annual report of elektro primorska d.d. company and elektro

Annual Reportof Elektro Primorska d.d. Company

and Elektro Primorska Group for Year 2014

KAZALO

A. BUSINESS REPORT

1. MANAGEMENT REPORT

2. MANAGEMENT RESPONSIBILITY STATEMENT

3. SUPERVISORY BOARD REPORT

4. CORPORATE GOVERNANCE STATEMENT

4.1. Management board

4.1.1. Appointment and composition

4.1.2. Responsibilities and operation

4.1.3. Remuneration of the management

4.1.4. System of internal control and risk management relating to financial

reporting, auditing

4.2. Supervisory board

4.2.1. Appointment and composition

4.2.2. Powers and operation

4.2.3. Remuneration of supervisory board and supervisory board committees' members

4.3. Shareholders meeting

4.4. Statement of compliance with the Corporate Governance Code

4.5. Compliance with the recommendations and expectations of Slovenian Sovereign Holding

4.6. Management of the Parent Company and the Group

5. PRESENTATION OF THE COMPANY

5.1. Company identity card

5.2. Mission, vision and business culture of the company

5.2.1. Mission of the company

5.2.2. Vision of the company

5.2.3. Business culture

5.3. Regulatory frameworks of the electricity activity of the company

5.4. Company organization

6. HUMAN RESOURCES MANAGEMENT IN YEAR 2014

6.1. General

6.2. Overview of key data about employees in year 2014

6.3. Age structure of employees

6.4. Structure of employees according to the years of service

6.5. Structure of employees according to gender

6.6. Educational structure of employees

6.7. Employees with disabilities

6.8. Education of employees

6.9. Care for employees

6.10. Health and safety at work

6.11. Voluntary supplementary pension insurance

6.12. Accident insurance

6.13. Secondary activities affecting the well-being of employees

7. IMPLEMENTATION OF ANNUAL OBJECTIVES IN YEAR 2014

8. DISTRIBUTION OF ELECTRICITY

8.1. Services for SODO

8.1.1. Achieving the goals and comparison with year 2013

8.2. Investments


8.3. Acquired and transmitted electricity in year 2014

8.4. Access to the distribution network

8.4.1. Use of electricity network

8.4.2. Excessively acquired wattles power at cos ϕ < 0,95

8.4.3. Electricity losses in the distribution network

8.4.4. Peak of distribution network consumption and operating hours

8.4.5. Production of electricity from producers connected to the distribution network

8.4.6. Quality of electricity supply

8.4.6.1. Voltage quality

8.4.6.2. Continuity of power supply

8.4.6.3. Commercial quality

9. SERVICES FOR EXTERNAL CUSTOMERS

10. INFORMATION SUPPORT AND DEVELOPMENT

11. INTEGRATED MANAGEMENT SYSTEM

12. CARE FOR THE ENVIRONMENT

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12.1. Environmental policy 52

12.2. Realization of environmental programs in year 2014 52

13. RISK MANAGEMENT 52

13.1. Financial risks 53

13.2. Operational risks 53

13.3. Strategic risks 54

13.4. Legislative risks 54

B. FINANCIAL STATEMENTS 56

1. BALANCE SHEET AS AT DECEMBER 31 2014 56

2. PROFIT AND LOSS ACCOUNT FOR YEAR ENDED AS AT DECEMBER 31 2014 58

3. STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED AS AT DECEMBER 31 2014

4. CASH FLOW STATEMENT FOR YEAR ENDED AS AT DECEMBER 31 2014 60

5. STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED AS AT DECEMBER 31 2014 61

6. STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED AS AT DECEMBER 31 2013 62

7. INDICATORS 63

7.1. Main indicators of financing (investing) 63

7.2. Main investment indicators (investing) 63

7.3. Main horizontal financial structure indicators 64

7.4. Main indicators of economy 64

7.5. Main indicators of return 64

C. NOTES TO THE FINANCIAL STATEMENTS ACCORDING TO THE COMPANIES ACT

AND SLOVENIAN ACCOUNTING STANDARDS

1. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS 65

2. NOTES TO THE BALANCE SHEET ITEMS 69

2.1. Intangible assets 69

2.2. Tangible fixed assets 71

2.3. Long-term financial investments 74

2.4. Long-term operating receivables 75

2.5. Stocks 75

2.6. Short-term financial investments 76

2.7. Short-term operating receivables 77

2.8. Monetary assets 79

2.9. Short-term accruals and prepaid expenditure 79

2.10. Capital 80

2.11. Provisions and long-term accruals and deferred income 81

2.11.1. Provisions 81

2.11.2. Long-term accruals and deferred income 81

2.12. Long-term liabilities 82

2.13. Short-term liabilities 83

2.14. Short-term accrued costs and deferred revenues 83

3. NOTES TO THE PROFIT AND LOSS ACCOUNT 85

3.1. Operating revenues 86

3.2. Operating expenses 87

3.3. Financial revenue 90

3.4. Financial expenses 91

3.5. Other revenue 91

3.6. Other expenses 91

3.7. Corporate income tax 92

3.8. Net profit or loss 92

3.9. Total comprehensive income for the period 92

4. NOTES TO THE CASH FLOW STATEMENT 93

4.1. Receipts from operating activities 93

4.2. Expenditure for operating activities 93

4.3. Receipts from investing activities 93

4.4. Expenditure for investing activities 93

4.5. Receipts from financing activities 93

4.6. Expenditure for financing activities 93

4.7. Cash flow for the period 93

5. DISCLOSURE OF EVENTS WITH RELATED PARTIES 94

6. CONTINGENT LIABILITIES OF THE COMPANY 95

7. EVENTS AFTER THE BALANCE SHEET DATE 95

8. NOTES TO THE FINANCIAL STATEMENTS ACCORDING TO ENERGY ACT

AND THE COMPANIES ACT

8.1. Notes to the balance sheet

8.2. Notes to the profit and loss account

8.3. Criteria for allocating revenues and expenses, assets and liabilities of joint activities

to individual activities

8.4. Sub-balance sheet according to the Energy Act as at 31. 12. 2014

8.5. Profit or loss account according to the energy act for year 2014 101

D. BUSINESS REPORT OF ELEKTRO PRIMORSKA GROUP

1. PRESENTATION OF THE GROUP

1.1. Composition of the group

1.2. Presentation of controlled company E 3, d. o. o.

1.3. Presentation of associate company Knešca, d. o. o.

1.4. Presentation of the controlling company JOD, d. o. o.

1.5. Presentation of the controlling company ECO ATMINVEST, d. o. o.

2. RISK MANAGEMENT

3. CONSOLIDATED FINANCIAL STATEMENTS

3.1. Consolidated balance sheet as at December 31 2014

3.2. Consolidated profit or loss account for business year ended as at December 31 2014

3.3. Consolidated statement of comprehensive income for year ended as at

December 31 2014

3.4. Consolidated cash flow statement for year ended as at December 31 2014

3.5. Consolidated statement of changes in equity for year ended as at December 31 2014

3.6. Indicators in Elektro Primorska Group

4. FINANCIAL REPORT OF ELEKTRO PRIMORSKA GROUP

4.1. General notes and disclosures

4.2. Notes to the consolidated balance sheet

4.2.1. Long-term assets

4.2.1.1. Intangible assets

4.2.1.2. Tangible fixed assets

4.2.2. Long-term financial investments

4.2.3. Long-term operating receivables

4.2.4. Deferred tax assets

4.2.5. Short-term assets

4.2.5.1. Stocks

4.2.5.2. Short-term financial investments

4.2.5.3. Short-term operating receivables

4.2.5.4. Monetary assets

4.2.6. Accruals and prepaid expenditure

4.2.7. Capital

4.2.8. Provisions and long-term accruals and deferred income

4.2.8.1. Provisions

4.2.8.2. Long-term accruals and deferred income

4.2.9. Long-term liabilities

4.2.10. Short-term liabilities

4.2.11. Accrued expenses and deferred revenues

4.3. Notes to the consolidated profit or loss account

4.3.1. Operating revenues

4.3.2. Operating expenses

4.3.3. Financial revenue

4.3.4. Financial expenses

4.3.5. Other revenues

4.3.6. Other expenses

4.3.7. Corporate income tax

4.3.8. Net profit or loss

4.4. Notes to the consolidated cash flow statement

4.5. Contingent liabilities of Elektro Primorska Group

4.6. Events after the balance sheet of Elektro Primorska Group

5. MANAGEMENT RESPONSIBILITY STATEMENT – GROUP OPERATIONS

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ABusiness Report

Business Report | 1. Management Report Business Report | 1. Management Report A A8 9

Dear shareholders, business partners, and co-workers,

year 2014 was full of events that marked the operations of the group in many ways. At the

very beginning, when we just finished the operations of the previous year, put our sails up

and turned to new goals, we were hit by a natural disaster of an exceptional character. Ice

damage that shook us well at the end of January caused extreme damage on the entire

Slovenian energy infrastructure. Area covered by Elektro Primorska was especially hard

hit. There were more than 350 km of distribution network damaged, which represents

more than four percent of the infrastructure owned by the company.

We started renovating deliberately and energetically. Our first goal was to ensure the

most urgent supply of electricity to all our customers. We installed more than120 aggre-

gates and upgraded certain parts of the damaged network. We reached the goal in

exceptional circumstances, with the help of external partners and international aid, within

less than a month.

Even the rest of the year was devoted almost exclusively to rehabilitation of the damaged

network. Majority of investment funds were intended for the restoration of medium-vol-

tage power lines and construction of the heavy line between Pivka and Postojna, which

increased the reliability of power supply for the town of Postojna. Final rehabilitation of

damage, mainly on the low-voltage network, will be delayed well into year 2015.

Operating results of the parent company are entirely marked with the vents from the be-

ginning of the year. The resulting damage and the implementation of rehabilitation have

had a significant impact on costs and revenues of the company. Increased volume of co-

sts is connected with operation of aggregates, overtime work, hiring the services of exter-

nal contractors and write-off of fixed assets damaged during the glaze storm. Because of

paid insurance claims, we exceeded the planned volume of operating revenues as well.

Despite the extreme conditions, we achieved a positive operating result in the amount of

3.2 mio EUR and even exceeded other core business objectives.

We carried out by more than 13 mio EUR of investments; surpassed planned objectives

in the segment of own services, carried out all necessary maintenance work and at the

same time additionally created a difference in price in the segment of implementing ser-

vices for the market.

In year 2014 we continued with the implementation of measures of the cost rationalizati-

on program (RAST), which is implemented on the level of entire group and will be taking

place until the end of year 2015.

In accordance with the adopted methodology of integrated risk management we imple-

mented measures, which were adopted with the purpose of reducing and controlling the

1.Management Report

risks, and we achieved a radical reduction of risk assessment in the parent company as

well as in the subsidiary E 3, d. o. o.

In accordance with the annual and operative plan of internal audit for year 2014 key

business processes were reviewed and audited in the parent company as well as in the

subsidiary. There were nearly 60 measures issued, of which 60 % have already conclu-

ded, while 40 % are being implemented.

On the electricity market, where one of the key roles are played also by our subsidiary E 3,

d. o. o., the fight for market share among the key players has continued, which expressed

mainly in the form of additional reduction of prices for existing products. Our subsidiary

did not give into the senseless fight of price reductions, but fought the competition by

finding the way to new buyers through introduction of new selling channels. We were

so successful at this, that we recorded another customer growth at the end of the year,

both in the segment of household and business customers. In the last quarter we also

re-launched the sale of electricity in Italy, which was stopped due to reorganization of

the Italian buyer.

Despite positive trend in the last quarter it was impossible to make up for the lost electri-

city quantities, which was the result of customers loss in the first half of the year, excepti-

onally warm winter and mild summer. Weather conditions also impacted the field of heat

and electricity production, where we recorded worse result than planned.

In the given circumstances we are pleased with the achieved result of the subsidiary in

the amount of 1.5 mio EUR, despite the fact that planned profit was not realized.

In Elektro Primorska Group we are well aware that in addition to the business success of

the company, attitude toward the environment we operate in is also important, so we pro-

mote the principles of socially responsible behavior in business and social environment.

We also strive for improvement of environmental aspects of operation, for rational beha-

vior and rational use of energy, raw materials and other natural resources.

Year 2014 is behind us. In Elektro Primorska Group we will certainly remember it well. On

this occasion, I would like to thank once again all co-workers, who in the moment of crisis

proved their loyalty and outstanding care for what is the main mission of the company,

namely to ensure undisturbed electricity supply. In this year we all learned a lot and we

did our work as a mission.

Dear shareholders and business partners, together with our co-workers we would like

to thank you for your trust in the past year. We will continue to care for the successful

development of the group and we wish for your support and creative participation while

doing so.

Uroš Blažica,

Chairman of the Board

A A10 11

Uroš Blažica,


Business Report | 1. Management Report Business Report | 1. Management Report

A A12 13

Management board hereby approves the financial statements for year 2014and business

report for the period between January 1 and December 31 2014, as well as used accou-

nting policies and notes included in the proposed annual report.

Management is responsible for preparing the annual report and hereby declares that the

report provides a true and fair picture of the financial condition of the company and its

operating results for year 2014.

Management board hereby certifies that relevant accounting policies were used consis-

tently and that accounting estimates were prepared according to the principles of pru-

dence and due diligence. At the same time it certifies that the financial statements and

notes were prepared on a going concern basis and in accordance with the relevant legi-

slation and Slovene Accounting Standards.

Management board is also responsible for appropriate accounting, for adoption of

appropriate measures to protect the property and prevent and detect fraud and other

irregularities.

In its operation company strictly abides by the laws and tax regulations, so the manage-

ment of the company does not expect any significant obligations in this respect.

In the period from January 1 2014 to December 31 2014 the supervisory board operated

in the following composition:

• mag. Uroš Saksida, chairman of the supervisory board,

• Valter Vodopivec, vice-president of the supervisory board, employee representative,

• Dean Kocjančič, supervisory board member,

• Massimo Makovac, supervisory board member,

• Matjaž Bajec, supervisory board member,

• Jernej Kenda, supervisory board member, employee representative.

Composition of the supervisory board is varied. Members possess relevant expertise,

experience and skills. With their knowledge and experience they complement each other,

which ensure adequate control over the operations of the company.

Members of the supervisory board in the management or supervisory bodies of related

and unrelated companies are:

• mag. Uroš Saksida – director of Stem, d. o. o. Company, Vipavska 67, 5000 Nova

Gorica,

• Valter Vodopivec – member of the supervisory board in company Mestne storitve,

javno podjetje, d. o. o., Trg Edvarda Kardelja 1, 5000 Nova Gorica,

• Dean Kocjančič – director of Tourist association Izola, g. i. z., Ljubljanska ulica 17,

6310 Izola,

• Massimo Makovac, who is not a member in any of the management or supervisory

bodies of related or unrelated companies,

• Matjaž Bajec – director of company Mlina, družba za upravljanje z naložbami,

d. o. o., Tovarniška cesta 14, 5270 Ajdovščina,

• Jernej Kenda, who is not a member in any of the management or supervisory bod-

ies of related or unrelated companies.

In year 2014 the supervisory board carefully and responsibly supervised the operation of

the company and group Elektro Primorska. Supervisory Board has carried out its work

in accordance with the law, the statute of the company, Rules of Procedure of the Su-

pervisory Board, the Code of Corporate Governance of State Capital Investments and

recommendations of the operator of direct and indirect equity investments of the Re-

public of Slovenia. Operation and supervision of the content related to the monitoring of

achievement of business objectives and long-term business and financial development

of the company and the Group. Management Board regularly, correctly and thoroughly

reported to the Supervisory Board on the operating results, on the broad terms of busi-

ness and significant events in the company and the group. Supervisory board believes

that cooperation with the Management Board held a professional and appropriate pro-

fessional level.

2.Management Responsibility Statement

3.Supervisory Board Report

Composition of the Supervisory Board

Operation of the Supervisory Board

Business Report | 2. Management Responsibility Statement Business Report | 3. Supervisory Board Report

Business Report | 3. Supervisory Board Report Business Report | 3. Supervisory Board ReportA A14 15

In year 2014 Supervisory Board met at nine regular and three correspondence sessions,

where it adopted a total of 82 decisions and dealt with the following major contents:

5th regular session, February 4 2014

• familiarization with the situation on the electricity distribution network owned by the

company after the ice damage,

• consideration of the report on the operations of the group for the period January–

November 2013,

• consideration of the report on liquidity situation of the group,

• approval of estimated sources of financing investments and long-term indebted-

ness of Elektro Primorska d. d. Company for year 2014,

• adoption of the annual internal audit plan for year 2014,

• consideration of RAST program,

• familiarization with the report of the audit committee of the supervisory board.

6th regular session, March 27 2014

• consideration of the report on the operations of the group for the period January

-December 2013,

• familiarization with the interim report on the damage and the rehabilitation of distri-

bution network owned by the company after the ice damage,


• approval of the supervisory board of the contracts for real estate sales,

• consideration of the report on the integrated risk management of the group for the

last quarter of year 2013,

• consideration of the report on the integrated risk management of the group for year

2013,

• consideration of the report on internal audit of the group for the last quarter of year

2013,

• consideration of the report on internal audit of the group for year 2013,

• familiarization with the time schedule of implementation of the 19th shareholders

meeting of Elektro Primorska d. d. Company,

• familiarization with the report of the audit committee of the supervisory board,

• requirement to complete an annual internal audit plan for year 2014.

7th regular session, May 8 2014


February 2014,

• consideration of the evaluation of the group operations for the period January–April

2014,


• familiarization with the guidelines of the revised plan of investments for year 2014,

• consent to the commencement of the procedure of borrowing in Elektro Primorska

d. d. Company for the purpose of refinancing the existing loans,

• adoption of the amended annual internal audit plan for year 2014,

• consideration of the draft annual report of the Supervisory Board for year 2013.


• consideration and approval of the revised annual report of the company and group

for year 2013,

• drafting a proposal for allocation of distributable profit,

• consideration and approval of the annual report of the supervisory board of the

company for year 2013,

• consideration and approval of materials and decision proposals for the 19th share-

holders meeting of Elektro Primorska d. d. Company.

1st correspondence session, June 4 2014–June 6 2014

• consideration and approval of Annex no.2 to the employment contract of the chair-

man of the board.

9th regular session, July 10 2014


May 2014,

• consideration of the evaluation of the group operations for the period January–De-

cember 2014,



first quarter of year 2014,

• consideration of the report on internal audit of the group for the first quarter of year

2014,

• familiarization with the decision on the refusal of a public contract for the supply of

direct electricity meters,

• familiarization with the procedure and costs of introduction of new ERP system.

2nd correspondence session, August 25 2014–August 26 2014

• consent to the conclusion of the transaction to hire long-term loan to refinance ex-

isting long-term indebtedness.

10th regular session, September 11 2014


June 2014,


• familiarization with the conclusion of the Annex no.3 to the Contract on the lease

of electricity distribution infrastructure and provision of services for the distribution

system operator,

• consideration of comparative analysis of selected indicators of electricity distribu-

tion companies in the period 2011–2013,

• consideration of comparative analysis of selected indicators of energy trading sub-

sidiary companies in the period 2011–2013,

• consent to the conclusion of a contract for the lease of the new ERP system,


second quarter of year 2014,

• consideration of the report on internal audit of the group for the second quarter of

year 2014,


A A16 17

• adoption of amendments to the Rules of Procedure of the Audit Committee of the

Supervisory Board of Elektro Primorska d. d. Company and confirmation of a clean

copy of the Rules of Procedure.

11th regular session, October 22 2014


–August 2014,


• adoption of the revised plan of investments for year 2014 (version No. 3),

• familiarization with the impact of ice damage on company's operation in year 2014,

• discussion and conclusion on the fulfillment of the criteria for the payment of bonus-

es to the chairman of the board for year 2013.

12th regular session, December 4 2014


–September 2014,


• consideration of the draft of the Business plan of Elektro Primorska d. d. for the

period 2015–2017.


• consideration of the draft of the Business plan of Elektro Primorska d. d. for the

period 2015–2017,


third quarter of year 2014,

• consideration of the report on internal audit of the group for the third quarter of year

2014,


• adoption of a plan of work of the audit committee of the supervisory board of Elektro

Primorska d. d. for year 2015,

• consideration and approval of the proposal for additional criteria for the selection of

the contractor to revise the annual report.

3rd correspondence session, December 22 2014–December 23 2014

• consideration and approval of the Business plan of Elektro Primorska d. d. for the

2015–2017,

• confirmation of the forecast sources of financing investments and long-term indebt-

edness of the company for period 2015–2017.

At all meetings members of the Supervisory Board met in full cast.

Supervisory Board had no expenses for its operation, except for costs linked to the deci-

sion of the general meeting on the payments for performing the function. Remuneration

of the supervisory board members is disclosed in table no. 54 of the annual report.

Professional support to the supervisory board in exercising control over the management

of the company was offered also by the audit committee of the supervisory board. Re-

view of business and legal transactions of the company in 2014 were monitored by the

following members of the audit committee:

• Dean Kocjančič, chairman of the audit committee,

• Massimo Makovac, internal member of the audit committee,

• Maja Curk, external member of the audit committee, and

• Aleš Jakin, external member of the audit committee.

In year 2014 the audit committee met at four regular and one correspondence session,

where members paid special attention primarily to the following topics: liquidity, compre-

hensive risk management, effectiveness of internal controls, reviewing the correctness of

the implementation of procurement procedures, external audit.

1st correspondence session, January 17 2014–January 24 2014

• consideration of the annual internal audit plan for year 2014.

3rd regular session, February 20 2014


November 2013,

• analysis of the performance of subsidiary E 3, d. o. o., and related companies,


• familiarization with the process of recovery in the parent company and subsidiary

company E 3, d. o. o.


• consideration of the proposal of selecting the audit of the annual report for year

2014,

• consideration of the revised annual report of the company Elektro Primorska d. d.

and group for year 2013,


–March 2014,



last quarter of year 2013,

• consideration of the annual report on the integrated risk management of the group

for year 2013,

• consideration of the report on internal audit of the group for the last quarter of year

2013,

• consideration of the annual report on internal audit of the group for year 2013,

• self-assessment of the audit committee of the supervisory board.

5th regular session, September 2 2014

• consideration of content of the contract on auditing the individual and consolidated

financial statements for year 2014,


–June 2014,

Work of the supervisory board committees

Business Report | 3. Supervisory Board Report Business Report | 3. Supervisory Board Report

A A18 19

Based on the review of the annual report and the accompanying auditor's report, the

Supervisory Board established that the Annual Report is prepared in accordance with

the provisions of the Companies Act and in accordance with accounting standards and

that the information contained therein constitute a faithful reflection of the company's

operations in the previous financial year.

On the basis of the foregoing considerations and the positive opinion issued by the cer-

tified auditing company, the Supervisory Board, without comment approved the Annual

Report of the company Elektro Primorska d. d. and of Elektro Primorska Group for 2014.

With this the Annual report of Elektro Primorska d. d. Company and of Elektro Primorska

Group for 2014 is adopted.

In year 2014 Elektro Primorska d. d. Company made net profit in the amount of 2,813,603

EUR. Following the decision of the management, the company has formed other profit

reserves in the amount of 47.36 % of net profit for year 2014 already in compiling the

annual report. Company notes that the distributable profit as at 31. 12. 2014 amounted to

1,481,000 EUR and consists of the net profit from year 2014 in the amount of 1,481,000

EUR.

Management Board proposes that the entire distributable profit in the amount of

1,481,000 EUR is paid to shareholders in the form of dividends.

Supervisory Board believes that the Management Board's proposal on the use of dis-

tributable profit is in line with the strategic development goals of the company and takes

into account the interest of the shareholders for the long-term increase in share value,

and therefore supports the Management Board proposal on profit distribution and will

forward it together with the Management Board to the General Meeting of Shareholders.

Nova Gorica, May 25 2015

Uroš Saksida, MSc

Chairman of the Supervisory Board

• consideration of the operational assessment of the group for the period January–

December 2014,


• consideration of comparative analysis of selected indicators of electricity distribu-

tion companies in the period 2011–2013,

• familiarization with the presentation of Eco Atminvest, d. o. o. Company,


first and second quarter of year 2014,

• consideration of the report on internal audit of the group for the first and second

quarter of year 2014,

• consideration of the proposal of amendments to the Rules of Procedure of the Audit

Committee of the Supervisory Board.


• consideration of the proposal of additional criteria for selecting the audit of the an-

nual report,


–September 2014,


• consideration of comparative analysis of selected indicators of energy trading sub-

sidiary companies in the period 2011–2013,

• familiarization with the operations of Eco Atminvest, d. o. o. Company, and forming

of opinion about the planned merger with E 3, d. o. o. Company,


third quarter of year 2014,

• consideration of the report on internal audit of the group for the third quarter of year

2014,

• consideration of the annual report on internal audit for year 2015,

• consideration of the work plan of the supervisory board audit committee for year

2015.

Members of the audit committee met in full composition, except at the 4th regular ses-

sion, when Ms. Maja Curk, external member of the audit committee, was justifiably ab-

sent.

Audit Committee had no expenses for its operation, except for costs linked to the deci-

sion of the general meeting on the payments for performing the function. Remuneration

of the audit committee members is disclosed in table no. 54 of the annual report.

Approval of the annual report and position on the auditor's report

At its 17th regular session on May 25 2015 the supervisory board considered the annual

report of Elektro Primorska d. d. Company and Elektro Primorska Group for year 2014,

including the report by the audit company ABC Revizija, družba za revizijo in sorodne

storitve, d. o. o., in which the authorized auditing firm notes that the financial statements

that are part of the annual report give a true and fair view of the financial situation of the

Company and the Group and their income, changes in equity and cash flow statements.

Supervisory board had no comments to the auditor's report.

Approval of the annual report and position on the auditor's report

Business Report | 3. Supervisory Board Report Business Report | 3. Supervisory Board Report

Business Report | 4. Corporate Governance Statement Business Report | 4. Corporate Governance StatementA A20 21

Supervisory Board's consent is not required when it comes to business in the field of

buying and selling electricity, legal transactions with real estate and borrowing and len-

ding, insofar as these legal transactions are included in the Company's business plan.

Chairman of the Board reports regularly to the Supervisory Board about its work and

informs it about all significant business events. Chairman of the management board and

Chairman of the Supervisory Board consult on the strategy and business development

also outside the meetings of the Supervisory Board.

4.1.3. Remuneration of the management

In accordance with the employment contract the Chairman of the Board shall be entitled

to the basic monthly salary and performance bonus. Basic salary (gross pay, undimini-

shed by taxes and contributions) is set as a multiple of average gross wage paid in a

group of Elektro Primorska in the previous financial year. Bonus for performance is de-

termined in accordance with the criteria set out in the employment contract by a decision

of the Supervisory Board within 30 days after the adoption of the annual report for the

financial year for which the bonus is calculated. Bonus can amount a maximum of 15% of

the basic monthly salaries paid to the chairman of the board in the financial year and shall

be paid only in the event that the company's planned profit was exceeded.

In accordance with the employment contract the Chairman of the Board is also entitled to

an annual preventive medical examination, life and accident insurance, use of company

car for business and private purposes, and payment of education expenses.

4.1.4. System of internal control and risk management relating to financial

reporting, auditing

For the effective functioning of the management system of the company it is crucial

to ensure reliability of financial reporting. Internal controls include all procedures and

measures that the company implemented in order to manage risk and to ensure the

preparation of financial statements that present a true and fair view of the financial posi-

tion, income statement, cash flows and changes in equity in accordance with accounting

standards and applicable regulations.

Internal audit activity in the company and the group is carried out in accordance with the

Regulations on Internal Audit in Elektro Primorska d. d. Basic function of internal audit is

constantly checking and making recommendations for improvements in the functioning

of the internal control system in terms of managing all types of risk. In accordance with

the annual internal audit plan, which was approved by the Supervisory Board, in 2014 the

parent company conducted an internal audit in the following areas of process implemen-

tation: a) informatics in Elektro Primorska Company b) investments and maintenance of

infrastructure in Elektro Primorska c) process of recovery.

Audit of the financial statements of the parent company and subsidiaries is carried out

by the audit company ABC Revizija, d. o. o., Ljubljana. Within the audit of financial sta-

tements the external auditor cooperates with the internal audit. External and Internal Au-

ditors report to the Management Board, Supervisory Board and Audit Committee of the

Supervisory Board on their findings.

4.2. Supervisory board4.2.1. Appointment and composition

Supervisory board in Elektro Primorska Company has six members. Four members are

representatives of shareholders, two representatives of workers. Members of the super-

visory board representing the shareholders are elected by the general meeting, while

representatives of workers by the works council in accordance with the law and its acts.

Term of office of the members of the Supervisory Board is four years and they may be

reappointed.

Since August 28 2013 the supervisory board of Elektro Primorska has been operating

in the following composition: Uroš Saksida, MSc, chairman, and Matjaž Bajec, Dean

Kocjančič, Massimo Makovac, Valter Vodopivec and Jernej Kenda, members.

4.2.2. Powers and operation

Powers of the Supervisory Board are defined by law and the statute of the company

Elektro Primorska d. d. In its operations, the Supervisory Board complied with the provi-

sions of the Corporate Governance Code of the Republic of Slovenia, which was based

on the Act Amending the Slovenian Sovereign Holding Act on March 15 2013 adopted

by the Slovenian Restitution Fund, d. d. (SOD), and from December 19 2014 with the

provisions of the Corporate Governance Code for Companies with Capital Assets of the

State, which was in accordance with the provisions of ZSDH-1 adopted by the Slovenian

Sovereign Holding, d. d.

In year 2014 the Supervisory Board met at nine regular and three correspondence sessi-

ons. Based on the responsibilities and powers set by law and the statute of the company,

the Supervisory Board of Elektro Primorska d. d. regularly monitored and supervised the

operations of the parent company and the group Elektro Primorska.

4.1. Management board4.1.1. Appointment and composition

In accordance with the Statute, the Management Board consists of one member. Office

of the chairman of the Management Board lasts four years and he may be reappointed.

Since June 30 2012 the chairman of the board has been Uroš Blažica.

4.1.2. Responsibilities and operation

Chairman of the Board manages the business of the company to the benefit of the com-

pany, independently and on his own responsibility. In accordance with the Statute of the

company the chairman of the board must obtain the consent of the Supervisory Board

prior to the conclusion of a legal transaction of over 835,000.00 EUR, for transactions on

real estate and borrowing of more than 418,000.00 EUR.

4.Corporate Governance Statement

A A22 23

Supervisory Board has formed a four-member Audit Committee, which in 2014 consisted

of: Dean Kocjančič, chairman, Massimo Makovac, internal member, and Maja Curk and

Aleš Jakin, external members.

Supervisory Board has not formed other committees.

4.2.3. Remuneration of supervisory board and supervisory board committees'

members

For performance of their functions and regular work at the meetings members of the

Supervisory Board and members of the Supervisory Board committees are entitled to

payment for performing the function, attendance fees and reimbursement, as determi-

ned by a decision of the general meeting. At the 16th general meeting of the company,

which took place on August 25 2011, the decision was adopted based on which the

members of the supervisory board are entitled to payment for performing the function in

the amount of 11,300 EUR gross per year, to attendance fee in the amount of 275 EUR

gross and to reimbursement of expenses in connection with the performance. Chairman

of the Supervisory Board is entitled to 50% larger payments and attendance fees. For

correspondence sessions of the Supervisory Board, members of the Supervisory Board

are entitled to 80% of the attendance fee.

Members of the supervisory board committees shall receive a fee for performing the

functions, which for each member of the committee amounts to 25% of the basic perfor-

mance fee of the supervisory board member. Chairman of the committee is also entitled

to an additional payment in the amount of 50% additional cost for a member of the

supervisory board committee, while deputy chairman of the committee to payment in

the amount of 10% additional cost for performing the function of a supervisory board

committee member. In accordance with the decision of the supervisory board the exter-

nal members of the committee are entitled to payment for performing the function in the

amount 11,300 EUR gross and attendance fee in the amount of 80 % attendance fee

belonging to the supervisory board members.

4.3. Shareholders meeting Shareholders of Elektro Primorska d. d. exercise their rights arising out of the Compa-

nies Act, at the general meetings of the company. Voting rights may be exercised by

shareholders who have been until the day of the meeting recorded in the central registry

of securities or the share register and have announced their participation at the general

meeting at least three days before the general meeting, about which the shareholders are

specifically warned. Statute of the company does not set any restrictions on voting rights.

In year 2014 the shareholders met at the general meeting, which took place on July 4

2014. Shareholders were familiarized with the annual report for year 2013 and the report

of the supervisory board on the verification of the annual report for business year 2013,

they granted a discharge to the management and supervisory boards, decided on the use

of distributable profit for year 2013 and appointed the company ABC Revizija, družbo za

revizijo in sorodne storitve, d. o. o., Ljubljana, an auditor of Elektro Primorska d. d. Com-

pany for business year 2014.

4.4. Statement of compliance with the Corporate Governance Code In year 2014 Elektro Primorska d.d. Company complied with the provisions of the Corpo-

rate Governance Code of the Republic of Slovenia, which was based on the Act Amen-

ding the Slovenian Sovereign Holding Act on March 15 2013 adopted by the Slovenian

Restitution Fund, d. d. (SOD). From December 19 2014 the company has complied with

the provisions of the Corporate Governance Code for Companies with Capital Assets

of the State, hereafter: Code, which was in accordance with the provisions of ZSDH-1

adopted by the Slovenian Sovereign Holding, d. d. Code is published on the website:

http://www.sdh.si/sl-si/upravljanje-nalozb/kodeks-upravljanja-kapitalskih-nalozb-

republike-slovenije

4.5. Compliance with the recommendations and expectations of Slovenian Sovereign Holding Elektro Primorska d. d. Company meets the recommendations and expectations of Slo-

venian Sovereign Holding with the smaller exception of recommendations and expecta-

tions that have been newly adopted in December 2014 and the company will strive to

implement in 2015.

4.6. Management of the Parent Company and the Group In Elektro Primorska d. d. a two-tier management system has been established. Appo-

intment of members of the management board and the supervisory board is conducted

in accordance with applicable law and with the recommended standards in the field of

management.

Elektro Primorska Group consists of Elektro Primorska d. d. as the parent company,

company E 3, energetika, ekologija, ekonomija, d. o. o. (owned by Elektro Primorska d.

d.), company JOD, d. o. o. ( 100 % owned by E 3, d. o. o.) and company ECO ATMIN-

VEST, d. o. o. (100 % owned by E 3, d. o. o., since December 2013) as subsidiaries,

and company Knešca, d. o. o., as associate company (47.27 % owned by JOD, d. o. o.

Company).

For better connections and control over the operations of the subsidiary, management

of the parent company represents the general meeting of the subsidiary E 3, energetika,

ekologija, ekonomija, d. o. o. Control of subsidiary's operation takes place on the basis

of regular reporting and approving of transactions in accordance with the provisions of

the Act of Incorporation of the company E 3, d. o. o.

Business Report | 4. Corporate Governance Statement Business Report | 4. Corporate Governance Statement

A A24 25

5.1. Company identity card

5.Presentation Of The Company

Name: Elektro Primorska, podjetje za distribucijo električne energije, d. d.

Abbreviated name: Elektro Primorska d. d.

Business address: Erjavčeva ulica 22, 5000 Nova Gorica

Phone: 05 339 67 00

Fax: 05 339 67 05

VAT identification number: 37102656

Registration number: 5229839

Transaction accounts numbers: 04750 0000510950 Nova KBM, d. d.

02241 0019980250 Ljubljanska banka, d. d.

03130 1000002961 SKB banka, d. d.

06000 0039424688 Banka Celje, d. d.

Company is registered in the Companies Register at the District Court in Nova Gorica under number 1/01335/00.

Share capital of the company: 78,562,831.75 EUR

Ownership as of 31. 12. 2014: 79.5000 % Republic of Slovenia

2.7631 % Skladi kapitalskih družb

14.4203 % PID (Authorized Investment Companies), funds, business entities

3.3166 % Employees, retired employees, other

Supply area: SW, W, NW part of Slovenia

Size of the supply area: 4,335 km2

Number of customers: 131,408

Amount of transferred electricity: 1,445 GWh

Supervisory board: http://www.elektro-primorska.si

E-mail address: [email protected]

Management: Uroš Blažica, chairman of the board

Supervisory board: mag. Uroš Saksida, chairman of the supervisory board

Dean Kocjančič, member

Massimo Makovac, member

Matjaž Bajec, member

Valter Vodopivec, member

Jernej Kenda, member

5.2. Mission, vision and business culture of the company

5.2.1. Mission of the company

Fundamental mission of Elektro Primorska d. d. Company is ensuring quality and reliable

electricity supply in an environmentally friendly and safe way, in accordance with the laws

and regulations. Mission of the company is also care for development and construction of

electricity network in accordance with the needs of business and household customers.

With professional and efficient operation we want to meet the expectations of owners

and other stakeholders. It relates to the mission and vision of SODO, d. o. o. Company,

which are published on the following website (http://www.sodo.si/druzba_sodo/vizija):

5.2.2. Vision of the company

Our vision is to create business environment which enables creation of new solutions and

development of infrastructure, sale and new projects by understanding the wishes of our

users, and by acting responsibly towards environment and employees.

Companies of Elektro Primorska Group will be companies of high business excellence in

relation to our customers, employees, business partners, shareholders and other busi-

ness environment. Its companies will continue to be socially responsible, will demon-

strate high business culture and excellence of operation. They will be introducing friendly

and innovative services and solutions for customers, buyers and other users of their

services. They will achieve all this effectively through quality services and by minimizing

operating costs. Companies will be flexibly organized, which will enable them to adapt

originally to changes in business environment.

5.2.3. Business culture

Past experience and foreign experience confirm that for the successful operation of the

company a good business culture is also needed. With constant development of inte-

grated management system in accordance with ISO 9001 standard, with a responsible

attitude towards the environments in accordance with the ISO 14001 standard, health

and safety at work management system in accordance with BS OHSAS 18001 standard,

which we verify by regular internal and external audits, and with acquisition of Family

Friendly Company certificate we prove that we cultivate good business culture and es-

tablish social responsibility as business strategy of the company.

5.3. Regulatory frameworks of the electricity activity of the company

Important legal, statutory and contractual regulations governing the electricity business

of the company are:

»Our mission is to care for the long-term, reliable, quality and efficient supply of electricity distribution network users. We wish to connect with the customer and become recognizable in our field as a friendly company with responsible environmental management.«

Business Report | 5. Presentation Of The Company Business Report | 5. Presentation Of The Company

A A26 27

Energy Act (EZ-1), which entered into force on March 22 2014, is an organic law, which

fully transfers the European legislation in the field of the energy market, energy efficiency

and renewable energy sources into the Slovenian legislation, and increases the trans-

parency of legal arrangements in this field as well as complies with the decision of the

Constitutional Court of the Republic of Slovenia as at April 14 2011.

Energy Act lays down:

• principles of energy policy,

• rules for the operation of the market of electricity and natural gas,

• transport of carbon dioxide through the pipe transmission networks,

• resolving consumer complaints,

• methods and forms of utilities implementation in the energy sector,

• principles of reliable supply and efficient use of energy,

• promoting the use of energy from renewable energy sources,

• requirements for the eco-design of products related to energy,

• an indication of the consumption of energy and other resources of these products

with the energy label and product information sheets,

• conditions for the operation of energy plants,

• conditions for carrying out energy activities,

• issuing licenses and energy permits,

• competence, organization and functioning of the Energy Agency and the powers of

other bodies performing tasks under this Act.

Energy Act provides:

• conditions for the safe and reliable supply of users with energy services accord-

ing to market principles, principles of sustainable development, taking into account

efficiency, rational utilization of renewable energies and environmental protection

conditions;

• competitiveness in the energy market by the principles of impartiality and transpar-

ency, taking into account consumer protection and enforcement of effective control

of the energy supply.

Decree on the method of provision of an electricity DSO service of general econom-

ic interest and a service of general economic interest of electricity supply to tariff

customers regulates the manner of implementation of the mandatory utilities activity of

system operator of the electricity distribution network (hereafter: system operator activ-

ity) and the mandatory utilities activity of electricity supply to tariff customers (hereafter:

supply to tariff customers), but above all it regulates:

• rights and obligations of public service,

• organizational and spatial design to provide these public services,

• manner and conditions of providing services, which compose the public service,

• rights and obligations of users,

• method of financing the public service.

General Conditions for connection to the distribution Electric system

They were published by SODO, d. o. o., Maribor, on the basis of the fourth paragraph

of Article 70 of the Energy Act (Official Gazette of the Republic of Slovenia, No. 27/07 –

official consolidated text) and Decree on the concession of an electricity DSO service of

general economic interest (Official Gazette of the Republic of Slovenia, No. 39/07) and

after obtaining the consent of the Government of the Republic of Slovenia, which was

issued by order No. 36001-8/2007/4 as at December 27 2007 after a prior opinion from

the Public Agency of the Republic of Slovenia for Energy as at November 13 2007.

General terms and conditions for the supply and consumption of electricity from the

electricity distribution network define:

• relations between SODO and consumers,

• connection to the electricity distribution network (hereinafter: network),

• consumption and delivery of electricity,

• measuring device and measurement of electricity,

• billing, method of charging and billing for the use of networks,

• relations between SODO and electricity suppliers,

• relations between customers and electricity suppliers,

• records of measuring points,

• quality of services of the system operator of the electricity distribution network.

Rules on the system operation of electricity distribution network

They were published by SODO, electricity distribution system operator, d. o. o., Maribor,

on the basis of the fourth paragraph of Article 40 of the Energy Act (Official Gazette of the

Republic of Slovenia, No. 27/07 – official consolidated text, 70/08, and 22/10) and Article

8 of the Decree on the concession of an electricity DSO service of general economic

interest (Official Gazette of the Republic of Slovenia, No. 39/07) and after obtaining the

consent of the Government of the Republic of Slovenia, which was issued by order No.

36001-3/2011/3 as at April 21 2011 and after a prior consent from the Public Agency of

the Republic of Slovenia for Energy No. 535-11/2009-3/EE-06 as at November 9 2009.

System operating instructions for the electricity distribution network provide for a system

of operation of the electricity distribution network, defining the distribution services of

electricity through distribution network, the method of providing system services on the

distribution network, operation and development of the distribution network, and techni-

cal conditions for connection to the distribution network.

Contract on electricity infrastructure lease and provision of services for electricity

distribution system operator

In June 2007 Elektro Primorska d. d. for the first time concluded the contract with SODO

Company from Maribor, which is, as already mentioned, the exclusive holder of the con-

cession for the distribution network system operator in Slovenia. On the basis of this

contract Elektro Primorska d. d. continues to perform most of the activities related to

the implementation of the activities of the distribution network system operator, which it

already carried out until July 1 2007. These activities (services) are:

• maintenance of electricity infrastructure and organizing emergency services,

• management and operation of the electricity distribution network,

• development, planning and investment in electricity infrastructure,

• preparation and management of investments,

• monitoring and assessing the quality of supply,

• electricity metering,

• provision of services of access to the distribution network and other services to

users.


A A28 29

Since July 1 2007 the company Elektro Primorska d. d. no longer generates revenue from

charges for the use of the network (network charge), because it is a revenue of the con-

cessionaire, but revenue from rentals for the electricity infrastructure and revenue for the

implementation of the above mentioned services to SODO from Maribor.

On October 29 2012 the Official Gazette of RS No. 81/2012 published Act determining

the methodology for charging for the network charge, the methodology for setting the

network charge, and the criteria for establishing eligible costs for electricity networks

with Annex 1: Implementation criteria and parameters for determining network charges

for electricity network and identifying the eligible costs for the regulatory period 1. 1.

2013–31. 12. 2015.

Act determining the methodology for charging for the network charge, the metho-

dology for setting the network charge, and the criteria for establishing eligible costs

for electricity networks. This act issued by the Energy Agency, defines:

• the methodology for setting the network charge and the criteria for establishing

eligible costs for electricity networks, separately for transmission and distribution

network;

• methodology for charging for the network charge separately for transmission and

distribution network;

• methodology for charging for the network charge for customers that buy electricity

from production facilities of renewable energy sources and high-efficiency co-gen-

eration to the nominal power of 10 MW, for which they obtained the certificate of

origin and which producers sell independently in the electricity market to end cus-

tomers connected to the same distribution network;

• duration of the regulatory period, implementation criteria and parameters for setting

the network charge and to determine the eligible costs of the regulatory period.






2013–31. 12. 2015. On December 16 2013 the Council of Energy Agency adopted the

Act amending the Act determining the methodology for charging for the network charge,

the methodology for setting the network charge, and the criteria for establishing eligible

costs for electricity networks. Act applies from January 1 2014 and in certain items is

retroactive.

5.4. Company organization

In accordance with the Rules on the internal organization of Elektro Primorska d. d. Com-

pany, which entered into force on January 1 2013, the activity of the company is carried

out in the following organizational units:

Sectors:

• sector for distribution system management (DEES)

• sector for distribution network (SDO)

• general sector (SS) and

• finance and accounting sector (FRS).

Special services of the management:

• service of information and communication technologies (IKT) and

• service for purchase and procurement (SNJN).

Regional distribution units:

• Distribution unit Nova Gorica (DU Nova Gorica )

• Distribution unit Koper (DU Koper)

• Distribution unit Sežana (DU Sežana) and

• Distribution unit Tolmin (DU Tolmin).

Management board has the chairman of the board office, where there are organized the

secretariat, field of integrated management system, internal audit and risk management.


A A30 31

6.Human Resources Management in Year 2014

6.1. General At a time when business conditions are increasingly exacerbating, human resources ma-

nagement requires appropriate balance between measures that enable the company to

influence the reduction of costs directly and measures that ensure motivation of employe-

es for better work and retention of key personnel. That employees are the key factor of

success and undisturbed operation of the company was once again established in year

2014, when nature put us to the test once more. Despite the tough operating conditions

we did not neglect the most important fields, like training and education, creativity and

cooperation between co-workers, which resulted in successful solving of problems and

implementing of the set goals.

6.2. Overview of key data about employees in year 2014As at December 31 2014 there were 477 employees in the company. Average number

of employees for year 2014 was 476 and increased by one employee compared to the

average number in 2013.

6.3. Age structure of employees Average age of employees in the company was 44.89 years and increased by 0.63

compared to the year 2013.

6.4. Structure of employees according to theyears of service In year 2014 more than 60 % of employees had been employed for a period longer than 20 years.

ActivityNo. of em-

ployees as at 31. 12. 2013

Structure (%)No. of em-

ployees as at 31. 12. 2014

Structure (%)

Main activity (distribution network sector, electricity system management sector)

376 77.6 370 77.6

Joint activities (management, financial accounting sector, general sector, purchasing, information technology)

106 22.4 107 22.4

Total 473 100 477 100

No. Age class Number of employees

1 to 20 1

2 from 21 to 30 years 37




6 61 and more years 16

Total 477

No. Years of service Number of employees

1 to 5 28





6 over 40 years 16

Total 477

Table 1:Employees

overview

Table 2:Number of employees in individual age class

Table 3:Number of employees according to the years of service

Grafikon 1:Age structure of employees

61 and more years 3,4 %

29,7 %

27,7 %

7,8 %

0,2 %

31,2 %

from 51 to 60 years

from 41 to 50 years

from 31 to 40 years

from 21 to 30 years

to 20

Business Report | 6. Human Resources Management In Year 2014 Business Report | 6. Human Resources Management In Year 2014

A A32 33

Graph 2: Structure of employees according to the years of service

over 40 years 3,3 %

27,9 %

23,7 %

8,8 %

5,9 %

30,4 %

from 31 to 40 years

from 21 to 30 years

from 11 to 20 years

from 6 to 10 years

to 5

Average period of employment per employee in year 2014 amounted to 23.55 years and

it increased slightly – by 0.45, compared to the year 2013.

6.5. Structure of employees according to gender Gender ratio does not deviate significantly from year to year.

No. Gender Number of employees

1 Male 401

2 Female 76

Total 477

Table 4:Number of employees

according to gender

Male 84,1 %

Female 15,9 %

Graph 3:Structure of employees according to gender

6.6. Educational structure of employeesEducational level of employees is not significantly different compared with the previous year.

6.7. Employees with disabilities As at December 31 2014 there were 35 disabled persons employed in the company.

7 disabled workers performed their duties as a part-time job (4 hours); other 28 were

employed with a full time working obligation. Percentage of employees with disabilities

exceeds 6 % of all employees, which fulfills the statutory quota from the Decree estab-

lishing employment quota for persons with disabilities – Article 3, Paragraph 3) D.

Since May 2014 the company has been granted the right by the Republic of Slovenia

Fund for Promotion of Employment for Disabled Persons to bonuses for exceeding quo-

tas, which the fund pays monthly in the amount of 20 % of the minimum wage for each

disabled employee above the statutory quota.

6.8. Education of employees In year 2014 192 employees attended the trainings, including seminars, courses, pro-

fessional trainings, professional examinations, internal trainings. 267 working days were

spent for these purposes.

Within the application to the public tender Training and Education of Employees 2011 the

company was selected by the Slovene Human Resources Development and Scholarship

Fund for co-financing the implementation of employee motivation trainings. In this re-

No.Level

according to BP

No. of employees asat 31. 12. 2013

Structure(%)

No. of employees as at 31. 12. 2014

Structure(%)

1 8/2 1 0,21 1 0,20

2 8/1 4 0,85 4 0,84

3 7 41 8,67 43 9,00

4 6/2 37 7,82 38 8,00

5 6/1 51 10,78 52 10,90

6 5 148 31,29 149 31,24

7 4 169 35,73 168 35,22

8 3 15 3,17 15 3,10

9 2 6 1,27 6 1,30

10 1 1 0,21 1 0,20

Total 473 100 477 100

Table 5: Educational structure of employees


A A34 35

spect the Company was entitled to reimbursement of 70 % of funds for the implemented

trainings.

175 employees attended trainings and examinations in the field of health and safety at

work.

In order to obtain higher educational level the company has 15 contracts on education

concluded with the employees, which have n been completed yet.

For the purposes of additional education and progress of employees (tuitions, work-

shops, seminars, courses) in year 2014 we paid 131,354.32 EUR or an average of 276

EUR per employee. This amount includes also costs of employee salaries, which are

planned in the other item - cost of wages and salaries.

Since October 1 2013 the company has not been giving scholarships. For several years

now there has been enough suitably educated candidates on the labor market, so we

give more funds to practical trainings of high school and university students, who other-

wise have no opportunities obtaining specific skills in other companies.

6.9. Care for employeesIn Elektro Primorska Company we devote much attention to creating good working con-

ditions, maintaining and improving the health and to identifying and eliminating adverse

events. We are aware that a satisfied and motivated employee can contribute the most

to the success of the company.

Employees are informed about the events and activities in the company daily through

electronic mail, on the intranet and bulletin boards. In the second half of the year we ad-

ditionally enriched the informing of employees with the issuing of an internal e-newsletter.

6.10. Health and safety at work Safe and healthy working environment are the basic prerequisites for productivity and

satisfaction of workers, who care for the well-being of all employees and the company

as a whole.

In year 2014 we took care to provide and meet conditions for safe and healthy work of

employees and carried out all the necessary activities to reduce and prevent life and

health risks at workplaces.

In the company we take care of safe and orderly working conditions and to preserve the

health of employees:

• by respecting the Occupational Health and Safety Act and all the alternative legal

acts (in this respect a register of health and safety at work legislation was made),

• by regular periodic medical examinations of workers,

• by implementing specific preventive health measures: e.g. vaccinations against TBE,

flu, implementation of preventive measures though promoting health at workplace,

• by implementing health and safety at work policy, which is the commitment of the

company's management to ensure health and safety at work and represents a

framework for defining objectives of quality, environmental management and health

and safety at work,

• by making and adopting the Declaration of safety with Risk Assessment, which

additionally bounds the management of the company to implement measures, set

goals, informing, trainings, giving instructions, appropriate organization and provi-

sion of necessary sources,

• by regular periodic checks and care of the working and protective equipment,

• by making instructions for safe work and controlling the implementation of safe work

measures,

• by monitoring the condition regarding injuries at work, occupational diseases as well

as detecting and preventing their causes,

• by training workers for safe work and regular assessments of their knowledge and

preparedness in the field of safety and health at work.

In the context of a systematic approach to improving health and safety at work in Elektro

Primorska Company we emphasize the necessity of a responsible attitude of the employ-

ees to the field of health and safety at work including fire protection.

easier

2010

2012

2011

2013

2014

1

21 17 13 16 26

2

3

serious

Graph 4:Number of accidents at work in Elektro Primorska d. d. in the period from 2010 to 2014


A A36 37

6.11. Voluntary supplementary pensioninsurance Regulation and realization of the principles of social security of employees is part of the

company's business policy. One of the segments taking care of the good social condi-

tion of employees is also the decision of the company for an agreement on financing the

supplementary pension insurance for employees of Elektro Primorska d. d.

Joining the voluntary supplementary pension insurance scheme increases the social se-

curity of employees, above all during their retirement.

99 % of all employees are included in the voluntary supplementary pension insurance

scheme.

6.12. Accident insurance All employees in Elektro Primorska d. d. Company are insured against injury at work and

in connection with work.

6.13. Secondary activities affecting the well-being of employees We take care of the well-being of employees in Elektro Primorska d. d. Company by

stimulating and creating material conditions for different forms of socializing and spend-

ing holidays in holiday facilities owned by the company. Day of the employees was not

organized in year 2014 due to large workload of all employees during the elimination of

consequences of ice damage. Nevertheless, large number of employees took part in

annual sports games of electricity distribution companies, which are an opportunity for

socializing of employees within Elektro Primorska Group as well as with the employees of

other distribution companies. In year 2014 the company paid 5,000.00 EUR for operation

of Elektro Primorska sports society, which is the main motivator of sports and recreation-

al socializing of employees by organizing sports activities and mountain trips.

In accordance with the Family Friendly Company certificate, which the company obtained

already in year 2010, we continued with the implementation of selected and agreed for

new additional measures that will be implemented in year 2015.

Updating the system for the comprehensive management of customer relations

(implementation of the medium-term objective – improvement of customer satis-

faction for services rendered):

In year 2014 we upgraded and updated the technology of the elS information system for

work with customers. We continuously perform organizational, staff, and technological

measures to increase efficiency, transparency, risk management and rationalization of

costs. In year 2014 we realized the system to inform customers about outages, which is

currently at the stage of trial operation and integration into a new company website. Set

objective was fully achieved.

Update of the geographic information system (GIS Eng. NIS) (implementation of

the medium-term objective – continuous improvement of the power supply service

quality):

a. implementation of the first phase of GIS upgrade

b. inventory of LV network and entry into GIS up to 90 %.

In the context of the implementation of the first phase of upgrading the GIS geographic

information was forwarded to providers to demonstrate the functionality of systems for

entering and editing of geographic and attribute data. Interviews were conducted with

companies CGS, d. o. o., Sl-King, d. o. o., and GDi GISDATA, d. o. o. In addition, we had

a presentation of GIS, which the company SODO intends to introduce and presentations

of GIS solutions of the Telekom Slovenia. In view of this, we have prepared a compara-

tive analysis of the offers in the first phase. We have prepared a list of requirements for

network inventory in the first stage and forwarded it to Telekom Slovenia, d. d., together

with which we will study the technical possibilities of adapting their system for identifying

the distribution network.

Due to the accident and elimination of its consequences the inventory of LV-network was

being implemented in limited scale. We achieved 76.8 % realization.

Comprehensive asset management (asset management)

Long-term objective of introducing a system of integrated asset management is to in-

crease the utilization of funding opportunities, increase their value and reduce manage-

ment costs. Specific objectives, which we pursue in this, are:

• monitoring and managing the assets installations and related costs through one

system,

• integrated management of planned and unplanned maintenance activities,

• optimization of resources,

• planning stock movement,

7.Implementation of annual

objectives in year 2014

Business Report | 6. Human Resources Management In Year 2014 Business Report | 7. Implementation Of Annual Objectives In Year 2014

A A38 39

Business Report | 7. Implementation Of Annual Objectives In Year 2014 Business Report | 8. Distribution of Electricity

• managing contracts with suppliers,

• automation of business processes.

To establish a system of integrated assets management certain conditions must be met.

First one (elS renovation) was met on September 10 2014. Next necessary step is the

selection of the supplier of the new ERP system as the last purchase of a new GIS. IT

strategy of Elektro Primorska group is being prepared. Task force was established, which

defined the project's platform. Offers of potential providers were obtained. In January

2015 we selected a suitable provider and signed a contract. Activities related to IT strat-

egy formation start in February 2015.

Implementation of RAST program

Program of operating costs rationalization was launched in year 2012. In 2013 we started

with the implementation of proposed measure. In the first stage of the project's imple-

mentation Elektro Primorska Group defined the impact of these measures on the oper-

ations of the group (EBIT) in total amount of about 2.23 mio EUR (by the end of the year

2015). Following are achieved financial effects of the program according to individual

organizational units in year 2014 according to year 2011. Implementation of RAST pro-

gram continues in year 2015.

Graph 5:Achieved financial effects according to individual OU in year 2014 and 2011 (December 2014)

* Note: Problem of determining the actual savings in 2014 is related to the additional costs incurred in the period of ice damage, since these cannot be entirely excluded.

FINANCE AND ACCOUNTING DEPARTMENT

DISTRIBUTIONNETWORK

DEPARTMENT

DEESMANAGEMENT DEPARTMENT

IKT SERVICE

PUBLICPROCUREMENT

AND PURCHASES SERVICE

GENERALDEPARTMENT

Estimated impact on EBIT

(in EUR)439.515 977.250 121.776 57.645 88.281 234.816

Realized impact on EBIT

(in EUR)442.363 904.712 188.508 38.610 95.322 114.987

9

100,6 %

92,6 %

154,8 %

67,0 %108,0 %

49,0 %

9 9 9 19number ofmeasures

10

In year 2014 the activity was carried out in accordance with the Contract on the lease of

electricity infrastructure and provision of services for electricity distribution system ope-

rator between Elektro Primorska and SODO. It is implemented in two organizational units:

in distribution network sector – SDO and the electricity distribution system management

sector – SUDEES.

In year 2014 the electricity system managed by Elektro Primorska d. d., reached the fol-

lowing level of technical equipment according to distribution units (DU).

8.1. Services for SODOFor the implementation of services for SODO Company in year 2014 there were 6,256,455

EUR spent, which amounted to 90.93 % of planned funds for this period or 97.79 % com-

pared with year 2013.

8.Distribution of Electricity

Table 6:Distribution network operated by Elektro Primorska as at 31. december 2014

DV – power line, KBV – cable conduit, NNO – low voltage network, JR – public lightingRTP – transformer substation, RP – substation, TP – transformer station

DU GORICA DU KOPER DU SEŽANA DU TOLMINELEKTRO

PRIMORSKATOTAL

DV : 10kV–110 kV (m) 684,037 270,179 657,318 532,202 2,143,736

KBV: 10kV–35 kV (m) 129,824 182,893 169,917 75,561 558,195

NNO + JR (m) 1,620,522 1,799,150 1,121,777 1,304,971 5,846,420

RTP + RP (piece) 17 8 8 7 40

TP (piece) 800 526 570 474 2,370

Table 7:Realization of services for SODO in year 2014

Type of work Plan (€) Realization (€) Realization (€) % %

January–December 2014



2:1 2:1

1 2 3 4 5

129 Maintenance of electricity infrastructure

3,286,472 2,916,171 2,877,958 88,73 101.33

140 Implementation and organization of emergency service

372,600 376,795 375,178 101.13 100.43

141 Conducting of operation 420,700 419,842 426,267 99.80 98.49

146 Process management 374,600 354,444 364,317 94.62 97.29

151 Telecommunication support 160,000 146,704 164,629 91.69 89.11

156 Management of protective devices

42,200 36,000 30,000 85.31 120.00

161 Development 213,500 131,976 153,094 61.82 86.21

168 Monitoring and establishing of supply quality

32,000 8,960 22,033 28.00 40.67

169 Electricity metering 1,142,340 991,596 1,156,354 86.80 85.75

183 Implementation of access services

836,140 873,967 828,038 104.52 105.55

TOTAL IMPLEMENTATION OF SERVICES FOR SODO

6,880,552 6,256,455 6,397,868 90.93 97.79

A A40 41

Business Report | 8. Distribution of Electricity Business Report | 8. Distribution of Electricity


Financial realization of the plan of implementation of services for SODO is lower than

planned due to the rationalization implemented maintenance works measures. In indivi-

dual areas, the plan was physically carried out between 75% and 100%. Inspection of

equipment were realized 97.2 %, audit of devices 76.0 % and route clearings for over-

head lines 107.7 %. In audits of facilities, the percentage of output is lower, because our

colleagues were busy due to the elimination of ice damage.

8.2. InvestmentsImplementation of investments in 2014 took place in accordance with the plan and with

the changes that have been defined within the version II and version III of the plan of

investments. As by the month of October we successfully remedied the consequences of

ice damage with the planned financial resources, we decided that by the end of 2014 we

increase the volume of rehabilitation works, and thereby reduce the risk for the smooth

functioning of the electricity distribution system. Thus, we increased the planned amount

of investments in the version III of the investment plan from 12,000,000 EUR by additional

1,100,000 EUR to 13,100,000 EUR.

For investments in facilities, equipment procurement and project documentation we have

together invested 13,100,450 EUR or. 100.00 % of planned annual funds (in year 2013

financial realization of the plan was 10,982,407 EUR or. 91.52 % of planned funds).

We invested 11,388,425 EUR or. 98.64 % of planned annual funds in the sector for the

distribution network, 1,209,265 EUR or. 109.93 % of planned annual funds in the DES

management sector, 87,825 EUR or. 93.43 % of planned annual funds in market activiti-

es, 15,790 EUR or. 63.16 % of planned annual funds in general sector and 399,145 EUR

or. 118.88 % of planned annual funds in the services for information and telecommuni-

cation technologies.

According to different groups the results are as follows:

Facilities up to 20 kV

In facilities of up to 20 kV: DV, KBV, TP and NNO we invested a total of 9,550,861 EUR

or. 72.90 % of entire annual consumption (in year 2013 – 5,590,004.00 EUR). Financial

realization of the plan was 98.66 %.

Investment groups Realized assets Shares of investment groups

Buildings 10,265,185 € 78.36 % of all assets

Equipment 2,097,596 € 16.01 % of all assets

Documentation 737,669 € 5.63 % of all assets

Total: 13,100,450 €

Table 8: Investments according to main investment groups

Majority of investments in medium voltage overhead lines was carried out to eliminate the

consequences of ice damage in early 2014.

Significant investments in the 20 kV overhead lines:

DV Hrenovica RTP Postojna–Razdrto (5 km), DV Pivka–Ilirska Bistrica (4.9 km), DV

Vojsko–Kočevše (4 km) , DV RTP Črni Vrh–Idrija (3.7 km), DV RTP Postojna–TP Prestra-

nek (3.6 km), DV branch Vojsko (3 km), DV branch Mrzla Rupa (3 km).

Physical realization of the plan in the investment group 20 kV power lines amounts to

100.12%, while the financial 96.56%.

Investments in the medium-voltage cable conduits were carried out with the objective of

ensuring reliable supplies of electricity consumers. Thus, medium-voltage cable conduits

investments were incorporated in the urban areas with the aim of increasing the looping

of the network in areas where there are weather phenomena that affect the quality of

electricity supply (sleet, wind), and on the routes, where frequent defects were occurring

due to wear of the existing cable conduits.

Significant investments in the 20 kV cable conduits:

KBV RTP Postojna–Pasje hiše (4.5 km), KBV heavy line Pivka–Postojna (3.3 km), KBV riral

Pivka–Postojna (3.3 km), KBV 20 kV Lohača–Staje (2.2 km), EKK Miren–DV Sela (1.72

km), KBV Dekani 1–Dekani square (1.5 km), reconstruction KBV TP Parangal–Marina (1

km), KBV Debeli Rtič II–Miloki (0.9 km).

Physical realization of the plan in the investment group 20 kV cable conduits amounts to

89.89 %, while the financial 91.01 %. Discrepancy between planning and realization was

due to bad weather at the end of 2014, which did not allow the execution of the works

for the construction of cable routes, especially on the route between Pivka and Postojna.

Physical realization of the plan in the investment group 0.4 kV overhead lines amounts

to 99.94 %, while the financial to 104.49 %. Increased volume of realization is detected

mainly in the implementation of the renewal of obsolete 0.4 kV overhead lines in areas of

DU Nova Gorica.

Physical realization of the plan in the investment group 0.4 kV cable conduits amounts

to 89.19 %, while the financial to 110.60 %. Financial realization surpassed the planned

values due to the increased volume of work and specific costs in urban areas.

Physical realization of the plan in the investment group TP 20/0.4 kV amounts to 107.53

%, while the financial to 108.86 %. Greater realization than planned is due to the imple-

mentation of a large number of renovations of transformer stations.

A A42 43

110 kV power lines

In 2014, we carried out the renovation of the 110-kV Pivka Postojna, which collapsed in

February due to ice damage.

Physical realization amounts to 100 %, while financial to 109.45 %. Financial deviation

from the planned value was created because it was necessary to carry out additional

work, which the basic plan did not cover. Need for it was demonstrated during the ren-

ovation (rehabilitation of additional damage discovered on steel structures observed in

the implementation of works, additional works for cleaning undergrowth in the leg parts

of pillars, ancillary works for regulating the access routes due to soggy terrain, additional

replacement of cables between the SM 12 and SM 15 due to the detection of damage,

increased costs for the implementation of control over the quality of the works carried out

due to the inclusion of new subcontractors).

Transformer stations (RTP) 110/20 kV

In facilities of transformer stations RTP 110/20 kV we invested a total of 119,291 EUR. In

year 2014 we implemented the following investments in v RTP 110/20 kV:

• RTP 110/20 kV Ilirska Bistrica: together with the company ELES we completed the

construction and obtained an operating permit for a new 110 kV juncture in GIS

implementation.

• RTP 110/35/20 kV Tolmin: We completed the renovation of the 110 kV transformer

field TR 1 so that we changed technically obsolete primary and secondary equip-

ment.

• RTP 110/20 kV Gorica: We carried out electrical installation work to connect power

transformer 110/20 kV TR 2, which we transported from RTP Vrtojba. We plan to

complete the work in year 2015.

• RTP 110/20 kV Koper: we started with activities for the installation of operational

control of power transformer 110/20 kV TR 2.

• RTP 110/20 kV Idrija: we completed the reconstruction of own use energy facility, by

replacing the worn-out rectifiers and inverters.

• RTP 110/20 kV Cerkno: we started with activities for the reorganization of the con-

necting links in the juncture20 kV, which will enable the implementation of safe ma-

nipulation of the switch between the systems collectors.

Physical realization in investment group RTP 110/20 kV amounted to 47.82 %, while

financial to 59.88 %. Physical realization does not reach planned levels owing to the

delayed activities for the installation of insulation in medium voltage bus bars of power

transformers in RTP 110/35/20 kV Tolmin and RTP 110/20 kV Postojna, and in the execu-

tion of the connecting links in the juncture 20 kV in RTP 110/20 kV Cerkno.

2014 2013 2012

Power lines 20 kV 97.56 km 30.90 km 27.23 km

Cable conduits 20 kV 32.48 km 18.53 km 19.17 km

Low-voltage network 47.91 km 38.58 km 49.66 km

Transformer stations 24 pcs 37 pcs 38 pcs

Table 9:Physical indicators of constructed and reconstructed facilities

Transformer stations RTP 35/20/10 kV and substations (RP)

In RTP 35/20 kV RP we invested a total of 397,205 EUR. In year 2014 we implemented

the following investments in RP:

• RP 20 kV Gradišče – e completed the renovation of 20 kV juncture with the supply

and installation of new primary and secondary juncture equipment.

• RP 20 kV Bovec – together with the national technical office, we implemented a stat-

ic post-earthquake rehabilitation of the building and replaced batteries. We intend to

complete the static rehabilitation in 2015.

• RP 20 kV Rožna dolina – we installed a remote control with the aim of improving the

quality of electricity supply in the area.

• RP 20 kV Kanal – we carried out the replacement of rechargeable batteries.

• RP 20 kV Komen – we started with activities for the purchase of equipment for the

reconstruction of 20 kV juncture. We intend to carry out the reconstruction in 2015.

• RTP 110/20 kV Idrija: we started with the reconstruction of the equipment of own

use of energy facility. In 2014 we built two new cabinets of DC distribution and test-

ed them functionally. They will provide the power to in 2015 reconstituted secondary

part of 20 kV juncture and remote control devices. Old cabinet of DC distribution will

remain to power the rest of the juncture until the latter is reconstituted too.

Physical realization in investment group RTP 35/20 kV amounted to 83.07 %, while finan-

cial to 108.77 %. Physical realization does not reach the planned level due to the long

procurement procedures in the event of the implementation of investments in RP Komen.

Financial realization exceeds the physical due to incorrect assessments of the value of

post-earthquake rehabilitation in RP 20 kV Bovec.

Electricity facilities total

In electricity facilities we invested a total of 10,265,184 EUR, financial realization amount-

ed to 98.01 % of the planned (in year 2013: 7,306,021 EUR). Share of electricity facilities

in total spending amounted to 76.85 %.

Commercial and operating buildings

In 2014 we arranged rooms for measuring center in the service complex Kromberk,

bought an apartment on the Rejčeva Street and carried out small-scale investments in

commercial buildings in DU Nova Gorica and DU Sežana. Invested assets amounted to

197,827 EUR.

Physical realization in investment group commercial buildings amounted to 98.40 %,

while financial to 77.06 %. Financial realization lags behind the plans mainly due to the

delay of contractual activities for arrangement of a conference room at the seat of DU

Sežana to year 2015.

Physical realization in investment group operating facilities amounted to 107.41 %, while

financial to 96.46 %.

Facilities total

In facilities RTP, DV, KBV, TP, NNO and buildings we invested a total of 9,550,861 EUR,

financial realization amounted to 98.66 % of the planned (in year 2013 – 5,590,004 EUR).

Share of facilities in total spending amounted to 78.36 %.


A A44 45

Equipment

In the equipment we invested a total of 2,097,596 EUR or 16.01 % of all assets (in year

2013: 2,901,153 EUR). Total financial realization amounted to 110.78 % of the planned.

Remote control

We carried out the following major investments:

• carried out the adaptation of SCADA system for login of failures and replaced a wall

display in the distribution control center,

• continued with the project of installation of protection on covered conductors,

• installed protection devices for the control of resistor in two 110 kV transformer

fields,

• began with activities for replacement of secondary equipment of 20 kV juncture in

RTP Idrija (installed a new DC hub of own use),

• carried out the transition to the protocol IEC 104 RP Črni Vrh and Dobrovo,

• installed two new remotely controlled disconnectors,

• installed remote control in RP Rožna Dolina,

• replaced all technically outdated protective relays on existing DVPLMs.

Financial realization amounted to 103.58 % of the planned. Deviation was due to the ac-

celerated implementation of the replacement of relays DVPLM's according to the plans.

Financial realization amounted to 106.09 % of the planned. Deviation was due to the

accelerated implementation of works in the replacement of secondary equipment for

juncture20 kV in RTP Idrija and incorrect assessment of the budgets for replacing the

relays on existing DVPLMs.

Telecommunications


• rehabilitated the damaged telecommunication links from the ice damage, like RTP

Postojna–Belsko,

• began with activities for the introduction of digital FM.

Financial realization amounted to 98.89 % of the planned value.

Measuring devices


• purchased and installed in 1694 direct electricity meters,

• purchased and installed 207 industrial meters,

• replaced electricity meters in RTP Pivka,

• implemented the SUNSEED project.

Financial realization amounted to 112.70 % of the planned value. Financial realization de-

viates from the planned value because labor costs for the installation of electricity meters

were not included in the plan.

Tools

We purchased the necessary tools and equipment to carry out electrical installation

works, which replaced the worn-out.

Financial realization amounted to 87.77 % of the planned value. Planned value was not

achieved due to lower achieved prices for the purchase of tools and smaller needs for

tools than according to plans.

Means of transport

We purchased seven new transport vehicles, replacing the worn out.

Financial realization amounted to 111.38 %. Financial realization was exceeded due to

faster delivery of means of transport according to plans.

Office equipment

We purchased the necessary office equipment for the call center at company headquar-

ters and replaced other outdated equipment. Financial realization amounted to 49.88 %

of the planned value.

Informatics

We completed the renovation of IIS, we purchased computers and printers as well as in-

formation energy equipment. Financial realization amounted to 122.09 % of the planned

values. Deviation was caused due to unplanned labor costs for the installation of com-

puter and energy IT equipment.

Documentation

For the project documentation we invested a total of 737,669 EUR or 5.63 % of all assets

(in year 2013: 775,232 EUR). Financial realization amounted to 100.64 % of the planned.

We have produced 82.67 pieces of project documentation.


A A46 47

NO. NAME OF FACILITY, EQUIPMENT PLANNED 2014 IN EUR

REALIZATION 2013 IN EUR

REALIZATION 2014 IN EUR

% %

1 2 3 3:1 3:2

1 POWER LINES 4,153,950 1,256,352 4,101,600 98,7 % 326,5 %

1.1. DV 110 kV 700,000 0 766,173 109,5 % 0 %

1.2. DV 35kV 0 0 0 0,0 % 0 %

1.3. DV 20kV 3,453,950 1,256,352 3,335,426 96,6 % 265,5 %

2 CABLE CONDUITS 2,677,200 1,451,416 2,436,600 91,0 % 167,9 %

2.1. KBV 110kV 0 0 0 0 0

2.2. KBV 20kV 2,677,200 1,451,416 2,436,600 91,0 % 167,9 %

3 LOW VOLTAGE NETWORK 1,955,650 1.563,309 2,080,009 106,4 % 133,1 %

3.1. NADZEMNI VODI 0,4 kV 1,359,850 783,844 1,42,024 104,5 % 181,3 %

3.2. KABLOVODI 0,4kV 595,800 779,465 658,985 110,6 % 84,5 %

4 STATIONS 1,458,190 2,753,932 1,449,148 99,4 % 52,6 %

4.1. RTP 110/20kV 199,200 1,216,718 119,291 59,9 % 9,8 %

4.2. RTP 35/20/10kV 365,150 218,286 397,205 108,8 % 182,0 %

4.3. TP 20(10)/0,4kV 710.550 986.714 773,506 108,9 % 78,4 %

4.4. TRANSFORMATORJI 183,290 332,214 159,146 86,8 % 47,9 %

TOTAL FACILITIES UP TO 20 kV (1.2+2.2+3+4.3+4.4)

9,680,640 5,590,004 9,550,861 98,7 % 170,9 %

TOTAL ELECTRICITY FACILITIES (1+2+3+4)

10,244,990 7,025,008 10,067,357 98,3 % 143,3 %

7 COMMERCIAL BUILDINGS 116,250 212,978 89,592 77,1 % 42,1 %

8 OPERATING FACILITIES 112,200 68,035 108,236 96,5 % 159,1 %

FACILITIES TOTAL 10,473,440 7,306,021 10,265,184 98,0 % 140,5 %

9 REMOTE CONTROL 255,700 702,032 271,281 106,1 % 38,6 %

11 TELECOMMUNICATION 81,500 172,007 80,598 98,9 % 46,9 %

12 MEASURING DEVICES 755,300 1,183,333 851,285 112,7 % 71,9 %

13 MECHANIZATION 0 19,150 0 0,0 % 0,0 %

14 TOOLS 113,810 160,054 99,901 87,8 % 62,4 %

15 MEANS OF TRANSPORT 315,000 323,506 350,871 111,4 % 108,5 %

16 OFFICE EQUIPMENT 15,000 38,869 7,483 49,9 % 19,3 %

17 INFORMATICS 454,300 302,202 436,177 96,0 % 144,3 %

EQUIPMENT TOTAL 1,893,560 2.901,153 2,097,596 110,8 % 72,3 %

18 DOCUMENTATION

18.1. PROJECT DOCUMENTATION 733,000 775,232 737,669 100,6 % 95,2 %

DOCUMENTATION TOTAL 733,000 775,232 737,669 100,6 % 95,2 %

INVESTMENTS 13,100,000 10,982,407 13,100,450 100,0 % 119,3 %

Table 10:Overview of investment plan realization for year 2014

Table 11:Monthly quantities of delivered electricity


In Elektro Primorska d. d. Company in year 2014 we implemented investments according

to the adopted plan of investments in the amount of 13,100,000 EUR. Realization of the

plan of investments slightly exceeded the planned value. Compared to 2013, the realiza-

tion of the plan of investments increased by 19.3 %.

8.3. Acquired and transmitted electricity in year 2014 In year 2014 there were 1,340,006.8 MWh acquired from the transmission network,

188.351,0 MWh from electricity producers and 3,158.0 MWh from aggregates. In total,

the distribution network acquired 1,531,515.8 MWh. Comparison of assumed quantities

of electricity in 2014 from 2013 records a drop acquisition from the transmission network

by 4.9% and an increase in the acquisition of the qualified producers by 16.4%, so that

the joint acquisition index amounts to 0.9752.

In 2014, all customers were invoiced for 1,445,454.0 MWh.

Index of invoiced electricity on quantities from year 2013 amounted to 0.9733.

In year 2014 the electricity sent to Italy amounted to 50,153.9 MWh. 13,897.1 MWh were

sent to the area of Gorica and 36,256.8 MWh to the area of Opčine. Distribution of elec-

tricity in Italy is not recorded as a distribution from the distribution network management,

but as the supply of energy on commercial lines.

In 2014 losses in the distribution network amounted to 82,903.8 MWh or 5.74 % of in-

voiced quantities.

MonthRealization 2014

[kWh]Realization 2013

[kWh]Plan 2014 [kWh]

Index of realization (2014/2013)

January 121.323.005 124.697.217 124.805.441 0,9729

February 108.255.836 114.610.366 119.993.572 0,9446

March 124.301.395 130.822.608 128.870.595 0,9502

April 119.525.577 121.907.809 119.382.456 0,9805

May 115.761.830 120.188.098 125.765.262 0,9632

June 122.811.344 119.735.744 124.438.560 1,0257

July 129.996.626 134.126.144 131.492.783 0,9692

August 119.210.943 124.651.770 121.238.058 0,9564

September 115.094.643 123.549.603 122.787.417 0,9316

October 126.048.484 126.268.114 126.614.823 0,9983

November 119.536.751 119.329.518 118.128.337 1,0017

December 123.587.560 125.190.865 125.659.696 0,9872

Total 1.445.453.994 1.485.077.856 1.489.177.000 0,9733


A A48 49

8.4. Access to the distribution network In 2014 the organization of the distribution of electricity remained unchanged and so

distribution system operator - SODO, d. o. o., based in Maribor remained the holder of

providing access to the distribution network under the provisions of the Energy Act, while

the electricity distribution companies remained providers on the basis of contracts on

lease of distribution infrastructure and provision of services for SODO.

As part of the implementation of the operational tasks of providing access to the distribu-

tion networks all revenues from network usage are revenues of SODO.

Elektro Primorska d. d. as owner of the distribution infrastructure and the service pro-

vider issues SODO monthly bills for rent of infrastructure and services, as well as for

the purchase of electricity to cover losses in the distribution network in the amount of

recognized costs.

8.4.1. Use of electricity network

In accordance with the provisions of the Act determining the methodology for charging

for the network charge, the methodology for setting the network charge, and the criteria

for establishing eligible costs for electricity networks (Official Gazette RS, No. 17/2014)

tariff items for distribution network did not change.

On January 1 2014 lower tariff item for transmission network, which is managed by ELES

Company, entered into force. Network charge for transmission network decreased by 5.1

% compared to year 2013. Downward trend in transmission network charge will continue

in 2015.

In 2014 there was also no change in the contribution for the provision of support for

diffuse sources. This was last changed in September 2013, when there was a significant

reduction in high and medium-voltage consumption groups.

In year 2014 the number of customers connected to the distribution network of Elektro

Primorska, increased by 364 and as at December 31 2014 it amounted to 131,408.

In 2014 to all electricity consumers in the area of Elektro Primorska there were by

14,502,987 kW of power invoiced and 1,445,453,994 kWh of electricity, and in this re-

spect the invoiced value of 60,010,500 EUR. Index of invoiced value compared to the

value in 2013 is 0.9479.

8.4.2. Excessively acquired wattles power at cos ϕ < 0,95

In 2014 there were no changes regarding the way excessive reactive energy for cus-

tomers was acquired and with the acquisition on the transmission network. There was

a change in the pricelists though. For high-voltage feed the same differentiated price

remained 0.00626 EUR/kvarh per individual feed point. For medium and low-voltage feed

the consumption is no longer charged or the new pricelist now equals 0 EUR/kvarh. In

accordance with the lease agreement of the distribution infrastructure and implemen-

tation of services for the system operator of the electricity distribution network Elektro

Primorska d. d. issues invoices from excessively acquired reactive power in the name

and for the account of SODO, d. o. o.

In year 2014 there were 330,974 kvarh of excessively acquired wattles power acquired

from the transmission network. Index of wattles power from the transmission network

compared to the quantities in 2013 amounted to 1.0433. Cost of excessive reactive pow-

er is 0 EUR, whereas the total acquired energy occurs on the medium-voltage level.

In the same period the excessive wattles energy from electricity networks of all custom-

ers in the area there were 35,193,295 kvarh invoiced in the amount of 293,725,03 EUR.

Index of excessive reactive energy on quantities in 2013 amounted to 1.07165.

Account of excessive reactive energy for the area for the year 2014 show positive differ-

ence of 293,725.03 EUR.

8.4.3. Electricity losses in the distribution network

In accordance with the mentioned agreement on the lease of electricity distribution in-

frastructure and provision of services for the distribution system operator, the company

Elektro Primorska in 2014 purchased electricity to cover losses in its own name and for

2014 INVOICED QUANTITIES REVENUE FROM USE OF NETWORK [€] REVENUE SUPPORTS [€] TOTAL REVENUE

[€][kW] [kW] Trans-mission network

Distribution network

System Services

Addition JARSE

Addition BORZEN

Excessive wattles energy

consump-tion

Addition OVE + SPTE

Addition DVE

January 1.208.490 121.323.005 697.407 3.198.929 387.635 20.625 15.772 22.467 1.067.487 -2 5,410,319

February 1.200.256 108.255.836 643.634 2.961.053 384.994 18.403 14.073 19.120 1.049.774 3 5,091,054

March 1.209.753 124.301.395 683.972 3.058.826 388.040 21.131 16.159 25.725 1.060.095 5 5,253,953

April 1.156.473 119.525.577 559.017 2.620.424 370.950 20.319 15.538 25.592 1.020.099 -6 4,631,933

May 1.202.586 115.761.830 562.877 2.653.518 385.741 19.680 15.049 22.909 1.058.790 20 4,718,584

June 1.220.310 122.811.344 572.065 2.666.539 391.427 20.878 15.965 32.499 1.092.346 0 4,791,720

July 1.216.735 129.996.626 593.300 2.752.611 390.280 22.099 16.900 32.324 1.087.251 0 4,894,763

August 1.216.016 119.210.943 572.907 2.692.296 390.049 20.266 15.497 27.602 1.081.294 -3 4,799,909

September 1.194.774 115.094.643 554.970 2.628.177 383.236 19.566 14.962 24.024 1.046.636 0 4,671,571

October 1.241.074 126.048.484 688.165 2.959.676 398.087 21.428 16.386 23.442 1.112.979 0 5,220,164

November 1.214.036 119.536.751 663.195 2.917.149 389.414 20.321 15.540 20.224 1.070.051 0 5,095,895

December 1.222.484 123.587.560 709.114 3.189.304 392.124 21.010 16.066 17.798 1.085.219 0 5,430,635

TOTAL 14.502.987 1.445.453.994 7.500.623 34.298.502 4.651.978 245.727 187.909 293.725 12.832.020 17 60,010,500

Table 12:Revenues from network use and supports for year 2014


A A50 51

its own account under a contract of sale and purchase of electricity from the supplier

Holding Slovenske elektrarne at the price of 51.66 EUR/MWh. For the calculation of the

costs for covering the losses the recognized percentage of losses in the amount of 5.77%

of consumption of electricity charged to customers at the purchase cost of losses (51.66

€/MWh) was used.

Losses in the distribution network for year 2014 amounted to 82,903,838 kWh, which

represented 5.74 % of total invoiced electricity to all customers. Compared to year 2013

losses were lower in quantity and percentage (in year 2013: 85,419,284 kWh and 5.75 %).

Recognized costs for covering the losses amounted to 4,308,583 EUR, while the cost of

purchasing losses amounted to 4,282,812 EUR. Costs of covering the losses thus show

a positive difference in the amount of 25,771 EUR.

8.4.4. Peak of distribution network consumption and operating hours

In year 2014 the peak of distribution network EP consumption occurred on Wednesday,

December 10 2014, at 18.00 and it amounted to 252.905 MW. Compared to year 2013

(258.004 MW) it was lower by 5.099 MW or by 2.0 %. Annual operating hours amount to

6,055.7 hours.

In Table 13 monthly peaks in the distribution network of Elektro Primorska for the year

2014 and the related annual operating hours are shown. Graph 6 shows monthly con-

sumption peaks, while Graph 7 monthly quantities of acquired electricity in year 2014.

8.4.5. Production of electricity from producers connected to the distribution

network

In year 2014, according to the balance as at December 31 2014 there were 494* produ-

cers of electricity connected to the distribution network of Elektro Primorska d. d. or 26

more than in year 2013. In year2014registered production of these producers amoun-

ted to 197,979,631 kWh or was by 13.6 % higher than in year 2013. In the distribution

network of Elektra Primorska d. d. there were 188,351,020 kWh of electricity delivered or

by 16.4 % more than in year 2013. Difference between quantities of electricity produced

and power delivered in the distribution network, is proper consumption of SPTE produ-

ction facilities and delivery of produced electricity in the internal network of customers,

which in year 2014 amounted to 9,628,611 kWh.

Peak in EP for year 2014 amounted to252,905 MW and occurred on Wednesday December 10 2014 at 18:00.

Note:

*Entire electricity acquired represents entire acquisition of electricity in the distribution network (acquisition from transmission network+ acqui-

sition from producers) – following the system of hourly average values of balance group realization including derogations

**Monthly values of annual operating hours are calculated according to monthly data calculated to the annual value

150

175

200

225

250

275

300

P [MWh/h]

Peak 2014

Peak 2013

Janu

ary

Feb

ruar

y

Mar

ch

Ap

ril

May

June

July

Aug

ust

Sep

tem

ber

Oct

ober

Nov

emb

er

Dec

emb

er

Janu

ary

Feb

ruar

y

Mar

ch

Ap

ril

May

June

July

Aug

ust

Sep

tem

ber

Oct

ober

Nov

emb

er

Dec

emb

er

150

175

200

225

250

275

300

[GWh]

Quantities 2014

Quantities 2013

Graph 6:Monthly electricity consumption peaks in year 2014

Graph 7:Monthly acquired electricity quantities in year 2014

Table 13:Peak and annual operating hours of Elektro Primorska in year 2014

MonthMonthly peak

Entire electricity acquired*

Operating hours annual**

Operating hours annual** Monthly peak

ratio 2014 / 2013Entire electricity acquired 2013

[MWh/h] date hour [MWh] [h] [MWh/h]

January 249,772 29/01/14 10:00 135.703,488 6.397,031 248,240 1,006 142180,087

February 227,424 19/02/14 10:00 119.341,950 6.840,560 254,339 0,894 129905,179

March 235,560 05/03/14 20:00 132.944,392 6.645,071 256,768 0,917 144005,627

April 221,409 02/04/14 21:00 123.998,849 6.813,872 239,248 0,925 125382,141

May 207,253 28/05/14 10:00 118.623,045 6.739,061 213,407 0,971 117491,219

June 235,090 12/06/14 13:00 124.937,561 6.465,922 233,767 1,006 122781,507

July 228,036 17/07/14 13:00 131.572,732 6.793,501 239,001 0,954 136630,707

August 221,393 27/08/14 10:00 121.271,355 6.449,492 226,566 0,977 126445,586

September 221,142 08/09/14 21:00 122.917,515 6.762,607 217,677 1,016 123870,010

October 239,233 26/10/14 03:00 128.833,873 6.340,743 228,647 1,046 132125,848

November 246,435 26/11/14 18:00 131.791,646 6.506,654 245,846 1,002 128059,635

December 252,905 10/12/14 18:00 139.579,430 6.498,231 258,004 0,980 141616,466

Peak: 252,905 Total: 1.531.515,836 6.055,696 1570494,012

Annual peak 2014 252,905

Annual peak 2013 258,004

Annual peak ratio 2014 / 2013 0,980

Operating hour 2014 6.055,696

Operating hour 2013 6.087,092

Operating hours ratio2014 / 2013

0,995


A A52 53

* number of all power stations in the area of EP that are connected to the distribution network or internal network of the customer

Table 14: Production of electricity according to primary energy sources

Table 15:Number of interruptions, longer than three minutes

Table 16: SAIFI – System Average Interruption Frequency Index

Table 17: SAIDI – System Average Interruption Duration Index

8.4.6. Quality of electricity supply

8.4.6.1. Voltage quality

Continuous monitoring of voltage quality in the company Elektro Primorska in 2014 co-

vers 55 registrars in 28 facilities of the network. Data on the quality of the voltage is ob-

tained from 15 high-voltage bus bars, from two medium-voltage bus bars bordering the

neighboring network, and from 38 medium-voltage bus bars representing the main power

points in our distribution network.

Results of the permanent measurements in the area of the distribution company Elektro

Primorska in 2014 we can observe improvement of voltage quality compliance with the

requirements of the standard on the HV-level 96.52 % in year 2013 to 97.70 % in year

2014, while on the MV-level however there was a deterioration of voltage quality from

97.75 % in year 2013 to 97.68 % in year 2014.

Vast majority of deviations of voltage quality in 2014 was due to the ice damage in early

February 2014 and the failure of the transmission line DV 110kV Divača–Ajdovščina

(ELES) on October 15 2014. There was also an increase in flickers during summer storms

with lightning strikes.

In 2014 at 27 measuring points (out of 55) in all measured weeks we recorded a full

compliance with the voltage quality requirements of the standard, while the remaining

28 of the measuring points recorded at least one week of non-compliance parameters of

voltage quality standard EN 50160. On three measuring points we recorded deviation of

root mean square value of the voltage level, on nine measuring points we recorded devi-

ations of rms value of the voltage level, on nine measuring points we recorded increase

of flickers, on 25 measuring points we recorded the variation of frequency.

8.4.6.2. Continuity of power supply

In the area of Elektro Primorska on high-voltage and medium-voltage power devices in

year 2014 we recorded 6,086 unannounced interruptions of electricity, longer than three

minutes, of which 31 were outages of power transformers 110/SN kV and SN/SN kV.

For the purposes of regular and investment maintenance of devices 958 disconnections

were made, which caused announced interruption of electricity. In DCV Elektro Primorska

252 dispatches were issued, of which 89 were for works on power transformers 110/SN

kV and SN/SN kV.

Total number of unannounced and announced interruptions of electricity, longer than

three minutes, was 7,044. Number of interruptions is significantly higher than in previous

years, because of the glaze ice in January and February.

8.4.6.3. Commercial quality

In accordance with the Act concerning the reporting of data on quality of electricity

supply the company has been regularly monitored the commercial quality indicators and

reported to the Energy Agency and SODO.

Number of interruptions, longer than 3 minutes in year 2014 in year 2013 Index 14 /13

Number of unannounced interruptions 6086 1047 5,812

Number of announced interruptions – disconnections 958 509 1,882

Total number of announced and unannounced interruptions 7044 1556 4,527

SAIFI (System Average Interruption Frequency Index) in year 2014 in year 2013 Index 14 /13

Average number of unannounced interruptions per customer 5,19 4,12 1,259

Average number of announced interruptions – disconnections per customer 0,69 0,68 1,015

Average number of announced and unannounced interruptions per customer 5,88 4,8 1,225

SAIDI (System Average Interruption Duration Index) in year 2014 in year 2013 Index 14 /13

Average time of customer without electricity due to unannounced interruptions in hours

31,73 6,23 5,093

Average time of customer without electricity due to announced interruptions – disconnections in hours

1,57 1,37 1,146

Average time of customer without electricity due to announced and unan-nounced interruptions in hours

33,3 7,6 4,381

Availability: 0.99619

Electricity sourceNumber of power stations

Production 2014 [KWh]

Production 2013 [KWh]

2014 / 2013

HE SENG 22 106.785.928 84.663.419 1,261

HE Other 75 42.305.595 37.116.853 1,140

Solar power stations 357 34.051.675 37.860.699 0,899

Wind power stations 8 4.208.614 4.221.222 0,997

SPTE 32 10.627.819 10.435.943 1,018

Total 494 197.979.631 174.298.136 1,14


A A54 55

Business Report | 9. Services For External Customers Business Report | 10. Information Support and Development

9.Services For External Customers

10.Information Support and

Development

Acquisition of business for the market and for external customers took place with no-

tifications on published public tenders and direct negotiations with potential investors.

Services were conducted primarily in facilities of medium- and low-voltage network and

public lighting. Market business covers the entire scope of work for which the company

Elektro Primorska is specialized, namely the design and preparation of project documen-

tation, construction or reconstruction of cable lines, transformer stations, production

connectors for new buildings, renovation of public lighting with the reconstruction of

switching points and other minor services.

In 2014 we were successful in this work, as despite extraordinary competition in the

market we managed to exceed the market value of the services compared to the plan by

2.67 %, while compared to the previous year we fell back by 4.22 %.

IT service covers an area of modernization of the IT system, intranet and internet portal,

server infrastructure with all the services, databases, network computing infrastructure

for the needs of management of facilities and business computing as well as care for

installing new workstations and user support.

Contractual partner Informatika, d. d., is responsible for the operation of the accounting

information system and the development of new modules for connection processes, bill-

ing of network charge and balances on accounts.

Main activities in year 2014 were as follows:

• In the field of modernization of IT system all milestones in the contract with Informa-

tika, d. d. were completed, multiple test have been carried out, and in September a

renovated part of an information system went into operation;

• on the internal portal, we created a multitude of checks for purposes of monitoring

the costs;

• we upgraded the software module COT (comprehensive risk management);

• we upgraded the computer network primarily for the purpose of managing energy

facilities;

• we maintained all wired, radio and optical communications infrastructure including

FM network and participated in the upgrade of optical connections;

• we began with activities to replace the existing outdated FM system;

• we purchased new workstations for the purpose of replacing the obsolete ones;

• we set up new monitoring tools to monitor the performance of computers and com-

puter networks;

• in the context of all the distribution companies we have produced a joint security

policy;

• by means of an external contractor we made procedures for continuity of operations

for the entire company;

• we provided all the infrastructure services and support to the subsidiary E3, d. o. o.

Let us state a few other major services for the market we have carried out in 2014:

• cable conduit 20 kV in tunnel Markovec,

• SPTE Fructal,

• reconstruction of TP for company SKP KNAUF in Ajdovščina,

• preparation of project documentation for cable conduit 110 kV Koper–Izola,

• cable conduit and TP for company MOL in Rožna Dolina,

• cable conduit 20 kV for TP Martex 2,

• electrical installation work on the project CČN in Vrtojba,

• maintenance of public lighting in municipality of Izola,

• maintenance of public lighting in municipality Postojna,

• electrical installation work on the project SPTE Park 1,

• electrical installation work for TP Riba.

Framework of these services also includes operation of holiday facilities.

Type of work Plan(€) Realization(€) Realization(€) % %



January–November 2013

2 : 1 2 : 3

1 2 3 4 5

206 Market services 1,950,000 1,745,756 1,705,928 89,53 102,33

12 Other services 450,000 718,205 866,637 159,60 82,87

TOTAL 2,400,000 2,463,961 2,572,565 102,67 95,78

Table 18: Realization of services for external customers in year 2014

A A56 57

Business Report | 11. Integrated Management System Business Report | 12. Skrb za okolje

Integrated management system includes quality management system, environment man-

agement system and management system of safety and health at work. System consists

of interconnected processes, which Elektro Primorska uses to:

• provide quality services and customer satisfaction, and pursue development poli-

cies,

• care for the development of employees, their safety, health and satisfaction,

• reduce negative impacts on the environment and contribute to the development of

narrower and broader social environment.

Elektro Primorska has an established and certified integrated management system for

the following standards:

• Quality Management System – ISO 9001:2008,

• Environmental Management System – ISO 14001:2004 in

• Management System for Safety and Health at Work – BS OHSAS 18001:2007.

Integrated quality management system is managed through the structure of formalized

documents: a) rules of quality management, b) definition of processes, c) management

processes, d) instructions, e) forms. Quality of processes implementation is monitored

by quality indicators. Effectiveness of the integrated management system is regularly

checked by internal and external audits.

Requirements for improvements in the integrated management system are managed by

a special program that enables employees to communicate any ideas, comments and

suggestions for better business organization and other activities in the company. This

system also includes risk management.

Verification of the integrated management system took place in 2014 as planned by in-

ternal audits and annual reviews: environmental review, review of safety and health at

work, and management review. Internal audits of quality management system, environ-

ment management system and the system of safety and health at work were conducted

from April 23 to April 24 2014. On May 28 and May 29 2014 external assessment com-

pany SIQ conducted a regular external assessment of requirements of ISO 9001:2008

standard and reassessment of requirements of ISO 14001:2004 standard and BS OHSAS

18001:2007 standard, and it made findings that the company implements, maintains and

develops the management system in accordance with the requirements of the standards.

12.1. Environmental policy Environmental policy is an important component of the company's business policy and is

integrated into all business processes. Our business and our facilities intervene into the

space and its intended use, so with the established environmental management system

we manage the significant environmental aspects associated with the activity of electric-

ity transmission, maintenance and construction of facilities, the operation of electricity

metal workshops and vehicle fleet. By adopting environmental programs in accordance

with the financial capabilities of the company we realize framework and implementing

environmental objectives.

12.2. Realization of environmental programs in year 2014In 2014 in accordance with the set environmental objectives we implemented the follow-

ing activities of environmental programs:

• we replaced asbestos cement roofing on RP Bovec,

• we reduced light pollution in RP Bovec, service premises Kromberk and service

premises and inspectorate in Tolmin

• we replaced ionization fire detectors with optical detectors in distribution transform-

er stations RTP Lucija and RTP Vrtojba.

Risks are managed in accordance with the methodology of integrated risk management

in Elektro Primorska. Identified risks are classified in accordance with the methodology

for managing risks in one of the four groups that are included in the risk register: financial,

operational, strategic and legislative. Risks are evaluated at least monthly on the basis

of assessing the implications of the risk and on the basis of the likelihood that a risk will

occur. These risks are managed in the following ways: risk avoidance – abandonment

of risky operations; risk reduction – use of different hedging, transferring risk to a third

party; acceptance of risk – accepting the risk that is acceptable. In order to continuously

identify risks primarily responsible are the heads of organizational units and other author-

ized expert staff.

11. Integrated Management System

12.Care for the Environment

13.Risk Management

A A58 59

Business Report | 13. Risk Management Business Report | 13. Risk Management

Reporting on the status of individual risks or measure is carried out through the portal

- monthly, quarterly and annually. Internal audit supervises the implementation of the

measures and compliance of the reported with the actual situation. Reporting and risk

control are an integral part of the integrated management system in the company. For a

systematic display of the degree of all risks on the cut-off date, total average rate of all

the risks (average of the sum of all risk levels of all groups) has been introduced. In year

2014 the value decreased from the baseline 3.17 to 2.89. For all measures that exceed

the acceptable level of risk 3.00, new measures, contractors and deadlines for implemen-

tation were determined. These measures are being implemented.

In 2015 we will include in the risk management system, also risks arising from the busi-

ness continuity process.

13.1. Financial risks Financial risks of the company represent those risk factors that directly threaten the

achievement of planned income statement and capital adequacy. Significant risks are:

credit, liquidity, market.

Credit risk arises because of untimely settled receivables. Systematic monitoring of

debtors' financial position and use of applications for enforcement to recover the debts

lower the credit risk of the company.

Liquidity risk is directly related to the credit risk. With cash flow planning company man-

ages liquidity risk by adjusting expenditure to financial capacity, draws bridging loans

and plans the dynamics of raising long-term investment loans.

Economics of investments is associated with the two stated risks, due to the eventual

exceeding of the value of investments and due to the deviation of specific planned values

for the type investment solutions.

Market risk arises from failure to achieve services for the market, which affects the cash

flow.

Interest rate risks are associated with the possibility of unexpected increases in financing

costs, which are tied to a variable interest rate based on market conditions. Company

minimizes interest rate risk by selecting the best bidder when borrowing.

Company is not faced with currency risks due to the limited sectoral operation.

13.2. Operational risks Operational risks are related to the implementation of business processes in the com-

pany. In the past the company modernized and certified its business processes in ac-

cordance with the standards of quality management system ISO 9001, environmental

management system ISO 14001 and system of health and safety at work BS OHSAS

18001. Indirectly, by complying with the provisions of standards the potential risks of

the operation are reduced. In this field, we are facing human resource risk, risks in the

operation of the system and the IT risk.

Human resources risks are associated with the possibility of loss or lack of qualified

staff and the emergence of work-related injuries arising from risky working practices in

the business of power distribution. The risk is managed through scholarships, constant

training of employees, encouraging further education, communication and information to

all employees, liability insurance of employees in the implementation of design, assembly

and maintenance work, and collective accident insurance of employees. We continuously

improve the safety and health at work, which reduces the risk of injury at work and main-

taining the health of employees.

Risks associated with the system operation are related to ensuring the broadest pos-

sible availability of facilities, which we ensure with regular planning, construction and

maintenance, by implementing activities (reviews, audits, measurement) with the aim of

preventing the failure of electricity power plants and the occurrence of major damage to

the device. Property risk arises from exposure of electrical installations and other assets

of the company to environmental influences and other threats. Risks are managed in such

a way that we have concluded adequate property insurance with insurance companies.

Information risk is associated with the operation of a computerized information system

in the company and includes the risk of data loss, unauthorized access to data, intrusion

into the system, and undisturbed operation of the system. Company has signed a con-

tract for the provision of key information services with the Informatika Company, which

provides services to other distribution companies as well. With investing each year in

equipment of the computer system, with an appropriate security policy, with the renova-

tion of the information system in collaboration with Informatika, and with the implemen-

tation of adopted measures, these risks are managed.

13.3. Strategic risks Strategic risks affect the ability to ensure an efficient and competitive continuity of com-

pany operations. Among the strategic risks the company is facing price, quantity, invest-

ment risks, and risks related to power supply interruptions of own cause.

Price risks occur in the contractual relationship between SODO and Elektro Primors-

ka, which regulates the rent of electricity infrastructure and the provision of services by

Elektro Primorska for SODO. They determine the price for rental of infrastructure and

the provision of other services. Late conclusion of the contract or annex to the contract

for the financial year represents the price risk. Price risks also arise in procurement of

materials and equipment used in investment and maintenance works. They arise from

changes in commodity prices, especially copper, and conditions on the market of electro

technical materials and equipment. During the year price risk is managed through the

implementation of the procurement of material and equipment and by signing annual

contracts for real-time supply.

A A60 61

Quantitative risks arise in the transfer of electricity through the distribution network to

customers. They arise from the uncertainty of consumption of electricity and they have

impact on revenues from network usage and, consequently, on the amount of the Com-

pany's revenue from the provision of services for SODO. Quantitative risks are managed

by the monthly monitoring of the transferred quantities of electricity through distribution

network and charged usage of the network.

Investment risks are reflected in the possibility of achieving the implementation of

planned investments. They are managed by real-time verification of realization and effec-

tiveness of the adopted plans.

Risks due to power interruption for own reason require large financial investments with

effects over a longer period. They are managed with the regular reporting on the imple-

mentation of the plan of necessary investments in infrastructure.

13.4. Legislative risks Essence of managing regulatory risks is in ensuring the functioning of the system in

accordance with regulations. Responsibility for legitimate business and compliance with

the internal workings of the company EP is specially defined. Decision-making in the EP

is limited to the framework of sectoral legislation. Regulation of the operation resulting

from the contractual obligations between SODO and Elektro Primorska, as provider of

public utility service, constitutes restrictions the company must respect and are not al-

ways economically viable.

Business Report | 13. Risk Management Business Report | 13. Risk Management

BFinancial Statements

Financial Statements | 1. Balance Sheet as at December 31 2014B64

1.Balance Sheet as atDecember 31 2014

Table 19:Balance sheet

(assets) ASSETS NOTE 31.12.2014 31.12.2013

A. Long-term assets : in EUR

I. Intangible assets 2.1. 1,914,064 837,805

1. Long-term rights 1,852,408 738,615

2. Long-term deferred development costs 19,414 99,190

3. Other LT accruals and pre-paid expenditure 1,692

4. Intangible assets in acquisition 40,550

II. Tangible fixed assets 2.2. 169,050,522 168,508,891

1. Land 5,805,301 5,795,772

2. Buildings 114,595,258 111,810,105

3. Equipment 45,831,490 47,129,861

4. Fixed assets in acquisition 2,818,473 3,773,153

III. Long-term financial investments 2.3. 7,014,088 6,994,741

1. Investments in group companies shares 6,522,017 6,522,017

2. Other shares and stakes 492,071 472,724

IV. Long-term operating receivables 2.4. 20,322 16,965

1. Long-term receivable due from others 20,322 16,965

Total long-term assets 177,998,996 176,358,402

B. Short-term assets:

I. Stocks 2.5. 965,840 858,455

1. Material 965,840 858,455

II. Short-term financial investments 2.6. 25,207 129,145

1. Short-term loans to others 25,207 129,145

III. Short-term operating claims 2.7. 7,242,753 8,220,445

1. Short-term operating claims on group companies 70,297 84,995

2. Short-term operating accounts receivable 6,678,229 7,465,500

3. Short-term operating claims on others 494,227 669,950

IV. Monetary assets 2.8. 95,222 5,034,969

Total short-term assets 8,329,022 14,243,014

C. Short-term accruals and pre-paid expenditure 2.9. 289,429 719,451

TOTAL ASSETS 186,617,447 191,320,867

Financial Statements | 1. Balance Sheet as at December 31 2014 B65

Table 20: Balance sheet (liabilities)

Breakdown of individual items and explanatory notes are part of the financial statements

and should be read in conjunction with them.

LIABILITIES NOTE 31.12.2014 31.12.2013

A. Capital: in EUR

I. Called-up capital 78,562,832 78,562,832

1. Share capital 78,562,832 78,562,832

II. Capital reserves 46,208,187 46,208,187

III. Profit reserves 11,314,699 9,071,106

1. Statutory reserves 651,328 651,328

2. Other profit reserves 10,663,371 8,419,778

IV. Revaluation surplus -41,298 42,522

V. Net profit or loss from previous periods 140,188

VI. Net profit or loss of the business year 1,481,000 2,088,679

Total capital 2.10. 137,525,420 136,113,514

B. Provisions and LT accrued costs and deferred revenues 2.11. 13,083,346 13,114,937

1. Provisions 3,284,729 3,216,790

2. Long-term accrued costs and deferred revenues 9,798,617 9,898,147

C. Long-term liabilities 2.12. 20,310,659 20,517,977

I. Long-term financial liabilities 20,310,659 20,517,977

1. Long-term financial liabilities to banks 20,310,659 20,517,977

Č. Short-term liabilities 2.13. 15,066,751 20,935,644

II. Short-term financial liabilities 7,803,318 10,929,030

1. Short-term financial liabilities to banks 7,803,318 10,927,973

2. Other short-term financial liabilities 1,057

III. Short-term operating liabilities 7,263,433 10,006,614

1. Short-term operating liabilities to group companies 38,387 87,220

2. Short-term operating liabilities to suppliers 5,817,414 7,600,323

3. Other short-term operating liabilities 1,407,632 2,319,071

Total liabilities 48,460,756 54,568,558

D. Short-term accrued costs and deferred revenues 2.14. 631,271 638,795

TOTAL LIABILITIES 186,617,447 191,320,867

B66

2.Profit and Loss Account for Year Ended as at December 31 2014

Table 21:Profit and loss

account



NOTE 2014 2013

in EUR

1. Net sales revenue 3.1. 38,391,026 40,807,348

a. on domestic market 38,391,026 40,807,348

2. Capitalized own products and services 3.1. 6,098,307 6,300,696

3. Other operating revenues 3.1. 3,925,150 1,647,952

4. Costs of goods, material, and services 3.2. -16,939,400 -16,401,697

a. Costs of goods sold and material used -10,312,114 -8,971,667

b. Costs of services -6,627,286 -7,430,030

5. Labor costs 3.2. -15,539,166 -15,139,882

a. Costs of salaries -11,391,828 -10,892,670

b. Costs of additional pension insurance of employees -566,045 -575,110

c. Social security costs -1,856,986 -1,790,765

č. Other labor costs -1,724,307 -1,881,337

6. Amortization/depreciation expense 3.2. -11,642,503 -11,397,832

a. Depreciation -10,745,484 -11,009,697

b. Operating expenses from revaluation in intang. and tang. fixed assets

-694,009 -163,021

c. Operating expenses from revaluation in current assets -203,010 -225,114

7. Other operating expenses 3.2. -176,482 -204,800

8. Financial revenues from shares 3.3. 17,299 49,656

a. In other companies 17,299 49,656

9. Financial revenues from given loans 3.3. 12,655 2,201

a. given to others 12,655 2,201

10. Financial revenues from operating claims 3.3. 44,861 68,759

a. on others 44,861 68,759

11. Financial expenses from impairments and financial invest-ment write-offs

3.4. -2,799

12. Financial expenses from financial liabilities 3.4. -872,883 -789,933

Financial expenses from loans, received from banks -803,109 -743,413

Financial expenses from operating liabilities -69,774 -46,520

13. Financial expenses from operating liabilities 3.4. -5,058 -4,880

a. Financial expenses from liab. to suppliers and bill of ex-change l.

-4,568 -4,591

b. Financial expenses from other operating liabilities -490 -289

14. Other revenues 3.5. 3,465 3,346

15. Other expenses 3.6. -78,657 -65,782

NET PRE-TAX PROFIT OR LOSS OF THE ACCOUNTING PERIOD 3,238,614 4,872,353

16. Income tax 3.7. -425,011 -694,996

17. NET PROFIT OR LOSS OF THE ACCOUNTING PERIOD 3.8. 2,813,603 4,177,357

B67

3. Statement of Comprehensive Income For Year Ended as at

December 31 2014

Table 22:Statement of comprehensive income

Pojasnilo 2014

in EUR

17. Net profit or loss of the accounting period 3.9. 2,813,603

Changes in the surplus from the revaluation of financial assets available for sale 10,893

Other components of comprehensive income -94,713

TOTAL COMPREHENSIVE INCOME OF THE ACCOUNTING PERIOD

2,729,783

Financial Statements | 2. Profit And Loss Account for Year Ended as at December 31 2014 Financial Statements | 3. Statement Of Comprehensive Income For Year Ended As At December 31 2014

B68

4.Cash Flow Statement for Year Ended as at December 31 2014

Table 23:Cash flow statement



NOTE 2014 2013

A. OPERATING CASH-FLOW in EUR

1. Operating receipts 4.1. 74,769,154 73,615,181

a. Receipts from sales of products and services 49,888,228 48,441,346

b. Other operating receipts 24,880,925 25,173,835

2. Operating expenditure 4.2. -64,046,689 -58,972,237

a. Expenditure for purchase of material and services -17,441,140 -13,555,657

b. Expenditure for salaries and employees profit shares -16,326,980 -15,044,663

c. Expenditure for duties of all kinds -3,352,917 -3,806,941

č. Other operating expenditure -26,925,652 -26,564,976

3a. Excess of operating receipts or expenditure 10,722,465 14,642,944

B. CASH FLOWS IN INVESTING ACTIVITIES

4. Receipts in investing activities 4.3. 69,383 197,771

a. Receipts from received interest and profit shares of others referring to investing activities

58,761 122,962

b. Receipts from disposal of tangible fixed assets 10,622 74,809

5. Expenditure in investing activities 4.4. -10,232,657 -10,940,618

a. Expenses for acquisition of intangible assets -165,450 -831,631

b. Expenses for acquisition of tangible fixed assets -10,058,753 -10,108,987

c. Expenses for acquisition of long-term financial investments -8,454

6. Excess of expenditure in investing activities -10,163,274 -10,742,847

7a. Excess of operating and investing receipts 559,191 3,900,097

C. CASH FLOWS IN FINANCING ACTIVITIES

8. Receipts in financing activities 4.5. 38,957,000 31,949,000

a. Receipts from long-term loans 21,060,000 9,800,000

b. Receipts from short-term loans 17,897,000 22,149,000

9. Expenditure in financing activities 4.6. -44,455,938 -30,973,726

a. Expenditure for given interest -854,493 -792,351

b. Expenditure for repayment of long-term loans -21,391,973 -7,896,063

c. Expenditure for repayment of short-term loans -20,897,000 -20,967,000

č. Expenditure for dividend -1,312,472 -1,318,312

10a. Excess of receipts or expenditure in financing activ. 975,274

10b. Excess of expenditure in financing activ. -5,498,938

11a. Total excess of receipits or expenditure 4,875,371

11b. Total excess of expenditure or expenditure -4,939,747

Č. CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 95,222 5,034,969

X. OPENING BALANCE OF CASH AND CASH EQUIVALENTS 5,034,969 159,598

Y. CASH FLOW FOR THE PERIOD 4.7. -4,939,747 4,875,371

Closing balance of cash on 31.12. 95,222 5,034,969

B69

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Financial Statements | 4. Cash Flow Statement For Year Ended As At December 31 2014 Financial Statements | 5. Statement Of Changes in Equity For Year Ended as at December 31 2014

B70

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B71

7.Indicators

7.1. Main indicators of financing (investing)

7.2. Main investment indicators (investing)

Indicators of financing show the financing structure of the company and express the

degree of the company's financial independence.

These indicators are used to establish where the company invested its assets and what

structure of assets it has according to these investments.

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. equity financing rate capital / liabilities

0,737 0,711 0,717 0,697 0,650 0,622 0,660

2. long-term financing rate capital , long-term debts and long-term provisions/ liabilities

0,916 0,887 0,889 0,868 0,813 0,804 0,822

3. debt financing rate debts / liabilities

0,260 0,285 0,274 0,297 0,350 0,370 0,329

Table 26:Main indicators of financing

Table 27:Main investment indicators

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. operating fixed assets rate fixed assets / assets

0,906 0,881 0,908 0,899 0,820 0,805 0,826

2. Financial investment rateLong-term and short-term financial invest-ments/assets

0,038 0,037 0,038 0,037 0,008 0,008 0,008

3. long-term assets ratefixed assets, long-term financial invest-ments and l.t. oper. claims / assets

0,944 0,917 0,946 0,936 0,828 0,813 0,835

Financial Statements | 6. Statement Of Changes In Equity For Year Ended As At December 31 2013 Financial Statements | 7. Indicators

B72

7.4. Main indicators of economy

Indicators of economy are indicators of business success and explain business results

in relation to the invested elements of the business process.

Table 29:Main indicators of

economy

7.3. Main horizontal financial structure indicators

These indicators show how individual categories of assets are financed and how the

company is able to settle its short-term financial liabilities.

Table 28:Main horizontal

financial structure indicators

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. equity to operating fixed assets capital / fixed assets

0,814 0,808 0,789 0,776 0,792 0,773 0,800

2. immediate solvency ratioliquid assets / short-term liabilities

0,006 0,240 0,008 0,036 0,005 0,112 0,044

3. quick ratioliquid assets and short-term claims / short-term liabilities

0,487 0,633 0,377 0,331 0,795 0,872 0,911

4. current ratioshort-term assets / short-term liabilities

0,553 0,680 0,429 0,393 0,837 0,913 0,961

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. operating efficiency ratio operating revenues / operating expenses

1,093 1,130 1,091 1,060 1,015 1,002 1,028

2. entire efficiency ratio revenues / expenses

1,072 1,111 1,074 1,040 1,018 1,003 1,011

B73

7.5. Main indicators of return

By analyzing the ratio of profitability we establish that company's operation

is viable due to a positive operating result.

Table 30: Main indicators of return

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. level of revenue profitability net profit or loss / sale revenues

0,073 0,102 0,073 0,039 0,018 0,003 0,012

2. ROA net profit or loss / average assets

0,015 0,022 0,016 0,008 0,010 0,002 0,007

3. ROE (%)net profit or loss / average capital (excl. net profit or loss of business year)

0,021 0,031 0,022 0,012 0,016 0,003 0,011

Financial Statements | 7. Indicators Financial Statements | 7. Indicators

C Notes to the Financial Statements According to

the Companies Act snd Slovenian Accounting

Standards

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards1. Basis for Preparation of Financial Statements

C76

1.Basis for Preparation of Financial Statements

Financial statements have been prepared in accordance with Slovenian Accounting

Standards (SRS) 2006, Energy Act (Official Gazette RS Nos. 27/07, 70/08 in 22/10) and

Companies Act (ZGD-1).

SAS 2006 prescribe accounting policies and, in some cases, allow a choice between per-

missible accounting policies. In its Accounting Rules the Company defined in detail the

accounting treatment of balance sheet items in the accounting records and determined

the applicable accounting policies.

In accordance with Article 19 of the Act amending the Companies Act (new Article 46. a)

revenue and costs are adjusted for the regulated period backward based on the eligibility

criteria, which were produced and are monitored by the Agency for Energy. Compliance

with the Energy Act in this part, which corrects the revenue and cost backward, is con-

sidered a deviation from the Slovenian Accounting Standards.

In the operation of the Company July 1 2007 plays an important role. On this day, Elektro

Primorska d. d. lost the status of a public company and since then operates only as a

limited company. With a decision of the Government of RS on the concession for the pro-

vision of public service activities of the distribution system operator for the entire territory

of the Republic of Slovenia it granted the exclusive concession to a newly established

company SODO based in Maribor.

According to the decree on the implementation of the activity of the system operator

SODO company concluded a contract on the lease of electricity distribution infrastruc-

ture and provision of services for the system operator of the electricity distribution net-

work with Elektro Primorska as the owner of the distribution infrastructure in the area of

Elektro Primorska. Contract defines that Elektro Primorska:

• leases infrastructure for rent determined annually with annexes to the contract,

• implements services for SODO and charges for services described in the annex to

the contract,

• in the name and for the account of SODO purchases electricity for losses incurred

on the network,

• in the name and for the account of SODO issues invoices to end users of the distri-

bution network accounts for the network use,

• in the name and for the account of SODO charges the network charge for power

consumption.

On February 27 2012 a new lease contract on the electricity infrastructure and provision


C77

of services for electricity distribution system operator was concluded with SODO Com-

pany, which has been used since January 1 2011. Contract also contains provisions re-

lating to the preliminary settlement of regulatory year. Based on this, the company in the

income statement for year 2014 considered the final settlement of regulatory year 2013

(negative in the amount of 7,984 EUR) and preliminary settlement of year 2014 (positive

in the amount of 258,473 EUR).






2013–31. 12. 2015.

Based on this Act the Energy Agency on November 15 2012 with a decision No. 111-

13/2012-01/452 determined the regulatory framework for the distribution network system

operator SODO for the regulatory period from January 1 2013 to December 31 2015.

In the decision, the eligible costs, broken down by individual regions of the distribution

network are planned.

Planned eligible costs in the area of the distribution network of Elektro Primorska provide

a framework of company assets in each year of the regulatory period.

On December 16 2013 the Council of Energy Agency adopted the Act amending the Act

determining the methodology for charging for the network charge, the methodology for

setting the network charge, and the criteria for establishing eligible costs for electricity

networks. Act applies from 1 January 2014.

Price list of services for external customers changed in October 2013.

Wind farm Volovja reber

On June 26 2006 the Ministry of Environment and Spatial Planning (MOP), Slovenian

Environment Agency (ARSO), issued an environmental consent to Elektro Primorska d.

d. for the construction of wind farms on Volovja reber and associated infrastructure. On

February 19 2007, Elektro Primorska d. d. on the basis of this consent obtained a partial

building permit, which has become final on March 27 2007. At the request of Elektro Pri-

morska the validity of the building permit was extended until March 27 2012.

When the Ministry of Environment and Spatial Planning in 2007 recognized the status

of a participant in the process of issuing the environmental consent for the construction

of wind farms and associated infrastructure to the Society for Observation and Study of

Birds of Slovenia (DOPPS), the process of issuing the environmental consent was reno-

vated ex officio, while the implementation of environmental consent was withheld at the

same time.

In a renewed process of issuing the environmental consent ARSO left the issued envi-

ronmental consent in force, while MOP rejected an appeal DOPPS against the confirmed

C78

environmental consent. DOPPS filed an action against the decision of the Environmental

Agency with the Administrative Court in Ljubljana, which granted the action by judgment

as at March 3 2011 and remanded the case for reconsideration procedure to ARSO. On

December 19 2011 ARSO in a new decision in the renewed procedure performed oral

hearing and on April 4 2012 issued a decision confirming the validity of the environmental

consent of June 26 2006.

In accordance with the building permit to build wind farms on Volovja reber Elektro Pri-

morska d. d. began with the implementation of works for the construction of the connec-

tion point 110 kV power line RTP Ilirska Bistrica-RTP Volovja reber in distribution trans-

former station RTP Ilirska Bistrica. With this, the company prevented the construction

permit as at March 27 2012 to expire.

After DOPPS appeal against the decision of the Environmental Agency of April 4 2012,

the Ministry of Agriculture and Environment RS on December 21 2012 issued a decision,

annulling the decision of the Environmental Agency of April 4 2012, and remanded the

case to ARSO for reconsideration procedure and decision-making. On May 6 2013 ARSO

issued a new decision no. 35402-11/2004-328, which abolished the environmental con-

sent from the year 2006. Company Elektro Primorska appealed to the issued decision.

But the Ministry of Agriculture and the Environment of RS as a body of appeal rejected

the appeal from EP with the decision no. 35402-29/2013/2 as at December 4 2013.

As a result, Elektro Primorska on October 21 2013 signed an agreement with the Munici-

pality of Ilirska Bistrica, which defines the termination of the agreement from 2007 and the

abolition of all obligations of Elektro Primorska d.d. to the Municipality of Ilirska Bistrica,

which has been identified for the event of the construction of wind farms Volovja reber.

Construction license:

• it was obtained based on the Environmental approval for the construction of wind

farm and associated infrastructure on Volovja reber as at June 26 2006,

• partial building permit as at February 19 2007 was extended with the decision as at

November 12 2009 to March 27 2012,

• it was activated in the beginning of March 2012 by constructing the concrete foun-

dation on the land plot No. 390/15 k. o. Dobrepolje near the area of a power line

portal.

Environmental approval:

• It was issued on June 26 2006 by the Ministry of the Environment and Spatial Plan-

ning (MOP), Slovenian Environment Agency (ARSO).

• In 2007, MOP recognized the Society for Observation and Study of Birds of Slovenia

(DOPPS) the status of a participant in the procedure of issuing an environmental

permit.

• After the recognition of the right side of the participant DOPPS, the process of issu-

ing the environmental consent has been renovated ex officio, while the implementa-

tion of environmental consent was withheld at the same time.

• In the renewed procedure of issuing the environmental consent ARSO left the issued

environmental consent in force, while MOP rejected an appeal of DOPPS against

the confirmed environmental consent.

C79

• DOPPS filed an action against the decision of the Environmental Agency with the

Administrative Court in Ljubljana, which granted the action by judgment as at March

3 2011 and remanded the case for reconsideration procedure of ARSO.

• On April 4 2012 ARSO issued the decision that confirmed the validity of environmen-

tal approval as at June 26 2006.

• According to DOPPS appeal against the decision of the Environmental Agency of

April 4 2012, the Ministry of Agriculture and Environment RS on December 21 2012

issued a decision, annulling the decision of the Environmental Agency of April 4

2012, and remanded the case to ARSO for reconsideration procedure and deci-

sion-making.

• On May 6 2013 ARSO issued a new decision no. 35402-11/2004-328, which abol-

ished the environmental consent from the year 2006 and rejected the application

of Elektro Primorska for issuing environmental consent for the planned wind farm

Volovja reber.

• Company Elektro Primorska appealed to the issued decision of May 6 2013. But

the Ministry of Agriculture and the Environment of RS as a body of appeal rejected

the appeal from EP with the decision no. 35402-29/2013/2 as at December 4 2013.

• As a result, Elektro Primorska on October 21 2013 signed an agreement with the

Municipality of Ilirska Bistrica, which defines the termination of the agreement from

2007 and the abolition of all obligations of Elektro Primorska to the Municipality of

Ilirska Bistrica, which has been identified for the event of the construction of wind

farms Volovja reber.

• Elektro Primorska in year 2014 fully discontinued all further activities related to the

implementation of works of the partial construction permit (issued on February 19

2007), which form an integral part of the stated environmental consent from year

2006.

• Company has therefore adjusted the value of the investment in the construction of

wind farms in the amount of funds invested 829,032 EUR.

Company ended the operations in 2014 positively. It generated a net profit of 2,813,603

EUR, which is lower than planned for the year 2014 and the net profit of the previous year.



C80

2.Notes to the BalanceSheet Items

2.1. Intangible assets Intangible assets are recognized in the accounting records and the balance sheet when it

is probable that the economic benefits associated with them will flow in, and when their

cost can be measured reliably.

Among intangible assets the company recognizes development studies and studies in

acquiring. Among the rights there are recognized holiday facilities usage rights and land

rights, as well as right to use space in the facility for the purposes of transformer stations,

and the right to use the software. While other long-term accrued expenses and deferred

costs include costs of prepaid rent.

Cost of an intangible asset consists of its purchase value or cost of manufacture. The

Company records intangible assets using the cost model.

Value of intangible assets in 2014 increased for the purchase and activation of long-term

rights in the amount of 1,463,788 EUR.

Value adjustments of studies in obtaining are value of invested assets in connection with

the planned investment in the construction of wind farms, which the company has been

forming since 2004 because of complaints in the process of obtaining a building permit.

Developmental studies are recognized at their purchase value and written off to the bur-

den of the cost of studies and not as a depreciation expense. We write them off in the

amount of 20% annually, depending on the useful life of these assets, which is five years.

Individual carrying values of intangible assets are not significant for the financial state-

ments as a whole.

Company has no intangible assets with limited ownership rights.

C81

Table shows the changes in intangible assets during the year 2014:

Table shows the changes in intangible assets during the year 2013:

Table 31:Changes in intangible assets in year 2014


2014 Deferred development studies costs

Long-term rights

Other long-term accruals

and pre-paid expenditure

Intangible assets in

acquisition

Total

Acquisition cost in EUR

Balance 1.1.2014 1,244,370 1,802,468 0 1,105,017 4,151,855

Increases in year 1,710 1,504,338 1,506,048

Increases from invest. in progress 1,463,788 -1,463,788 0

Decreases in year -427,555 -18 -427,573

Balance 31.12.2014 816,815 3,266,256 1,692 1,145,567 5,230,330

Value adjustment

Balance 1.1.2014 1,145,180 1,063,853 0 1,105,017 3,314,050

Depreciation in year 79,776 349,995 429,771

Decreases in year -427,555 -427,555

Balance 31.12.2014 797,401 1,413,848 0 1,105,017 3,316,266

Carrying amount

Balance 1.1.2014 99,190 738,615 0 0 837,805

Balance 31.12.2014 19,414 1,852,408 1,692 40,550 1,914,064


Long-term rights


acquisition

Total


Balance 1.1.2013 1,466,478 1,090,020 1,105,017 3,661,515

Increases in year 712,448 712,448

Increases from invest. in progress 712,448 -712,448 0


Balance 31.12.2013 1,244,370 1,802,468 1,105,017 4,151,855

Value adjustment

Balance 1.1.2013 1,216,573 772,553 1,105,017 3,094,143



Balance 31.12.2013 1,145,180 1,063,853 1,105,017 3,314,050

Carrying amount

Balance 1.1.2013 249,905 317,467 0 567,372

Balance 31.12.2013 99,190 738,615 0 837,805

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards2. Notes to the Balance Sheet Items


C82

2.2. Tangible fixed assets Tangible fixed assets of the company are land, buildings and equipment and these assets

under construction. They are disclosed in the balance sheet at their carrying amount,

which represents the difference between the acquisition and the written down value.

Company has no investment property and evaluates the tangible fixed assets according

to the acquisition cost model.

Cost of the tangible fixed assets is comprised of its purchase price and all costs that can

be directly attributed to its restoration for use.

Acquisition cost of facilities built on its own is cost price, which does not exceed the price

of the same kind of things on market. Cost price is comprised of direct material costs

of manufacturing and services, direct labor costs and general production costs In accor-

dance with SAS 1.11 the company subdivides the purchase costs of new acquisitions

in year 2014, which have different useful lives, to component parts that are significant in

relation to the entire purchase price.

Value adjustments are established in the amount of calculated depreciation.

Company must revalue tangible fixed assets due to impairment when their carrying amo-

unt exceeds the recoverable value. Recoverable amount is the net selling price or value

in use, whichever is higher.

Changes in tangible fixed assets in 2014 are shown in the following table:

Table 33:Changes in tangible fixed assets in year

2014

2014 Land Facilities Equipment Fixed assets in acquisition and advances

Total


Balance 1.1.2014 5,795,772 371,057,021 143,281,334 4,588,724 524,722,851

Increases in year 144,111 23,705 11,599,032 11,766,848

Increases from invest. in progress 9,529 9,002,545 3,471,936 -12,484,010 0

Decreases in year -8,112,665 -2,955,604 -56,241 -11,124,510

Transfer 24,610 -24,610 0

Balance 31.12.2014 5,805,301 372,115,622 143,796,761 3,647,505 525,365,189

Value adjustment

Balance 1.1.2014 259,246,916 96,151,473 815,571 356,213,960

Depreciation in year 5,698,022 4,697,469 10,395,491

Decreases in year -7,427,304 -2,880,941 -10,308,245

Increases in year 13,461 13,461

Transfer 2,730 -2,730 0

Balance 31.12.2014 257,520,364 97,965,271 829,032 356,314,667

Carrying amount

Balance 1.1.2014 5,795,772 111,810,105 47,129,861 3,773,153 168,508,891

Balance 31.12.2014 5,805,301 114,595,258 45,831,490 2,818,473 169,050,522

C83

Carrying value of fixed assets compared to the opening balance increased by 541,631 EUR.

Changes consisted of new purchases in the amount of 11,766,848 EUR, depreciation in the

amount of 10,395,491 EUR, additional value adjustment of investments in the amount of

13,461 EUR and the eliminations of the carrying value in the amount of 816,265 EUR.

Value adjustments of fixed assets in acquisition, in the amount of 829,032 EUR, refer to inves-

ted assets, in relation to the planned investment in the construction of wind power plants, which

is in the process of complaints. Adjustments have been formed since 2004. In year 2014 an

adjustment was additionally formed in the amount of 13,461 EUR.

Company has no fixed assets obtained by financial lease. One property is mortgaged in favor

of Nova Kreditna Banka Maribor. Obligation is recorded in off-balance sheet.

Since July 1 2007 the public utility service in the area of Elektro Primorska d. d. has been condu-

cted by the newly established company SODO, d. o. o. In accordance with the relevant contract

the company Elektro Primorska rented SODO the entire infrastructure. As at December 31 2014

the purchase value of infrastructure given to rent amounted to 461,683,893 EUR, value adju-

stments to 315,998,276 EUR and carrying amount to 145,685,617 EUR. Of which there are by:

• 3,356,040 EUR of land,

• 98,657,148 EUR of infrastructure facilities,

• 41,880,070 EUR of infrastructure equipment and

• 1,792,359 EUR of long-term rights.

In 2013 the company realized investment plan in one hundred percent in the amount of

13,100,450 EUR. For the realization it hired a long-term loan in the amount of 7,500,000 EUR.

Detailed information on the acquisition is presented in the report on the activities of the distribu-

tion system operator in chapter 8.2.

Table 34:Changes in tangible fixed assets in year 2013

2013 Land Facilities Equipment Fixed assets in acquisition and advances

Total


Balance 1.1.2013 5,750,629 366,523,874 141,416,697 5,530,269 519,221,469




Balance 31.12.2013 5,795,772 371,057,021 143,281,334 4,588,724 524,722,851

Value adjustment

Balance 1.1.2013 255,540,992 94,016,693 815,571 350,373,256



Balance 31.12.2013 259,246,916 96,151,473 815,571 356,213,960

Carrying amount

Balance 1.1.2013 5,750,629 110,982,882 47,400,004 4,714,698 168,848,213

Balance 31.12.2013 5,795,772 111,810,105 47,129,861 3,773,153 168,508,891



C84

2.3. Long-term financial investmentsLong-term financial investments of the Company are shares and shares in other compa-

nies and the capital of the subsidiary E 3, energetika, ekologija, ekonomija, d. o. o., which

is 100 % owned by the company.

In accordance with SAS 3, which deals with financial investments, they are classified as

assets available for sale.

Investments consist of the following items:

Investment in 11.88 % of shares in Informatika, d. d., Maribor, Company is stable. Com-

pany complied the financial investment in the company Zavarovalnica Triglav, d. d. with

the market value. Revaluation is recognized in other comprehensive income within equity

items.

Table 35:Long-term financial

investments

Table 36:Changes in financial

investments

31.12.2014 31.12.2013

Investments in shares of group companies in EUR

E3, energetika, ekologija, ekonomija d.o.o. 6,522,017 6,522,017

Total 6,522,017 6,522,017

Other shares

Informatika Maribor d.d. 240,755 240,755

Banka Koper d.d. 95,879 95,879

Zavarovalnica Triglav d.d. 55,884 44,991

Primorski tehnološki park d.o.o. 1,808 1,808

Eldom Ljubljana d.o.o. 106,395 106,395

Stelkom d.o.o. Ljubljana 57,837 57,837

VIRS 12,626 4,172

571,184 551,837

Impairment of investment Eldom d.o.o. -72,904 -72,904

Impairment of investment Stelkom d..o.o. -6,209 -6,209

-79,113 -79,113

Total 492,071 472,724

Total long-term financial investments 7,014,088 6,994,741

Investments in shares of group

companies

Other shares Total

Changes in financial investments in EUR

Balance 1.1. 6,522,017 472,724 6,994,741

Increases 19,347 19,347

Balance 31.12. 6,522,017 492,071 7,014,088

C85

2.4. Long-term operating receivables

Long-term operating receivables are assets for maintenance of facilities, which are

according to the Housing Act combined with operators of apartment buildings.

2.5. StocksStocks consist of material and small tools in the warehouse.

Stocks also include small tools with a useful life of up to one year and small tools of up to

500 EUR and the duration of over a year. These are means of protection and small tools

on the stock, which are kept off-balance according to the individual once issued in use.

Stocks are initially measured at purchase cost, consisting of purchase price and direct

acquisition costs. Purchase price is reduced by obtained discounts.

Consumption of stocks is calculated at a moving average price method.

Largest share of stocks are materials intended for the maintenance and construction of

electric power facilities and equipment. According to the previous year the stocks on the

last day were higher by 12.5 %.

Based on a comparison of the value of stocks with the latest known purchase prices, we

performed impairment of stocks in the amount of 6,463 EUR. In the last year no changes

occurred in 53,107 EUR of stock value, which represents 5.5 % of stocks that are ne-

cessary for maintenance of energy facilities and were not impaired.

Inventory differences amounted to 36 EUR, while due to uselessness during the year by

10,232 EUR of stock values were written off.

Table 37:Long-term operating receivables

Table 38:Stocks

31.12.2014 31.12.2013

in EUR

Claims to apartment building managers 20,322 16,965

Total 20,322 16,965

31.12.2014 31.12.2013

in EUR

Materials 907,395 788,906

Small tools 58,445 69,549

Total 965,840 858,455



C86

2.6. Short-term financial investments Financial investments are financial assets the company has in order to increase its finan-

cial revenue through income arising from it. These are investments in financial debts of

other companies.

Amount 25,207 EUR represents a short-term deposit with a bank dedicated to the recon-

struction of the building in post-earthquake reconstruction in Bovec. These assets will be

paid directly to the provider by the bank. Cost of reconstruction exceeding the amount of

the deposit is co-financed by the Government of the Republic of Slovenia.

2.7. Short-term operating receivables All receivables are initially recognized with the amounts arising from the relevant do-

cuments under the assumption that they will be paid. Receivables for which there is a

presumption that they will not be settled or are not settled in due time, are recognized as

doubtful and disputed.

Doubtful and disputed receivables include:

• outstanding claims arising before year 2014,

• disputed claims and

• receivables of business partners in the insolvency proceedings and compulsory

settlements.

Table 39:Short-term financial

investments

Table 40:Short-term

operating receivables

Short-term loans to others

in EUR

Balance 1.1. 129,145

Refunds -103,938

Balance 31.12. 25,207

31.12.2014 31.12.2013

Short-term receivables from sales: in EUR

- from group companies 69,489 56,587

- on domestic market 7,211,977 7,957,707

Value adjustment -565,061 -522,528

6,716,405 7,491,766

Interest receivables:

- from group companies 8 0

- from other buyers 78,792 83,838


17,681 27,839

Advances 13,640 2,482

Other operating receivables:

- from group companies 800 28,408

- from state and other institutions 417,432 404,736

- from employees 220,601

- from others 78,612 44,670

Value adjustment -1,817 -57

495,027 698,358

Total 7,242,753 8,220,445

C87

As at December 31 2014 the age structure of receivables was as follows:

• 82 % of outstanding receivables,

• 6 % of overdue receivables up to 30 days,

• 2 % of overdue receivables from 31 to 60 days and

• 10 % of overdue receivables over 60 days in the amount of 727,193 EUR, for which

by 626,180 EUR or 86 % value adjustments were formed as they are older than 365

days or disputed or debtors are in in the insolvency proceedings and compulsory

settlements.

Doubtful and disputed claims were impaired by the company according to the individual

claim and business partner. In year 2014 it thus formed by 2 % of value adjustments

according to the balance of receivables. From the value adjustment of short-term opera-

ting receivables balance in year 2014 there were by 4% of recovered and 19% of defini-

tely written off. Receivables are not insured, but most of them are of such a nature that in

the event of default, after repeated reminders, we sanction them through the termination

of access to the distribution network.

In operating receivables from state and other institutions the largest portion of claims

represent claims for the refund of overpaid tax prepayments of corporate income tax in

the amount of 212,069 EUR and claims for the recovery of non-deductible VAT in the

amount of 175,223 EUR.

Operating receivables from others are mainly receivables from the company SODO for

overpayment of network charge, claims on behalf of SODO for the connection power

network charge and for services GJS SODO and other receivables.

Table 41:Age structure of receivables

Table 42:Value adjustment of short-term operating receivables

Age structure of receivables:

31.12.2014 31.12.2013

Value adjustment of short-term operating receivables in EUR

Balance 1.1. 578,584 450,529

Collected receivables written off -21,600 -9,159

Final write-off of receivables -105,763 -52,829

Formation of value adjustments in the year 176,776 190,043

Balance 31.12. 627,997 578,584

31.12.2014 31.12.2013

in EUR

Outstanding receivables 6,052,663 6,508,902

Receivables overdue from 30 days 454,467 651,441

Receivables overdue from 31 to 60 days 125,943 310,349



Receivables overdue over 365 days 514,561 480,001

Total 7,360,266 8,098,132



C88

2.8. Monetary assetsTable 43:

Monetary assets

2.9. Short-term accruals and prepaid expenditure

2.10. CapitalCapital of the company consists of:

• share capital,

• capital reserves,

• statutory reserves,

• other profit reserves,

• revaluation surplus,

• net profit brought forward and

• net profit for the financial year.

In short-term accruals and prepaid expenditure the company recognizes VAT from recei-

ved advances and overpayments, and deferred costs from invoices received in year 2014

for expenses referring to the business year 2015.

Short-term accrued revenues refer to the preliminary account of SODO Company for rent

and services for year 2014 in the amount of 258,473 EUR, which was made in March

2015. In the same month the invoice was issued to SODO Company, and the revenues

were included in year 2014. Remaining amount of 24,814 EUR includes accrued revenues

from settlement of services to the subsidiary E 3, d. o. o., which were invoiced in year

2015, but accrued in year 2014.

Monetary assets include cash in bank accounts.

Table 44:Short-term accruals

and prepaid expenditure

31.12.2014 31.12.2013

in EUR

Cash in banks 95,222 404,969

Short-term deposit 4,630,000

Total 95,222 5,034,969

31.12.2014 31.12.2013

in EUR

VAT from received advances 2,501 1,287

Short-term deferred costs 2,697 8,451

Short-term accrued revenues 283,287 708,450

Vouchers 944 1,263

Total 289,429 719,451

C89

Share capital of Elektro Primorska d. d. Company is divided in 18,826,797 ordinary reg-

istered unit shares. Each share has an equal share and associated amount in the share

capital. Ordinary shares are shares that give their holders:

• right to participate in company management,

• right to profit (dividends),

• right to an adequate share of the assets after the liquidation or bankruptcy of the

company.

All shares are of one class.

Capital reserves of the company originate from general equity revaluation adjustment,

which was during the transition to SRS 2006 transformed into capital reserves.

Revaluation surplus refers to revaluation of financial investments to their fair value.

All elements of capital outside share capital belong to the owners of the share capital in

proportion to their equity share capital.

Result for the year 2014 is positive and amounts to 2,813,603 EUR. In accordance with

the powers laid down in the Companies Act-1 the management board allocated 47% of

net profit to other profit reserves in the amount of 1,332,603 EUR. Residue net profit for

2014 represents the distributable profit totaling to 1,481,000 EUR.

Following the decision of the general meeting as at July 4 2014 the company allocated

1,317,876 EUR of distributable profit in year 2013 to dividends of shareholders, while the

remaining amount of 910,991 to other profit reserves.

Book value of the company's share as at December 31 2014 amounted to 7.3 EUR.

Based on SRS 8.30 the company must disclose the profit calculated on the basis of the

revaluation for maintaining the purchasing power of capital on the basis of consumer

price index. In year 2014 it amounted to 0.2 %, therefore, in the case of revaluation of

equity net profit of the company would amount to 2,541,376 EUR.

Statement of changes in equity shows changes in equity for the years 2013 and 2014.

Table 45:Capital31.12.2014 31.12.2013

in EUR

Share capital 78,562,832 78,562,832

Capital reserves 46,208,187 46,208,187

Statutory reserves 651,328 651,328

Other profit reserves 10,663,371 8,419,778

Revaluation surplus -41,298 42,522

Net profit brought forward 140,188

Net profit for the financial year 1,481,000 2,088,679

Total 137,525,420 136,113,514



C90

2.11. Provisions and long-term accruals and deferred income Amount recognized as a provision is the best estimate of the expenditure required to set-

tle the existing long-term commitments on the balance sheet date. Value of the provision

must be equal to the present value of the expenditures expected to be required to settle

the obligation.

Company formed the long-term provisions for long service bonuses and for severance

pays at retirement as at December 31 2014 in accordance with SAS 10. Assumptions

based on which the actuary calculation was made, include data that companies submit-

ted to the actuary, namely the data for five past years on employees and their changes,

data on the salary growth, severance pays, long service bonus and provisions in the

collective agreement referring to the long-term benefits of the employees.

Actuarial calculation takes into account uniform discount rate by reference to market

interest rates on high-yield corporate bonds. Interest rate curve of the euro area is used

(from 0.12 % to 2.4 %).

Long-term provisions are decreased directly by costs for which settlement they were

formed, and are formed by the differences according to the actuarial report on calculation

as at December 31 of the current year and balance in the accounting records.

2.11.1. Provisions

2.11.2. Long-term accruals and deferred income

Table 46:Provisions

Table 47: Long-term accruals

and deferred income

31.12.2014 31.12.2013

PROVISIONS in EUR

Balance 1.1. 3,216,790 3,095,830

Formation 282,645 347,477

Drawing -214,706 -226,517

Balance 31.12. 3,284,729 3,216,790

Assets ac-quired free

Averageconnection

costs

Co-financing of facilities

construction

Received supports

Other Total

in EUR

Balance 1.1. 7,163,250 2,545,157 189,740 0 0 9,898,147

Formation 151,874 157,846 30,805 340,525

Decrease due to write-off -63,527 -63,527

Drawing in revenues -257,023 -110,299 -9,206 -376,528

Balance 31.12. 6,994,574 2,434,858 180,534 157,846 30,805 9,798,617

C91

In year 2014 the company formed long-term accruals and deferred income for free acquisiti-

ons of energy facilities of legal and natural persons.

Drawing of long-term accruals of fixed assets acquired free and co-financing of facility con-

structions in the amount of 266,229 EUR represents the amount of annual depreciation, whi-

ch is calculated from individual freely acquired or co-financed in share fixed asset.

Average costs of connection are drawn for the actual charged depreciation for each individu-

al energy facility. Depreciation of these facilities amounted to 110,299 EUR.

In 2014 the company received state support for the earthquake reconstruction of the facility

in Bovec in the amount of 30,491 EUR and support from the European Union to the project

SUNSEED. These two projects have not yet been completed in year 2014.

2.12. Long-term liabilities Long-term financial liabilities are long-term borrowings for investment.

Their book value is equal to their initial value, reduced by transfers to short-term liabilities.

Interests on long-term liabilities are recorded as financial expenses or increase the cost of

fixed assets in preparation to its working condition.

Long-term financial liabilities are secured by bills and represent borrowings that fall due after

2015. For all loans the Ministry of Finance issues consent to the borrowing of the company,

after the most favorable bidder was previously approved or selected.

All loans are due and payable no later than April 2020. Long-term loan taken out in 2014 in the

Sparkasse Bank in the amount of 7,500,000 EUR, is payable in a period longer than 5 years

(contractually agreed installments falling due in the period of 5 years amount to 500,000 EUR).

Interest rates have a one-month, three-month or six-month EURIBOR and the bank's premium

range from 1.5 % to 3.2 %. Interest on borrowings is calculated and paid monthly.

Table 48:Long-term liabilities 31.12.2014 31.12.2013

Long-term liabilities in EUR

BKS Bank AG 8,400,000

SKB d.d. 9,669,328 14,513,331

Banka Sparkasse d.d. 7,500,000 1,270,966

Banka Celje d.d. 1,211,315 3,028,320

Nova Ljubljanska banka d.d. 1,333,333 9,633,333

Total 28,113,976 28,445,950

Short-term part of long-term liabilities -7,803,317 -7,927,973

Total 20,310,659 20,517,977

Total long-term liabilities 20,310,659 20,517,977



C92

2.13. Short-term liabilitiesShort-term liabilities are disclosed separately for short-term financial liabilities and shor-

t-term operating liabilities.

Short-term liabilities to banks include installments of long-term loans falling due in 2015.

Operating liabilities decreased compared to the previous year by 2,743,180 EUR. Liabiliti-

es to suppliers reduced by 1,784,535 EUR, while to employees by 370,423 EUR.

Short-term liabilities to employees include liabilities for the December payroll.

Liabilities to the state consist of liabilities for the value added tax and liabilities to the state

and other institutions from payroll.

Table 49:Short-term liabilities

31.12.2014 31.12.2013

SHORT-TERM FINANCIAL LIABILITIES in EUR

Short-term part of long-term loans 7,803,317 7,927,973

SKB d.d. 3,000,000

Total short-term fin. liabilities to banks 7,803,317 10,927,973

Liabilities for payment of dividends 1,057

Total short-term financial liabilities 7,803,317 10,929,030

SHORT-TERM OPERATING LIABILITIES

Liabilities to group companies 23,336 24,963

Liabilities to suppliers 5,773,680 7,575,569

Liabilities for advances 43,735 24,754

Total short-term operating liabilities to suppliers 5,840,751 7,625,286

Liabilities to employees 15,051 62,257

Liabilities to state and other institutions 1,190,055 1,560,478

Liabilities to state and other institutions 112,712 756,667

Other liabilities 104,865 1,926

Total other short-term operating liabilities 1,422,683 2,381,328

Total short-term operating liabilities 7,263,434 10,006,614

TOTAL SHORT-TERM LIABILITIES 15,066,751 20,935,644

C93

2.14. Short-term accrued costs and deferred revenues

Short-term accrued costs and deferred revenues disclose VAT from advances given.

Short-term deferred revenues are formed for the surplus of funds received for the years

2010 and 2011 on the basis of settlement for the regulatory year under the contract

between the two companies SODO and Elektro Primorska in the amount of 97,471 EUR.

Accrued expenses include accrued bonus at the end of the year on the basis of the

collective agreement in the amount of 268,326 EUR. Final profit of the company was

recognized only in the middle of March 2015, when company SODO sent a preliminary

settlement for 2014. Advance payment of bonus has already been calculated and paid,

while the difference to the final amount was included in the costs of year 2014, because

the company is obliged to pay it based on the agreement between the company mana-

gement and the trade union.

Among accrued expenses there are also recognized costs of purchasing the losses in the

amount of 247,754 EUR for 2014, for which the company will receive the final calculation

in 2015.

Table 50:Short-term accrued costs and deferred revenues

31.12.2014 31.12.2013

in EUR

VAT from advances given 345 378

Short-term deferred revenues 97,471 196,750

Accrued expenses 533,455 441,667

Total 631,271 638,795



C94

3.Notes to the Profit andLoss Account

Company comprises the statement of profit and loss, as defined under SAS 25, accor-

ding to version I.

Revenue is recognized if increases in economic benefits during the accounting period are

associated with increases in assets or decreases in liabilities, and those increases can be

measured reliably. Revenues and increases of assets or decreases in liabilities shall thus

be recognized simultaneously.

Company achieved revenues:

• from electricity for losses,

• from rent,

• sale of services,

• capitalized own products and services,

• other operating revenues,

• financial revenues and

• other revenues.

Use of electricity network is charged to business customers through a special account

based on the amount of transmitted energy and capacity charges. Company charges for

the use of the energy network and DVE and SPTE contributions to its customers in the

name and on behalf of SODO, d. o. o., in the framework of the services they perform for

this company.

Revenues from the sale of services include electrical installation services and maintenan-

ce of equipment owned by clients. Their volume depends on customer orders. Revenues

in 2014 were evaluated in accordance with the price list of services of complementary

activity, which changed in October 2013. Company also provides services for network

users, which include connections and disconnections to the network, replacement of fu-

ses and additional readings on demand, but from January 1 2013 are no longer included

in revenue of the company, but the company performs them on behalf of the company

SODO and transfers the charged funds monthly.

In its revenues the Company discloses sale of electricity from losses in the electricity

network, rent of infrastructure and services for SODO in accordance with the contract

and the annexes to the contract. Amount of funds for losses, rent and services is based

on the regulatory framework for 2014, defined by the Act determining the methodology

for charging for the network charge, the methodology for setting the network charge, and

the criteria for establishing eligible costs for electricity networks (Official Gazette of RS

C95

No. 81/2012 as at October 29 2012), which was determined by the Energy Agency and

based on a decision issued under this Act. On December 16 2013 the Council of Energy

Agency adopted the Act amending the above mentioned Act, which in certain items is

retroactive.

Based on the new contract with SODO revenues of the current year include also final

settlement of regulatory year 2013 and preliminary account of year 2014.

Revenues from capitalized own products and services result from the manufacturing do-

cumentation, construction, electrical installation and other works for the self-managed

construction of facilities.

Other operating revenue associated with business effects cover the disbursement of

accruals, revaluation operating revenue arising from the disposal of tangible fixed assets

and the repayment of impaired assets, subsidies received, and compensation received

from insurance.

Financial revenues and expenses are made out or received accounts of interest and

dividend income.

3.1. Operating revenues

Table 51:Operating revenues2014 2013

Revenues from sale of in EUR

- electricity 4,310,110 4,974,377

- infrastructure rent 15,678,046 18,149,462

- other rent 310,688 409,791

- SODO services 16,014,023 15,216,339

- other services 2,086,143 2,059,188

- settlement for past regulatory periods -7,984 -1,809

Total 38,391,026 40,807,348

Capitalized own products and services 6,098,307 6,300,696

Otheroperating revenues from:

- drawing of accruals 376,528 1,194,399

- sale of fixed assets 9,491 95,588

- collected written-off receivables 21,600 9,159

- received grants 216,106 10,125

- received compensations 3,281,068 315,807

- other operating revenues 20,357 22,874

Total 3,925,150 1,647,952

Total operating revenues 48,414,483 48,755,996

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards3. Notes to the Profit and Loss Account


C96

Other operating revenues from the extraction of accruals consist of revenue from the

use of provisions for depreciation of fixed assets acquired free of charge in the amount

of 257,023 EUR, use of provisions for the average costs of connection in the amount

of 110,299 EUR, and other use of provisions for the co-financing of the construction of

energy facilities.

Revenues from sale of fixed assets represent surplus of sales over the carrying value of

fixed assets sold.

Collected written off receivables include an amount of receivables for which a value adju-

stment was formed to the charge of expenses, and which were paid in 2014.

Received grants include received state support for partial reimbursement of the costs of

using aggregates at ice damage and employment of persons with disabilities over the

required quota.

Compensations received were recognized by the insurance companies for damage to

power plants and cars. In 2014, they were higher than the previous year due to the clea-

ring of claims during ice damage.

Revenues from sales decreased by 2,416,322 EUR in comparison with the previous

year, of which revenue from electricity sold decreased by 664,267 EUR, revenues from

rents are lower by 2,570,519 EUR, while revenues from services for SODO are higher by

797,684 EUR. Revenues from other services are higher by 26,955 EUR, while settlement

for previous regulatory period is slightly lower than in the previous year.

All revenues in 2014 were achieved with sales in the domestic market.

3.2. Operating expenses Expenses are recognized if decreases in economic benefits during the accounting period

are associated with decreases in assets or increases in liabilities and such decreases can

be measured reliably. Expenses are recognized simultaneously with the recognition of

the decrease in assets or increase in debts.

Operating expenses include all expenses incurred in the financial year, recorded by natu-

re, such as costs of materials and services, labor costs, write-downs and other operating

expenses, on the basis of documents that prove that they are linked with the economic

benefits.

Operating expenses from revaluation arise upon the impairment or disposal of tangible

fixed assets and intangible assets and in relation to current assets due to their impa-

irment.

Analysis of costs by functional group does not include revaluation expenses in the amo-

unt of 897,019 EUR, which are shown in the income statement as write-offs.

C97

Cost of goods sold covers exclusively costs of electricity purchase for losses in the amo-

unt of 4,282,812 EUR, for supplies in the amount of 1,527 EUR and settlement of costs

for year 2013 in the amount of 20,341 EUR. Costs of electricity purchase for losses are

increased by the estimated value of energy undercharged by the supplier Holding Slo-

venske elektrarne, for which the company will receive a debit note in the first half of 2015.

Cost of materials represent spare parts and materials for maintenance and the elimination

of damage, the cost of materials for the installation of services to their own needs and

market (4,398,990 EUR), cost of fuel consumed (1,146,582 EUR), electricity (138,540

EUR), office supplies (50,819 EUR), small tools (245,392 EUR), and the rest the costs of

auxiliary materials.

Costs of services include costs of maintenance of fixed assets (2,223,781 EUR), cost of

health care, counseling, law and education services, as well as cost of computer pro-

grams and studies (804,545 EUR), insurance premiums and costs of banking services

(921,101 EUR), cost of computer processing (736,315 EUR), costs of telephone and pos-

tal services (456,401 EUR) and other costs related to the ordinary operations (1,485,143)

EUR.

Table 52:Analysis of costs by functional groups

Table 53:Costs by nature 2014 2013

Costs of material, goods and services in EUR

Cost of electricity sales 4,304,680 4,934,540

Cost of material 6,007,434 4,037,127

Cost of services 6,627,286 7,430,030

Total 16,939,400 16,401,697

Production costs

Sale costs General ac-tivity costs

Total

in EUR

Cost of goods 4,304,680 4,304,680

Cost of material 4,818,170 745,962 443,302 6,007,434

Cost of services 5,738,820 127,004 761,462 6,627,286

Labor costs 12,438,973 324,104 2,776,089 15,539,166

Depreciation 10,487,249 258,235 10,745,484

Other operating costs 147,533 333 28,616 176,482

Total 37,935,425 1,197,403 4,267,704 43,400,532



C98

Costs of services include also payments to six members of the supervisory board, which

in year 2014 amounted to 95,155 EUR. This amount includes a net payment, income tax

and contribution. The Company did not grant any loans or issued guarantees for their

liabilities to the members of the supervisory board.

Payments to members of the supervisory board in year 2014:

Other two members of the audit committee were paid a total of 12,800 EUR in year 2014.

Costs of the audit, advisory and other financial services in the amount of 76,718 EUR

include by 8,850 EUR of costs for the service of auditing the annual report.

Other labor costs include reimbursement to employees, accident insurance, social

assistance, and the costs of long-term provisions for severance pay and long-service

bonuses to employees in the amount of 118,159 EUR. Costs of annual leave bonus in

2014 amounted to 375,833 EUR.

According to the collective agreement in 2014 482 employees received a salary. Accor-

ding to the agreements, which are not subject to the tariff part of the collective agre-

ement, the salary was received by seven employees, who in 2014 received a total of

478,676 EUR (management not included).

Table 54: Remuneration of

supervisory board members

Table 55:Labor costs 2014 2013

Labor costs in EUR

Wage cost 11,391,828 10,892,670

Costs of supplementary pension insurance 566,045 575,110

Cost of contributions and other duties from salaries 1,856,986 1,790,765

Other labor costs 1,724,307 1,881,337

Total 15,539,166 15,139,882

Supervisory board member

Gross reve-nue for the accounting

year

Of which:

Bonus for performing the function in SB

Attendance fee SB

Reimburse-ment of travel

expenses

Bonus for performing the function

in AC

Attendance fee Audit

Committee

in EUR

Uroš Saksida 18,272 15,537 2,640 95

Valter Vodopivec 14,034 11,394 2,640

Matjaž Bajec 13,306 10,358 2,640 308

Dejan Kocjančič 18,946 10,358 2,640 1,007 3,885 1,056

Massimo Makovec 17,599 10,358 2,640 955 2,590 1,056

Jernej Kenda 12,998 10,358 2,640

Total 95,155 68,363 15,840 2,365 6,475 2,112

C99

Gross remuneration of members of the board, paid in the year 2014:

Bruto prejemki članov uprave, izplačani v letu 2014:

Chairman of the Management Board and employees on individual contracts were not

approved any loans or issued guarantees for their liabilities by the company.

Write-offs

Company uses the linear depreciation method. During the overall useful life of each asset

it consistently allocates its depreciable amount among the individual accounting periods

as depreciation at that time. All assets that are subject to depreciation are classified into

depreciation groups. Each group has a technical depreciable fixed period of life, from

which the depreciation rate is calculated. Fixed assets are depreciated individually.

Table below provides an overview of depreciation rates in percentages used for the cal-

culation of depreciation in 2014.

Table 56: Remuneration of the management board members

Table 57: Depreciation rates

Table 58:Write-offs2014 2013

Write-offs in EUR

Depreciation of intangible assets 349,994 291,301

Depreciation of facilities 5,698,021 5,730,588

Depreciation of equipment 4,697,469 4,987,808

Total depreciation 10,745,484 11,009,697

Revaluation expenses for:

- intangible and tangible assets 694,009 163,021

- current assets 203,010 225,114

Total revaluation expenses 897,019 388,135

Total write-offs 11,642,503 11,397,832

2014 2013

Intangible assets (excluding software) 3,33 - 20,00 3,33 - 20,00

Computer and software equipment 33,3 33,3

Properties (land and buildings) 0,00 - 5,00 0,00 - 5,00

Transformers 2,86 - 3,33 2,86 - 3,33

Electronic meters 4,17 - 6,67 4,17 - 6,67

Transport vehicles 8,33 8,33

Cars 12,5 12,5

Other tangible fixed assets 2,50 - 20,00 2,50 - 20,00

Works of art 0,00 0,00

Fixed salary Reimburse-ment of

expenses

Bonus – insurance premium

Other reve-nue and other

bonuses

Total

in EUR

Uroš Blažica 85,250 1,607 24 1,284 88,165



C100

Depreciation for the year 2014 was used to repay investment loans in the amount of

7,831,973 EUR, the remainder of the depreciation has been a source of investment fi-

nancing.

In year 2014 the company has by 694,009 EUR of expenses from revaluation of intangible

and tangible fixed assets as a result of inventory write-off of unserviceable assets, sales

at the lower market price than the carrying value of the asset, but in particular from the

write-off as a result of the destruction of buildings and equipment caused ice damage.

Operating expenses from revaluation of current assets in the amount of 186,314 EUR re-

late to the formed value adjustments of receivables for the use of networks and services,

and receivables for accrued interest, while in the amount of 16,696 EUR they relate to the

impairment in value of material stocks.

Among the duties, independent of profit or loss, the majority refers of the different types

of fees. Environmental protection expenditure includes compensation for the use of bu-

ilding land.

3.3. Financial revenueFinancial revenues arise in connection with financial investments and receivables in the

form of accrued interest. They are recognized when there is no doubt about their size

and collectability.

Revenues from shares are paid dividends from financial investments of Bank Koper, d.

d., and Zavarovalnica Triglav, d. d.

Interest is charged to customers using the network and services, namely from late

payments and the balance of open receivables overdue as at December 31 2014.

Table 59:Other operating

expenses

Table 60:Financial revenue

2014 2013

Other operating expenses in EUR

Provisions for claims 22,821

Total provisions 22,821

Duties, independent of profit or loss 47,409 88,176

Environmental protection expenditure 98,123 98,829

Scholarships 2,734

Rewards to learners on practice 8,129 3,970

Other 11,091

Total other expenses 153,661 204,800

Total other operating expenses 176,482 204,800

2014 2013

in EUR

Financial revenues from shares 17,299 51,857

Financial revenues from given loans 12,655

Financial revenues from operating receivables 44,861 68,759

Total 74,815 120,616

C101

3.4. Financial expenses

Financial expenses from liabilities to banks are higher than in the previous year and re-

present the bank charged interest on short-term and long-term loans. Part of the interest

of long-term loans increase the cost of investments and are not recorded in financial

expenses.

Expenses from other financial liabilities constitute interest from actuarial calculations.

3.5. Other revenue Other revenues and expenses are difficult to announce as they are not expected to occur

regularly. Company thus discloses extraordinary revenues.

Other revenues and expenses arise from events or transactions that do not occur regu-

larly and frequently.

3.6. Other expenses

Compensations are charged for damage, which were caused during the construction or

maintenance, mainly to natural persons, on their land.

Other expenses are disclosed financial aid and donations in the amount of 22,256 EUR,

offset by hundredths and other expenses not indispensable for business.

Table 61:Financial expenses

Table 62:Other revenue

Table 63:Other expenses

2014 2013

in EUR

Financial expenses from liabilities to banks 803,109 743,413

Expenses from other financial liabilities 69,774

Expenses for operating liabilities 5,058 51,400

Expenses from impairment of financial investments 2,799

Total 877,941 797,612

2014 2013

in EUR

Other revenue 3,465 3,346

Total 3,465 3,346

2014 2013

in EUR

Financial sanctions 30

Compensations 19,973 8,206

Other expenses 58,654 57,576

Total 78,657 65,782



C102

3.7. Corporate income taxCompany charged the income tax in the amount of 425,011 EUR.

The Company does not recognize and does not eliminate receivables and deferred tax

liabilities if the amounts of receivables and deferred tax liabilities are irrelevant for the

company both individually and jointly. Amount of claims is essential if it exceeds 1% of

the value of total assets, the amount of liabilities if it exceeds 1% of liabilities.

3.8. Net profit or loss

For business year 2014, the company income statement showed a net profit of 2,813,603

EUR. Profit before tax is by 1% lower than planned.

While compiling the annual accounts the management board of already allocated

1,332,603 EUR to other reserves from profit; the difference in the amount of 1,481,000

EUR remained unallocated.

3.9. Total comprehensive income for the period Company has the positive surplus from revaluation of financial assets available for sale in

the amount of 10,893 EUR, and the negative value of other components of comprehensi-

ve income of actuarial earnings in the amount of 94,713 EUR.

Total comprehensive income for the period is thus 2,729,783 EUR.

Table 64:Net profit or loss 2014 2013

in EUR

Operating result 4,116,932 5,611,785

Financial result -803,126 -676,996

Profit or loss from extraordinary -75,192 -62,436

Profit before tax 3,238,614 4,872,353

The tax on income of legal persons -425,011 -694,996

Net profit or loss 2,813,603 4,177,357

C103

4. Notes to the Cash Flow

Statement

Cash flow statement has been prepared using the direct method, version I. Data for the

statement of cash flows derived from records of cash receipts and payments from the

accounts of the company.

4.1. Receipts from operating activities Receipts from operating activities consist of inflows to the accounts. These are the rece-

ipts from sales of products and services and other income from operations, like costs of

network use, which company receives on the account of SODO, d. o. o., compensations,

co-financing receipts and network charge for power consumption.

4.2. Expenditure for operating activities Operating expenditure are outflows from accounts consisting of operating expenses paid

in the year such as materials, services, salaries, benefits and other outflows.

4.3. Receipts from investing activities Receipts from investing are inflows arising from interest paid and shares in profits, as well

as revenues from disposal of fixed assets.

4.4. Expenditure for investing activities Expenditures for investing are measured by outflows of invoices paid for the acquisition

of tangible and intangible assets and financial investments.

4.5. Receipts from financing activities Receipts from the financing activities are amounts remitted to the long-term and shor-

t-term loans.

4.6. Expenditure for financing activities Payments for interest, dividends and repayment of loans are expenditures for financing

activities.


Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards4. Notes to the Cash Flow Statement

C104

4.7. Cash flow for the period Difference between the initial cash balance and closing balance is a negative cash flow

for year 2014 in the amount of 4,939,747 EUR.

Company established net cash from operating activities. Net cash used in investing acti-

vities is a result of high investments, while net cash used in financing activities a result of

the repayment of bank loans.

5.Disclosure of Events With Related Parties

As a related party company recorded assets and liabilities of the following companies:

• E 3, d. o. o., Nova Gorica, which is 100 % owned,

• Informatika, d. d., Maribor (11.9 % share in the capital),

• Stelkom, d. o. o., Ljubljana (9.9 % share),

• JOD, d. o. o., which is 100 % owned by the subsidiary E 3, d. o. o.,

• ECO ATMINVEST, d. o. o., which is also 100 % owned by the subsidiary E 3, d. o. o.,

• Knešca, d. o. o., from Most na Soči, which is associate company of the subsidiary

JOD, d. o. o., and therefore indirectly related also to the parent company Elektro

Primorska d. d.

Elektro Primorska d. d. Company has as at 31. 12. 2014 in the balance sheet the following

receivables and payables to related companies:

Table 65: Receivables and

payables 31.12.2014 31.12.2013

Receivables: in EUR

Receivables from company E3, d.o.o. 69,929 84,995

Receivables from company Stelkom, d.o.o. 32,441 33,730

Receivables from company ECO ATMINVEST d.o.o. 368 2,198

Receivables from company Informatika d.d. 1,915

Total 104,653 120,923

31.12.2014 31.12.2013

Liabilities: in EUR

Liabilities from company E3, d.o.o. 38,387 87,220

Liabilities from Informatike, d.d. 135,485 90,778

Total 173,872 177,998

C105

In year 2014 Elektro Primorska d. d. recorded in the income statement the following re-

venues and expenses to related companies:

Management estimates that in the relationship with the parent company no transactions

were concluded, which would mean advantage or disadvantages arising from business

for any company.

Table 66:Revenues and expenses

Table 67: Contingent liabilities of the company

6.Contingent Liabilities of the Company

According to the assessment of legal experts disputes are not such as to have a signi-

ficant impact on the economic outturn. Company assesses that provisions formed for

these purposes are high enough and would cover contingent liabilities of the company.

Company keeps contingent liabilities in the off-balance sheet for a guarantee for a loan of

the subsidiary E 3, d. o. o., for the liens upon immovable property to Nova Kreditna Bank

Maribor, and issued bank guarantees for tender and for elimination of defects during

warranty period (in providing services to external customers).

2014 2013

Revenues: in EUR

Net sales E3, d.o.o. 470,071 393,860

Net sales Stelkom, d.o.o. 107,016 113,769

Net sales Knešca d.o.o. 362

Total 577,449 507,629

2014 2013

Expenses: in EUR

Costs for the purchase of materials and services E3, d.o.o. 151,339 185,118

Cost of services Informatika d.d. 991,528 939,792

Total 1,142,867 1,124,910

31.12.2014 31.12.2013

in EUR

Liabilities for guarantee 272,727 1,500,000

Liabilities from pledged property 4,671,176 4,671,176

Bank guarantees 464,613 24,215

Total 5,408,516 6,195,391

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards5. Disclosure of Events With Related Parties

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards6. Contingent Liabilities of the Company

C106

7.Events After the BalanceSheet Date

8.Notes to the Financial Statements According to Energy Act and the Companies Act

After the end of the reporting period and before the conclusion of the financial statements

there were no events that could influence the financial statements for year 2014.

In accordance with Article 38 of the Energy Act, a company must prepare accounts

specifically for the energy market activities and especially for the other activities of the

company. Individual activities are business segments that the company must, in accor-

dance with the general disclosure under the Companies Act, specifically disclose in the

annual report.

At the end of the year Elektro Primorska d. d. composes financial statements for the

company as a whole. As an annex to the notes to the financial statements it attaches

the statements in accordance with Article 38 of the Energy Act. In this respect the com-

pany must distinguish the activity of electricity supply from other activities.

Following are the criteria for:

• calculating indirect costs for the allocation to individual activities and

• criteria according to which assets, liabilities, revenues and expenses are allocated

to individual activities.

8.1. Notes to the balance sheet Balance sheets show assets and liabilities referring to the balance as at 31. 12. 2014.

Physical division of assets in a particular activity was carried out in 2001. It was done

by the company appointed group of experts from technical field in cooperation with the

financial sector.

Division of assets and liabilities of joint activities is carried out and distributed to the

individual activities according to agreed criteria on the balance sheet date. Method of

calculation of criteria is described in the report below.

C107

Amount of the share capital and capital reserves have been identified in the balance

sheet as at 31. 12. 2001 and remain unchanged. Other components of equity, reserves

and profit are changed.

In the balance sheet as at 31. 12. 2014 after the allocation of results and an unchanged

equity, receivables and liabilities are disclosed among activities that offset the sub-

balance activities and are »consolidated« in the balance sheet for the company.

8.2. Notes to the profit and loss account In the profit and loss account revenues and expenditure of the individual activity are

disclosed. These are direct revenues and expenses of each activity and revenues and

expenses of general activities distributed on the basis of agreed criteria displayed.

8.3.Criteria for allocating revenues and expenses, assets and liabilities of joint activities to individual activities

share of labor costs no. employees from working hours in activity ×100

no. of all employees from working hoursKey 1

share of current value of intangible assets and tangible fixed assets

current value of fixed assets in activity ×100

current value of all fixed assetsKey 2

share of revenuesrevenues in activity×100

all revenuesKey 3

share of material consumption consumption of material from the warehouse for activity

entire consumption of material from the warehouseKey 4

share of the cost of materials and servicesconsumption of material and services in activity ×100

entire consumption of material and servicesKey 5

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards7. Events After the Balance Sheet Date

Notes to the Financial Statements According to the Companies Act and Slovenian Accounting Standards8. Notes to the Financial Statements According to Energy Act and the Companies Act


C108

8.4. Sub-balance sheet according to the Energy Act as at 31. 12. 2014

Table 68:Sub-balance sheet

according to the Energy Act (assets))

Assets ED infrastructure and services

for SODO

Marketactivities

Total

A. Long-term assets: in EUR

I. Intangible assest 1,913,813 251 1,914,064

1. Long-term rights 1,852,210 198 1,852,408


3. Other LT accruals and pre-paid expenditure 1,692 1,692

4. Intangible assets in acquisition 40,497 53 40,550

II. Tangible fixed assets 167,655,521 1,395,001 169,050,522

1. Land 5,116,950 688,351 5,805,301

2. Buildings 113,945,180 650,078 114,595,258

3. Equipment 45,779,371 52,119 45,831,490

4. Fixed assets in acquisition 2,814,020 4,453 2,818,473

III. Long-term financial investments 7,012,545 1,543 7,014,088

1. Investments in group companies shares 6,520,582 1,435 6,522,017

2. Other shares and stakes 491,963 108 492,071

IV. Long-term operating receivables 20,318 4 20,322

1. Long-term receivable due from others 20,318 4 20,322

Total long-term assets 176,602,197 1,396,799 177,998,996

B. Short-term assets:

I. Stocks 965,604 236 965,840

1. Material 965,604 236 965,840

II. Short-term financial investments 25,202 5 25,207

1. Short-term loans to others 25,202 5 25,207

III. Short-term operating claims 6,746,774 495,979 7,242,753

1. Short-term operating claims on group companies 1,133 69,164 70,297

2. Operating accounts receivable 6,273,514 404,715 6,678,229

3. Operating claims on others 472,127 22,100 494,227

IV. Monetary assets 91,089 4,133 95,222

Total short-term assets 7,828,669 500,353 8,329,022

C. Short-term accruals and pre-paid expenditure 288,240 1,189 289,429

Č. Claims on other activites 711,571 711,571

TOTAL ASSETS 184,719,106 2,609,912 187,329,018


C109

Table 69:Sub-balance sheet according to the Energy Act (liabilities)

Liabilities ED infra-structure and services for

SODO

Marketactivities

Total

Capital: in EUR

I. Called-up capital 78,185,730 377,102 78,562,832

1. Share capital 78,185,730 377,102 78,562,832

II. Capital reserves 45,787,692 420,495 46,208,187

III. Profit reserves 9,833,957 1,480,742 11,314,699

1. Statutory reserves 741,732 -90,404 651,328

2. Other profit reserves 9,092,225 1,571,146 10,663,371

IV. Revaluation surplus -41,289 -9 -41,298

V. Net profit or loss of the business year 1,317,879 163,121 1,481,000

Total capital 135,083,969 2,441,451 137,525,420

B. Provisions and LT accrued costs and deferred revenues 13,061,478 21,868 13,083,346

1. Provisions 3,284,007 722 3,284,729

2. Long-term accrued costs and deferred revenues 9,777,471 21,146 9,798,617

C. Long-term liabilities 20,310,659 20,310,659



Č. Short-term liabilities 14,922,703 144,048 15,066,751

I. Short-term financial liabilities 7,803,318 7,803,318


II. Short-term operating liabilities 7,119,385 144,048 7,263,433

1. Short-term operating liabilities to group companies 36,299 2,088 38,387

2. Short-term operating liabilities to suppliers 5,675,674 141,740 5,817,414

3. Other short-term operating liabilities 1,407,412 220 1,407,632

Total liabilities 48,294,840 165,916 48,460,756

D. Short-term accrued costs and deferred revenues 628,726 2,545 631,271

E. Liabilities to other activities 711,571 711,571

TOTAL LIABILITIES 184,719,106 2,609,912 187,329,018

Pojasnila k računovodskim izkazom po ZGD in SRS | 8. Pojasnila k računovodskim izkazom po energetskem zakonu in zakona o gospodarskih družbah

C110

8.5. Profit or loss account according to the energy act for year 2014

Table 70:Profit or loss

account according to the Energy Act

Assets ED infra-structure and services for

SODO

Marketactivities

Total

in EUR

1. Net sales revenue 36,303,540 2,087,486 38,391,026

a. on domestic market 36,303,540 2,087,486 38,391,026

2. Capitalized own products and services 6,098,307 6,098,307

3. Other operating revenues 3,922,538 2,612 3,925,150

4. Costs of goods, material, and services -15,881,686 -1,057,714 -16,939,400

a. costs of goods sold and material used -9,540,776 -771,338 -10,312,114

b. costs of services -6,340,910 -286,376 -6,627,286

5. Labor costs -14,930,013 -609,153 -15,539,166

a. costs of salaries -10,950,523 -441,305 -11,391,828

b. costs of additional pension insurance of employees -553,469 -12,576 -566,045

c. social security costs -1,784,673 -72,313 -1,856,986

č. other labor costs -1,641,348 -82,959 -1,724,307

6. Amortization/depreciation expense -11,591,810 -50,693 -11,642,503

a. depreciation -10,708,262 -37,222 -10,745,484

b. operating expenses from revaluation in intang. and tang. fixed assets

-680,545 -13,464 -694,009

c. operating expenses from revaluation in current assets -203,003 -7 -203,010

7. Other operating expenses -175,737 -745 -176,482

8. Financial revenues from shares 17,295 4 17,299

a. in other companies 17,295 4 17,299

9. Financial revenues from given loans 12,652 3 12,655

a. given to others 12,652 3 12,655

10. Financial revenues from operating claims 35,437 9,424 44,861

a. on others 35,437 9,424 44,861

11. Financial expenses from financial liabilities -866,647 -6,236 -872,883

a. from loans, received from banks -803,109 -803,109

b. from other financial liabilities -63,538 -6,236 -69,774

12. Financial expenses from operating liabilities -4,609 -449 -5,058

a. from liabilities to suppliers and bill of exchange liabilities -4,163 -405 -4,568

b. from other operating liabilities -446 -44 -490

13. Other revenues 3,464 1 3,465

14. Other expenses -78,650 -7 -78,657

NET PRE-TAX PROFIT OR LOSS OF THE ACCOUNTING PERIOD 2,864,081 374,533 3,238,614

15. Income tax -360,376 -64,635 -425,011

16. NET PROFIT OR LOSS OF THE ACCOUNTINGPERIOD

2,503,705 309,898 2,813,603

C111

DBusiness Report ofElektro Primorska Group

D114

Business Report of Elektro Primorska Group | 1. Presentation of the Group D115

1.Presentation of the Group

1.1. Composition of the group Elektro Primorska group is composed of:

• Elektro Primorska d. d. as the controlling company

• E 3, d. o. o., as the controlled company in 100 % ownership of the parent com-

pany

• JOD, d. o. o., in 100 % ownership of company E 3, d. o. o.

• ECO ATMINVEST, d. o. o., in 100 % ownership of company E 3, d. o. o.

• Knešca, d. o. o., from Most na Soči, in 47.27 % ownership of company JOD,

d. o. o., as the associate company.

Consolidation includes parent company Elektro Primorska d. d., controlled companies

E 3, d. o. o., JOD, d. o. o., and ECO ATMINVEST, d. o. o., which are fully consolidated

and associate company Knešca, d. o. o., which is consolidates under the equity method.

As at December 312014 the parent company Elektro Primorska d. d. had 137,525,420

EUR of capital among the liabilities. In year 2014 it operated positively and made

2,813,603 EUR of net profit.

Controlled company E 3, d. o. o., ended the 2014 business year with a net profit in the

amount of 1,319,963 EUR. As at 31. 12. 2014 the company disclosed 13,443,877 EUR

of capital.

Company JOD, d. o. o., ended the business year with a net profit in the amount of 72,283

EUR. As at 31. 12. 2014 the company disclosed capital in the amount of 1,115,783 EUR.

Company ECO ATMINVEST, d. o. o., ended the business year with a loss in the amount

of 154,684 EUR and as at 31. 12. 2014 it disclosed negative value of capital in the amo-

unt of 244,591 EUR.

Knešca, d. o. o., operated positively in year 2014 and made 336,702 EUR of net profit. As

at 31. 12. 2014 it disclosed capital in the amount of 1,199,621 EUR.


1.2. Presentation of controlled companyE 3, d. o. o.Company E 3 energetika, ekologija, ekonomija, d. o. o., was established on November

15 2004. Founder and sole shareholder is Elektro Primorska d. d. Company. Basis for the

foundation of the company was the Energy act, which required legal spin-off of regulated

activities from market and production activities.

E 3, d. o. o., began with regular operations on January 1 2005. On December 3 2004 it

acquired a license for carrying out energy activities of production and trading of electri-

city.

Within the company E 3, d. o. o., is organized into three organizational units, namely:

• Department of electricity purchase and sale

• Department of production and services and

• General Service department.

On May 1 2010 the company began to pursue an economic public service activity of the

distribution system operator of heat in Šempeter – Vrtojba municipality. In accordance

with the concession agreement the company took over the heating of a residential com-

plex Podmark.

On January 1 2011 the company was merged with the spine-off part of Elektro Primor-

ska d. d. Company, which deals with the purchase and sale of electricity. Company has

Name: E 3 energetika, ekologija, ekonomija, d. o. o.

Abbreviated name: E 3, d. o. o.

Business address: Nova Gorica, Erjavčeva 24



Bank accounts: 04750-0001095763 Nova KBM, d. d.

02945-0259665734 NLB, d. d.

Company is registered in the Companies Register at the District Court of Nova Gorica, No. 1/04504/00.

Share capital of company: 6,522,016.72 EUR

Owner: Elektro Primorska d. d., 100 %

Company represented by: Darko Pahor

Controlled company Jod, d. o. o. 100 %

Eco Atminvest, d. o. o. 100 %

Associate company: KNEŠCA, d. o. o.

JOD, d. o. o., Nova Gorica 47,27 %

(9) fizičnih oseb 52,73 %


Name: KNEŠCA, d. o. o., Proizvodnja električne energije

Abbreviated name: KNEŠCA, d. o. o.

Business address: Kneža 78, Most na Soči



Bank account: 27000-0000204363

Company is registered in the Companies Register at the District Court of Nova Gorica, No.RC-065-2005/224.

Share capital of the company: 129,361 EUR

Owners: JOD, d. o. o. 47,27 %

Natural persons 52,73 %

Director of the company: Vincenc Hozjan

licenses for carrying out energy activities in the field of electricity production, production

and distribution of heat, and supply, trade, representation and mediation in the electricity

market.

At the end of year2014 there were 41 employees in the company, which are four employe-

es more than in the previous year.

Basic indicators of economy and return are favorable. Company operated with a net

profit in the amount of 1,319,963 EUR.

1.3. Presentation of associate company Knešca, d. o. o. In June 2006 E 3, d. o. o., Company repurchased 23.61 % share in Knešca, d. o. o.,

Company, while in July of the same year also shares of four (4) natural persons in the

amount of 23.66 % (total share of the company is 47.27 %). In year 2012 the share was

transferred as a contribution in kind to a subsidiary JOD, d. o. o.

In comparison with the other ten (9) individual owners Company JOD, d. o. o., has an

important 47.27 % share capital of Knešca, d. o. o. Company.

In year 2014 company operated positively and made 405,904 EUR of profit. It was char-

ged with 69,202 EUR of corporate income tax, and net profit of the year amounted to

336,702 EUR. As at 31. 12. 2014 capital of the company amounted to 1,199,621 EUR.

In consolidated accounts it is presented as associate company and included in the con-

solidation of the group according to the equity method in accordance with the SRS.

D118

1.4. Presentation of the controlling company JOD, d. o. o.

On August 4 2011 Company E 3, d. o. o., founded JOD, d. o. o. Company. Share capital

was paid on July 15 2011.

1.5. Presentation of the controlling company ECO ATMINVEST, d. o. o.

In September 2013 company E 3, d. o. o., bought 50 % share of the company, and in

December 2013 the remaining part.

In year 2014 company made 72,283 EUR of net profit. Company did not operate, so no

operating revenues were generated. All revenues were of financial nature, namely from

received dividends of the associated company Knešca, d. o. o.

Name: JOD, družba za inženiring in izgradnjo energetskihobjektov, d. o. o.

Abbreviated name: JOD, d. o. o.

Business address: Ulica 15. maja 15, 6000 Koper



Bank account: 047500001863518

Company is registered in the Companies Register at the District Court of Koper, No. Srg 2011/29737.

Share capital of the company: 1,043,500 EUR

Owners: E 3, d. o. o., Nova Gorica (100 %)

D119

Name: ECO ATMINVEST, energija, okolje, ekonomija, d.o.o.

Abbreviated name: ECO ATMINVEST, d. o. o.

Business address: Bidovčeva ulica 1, 5000 Nova Gorica



Bank account: SI56 0475 0000 1795 521

Company is registered in the Companies Register at the District Court of Nova Gorica, No. Srg 2014/11036

Share capital of the company: 7,500 EUR

Owners: E 3, d. o. o., Nova Gorica (100 %)

Director of the company: Darko Pahor

In year 2014 the company operated with a loss in the amount of 154,684 EUR.

Business Report of Elektro Primorska Group | 1. Presentation of the Group Business Report of Elektro Primorska Group | 1. Presentation of the Group

D120

2.Risk Management

Risk management is defined by COT methodology, which is valid for Elektro Primorska

Group. Subsidiary E3, d. o. o., buys and sells electricity and is thus extremely exposed

to the market risks, which indirectly worsen capital adequacy of Elektro Primorska d. d.

Company.

Elektro Primorska Group meets different risks, monitors them regularly and submits

appropriate measures to control them and thus establishes more stable operating con-

ditions.

Risk management is one of the key tasks of the Elektro Primorska group's management.

Market risks arise from the uncertain changes in prices on the domestic and foreign

electricity markets, where the company is present, as well as from the open position

of the trading portfolio of the company. Open position, which is exposed to market risk

arises when the aggregate quantity of electricity purchased at a fixed price within a given

accounting period deviates from the quantities sold at a fixed price. In doing so, the risk is

controlled to the maximum extent so that each sale is marked by the appropriate counter

purchase and conversely. In order to hedge open positions, in addition to contracts with

the obligation to supply at a fixed price, the company also uses the option of purchasing

electricity through several »open« contracts that allow optimal purchase of electricity in

several markets, and by limiting the open position not to exceed the percentage amounts

of electricity provided by Regulations.

Quantity risks are the result of the risks arising from the difference between the forecast

(leased) and the actual delivered quantity of electricity. Quantity risks are borne by the

company in open contracts, that is in all contracts with final customers and qualified

producers. Company manages this risk through a comprehensive information support

for long- and short-term forecasting of consumption profiles and delivery of electricity,

and through active daily monitoring of deviations of all measurement points included in

the balance subgroup E3.

Price risks are associated with increased competition in the electricity market and un-

certainty in market prices. EP group manages price risks through appropriate pricing

policies and coordinated maturity of the sales and purchase contracts.

D121

Credit risks are the result of losses due to untimely performance or even failure to ful-

fill obligations of the buyer of electricity to the company. Company limits credit risk by

carefully checking the creditworthiness of customers, continuously monitoring, and ma-

naging credit exposures of individual customers according to their limits and by monito-

ring outstanding receivables. To reduce such risk sale transactions in electricity field are

largely secured by instruments that include adequate insurance. Risk management is not

only associated with insurance, but rather with exactly defined purchase contracts, which

the company claims in all types of transactions with electricity.

Liquidity risks arise, if the company would not be able to meet its financial obligations as

they fall due. By daily monitoring and planning of short- and long-term solvency provided

by up to date coordination and planning of cash flows, the company ensures that the risk

of a liquidity capacity is in the range of acceptable parameters and that it is manageable.

Regulatory risks result from changes in market rules or legislation on the Slovenian mar-

ket or foreign electricity markets and may affect business results. Company actively

monitors developments in the legislation both through the parent company as well as

independently according to activities of the controlled company E 3, d. o. o., to be able to

promptly respond to such changes by adjusting trades and production activities.

In addition to external risks arising from the contracts concluded, the company must also

manage internal risks arising from operational business of the company and its organi-

zation.

Operational risk is present in all business operations performed by the company. The

risk is reflected in the fact that due to insufficient efficacy of information technology,

quality processes and control processes, the company could suffer financial damage.

Company limits these risks with a control system based on the principle that all major

operations are carried out with control of at least two persons as well as with continuing

improvements in upgrading information infrastructure and automatic control of individual

phases of the process. In addition, the company seeks to limit this risk by identifying all

the processes, clearly defining the roles of individuals, including their powers, responsi-

bilities and policies. Operational risks are reduced by highly professional, experienced

and motivated employees. From the latter it is expected to continuously upgrade existing

and acquire new knowledge, as well as dynamism, multidisciplinary activities, teamwork

and own-initiative. Also, the provision of adequate working conditions and environment

must prevent the possible loss of key employees, which is the essence of the staff risk.

Business Report of Elektro Primorska Group | 2. Risk Management Business Report of Elektro Primorska Group | 2. Risk Management

D122

3.Consolidated FinancialStatements

3.1. Consolidated balance sheet as at December 31 2014

Table 71: Consolidated

balance sheet as at December 31 2014

(assets)

Assets Note 31/12/14 31/12/13

A. Long-term assets: in EUR

I. Intangible assest 4.2.1.1. 2,394,084 974,999

1. Long-term rights 2,233,242 776,623

2. Goodwill 89,907 89,907


4. Other LT accruals and pre-paid expenditure 1,692

5. Intangible assets in acquisition 49,830 9,280

II. Tangible fixed assets 4.2.1.2. 178,085,210 177,615,806

1. Land 5,905,500 5,895,970

2. Buildings 119,343,119 116,591,165

3. Equipment 49,318,381 50,798,795

4. Fixed assets in acquisition 3,518,210 4,329,876

III. Long-term financial investments 1,911,796 1,911,796

1. Investments in group companies shares 1,399,725 1,324,664

2. Other shares and stakes 512,071 492,725

IV. Long-term operating receivables 4.2.3. 69,642 16,965

1. Long-term receivable due from others 69,642 16,965

V. Deferred tax assets 4.2.4. 655,399 670,355

Total long-term assets 4.2.1. 183,116,131 181,095,514

B. Short-term assets: in EUR

I. Stocks 4.2.5.1. 967,296 870,006

1. Material 967,296 870,006

II. Short-term financial investments 4.2.5.2. 40,623 194,561

1. Short-term loans to others 40,623 194,561

III. Short-term operating claims 4.2.5.3. 24,568,467 28,123,350

1. Operating accounts receivable 22,593,405 26,493,803

2. Operating claims on others 1,975,062 1,629,547

IV. Monetary assets 4.2.5.4. 868,441 6,488,438

Total short-term assets 4.2.5. 26,444,827 35,676,355

C. Short-term accruals and pre-paid expenditure 4.2.6. 1,181,629 885,344

TOTAL ASSETS 210,742,587 217,657,213

D123

Consolidated balance sheet as at December 31 2014

Table 72: Consolidated balance sheet as at December 31 2014 (liabilities)

Explanatory notes are part of the financial statements and should be read in conjunction

with them.

Liabilities Note 31/12/14 31/12/13

A. Capital: in EUR

I. Called-up capital 78,562,832 78,562,832

1. Share capital 78,562,832 78,562,832

II. Capital reserves 46,208,187 46,208,187

III. Profit reserves 17,571,277 13,347,083

1. Statutory reserves 768,501 768,501

2. Other profit reserves 16,802,776 12,578,582

IV. Revaluation surplus -35,997 42,522

V. Net profit or loss from previous periods 763,796 755,497

VI. Net profit or loss of the business year 2,086,817 3,549,759

Total capital 4.2.7. 145,156,912 142,465,880

B. Provisions and LT accrued costs and deferred revenues 4.2.8. 14,130,053 14,184,876

1. Provisions 3,484,839 3,411,933

2. Long-term accrued costs and deferred revenues 10,645,214 10,772,943

C. Long-term liabilities 4.2.9. 20,868,992 21,445,704



Č. Short-term liabilities 4.2.10. 29,687,239 38,526,676

I. Short-term financial liabilities 8,348,080 11,515,741


2. Other short-term financial liabilities 241,167 1,057

II. Short-term operating liabilities 21,339,159 27,010,935

1. Short-term operating liabilities to suppliers 19,382,785 23,956,726

2. Other short-term operating liabilities 1,956,374 3,054,209

Total liabilities 64,686,284 74,157,256

D. Short-term accrued costs and deferred revenues 4.2.11. 899,391 1,034,077

TOTAL LIABILITIES 210,742,587 217,657,213

Business Report of Elektro Primorska Group | 3. Consolidated Financial Statements Business Report of Elektro Primorska Group | 3. Consolidated Financial Statements

D124


with them.

14. Other revenues 4.3.5. 3,576 60,679

15. Other expenses 4.3.6. -84,646 -70,877

NET PRE-TAX PROFIT OR LOSS OF THE ACCOUNTING PERIOD 4,655,809 8,207,756

16. Income tax 4.3.7. 561,452 1,007,539

17. Deferred tax 14,955 -298,793

18. NET PROFIT OR LOSS OF THE ACCOUNTINGPERIOD

4.3.8. 4,079,402 7,499,010

3.2. Consolidated profit or loss account forbusiness year ended as at December 31 2014

3.3. Consolidated statement of comprehensiveincome for year ended as at December 31 2014

Table 73: Consolidated profit

or loss account for business

year ended as at December 31 2014

Assets Note 2014 2013

in EUR

1. Net sales revenue 4.3.1. 92,558,815 114,119,766

a. on domestic market 89,559,539 105,725,368

b. on foreign market 2,999,276 8,394,398

2. Capitalized own products and services 4.3.1. 6,127,555 6,381,552

3. Other operating revenues 4.3.1. 4,717,350 2,286,524

4. Costs of goods, material, and services 4.3.2. -67,242,378 -84,717,574

a. costs of goods sold and material used -58,426,372 -74,971,681

b. costs of services -8,816,006 -9,745,893

5. Labor costs 4.3.2. -16,912,474 -16,403,690

a. costs of salaries -12,409,457 -11,844,823

b. costs of additional pension insurance of employees -611,587 -621,212

c. social security costs -2,021,731 -1,946,341

č. other labor costs -1,869,699 -1,991,314

6. Amortization/depreciation expense 4.3.2. -13,203,378 -12,580,930

a. depreciation -11,411,019 -11,692,566

b. operating expenses from revaluation in intang. and tang. fixed assets

-694,009 -163,021

c. operating expenses from revaluation in current assets -1,098,350 -725,343

7. Other operating expenses 4.3.2. -748,832 -289,111

8. Financial revenues from shares 4.3.3. 167,997 205,601

a. associate companies 150,698 153,049

b. in other companies 17,299 49,655

c. from other investments 2,897

9. Financial revenues from given loans 4.3.3. 13,339

a. given to others 13,339

10. Financial revenues from operating claims 4.3.3. 214,697 253,852

a. on others 214,697 253,852

11. Financial expenses from impairment and financial investment write-offs

4.3.4. -110,799

a. from group companies -108,000

b. from others -2,799

12. Financial expenses from financial liabilities 4.3.4. -918,211 -762,883

a. from loans, received from banks -844,793 -762,883

b. from other financial liabilities -73,418

13. Financial expenses from operating liabilities 4.3.4. -37,601 -164,354

a. from liabilities to suppliers and bill of exchange liabilities -37,111 -164,354

b. from other operating liabilities -490

2014

in EUR

18. NET PROFIT OR LOSS OF THE ACCOUNTING PERIOD 4,079,402

Changes in the surplus from the revaluation of financial assets available for sale 10,893

Other components of comprehensive income -89,411

Total comprehensive income of the accounting period 4,000,884

D125

Table 74: Consolidated statement of comprehensive income for year ended as at December 31 2014

Table 75: Consolidated cash flow statement for year ended as at December 31 2014

3.4. Consolidated cash flow statement for year ended as at December 31 2014


with them.

Note 2014 2013

A. OPERATING CASH-FLOW v EUR

1. Operating receipts 185,211,582 206,949,458

a. Receipts from sales of products and services 159,983,781 180,897,350

b. Other operating receipts 25,227,801 26,052,108

2. Operating expenditure -174,267,066 -190,689,575

a. Expenditure for purchase of material and services -81,679,534 -98,998,268

b. Expenditure for salaries and employees profit shares -17,725,682 -16,294,521

c. Expenditure for duties of all kinds -9,326,117 -8,040,860

č. Other operating expenditure -65,535,733 -67,355,926

3. Excess of operating receipts 10,944,516 16,259,883

B. CASH FLOWS IN INVESTING ACTIVITIES

4. Receipts in investing activities 326,077 319,080

a. Receipts from received interest and profit shares 315,455 230,423

b. Receipts from disposal of tangible fixed assets 10,622 88,657

5. Expenditure in investing activities -11,042,276 -11,251,391

a. Expenses for acquisition of long-term intangible assets -237,699 -831,631

b. Expenses for acquisition of tangible fixed assets -10,709,688 -10,311,760

c. Expenses for acquisition of long-term financial investments -8,454

č. Expenses for acquisition of short-term financial investments -86,435 -108,000

6. Excess of expenditure in investing activities -10,716,199 -10,932,311

7. Excess of operating and investing receipts 228,317 5,327,572

C. CASH FLOWS IN FINANCING ACTIVITIES

8. Receipts in financing activities 38,957,000 31,949,000

a. Receipts from long-term loans 21,060,000 9,800,000

b. Receipts from short-term loans 17,897,000 22,149,000

9. Expenditure in financing activities -44,825,450 -31,436,454

a. Expenditure for given interest -896,732 -927,806

b. Expenditure for repayment of long-term loans -21,719,246 -8,223,336

c. Expenditure for repayment of short-term loans -20,897,000 -20,967,000

č. Expenditure for dividend -1,312,472 -1,318,312

10. Excess of expenditure in financing activities -5,868,450 512,546

11.Total excess of receipts or expenditure -5,640,133 5,840,118

Č. CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 830,086 6,470,219

X. Opening balance of cash and cash equivalents 6,470,219 630,101

Y. CASH FLOW FOR THE PERIOD 4.4. -5,640,133 5,840,118

Cash at end of period as at 31.12. 830,086 6,470,219


D126

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D127

Tab

le 7

7:

Con

solid

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ges

in e

qui

ty

for

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end

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D

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o

f th

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in E

UR

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D128

3.6. Indicators in Elektro Primorska GroupMain indicators of financing (investing)

Contextually they define relations among liabilities, so they are used to establish the

structure of financing the assets, and at the same time they express the degree of

financial independence.

Main investment indicators (investing)

These indicators are used to establish where Elektro Primorska Group invested its

assets and what structure of assets it has according to these investments.

Main horizontal financial structure indicators

These indicators show how individual categories of assets are financed and how the

Elektro Primorska group is able to settle its short-term financial liabilities.

Table 78:Main indicators of

financing

Table 79:Main investment

indicators

Table 80:Main indicators of financial structure

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. Equity financing rate capital / liabilities

0,689 0,655 0,649 0,629 0,644 0,625 0,654

2. Long-term financing rate capital, long-term debts and long-term provisions / liabilities

0,855 0,818 0,804 0,785 0,809 0,804 0,818

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. Operating fixed assets rate fixed assets / assets

0,845 0,816 0,840 0,823 0,819 0,802 0,818

2. Financial investment rate long-term and short-term financialinvestments / assets

0,009 0,009 0,008 0,006 0,006 0,006 0,006

3. Long-term assets rate fixed assets, long-term financialinvestments and l.t. oper. claims / assets

0,854 0,828 0,085 0,829 0,824 0,808 0,824

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. Equity to operating fixed assets capital / fixed assets

0,815 0,802 0,772 0,765 0,786 0,779 0,801

2. Immediate solvency ratio liquid assets / short-term liabilities

0,029 0,168 0,016 0,029 0,025 0,164 0,064

3. Quick ratio liquid assets and short-term claims / short-term liabilities

0,857 0,898 0,712 0,715 0,799 0,905 0,946

4. Current ratio short-term assets / short-term liabilities

0,891 0,926 0,737 0,747 0,838 0,944 0,993

D129

Table 81:Main indicators of economy

Table 82:Main indicators of return

Main indicators of economy

The operating efficiency ratio shows that the profit of the group companies is positive.

Main indicators of return

By analyzing the ratio of profitability we establish that the group's operation is viable

due to a positive operating result.

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. Operating efficiency ratio operating revenues / operating expenses

1,054 1,077 1,021 1,020 1,000 1,010 1,050

2. Entire efficiency ratio revenues / expenses

1,047 1,071 1,016 1,013 1,003 1,010 1,035

Seq. No

Description 2014 2013 2012 2011 2010 2009 2008

1. Level of revenue profitability net profit or loss / sale revenues

0,044 0,066 0,016 0,011 0,002 0,008 0,030

2. ROA net profit or loss / average assets

0,019 0,035 0,010 0,006 0,001 0,005 0,020

3. ROE net profit or loss / average capital (excl. net profit or loss of business year)

0,029 0,054 0,015 0,010 0,002 0,008 0,031


Business Report of Elektro Primorska Group | 4. Financial Report of Elektro Primorska Group D130

4.Financial Report of Elektro Primorska Group

4.1. General notes and disclosures Accounting policies and accounting notes described in the Elektro Primorska d.d. also

apply to Elektro Primorska Group.

Below we state only that information important for disclosure and draw up of consolida-

ted accounts.

Consolidated financial statements are comprised according to the provisions of the

Companies Act and in accordance to Slovenian Accounting Standards 2006.

Consolidation includes parent company Elektro Primorska d. d., controlled company E

3, d. o. o., controlled company JOD, d. o. o., controlled company Eco Atminvest and

associate company Knešca, d. o. o.

Consolidated financial statements include:

• consolidated balance sheet,

• consolidated profit or loss account,

• consolidated cash flow statement,

• consolidated statement of changes in equity and

• notes to the consolidated financial statements.

Companies in Elektro Primorska Group are subject to individual method of determining

the corporate income tax.

In group statements Elektro Primorska Group is presented in such a way as to deal with

a single company. Group financial statements are comprised based on the original finan-

cial statements of the companies, including the appropriate consolidation adjustments,

which are not subject to accounting in accounts of the considered companies.

Consolidated accounts are comprised based on the full consolidation of subsidiaries E 3,

d. o. o., JOD, d. o. o., and Eco Atminvest and with the use of equity method for associate

company Knešca, d. o. o.

Business Report of Elektro Primorska Group | 4. Financial Report of Elektro Primorska Group D131

Table 83:Long-term assets statements of Elektro Primorska Group

Consolidation procedures relate to the following:

• calculation of financial investment of the parent company with a capital of the con-

trolled company,

• elimination of intercompany receivables and payables,

• elimination of intercompany revenues and expenses,

• elimination of intercompany inflows and outflows,

• increase of investment in the associate company for the corresponding amount of

capital, reduced by dividends paid and related financial income and expenses.

4.2. Notes to the consolidated balance sheet In accordance with the SAS 24, which is related to the legal provisions on the scope of

data on the balance sheet, order and required breakdown of asset and liabilities items

for large companies have been considered, as well as provisions of the SAS defining

consolidation of balance sheets for external reporting.

Consolidated balance sheet includes assets and liabilities of the parent company Elektro

Primorska d. d., controlled company E 3, d. o. o., controlled company JOD, d. o. o., and

controlled company Eco Atminvest.

During the consolidation procedures 7,687,785 EUR of assets and liabilities have been

eliminated in the following items:

• receivables and payables in the amount of 450,681 EUR

• long-term financial investments in the amount of 7,137,586 EUR

• goodwill in the amount of –89,907 EUR

• equity in the amount of 7,047,679 EUR

• receivables and payables for short-term loans 164,234 EUR and

• accrued and deferred income in the amount of 25,191 EUR.

4.2.1. Long-term assets

Reported long-term assets of Elektro Primorska Group are:

Long-term assets 31.12.2014 31.12.2013

in EUR

1.1. Intangible assets 2,394,084 974,999

1.2. Tangible fixed assets 178,085,210 177,615,806

1.3. Long-term financial investments 1,911,796 1,817,389

1.4. Long-term operating claims 69,642 16,965

1.5. Deferred tax asset 655,399 670,355

Total 183,116,131 181,095,514

D132

Table 84:Changes in

intangible assets in year 2014

4.2.1.1. Intangible assets

Intangible assets of the parent company include deferred expenses of development stu-

dies and rights to use holiday facilities and land, as well as use of space in the transformer

station facility. In the intangible assets we also report rights to computer software use of

the controlled and parent companies.

Cost of the intangible asset is comprised of its purchase price or costs of manufacture.

Group recognizes its intangible assets according to the acquisition cost model. Value of

intangible long-term assets increased in year 2014 for the purchase of long-term rights

in the amount of 1,882,247 EUR. Disposals of intangible assets in acquisition constitute

activation in development studies or long-term rights.

Value adjustments on studies in acquisition are values of invested assets, related to plan-

ned investment in the construction of wind power plants, which the group forms since

2014 due to complaints in the process of obtaining a building permit.

Development studies are disclosed at their acquisition costs and are charged to costs

of studies and not as depreciation cost in the amount of 20 % per year, according to

the estimated useful life, which is five years for these assets. Individual book values of

intangible assets are not significant for the accounts as a whole.

Company has no intangible assets with limited ownership rights.

Following table shows changes in intangible assets in year 2014:


Long-term rights

Other long-term accruals

and pre-paid expenditure


acquisition

Goodwill Total


Balance 1.1.2014 1,244,369 2,358,314 0 1,114,297 89,907 4,806,887

Increases in year 1,710 1,882,247 1,883,957

Transfer 0 0

Increases from invest. in progress 1,841,697 -1,841,697 0

Decreases in year -427,555 -18 -427,573

Balance 31.12.2014 816,814 4,200,011 1,692 1,154,847 89,907 6,263,271

Value adjustment 0 0

Balance 1.1.2014 1,145,180 1,581,691 0 1,105,017 0 3,831,888

Depreciation in year 79,776 385,078 0 464,854

Write-off in year 0 0

Increases in year 0 0

Decreases in year -427,555 0 -427,555

Transfer 0 0

Balance 31.12.2014 797,401 1,966,769 0 1,105,017 3,869,187

Carrying amount 0 0

Balance 1.1.2014 99,189 776,623 0 9,280 89,907 974,999

Balance 31.12.2014 19,413 2,233,242 1,692 49,830 89,907 2,394,084

D133


Following table shows changes in intangible assets in year 2013:

4.2.1.2. Tangible fixed assets

Tangible fixed assets of the group companies are land, buildings and equipment and

these assets under construction. They are disclosed in the balance sheet at their carrying

amount, which represents the difference between the acquisition and the written down

value. Group has no investment property and evaluates the tangible fixed assets accor-

ding to the acquisition cost model.

Cost of the tangible fixed assets is comprised of its purchase price and all costs that can

be directly attributed to its restoration for use.

Acquisition cost of facilities built on its own is cost price, which does not exceed the price

of the same kind of things on market. Cost price is comprised of direct material costs of

manufacturing and services, direct labor costs and general production costs.


Long-term rights


acquisition

Goodwill Total


Balance 1.1.2013 1,466,478 1,645,388 1,114,297 0 4,226,163

Increases in year 712,926 89,907 802,833

Increases from invest. in progress 712,926 -712,926 0


Balance 31.12.2013 1,244,369 2,358,314 1,114,297 89,907 4,806,887

Value adjustment

Balance 1.1.2013 1,216,573 1,174,814 1,105,017 0 3,496,404



Balance 31.12.2013 1,145,180 1,581,691 1,105,017 0 3,831,888

Carrying amount

Balance 1.1.2013 249,905 470,574 9,280 0 729,759

Balance 31.12.2013 99,189 776,623 9,280 89,907 974,999

Business Report of Elektro Primorska Group | 4. Financial Report of Elektro Primorska Group Business Report of Elektro Primorska Group | 4. Financial Report of Elektro Primorska Group

D134

Tabela 86: Spremembe

opredmetenih sredstev v letu 2014

Changes in tangible fixed assets of the group in year 2014:

95 % of tangible fixed assets of the group belong to the parent company Elektro Primor-

ska d. d. Tangible fixed assets of the group increased due to new acquisitions in year

2014 by 12,325,069 EUR. 95 % of the increase value belongs to the parent company, 4

% to controlled company E 3, d. o. o., while the rest to company Eco Atminvest, d. o. o.

In year 2014 parent company realized its investment plan by 100%. It realized by

13,100,450 EUR of new investments.

In 2014 controlled company E 3, d. o. o., earmarked 558,220 EUR for investments.

Value adjustments of tangible fixed assets of the group increased in year 2014 by calcu-

lated depreciation in the amount of 11,025,941 EUR and reduced by asset eliminations.

Value adjustments of fixed assets in acquisition are adjustments of investments for con-

struction of wind power plants formed in the previous years. In year 2014 an adjustment

was additionally formed in the amount of 13,461 EUR.

Elektro Primorska Group has no fixed assets obtained by financial lease. Part of real

estate was pledged in year 2013 in return to the received bank guarantee to secure the

payment in E3 company. Estimated value of all pledged real estate is 8,325,948 EUR.

2014 Land Facilities Equipment Fixed assets in acqui-sition and advances

Total


Balance 1.1.2014 5,895,970 376,766,477 149,168,157 5,145,447 536,976,051




Transfer 24,610 -24,610 0

Balance 31.12.2014 5,905,500 377,970,759 149,948,051 4,347,242 538,171,552

Value adjustment

Balance 1.1.2014 260,175,311 98,369,363 815,571 359,360,245



Increases in year 13,461

Transfer 2,730 -2,730 0

Balance 31.12.2014 258,627,640 100,629,670 829,032 360,072,881

Carrying amount

Balance 1.1.2014 5,895,970 116,591,166 50,798,794 4,329,876 177,615,806

Balance 31.12.2014 5,905,500 119,343,119 49,318,381 3,518,210 178,085,210

D135

Table 87:Changes in tangible assets in year 2013

Changes in tangible fixed assets of the group in year 2013:

4.2.2. Long-term financial investments

In accordance with SAS 3, which deals with financial investments, they are classified as

assets available for sale.

Long-term financial investments of Elektro Primorska Group include investments of the

parent company in shares and other companies in the amount of 492,071 EUR, inve-

stment of controlled company E 3, d. o. o., in the Aeronautical Museum in Nova Gorica

in the amount of 20,000 EUR and investment of controlled company JOD, d. o. o., in the

associate company Knešca, d. o. o., in the amount of 1,399,725 EUR.

2013 Land Facilities Equipment Fixed assets in acqui-sition and advances

Total


Balance 1.1.2013 5,850,827 372,233,127 147,264,786 6,057,820 531,406,560




Balance 31.12.2013 5,895,970 376,766,477 149,168,157 5,145,447 536,976,051

Value adjustment

Balance 1.1.2013 256,290,507 95,827,333 815,571 352,933,411



Balance 31.12.2013 260,175,311 98,369,363 815,571 359,360,245

Carrying amount

Balance 1.1.2013 5,850,827 115,942,620 51,437,453 5,242,249 178,473,149

Balance 31.12.2013 5,895,970 116,591,166 50,798,794 4,329,876 177,615,806


D136

Table 88: Investment categories

Investments of the group are:

4.2.3. Long-term operating receivables

Long-term operating receivables in the amount of 69,642 EUR represent claims for facili-

ties maintenance funds that are joined at facility operators according to the Housing Act,

and long-term receivables from Eco Gorenje electricity package.

4.2.4. Deferred tax assets

Deferred tax assets in the amount of 655,399 EUR were disclosed by the group as lon-

g-term operating receivables. In year 2014 these receivables reduced by 14,956 EUR.

Effects of differences between the accounting value of items disclosed in the balance

sheet and their tax base are calculated in accordance with the balance sheet liability

method for all temporary differences. Deferred tax assets are the amounts of tax accrued

from long-term provisions and value adjustments on claims that will be recoverable in fu-

ture periods depending on their deductible temporary differences and unused tax losses.

31.12.2014 31.12.2013

Investments in shares associate companies in EUR

Knešca d.o.o. 1,399,725 1,324,664

Total 1,399,725 1,324,664

Other shares:

Informatika Maribor d.d. 240,756 240,756

Banka Koper d.d. 95,879 95,879

Zavarovalnica Triglav d.d. 55,884 44,992

Primorski tehnološki park d.o.o. 1,808 1,808

Eldom Ljubljana d.o.o. 106,395 106,395

Stelkom d.o.o. Ljubljana 57,837 57,837

VIRS 12,626 4,172

Aeronavtični muzej Nova Gorica 20,000 20,000

591,185 571,839

Impairment of investment Eldom d.o.o. -72,905 -72,905

Impairment of investment Stelkom d..o.o. -6,209 -6,209

-79,114 -79,114

Total 512,071 492,725

Total long-term financial investments 1,911,796 1,817,389

D137

Table 89:Short-term assets of the group

4.2.5. Short-term assets

Short-term assets of the group are:

4.2.5.1. Stocks

All stocks belong to the parent company. They are represented by material intended

for maintenance and construction of electricity facilities, and small tools not exceeding

the amount of 100 euro. Stocks also include protective equipment and small tools with

a useful life longer than one year and value of up to 500 euro. When issued to use such

equipment is then kept off-balance by individual user.

Stocks are initially measured according to their purchase price, while their consumption

is calculated according to the moving average valuation method.

4.2.5.2. Short-term financial investments

Parent company discloses a short-term deposit earmarked for the reconstruction of the

building in the amount of 25,207 EUR, while Eco Atminvest a short-term loan in the amo-

unt of 15,416 EUR.

31.12.2014 31.12.2013

in EUR

2.1. Stocks 967,296 870,006

2.2. Short-term financial investments 40,623 194,561

2.3. Short-term operating receivables 24,568,467 28,123,350

2.4. Monetary assets 868,441 6,488,438

Total 26,444,827 35,676,355


D138

Table 90:Short-term

receivables of the group

Table 91: Outstanding

receivables from sale and for interest

of the group

4.2.5.3. Short-term operating receivables

Short-term operating receivables in the group are by 13 % lower than in the previous

year. Receivables are not insured, but its nature is such that in the event of default, after

repeated reminders, they are sanctioned with the suspension of access to the network,

supply of electricity or heat.

Receivables from sale and interest receivables:

31.12.2014 31.12.2013

Short-term receivables from sales: in EUR

- on domestic market 24,379,021 27,620,781

- on foreign market 664,584 973,673

Value adjustment -2,630,356 -2,296,755

22,413,249 26,297,699

Interest receivables:

- from other buyers 449,023 436,598


154,632 172,114

Advances 39,924 23,990

Value adjustment -14,400

25,524 23,990

Other operating receivables:

- from state and other institutions 1,880,319 1,276,698

- from employees 236,226

- from others 111,700 125,265


1,975,062 1,629,547

Skupaj 24,568,467 28,123,350

31.12.2014 31.12.2013

in EUR

Outstanding receivables 18,479,033 21,737,586

Receivables overdue to 30 days 2,108,631 2,830,137

Receivables overdue from 31 to 60 days 747,019 1,035,109


Receivables overdue from 91 to 365 days 1,291,710 748,548

Receivables overdue over 365 days 2,597,303 2,295,250

Total 25,492,628 29,031,052

D139

Table 92:Monetary assets of the group

Tabela 93:Aktivne časovne razmejitve

Elektro Primorska Group forms value adjustments on claims according to the individual

claim and individual business partner for receivables believed not to be settled. They are:

• outstanding claims before 2014,

• defendant claims and

• claims of business partners in bankruptcy and receivership.

In Elektro Primorska Group value adjustments on claims were formed by the parent com-

pany as well as controlled company E 3. Share of claims formed in such way amounts to

11 % according to the balance of claims.

In Elektro Primorska Group 3 % of short-term trade receivables are in foreign market.

They are receivables of E 3, d. o. o. Company.

Among short-term trade receivables to others in the amount 1,975,062 EUR the largest

part are receivables from the state VAT refund and overpaid advance income tax in the

amount of 1,849,703 EUR, while receivables from operations for the account of third

parties amount to 63,382 EUR, the rest are other claims.

4.2.5.4. Monetary assets

Among monetary assets cash on the commercial bank accounts of group companies is

disclosed.

4.2.6. Accruals and prepaid expenditure

Short-term accruals and pre-paid expenditure amounted to 1,181,629 EUR. Predominant

part refers to the accrued cost of electricity purchase from controlled company E 3, d.

o. o., in the amount of 717,387 EUR, 258,473 EUR refer to accrued income of the parent

company from the preliminary account on year 2014, 135,827 EUR to VAT on advances

received, and remaining to other short-term deferred costs.

31.12.2014 31.12.2013

in EUR

Cash in banks 868,441 1,848,438

Short-term deposit 4,640,000

Total 868,441 6,488,438

31.12.2014 31.12.2013

in EUR

VAT on advances received 135,827 109,151

Short-term deferred costs or expenses 4,826 8,451

Accrued revenues 1,040,032 766,479

Vouchers 944 1,263

Total 1,181,629 885,344


D140

Table 94:Capital of the group

4.2.7. Capital

Capital of the group consists of:

• share capital,

• capital reserves,

• statutory reserves,

• other profit reserves,

• revaluation surplus,

• retained net profit from previous periods and

• net profit of the business year.

Share capital of Elektro Primorska Group is comprised of the equity capital of the parent

company, which is divided in 18,826,797 ordinary registered unit shares. Each share has

an equal share and associated amount in the share capital.

Capital reserves of the company originate from the general capital revaluation adjustment

of the parent company, which was transformed in capital reserves when transferring to

the use of SAS 2006.

Undistributed net profit of the business year in the amount of 2,086,817 EUR consists of

the profit of the parent company and controlled companies E 3, d. o. o., and JOD, d. o. o.,

loss of the company Eco Atminvest and associated profit of associate company Knešca,

d. o. o., in the amount of 159,159 EUR, reduced by paid dividends in the business year

in the amount of 75,637 EUR and paid bonus to the director in the amount of 8,461 EUR.

Group adjusted the initial balance of the profit from previous years in the amount 8,026

EUR because of the subsequent correction of the revenue tax return for year 2013 in

company JOD. Company carried out the correction after the completed consolidation.

Statement of changes in equity shows changes in capital of the group for years 2013

and 2014.

31.12.2014 31.12.2013

in EUR

share capital 78,562,832 78,562,832

capital reserves 46,208,187 46,208,187

statutory reserves 768,501 768,501

other profit reserves 16,802,776 12,578,582

revaluation surplus -35,997 42,522

retained net profit from previous periods 763,796 755,497

net profit of the business year 2,086,817 3,549,759

Total 145,156,912 142,465,880

D141

Table 95:Provisions of the group

Table 96:Long-term accruals and deferred income

4.2.8. Provisions and long-term accruals and deferred income

In Elektro Primorska Group long-term provisions for long service bonuses and for seve-

rance pays at retirement in accordance with SAS 10 were formed by the parent company

Elektro Primorska d. d. and controlled company E 3, d. o. o. Assumptions based on

which the actuary calculation was made, include data that companies submitted to the

actuary, namely the data for five past years on employees and their changes, data on

the salary growth, severance pays, long service bonus and provisions in the collective

agreement referring to the long-term benefits of the employees.

Actuarial calculation takes into account uniform discount rate by reference to market

interest rates on high-yield corporate bonds. Interest rate curve of the euro area is used

(from 0.12 % to 2.4 %).

Long-term provisions are decreased directly by costs for which settlement they were

formed, and are formed by the differences according to the report on calculation as at

31.1 of the current year.

4.2.8.1. Provisions

4.2.8.2. Long-term accruals and deferred income

31.12.2014 31.12.2013

REZERVACIJE in EUR

Balance 1.1. 3,411,933 3,331,378

Formation 300,059 314,478

Drawing in revenues -227,153 -233,923

Balance 31.12. 3,484,839 3,411,933

Assetsacquired free

Average connection

costs

Co-financing of facilities

construction

Compensa-tion claims

Received do-nations and

supports

Total

in EUR

Balance 1.1. 7,163,249 2,545,157 189,740 1,181 873,616 10,772,943

Formation 151,874 30,805 157,846 340,525

Decrease due to write-off -63,527 -63,527

Drawing in revenues -257,023 -110,299 -9,206 -28,199 -404,727

Balance 31.12. 6,994,573 2,434,858 180,534 31,986 1,003,263 10,645,214


D142

Table 97:Long-term liabilities

of the group

In year 2014 the parent company formed long-term accruals and deferred income for

free acquisitions of energy facilities of legal and natural persons and average connection

costs. Average connection costs are drawn for actual depreciation of individual power

facility, which amounted to 110,299 EUR for year 2014.

Drawing of long-term deferred income of free acquisitions of fixed assets and co-finan-

cing of building constructions is formed by annual depreciation, which is calculated from

individual freely acquired assets or in the share of the co-financed fixed asset.

For long-term accruals for claims the group formed by 30,805 EUR of liabilities. Entire

amount refers to the parent company.

Received donations refer to controlled company Eco Atminvest, which received funds

from the Ministry of Economy RS to co-finance project of wood biomass district heating.

4.2.9. Long-term liabilities

Long-term liabilities include liabilities to banks for borrowings for investments in the pa-

rent company and controlled company Eco Atminvest.

All loans are due and payable no later than in April 2020.

Long-term loan, raised in 2014 at Bank Sparkasse in the amount of 7,500,000 EUR, falls

due in the period longer than5 years (contractually agreed installments which fall due in

the period longer than 5 years amount to 500,000 EUR). Interest rates have a one-month,

three-month or six-month EURIBOR and the bank's premium range from 1.5 % to 3.2 %.

Interest on borrowings is calculated and paid monthly.

31.12.2014 31.12.2013

in EUR

Long-term liabilities 28,945,036 29,700,950

Short-term part of long-term liabilities -8,076,044 -8,255,246

Long-term financial liabilities 20,868,992 21,445,704

Total long-term liabilities 20,868,992 21,445,704

D143

Table 98:Short-term liabilities of the group

Due to consolidation in Elektro Primorska Group short-term liabilities in the amount of

450,681 EUR were offset with the short-term claims in the same amount. Entire amount

are short-term operating liabilities.

Short-term financial liabilities of the group include short-term loan of the controlled com-

pany Eco Atminvest and installments of the long-term loans of the parent company and

controlled companies E 3 and Eco Atminvest, due for payment in year 2015.

Short-term payables in the group of companies are lower by 4,711,316 EUR, which re-

presents 20 % less than in the previous year. Obligations to the state are lower than in

the previous year.

Short-term liabilities to employees are obligations for the December payroll, for part of

the bonuses for successful business in year2014.

4.2.10. Short-term liabilities

31.12.2014 31.12.2013

SHORT-TERM FINANCIAL LIABILITIES in EUR

Short-term financial liabilities to companies 21,500 5,000

Short-term financial liabilities to banks 3,254,438

Short-term part of long-term loans 8,326,579 8,255,246

Liabilities for payment of dividends 1,057

Total short-term financial liabilities 8,348,079 11,515,741

Liabilities to suppliers 18,578,292 23,289,608

Liabilities for advances 804,494 650,406

Total short-term operating liabilities to suppliers 19,382,786 23,940,014

Liabilities to employees 1,286,437 1,697,846

Liabilities to state and other institutions 534,637 1,334,078

Other liabilities 135,300 38,997

Total other short-term operating liabilities 1,956,374 3,070,921

Total 21,339,160 27,010,935

Total short-term liabilities 29,687,239 38,526,676


D144

Table 100: Operating revenues

of the group

Table 99:Accrued expenses

and deferred revenues of the

group

4.2.11. Accrued expenses and deferred revenues

Majority of accrued expenses and deferred revenues belong to the parent company.

Accrued expenses represent the accrued bonus at the end of the year on the basis of the

collective agreement in the amount of 290,962 EUR. Advance payment of the bonus has

already been calculated and paid, while the difference to the final amount was included

by the company to costs for year 2014, as based on the agreement between the mana-

gement board and the union it should be paid.

Accrued expenses also include costs of loss purchase of the parent company in the amo-

unt of 247,754 EUR, accrued expenses for payment of grants in the amount of 181,262

EUR, for which conditions were met and contracts signed in E 3 Company in year 2014,

but the company has not carried out the payment yet.

Short-term deferred revenues are formed in the parent company for surplus of received

funds for years 20110 and 2011 based on the offset of the regulatory year under the con-

tract between SODO and Elektro Primorska in the amount of 97,471 EUR.

4.3. Notes to the consolidated profit or loss account In the process of consolidation of the profit or loss for year 2014 868,596 EUR of all

revenues and 745,758 EUR of all expenses were excluded. Revenues were increased

by the associated profit of the associate company Knešca, d. o. o., in the amount of

159,159 EUR and reduced by the payment of bonuses to the director of this company in

the amount of 8,461 EUR.

4.3.1. Operating revenues

31.12.2014 31.12.2013

in EUR

VAT from advances given 373 406

Short-term deferred revenues 97,471 251,530

Accrued expenses 801,547 782,141

Total 899,391 1,034,077

2014 2013

in EUR

Net sales revenues 92,558,815 114,119,766

Capitalized own products and services 6,127,555 6,381,552

Other operating revenues 4,717,350 2,286,524

Total operating revenues 103,403,720 122,787,842

D145

Table 101: Operating expenses of the group

Due to consolidation there was 732,159 EUR of net sales revenue excluded from opera-

ting revenues.

In year 2014 consolidated net sales revenues were by 21,560,951 EUR lower than in

previous year.

Revenues from capitalized own products and services and other operating revenues

belong mainly to the parent company. Revenues from capitalized own products and

services are revenues from accounts of prepared documentation and participation in

construction of facilities for investments. Other operating revenues are comprised of re-

venues from the extraction of accruals for amortization of free acquisitions, co-financings

of facility construction and average connection costs.

46 % 47,996,713 EUR of the total operating revenue of the group belong to the parent

company, while 53% to the E3 subsidiary in the amount of 55,198,570 EUR, of which 5

% were realized on the foreign markets.

4.3.2. Operating expenses

Operating expenses are costs, recorded by type, like electricity purchase, material and

services, labor costs, write-offs and other operating expenses.

Due to consolidation there was 732,159 EUR of expenses value excluded from operating

expenses, namely by 249,499 EUR of costs of material and purchase value of sold goods

and by 482,660 EUR of costs of services.

Operating expenses in Elektro Primorska Group are lower than in the previous year by

15,884,243 EUR, which represents a 14 % reduction.

2014 2013

in EUR

Cost of electricity sold 51,098,643 69,377,245

Cost of material and services 16,143,735 15,340,329

Labor cost 16,912,474 16,403,690

Write-offs 13,203,378 12,580,930

Other operating expenses 748,832 289,111

Total 98,107,062 113,991,305


D146

Expenses of Elektro Primorska Group also include costs of supervisory board meetings

attendance fees. In year 2014 payments to members amounted to 95,155 EUR; all were

paid in the parent company.

Costs of annual report auditing in the group amounted to 14,385 EUR.

Companies in the group have one member each in the management board. They recei-

ved a total of 164,666 EUR.

Members of the board and employees on individual contracts were not approved any

loan or given any surety for their obligations by the companies.

Depreciation in the group is calculated in the amount of 11,411,019 EUR of which

10,745,485 EUR belong to the parent company.

Write-offs in the amount of 1,792,359 EUR refer to revaluation expenses. Of which

694,009 EUR are revaluation expenses of fixed assets and 895,340 EUR are value adju-

stments on receivables and value adjustment on stocks.

Analysis of costs by functional groups

Analysis of costs by functional groups does not include revaluation expenses in the amo-

unt of 1,792,359 EUR, which are shown under write-offs in the profit or loss account.

Table 102:Analysis of group's

costs Production

costsCost of sales Cost of man-

agementTotal

in EUR

Cost of goods 51,098,643 51,098,643

Cost of raw material 6,203,821 799,540 484,317 7,487,678

Cost of services 6,021,308 967,452 1,827,246 8,816,006

Labor costs 12,670,548 1,009,429 3,232,498 16,912,475

Depreciation 11,049,947 69,894 291,177 11,411,018

Other operating costs 153,296 20,829 574,707 748,832

Total 87,197,563 2,867,144 6,409,945 96,474,652

D147

4.3.3. Financial revenue

Financial revenue of Elektro Primorska group amounted to 396,033 EUR of which 167,997

EUR refer to revenues from shares, the rest on interest revenues. Compared to the previ-

ous year they are by 63,420 EUR lower.

4.3.4. Financial expenses

Financial expenses in the amount of 955,812 EUR consist of interest on short-term and

long-term loans, default interest on the late payment of supplier liabilities as well as in-

terest from actuarial calculations. Compared to the past year financial expenses from

banking loans are higher by 81,910 EUR, while default interest of suppliers are lower by

127,243 EUR. Parent company's participation in financial expenses is 92 %.

4.3.5. Other revenues

Other revenue arises from events and transactions, which are not expected to occur

regularly and often.

4.3.6. Other expenses

Other expenses in the amount of 84,646 EUR refer to the accrued compensation for

damage, which Elektro Primorska Company caused during the construction or mainte-

nance, mainly to natural persons, on their land, financial aid and grants and other expen-

ses that are not necessary for business. 93 % of other expenses belong to the parent

company.

4.3.7. Corporate income tax

In Elektro Primorska Group corporate income tax was charged by the parent company in

the amount of 425,011 EUR and controlled company E 3 in the amount of 136.441 EUR.

In the controlled company E 3 disclosure of deferred tax assets in the amount of 14,955

EUR was eliminated.

4.3.8. Net profit or loss

In year 2014 realized profit or loss, before tax return on income of legal persons, amou-

nted to 4,655,809 EUR.

Net profit or loss amounted to 4,079,402 EUR.

4.4. Notes to the consolidated cash flow statement Group cash flow statement is comprised according to direct method from data on tran-

sactions and balances on bank accounts. It presents the changes in monetary assets in

the accounting period. In accordance with the SAS the consolidated cash flow statement

does not include items of inflows and outflows among companies in the group in the

amount of 1,261,739 EUR.

Difference between initial and closing cash balance in the group is the negative cash flow

for year 2014 in the amount of 5,640,133 EUR. In the previous year cash flow result was

positive.

Operations show a positive cash flow, while at investing and financing cash flow is ne-

gative.


D148

4.5. Contingent liabilities of Elektro Primorska GroupAccording to the assessment of legal experts disputes are not such as to have a signifi-

cant impact on the economic outturn. Group assesses that provisions formed for these

purposes are high enough and would cover contingent liabilities of the company.

Group has contingent liabilities for issued bank guarantees for tender, for performance

(electricity supply), for elimination of defects during warranty period (in providing services

to external customers).

4.6. Events after the balance sheet of Elektro Primorska Group In year 2015 controlled company ECO ATMINVEST, d. o. o., merged by acquisition with

company E 3, d. o. o.

Table 103: Contingent liabilities

of the group 31.12.2014 31.12.2013

in EUR

Liabilities for guarantee 272,727 1,500,000

Liabilities from pledged property 8,325,948 8,325,948

Bank guarantees 8,832,986 9,134,980

Total 17,431,661 18,960,928

Business Report of Elektro Primorska Group | 5. Management Responsibility Statement – Group Operations D149

5. Management Responsibility

Statement – Group Operations

Management board hereby approves the financial statements of the group companies

for year 2014 and business report of the group for the period between January 1 and De-

cember 31 2014, as well as used accounting policies and notes included in the proposed

annual report.

Management is responsible for preparing the annual report and hereby declares that the

report provides a true and fair picture of the financial condition of the company and its

operating results for year 2014.

Management board hereby certifies that relevant accounting policies were used consis-

tently and that accounting estimates were prepared according to the principles of pru-

dence and due diligence. At the same time it certifies that the financial statements and

notes were prepared on a going concern basis and in accordance with the relevant legi-

slation and Slovene Accounting Standards.

Management board is also responsible for appropriate accounting, for adoption of

appropriate measures to protect the property and prevent and detect fraud and other

irregularities.

In its operation the group strictly abides by the laws and tax regulations, so the manage-

ment of the company does not expect any significant obligations in this respect.

Nova Gorica, April 10 2015 Uroš Blažica,


Business Report of Elektro Primorska Group | 4. Financial Report of Elektro Primorska Group

appendix Area of Elektro Primorska d.d.

Company is 4,335 km2.

Kazalo grafov

Graph 1: Age structure of employees

Graph 2: Structure of employees according to the years of service

Graph 3: Structure of employees according to gender

Graph 4: Number of accidents at work in Elektro Primorska d. d. in the period from 2010 to 2014

Graph 5: Achieved financial effects according to individual OU in year 2014 and 2011 (December 2014)

Graph 6: Monthly electricity consumption peaks in year 2014

Graph 7: Monthly acquired electricity quantities in year 2014

Index of tables

Table 1: Employees overview

Table 2: Number of employees in individual age class

Table 3: Number of employees according to the years of service

Table 4: Number of employees according to gender

Table 5: Educational structure of employees

Table 6: Fizični obseg elektroenergetskih naprav na dan 31. 12. 2014

Table 7: Realization of services for SODO in year 2014

Table 8: Investments according to main investment groups

Table 9: Physical indicators of constructed and reconstructed facilities

Table 10: Overview of investment plan realization for year 2014

Table 11: Monthly quantities of delivered electricity

Table 12: Revenues from network use and supports for year 2014

Table 13: Peak and annual operating hours of Elektro Primorska in year 2014

Table 14: Production of electricity according to primary energy sources

Table 15: Number of interruptions, longer than three minutes

Table 16: SAIFI – System Average Interruption Frequency Index

Table 17: SAIDI – System Average Interruption Duration Index

Table 18: Realization of services for external customers in year 2014

Table 19: Balance sheet (assets)

Table 20: Balance sheet (liabilities)

Table 21: Profit and loss account

Table 22: Statement of comprehensive income

Table 23: Cash flow statement

Table 24: Statement of changes in equity 2014

Table 25: Statement of changes in equity 2013

Table 26: Main indicators of financing

Table 27: Main investment indicators

Table 28: Main horizontal financial structure indicators

Table 29: Main indicators of economy


Table 31: Changes in intangible assets in year 2014


Table 33: Changes in tangible fixed assets in year 2014

Table 34: Changes in tangible fixed assets in year 2013

Table 35: Long-term financial investments

Table 36: Changes in financial investments

Table 37: Long-term operating receivables

Table 38: Stocks

31

32

32

35

38

50

50

30

31

31

32

33

39

39

40

42

46

47

49

51

52

53

53

53

54

64

65

66

67

68

69

70

71

71

72

72

73

81

81

82

83

84

84

85

85

86

86

87

87

88

88

89

90

90

91

92

93

95

97

97

98

98

99

99

99

100

100

101

101

101

102

104

105

105

108

109

110

122

123

124

125

125

126

127

128

128

128

129

129

131

132

133

134

Table 39: Short-term financial investments

Table 40: Short-term operating receivables

Table 41: Age structure of receivables

Table 42: Value adjustment of short-term operating receivables

Table 43: Monetary assets

Table 44: Short-term accruals and prepaid expenditure

Table 45: Capital

Table 46: Provisions

Table 47: Long-term accruals and deferred income

Table 48: Long-term liabilities

Table 49: Short-term liabilities

Table 50: Short-term accrued costs and deferred revenues

Table 51: Operating revenues

Table 52: Analysis of costs by functional groups

Table 53: Costs by nature

Table 54: Remuneration of supervisory board members

Table 55: Labor costs

Table 56: Remuneration of the management board members

Table 57: Depreciation rates

Table 58: Write-offs

Table 59: Other operating expenses

Table 60: Financial revenue

Table 61: Financial expenses

Table 62: Other revenue

Table 63: Other expenses

Table 64: Net profit or loss

Table 65: Receivables and payables

Table 66: Revenues and expenses

Table 67: Contingent liabilities of the company

Table 68: Sub-balance sheet according to the Energy Act (assets))

Table 69: Sub-balance sheet according to the Energy Act (liabilities)

Table 70: Profit or loss account according to the Energy Act

Table 71: Consolidated balance sheet as at December 31 2014 (assets)

Table 72: Consolidated balance sheet as at December 31 2014 (liabilities)

Table 73: Consolidated profit or loss account for business year ended as at December 31 2014

Table 74: Consolidated statement of comprehensive income for year ended as at December 31 2014

Table 75: Consolidated cash flow statement for year ended as at December 31 2014

Table 76: Consolidated statement of changes in equity for year ended as at December 31 2014

Table 77: Consolidated statement of changes in equity for year ended as at December 31 2013

Table 78: Main indicators of financing

Table 79: Main investment indicators

Table 80: Main indicators of financial structure

Table 81: Main indicators of economy


Table 83: Long-term assets statements of Elektro Primorska Group



Table 86: Changes in tangible assets in year 2014

Table 87: Changes in tangible assets in year 2013

Table 88: Investment categories

Table 89: Short-term assets of the group

Table 90: Short-term receivables of the group

Table 91: Outstanding receivables from sale and for interest of the group

Table 92: Monetary assets of the group

Tabela 93: Aktivne časovne razmejitve

Table 94: Capital of the group

Table 95: Provisions of the group

Table 96: Long-term accruals and deferred income

Table 97: Long-term liabilities of the group

Table 98: Short-term liabilities of the group

Table 99: Accrued expenses and deferred revenues of the group

Table 100: Operating revenues of the group

Table 101: Operating expenses of the group

Table 102: Analysis of group's costs

Table 103: Contingent liabilities of the group

Oblikovanje: WOAF Design studio, Andraž Filač / Fotografija: Arhiv Elektro Primorska / Tisk: Color Print Nova Gorica

AUKN

BDP

CUO

COT

D

DE

DCV

DV

DVPLM

DVE

EIMV

ERP

EBIT

GIS

GIZ

I

IIS

JR

KBV

KEE

NIS

NN

NR

OVE

RAST

REDOS

RP

RS

RTP

SAIDI

SAIFI

SCADA

SDH

SM

SN

SOD

SODO

SODO EP

SPTE

TP

UDO

URE

UMAR

UKV

VN

VZD

ZSDH

List of Abbreviations

Capital Assets Management Agency of Republic of Slovenia

gross domestic product

use of network price

comprehensive risk management

electricity distribution

distribution unit

remote control center

power line

remotely controlled switch point

domestic energy sources

Milan Vidmar Electric Power Research Institute

enterprise resource planning

earnings before interest and tax

geographic information system

economic interest grouping

investments

integrated information system

public lighting

cable conduit

quality of electricity

network information system

low voltage

internal audit

renewable energy sources

program of operating costs rationalization

development of Slovenian electricity distribution network

substation

Republic of Slovenia

transformer station

average interruption duration index

average interruption frequency index

distribution networks system monitoring

Slovenian Sovereign Holding

standing place

medium voltage

Slovenian Compensation Fund

distribution network system operator

activity of Elektro Primorska d. d., implementing a service for SODO

cogeneration of heat and electricity

transformer station

distribution network management

efficient use of electricity

Institute of Macroeconomic Analysis and Development

ultra short waves

high voltage

maintenance

Slovenian Sovereign Holding Act

135

136

137

138

138

139

139

140

141

141

142

143

144

144

145

146

148

annual report of elektro primorska d.d. company and elektro

Documents