vehicles in amount of
– Modernization and inclusion in SCADA (which is an automatic control system which moni-
tors the equipment) of transformers points and stations, in amount of RON 164 thousand
(2021: RON 2,430 thousand);
24 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-pur-
chase agreements will be fulfilled. By the end of 31 December 2022, two of the project companies were
acquired by 60% (please see note 32), therefore they are accounted as subsidiaries, the other ones 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, to-
talling 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.
– Foton Power Energy SRL, develops the photovoltaic project “Bihor 1”, with a projected ca-
pacity 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 2022, the 2 entities are accoun-
ted 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 18,832 thousand,
is detailed as follows:
Acquisition date
Percentage
ownership and
voting rights at
acquisition date
Net assets at acquisition date
Group’s share of net assets
Goodwill
Cost of investment at acquisition
date
Crucea Power
Park S.R.L.
31.07.2021
30%
(242)
(73)
12,573
12,500
Foton Power
Energy
S.R.L.
31.12.2021
30%
(7)
(2)
6,334
6,332
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
459
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Summarised financial information in respect of each of the Group’s associates is set out below:
Crucea Power Park S.R.L.
31.12.2022
Foton Power Energy
S.R.L.
31.12.2022
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets at acquisition
date
Loss for the period
Closing net assets 31.12.2022
Closing net assets of associates
31.12.2022
Group’s share in associates %
Group’s share of net assets as at
31.12.2022
Goodwill
Carrying amount of interest in
associate 31.12.2022
8,520
1,142
(9,886)
(44)
(268)
(246)
(22)
(268)
Crucea Power Park S.R.L.
Foton Power Energy
S.R.L.
(268)
30%
(80)
12,573
12,492
244
35
(296)
(1)
(18)
(7)
(11)
(18)
(18)
30%
(5)
6,334
6,329
The share loss in amount of RON 13 thousand for the period was recognized in the consolidated
statement of profit and loss for the year ended as at 31 December 2022.
25 Financial assets related to concession arrangements
Based on the concession contracts (mentioned above) amendments, the additional cost of pur-
chasing electricity for covering the own technological consumption of the distribution operators (actual
costs with the purchase of electricity for own technological consumption (“CPT”) coverage compared to
the costs included in the regulated tariffs) are recognised as financial asset as part of the concession
agreement. Such amounts are guaranteed by the concession agreement which is enforceable by law.The
resulting financial assets is presented in the accompanying consolidated financial statements at fair value
determined as the net present value of the additional costs with the acquisition of electricity incurred.
On 31 December 2022 the total amount of the additional costs with the acquisition of electricity
incurred between 1 January 2022 and 31 December 2022 amounting to RON 951,557 thousand were re-
cognized as a financial asset as stated in the addendum to the concession agreement concluded with the
Ministry of Energy on 20 January 2023.
Equity and liabilities
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 2022 (31 December 2021: 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 0.62% at the end of 2022 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 sha-
reholders which are not yet registered with the Trade Register at year end are recognized as pre-paid
capital contributions from shareholders.
The share premium resulted at IPO was RON 171,128 thousand. The transaction costs of RON
68,079 thousand were deducted from the share premium.
Following the SPO that took place in November 2019, the share capital of Electrica SA was
increased by in kind and in cash contribution, with the amount of RON 5,037 thousand, from the
amount of RON 3,459,399 thousand to the amount of RON 3,464,436 nuthousand, by issuing a num-
ber 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 acqu-
iring the shares and Global Depositary Receipts was RON 75,372 thousand.
(c) Revaluation reserve
The reconciliation between opening and closing balance of revaluation reserve is as follows:
Balance at 1 January
Release of revaluation
reserve to retained
earnings corresponding
to depreciation and
disposals of property,
plant and equipment
Balance as at 31
December
(d) Legal reserves
2022
2021
102,829
116,372
(10,712)
(13,543)
92,117
102,829
Legal reserves are set up as 5% of the gross profit for the year in the statutory individual finan-
cial 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 2021
Set-up of legal reserves
Balance at 31 December 2021
Set-up of legal reserves
Balance at 31 December 2022
(e) Dividends
Legal reserves
392,276
16,129
408,405
21,178
429,583
Romanian companies may distribute dividends from statutory profits, according to the sepa-
rate financial statements prepared in accordance with Romanian accounting regulations.
The dividends declared by the Company in 2022 and 2021 (from the statutory profits of previ-
ous years) are as follows:
Distribution of dividends
2022
2021
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
To the owners of the Company
Total
152,798
152,798
247,874
247,874
461
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
460
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
On 20 April 2022 the General Shareholders Meeting of the Company approved dividend dis-
tribution of RON 152,798 thousand (2021: RON 247,874 thousand). The dividend per share distribu-
ted is RON 0.45 per share (2021: RON 0.73 per share). When calculating the dividend per share, the
Company’s repurchased own shares (6,890,593 shares) were not considered as outstanding shares
and are deducted from the total number of issued ordinary shares.
Out of the dividends declared by the Company of RON 152,798 thousand (2021: RON 247,874
thousand), the dividends paid were of RON 152,447 thousand (2021: RON 247,258 thousand) the
remaining difference represents dividends uncollected by the shareholders.
1177/13.11.2020 was issued by ANCOM as a result of Telekom Romania’s appeal, dissatisfied with the tariffs char-
ged by former SDEE MN, SDEE TN and SDEE TS (actual DEER), based on the study approved at the Group level.
In 2022, The Court of Appeal of Bucharest rejected the appeal filed by DEER through sentence 2509/2022,
therefore, the Group recorded a provision in this regard, calculated as the difference between the rates in the
contract and those in the ANCOM decision.
30 Bank borrowings and overdrafts
Drawings and repayments of borrowings during the year ended 31 December 2022 were as
27 Trade payables
Electricity suppliers
Capital expenditure suppliers
Other suppliers
Total
31 December
2022
31 December
2021
970,815
243,715
192,567
1,407,097
619,653
156,546
115,136
891,335
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
VAT payable
Liabilities towards
the State
Other liabilities
Total
31 December 2022
31 December 2021
Current
Non-current
Current
Non-current
565,075
11,733
290,728
867,536
-
-
72,432
72,432
133,833
7,148
130,282
271,263
-
-
32,732
32,732
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
2022
Provisions recognized
Provisions utilised
Provisions reversed
Balance at 31 December
2022
Tax related
Other
Total
1,084
-
-
-
1,084
33,838
40,800
(3,021)
(19,000)
52,617
34,922
40,800
(3,021)
(19,000)
53,701
As at 31 December 2022, provisions refer mainly to benefits upon the termination of execu-
tive directors’ mandate contracts in the form of a non-compete clause amounting to RON 1,839
thousand (31 December 2021: RON 3,971 thousand) and for various claims and litigations involving
the Group companies in amount of RON 51,862 thousand (31 December 2021: RON 30,951
thousand).
For the supply segment, during 2022 the Group set up a provision on the supply segment in
amount of RON 3,880 thousand in relation to a claim with EDPR Romania SRL. Also, starting with
July 2022, from the amendment of the Performance Standard 82/2021, the compensations are cal-
culated daily or weekly and paid to the customers. Thus, for the provision recognized until 30 June
2022, was recorded a reversal in amount of RON 7,947 thousand and an additional provision of RON
6,900 thousand was set up for the period July-December 2022.
For the distribution segment, during 2022 was recorded a provision in amount of RON 24,345 thou-
sand with ANCOM. Through the action formulated in file 7407/2/2020, ANCOM Decision 1177/13.11.2020 which
established the pole rent rates for former SDEE MN, SDEE TN, SDEE TS (actual DEER) was challenged. Decision
follows:
Balance at 1 January
2022
Drawings of
borrowings during
the period, out of
which:
EBRD
Eximbank Romania
Vista Bank
Total drawings
Accumulated
interest
Payment of interest
out of which paid in
2021
Reimbursements,
out of which:
BRD
BRD
BRD
Banca Transilvania
Unicredit Bank
BCR
Balance at 31
December 2022
Currency
Interest rate
Maturity year
Amount (RON
thousand)
628,489
RON
RON
RON
RON
RON
RON
RON
RON
RON
Floating rate (1.15%
+ interbank rate +
ROBOR spread)
ROBOR 3M+1.65%
ROBOR 3M+2.95%
2031
2024
2024
3,99%
3.85%
3,85%
4.59%
3.85%
ROBOR 3M+1%
2026
2028
2028
2027
2026
2028
113,451
4,110
100,000
217,561
9,124
28,957
(1,536)
92,925
20,800
11,432
14,286
17,857
9,600
18,950
760,713
As at 31 December 2022, respectively 31 December 2021, the bank borrowings is as follows:
Lender
Borrower
Balance at 31 December
2022
Balance at 31 December
2021
Banca Transilvania
UniCredit Bank
BRD
BRD
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Sud
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Nord
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Muntenia Nord S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Nord
S.A.)
80,367
98,227
38,793
48,498
83,200
104,000
78,571
92,857
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
463
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
462
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Lender
Borrower
Balance at 31 December
2022
Balance at 31 December
2021
Reimbursements: quarterly instalments until 2028; Grace period: 12 months. As at 31 December 2022,
the outstanding balance is of RON 78,571 thousand. (Outstanding balance as at 31 December 2021:
RON 92,857 thousand)
62,904
74,342
e) Investment loan granted by BRD – Groupe Societe Generale
BRD
BCR
EBRD
Eximbank Romania
Vista Bank
Distributie Energie
Electrica Romania (fosta
SDEE Transilvania Sud
S.A.)
Distributie Energie
Electrica Romania (fosta
SDEE Muntenia Nord S.A.)
Distributie Energie
Electrica Romania
Distributie Energie
Electrica Romania
Societatea Energetica
Electrica S.A.
Total
Less: current portion of the long-term bank
borrowings
Less: accumulated interest
Total long-term borrowings, net of current portion
Bank Borrowings description
109,785
202,983
4,110
100,000
760,713
(104,400)
(9,120)
647,193
128,243
82,322
-
-
628,489
(508,197)
(1,536)
118,756
a) 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 in-
vestment 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 2022, the outstanding balance is of RON
80,367 thousand, of which RON 80,357 thousand principal and RON 10 thousand accrued interest.
(Outstanding balance as at 31 December 2021: RON 98,227 thousand)
b) 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 2022, the outstanding balance is of RON
38,793 thousand, of which RON 38,400 thousand principal and RON 393 thousand accrued interest.
(Outstanding balance as at 31 December 2021: RON 48,498 thousand)
c) 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 2022, the outstanding ba-
lance is of RON 83,200 thousand. (Outstanding balance as at 31 December 2021: RON 104,000
thousand)
d) 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;
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
464
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 31 December 2022, the outstanding
balance is RON 62,904 thousand, of which RON 62,857 thousand principal and RON 47 thousand
accrued interest. (Outstanding balance as at 31 December 2021: RON 74,342 thousand)
f) 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 mon-
ths. As at 31 December 2022, the outstanding balance is RON 109,785 thousand, of which RON
108,961 thousand principal and RON 824 thousand accrued interest. (Outstanding balance as at 31
December 2021: RON 128,243 thousand)
g) 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, con-
cluded with the European Bank for Reconstruction and Development a credit agreement for invest-
ments 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 thou-
sand; Interest rate: agreed individually for each tranche drawn; Repayments: 17 half-yearly instal-
ments until 31.07.2031; Grace period: 24 months. As at 31 December 2022, the outstanding balance is
RON 202,983 thousand, of which RON 195,136 thousand principal and RON 7,847 thousand accrued
interest. The loan agreement is guaranteed by Electrica SA.
h) Investment loan granted by the European Investment Bank (“BEI”)
On 14 July 2021, Societatea de Distributie Energie Electrica Romania SA, as a borrower, con-
cluded with the European Investment Bank an investment credit contract for the purpose of finan-
cing 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 2022, the outstan-
ding balance is Nil as no withdraw was made from the loan. The loan agreement is guaranteed by
Electrica SA.
i) Loan for financing current activity granted by Eximbank Romania
On 22 December 2022, Distributie Energie Electrica Romania S.A., as a borrower, concluded with
Eximbank Romania a credit agreement for a period of 24 months. The main provisions are: Maximum loan
amount: 250,000 thousand RON; Interest rate: ROBOR 3M +1.65 % p.a.; Repayments: 6 equal quarterly instal-
ments; Grace period: 6 months. On 31 December 2022, the outstanding balance is RON 4,110 thousand. The loan
benefits from a guarantee in the name and account of the state and is guaranteed by Electrica SA.
j) Line of Credit for working capital and for issuing Bank Guarantee Letters granted by Vista
Bank
On 30 December 2022, Societatea Energetica Electrica S.A., as the borrower, concluded a contract for
a line of credit for working capital and for the issuance of Bank Guarantee Letters granted by Vista Bank for a
period of 18 months. The main provisions are: Maximum credit amount: 100,000 thousand RON; Interest rate:
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
465
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
ROBOR 3M +2.95 % p.a.; full refund at maturity. On 31 December 2022, the balance of the loan is 100,000 thou-
sand RON.
Overdrafts
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, BRD – Groupe Societe
Generale S.A., Alpha Bank and UniCredit) with a total overdraft limit of up to RON 2,743,542 thou-
sand at 31 december 2022 (Total overdraft limit as at 31 december 2021: RON 1,830,000 thousand).
The overdraft facilities are used for financing activities. The outstanding balance of the over-
draft facilities as at 31 December 2022 is of RON 2,571,037 thousand (31 December 2021: RON 627,402
thousand).
Lender (overdrafts)
Borrower
Balance at 31 December
2022
Balance at 31 December
2021
ING Bank N.V
Alpha Bank
BCR
BRD
Banca Transilvania
ING Bank N.V
Raiffeisen Bank
UniCredit Bank
BCR
Banca Transilvania
ING Bank N.V
Intesa San Paolo
Raiffeisen Bank
Total overdrafts
Financial Covenants
Societatea Energetica
Electrica S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Electrica Furnizare S.A.
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
Distributie Energie
Electrica Romania S.A
209,138
147,497
227,311
216,570
185,528
169,600
343,001
300,294
208,412
158,965
49,855
135,096
219,770
2,571,037
120,691
-
16,125
-
-
-
282,477
-
-
109,748
-
98,361
-
627,402
The financial covenants specified in the agreements with BRD – Groupe Societe Generale,
Unicredit Bank, Comerciala Romana, European Bank for Reconstruction and Development and
European Investment Bank have been fulfilled as at 31 December 2022.
.
Pledged assets
On 31 December 2022, for several overdrafts the Group has pledges (guarantees) for trade
receivables amounts, as specified on contracts.
Bank Guarantees
The maximum limit of the facility for issuing bank guarantees (credit facility for issuing gu-
arantee instruments and multi-product lines) RON 2,502,000 thousand, of which non-cash uses RON
1,045,153 thousand.
Financial instruments
31 Financial instruments - fair values and risk management
(a) Accounting classifications and fair values
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
466
(b) Financial risk management
The Group has exposure to the following risks arising from financial instruments:
y credit risk;
y liquidity risk;
y 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 receiva-
bles 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 sta-
te-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 2022:
Expected
credit loss rates
(“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
31 December 2022
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
3%
4%
16%
35%
95%
1,951,656
(60,310)
1,891,346
490,985
(19,342)
471,643
66,365
(10,488)
27,259
(9,671)
55,877
17,588
582,426
(552,878)
29,548
3,118,691
(652,689)
2,466,002
No
No
No
No
Yes
The Group performed a sensitivity analysis and a 5% increase in the expected credit loss
rates would not lead a material impact on the results of the Group.
The following table provides information about the exposure to credit risk and expected
credit losses for trade receivables for customers as at 31 December 2021:
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
467
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.
Neither past due
nor impaired
31 December 2021
Expected
credit loss rates
(“ECL”)
Gross value
Lifetime ECL
Net trade
receivables
Credit impaired
2%
1,080,179
(16,615)
1,063,564
No
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Past due 1-30
days
Past due 31-60
days
Past due 61-90
days
Past due more
than 90 days
Total
5%
15%
38%
98%
31 December 2021
228,537
(10,598)
217,939
36,646
(5,317)
31,329
15,428
(5,930)
9,498
964,687
(942,398)
22,289
2,325,477
(980,858)
1,344,619
No
No
No
Yes
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 liabili-
ties 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 transac-
tions as far as practically possible. The Group does not use derivative or hedging instruments.
Details of the main movements in the allowances for doubtful debts are disclosed in Note 18.
Exposure to currency risk
(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 30).
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting
date. The amounts are gross and undiscounted.
Carrying
amount
Contractual cash flows
Total
less than 1
year
1-2 years
2-5 years
More than
5 years
2,571,037
2,571,037
2,571,037
-
-
53,673
53,673
19,211
10,795
10,645
760,713
760,713
113,520
354,471
200,505
1,407,097
1,407,097
1,407,097
-
-
951,557
951,557
190,311
190,311
570,934
-
13,022
92,217
-
-
5,744,077
5,744,077
4,301,176
555,577
782,084
105,239
627,402
627,402
21,544
21,544
627,402
9,442
-
4,874
-
5,071
-
2,157
628,489
628,489
509,733
27,455
82,372
8,929
891,335
2,168,770
891,335
2,168,770
891,335
2,037,912
-
32,329
-
87,443
-
11,086
Financial liabilities
31 December 2022
Bank overdrafts
Lease liability
Long term bank
borrowings
Trade payables
Financial assets
related to concession
agreements
Total
31 December 2021
Bank overdrafts
Lease liability
Long-term bank
borrowings
Trade payables
Total
(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 ob-
jective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
The summary of quantitative data about the Group’s exposure to currency risk is as follows:
in thousands of RON
Cash and cash equivalents
Lease liability
Net statement of financial position
exposure
31 December 2022
denominated in EUR
31 December 2021
denominated in EUR
277
(21,004)
(20,727)
812
(19,118)
(18,306)
The following significant exchange rates have been applied during the year:
RON
EUR 1
Sensitivity analysis
Average rate
Year-end spot rate
2022
2021
2022
2021
4.9315
4.9204
4.9474
4.9481
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 2022
EUR (5% movement)
31 December 2021
EUR (5% movement)
Interest rate risk
Profit before tax
Strengthening
Weakening
(1,036)
(915)
1,036
915
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.
Exposure to interest rate risk
The interest rate profile of the Group’s interest-bearing financial instruments is as follows:
31 December 2022
31 December 2021
Fixed-rate instruments
Financial assets
Call deposits
Financial assets
Financial liabilities
193,219
951,557
53,897
-
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
469
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
468
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
31 December 2022
31 December 2021
B. Acquisition-related costs
Long-term bank borrowings
Lease liability
Variable-rate instruments
Financial liabilities
Lease liability
Long-term bank borrowings
Bank overdrafts
(651,752)
(37,378)
455,646
(16,295)
(108,961)
(2,571,037)
(2,696,293)
(418,893)
(8,276)
(373,272)
(13,268)
(209,596)
(627,402)
(850,266)
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.
31 December 2022
Variable-rate instruments
31 December 2021
Variable-rate instruments
Other information
32 Acquisition of subsidiaries
Profit before tax
50 bp increase
50 bp decrease
(13,481)
(4,251)
13,481
4,251
On 6 September 2022, Electrica acquired 75% of Green Energy Consultancy & Investments
S.R.L. shares granting control of the entity.
On 21 March 2022 the Group acquired an additional 30% of the shares and voting interests
in Sunwind Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gaining
control of Sunwind Energy S.R.L..
On 27 May 2022 the Group acquired an additional 30% of the shares and voting interests in
New Trend Energy S.R.L.. As a result, the Group’s equity interest increased from 30% to 60%, gaining
control of New Trend Energy S.R.L..
The Group has concluded that the new purchased subsidiaries represent a business
combination.
Taking control of both New Trend Energy S.R.L. and Sunwind Energy S.R.L. will enable the
Group to develop a portfolio of electricity generation capacities from renewable sources.
A. Consideration transferred
The Consideration transferred for the shares acquired was as follows:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
Cash
Fair value of pre-
existing interest
Consideration
transferred
1,446
-
1,446
802
4,786
5,588
2,204
2,190
4,394
4,452
6,976
11,428
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
470
The Group incurred acquisition-related costs of RON 100 thousand relating to external legal
fees and due diligence costs. These costs have been included in “Other operating expenses” in the
condensed consolidated statement of profit or loss.
C. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities
assumed at the date of acquisition:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
239
-
-
1
273
6,095
46
7
163
2,862
20
-
675
8,957
66
8
240
6,421
3,045
9,706
(196)
-
-
(47)
(243)
(3)
(1)
(6,764)
(332)
(8)
(7,105)
(684)
(1)
(3,184)
(191)
-
(3,376)
(331)
(198)
(9,948)
(523)
(55)
(10,724)
(1,018)
Property, plant and
equipment
Right of use assets
Trade and other
receivables
Cash and Cash
equivalents
Total assets
Trade and other
payables
Finance lease
liability
Other non-current
liabilities
Other payables
Total liabilities
Net assets
D. Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Green Energy
Consultancy &
Investments S.R.L.
(31 August 2022)
New Trend Energy
S.R.L.
(31 May 2022)
Sunwind Energy
S.R.L.
(31 March 2022)
Total
1,446
5,588
4,394
11,428
.
(1)
(274)
(132)
(407)
3
1,448
684
5,998
331
1,018
4,593
12,039
Consideration
transferred
NCI, based on
their proportionate
interest in the
recognised amounts
of the assets and
liabilities
Fair value of
identifiable net
assets
Goodwill
The goodwill is attributable mainly to the know-how of the projects and the synergies expec-
ted to be achieved from integrating the companies into the Group’s existing business. The manage-
ment has concluded by assessing internal and external sources, that there is no indication that the
goodwill may be impaired. None of the goodwill recognized is expected to be deductible for tax
purposes.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
471
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
33 Related parties
(a) Main shareholders
As at 31 December 2022 and 31 December 2021, 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.
(a) Management and administrators’ compensation
Executive Management
compensation
2022
2021
34,726
34,429
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:
2022
2021
Members of Board of Directors
3,063
3,992
Electrica SA’s Board of Directors comprises 7 members. According to the remuneration po-
licy approved by the General Meeting of Shareholders that took place on 20 April 2022, 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 2022 and 2021.
(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 in-
fluence 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 ener-
gy producers/suppliers, as follows:
Supplier
OPCOM
Transelectrica
Nuclearelectrica
Hidroelectrica
Complexul Energetic
Oltenia
OMV Petrom SA
SNGN Romgaz SA
Electrocentrale
Bucuresti
ANRE
Transgaz
Others
Total
Purchases (without VAT)
2022
2021
2,727,101
968,470
866,763
581,598
478,813
261,123
197,490
191,862
10,458
8,029
7,768
6,299,475
1,700,630
756,925
512,915
241,722
396,072
-
10,727
34,776
10,320
8,958
7,889
3,680,934
Balance (including VAT)
31 December 2022
23,981
185,856
93,013
42,493
45,257
26,349
7,445
-
14
986
1,168
426,562
31 December 2021
29,203
155,931
43,343
19,711
31,502
-
3,305
-
132
1,226
1,332
285,685
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:
Client
OPCOM
Transelectrica
Sales
(without VAT)
2022
Balance, gross
(including VAT)
Allowance
(including VAT)
31 December 2022
Balance, net
326,640
314,253
22,630
112,754
-
-
22,630
112,754
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
472
Client
SNGN Romgaz SA
Hidroelectrica
CN Romarm
CFR Electrificare
Transgaz
CN Remin SA
C.N.C.A.F MINVEST
SA
Oltchim
CET Braila
Termoelectrica
Others
Total
Client
OPCOM
Transelectrica
SNGN Romgaz SA
Hidroelectrica
CN Romarm
CFR Electrificare
C.N.C.F CFR SA
CNAIR
Municipiul Galati
Transgaz
CN Remin SA
C.N.C.A.F MINVEST
SA
Oltchim
CET Braila
Termoelectrica
National Agency for
Payments and Social
Inspection
Ministry of Energy
Others
Total
Sales
(without VAT)
2022
Balance, gross
(including VAT)
86,353
68,716
17,386
10,332
11,580
704
-
-
5
0
127,686
963,655
2,253
16,429
648
2,089
764
71,279
26,802
115,943
3,365
1,206
11,277
387,439
Allowance
(including VAT)
31 December 2022
9
-
0
-
0
71,148
26,802
115,943
3,361
1,206
522
218,991
Balance, net
2,245
16,429
648
2,089
764
132
-
-
3
-
10,754
168,448
Sales
(without VAT)
2021
Balance, gross
(including VAT)
Allowance
(including VAT)
31 December 2021
Balance, net
162,855
92,505
48,099
19,622
14,156
10,410
8,281
6,928
4,568
2,249
700
-
-
9
-
-
-
32,956
403,338
28,468
27,091
1,664
2,638
1,093
507
701
962
12
1,571
71,216
26,802
536,156
3,361
1,206
59,271
11,420
2,204
776,343
-
-
-
-
-
-
(1)
-
(12)
-
(71,216)
(26,802)
(536,156)
(3,361)
(1,206)
-
-
(536)
(639,290)
28,468
27,091
1,664
2,638
1,093
507
700
962
-
1,571
-
-
-
-
-
59,271
11,420
1,668
137,053
34 Contingencies
Contingent liabilities
Fiscal environment
.
.
I
A
S
A
C
R
T
C
E
L
E
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 lia-
bilities 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 inconsisten-
cy 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 con-
trols and litigations with tax authorities. The management of the Group believes that adequate
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
473
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
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 re-
presenting building tax for the period 01.01.2012-31.12.2015 in the total amount of RON 24,831 thou-
sand, 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. The amount of late charges was recalculated to
RON 13,021 thousand between the tax inspection report date and principal debt payment date.
Litigious actions were started in order to challenge the tax inspection report.
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”. At the
same time, for the late penalties in the amount of RON 13,021 thousand, a letter of bank guarantee
was established in the amount of RON 13,021 thousand valid until 10 August 2023, in order to mitiga-
te the associated risks.
The capital expenditures actually incurred may differ from the ones planned.
(c) Guarantees and pledges
At 31 December 2022 and 31 December 2021, 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 30), 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 2022, the Group has outstanding bank letters of guarantee of RON 952,008
thousand (31 December 2021: RON 1,088,629 thousand) issued in favour of its suppliers.
(d) Audit fees
The audit fees for the consolidated financial statements were in amount of 957 thousand
RON, and during the year 2022, non-audit services fees were in amount of 377 thousand RON (limi-
ted review of the interim consolidated financial statements, verification of the degree of fulfilment of
the financial indicators stipulated in the contract, analysis and verification of transactions reported
according to art. 923 para. 5 of Law no. 24/2017).
Other litigations and claims
36 Subsequent events
The Group is involved in a series of litigations and claims (ie. with ANRE, NAFA, Court of
Vulturu project
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 mana-
gement 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 pre-
liminary ruling was issued so far).
35 Commitments
(a) Contractual commitments
Contractual commitments as at 31 December 2022 and 31 December 2021 are as follows:
31 December 2022
31 December 2021
Purchase of electricity
Purchase of green certificates
Purchase of property, plant and
equipment and intangible assets
Purchase of investments
Total
(b) Investment program
802,252
129,246
446,937
289,636
1,668,071
The investment program at Group level approved for the year 2023 is as follows:
2023
Distribution activity
Supply activity
Maintenance activity
Production activity
Other/ shared
Total
3,200,154
132,937
212,930
60,485
3,606,506
848,800
61,200
10,500
343,000
33,500
1,297,000
The project company Green Energy Consultancy & Investments S.R.L, having as main object
of activity the production of energy from photovoltaic sources, was acquired 100% on 6 February
2023, until 31 December 2022 was acquired 75% (please see note 1). Green Energy Consultancy &
Investments S.R.L. develops the photovoltaic project “Vulturu”, with a designed installed capacity of
12 MWp DC (peak power at the panels level) and 9.75 MW AC (authorised power for delivery into the
grid), located near Vulturu locality, Vrancea county. The project is in the “ready-to-build” phase.
Concession agreements amendments
On 20 January 2023, the Ministry of Energy as concedent amended the concession agree-
ment with the Group for the distribution segment to reflect that in case of early termination of the
concession agreement, for any reasons, the cocessionaire would reimburse to the Group the value of
actual costs with the purchase of electricity for own technological consumption compared to the
costs included in the regulated tariffs.
The amendments to the concession agreements have been agreed with the Ministry of
Energy before 31 December 2022, however the addendums were issued on 20 January 2023 and
they have mentions in preambul about the communications from 2022. The management considers
that all facts and circumstances were available as of 31 December 2022, therefore Group accounted
for these amendments as a subsequent adjusting event for the year ended 31 December 2022 and
recognised a financial asset, which is further detailed in Note 25.
Chief Executive Officer
Alexandru – Aurelian Chirita
Chief Financial Officer
Stefan Alexandru Frangulea
24 March 2023
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
475
.
.
I
A
S
A
C
R
T
C
E
L
E
2
2
0
2
T
R
O
P
E
R
L
A
U
N
N
A
474
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS-EU)AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2022(All amounts are in THOUSAND RON, if not otherwise stated)
Independent Auditor’s Report on the 2022
Consolidated Financial Statements (IFRS-EU)
476
477
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Deloitte Audit S.R.L.
Clădirea The Mark Tower,
Calea Griviței nr. 82-98,
Sector 1, 010735
București, România
Tel: +40 21 222 16 61
Fax: +40 21 222 16 60
www.deloitte.ro
INDEPENDENT AUDITOR’S REPORT
To the Shareholders,
Societatea Energetica Electrica S.A.
Report on the Audit of the Consolidated Financial Statements
Qualified Opinion
1. We have audited the consolidated financial statements of Societatea Energetica Electrica S.A. and its subsidiaries (the Group), with
registered office in Bucharest, District 1, Street Grigore Alexandrescu, No. 9, identified by unique tax registration code 13267221,
which comprise the consolidated statement of financial position as at December 31, 2022, and the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then
ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and notes to the
consolidated financial statements.
2.
The financial statements as at December 31, 2022 are identified as follows:
• Net assets / Equity
• Net profit for the financial year
RON 5,367,246 thousand
RON 558,845 thousand
3.
In our opinion, except for the possible effects of the matter described in the “Basis for Qualified Opinion” section of our report, the
accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Group as at December 31, 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards as adopted by EU (“IFRS”).
Basis for Qualified Opinion
4.
As explained in Note 25, the Group has recorded a financial asset related to the concession agreement of RON 951,557 thousand
related to the additional cost of purchasing electricity for covering the own technological consumption of the distribution operators.
We were unable to obtain sufficient evidence to support the recognition of the amounts recorded as financial assets related to the
concession agreement in the consolidated statement of financial position as of December 31, 2022 and the elements making up the
statement of profit and loss and other comprehensive income, statement of changes in equity and statement of cash flows.
5. We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation (EU) No. 537/2014 of the
European Parliament and the Council (forth named “the Regulation”) and Law 162/2017 (“the Law”). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code), in accordance with ethical requirements relevant for the audit of the financial statements in
Romania including the Regulation and the Law and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Emphasis of Matter
6. We draw attention to Note 2 of the consolidated financial statements, which describes that starting with 2022 the Group prepares
two sets of consolidated financial statements, one under statutory regulations, namely Ministry of Finance Order 2844/2016 with
subsequent amendments and one under International Financial Reporting Standards as adopted by the European Union (“IFRS”).
These consolidated financial statements are prepared under International Financial Reporting Standards as adopted by the European
Union (“IFRS”), which differs from Ministry of Finance Order 2844/2016 with subsequent amendments, as summarized in Note 2.
Consequently these consolidated financial statements do not comply with Ministry of Finance Order 2844/2016 with subsequent
amendments. Our audit report is not modified in respect of this matter.
Key Audit Matters
7.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters
Going Concern
As presented in Note 6 the consolidated financial statements have
been prepared on the going concern basis. The key judgement
leading to this conclusion are set out in that note.
In particular the Group operates in the electricity distribution and
supply industry which is currently affected by the capping laws on
sales to end customers. The Romanian authorities regulatory
position is under review and there may be further laws enacted
which could adversely impact the Group’s operating cash flows. In
the forthcoming twelve months the Group will need to obtain
additional financing and given the position of the Group and its
significance to the Romanian economy management expects that
all necessary financing will be made available.
The ability of the Group to continue as a going concern is
dependent on the successful extension of the existing debt
facilities, drawdown of new financing and 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 financings.
In view of the significant judgements, the application and
disclosures of the basis of the going concern assumption are
considered a Key Audit Matter.
Valuation of Retail accrued revenue, related to electricity supplied
to households
The Group recognizes at the end of each reporting period accrued
revenue from the energy supply activity, related to the household
population. If the actual meter readings are not available at the
end of the reporting period, energy supplied to households is
estimated based on internal information related to historical
patterns of consumption. The degree of estimation uncertainty
reduces from one period to another, however judgement is
inherent in the valuation of the accrued revenue related to the
household population.
Because of the significance of the estimations around the accrued
revenue related to the households and the inability of relying on
the effectiveness of the controls, we consider the valuation of
retail accrued revenue, related to households a key audit matter.
How our audit addressed the key audit matter
We have assessed managements valuation of the going concern
assumption by performing the following procedures:
• We have obtained the cash flow forecasts and critically
challenged the management and the Board of Directors
and Audit Committee on the assumptions used;
• We considered whether at the date of this report additional
information exist from the Romanian authorities with
respect to the capping mechanism;
• We have assessed the Group’s position on the existing debt
facilities, covenant compliance and newly negotiated debt
facilities, during 2023 until the date of this report;
• We considered the Group’s requirements to secure
additional financing in light of its position in the Romanian
market;
• We assessed the adequacy of the disclosure of the basis of
going concern assumption, including the key judgements
adopted;
The group has a number of IT systems across the businesses and
we were not able to rely on the effectiveness of IT controls within
the revenue cycle. The audit procedures adopted were
substantive in nature and included the following:
•
•
•
•
•
Obtaining an understanding of the accounting policies used
in the preparation of the consolidated financial statements,
with respect to revenue recognition;
Testing the reconciliation made by the Group between the
quantity of electricity purchased for supply purposes and
the quantity of electricity delivered from the supply
activity;
Testing the acquired electricity for supply purposes through
a combination of direct confirmations received from the
electricity producers and other supporting documents;
Testing the revenues related to electricity supplied to
customers on the free market through a combination of
direct confirmations and other supporting documents;
Testing the revenues related to electricity supplied to all
customers on the universal service by means of
independent re-computation of the revenues, using the
tariffs published for 2022; and
•
Performing analytical procedures on all electricity sales.
Other information – Administrator’s Report
8.
The administrators are responsible for preparation and presentation of the other information. The other information comprises the
Administrator’s report and the Remuneration Report, but does not include the consolidated financial statements and our auditor’s
report thereon.
Numele Deloitte se referă la organizația Deloitte Touche Tohmatsu Limited, o companie cu răspundere limitată din Marea Britanie, la firmele membre ale acesteia, în cadrul căreia
fiecare firmă membră este o persoană juridică independentă. Pentru o descriere amănunțită a structurii legale a Deloitte Touche Tohmatsu Limited și a firmelor membre, vă rugăm să
accesați www.deloitte.com/ro/despre.
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Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Our opinion on the financial statements does not cover the other information and, unless otherwise explicitly mentioned in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements for the year ended December 31, 2022, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
With respect to the Administrator’s report, we read it and report if this has been prepared, in all material respects, in accordance
with the provisions of Ministry of Public Finance Order no. 2844/2016, with subsequent amendments.
With respect to the Remuneration report, we read it and report if this has been prepared, in all material respects, in accordance with
the provisions of Law 24/2017, articles. no. 106 – 107.
On the sole basis of the procedures performed within the audit of the consolidated financial statements, in our opinion:
a)
b)
c)
the information included in the administrators’ report and the Remuneration report for the financial year for which the
financial statements have been prepared is consistent, in all material respects, with these consolidated financial
statements;
the administrators’ report has been prepared, in all material respects, in accordance with the provisions of Ministry of
Public Finance Order no. 2844/2016, with subsequent amendments;
the Remuneration report has been prepared, in all material respects, in accordance with the provisions of Law 24/2017,
articles. no. 106 – 107.
Moreover, based on our knowledge and understanding concerning the Group and its environment gained during the audit of the
consolidated financial statements prepared as at December 31, 2022, we are required to report if we have identified a material
misstatement of this Administrator’s report and remuneration report. Except for the possible effects of the aspects presented in the
“Basis for Qualified Opinion” section of our report, we have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
9. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by EU and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
10.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
11. Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
12. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
13. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
•
•
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
•
•
•
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
14. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear
on our independence, and where applicable, related safeguards.
16.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
17. We have been appointed by the General Assembly of Shareholders April 28, 2021 to audit the consolidated financial statements of
Societatea Energetica Electrica S.A. for the financial year ended December 31, 2022. The uninterrupted total duration of our
commitment is 5 years, covering the financial years ended December 31, 2018 to December 31, 2022.
We confirm that:
•
•
Our audit opinion is consistent with the additional report submitted to the Audit Committee of the Company that we issued the
same date we issued and this report. Also, in conducting our audit, we have retained our independence from the audited entity.
No non-audit services referred to in Article 5 (1) of EU Regulation No. 537/2014 were provided.
The engagement statutory auditor on the audit resulting in this independent auditor’s report is Răzvan Ungureanu.
Report on compliance with the Commission Delegated Regulation (EU) 2018/815 (“European Single Electronic Format Regulatory
Technical Standard“ or “ESEF”)
We have undertaken a reasonable assurance engagement on the compliance with Commission Delegated Regulation (EU) 2019/815
applicable to the financial statements included in the annual financial report of SOCIETATEA ENERGETICA ELECTRICA S.A. (“the Company”)
in the digital files 213800P4SUNUM5AUDX61 (“Digital files”).
Responsibilities of Management and Those Charged with governance for the Digital Files prepared in compliance with the ESEF
Management is responsible for preparing Digital Files that comply with the ESEF. This responsibility includes:
▪
▪
▪
the design, implementation and maintenance of internal control relevant to the application of the ESEF;
the selection and application of appropriate iXBRL mark ups;
ensuring consistency between the digital files and the consolidated financial statements to be submitted in accordance with
International Financial Reporting Standards as adopted by EU and also with the consolidated financial statements submitted in
accordance with Ministry of Finance Order 2844/2016 with subsequent amendments;
Those charged with governance are responsible for overseeing the preparation of the Digital Files that comply with ESEF.
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481
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480
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Independent Auditor’s Report on the 2022 Consolidated Financial Statements (IFRS-EU)
Auditor’s Responsibilities for Audit of the Digital Files
Our responsibility is to express a conclusion on whether the consolidated financial statements included in the annual financial report
complies in all material respects with the requirements of ESEF based on the evidence we have obtained. We conducted our reasonable
assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements
Other than Audits or Reviews of Historical Financial Information (ISAE 3000) issued by the International Auditing and Assurance Standards
Board.
A reasonable assurance engagement in accordance with ISAE 3000 involves performing procedures to obtain evidence about compliance
with ESEF. The nature, timing and extend of procedures selected depend on the auditor’s judgment, including the assessment of the risks
of material departures from the requirements set out in ESEF, whether due to fraud or error. A reasonable assurance engagement includes:
▪
▪
▪
▪
obtaining an understanding of the Company’s process for preparation of the digital files in accordance with ESEF, including
relevant internal controls;
reconciling the digital files including the marked up data with the audited consolidated financial statements of the Company to
be submitted in accordance with International Financial Reporting Standards as adopted by EU and also with the consolidated
financial statements submitted in accordance with Ministry of Finance Order 2844/2016 with subsequent amendments;
evaluating if all financial statements contained in the consolidated annual report have been prepared in a valid XHTML format;
evaluating if iXbrl mark-ups, including the voluntary mark-ups comply with the requirements of ESEF.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
In our opinion, the consolidated financial statements for the year ended 31 December 2022 included in the annual financial report in the
Digital Files, comply in all materials respects with the requirements of ESEF.
In this section, we do not express an audit opinion, review conclusion or any other assurance conclusion on the consolidated financial
statements. Our audit opinion relating to the consolidated financial statements of the Group for the year ended 31 December 2022 is set
out in the section Report on the audit of the consolidated financial statements above.
Răzvan Ungureanu, Statutory Auditor
For signature, please refer to the original signed
Romanian version.
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under AF 4866
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482
On behalf of:
DELOITTE AUDIT SRL
Registered in the Electronic Public Register of Financial
Auditors and Audit Firms under FA 25
The Mark Building, 84-98 and 100-102 Calea Griviței, 9th Floor, District 1
Bucharest, Romania
March 27, 2023
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483
Statement of the Management
484
485
Statement of the Management
Based on the best available information, we confirm that the consolidated financial
statements reviewed and audited for the period ended 31 December 2022 prepared in ac-
cordance with International Financial Reporting Standards as adopted by the European
Union (“IFRS-EU”), provides an accurate and real image regarding the Electrica Group’s fi-
nancial position, the financial performance and the cash flows, as required by the applicable
accounting standards, and that this Report, prepared in accordance with art. 63 of the law
no. 24/2017 on issuers of financial instruments and market operations and to annex no. 15
to ASF Regulation no. 5/2018 for the period ended 31 December 2022, comprises accurate
and real information regarding the Group’s development and performance.
Based on the best available information, we confirm that the consolidated financial
statements reviewed and audited for the period ended 31 December 2022 prepared in ac-
cordance with OMFP 2844/2016 for the approval of the Accounting Regulations in accor-
dance with the International Financial Reporting Standards adopted by the European Union
with subsequent changes, provides an accurate and real image regarding the Electrica
Group’s financial position, the financial performance and the cash flows, as required by the
applicable accounting standards, and that this Report, prepared in accordance with art. 63
of the law no. 24/2017 on issuers of financial instruments and market operations and to
annex no. 15 to ASF Regulation no. 5/2018 for the period ended 31 December 2022, compri-
ses accurate and real information regarding the Group’s development and performance.
.
Chair of the Board of Directors,
Iulian Cristian BOSOANCA
Chief Executive Officer,
Alexandru-Aurelian CHIRITA
Chief Financial Officer,
Stefan Alexandru FRANGULEA
.
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