TR2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY A AND GROUP JPERFO ON RMANCE 2xA Network Nearly In 2024, Elektro Gorenjska demonstrated outstanding network reliability. The SAIDI indicator (own cause) – which tracks the average duration of unplanned electricity supply interruptions per customer –stood at just 18.79 minutes, compared to the Slovenian national average of 43.95 minutes. With 57% fewer unplanned outages than other Slovenian electricity distributors, Elektro Gorenjska delivered on its promise of a stable and resilient power supply. 2 5% as Reliable as the National Average Growth in Environmental Investments In 2024, Elektro Gorenjska Group invested 27.1 million euros in environmental initiatives – up from 21.7 million euros in 2023. This nearly 25% growth highlights the Group’s clear strategic focus on sustainable development, reducing its environmental footprint and accelerating the energy transition. Caring means listening with empathy, Quality is the Reliability is built To constantly cornerstone step by step – Stability is not nurturing seek better about resisting positive change of trust and through respect, solutions, Responsibility change – it’s in society the driving integrity and challenge means having about striking and nature force behind responsibility. the limits of the courage and the right balance and creating exceptional Every task possibility commitment between resilience enduring energy achievements. completed and forge new to do what is and flexibility. for future It is the and every goal paths toward necessary. generations foundation of achieved is a meaningful – because lasting success. promise kept. progress. tomorrow matters. In 2024, Elektro Gorenjska recorded a sharp rise in the integration of renewable energy sources (RES) into its distribution network. According to the 2024 Gallup employee engagement survey, an An additional 34.8 MW of RES capacity was connected, raising impressive 39% of Elektro Gorenjska employees were actively engaged in the total installed capacity to 185.9 MW – a more than 20% their work – more than double the Slovenian national average of 16%. increase compared to 2023. This reinforces Elektro Gorenjska’s key role in advancing the energy transition and accelerating regional 2 This significantly above-average result reflects a positive organizational decarbonization.0%Growth in Renewable Energy Sources (RES) Integration 2 culture, effective leadership, strong internal communication, and a systematic approach to employee development. Employee Engagement the National Average at 39% – Over x STABLE CARING QUALITY-DRIVEN RELIABLE INNOVATIVE RESPONSIBLE NN UAL RE Sustainable energy is more than just a story about electricity. It is the story of people who, with knowledge, dedication and heart, work every day to ensure a reliable power supply for Gorenjska. It is a story of cooperation and trust that Elektro Gorenjska builds with users, partners and the community. It is a story of reliability – where, in a world of rapid change, Elektro Gorenjska remains firmly anchored in the values of lasting innovation, responsibility and openness. Elektro Gorenjska. Providing sustainable energy. ABLE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 1. KEY HIGHLIGHTS OF ELEKTRO GORENJSKA IN 2024 18 1.1. Elektro Gorenjska in 2024 – Key Events 22 1.1.1. Events After the End of the Financial Year 27 1.2. Message from the CEO 28 Supervisory Board Report on the review of the Annual Report of the Elektro Gorenjska Company 1.3. 34 and Group for 2024 pursuant to article 282 of the companies act (ZGD-1) 1.4. Supervisory Board 40 1.5. General Meeting of Shareholders 41 F 2. ABOUT THE ELEKTRO GORENJSKA GROUP 42 2.1. Our Mission, Vision, and Values 44 2.2. Our Operations 46 2.3. Structure of the Elektro Gorenjska Group 48 2.4. Organisational Structure of Elektro Gorenjska 49 2.5. Share Capital and Ownership Structure 50 2.6. Sustainable Development Strategy of Elektro Gorenjska 51 2.6.1. Strategic Directions and Initiatives 51 2.6.2. Strategic Projects 52 ON 2.6.3. Our Business Model 54 2.6.4. Our Development Plan 58 2.6.5. Our Commitment to Continuous Innovation 59 3. ECONOMIC ASPECTS 64 3.1. Business Environment Analysis 66 3.2. Key Results and Performance Indicators in 2024 68 3.3. Business Performance Analysis of the Group in 2024 69 4. DEVELOPMENT OF A COMPREHENSIVE RISK AND OPPORTUNITY MANAGEMENT SYSTEM 76 4.1. Risk Management System at Elektro Gorenjska 78 4.2. Risk Management System at Gorenjske elektrarne 80 ENTS 4.3. Presentation of Key Risks of the Elektro Gorenjska Group and Their Mitigation 81 4.4. Opportunity Management System 85 4.5. Integrated Quality Management System at Elektro Gorenjska 86 5. CORPORATE GOVERNANCE 88 5.1. Statement on Governance 90 5.2. Sustainable Business Policy 91 5.3. Internal Audit 93 7 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINA FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17. FINANCIAL REPORT 182 17.1. Management Statement of Responsibility 184 .2.ABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 6. FOUNDATIONS FOR PREPARATION 96 6.1. Double Materiality Assessment 98 6 Double Materiality Matrix 105 17.2. Auditor’s Report 185 7. ENVIRONMENTAL ASPECTS 106 17.3. Financial Statements of Elektro Gorenjska for the Financial Year Ended 31 December 2024 190 7.1. Guidelines for Responsible Environmental Management 108 17.4. Basis of Preparation of Financial Statements 202 7.2. Disclosure of Material Environmental Information – Elektro Gorenjska Group in 2024 109 17.5. Notes to the Financial Statement Items 213 7.3. Carbon Footprint Reduction Strategy 110 17.5.1. Notes to the Statement of Financial Position Items 213 7.4. Energy Consumption and Resource 112 17.5.2. Notes to the Income Statement Items 228 7.5. Greenhouse Gas Emissions 113 17.5.3. Notes to the Statement of Other Comprehensive Income 233 7.6. Measures to Reduce Environmental Impact B114 LE17.5.4. Notes to the Cash Flow Statement 233 8. PRESERVING BIODIVERSITY AND ECOSYSTEMS 117 17.6. Related Party Transactions 234 9. RENEWABLE ENERGY GENERATION BY GORENJSKE ELEKTRARNE 118 7. Financial Risk Management 239 10. MA 17.8. Events After the Reporting Date 240 SO NAGING IMPACTS, RISK CIAL RESPONSIBILITY S AND OPPORTUNITIES 121 11. 122 17.9. Disclosures in Accordance with the Electricity Supply Act 241 11.1. Stakeholder Interests and Perspectives 124 Criteria and Methodologies for Allocation of Indirect Costs (Expenses), Revenues, Assets and 17.9.1. 241 Liabilities by Activity 11.2. Responsibility Towards Employees 126 17.9.2. Statement of Financial Position by Activity 243 11.3. Gender Equality and Diversity 128 17.9.3. Income Statement by Business Segment 249 11.4. Occupational Health and Safety 129 FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 11.5. Creating a Positive Work Environment 132 18. FINANCIAL REPORT OF THE ELEKTRO GORENJSKA GROUP 252 11.6. Strategic Guidelines for Human Resource Management 133 18.1. Management Statement of Responsibility 254 11.7. Employee Training and Development 134 18.2. Auditor's Report 255 11.8. Internal Communication 135 Financial Statements of the Elektro Gorenjska Group for 11.9. Corporate Culture 136 18.3. 260 the Financial Year Ended 31 December 2024 11.10. Compensation Policy O137 F 17. 18.4. Notes to the Consolidated Financial Statements 272 11.11. Social Protection 138 18.5. Notes to the Financial Statement Items of the Elektro Gorenjska Group 288 11.12. Employment of PerOsons with Disabilities 138 18.5.1. Notes to the Items in the Statement of Financial Position 288 12. WORKERS IN THE VALUE CHAIN 140 18.5.2. Explanatory Notes to the Items in the Income Statement 301 13. LOCAL PARTNERSHIPS 148 18.5.3. Explanatory Notes to Items in the Statement of Other Comprehensive Income 306 14. SPONSORSHIPS AND DONATIONS 150 18.5.4. Explanatory Notes to Items in the Statement of Cash Flows 306 15. RESPONSIBILITY TO NETWORK USERS 154 18.6. Fair Values 307 15.1. Investments 156 18.7. Capital Management 309 15.2. Electricity Distribution Volume in 2024 157 18.8. Related Party Transactions 310 15.3. Electricity Losses in the Network N157 18.9. Financial Risks 313 15.4. Voltage Quality in Electricity Supply 158 18.10. Events After the Reporting Date 317 15.5. Supply Continuity in Electricity Delivery 160 15.6. Commercial Quality 162 15.7. Maintenance of the Electricity Energy Infrastructure (EEI) 167 16. CORPORATE GOVERNANCE AT ELEKTRO GORENJSKA 170 16.1. Business Conduct Policies and Corporate Culture 172 16.2. Compliance Management 174 16.3. Regulatory Compliance 174 16.4. Supplier Relationship Management 175 16.5. Data Protection 176 16.6. Corporate Integrity 176 16.7. Cybersecurity 179 16.8. Sustainability Management System 180 8 9 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE B ADMS Advanced Distribution Management System AGEN Slovenian Energy Agency AMI Advanced Meter Infrastructure CAIDI The Customer Average Interruption Duration Index CAIFI The Customer Average Interruption Frequency Index CAPEX Capital Expenditures CHP Combined Heat and Power DPO Data Protection Officer DSO Distribution System Operator RE EEI Electricity Energy Infrastructure LV Low Voltage EMS Environmental Management System LVN Low Voltage Network EMR Electromagnetic Radiation MAIFI Momentary Average Interruption Frequency Index ESG Environmental, social, and governance MC Metering Centre ESRS European Sustainability Reporting Standards ML Measurement Laboratory EU European Union MV Medium Voltage GDP Gross Domestic Product Organisation for Economic Co-operation and OECD Development GHG Greenhouse Gas OHS Occupational Health and Safety GIS Gas Isolated Substation OHTL Overhead Transmittion Line GJS DO Public Utility Service – Distribution System Operator HPP Hydropower Plant OPEX Operating Expenditures IA HV High Voltage OT Operational Technology IASB International Accounting Standards Board OU Organizational Unit ICT Information and Communication Technology PDU Power Distribution Unit IFRS International Financial Reporting Standards Contract for the Lease of Electricity Distribution ILO International Labour Organization Pogodba z DO Infrastructure and for the Provision of Services for the Activities of the Distribution System Operator. INFOSEC Information Security System PVPP Photovoltaic Power Plant iQMS Integrated Quality Managament System RDI Research, Development and Innovation ISMS Information Security Management System RES Renewable Energy Sources ISR Information Security Risk RMU Ring Main Unit IT Information Technology Primary Substation – RTP used only when part of the LCA Life cycle assessment RTP name ION SAS Slovenian Accounting Standards SAIDI System Average Interruption Duration Index SAIFI System Average Interruption Frequency Index SDH Slovenian Sovereign Holding SO Strategic Orientation TS Transformer Station UAP Unified Access Point UGC Underground Power Cable ZOEE Electricity Supply Act 10 IST 11 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE ON ENTS IN ESRS 2 – GENERAL DISCLOSURES Code Disclosure Chapter in the 2024 annual report BP-1 General basis for preparation of sustainability statements Foundations for Preparation CCOR BP-2 Disclosures in relation to specific circumstances Events After the End of the Financial Year Statement on Governance, Sustainable Business GOV-1 The role of the administrative, management and supervisory bodies Policy Information provided to and sustainability matters addressed by the GOV-2 Sustainable Business Policy undertaking’s administrative, management and supervisory bodies GOV-3 Integration of sustainability-related performance in incentive schemes Internal Audit GOV-4 Statement on due diligence Statement on Governance Development of a Comprehensive Risk and ANCE GOV-5 Risk management and internal controls over sustainability reporting Opportunity Management System Sustainable Development Strategy of Elektro SBM-1 Strategy, business model and value chain Gorenjska, Our Business Model SBM-2 Interests and views of stakeholders Stakeholder Interests and Perspectives Material impacts, risks and opportunities and their interaction with strategy SBM-3 Managing Impacts, Risks and Opportunities and business model Description of the processes to identify and assess material impacts, risks and Development of a Comprehensive Risk and IRO-1 opportunities Opportunity Management System ITH Disclosure requirements in ESRS covered by the undertaking’s sustainability IRO-2 Double Materiality Assessment statement ESRS E2 – POLLUTION Code Disclosure Chapter in the 2024 annual report E1-1 Transition plan for climate change mitigation Carbon Footprint Reduction Strategy Material impacts, risks and opportunities and their interaction with strategy ESRS 2 SBM-3 (E1) Managing Impacts, Risks and Opportunities and business model SRS Description of the processes to identify and assess material impacts, risks and ESRS 2 IRO-1 (E1) Managing Impacts, Risks and Opportunities opportunities. Guidelines for Responsible Environmental E1-2 Policies related to climate change mitigation and adaptation Management E1-3 Actions and resources in relation to climate change policies Measures to Reduce Environmental Impact E1-4 Targets related to climate change mitigation and adaptation Carbon Footprint Reduction Strategy E1-5 Energy consumption and energy mix Energy Consumption and Resource TAN E2-2 Actions and resources related to resource use and circular economy Preserving Biodiversity and Ecosystems ARDS 12 13 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE ESRS S – SOCIAL STANDARDS Code Disclosure Chapter in the 2024 annual report ESRS 2 SBM-2 (S1) Interests and views of stakeholders Stakeholder Interests and Perspectives Material impacts, risks and opportunities and their interaction with strategy ESRS 2 SBM-3 (S1) Managing Impacts, Risks and Opportunities and business model S1-1 Policies related to own workforce Responsibility Towards Employees Processes for engaging with own workers and workers’ representatives about S1-2 Responsibility Towards Employees impacts Processes to remediate negative impacts and channels for own workers to S1-3 Responsibility Towards Employees raise concerns Taking action on material impacts on own workforce, and approaches to S1-4 mitigating material risks and pursuing material opportunities related to own Responsibility Towards Employees workforce, and effectiveness of those actions Targets related to managing material negative impacts, advancing positive Strategic Guidelines for Human Resource S1-5 impacts, and managing material risks and opportunities Management S1-6 Characteristics of the undertaking’s employees Responsibility Towards Employees S1-7 Characteristics of non-employee workers in the undertaking’s own workforce Responsibility Towards Employees S1-8 Collective bargaining coverage and social dialogue Responsibility Towards Employees S1-9 Diversity metrics Gender Equality and Diversity S1-10 Adequate wages Compensation Policy S1-11 Social protection Social Protection S1-12 Persons with disabilities Employment of Persons with Disabilities S1-13 Training and skills development metrics Employee Training and Development S1-14 Health and safety metrics Occupational Health and Safety S1-15 Work-life balance metrics Creating a Positive Work Environment S1-16 Remuneration metrics (pay gap and total remuneration) Compensation Policy S1-17 Incidents, complaints and severe human rights impacts Responsibility Towards Employees S2-1 Policies related to value chain workers Workers in the Value Chain S2-2 Processes for engaging with value chain workers about impacts Workers in the Value Chain Processes to remediate negative impacts and channels for value chain S2-3 Workers in the Value Chain workers to raise concerns Taking action on material impacts on value chain workers, and approaches to S2-4 mitigating material risks and pursuing material opportunities related to value Workers in the Value Chain chain workers, and effectiveness of those actions ESRS G – GOVERNANCE AND INTEGRITY Code Disclosure Chapter in the 2024 annual report ESRS 2 GOV-1 Role of administrative, management, and supervisory bodies Statement on Governance (G1) G1-1 Business conduct policies and corporate culture Business Conduct Policies and Corporate Culture G1-2 Management of supplier relationships Supplier Relationship Management G1-3 Prevention and detection of corruption and bribery Compliance Management Description of the processes to identify and assess material impacts, risks, ESRS 2 IRO-1 (G1) Managing Impacts, Risks and Opportunities and opportunities G1-4 Corruption or bribery incidents Corporate Integrity G1-5 Political influence and lobbying activities Corporate Integrity G1-6 Payment practices Business Conduct Policies and Corporate Culture 14 15 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE USI NESS EBUSINESS REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PORT . 2024 was a turning point for the Elektro Gorenjska Group. A new Sustainable Development Strategy for Elektro Gorenjska for the period from 2024 to 2028 was adopted, setting out the company's strategic focus on its core business. The process of selling off the Gorenjske elektrarne subsidiary was completed. In line with the new strategy, our sustainable operations are being strengthened. We have begun to take an even more active role in promoting the development of the Gorenjska region. EY IKEYG H HIGHLIGHTS OF ELEKTRO GORENJSKA IN 2024 BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP ABOUT ELEKTRO GORENJSKA GROUP OUR EMPLOYEES 5,536 km 72.29% 332 24.46 39% employees training hours per employee engaged employees of electricity distribution network of MV underground cables (336 v 2023) (27.24 hours in 2023) (31% in 2023) (5,440 km in 2023) (69.87% in 2023) OUR OPERATIONS 14 HPPs 36 sPVs 4 CHPs (14 in 2023) (26 in 2023) (4 in 2023) 185.9 MW 52,516 MWh 1,142,068 MWh MW of installed capacity at the generation unit connection points, by of electricity produced of electricity distributed generation source (49,789 MWh in 2023) (1,151,188 MWh in 2023) (151.1 MW in 2023) 88.63% 92,928 1,556 MW 92.3% of metering points integrated into the AMI of LV underground cables network users of total connected load (Advanced Meter Infrastructure) system (87.92% in 2023) (92,526 in 2023) (1,544 MW in 2023) (90.4% v 2023) OUR OPERATIONS QUALITY OF OUR NETWORK 0.49 18.79 3.73% distribution network losses SAIFI (own cause) SAIDI (own cause) 2023 2024 (3.45% in 2023; 2023 2024 (0.78 in 2023) (32.80 in 2023) Slovenian average : 4.25%) €48.3 million €21,295 thousand OUR CONTINUOUS INNOVATION OUR ENVIRONMENTAL COMMITMENT in net sales revenue EBITDA (€55.1 million in 2023) (€27,672 thousand in 2023) 66 €27.1 million 2023 2024 in environmental investments 2023 2024 submitted innovation proposals (€21.7 million in 2023) €3,838 thousand €30.9 million (51 in 2023) net profit of investments 25,233 t (€10,726 thousand in 2023) (€29.0 million in 2023) 19 of CO₂ emissions – carbon footprint (2023) (43,460 t in 2022) development projects in progress 20 21 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 1.1. Elektro Gorenjska in 2024 – Key Events Committed to stability. Dedicated to quality. Attentive to opportunity. Responsible toward the future. Reliable today. Innovative for tomorrow. These words capture the dynamic spirit of Elektro Gorenjska in 2024. Throughout the year, we brought to life a wide range of ambitious projects that not only fueled our growth but also reinforced our strategic position in Slovenia’s energy sector. True to our values, we upheld our role as a responsible and engaged corporate citizen. Our story is written day by day—through concrete actions that push the boundaries of what is possible. • Supporting sustainable development in Gorenjska. Elektro Gorenjska signed a climate neutrality pledge in Kranj alongside over 30 companies —an important step in the company’s efforts to build a high-quality • Working together. The 8th Strategic and sustainable way of life in Gorenjska. Conference of Slovenian Electricity • Co-creating the energy of the future. As Distribution Companies took place in part of the Society 5.0 – Hydrogen Future Nova Gorica under the theme Distribution • Following trends. Field workers at Elektro (Družba 5.0 – Prihodnost z vodikom) project, for Environmental Sustainability and Gorenjska participated in training on cable Elektro Gorenjska signed a consortium Technological Development. Elektro installation techniques and innovations in agreement with partners to establish a Gorenjska’s representatives joined domestic electromechanical materials. hydrogen ecosystem based on low-carbon and international experts in spotlighting • Shaping the future. The Supervisory sources. sustainability and the challenges that Board approved Elektro Gorenjska’s new • Generating green energy. Under the PS.2 accompany the green transition. • Connecting generations. The Elektro Sustainable Development Strategy for the scheme, Gorenjske elektrarne connected • Laying the foundation for long-term Gorenjska Group held its traditional 2024–2028 period. four photovoltaic power plants to the grid— business excellence. Elektro Gorenjska gathering for retired employees. • Investing, developing, modernising. installed on the rooftops of Kovinoplastika received the Crystal Plaque for Golden • Engaging with youth. We welcomed Renovation works proceeded smoothly Lož facilities in Stari Trg pri Ložu, Nova Vas, Credit Excellence—a recognition of sustained electrical engineering and mechatronics at three construction sites of the Sava and Unec, as well as on the sports hall of financial stability, sound business policy, and students from the University of Ljubljana’s Hydropower Plant. Factory acceptance the Preddvor Primary School. integrity in business relations. Faculty of Electrical Engineering to our tests were carried out at TES, and the • Fostering innovation. Elektro Gorenjska company headquarters. synchronous generator was delivered. organized its first Transformatorfest—a • Sharing knowledge and experience. In festival of continuous innovation open to all partnership with Siemens, we presented PLAYING AN ACTIVE ROLE IN employees of the Elektro Gorenjska Group. the pilot project OT Companion to THE MUNICIPALITY OF KRANJ’S The event featured interactive activities, representatives of the Croatian transmission A NEW STRATEGY – A NEW MILESTONE SUSTAINABLE FUTURE engaging workshops, and presentations system operator (HOPS). The exchange IN THE DEVELOPMENT OF ELEKTRO of the company’s most current innovation focused on best practices in digitalisation GORENJSKA GROUP »Electricity distributors are a key pillar projects. and the development of secondary systems of the green transition. We embrace in the energy sector. »Our strategy is a living, dynamic this role with a strong sense of document. It enables us to remain responsibility and a proactive mindset. proactive, quickly respond to changes, Together with our partners, we are adjust our business models, seize co-creating new pathways toward a ELEKTRO GORENJSKA AWARDED THE ENDURING ENERGY CONNECTS opportunities, and mitigate risks. Our sustainable future. Our commitment CRYSTAL PLAQUE FOR GOLDEN CREDIT GENERATIONS new strategy focuses on our core to the Gorenjska region is part of EXCELLENCE mission—electricity distribution—while our DNA. The signing of the climate »Many generations of employees have emphasising the development of a neutrality pledge by the Municipality »Elektro Gorenjska was recognized for its shaped our journey with innovation, reliable grid, the adoption of modern of Kranj—an essential document within financial resilience, exemplary business responsibility, and care. Thanks to technologies, and sustainable practices. the Mission 100 Climate-Neutral strategy, and integrity. According to them, we have been delivering the Our main goal is the evolution of a and Smart Cities by 2030 initiative— CompanyWall, the credit rating agency, most reliable electricity distribution sustainable distribution system.« supports our vision of a higher quality, the company has maintained top-tier credit network in Slovenia for years. We care more sustainable life in Gorenjska. The excellence for three consecutive years—a deeply about our people, which is why agreement outlines the key measures testament to our results and the trust of we highlight the importance of staying needed to achieve goals, along with our partners. This elite rating is awarded connected with our retired colleagues – the methods and financial resources for only to the most competitive companies in they will always form an important part their implementation. We are creating the region, reinforcing our commitment to of the Elektro Gorenjska family.« a lasting future and delivering enduring stable and responsible operations.« energy.« 22 23 JANUARY FEBRUARY MARCH APRIL 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP KEY EVENTS2024• Modernising infrastructure. As part of the GreenSwitch project, upgrades to 50 transformer stations began. Two new stations, TS Visoko and TS Cvelfar, • Innovating. Elektro Gorenjska launched a • Developing young talents. Elektro were built, and a new 20 kV cable loop virtual advisor on its website. The chatbot Gorenjska hosted the third edition of the was completed between Sveti Andrej and EGON provides users and employees with Transformator Summer School. Participants Bodoveljska Grapa—areas heavily affected 24/7 access to key information, making engaged in hands-on projects, field trips, by the 2023 floods. it easier to find answers quickly and and learning activities to gain practical skills • Expanding. Gorenjske elektrarne installed conveniently. and explore best practices in energy and a new e-charging station at the Kranjska • Investing. Elektro Gorenjska began sustainability. Gora HPP parking area. upgrading the RTP Primskovo energy facility. • Ensuring energy resilience. A nighttime • Strengthening partnerships. At the This included the expansion of the 20 kV storm with heavy rainfall caused damage Goodyear Slovenia facility, Gorenjske • Building bridges. Elektro Gorenjska hosted switchgear, replacement of secondary to Elektro Gorenjska’s infrastructure in the Elektrarne installed 3,676 m² of solar a regional GreenSwitch meeting, bringing equipment, and construction of a new Kokra area, including a 20 kV underground panels that will generate about 788 MWh together representatives from Slovenia 110 kV GIS switchgear. Mid-month, teams cable, most of the LV network in the TP of renewable electricity annually, reducing (ELES, Elektro Celje, Elektro Ljubljana), successfully completed the first phase— Kokra Vas area, and the 20 kV Jezersko CO₂ emissions by approximately 386 tonnes Austria (KNG-Kärnten Netz GmbH), and reconstruction of protection and control cable line. per year. Croatia (HOPS, HEP ODS). systems for the 20 kV switchgear. • Modernising. Gorenjske elektrarne • Inspiring future professionals. Second- • Managing responsibly. Elektro Gorenjska completed the final phase of equipment year students from the Vocational College held its 31st Annual General Meeting of upgrades at the Sava Hydropower Plant, of the Kranj School Centre visited Elektro shareholders. Shareholders approved the including the 7.2 kV generator switchgear ENHANCING RELIABILITY AND CROSS- Gorenjska to learn about the company's proposed resolutions, granted discharge to and 24 kV measurement and disconnection BORDER CONNECTIVITY operations and career opportunities. the Management and Supervisory Boards, switchgear. • Taking care for our people. Elektro and confirmed the distribution of the 2023 »GreenSwitch is a multi-million-euro EU Gorenjska received a special commendation balance sheet profit. project focused on the modernisation and from the Ekvilib Institute for promoting a digitalisation of the electricity distribution family-friendly corporate culture. SHAPING A STORY OF LASTING network. Its core goals include boosting ENERGY WITH YOUNG TALENTS capacity, resilience, and cross-border MEET EGON, ELEKTRO GORENJSKA’S connectivity with Austria. VIRTUAL ASSISTANT »The Transformator Summer School STRENGTHENING TIES WITH is designed for young individuals At Elektro Gorenjska, seven key investments YOUNGER GENERATIONS »Innovation has always been at the heart passionate about technology, are underway, including upgrades of Elektro Gorenjska’s operations. With innovation, and sustainability. With to secondary systems at Distribution »We are committed to openness and the launch of EGON, our digital advisor, mentorship, expert lectures, fieldwork, Transformer Stations RTP Zlato polje knowledge-sharing with young people, we’ve taken a significant step forward in and collaborative projects, participants and RTP Primskovo, installation of new knowing the value of fresh perspectives. user-focused solutions. EGON is available gain valuable experience in real- transformers, remote control upgrades, Through regular student visits, we 24/7, offering quick and easy access world energy challenges. Through this and enhancement of the ADMS system. give future professionals the chance to information on grid connections, initiative, Elektro Gorenjska is nurturing The project also includes three new base to explore the energy sector and meet metering point changes, network a new generation of professionals stations, new medium-voltage loops, and a our experts. This exchange is vital to charges, and outages. It streamlines committed to a sustainable energy cross-border connection through the Ljubelj building the next generation of talent communication and drastically reduces future.« tunnel and an upgrade of the connection at for a sustainable energy future.« the time needed to get essential Jezerski vrh.« answers.« 24 25 MAY JUNE JULY AUGUST 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP • Creating innovations. Elektro Gorenjska launched the #TOPSTART innovation project, encouraging employees to submit ideas for KEY EVENTS 2solving a specific challenge. • Building resilience. Elektr articipated in Odpornost t national crisis mana0o Gorenjska p 2024, Slovenia’s larges gement and response exercise to date. • Honouring cooperation. Elektro Gorenjska and Kärnten Netz (Austria) marked the 10th • Delivering excellence. Elektro Gorenjska anniversary of their joint response to the 2successfully passed an external audit of its Strengthening partnerships. Elektro 2014 ice storm, highlighting the importance Integrated Quality Management System Gorenjska hosted its traditional pre-holiday of cross-border collaboration during (IQMS), conducted by a six-member team gathering for business partners at Brdo pri emergencies. from SIQ. No non-conformities were found. Kranju. • Promoting health. As part of our • Fostering international collaboration. As 4• • Giving back. Elektro Gorenjska donated workplace health promotion efforts, part of the EU-funded PEDvolution project €8,000 to Zavod 7 in support of Neodvisen. employees had access to blood sugar, blood (running through December 2026), Elektro si, a programme that raises youth pressure, and cholesterol screenings. Gorenjska hosted a meeting for all 16 awareness about modern addictions. • Achieving goals. Gorenjske elektrarne project partners in Slovenia. • Supporting social responsibility. Elektro • Bringing people together. Elektro won a public tender by the Municipality • Promoting continuous learning. Elektro Gorenjska Group once again partnered Gorenjska Group held its traditional of Tržič to install six new rooftop solar Gorenjska conducted theoretical and with social enterprises to create year-end Company Day at the Visoko Mansion in the power plants on public buildings, including practical training sessions on live-line business gifts and promotional materials. Poljane Valley. primary schools Podljubelj, Lom and Tržič, working for qualified employees. Supporting organizations that provide • Celebrating success. The third edition kindergartens Deteljica and Palček and the • Building strong partnerships. Gorenjske employment opportunities for people facing of the Transformator Summer School municipality premises. elektrarne and TAB signed a letter of intent barriers to the job market remains a long- concluded successfully. for long-term strategic cooperation on standing and ongoing commitment of the • Building expertise. All five Slovenian solar PV installations with battery storage company. electricity distribution companies joined systems, strengthening their presence in the IN CHALLENGING TIMES, TRUE forces for a joint emergency pole-setting drill sustainable energy market. PARTNERSHIPS EMERGE held in Dolsko. • Deepening cooperation. Elektro Gorenjska A UNIQUE HOLIDAY GESTURE WITH A »In October 2024, Elektro Gorenjska and and Siemens completed the 18-month OT SOCIALLY RESPONSIBLE TOUCH Kärnten Netz marked the tenth anniversary DRIVING QUALITY OF ELEKTRO Companion project, implemented at RTP of the devastating ice storm that struck GORENJSKA THROUGH CERTIFIED Labore and RTP Škofja Loka. »The Elektro Gorenjska Group has a long- Slovenia in February 2014. The natural SYSTEMS standing tradition of preparing its holiday disaster caused severe damage to the gifts in partnership with social enterprises electricity connection to Jezersko. Thanks »Elektro Gorenjska successfully that support individuals with limited ENDURING ENERGY IS CREATED BY to the rapid cooperation between Elektro completed an external audit of its employment opportunities. Each year, in PEOPLE, FOR PEOPLE Gorenjska and Austria’s Kärnten Netz, quality management systems. The partnership with the Korak Employment power was restored to customers in audit was conducted by a six-member Centre and Birografika Bori, the company »Every success and every step forward Jezersko in an exceptionally short time. team under the auspices of the creates unique New Year’s gifts for is the result of teamwork, trust, and Slovenian Institute of Quality (SIQ). It children, business partners, and employees mutual support. The true strength of The anniversary celebration in Jezersko was based on a random sampling of alike. These holiday gifts go beyond our company lies in its people—in their served as a symbol of lasting friendship 15 business processes across various being symbolic gestures—they represent knowledge, experience, and passion. and a reminder that storms know no Elektro Gorenjska locations. The meaningful actions that contribute to We are encouraged by the energy borders. Representatives of both companies team also assessed compliance with positive change in society.« of our colleagues and associates gathered to commemorate the milestone, the requirements of the company’s to continue to develop, grow, and joined by State Secretary MSc. Tina Seršen Integrated Quality Management contribute to a better tomorrow both and Carinthian Governor Peter Kaiser, System (IQMS). No non-conformities within the company and in society. who both highlighted the importance of were identified in relation to the cross-border energy cooperation. What audit’s requirements or objectives. The 1.1.1. Events After the End of the Our annual Company Day is a began as a response to an emergency call auditors found no discrepancies in the celebration of that spirit, reminding has become a symbol of solidarity and company’s operations. Financial Year us how powerful we are when united partnership between Slovenia and Austria. around a shared purpose. It is a day A quality management system audit In January 2025, Elektro Gorenjska signed an agreement to sell its to honour the energy that drives our This partnership continues today through is a process for verifying whether an 100% stake in Gorenjske elektrarne. The sale is subject to certain networks and the people who shape our the EU-funded GreenSwitch project, which organization’s system meets specific conditions precedent, which had not been fulfilled by the date of common story.« strengthens the electricity connection requirements. It is a key process approval of the Group's financial statements. between Carinthia and Slovenia and that enables Elektro Gorenjska to establishes a backup network for future continuously improve and strengthens On 31 March 2025, Gorenjske elektrarne became the 100% owner emergencies.« the trust of its stakeholders.« of ALFI SOL 2. 26 27 SEPTEMBER OCTOBER NOVEMBER DECEMBER 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP Dr. Ivan Šmon, MBA, CEO E SSA E1.2. Message from the CEO 28 29 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2024: A YEAR OF SUCCESS, MILESTONES AND TRANSFORMATION FOR THE ELEKTRO DEEPENING STRATEGIC PARTNERSHIPS GORENJSKA GROUP A key element of our long-term strategy is strengthening cooperation with ELES, the 2024 was one of the most pivotal in the history of the Elektro Gorenjska Group. Despite Slovenian transmission system operator that has taken on the role of public utility service highly dynamic conditions in the energy market and a rapidly evolving business – distribution system operator (GJS DO). This partnership enhances knowledge sharing, environment, all members of the Group—from the parent company Elektro Gorenjska to exchange of best practices, and improved coordination of investment planning. Our the subsidiary Gorenjske elektrarne and its dependent company GEK Solar—successfully contractual performance of GJS DO duties in 2024 led to a high level of supply quality, achieved the most important objectives. Through further investments in infrastructure, reflected in excellent user feedback. development-focused projects, and digitalisation that is transforming established practices in the energy sector, we laid a solid foundation for a future defined by At the same time, we continue to build broader partnerships within the energy responsible, innovative, and sustainable growth. ecosystem—developing integrated solutions for sustainable energy production, consumption, and management. Closer cooperation with major consumers and POSITIVE FINANCIAL RESULTS AS A TESTAMENT TO THE ELEKTRO GORENJSKA municipalities improves understanding of needs, optimises investment plans, and GROUP'S STABILITY AND STRENGTH accelerates project implementation. In 2024, Elektro Gorenjska Group recorded €48.3 million in net sales revenue. All our SOCIAL RESPONSIBILITY AND REGIONAL DEVELOPMENT companies ended the financial year with positive results. The parent company Elektro Gorenjska generated €4.2 million in net profit, Gorenjske elektrarne €3 million, and GEK Elektro Gorenjska remains a committed corporate citizen, actively supporting local 2024 opened a new chapter Solar €119,000. sports, cultural, and humanitarian organisations through sponsorship and donations. for Elektro Gorenjska. Our We believe these efforts create long-term value for the Gorenjska region and those facing Our strong performance was driven primarily by ongoing electricity infrastructure life’s challenges every day. Sustainable Development upgrades, a rising number of solar power plant connections, and additional services related to the development of smart grids. These activities are carried out in cooperation Our role as a regional development facilitator has grown through new projects such Strategy for 2024–2028 with domestic and international experts in the fields of distribution, renewable energy, as GreenSwitch and OT Companion, which have improved network reliability and and digital solutions—helping us maintain high standards and modern approaches. delivered advanced, flexible, and sustainable energy solutions. A record number of solar was adopted as a strategic power plants were connected in 2024, contributing to the green transition, greater response to the dynamic DIGITALISATION AND INNOVATION IN ACTION energy independence, and the co-creation of a renewable energy ecosystem. business landscape. A significant milestone in 2024 was the major upgrade of the RTP Primskovo facility, We also finalised an Action Plan for Sustainable Energy Infrastructure Transition advancing the digitalisation of our network. This step is crucial for more efficient in Gorenjska by 2030, bringing together all municipalities in the region. The plan monitoring, management, and optimisation of electricity transmission, enabling near coordinates infrastructure development, the deployment of smart technologies, and real-time data acquisition and faster response in the event of faults or emergencies. energy efficiency improvements. In November 2024, we joined 12 partners in supporting a sustainable development initiative for the Julian Alps Biosphere Reserve—a pilot Another achievement was the launch of EGON, our virtual assistant available 24/7 to project for green energy self-sufficiency, with global potential. provide users with easy access to information and services. While not a replacement for personal contact with our experts, EGON facilitates faster, simpler resolution of basic A MILESTONE ANNIVERSARY AND A SYMBOL OF INTERNATIONAL COOPERATION inquiries—bringing us closer to a modern, user-friendly experience that balances digital accessibility with our tradition of expert, human support. In 2024, we celebrated the 10th anniversary of our energy partnership with Austria’s Kärnten Netz, which began in early 2014 following a devastating ice storm. More than Our development projects—carried out in partnership with local communities, a technical collaboration, this connection has become a powerful symbol of solidarity research institutions, and other industry stakeholders—bring added value. Currently, and friendship between Slovenia and Austria—proving that even in the most demanding 19 development and investment projects are underway, ranging from advanced circumstances, determined cooperation and innovation can ensure uninterrupted transformer station construction and smart metering systems to grid stability solutions electricity supply. The anniversary reminded us of the importance of nurturing cross- under extreme weather conditions. In 2024, we initiated several major infrastructure border partnerships that strengthen grid stability and preparedness for the future. investments to support the growth of renewables and emerging technologies. 30 31 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP DELIVERING LASTING ENERGY AND INVESTING IN HUMAN CAPITAL Our top priority remains the modernisation and digitalisation of the network, already recognised as the most reliable in Slovenia. In the coming years, we plan to further renovate outdated transformer stations, implement smart metering systems, and improve grid load management and outage response. In parallel, we’re enhancing digital solutions for users, including personalised CORPORATE INTEGRITY AND SUSTAINABLE BUSINESS consumption data access, simplified service requests, and advisory tools for those exploring self-sufficiency or new energy services such as community solar, energy storage, In 2024, we introduced a more systematic approach to corporate integrity—enhancing or demand response. transparency and setting higher standards for ethical and responsible business conduct. By establishing a dedicated function in this area, we aim to foster open communication, We know that real transformation depends on people. That’s why we continue to clearly define responsibilities, and ensure compliance with legal and social expectations. invest in workforce development, mentorship for young talent, international exchange opportunities, and continuous education on emerging technologies. Our teams have Embracing corporate integrity is not only a moral obligation but a strategic consistently shown they can rise to any challenge—and we look to the future with advantage—especially in a world where ethical and sustainability criteria are optimism, ready to embrace further technological shifts and new business models in the increasingly emphasised. It enables Elektro Gorenjska to fulfil its commitments power sector. to stakeholders while creating long-term value and building strong, trust-based relationships. GRATITUDE AND LOOKING AHEAD This clear vision positions us A KEY BUSINESS MILESTONE: SALE OF GORENJSKE ELEKTRARNE I would like to sincerely thank everyone who supports our mission—from employees as a central stakeholder in who keep the network running smoothly each day, to partners who share our vision of One of the most significant milestones of 2024 was the sale of Gorenjske elektrarne progress and innovation, and to the users who place their trust in us and increasingly co-creating a sustainable subsidiary—marking the largest business transaction in our company’s history. This take an active role in shaping a sustainable energy future. strategic decision, made following in-depth analysis and consultation, will generate future for Gorenjska. We important capital inflows to strengthen our core electricity distribution business, Through the successful execution of major strategic projects, increased investments, and aim to shape all strategic modernise our network, and accelerate renewable energy development. the implementation of digital and innovative solutions across all levels of our operations, we are reinforcing Elektro Gorenjska’s position as a leading electricity distributor in decisions in cooperation The transaction is expected to be finalised in 2025 upon receipt of all required regulatory Slovenia. At the same time, we continue to act responsibly—toward the environment and approvals. Results have already exceeded our initial expectations. The sale will also society—especially in an era where climate and energy topics dominate public discourse. with users, employees, local reshape the organisational structure and portfolio of the Elektro Gorenjska Group, communities, investors, allowing us to focus more sharply on our core mission as a distribution system operator. Despite our success and growth, we are fully aware of the challenges ahead: uncertain energy markets, regulatory demands, diversification of energy sources, fast-paced and other partners—while NEW STRATEGY: A TURNING POINT FOR ELEKTRO GORENJSKA 2024–2028 technological progress, and the evolving needs of our users. Yet we are confident that our knowledge, experience, strong community ties, ethical standards, and passion for upholding high standards of The adoption of the new Sustainable Development Strategy 2024–2028 in 2024 Our vision remains clear: innovation will keep us at the forefront of Slovenia’s and Europe’s energy future. marked a new chapter for Elektro Gorenjska. Developed in response to changes in efficiency, profitability, and to continue delivering the the business environment—and in alignment with the sale of Gorenjske Elektrarne— Our vision remains clear: to continue delivering the most reliable electricity supply in environmental responsibility. the strategy reaffirms our focus on delivering a stable and reliable electricity supply most reliable electricity Gorenjska, to lead by example, and to remain a key player in the transition toward a throughout Gorenjska. This means divesting from non-core activities and assets and sustainable, digital society. With the challenges of the future on the horizon, we are ready pursuing our long-standing strategic goal of obtaining our own GJS DO concession. supply in Gorenjska, to to respond quickly and effectively—because we have proven, time and again, that we lead by example, and to know how to act reliably, responsibly, and with unwavering dedication. The strategy also shifts away from the Group-based concept and returns to the core processes of Elektro Gorenjska, based on two key strategic directions: remain a key player in Let 2024 be remembered as a year of major achievements, perseverance, innovation, and courage for all of us at Elektro Gorenjska—and may it be a source of inspiration for 1. Sustainable operations of Elektro Gorenjska. the transition toward a continued growth, progress, and success in the years to come. 2. Development and management of a sustainable distribution system. sustainable, digital society. This clear vision positions us as a central stakeholder in co-creating a sustainable Dr. Ivan Šmon, MBA, CEO future for Gorenjska. We aim to shape all strategic decisions in cooperation with users, employees, local communities, investors, and other partners—while upholding high standards of efficiency, profitability, and environmental responsibility. 32 33 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP E ACTIVITIES OF THE SUPERVISORY BOARD IN 2024 In 2024, the Supervisory Board held a total of fourteen meetings, of which twelve were regular sessions and two were held by correspondence. Compared to 2023, one additional correspondence meeting was held. The increase in the number of meetings in 2024 compared to the adopted work plan is attributed to the adoption of the company’s new strategy (a special session held at the beginning of January), close monitoring of the sale of the subsidiary Gorenjske elektrarne, d. o. o. and the need for correspondence sessions regarding the sale of a real estate complex in Žirovnica and decisions related to additional tasks of the Audit Committee of the Supervisory Board of Elektro Gorenjska, d. d., in performing the audit committee duties for the subsidiary Gorenjske elektrarne, d. o. o. At the beginning of 2024, the Supervisory Board adopted the Sustainable Development Strategy of Elektro Gorenjska, d. d. for 2024–2028, which was approved on 10 January 2024. The strategy was prepared in line with the new expectations of the majority shareholder regarding the sustainable development of the joint-stock company, and it did not include guidance or provisions for other companies within the Group due to the planned divestment of the subsidiary. PO In 2024, the Supervisory Board adopted a total of 126 resolutions. The implementation of these resolutions is monitored at the beginning of each regular meeting. All Supervisory Board members acted independently in their decision-making, in accordance with the submitted declarations, which are transparently published on the company’s website. Members were well prepared for the meetings and the topics discussed, contributing constructive suggestions, corrections and remarks. Following prior deliberation, they adopted decisions in line with their competencies. The members carried out their duties diligently and responsibly, with the due care and diligence of a prudent and conscientious manager, in accordance with their fundamental role of overseeing the company’s management and based on their powers as defined primarily in the Companies Act (ZGD-1), the Articles of Association, and the Rules of Procedure of the Supervisory Board. In carrying out their duties, members of the Supervisory Board adhered to the Recommendations and Expectations of the Slovenian Sovereign Holding (SDH) and the Corporate Governance Code for State-Owned Enterprises. The Management Board confirmed compliance with these regulations and recommendations in Statement on Governance, which forms an integral part of the Annual Report. The Supervisory Board made continuous efforts to enhance good practices in overseeing the company’s operations. Its members complemented each other with their knowledge and experience. The Board T is composed in a manner that ensures all required professional competencies are present for the effective supervision of the company’s operations. Particular recognition is due to the two employee representatives, who have demonstrated strong engagement by closely following the Board and committee meetings, contributing to effective oversight through their in-depth understanding of the company. The work of the Supervisory Board was carried out in accordance with the adopted Financial Plan and the Annual Work Plan of the Supervisory Board and its Committees, as well as in response to additional unforeseen tasks. In addition to regular reporting, the Management Board consistently 1.3. reported on the status and progress of strategic projects. The Supervisory Board continued to closely monitor the reports of the Management Board regarding Supervisory Board the effects of the Act on Emergency Measures to Mitigate the Consequences of High Energy Prices (Official Gazette of the Republic of Slovenia, No. 29/22 – intervention act), which deprived the Report on the review of company of revenue from three months of network charges. Despite the reduced guaranteed return, the company was required to carry out planned investments, which were limited due to the impacts of the aforementioned act. The Supervisory Board requested the Management Board to present measures the Annual Report of aimed at mitigating the financial and other business consequences of the intervention act. It closely monitored the implementation of such measures, with particular attention to the status of investment projects. In line with established practice, this monitoring was carried out via regular semi-annual the Elektro Gorenjska reports on the status of major investments and public procurement procedures. Company and Group In line with its competencies and good corporate governance practices, the Supervisory Board also continued to monitor the operations of Gorenjske elektrarne, d. o. o. as part of reporting on the performance of companies within the Elektro Gorenjska Group. This oversight was further strengthened for 2024 pursuant through the Audit Committee. Pursuant to the exception under Article 514a of the Companies Act (ZGD-1), which stipulates that in the case of subsidiaries that are medium-sized companies and do not to article 282 of the have their own Supervisory Board, the audit committee duties may exceptionally be carried out by the audit committee of the parent company, the Supervisory Board adopted a resolution in June to expand the powers of its Audit Committee to include the performance of tasks for the subsidiary Gorenjske companies act (ZGD-1) elektrarne, d. o. o. 34 35 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP COMPOSITION OF THE SUPERVISORY BOARD IN 2024 EIn 2024, the Supervisory Board operated in the following unchanged composition: • The Supervisory Board continued its good practice of monitoring reports on the review of major company projects. Under standing resolutions, the Management Board is obliged to report biannually • Gabrijel Škof, Chair of the Supervisory Board, – based on the situation as at 31 May and 31 October – on all major investment projects outlined in • Rajko Stanković, Deputy Chair of the Supervisory Board, the business plan. • Vid Meglič, Member, • Franjo Curanović, Member, • In accordance with standing resolutions, the Supervisory Board monitored public procurement • David Gogala, Member (Employee Representative), processes from their initiation, receiving early-stage notifications. The Management Board reports • Borut Jereb, Member (Employee Representative). in advance on transactions for which Supervisory Board consent is required under the Articles of Association. The practice introduced during the previous term of the Supervisory Board – monitoring reports on all public procurement procedures, including those not requiring Supervisory Board REVIEW OF COMPANY OPERATIONS AND THE WORK OF THE MANAGEMENT consent – continued in 2024. The Audit Committee monitors such reports quarterly and informs the BOARD IN 2024 Supervisory Board of its findings. Throughout the year, the Supervisory Board reviewed the company’s operations based on quarterly • In 2024, the Supervisory Board, in accordance with the company’s Articles of Association, approved financial reports, reports on the implementation of strategic projects by the Management Board and 9 legal transactions, including annexes due to increased contract values, totalling over €24.4 million additional performance data (monthly performance estimates for the companies in the Group). (excluding VAT). The Supervisory Board devoted particular attention to the following areas: • Based on the company’s Articles of Association, during the review of the 2025 Business Plan of P• Ongoing oversight and monitOoring of the sale process of the subsidiary Gorenjske elektrarne, d. o. o.; Elektro Gorenjska, d. d., and financial projections for 2026 and 2027, the Supervisory Board – having • Regular monitoring of the company’s operations, with particular emphasis on adjustments related to received assurance from the Management Board that the company would comply with the Regulation the consequences of the intervention act, which in 2024 resulted in a negative operating result for the on the Conditions and Procedures for Borrowing by Legal Entities pursuant to Article 87 of the Public 2022 financial year; Finance Act, and that the company is capable of independently borrowing and repaying the planned • Supervision of all procedures related to the reimbursement of network charge funds withdrawn from debt – granted consent to short-term borrowing of up to €7 million. the company during the COVID period under the intervention act; • Monitoring of the sale of non-essential business assets (the real estate complex in Žirovnica); • Pursuant to the Act on the Remuneration of Directors of Companies (ZPPOGD), the Supervisory • Oversight of investments, execution of construction works, and ongoing monitoring of operations Board determined the amount of the variable remuneration component for the President of the and financial reporting; Management Board for 2023 and adopted performance criteria for the variable remuneration for • Continuous monitoring of operations of the Elektro Gorenjska Group companies – Gorenjske 2025. elektrarne, d. o. o. and GEK Solar, projektiranje in inženiring, d. o. o. – also through the audit committee of the parent company; • The Supervisory Board, together with the Management Board, monitored all activities related to the • Supervision of the implementation of shareholders' resolutions; implementation of the National Energy and Climate Plan (NEPN), company decarbonisation, and the • Monitoring of major investment projects; connection of solar power plants. • Supervision of strategic projects as set out in the Sustainable Development Strategy of Elektro Gorenjska, d. d. for 2024–2028; COOPERATION WITH THE PRESIDENT OF THE MANAGEMENT BOARD • Oversight of contracts requiring the Supervisory Board's approval under the company’s Articles of Association; The Supervisory Board considers that the President of the Management Board, Dr Ivan Šmon, MBA, T• Monitoring of public procurement procedures; led the company successfully in 2024, which is expected to result in a profit for the financial year. • Drafting of proposals for resolutions to be adopted at the regular General Meeting; • Monitoring of risks, particularly in connection with the increased volume of investments under the The Supervisory Board evaluates the cooperation with the President of the Management Board Development Plan and NEPN (National Energy and Climate Plan of the Republic of Slovenia). as highly professional and constructive. All meeting materials were submitted in a timely manner, thoroughly and expertly prepared, and appropriately presented at sessions. Reports on the In light of the areas outlined above, the following activities of the Supervisory Board in 2024 should be implementation of resolutions and other reports requested by the Supervisory Board were prepared particularly highlighted: on a regular basis. • The Supervisory Board regularly reviewed quarterly reports on the performance of Group companies The Supervisory Board had access to all necessary and relevant reports, data, and information, and assessed business results, focusing on the implementation of the 2024 business plan. enabling it to monitor company operations responsibly and make well-informed decisions. • In accordance with the Companies Act (ZGD-1), the Supervisory Board reviewed and approved The Supervisory Board assesses its cooperation with the President of the Management Board over the the audited Annual Report of Elektro Gorenjska and the Group for 2023 and issued a written report past year as very successful. confirming its review and approval for the 2023 financial year. • The Supervisory Board approved the Sustainable Development Strategy of Elektro Gorenjska, d. d. FUNCTIONING OF THE SUPERVISORY BOARD COMMITTEES for 2024–2028, with a focus on the sustainable operations of the joint-stock company rather than the Group. In 2024, two committees operated within the Supervisory Board. • The Supervisory Board contributed to the preparation of draft resolutions for the 31st regular AUDIT COMMITTEE General Meeting of shareholders, held on 20 June 2024. It proposed that the General Meeting approve and confirm the performance of the President of the Management Board in 2023 and grant him The Audit Committee provides expert support to the Supervisory Board, particularly in the areas of discharge from liability. financial and sustainability reporting, financial operations, internal controls and risk management, and internal and external audits. It prepares expert bases and draft resolutions required for the work • Two committees operated actively within the Supervisory Board in 2024: the Audit Committee and and decision-making of the Supervisory Board. the Human Resources Committee. Both worked in accordance with their rules of procedure. In the second half of 2024, the Audit Committee additionally took on the role of audit committee for the In 2024, the Audit Committee comprised Franjo Curanović (Chair), Rajko Stanković (Member) and subsidiary Gorenjske elektrarne, d. o. o. Prof. Dr Simon Čadež (External Member). The committee held eight regular meetings, which were regularly attended by all members. 36 37 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP E SUPERVISORY BOARD POSITION ON THE 2024 AUDIT REPORT The President of the Management Board and the internal auditor (Head of Internal Audit) were invited to all meetings, alongside additional presenters as needed. In the opinion of BDO Revizija, d. o. o., Ljubljana, the audit firm that carried out the audit of the Group’s 2024 financial statements, the financial statements present, in all material respects, a In accordance with its rules of procedure, the Supervisory Board was kept informed of invitations true and fair view of the financial position of Elektro Gorenjska and the Group as at 31 December and minutes. The Chair of the Audit Committee reported periodically to the Supervisory Board on its 2024, as well as their profit or loss, comprehensive income and cash flows for the year then ended, activities. in accordance with International Financial Reporting Standards as adopted by the European Union. The company received the independent auditor’s report on 16 April 2025. A representative of BDO Key activities of the Audit Committee in 2024 included: presented the audit process and findings on 17 April 2025 at the 15th regular meeting of the Supervisory Board’s Audit Committee. Annual Report 2023: The Committee reviewed the Annual Report, including sustainability disclosures of Elektro Gorenjska, d. d., and the consolidated report of the Group. In connection with this review, Upon submission of the audited Annual Report of Elektro Gorenjska and the Group for 2024, the the Committee met with the audit partner from BDO and examined the auditor’s report. Supervisory Board reviewed the Audit Committee’s conclusions regarding the auditor’s report and confirmed that the audit had been conducted in accordance with applicable legislation and auditing Business Plan and Current Operations: The Committee reviewed the parent company's 2025 standards. The Supervisory Board had no comments on the independent auditor’s report and adopted Business Plan with projections through 2027 and proposed it for adoption by the Supervisory Board. It a positive stance on it. also reviewed the 2025 Business Plan of the subsidiary with the same projection period. The Audit Committee and the Supervisory Board concluded that an unqualified (positive) audit The Committee reviewed the quarterly performance of Group companies and reported to the opinion had been issued. PSupervisory Board. APPROVAL OF THE COMPANY AND GROUP ANNUAL REPORT FOR 2024 AND Internal Audit: The Audit CommOittee worked closely with the internal auditor in their role as Head of Internal Audit. It reviewed the Internal Audit Annual Report for 2023, reports on completed PROPOSAL FOR PROFIT ALLOCATION internal audit engagements, and monitored the implementation of recommendations. The Committee also reviewed interim internal audit reports and the external quality assessment report of the The Management Board submitted the Company and Group Annual Report, together with the audit internal audit function. Furthermore, it reviewed the internal audit work plan and proposed that the report, to the Supervisory Board for review and approval within the statutory deadline. The Audit Supervisory Board approve it. Committee thoroughly reviewed both the Annual Report and the audit report and presented its opinions and findings. Based on regular monitoring of the Company’s and Group’s performance Cooperation with External Auditor: The Committee met with the external auditor before the and a detailed examination of the submitted reports, the Supervisory Board concludes that the 2024 finalisation of the 2023 financial statement audit and during the pre-audit phase for 2024. Annual Report has been prepared in accordance with applicable legislation and regulations and Self-Assessment: The Audit Committee conducted a self-assessment of its activities. provides a clear and transparent representation of the company’s assets, liabilities, financial position, profit or loss and comprehensive income. The 2024 Annual Report of Elektro Gorenjska and the Group has been prepared in accordance with the provisions of the Companies Act and applicable HUMAN RESOURCES COMMITTEE international accounting standards. The Human Resources Committee operated in 2024 with the following composition: In addition to the parent company, the Elektro Gorenjska Group includes Gorenjske elektrarne, d. o. o. • Gabrijel Škof, Chair, (a 100% subsidiary), and GEK Solar, d. o. o., which is fully owned by Gorenjske elektrarne, d. o. o. • Vid Meglič, Member, and T• Borut Jereb, Member. All companies within the Group concluded the 2024 financial year with a profit. The distributable profit of Elektro Gorenjska, d.d. for 2024 amounts to €1,381,878.00, consisting of €1,380,886.35 in The Committee held three meetings in 2024, all of which were regularly attended by its members. net profit for 2024 and €991.65 in retained earnings. Compared to the distributable profit for 2023, During the reporting period, the Committee adopted a total of 13 resolutions, all of which were this represents a decrease of €162,734.75. The Management Board will propose to the General implemented. Meeting that the entire distributable profit for 2024 be distributed to shareholders in the amount of €0.08 per share. At its meetings, the Committee reviewed, discussed and adopted the following matters: The Supervisory Board reviewed and agreed with the proposed profit allocation. • Familiarisation with the Permanent Innovation initiative at Elektro Gorenjska, which had also been presented during the SDH training held on 31 January 2024; Following its review of the Company and Group Annual Report for 2024, the members of the • Adjustment of the President of the Management Board’s gross salary in accordance with the Supervisory Board raised no comments and unanimously adopted this report of the Supervisory Board Remuneration Policy for management bodies of Elektro Gorenjska, d. d. and those of subsidiaries on the verification and approval at its 24th regular session, held on 16 May 2025. within the Elektro Gorenjska Group (annually, by the end of March at the latest); • Review of succession management in the company; • Proposal to the Supervisory Board to adopt a revised Remuneration Policy for the management Kranj, 16 May 2025 bodies of Elektro Gorenjska, d. d. and its subsidiaries, aligned with the amendments to the SDH Recommendations and Expectations of December 2023; Gabrijel Škof, • Amendments to the employment contract with the President of the Management Board (Annex Chair of the Supervisory Board No. 2 – gross salary adjustment for 2024; Annex No. 3 – alignment with the new remuneration policy); • Proposal to the Supervisory Board regarding the amount of the variable remuneration component for the President of the Management Board for 2023; • Amendments to the employment contract with the President of the Management Board (Annex No. 2 – gross salary adjustment for 2024; Annex No. 3 – alignment with the new remuneration policy); • Proposal to the Supervisory Board regarding the amount of the variable remuneration component for the President of the Management Board for 2023; • Proposal to the Supervisory Board for the adoption of performance criteria for the variable remuneration component for the President of the Management Board for 2025. 38 39 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP AUDIT COMMITTEE OF ELEKTRO GORENJSKA SUPERVISORY BOARD In 2024, the standing Audit Committee of the Supervisory Board of Elektro Gorenjska operated in the following composition: 1.4. Supervisory Board AUDIT COMMITTEE SB EG, D. D. FUNCTION TERM FROM TERM TO Franjo Curanović Chairman 25 Aug 2023 (Chairman since 31 Aug 2023 25 Aug 2027 The powers and composition of the Supervisory Board are defined by the company’s Rajko Stanković Member 25 Aug 2023 Articles of Association. The Supervisory Board is composed of six members, four of (Member since 31 Aug 2023) 25 Aug 2027 whom represent capital interests and two who represent employees. Members of the Supervisory Board are elected for a term of four years and may be re-elected. The Dr. Simon Čadež External Member 31 Aug 2023 25 Aug 2027 shareholder-appointed members are elected by the General Meeting of Shareholders by a simple majority of the votes cast. The two employee representatives are appointed by The committee's term is tied to the term of the Supervisory Board. the company’s Works Council.   HUMAN RESOURCES COMMITTEE OF THE SUPERVISORY BOARD OF Composition of the Supervisory Board in 2024: ELEKTRO GORENJSKA In 2024, the standing Human Resources Committee of the Supervisory Board of Elektro SUPERVISORY BOARD OF EG, D. D. FUNCTION TERM FROM TERM TO Gorenjska operated in the following composition: Gabrijel Škof Chairman 29 Aug 2021 Chairman since 31 Aug 2023) 29 Aug 2025 HUMAN RESOURCES COMMITTEE OF SB EG, D. D. FUNCTION TERM FROM TERM TO Rajko Stanković Deputy Chairman 25 Aug 2023 (Deputy Chairman since 31 Aug 2023) 25 Aug 2027 Gabrijel Škof Chairman 29. 8.2021 (Chairman since 31 Aug 2023) 29 Aug 2025 Vid Meglič Member 29 Aug 2021 29 Aug 2025 Vid Meglič Member 29 Aug 2021 29 Aug 2025 Franjo Curanović Member 25 Aug 2023 25 Aug 2027 Borut Jereb Member 9 Aug 2023 9 Aug 2027 Borut Jereb Member 9 Aug 2023 9. Aug 2027 David Gogala Member 9 Aug 2023 9. Aug 2027 1.5. General Meeting of Shareholders By resolution of the General Meeting, in addition to session fees of €275, members of the In 2024, the Management Board convened one regular session of the company’s General Supervisory Board receive a monthly remuneration of €942 for members and €1,412.50 for Meeting. the Chairman of the Supervisory Board. Details of the 2024 remuneration are presented in the chapter Transactions with Related Parties. The 31st regular General Meeting was held on 20 June 2024, with 85.62% of voting shareholders present. Shareholders voted on four agenda items, as published in the meeting notice on the online portal of the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES). Shareholders were first presented with the audited annual report of the company and the Group for 2023, the auditor’s opinion, and the written report of the Supervisory Board on the review and approval of the annual report for the 2023 financial year. They were also informed about the remuneration of members of the management and supervisory bodies within the Elektro Gorenjska Group for 2023, the remuneration policy for members of the management and supervisory bodies of Elektro Gorenjska, and the remuneration policy for members of the management bodies of the Group’s subsidiaries for the same year. Shareholders were informed of the net profit for 2023. As of 31 December 2023, the retained earnings amounted to €1,554,612.75. A resolution was adopted to allocate the entire amount for the payment of dividends, in the gross amount of €0.09 per share. The General Meeting granted discharge for 2023 separately to the President of the Management Board and to the members of the Supervisory Board. 40 41 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP . Elektro Gorenjska is the highest-quality and most development-oriented electricity distribution company in Slovenia. Theop priority is to ensure a continuous and stable electricity supply for the Gorenjska region. It is Elektro Gorenjska's heartfelt responsibility to drive progress, create opportunities for talent, and remain attentive to the needs of people. With the spirit of an innovator, Elektro Gorenjska contributes to the sustainable transformation of modern society—an invisible force that guides our every step. The company seeks out and creates sustainable green solutions, committed to actively shaping a more sustainable future. Elektro Gorenjska’s competent, dedicated, and creative employees are the driving force behind BOUits future. The company fostTers a work environment defined by organisational stability and reliability and driven by agility and dynamism. Elektro Gorenjska Group. Delivering lasting energy. HABOUT THEE ELEKTRO GORENJSKA GROUP 42 43 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2.1. Our Mission, Vision, and Values OUR MISSION WHOur missionY answers the questio?n: Why do we exist? It defines the reason and purpose behind the existence of Elektro Gorenjska. OUR VALUES WE PROVIDE SUSTAINABLE ENERGY. Our values define how we operate. They are the guiding principles of our daily actions and the compass that keeps Our mission to provide sustainable energy encompasses four key dimensions: us aligned with our vision. HIGH-QUALITY, CONTINUOUS AND RELIABLE INNOVATIVE HOW? ELECTRICITY SOLUTIONS SUPPLY THAT DRIVE A SUSTAINABLE COMMITMENT TO AND GREEN ENVIRONMENTAL TRANSITION RESPONSIBILITY IN FOR SLOVENIA OUR OPERATING OPENNESS ENVIRONMENT SUCCESSFUL BUSINESS RESPONSIBILITY WE BUILD TRUST WITH OUR WE STAND BY OUR COMMITMENTS. CUSTOMERS AND NURTURE STRONG, LASTING RELATIONSHIPS. We recognize personal responsibility in SUSTAINABLE INNOVATION making timely, realistic decisions and in WE EMBRACE INNOVATION AND how we engage with all stakeholders. We PURSUE SUSTAINABLE, GREEN We develop customer relationships and care about others. We act with honesty, SOLUTIONS. continually seek ways to improve quality OUR VISION care, and social responsibility. We take and satisfaction. We respond quickly to responsibility for our mistakes, our own issues and complaints, addressing them development, and staying informed. We We recognize opportunities in our with dedication and timeliness. We take The vision outlines what Elektro Gorenjska strives to be. manage company resources and assets environment and continuously look for initiative. We build customer trust by It is a roadmap to the desired future of Elektro Gorenjska. as responsible stewards. We demonstrate new ways to innovatively and effectively making realistic, achievable promises—   social responsibility by contributing to implement and improve internal processes and keeping them. We understand our ELEKTRO GORENJSKA IN 2028 the sustainable development of both and services in cooperation with external services and provide expert guidance. We the local and broader community. We stakeholders. We seek new green and prioritize quality over quantity and carry are committed to safety in all areas sustainable solutions that support the out even the simplest tasks with care. We are a central With a highly We rank among the Through the intensive We act as a key of operation and set an example of transition to a low-carbon society. stakeholder in competent and well- top 10% of European use of advanced grid facilitator of the corporate integrity. We pay attention to the needs of co-creating a organized team, we electricity distributors technologies and flexibility services We respect the past and the knowledge of employees and other stakeholders. We sustainable future efficiently develop and in terms of supply carefully planned market, following We are responsible for progress and experienced colleagues while continually are open, share ideas, and strive to for the Gorenjska manage a modern and quality and service investments, we fully the best practices willingly take on challenging tasks. We building on it. We invest in our personal find mutually acceptable solutions. We Wregion. susHtainable electricity coAntinuity. Tsupport the go?als of leading European carry out our work professionally and development. We care for one another, act with tact and aim for the overall distribution system. of a sustainable distribution operators. competently, striving for excellence. We listen to colleagues, involve them in satisfaction of the Group. We motivate transition, in line with strengthen the company’s reputation by decisions, and support them in thinking colleagues through friendly relationships. the Distribution System taking initiative and acting proactively creatively and independently so they can We behave respectfully and kindly, Development Plan. within our stakeholder environment. grow and develop. We resolve conflicts communicate openly, and share our constructively. We build and share thoughts and feelings with one another. We persevere and demonstrate strong knowledge among ourselves and with 100 % of our users Network cabling is Our operations Our performance Thanks to high dedication to achieving our goals. We our partners. We analyse market and are connected to optimally implemented, are efficient and indicators in levels of investment, remain engaged and committed. regulatory trends and their impact on the system and covering on average successful, both in sustainable we have maintained the industry, customers, markets, and benefit from more than 85% of our terms of process development financial stability, competitiveness. Within the limits of the high-quality network—ensuring execution and project and stakeholder solid profitability, law, we offer services that exceed expected services. strong resilience to delivery. We maintain cooperation and comprehensive standards. climate change impacts. a well-balanced and continue to improve security across all stable workforce— steadily. operational areas. both in numbers and in expertise. 44 45 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2.2. Our Operations The companies within the Elektro Gorenjska Group perform three main activities: • Electricity distribution, a regulated activity carried out in accordance with the Agreement with the Distribution System Operator (DSO), • Electricity production, and • Other (market-based) services. ENSURING A RELIABLE ELECTRICITY SUPPLY The core activity of Elektro Gorenjska is the distribution of electricity to end users. This is a regulated activity, performed under an agreement with ELES, the company holding the concession for this service. 1,986 km²SERVIC E AREA The distribution activity includes public utility services performed by Elektro Gorenjska under contract for the distribution system operator ELES, and comprises: • Maintenance of primary electricity energy infrastructure (EEI), • Organisation and operation of an on-call service, • Operation and management of the electricity distribution network, • Network development planning, • Preparation and implementation of investments in EEI, 5,536 km • Monitoring and assessing electricity supply quality, OF DISTRIBUTION NETWORK • Electricity metering, • Provision of access services and other services for users, • User connections, • Provision of data for covering electricity losses in the distribution network and for the supply of ELES, 92,928USERS • Other user services. PRODUCING GREEN ENERGY Gorenjske elektrarne, our subsidiary, generates electricity through HPPs, PVPP, and CHPs. For many years, it has also been active in the fields of energy efficiency and energy management. The electricity production activity includes: • Generation in hydropower plants (HPPs), • Generation in solar or photovoltaic power plants (PVPP), and • High-efficiency cogeneration of heat and power (CHPs). EXPERT PARTNERS IN ENERGY PROJECTS GEK Solar, a dependent company of Gorenjske elektrarne, was established in 2023. It focuses on engineering services in the field of solar energy—covering both the construction of infrastructure facilities for electricity and telecommunications, and the construction of solar power plants. The Group also includes Soenergetika, which operates in the energy supply chain within the market segment. Its main activity is the production of electricity and heat in cogeneration facilities. Other services—provided both within the regulated framework and the open market—include: • Investment implementation and maintenance, • Research and development, • Design and engineering, • Energy efficiency projects and energy management, and • Comprehensive engineering services. GORENJSKA IS OUR HOME The main area of operations for the Elektro Gorenjska Group is the northwestern part of OVERVIEW OF THE ELECTRICITY SUPPLY AREAS OF DISTRIBUTION COMPANIES. Slovenia – the Gorenjska region. 46 47 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2.3. Structure of the Elektro Gorenjska Group 2.4. Organisational Structure of Elektro Gorenjska MANAGEMENT AND ORGANISATION OF ELEKTRO GORENJSKA The Elektro Gorenjska Group is composed of the parent company Elektro Gorenjska and its wholly owned subsidiary Gorenjske elektrarne. The Group also includes two affiliated The Management Board of Elektro Gorenjska consists of a single member—the President companies: GEK Solar, which is 100% owned by Gorenjske elektrarne, and Soenergetika, of the Management Board—who is appointed by the Supervisory Board. The President in which Gorenjske elektrarne holds a 25% ownership stake. Additionally, Gorenjske serves a four-year term and may be reappointed. elektrarne owns a 20% stake in the company Alfi Sol 2. The company is led by Dr. Ivan Šmon, MBA. In accordance with the Articles of The Group’s financial statements include the accounts of the parent company Elektro Association, he holds powers related to the organisation and management of the Gorenjska, its subsidiaries, and the share of profit from the associated company. company. Based on legal requirements, the Articles of Association, and the Rules of Procedure of the Supervisory Board, he reports in detail to the Supervisory Board on the The Group also includes the company Informatika, in which Elektro Gorenjska holds company’s operations and performance at least four times per year. a 10.50% share. Due to its limited scope of operations, Informatika is not included in the consolidated financial statements. None of the companies in the Elektro Gorenjska Group operate through branches. MANAGEMENT INTERNAL AUDIT DEPARTMENT PARENT COMPANY CORPORATE SERVICES ICT SECTOR STRATEGIC INNOVATION NETWORK SECTOR INVESTMENT SECTOR SECTOR SECTOR President of the Management Board: Dr. Ivan Šmon, MBA Total revenue in 2024: €49,312,641 INVESTMENT AND ICT INFRASTRUCTURE RESEARCH, DEVELOPMENT, OPERATIONS MAINTENANCE PLANNING CONTROLLING TEAM 1 (AGILE) AND CYBERSECURITY AND INNOVATION Net profit in 2024: €4,219,795 DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT Share capital as at 31 Dec 2024: €104,136,615 METERING AND PROJECT DESIGN LEGAL AND INFORMATION ADVANCED SOLUTIONS TEAM 2 (AGILE) NETWORK CHARGES DEPARTMENT GENERAL AFFAIRS SOLUTIONS AND PROJECTS DEPARTMENT DEPARTMENT DEPARTMENT DEPARTMENT SUBSIDIARY – 100% NETWORK INVESTMENT AND Director: Mag. Aleks Jan MANAGEMENT MAINTENANCE ASSET MANAGEMENT DEPARTMENT EXECUTION DEPARTMENT DEPARTMENT Total revenue in 2024: €11,076,259 Net profit in 2024: €2,983,990 POWER SYSTEM HUMAN RESOURCES PLANNING DEPARTMENT AND CORPORATE Share capital as at 31 Dec 2024: €13,684,880 COMMUNICATIONS DEPARTMENT SUBSIDIARY – 100% ASSOCIATE – 25% FINANCE AND ACCOUNTING DEPARTMEN Director: Mag. Aleks Jan Director: Aleš Ažman, MBA TEAM 3 (AGILE) Total revenue in 2024: €1,206,666 Total revenue in 2024: €2,992,008 SOENERGETIKA Net profit in 2024: €118,934 Net profit in 2024: €180,482 ORGANISATIONAL STRUCTURE OF ELEKTRO GORENJSKA Share capital as at 31 Dec 2024: €200,000 Share capital as at 31 Dec 2024: €1,020,000 Each sector is composed of several departments. The Internal Audit Department reports ORGANIZATIONAL CHART OF THE ELEKTRO GORENJSKA GROUP directly to the Management Board. Elektro Gorenjska identifies related parties based on the provisions of the International The Network Sector manages the tasks of the public utility service for the distribution Financial Reporting Standards (IFRS), primarily IFRS 24 and IFRS 28, the Companies Act system operator, which Elektro Gorenjska performs under contract with ELES. (ZGD-1, Official Gazette of the Republic of Slovenia, No. 65/09 with amendments), and the Corporate Income Tax Act (ZDDPO-2, Official Gazette of the Republic of Slovenia, No. The Investment Sector is responsible for implementing investments and maintenance 117/06 with amendments). activities. Elektro Gorenjska does not directly or indirectly own at least 20% of the value or number The Strategic Innovation Sector focuses on research, development, innovation, and ad- of shares or equity interests in the capital, management, or supervision of any company vanced solutions and projects. other than those already mentioned. The company also does not control any other company under a contract in a way that differs from relationships between unrelated The Corporate Services Sector provides general and financial services, occupational parties, nor does it have significant influence over any other company.. health and safety services, and fleet management for all other sectors and companies within the Group. The Information and Communication Technology (ICT) Sector delivers ICT services across the entire Elektro Gorenjska Group. On 1 April 2024, a reorganisation was carried out with the goal of optimising business processes and preparing for a larger volume of investments required for our sustainable transition. 48 49 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2.5. Share Capital and Ownership Structure 2.6. Sustainable Development Strategy of Elektro Gorenjska As of 31 December 2024, the share capital of Elektro Gorenjska amounted to EUR Sustainable practices have been part of Elektro Gorenjska’s values since the very 104,136,615.39. It is divided into 17,273,475 ordinary registered no-par value shares beginning. Even in times when sustainability was neither widely discussed nor prioritised, (ticker symbol: EGKG). All shares belong to the same class. we strove to operate in harmony with both the natural and social environment. In 2024, we took a significant step forward by formally committing to sustainability through the The company has no authorised capital. In 2024, Elektro Gorenjska shares were not traded adoption of the Sustainable Development Strategy of Elektro Gorenjska for 2024–2028. on any regulated market. At Elektro Gorenjska, sustainability represents a holistic approach that integrates As of 31 December 2024, 95.98% of the company’s shares were owned by the Republic of environmental, social, and economic aspects to ensure long-term business responsibility Slovenia and legal entities, representing 19.91% of all shareholders. and stability. It is more than a business strategy. It is our commitment to building a fairer, cleaner, and more resilient future for all. TREND IN THE NUMBER OF ELEKTRO GORENJSKA SHAREHOLDERS FROM 31 DECEMBER 2020 TO 31 DECEMBER 2024: We are committed to sustainable strategic development. This means addressing people, nature, and business performance in a balanced way (ESG), in line with the European Sustainability Reporting Standards (ESRS). Our commitment to sustainability At Elektro Gorenjska, 270 is also reflected in our daily operational excellence, which ensures the stable supply of electricity. 260 sustainability represents 250 a holistic approach that Fully aware of our responsibility, we are continuing and expanding our story of continuity – one of consistent, reliable, and long-term presence in service of the environment and 240 integrates environmental, the people. This ENDURING PRESENCE is the essence of our purpose and operations. 230 social, and economic 220 248 237 223 225 226 210 aspects to ensure long-term 2.6.1. Strategic Directions and Initiatives 200 business responsibility and Under the new Sustainable Development Strategy, Elektro Gorenjska will in the future 2020 2021 2022 2023 2024 focus exclusively on its core activity – the provision of the public utility service as a stability. It is more than a distribution system operator. Its central mission will be to ensure a stable and reliable electricity supply for the Gorenjska region. business strategy. It is our OWNERSHIP STRUCTURE OF ELEKTRO GORENJSKA AS OF 31 DECEMBER 2024 (IN %) To achieve this, we are prioritising the development and maintenance of a reliable commitment to building a network, with strong emphasis on digitalisation, the introduction of modern fairer, cleaner, and more technologies, and innovative energy solutions. Republic of Slovenia 79.48 resilient future for all. The new strategy also places greater focus on sustainability and active stakeholder Other shareholders – legal entities 8.32 engagement. These stakeholders include network users, employees, partner organisations, professional associations, suppliers, municipalities, and the wider local Other shareholders – individual shareholders 3.96 community. Financial institutions 2.87 Elektro Gorenjska’s new strategy is stakeholder-oriented, meaning that the company Kapitalska družba, d.d. (Slovenian Pension Fund Management) 2.50 aligns its activities with a deep understanding of stakeholder interests. Through broader social responsibility and professional expertise, we aim to work collaboratively – through SDH, d.d. (Slovenian Sovereign Holding) 1.51 co-strategizing – to find long-term sustainable solutions that benefit society. Kapitalska družba, d.d. – PPS (Pension Fund Management, Special Pension Fund (PPS)) 1.00 At the same time, we recognise that efficiency and appropriate profitability are vital Investment companies qualities of our operations. Especially in the context of accelerated investments and rapid 0.29 technological development, they are essential to ensure the long-term continuity of our Participants in internal allocation 0.07 mission and our lasting presence. KAD d.d. – REG – non-voting (Pension Fund Management, Inc. – REG) 0.01   As of 31 December 2024, the largest shareholder of Elektro Gorenjska was the Republic of Slovenia, holding a 79.48% ownership stake. It was followed by Kapitalska družba with a 2.50% stake and Bau 1, d. o. o., with a 1.94% stake. 50 51 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP Key strategic directions of Elektro Gorenjska until 2028: 1. Sustainable Operations We continue the story of ENDURING PRESENCE under evolving regulatory conditions. The final objective is to create a modern innovation infrastructure, including a high- Our focus is on creating the right conditions to transform our network into a modern, innovation energy testing ground for research, development, and EU projects. It will sustainable electricity distribution system. serve as a “showroom” for modern energy products and services offered by Elektro Gorenjska and will introduce a “living lab” concept and a hub for cultivating a start-up We proactively take co-responsibility across the entire value chain and within the broader culture. stakeholder environment. We strive to be a place for top talent. Our corporate culture is evolving toward agility, inclusiveness, collaboration, accountability, widespread 2. Implementation of an Agile Operating Model innovation, and a strong commitment to sustainable goals. This project aims to foster cooperation across processes, departments, sectors, and TWithin the strategic dirRection of Sustainable Operations, we are implementing the subsidiaries in the field of green technologies, making agile operations a core process following key initiatives: within Elektro Gorenjska. Agile working will support the development of flexibility • Implementation of the Distribution System Development Plan, markets, provision of system services, establishment of energy communities, and • Securing adequate financial resources and an appropriate regulatory framework for implementation of large RES. the execution of the plan, • Achieving a high level of strategic innovation to support the distribution system's The goal is to unify technical and business competencies into a central agile workforce development, dedicated to developing a long-term business strategy. The project will establish • Realising sustainable development in line with ESRS standards, coordination processes for green transition activities and implement digital tools to • Ensuring enough competent and engaged employees at all levels, enhance information flow and monitoring of the entire process. • Strengthening an agile culture and inclusive leadership, • Achieving financial stability and optimal profitability. 3. Development of a Comprehensive Asset Lifecycle Management System (Methodology) 2. Development and Management of a Sustainable Distribution System The project aims to improve the technical, operational, and financial management of The Distribution System Development Plan must be implemented in a sustaAinable way, to assets. It focuses on developing a system for research planning and advanced data the greatest and most optimal extent. In the digital age, the development of smart grids analytics to support network management. is essential for electricity distributors. The effects of changing climate conditions in the planning and operation of our distribution system are being taken into account. The final goal is to establish the conditions for a comprehensive asset management T system, incorporating technologies such as IoT, Big Data Analytics, AI, AR/VR, and more. We continue toE improve our performance and processes for both external and internal users. We implement development projects that directly benefit the distribution system. 4. Optimisation of the Grid Connection Process We ensure the sustainable and long-term management of distribution system assets, in The goal of this project is to optimise and fully digitalise user services while simplifying line with the principles of sound management and the circular economy. the connection process to Elektro Gorenjska from the customer perspective. Within the strategic direction of Development and Management of a Sustainable The final goal is to streamline internal processes, create tools for load calculation Distribution System, we are implementing the following initiatives: support, and redesign the website. The project also includes the introduction of unified • Ensuring a sustainable distribution system, digital application forms and a digital inquiry system to provide users with easy access • Increasing satisfaction among users and key business partners in the value chain, to information through ChatBot, e-channels, and the contact centre. • Implementing high-quality and efficient project management, • Enhancing cost efficiency and lean process organisation. 5. Technological Upgrade of the Control Centre and Implementation of an Advanced Distribution Management System (ADMS)   2.6.2. Strategic Projects This project involves the introduction of a new ADMS system, based on a thorough analysis of the company’s current state and future needs. YStrategic projects are key elements for implementing the strategy, defining exact tasks and the manner of their execution. They provide a clear framework for the activities, The final goal is to implement an advanced ADMS platform that ensures secure and timelines, priorities, opportunities, and expectations needed to achieve strategic goals. robust management of the distribution network. The system will integrate all information The advantage of pre-defined strategic projects is the early identification of potential sources for operational control, consolidate technical, topological, and metering data, challenges and their logical integration with other projects within the company. and enable advanced data analytics to support decision-making, load management, safety, availability, asset lifespan, and overall network planning and development. The key strategic projects of Elektro Gorenjska, arising from the new Sustainable Development Strategy, are as follows: 1. Establishment of a Strategic-Innovation Centre The aim of the project is to position Elektro Gorenjska as a leader in modern energy and technological solutions in Gorenjska and Slovenia. It focuses on enabling strategic innovation within the company, which will support talent development and acquisition. The innovation centre will be a space for strategic stakeholder engagement and development. 52 53 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP O 2.6.3. Our Business Model Our business model is grounded in our mission to deliver sustainable energy. We provide the public utility service of electricity distribution in the Gorenjska region and are committed to ensuring accessibility, quality, and affordability of services for all residents. A distinctive feature of our model is that most of our revenue comes from public service activities. Therefore, the long-term stability and success of the company depend on appropriate regulatory pricing (network charges) and the continuous delivery of the prescribed quality of electricity supply. CORE CAPABILITIES OF ELEKTRO GORENJSKA Our core capabilities form a strong foundation for our operations. They represent the essential strengths that set us apart, enabling us to deliver consistent value to users – with reliable service, exceptional user experience, and lasting support for the competitive advantage of businesses and the quality of life of households. Our core capabilities are: 1. In-depth knowledge of energy and power systems, built on over 60 years of experience. 2. A forward-looking mindset, ambition, and prudence. 3. Well-structured business operations and processes. 4. A high level of employee dedication. KEY ADVANTAGES OF ELEKTRO GORENJSKA Our key advantages enable us to thrive in a rapidly changing business environment. They are: 1. A highly sustainable network at the top European level. 2. Strong development capabilities in research, innovation, human resources, monitoring systems, digitalisation, and cybersecurity. 3. Deep integration with the local community. 4. A trusted and reputable brand, especially in the Gorenjska region. 5. Proven reliability in project implementation and resolving user challenges. 54 BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP BUSINESS INPUT RESOURCES KEY TRENDS MODEL OF ELEKTRO € GORENJSKA FINANCIAL RESOURCES PEOPLE REGULATORY ENVIRONMENT ECONOMIC TRENDS INNOVATION TECHNOLOGY DEMOGRAPHIC TRENDS TECHNOLOGICAL TRENDS PARTNERS ENVIRONMENT ENERGY TRENDS ELEKTRO GORENJSKA Elektro Gorenjska is a public utility service provider in the field of critical infrastructure, namely electricity distribution. MISSION VISION VALUES MANAGEMENT STRATEGY RESULTS OF OUR OPERATIONS SATISFIED USERS RELIABLE ELECTRICITY GREEN ENERGY NETWORK SCOPE AND ENVIRONMENTAL SUSTAINABLE DEVELOPMENT OF SUSTAINABLE EMPLOYEE DEVELOPMENT SUPPORT FOR LOCAL SUPPLY PRODUCTION CAPACITY FOOTPRINT GORENJSKA, SLOVENIA AND INNOVATIONS COMMUNITIES EUROPE WIDER IMPACTS Creating value and delivering benefits for the broader society. Ensuring lasting energy. ELECTRIFICATION OF HOUSEHOLDS GREEN TRANSITION COMMUNITY CARE AND VALUE CREATION LONG-TERM RESPONSIBILITY 56 57 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2.6.4. Our Development Plan 2.6.5. Our Commitment to Continuous Innovation EThe current Electricity Network DVevelopment Plan for the Elektro Gorenjska area has At Elektro Gorenjska Group, continuous innovation goes beyond the latest technologies been prepared for the period 2025–2034. It serves as a strategic document that and processes. It represents a fundamental value that unites us. We are recognised outlines the key elements of the network’s development and anticipates investments that for our innovative spirit, actively participating as a partner in numerous national and will continue to ensure sufficient network capacity and enable reliable and long-term international research and development projects. In addition, we implement our own electricity supply to consumers. The plan is based on the guidelines of the Distribution development and investment projects, constantly strengthening our competitiveness and System Operator and is harmonised with representatives of all Slovenian distribution technological advancement. We systematically, purposefully, and strategically encourage companies, the transmission system operator ELES, the Slovenian Energy Agency (AGEN), At Elektro Gorenjska innovation among employees, fostering an environment where innovation is not just a as well as Elektro Gorenjska’s own data on network development for the specified period. Group, continuous goal but a way of thinking and working. The legal basis for preparing this ten-year development plan is laid out in the Electricity Supply Act (ZOEE), which requires that the distribution operator updates or prepares innovation goes PARTNERING FOR PROGRESS: OUR ROLE IN NATIONAL AND a comprehensive development plan for the distribution system every two years and EU R&D PROJECTS submits it to AGEN for approval. In doing so, we must follow the methodology prescEribed beyond the latest by AGEN under the ZOEE. LIn oOur ambition to become one of the most pioneering and innovPative companies, we technologies and actively engage in various R\&D projects in collaboration with external partners. Network development planning is becoming increasingly complex and is significantly processes. We secure additional funding for these projects through EU funding mechanisms and influenced by uncertainties over which we, as a distribution company and planner, national co-financing instruments provided by AGEN, the Slovenian Research and have limited control. These include the emergence of new technologies and operational Innovation Agency (ARIS), and Public Agency for Entrepreneurship, Internationalization, modeEls (e.g. smart grid solutions and integration of the flexibility market), a rapid Foreign Investments and Technology (SPIRIT Slovenia). increase in electricity demand due to electrification (e.g. heat pumps, EV charging stations), a surge in investments in the construction of distributed generation (e.g. sPVs), Key research and development projects undertaken in 2024 include: the development and integration of electricity storage systems, and the evolution of the regulatory framework, which, within the expected flexibility market, envisions a more active role for consumers in the future. PROJECT TITLE BRIEF DESCRIPTION AND TOTAL TYPE OF PROJECT DURATION ACTIVITIES IN 2024 PROJECT VALUE As part of the development plan, Elektro Gorenjska has outlined a comprehensive Activities to develop a joint European platform portfolio of investments for the next decade. Among these, the following key projects are Establishment of a for trading flexibility services continued. pan-European platform for The Slovenian part of the consortium, which particularly noteworthy: OneNet – One Network flexibility trading. for Europe 1 Oct 2020 –31 March 2024 includes Elektro Gorenjska, focused on demon- strating the use of flexibility services and de- € 27,900,419 Project Type: EU project, veloping software interfaces for standardized • In the upcoming ten-year period, the construction of new 110/20 kV distribution project qualified by AGEN information exchange with stakeholders in the transformer substations (RTPs) is planned, including RTP 110/20 kV Brnik – 110 kV GIS flexibility services market. and transformation, RTP 110/20 kV Kranjska Gora – 110 kV GIS and transformation, Establishment of energy Focused primarily on the development and RTP 110/20 kV Trata – 110 kV GIS and transformation. communities with a of hardware and software to support Creators – Creating pilot site in Jesenice. future energy community managers. • Several reconstruction projects are foreseen, such as the replacement of the Community Energy Involvement of the entire 1 Sept 2020 – 30 June 2024 Elektro Gorenjska Group supported the € 7,247,500 switchgear at RTP 110/20 kV Jesenice, the replacement of the 20 kV and 110 kV Systems Elektro Gorenjska Group. implementation of the pilot site at Acroni in Jesenice and developed business models for Tswitchgear at RTP 110/20 kV Tržič, and the gradual replacement of selected power Project Type: EU project various forms of energy communities. transformers across distribution transformer substation locations (RTP Radovljica, RTP Development of a platform An algorithm to activate flexibility services Labore, RTP Medvode, RTP Jesenice, RTP Železniki). for local flexibility trading, for voltage regulation at metering points was • Simultaneously, the construction of 110 kV networks will take place, including 2x110 DN-FLEX – Local- connecting DSOs, developed. Demonstration in the village of Flexibility Market aggregators, and active Srakovlje is being carried out. A connection kV overhead lines Kamnik–Brnik–Visoko, the 110 kV cable connection RTP Jeklarna–RTP Platforms for Distribution consumers. 1 Oct 2021 – 30 Sept 2024 with flexibility service providers was € 400,000 Železarna–RTP Jesenice (in cooperation with ELES), as well as the reconstruction of the Networks established via a unified access point (UAP), Project Type: ARIS project, with implementation of message exchange in 110 kV lines RTP Škofja Loka – RTP Železniki and RTP Moste–RTP Jesenice. project qualified by AGEN CIM format. • To improve overall network reliability, several major medium-voltage (MV) connections Addressing challenges of will be implemented, such as the 2x20 kV integration of the Jesenice power supply DRIFT – Optimization of controlling elements in station, 2x20 kV Moste–Lipce–Jesenice, 20 kV connection across the Vršič Pass, 20 kV LV Network Operation LV networks using deep An algorithm for managing LV networks for with Integrated Real- reinforcement learning optimal use of available flexibility services connection to Austria through the Ljubelj tunnel, 20 kV Rateče–Planica and Poligon– Time Flexibility Using algorithms. 1 Oct 2022 – 30 Sept 2025 was developed and optimized. A data storage € 400,000 Rateče connections, and 2x20 kV integration of Otoče, among others. Deep Reinforcement process and compiled datasets for training Learning Project Type: ARIS project, machine learning models were established. • A portion of the funds will be invested in the automation of the MV network (remotely project qualified by AGEN controlled switches in RMUs at transformer stations), and two projects are underway: Development of an operational measurements via metering centers (MC) at transformer stations, and intelligent system for monitoring and predictive remote meter reading for consumers via the AMI system. In the coming decade, maintenance of critical A health index calculation for distribution substantial focus will also be placed on smart grid development projects. infrastructure in the and power transformers was developed. To electricity distribution support this calculation, the range of data SmartEAM – Smart network. Providing an considered was expanded, a dedicated The approved ten-year development plan serves as the basis for preparing both the Enterprise Asset innovative solution database was established, and an application € 1,091,985 Management that transforms the 1 Oct 2022 – 30 Sept 2025 was created to display the calculation results. investment and business plans of Elektro Gorenjska. current paradigm of A set of additional sensors was also prepared, infrastructure monitoring which will be installed on power equipment and maintenance in to provide better insight into the real-time distribution networks is condition of transformers. being introduced. Project Type: EU Project 58 59 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP TOTAL TOTAL PROJECT TITLE BRIEF DESCRIPTION AND TYPE OF PROJECT DURATION ACTIVITIES IN 2024 PROJECT PROJECT TITLE BRIEF DESCRIPTION AND TYPE OF PROJECT DURATION ACTIVITIES IN 2024 PROJECT VALUE VALUE Development of a digital A review and inventory of various technical twin of the LV distribution Analytical modules to monitor the operational Developing strategies energy storage options was carried out. network to accelerate status of the distribution network and to for integrating a larger Stakeholders in the energy storage ecosystem the energy and green generate time series for simulations in the StoreMore – Analysis number of electricity were identified, and an analysis was DigiGRID – Digital Twin transition by increasing form of APIs have been established. An and Promotion of Energy storage units into 1 Jan 2024–31 Dec 2026 conducted on the barriers hindering large- € 2,218,540 of the LV Network to the integration of RES information infrastructure was set up, into Storage Solutions energy networks by scale deployment of energy storage systems Accelerate the Energy into the grid. The project 2 Nov 2022 – 31 Oct 2024 which the first version of the final software € 571,614 involving a wide range of at the national level. Several study visits to and Green Transition will also result in faster was installed. A database was implemented stakeholders. international best practices in the field of connection processes for for storing the network model in CIM format, energy storage were also conducted. these sources and reduced and the network model was exported in operational costs. CIM format from the source system, i.e., the Developing a simulation geographic information system. environment capable Project Type: SPIRIT project AHEAD – Holistic of identifying the most As part of the project, we defined the Approaches to the suitable locations for objectives of Work Package 3 (WP3). Initial CDeveloping a system Integration of Electric setting up electric vehicle work is underway on simulating electric that, using adaptive software logic, will help An algorithm to reduce electricity Vehicles into Power charging stations and 1 June 2024–31 May 2028 truck charging scenarios, and a plan has € 10,997,750 consumption peaks by managing the start- Distribution Networks optimising both the use of been developed for a custom Python library E.Efficient.Industry identify the most optimal up sequences of industrial machines was Using AI the power infrastructure that will serve as the key deliverable of our – Utilizing Electricity electricity consumption developed. Another algorithm to detect and the utilisation of contribution. Flexibility in Energy patterns for large Facilities to Optimize industrial consumers 3 Jan 2023 – 31 Dec 2025 faults in industrial equipment based on € 2,239,768 charging points in urban electricity consumption measurements is and rural areas. Power Consumption and actively manage consumption in real time under development. A calculator to estimate Establishing a shared using controllers. network charges under the new five-tier tariff EnerTEF – Joint Pan- environment for testing system was created. European Facilities and experimenting with AI The project launched in 2024 with the Project Type: SPIRIT Project for Testing and tools in the energy sector, Experimenting with AI in aiming to bridge the gap 1 Nov 2024–31 Oct 2027 identification of use cases. The pilot project and specific activities of each partner were € 6,687,663 Developing a system A review of professional literature in the the Energy Sector between practical needs further defined. for short-term voltage field of voltage and electricity consumption and the limited number of VoltAware – Voltage forecasting at metering forecasting at metering points was carried validated AI solutions. Stabilization and points to enable the use of 1 Oct 2023– 30 Sept 2025 out. Simple forecasting models for voltage € 747,120 Optimization Using AI flexibility services. prediction were implemented, which will serve as the basis for the development of algorithms Project Type: EU project for optimal use of flexibility services. Using advanced machine Methodologies and tools to forecast voltage OUR IN-HOUSE DEVELOPMENT AND INVESTMENT PROJECTS ForVolt –Development of learning algorithms to conditions in low-voltage networks 1–2 days Algorithms for Voltage accurately assess voltage in advance for the reservation of flexibility Condition Forecasting at conditions in the network 1 Jan 2024–31 Dec 2024 services were developed. The solutions also € 130,000 Elektro Gorenjska implements several own innovative and investment projects. These are Metering Points and optimize user flexibility enable more accurate forecasting of voltage focused on technological progress and the integration of innovative solutions into our to stabilize the grid during conditions 1–2 hours in advance for the critical periods. activation of flexibility services. regular operations.   The project revealed that predictive fault Development of the detection systems can identify early signs of Key development and investment projects implemented in 2024: algorithms for the malfunction. A correlation was found between PredOkvaro –Tools for predictive detection of voltage fluctuations and other metering Predictive Fault Detection physical faults in the parameters (meter events) that occur before in the Electricity electricity distribution 1 Jan 2024–31 Dec 2024 certain faults. These correlations served as € 50,000 TOTAL Distribution Network network based on data the basis for developing machine learning PROJECT TITLE BRIEF DESCRIPTION DURATION ACTIVITIES IN 2024 PROJECT and events from smart algorithms that, when data is processed in a VALUE meters. timely manner, can predict potential faults in the network. In 2024, the reconstruction of secondary The Project of Common equipment at the RTP Zlato Polje was almost The project focused on defining a network Interest (PCI) is partially completed, and the RTP Primskovo was nearly model in the context of observability between funded through the finalized (completion expected in 2025). Ten TwinEU – Advancing transmission and distribution system Digital Twin Technology Developing a digital twin Connecting Europe existing transformer stations were equipped operators and on defining a data exchange for European Energy of the European electricity 1 Jan 2024–31 Dec 2026 Infrastructure network. format. High-resolution measurements were € 25,216,061 GreenSwitch Facility (CEF). The aim is 1 March 2023–31 Dec 2028 with a remote control system, and three € 146,204,508 to modernize our existing replacement stations were built. One network conducted during transient events in the electricity infrastructure cable loop was also installed. Activities are distribution network to assess their impact on and equipment through underway to establish a cable connection the transmission network. targeted investments. with the Austrian distribution network KNG through the Ljubelj tunnel. Hedge-IoT – Developing a Critical transformers were identified for the A Comprehensive comprehensive approach integration of IoT devices at the network The aim of the project is Approach to the to empowering the edge, and key use cases were defined to renovate an existing Digitalisation of the digitalisation of the energy 1 Jan 2024–31 Dec 2026 for the Slovenian demonstration version. € 17,999,755 vacant building next to Energy Ecosystem with ecosystem through the The adaptation of computer code for the the RTP Zlato Polje into a IoT Solutions implementation of IoT calculation of Dynamic Thermal Rating (DTR) ŠPAIZA – Reconstruction modern innovation centre solutions. is currently underway. and Establishment of that will showcase key Reconstruction of the building began in an Innovation Centre at technological solutions to 1 Apr 2021–31 Dec 2025 2024. Completion of all construction and € 550,000 Measurements were established in the Zlato Polje the wider public. The space craft work is planned before summer 2025. PEDvolution – Developing interoperable Labore industrial zone to accurately assess is envisioned as a “living Interoperable Solutions solutions that accelerate the potential for utilising waste heat from laboratory” in ongoing for the Development and optimise the industrial processes. A study has been of Cross-Sectoral development of Positive 1 Jan 2024–31 Dec 2026 initiated to evaluate the possibility of using € 4,303,393 collaboration with the Kranj School Centre. Integration Energy Districts (PEDs) and this waste heat for heating residential cross-sectoral integration. buildings in the Planina neighbourhood in The aim of the project is to Kranj. upgrade the information MDMS – Implementation system for managing of a Meter Data measurements from 1 Jan 2024–31 Dec 2024 The meter data management system was Management System various data sources to established. € 229,000 support advanced data analytics. 60 61 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP ELEKTRO GORENJSKA SYSTEMATICALLY ENCOURAGES CONTINUOUS INNOVATION AMONG EMPLOYEES Special attention is devoted to innovation activities, which is why Elektro Gorenjska has maintained a systematic process for fostering innovation among employees for many years. In 2024, the Innovation Committee held seven sessions. A total of 66 innovation proposals were submitted (compared to 51 in 2023). The Innovation Committee and its members further engaged in promoting innovation among employees. In 2024, the Elektro Gorenjska Group formalised and consolidated its employee innovation process with the introduction of a new initiative called #TopStart. The project encourages employees to take part in solving current challenges each quarter. The Elektro Gorenjska Group issues a challenge, and employees submit innovative proposals and ideas for its resolution. This approach fosters creativity, collaboration, and the pursuit of new solutions, while also strengthening the culture of innovation within the organisation. #TopStart represents an important step toward promoting continuous improvement and involving all employees in the development of the Elektro Gorenjska Group. In 2024, the Innovation Committee launched two challenges open to all employees. The autumn challenge sought ideas for more effective onboarding of new hires, while the winter challenge focused on identifying which functions Elektro Gorenjska should address as a facilitator in the flexibility services market. Also in 2024, the Elektro Gorenjska Group introduced a new activity as part of its efforts to systematically promote innovation among employees: Transformatorfest – the Festival of Continuous Innovation. This day, filled with various activities, is dedicated to encouraging and strengthening innovation and creativity among employees across the Elektro Gorenjska Group. THE PROCESS OF IMPLEMENTING INNOVATION ACTIVITIES AT ELEKTRO GORENJSKA INNOVATION Implementation of Validation and hackatons and other Research and realization of forms of periodic development projects innovations and incentives improvements Rewarding accepted INNOVATION answers INNOVATION REASEARCH & PROJECT COMMITTEE OFFICE DEVELOPMENT OFFICE Assessment of proposals Submitting proposals Professionalization MASS INNOVATION and systematization Communication, of innovations and stimulation improvements Development of innovation culture STRATEGY 62 63 22002244 AANNNNUUAALL RREEPPOORRTT OOFF EELLEEKKTTRROO GGOORREENNJJSSKKAA –– CCOOMMPPAANNYY AANNDD GGRROOUUPP PPEERRFFOORRMMAANNCCEE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP . CO OMIC ECONOMIC ASPECTS 64 65 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 3.1. Business Environment Analysis The operations of Elektro Gorenjska and its Group are significantly influenced by both general economic conditions and the specific regulatory framework governing the electricity sector. Spring Forecast (February 2025) Indicators for the Republic of Slovenia 2024 Following a gradual slowdown in 2022 and 2023, employment growth nearly came to a 2025 2026 2027 halt in 2024 – while simultaneously reaching its highest level to date. At the same time, GDP (real growth, %) 1.6 2.1 2.4 2.3 due to reduced labour demand, the decline in the number of registered unemployed persons also slowed. In addition to economic activity, labour market conditions are Employment (growth, %) 0.1 0.1 0.4 0.5 strongly influenced by demographic factors. Given the already high employment levels and labour shortages, employment in 2025 is expected to grow by only 0.1%, and Unemployment rate (%) 4.6 4.6 4.5 4.5 by 0.4% and 0.5% in 2026 and 2027 respectively. After near-stagnation at record employment levels throughout most of 2024, only modest growth is projected for 2025, Inflation (Dec./Dec., %) 1.9 2.7 2.2 2.1 with a potential acceleration in the following two years, mainly due to the hiring of foreign workers. The unemployment rate is expected to decline further, driven not only by Inflation (annual average, %) 2.0 2.3 2.3 2.1 job placements but also by a rising trend of transitions from unemployment to inactivity or retirement. Gross wage per employee (real growth, %)* 4.1 3.8 3.1 3.0 By the end of 2024, inflation decreased to 1.9%, with the average annual inflation rate Labour productivity – GDP per employee (real growth, %) 1.4 2.0 2.0 1.7 at 2% - more than half the rate recorded in 2023 (4.2%). The main drivers of easing inflationary pressures were slower price increases in services and non-energy industrial Source: UMAR – Institute of Macroeconomic Analysis and Development of the Republic of Slovenia – Spring Economic Forecast 2025 goods. Year-on-year inflation was also strongly affected by base effects, mostly linked *Note: the spring forecast 2025 includes statistical data, information, and adopted measures as of 14 february 2025. to anti-inflationary interventions introduced in 2023. In 2025, price growth is expected to remain moderate across most segments, although service prices will continue to outpace the overall inflation rate. Inflation dynamics will be shaped significantly by past In 2024, economic growth slowed to 1.6%, down from 2.1% the previous year. While and ongoing policy measures and their gradual withdrawal. Annual inflation is forecast export performance exceeded expectations, both private and public consumption aligned to reach 2.7% by the end of 2025, with an average annual rate of 2.3%. Assuming with forecasts. However, there was a notable decline in investments, contrary to the relatively stable energy prices on international markets, year-on-year fluctuations in initially anticipated stagnation. Compared to the European average, Slovenia’s GDP in energy prices will reflect the phasing out of energy crisis mitigation measures. Service 2024 was 0.4 percentage points higher. In their latest forecasts, international institutions price growth is expected to remain above average in 2025 and beyond, driven by predict only a slightly higher GDP growth in the euro area for 2025 compared to 2024, continued labour shortages and rising wages. In the absence of major external shocks, followed by a gradual acceleration – albeit slower than projected in the autumn outlook, inflation is expected to gradually ease after 2025, stabilising around 2%. particularly in Germany. Rising geopolitical and economic uncertainty, reflected in the record-high trade policy uncertainty index in January 2025, coupled with measures Nominal wage growth moderated slightly in 2024; however, due to lower inflation, already implemented by the U.S. government, signal potential further slowdowns and real wage growth increased to 4.1%. In 2025, gross wages are expected to grow at heighten risks of worsening economic prospects. For the euro area, GDP growth is a relatively high pace, supported by increases in both the private and public sectors. forecast at 0.8% in 2025, with expected increases to 1.1% in 2026 and 1.2% in 2027. Thereafter, wage growth is likely to slow somewhat, though real wage growth will still reach around 3% — higher than the average over the past decade. Labour shortages will In Slovenia, economic growth is projected to rise to 2.1% in 2025, slightly below continue to exert upward pressure on wages, reinforced by the so-called “demonstration expectations from autumn 2024. Following a strong performance in early 2024, effect” of public sector pay increases. Nevertheless, to remain competitive, businesses which notably slowed towards the end of the year, merchandise exports in 2025 are are likely to restrain excessive wage growth, contributing to a gradual moderation in real expected to grow at a more moderate pace, aligning more closely with foreign demand wage growth. trends. The main driver of economic growth in 2025 will be domestic consumption, particularly private spending, supported by higher income from wages and social There is always a degree of uncertainty in macroeconomic forecasts — one that has transfers, alongside a recovery in investment activity following a downturn in 2024. increased significantly in recent years. In particular, the spring forecast for 2025 is Public investment will gain renewed momentum, driven by funding from the Recovery subject to numerous risks, mainly from the international environment, though some and Resilience Plan (RRP) and the 2023 Flood Recovery Fund. Nonetheless, uncertainty stem from domestic factors as well. These risks are predominantly negative and more and weak economic recovery in key trading partner countries will lead export-oriented pronounced than those outlined in the autumn forecast. Still, some scenarios could lead companies to adopt more cautious investment strategies. Additional stimulus will come to higher-than-expected economic growth. The main risk to lower economic growth stems from falling interest rates, positively impacting housing investments – although primarily from heightened global uncertainty, which is partly factored into baseline assumptions in the medium term. Over the following two years, a slightly faster pace of economic but could be further exacerbated by a potential escalation of U.S. protectionist measures growth is expected: 2.4% in 2026 and 2.3% in 2027. and retaliatory responses from affected countries.   66 67 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 3.2. Key Results and Performance Indicators in 3.3. Business Performance Analysis of the Group 2024 in 2024 ANALYSIS OF THE INCOME STATEMENT OF THE ELEKTRO GORENJSKA GROUP The operations of Elektro Gorenjska and the Elektro Gorenjska Group are significantly influenced by regulatory conditions related to the electricity distribution activity, which Elektro In 2024, the Elektro Gorenjska Group generated a profit of €4.567 million before tax. This result is Gorenjska performs under the Agreement with the Distribution System Operator (DSO). €7.307 million lower than in 2023. COMPOSITION OF THE INCOME STATEMENT (IN €) IN 2024 AND 2023 KEY RESULTS AND PERFORMANCE INDICATORS: EG Company EG Group 14,000,000 11,873,612 2023 2024 2023 2024 12,000,000 Indicator 10,000,000 Net financial debt / EBITDA 3.1 3.6 1.8 2.8 8,000,000 Current ratio (%) 0.8 1.0 1.3 1.4 6,000,000 Value added (€000) 33,379 32,569 44,665 39,267 4,566,560 4,000,000 Share of labour costs in value added (%) 46.0 49.7 38.0 45.8 2,000,000 EBITDA (€000) 18,026 16,394 27,672 21,295 ROA (%) 2.1 1.6 4.0 1.3 0 ROE (%) 3.2 2.4 6.0 2.1 -2,000,000 2023 2024 Revenue per employee (€) 153,380 151,222 195,850 170,044 Value added per employee (€) 113,856 107,607 138,316 117,274 EBIT FINANCIAL RESULT EARNINGS BEFORE TAX (EBT) Income Statement (€000) Indicator Operating revenue 44,966 45,770 63,244 56,936 Operating expenses 39,492 42,621 49,660 50,203 The profit before tax (EBT) is influenced by the operating result, primarily from the distribution activity performed by Elektro Gorenjska under contract with the Distribution Operator (DO), as EBIT 5,474 3,150 13,584 6,733 well as from electricity production. The lower profit before tax (EBT) is primarily the result of a Financial result -160 1,269 -1,710 -2,166 decrease in net sales revenue. The main reason for this is a decline in revenue from electricity sales. Net profit for the year 5,386 4,220 10,726 3,838 Statement of Financial Position (€000) Indicator Assets 260,197 267,367 280,305 288,595 OPERATING RESULT (IN €) IN 2024 AND 2023 – Long-term assets 243,742 252,484 248,367 262,492 – Short-term assets 14,974 14,705 31,937 26,103 69,000,000 Equity 170,316 174,346 182,985 186,621 59,000,000 Liabilities 89,881 93,021 97,320 101,974 49,000,000 39,000,000 27,671,945 29,000,000 21,295,225 19,000,000 13,584,045 9,000,000 6,732,667 -1,000,000 2023 2024 OPERATING REVENUES OPERATING EXPENSES OPERATING RESULT (EBIT) EBITDA 68 69 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP In 2024, the Elektro Gorenjska Group generated €56.936 million in Operating result (EBIT) in 2024 amounted to €6.733 million. Compared to 2023, it STRUCTURE OF OPERATING EXPENSES was lower by €6.851 million due to reduced operating revenue. The drop in operating operating revenue. revenue was mainly a result of lower electricity sales and a reduced volume of market- based projects. 1.3% 3% EBITDA, as an approximation of cash flow, stood at €21.295 million which is €6.377 2023 2024 COSTS OF GOODS, MATERIALS AND million less than in 2023. SERVICES In 2024, the Elektro Gorenjska Group generated €56.936 million in operating revenue. 29% 36.1% 28.4% 32.1% EMPLOYEE BENEFIT EXPENSES Net sales revenue amounted to € 48.269 million, representing a 12.4 % decrease compared to 2023. Most of the net sales revenue came from the rental of electricity DEPRECIATION, distribution infrastructure and services provided to the Distribution Operator (DO), AMORTISATION AND which totalled €35.398 million – an increase of 4.2 % compared to 2023. Revenue from IMPAIRMENT LOSSES capitalized own products and services amounted to €6.702 million, up 9.3% from 2023. 34.2% 35.8% OTHER OPERATING Other operating revenue totalled €1.965 million, which is 3.5% less than in 2023. EXPENSES STRUCTURE OF OPERATING REVENUE 3.2% 3.5% 100% 90% 9.7% 11.8% 80% OTHER OPERATING 33.4% 22.6% REVENUES FINANCE RESULT IN 2023 AND 2024 (IN €) 70% 60% CAPITALISED OWN 2,500,000 PRODUCTS AND OWN 50% SERVICES 2,000,000 40% OTHER NET SALES 1,500,000 53.7% 62.2% REVENUES 30% 1,000,000 20% RENTAL INCOME AND 500,000 SERVICE REVENUES 10% FOR SUBSIDIARIES 0 0 -500,000 2023 2024 -1,000,000 -1,500,000 -1,710,431 -2,166,107 -2,000,000 Operating expenses in 2024 amounted to €50.203 million, which is 1.1% more than in 2023 2024 2023. The largest share of operating expenses were employee benefit expenses, which reached €17.972 million in 2024 – an increase of 5.8% compared to the previous year, primarily due to an increase in the number of employees. Costs of goods, materials FINANCE INCOME FINANCE COSTS FINANCE RESULT and services totalled €16.139 million in 2024, which is 10.1 % less than the previous year. This reduction was due to a lower volume of market projects. Depreciation and amortization expenses amounted to €14.563 million in 2024, which is 3.4 % more than in 2023. This includes increased depreciation due to new investments, while impairment losses were lower than in 2023. Other operating expenses amounted to €1.530 The finance result was negative in 2024, amounting to €2.166 million. It was also million, more than double compared to 2023, due to higher provisions related to the negative in 2023, at €1.710 million. The negative result was influenced by interest denationalization of the Sava Hydropower Plant. payments on loans received from banks to finance investments. 70 71 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP NET PROFIT IN 2023 AND 2024 (IN €) ANALYSIS OF THE STATEMENT OF FINANCIAL POSITION OF THE ELEKTRO GORENJSKA GROUP As of the last day of 2024, the total assets of the Elektro Gorenjska Group amounted to 12,000,000 €289 million (31 December 2023: €280 million), representing an increase of 3.0 % since 10,725,665 the beginning of the year. Long-term assets increased by 5.7 % in 2024, while short-term 10,000,000 assets were 18.3 % lower. The equity-to-debt ratio at the end of 2024 stood at 2:1, which is 8,000,000 the same as on 31 December 2023. 6,000,000 4,000,000 3,837,699 STRUCTURE OF ASSETS AS AT 31 DECEMBER 2023 AND 31 DECEMBER 2024 2,000,000 0 -2,000,000 300,000 2023 2024 250,000 PROFIT BEFORE TAX INCOME TAX AND DEFERRED TAXES NET PROFIT 200,000 150,000 The Elektro Gorenjska Group generated a net profit of €3.838 million in 2024, down from a net profit of €10.726 million in 2023. The decrease in net profit compared to 100,000 2023 is primarily due to lower revenues from electricity sales and a reduced volume of 2023 2024 market-based projects. The values of the ROA and ROE indicators in 2024 were significantly lower compared LONG-TERM ASSETS SHORT-TERM ASSETS to 2023. As of 31 December 2024, the ROA stood at 1.3% and the ROE at 2.1%, which is noticeably below the end-of-year 2023 values of 4.0% for ROA and 6.0% for ROE. The lower indicator values are primarily the result of reduced revenues. Given the sector and the regulatory framework in which the Elektro Gorenjska Group operates, relatively low values of these indicators are to be expected. It is important to note that the continuous Long-term assets account for 91.0 % of the Elektro Gorenjska Group’s total assets. Within investment efforts have a negative impact on the ROA. At the same time, it should be this category, the most significant component is property, plant and equipment (PPE), emphasized that only through consistent investment can the Elektro Gorenjska Group's which represents 97.2% of all long-term assets. PPE increased by EUR 14.8 million, as mission be pursued and a high-quality, reliable electricity distribution ensured. investments in 2024 exceeded depreciation. Short-term assets represent 9.0 % of the company’s total assets. Compared to the end of 2023, they decreased by €5.8 million, primarily due to lower cash and cash equivalents as 7.0 well as inventories. 6.0 6.0 STRUCTURE OF FUNDING SOURCES AS AT 31 DECEMBER 2023 AND 31 DECEMBER 2024 5.0 4.0 4.0 31 December 2023 31 December 2024 3.0 2.1 6.7% 2.0 8.9% 1.3 EQUITY 1.0 25.8% 28.6% 0 LONG-TERM LIABILITIES 2023 2024 SHORT-TERM ROA (%) ROE (%) 65.3% 64.7% LIABILITIES 72 73 In €000 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP In 2024, the value of equity increased by As part of the liabilities to sources of funds, equity accounted for 64.7%. In 2024, the value of equity increased by 2.0%, or €3.6 million. This change was primarily driven by the net profit generated during the reporting period. Long-term liabilities – mainly long-term financial obligations to banks – represented 28.6% of total funding sources as of 31 December 2024. They increased by 14.3%, or €10.3 million, in 2024, as the repayment of principal on existing loans was lower than the amount of newly drawn loans. As of 31 December 2024, 11% of the Elektro +2% Gorenjska Group’s long-term loans carried a fixed interest rate. 59,647,327 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 The Elektro Gorenjska Group monitors its safe level of indebtedness using the Net 7,342,858 10,000,000 Financial Debt/EBITDA ratio. As of 31 December 2024, this ratio stood at 2.8, which is 1.0 percentage point higher than at the end of 2023. An unacceptable level of 0 indebtedness is a ratio exceeding 3.5. This covenant is applied by some banks in existing loan agreements. FIXED INTEREST RATE VARIABLE INTEREST RATE The current ratio indicates liquidity. At the end of 2024, it stood at 1.4, slightly higher than on the last day of 2023, when it was 1.3. A recommended value for the current Short-term liabilities accounted for 6.7% of funding sources at the end of 2024. ratio is 1. Compared to the end of 2023, they decreased by 22.7%, or €5.7 million, primarily due to a reduction in short-term operating and financial liabilities. 1.4 1.4 1.3 1.2 70,000 3.0 1.0 2.8 0.8 60,000 2.5 0.6 50,000 2.0 1.8 0.4 40,000 1.5 0.2 30,000 1.0 0 20,000 0.5 2023 2024 10,000 0.0 2023 2024 NET FINANCIAL DEBT EBITDA CREDITWORTHINESS 74 75 In € 1000 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP .RISK ANDThe risk man agement system is part of the integrated quality management system (iQMS). It is designed to ensure the effective management of strategically important risks, following the ISO 31000 standard, and defines the procedure for their control. To achieve long-term business goals, the system includes the identification, assessment, and treatment of risks that could adversely impact operations. The occurrence of a loss or damage could negatively affect the company’s assets, cash flow, profitability, reputation and financial results. The key objective of risk management at Elektro Gorenjska is the proactive control of those risks that influence the achievement of goals defined in the strategic and business plans. The established risk management system enables Elektro Gorenjska to detect and identify negative trends and to take timely and appropriate measures to manage each identified risk. In addition to addressing known risks, the system also effectively and promptly identifies emerging risks, new threats or factors, existing and additional PPORmeasures, quality indicators and more. Risk is defined as an event or condition that may occur in the future in an uncontrolled way and could adversely impact the achievement of our objectives and the value of the company. Risk can also stem from missed opportunities. Each strategic risk within the company is defined by the following key elements: • It is classified into one of three categories: business, financial or operational. • A designated risk owner and a responsible process or operational owner are assigned. • Key threats and contributing risk factors are clearly identified. • The risk’s potential impact – after mitigation – is assessed, with a direct influence on DEVELOPMENT OF the company’s financial performance. • Control measures are in place, including both existing actions already implemented A COMPREHENSIVE RISK and additional measures under development to further reduce the likelihood of occurrence. AND OPPORTUNITY • The risk is monitored through a dedicated reporting system and supported by MANAGEMENT SYSTEM comprehensive documentation. 76 77 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 4.1. Risk Management System at Elektro – IDENTIFIED RISKS BY TYPE AS AT 31 DECEMBER 2024 (SHARE) Gorenjska 12.9% The risk management system is based on the Risk Matrix of Elektro Gorenjska, which systematically defines the severity of each identified risk. It incorporates a combination of the likelihood of occurrence and the assessment of its potential impact. OPERATIONAL RISKS (4) 22.6% FINANCIAL RISKS (6) 64.5% BUSINESS RISKS (21) RISK MATRIX OF ELEKTRO GORENJSKA POTENTIAL DAMAGE > 10.0 million € 5 10 15 20 25 > 2.0 million € in ≤ 10.0 million € 4 8 12 16 20 SHARE OF ESTIMATED MAXIMUM LOSSES BY RISK SEVERITY (IN %) > 0.5 million € in ≤ 2.0 million € 3 6 9 12 15 > 0.1 million € in ≤ 0.5 million € 2 4 6 8 10 ≤ 0.1 million € 1 2 3 4 5 13.5% 18.6% PROBABILITY HIGH RISK (3) Frequency (in years) 1x20 1x10 1x6 1x4 1x2 SIGNIFICANT RISK (15) MODERATE AND LOW RISK (13) 67.9% High risk (H) Significant risk (S) Moderate and low risk (ML) Most of the key risks identified by Elektro Gorenjska in 2024 originated from the category of business risks (21), followed by financial risks (7) and operational risks (4). IDENTIFIED RISKS BY SEVERITY AS AT 31 DECEMBER 2024 (SHARE) SHARE OF ESTIMATED MAXIMUM LOSSES BY RISK TYPE (IN %) 4.9% 9.7% 13.3% FINANCIAL RISKS (6) HIGH RISK (3) 41.9% BUSINESS RISKS (21) SIGNIFICANT RISK (15) 48.4% 81.8% OPERATIONAL RISKS (4) MODERATE AND LOW RISK (13) 78 79 IMPACT 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 4.3. Presentation of Key Risks of the Elektro Gorenjska Group and Their Mitigation Below is an overview of the key risks that the Elektro Gorenjska Group actively manages in its business environment. 4.2. Risk Management System at Gorenjske AGEN METHODOLOGY AND OTHER ELECTRICITY DISTRIBUTION REGULATIONS elektrarne Revenue from infrastructure rental and service fees is determined by AGEN through the Act on the Methodology for Determining the Network Fee and criteria for determining eligible costs. Due to legislative changes in the field of the public service of the The foundation of effective risk management lies in identifying and assessing the Distribution Operator (DO), there is a risk of lower revenues if required cost efficiency is severity of risks, which the company evaluates as the product of the likelihood of the risk not achieved, as well as a risk to appropriate development in accordance with current materializing and its impact on business operations. This is visually represented in the investment plans defined in the company’s Business Plan, Network Development Plan Risk Matrix of Gorenjske elektrarne. and Investment Plan. The company recognizes the importance of timely and proactive identification of all The Elektro Gorenjska Group therefore continuously ensures cost-effective operations and types of risks. Risk management is a process aimed at identifying, evaluating, managing actively participates in the drafting of laws and by-laws through various working groups. and controlling potential events that could negatively affect the company. It includes Additionally, it focuses on appropriate planning and optimized execution of business implementing appropriate safeguards to ensure the achievement of the company’s processes. objectives. LIQUIDITY RISK The basis of comprehensive risk management is the identification and evaluation of risks, where severity is assessed as the product of the likelihood of residual risk and its post- The Elektro Gorenjska Group could face liquidity challenges due to uneven cash inflows mitigation impact on business performance. and outflows, prolonged loan acquisition procedures, or significantly exceeding planned investments. Based on the severity assessment, strategic risks are classified into the following categories: This risk is managed through diligent debt collection processes, short- and long-term • High (critical), financial planning, regular monthly meetings with departments affecting this risk, • Significant and internal cash flow management, timely loan acquisition procedures, financial oversight • Moderate to low. and adjustments to the pace and scale of investment execution. INTEREST RATE RISK 5 10 15 20 25 The Elektro Gorenjska Group has long-term loans with both fixed and variable interest rates, which are heavily influenced by EU central bank policies. An increase in interest 4 8 12 16 20 rates has a direct negative impact on performance due to higher financing costs. 3 6 9 12 15 The Elektro Gorenjska Group manages this risk by negotiating lower margins or markups with banks, refinancing existing loans or repaying loans with unfavourable financial 2 4 6 8 10 terms, actively monitoring trends in variable and fixed interest rates and bank margins and seeking the most favourable funding conditions. 1 2 3 4 5 WEATHER CONDITION RISK PROBABILITY Gorenjske elektrarne’s core activity is highly dependent on weather conditions. About High Significant Moderate to low 90% of total production comes from hydropower plants (HPPs), which are directly affected by precipitation, with potential fluctuations of ±25% from the long-term average. Photovoltaic operations depend on sunlight, while Small Photovoltaic Power Plant performance depends on whether the winter is mild or harsh. Risks are also associated with climate change due to global warming. This risk is primarily managed through a strong development policy focused on revenue diversification and introducing new energy efficiency-related income streams. 80 81 IMPACT 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP MARKET RISK – ELECTRICITY PRICE FLUCTUATIONS LACK OF INVESTMENT FUNDS Gorenjske elektrarne faces market risk due to fluctuating electricity prices. The risk may arise if the Elektro Gorenjska Group is unable to secure sufficient funds for the implementation of planned investments due to a lack of internal financial resources TThis is managed thArough ongoing monitoring of factors influencing prices and and limited borrowing capacity. There is a possibility of a shortage of internal funds forecasting their movements. Electricity sales for future periods are based on these because of legislative changes that reduce operating results and may also impose more analyses. Buyers are chosen based on the most favourable offers. The Gorenjske stringent conditions for obtaining loans to finance investments. The level of internal funds elektrarne mitigates price volatility through hedging at various times throughout the is also influenced by dividend payouts to shareholders. Over the long term, this risk could year and by selling electricity through operating support schemes. increase, as reduced investment in infrastructure could lead to poorer voltage quality, more frequent supply interruptions, and a decline in commercial service quality. PRODUCTION CAPACITY AVAILABILITY This risk is managed by adjusting the scope of investments (rebalance) in accordance As a concessionaire, Gorenjske elektrarne must regularly maintain water infrastructure with available resources, maintaining active communication with SDH as the central and related land it owns or leases. Any production outage, combined with equipment manager of capital assets and majority owner, timely coordination with the company’s failure, unexpected shutdowns, or poor maintenance, can result in significant revenue supervisory bodies, and continuous employee awareness-raising regarding the loss. company's strategic direction. The company therefore ensures that malfunctions in production units are prevented BREAKDOWNS AND ACCIDENTS through regular monitoring, enhanced monitoring during adverse weather conditions and diligent maintenance. In the event of a production outage, the company mobilizes its Breakdowns and accidents of unknown magnitude may occur due to external factors employees and internal resources, or engages external contractors, to resolve the issue (weather conditions or unintentional damage caused by third parties) or faults in power as quickly as possible. All production facilities are adequately insured. equipment. NETWORK BEFFICIENCY Elektro Gorenjska Group primarily manages this risk through appropriate construction, maintenance, and operation of the network, as well as by continuously upgrading The power system is undergoing major changes. Distribution networks are at the information technology and securing EEI. forefront of the low-carbon transition. There has been a surge in solar panel and heat pump installations, increased use of electric vehicles and batteries—Iall of which increase PROCUREMENT RISKS stress on low-voltage (LV) networks and impact voltage quality. Some networks are already overloaded and require reinforcement, which involves high costs, complex spatial There is a risk that an individual company within Elektro Gorenjska Group may fail to planning and resource strain. ensure the timely, required, or ordered and cost-aligned delivery of materials or execution of services/construction. Procurement risks and the resulting inability to carry out public Elektro Gorenjska manages this risk by connecting distributed energy sources to network procurement procedures for purchasing equipment or executing services/construction points with adequate short-circuit power, using the QGIS tool for low-voltage (LV) network may lead to non-compliance with applicable legislation. Delays in initiating procurement planning and employing other support tools that enhance the observability of the LV procedures, submitted audit requests, and other risk factors can cause project delays, network. It also conducts appropriate analyses before connecting new large consumers jeopardize planned investments, increase company costs, and hinder the ability to carry or new consumers in areas where poor voltage conditions are anticipated. To ensure LI out core business processes. network efficiency during planning, the company uses AMI and MiSmart measurement data and introduces advanced analytics. It is also exploring options for utilizing flexibility These risks are managed through proper scheduling of procedures, larger stockpiles services (demand-side response). of materials with anticipated supply difficulties, strict legal compliance, consistent Y application of supplier evaluation guidelines, expert preparation of tender SERVICE QUALITY AND USER EXPERIENCE documentation, monitoring the Public Procurement Directorate portal and State Audit Commission practices, and professional training. In 2022, Gorenjske elektrarne began installing Small Photovoltaic Power Plant systems and supplying electricity on customer premises. The company is therefore committed to IMPACT OF ECOLOGICALLY ACCEPTABLE FLOW (QES) REQUIREMENTS delivering expected output, safe operation, and service upgrades. Qes is the ecologically acceptable flow that must be maintained when using water for It mitigates this risk by using Solaredge technology, installing high-quality materials, hydropower generation. A potential change – especially an increase in the ecologically implementing monitoring systems and ensuring proper insurance. acceptable flow due to the introduction of water permits (replacing concessions) – would reduce the hydroelectric production capacity and consequently the revenue in that segment. Gorenjske elektrarne mitigates this risk through active dialogue with the Ministry of Infrastructure and the Ministry of the Environment and Spatial Planning of Republic Slovenia, as well as by diversifying income streams. 82 83 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP ENVIRONMENTAL RISKS OCCUPATIONAL HEALTH AND SAFETY RISKS Risk factors that can lead to harmful environmental impacts include non-compliance This area mainly includes the risk of serious injury or death on the job. Risk is managed with laws and internal environmental procedures, ignoring energy and environmental through mandatory use of protective equipment, training, and other legal requirements Oinspector decisions, equipment breakdoPwns, handling of hazardous substances, related to occupational health and safety. All employees are also covered by collective hazardous waste, and external factors (weather conditions, third-party damage, natural accident insurance. and other disasters). Elektro Gorenjska Group manages these risks by complying with environmental legislation, meeting ISO 14001:2015 standards, educating employees on environmental management, systematically identifying new environmental impacts, and insuring both energy and non-energy infrastructure. 4.4. Opportunity Management System In hydroelectric operations, environmental risks may arise from impacts on the environment, groundwater, and aquatic life. The biggest risks are during installation The Opportunity Management System is a key process within the Elektro Gorenjska of machinery and electrical equipment containing oils, which could contaminate the Group, enabling the identification, evaluation, and leveraging of opportunities for environment or water in case of leakage. Gorenjske elektrarne addresses this with business improvement and growth. It provides a structured approach to discovering high construction standards and careful spatial placement of production facilities. Any new business prospects, assessing risks, and responding to market changes with the potential interventions in the riverbed are carried out professionally, based on prepared aim of increasing competitiveness and ensuring long-term success. Through effective solutions developed in cooperation with a water management company, ensuring opportunity management, the Elektro Gorenjska Group not only capitalizes on minimal environmental impact. The company also holds insurance to mitigate risks in advantages but also actively shapes its future, adapts more swiftly to evolving demands, the unlikely event that ecological damage occurs despite all preventive measures and and enhances value for its employees, users, and other stakeholders. actions. LACK OF QUA LIFIED PERSONNEL This risk includes a shortage of professPionally competent staff, loss of key personnel, and challenges in recruiting qualified employees. Elektro Gorenjska Group manages this by hiring qualified (especially highly educated) personnel, motivating existing staff, offering scholarships, educational opportunities, upskilling, and professional development (e.g., personal and team coaching, soft skills training). OPERATION OF THE INTERNAL INFORMATION SYSTEM ORFor decades, the Elektro Gorenjska Group has been intensively modernizing and strengthening its distribution network. A system is in place for collecting, evaluating, and implementing innovation proposals, actively managed by employees from all departments. The number and quality of proposals have been continuously improving over the past five years. Research and development are coordinated by the Research and Development Department, which actively works with all internal sectors on European development and implementation projects. Business development is recognized as one of the company's core processes and is managed at the highest level, coordinated by the Innovation Office. ICT risks refer to any threat to business data, critical systems, and processes. This Priority areas include: includes risks associated with use, ownership, operation, integration, impact, and adoption of ICT within the Group. • Active search for and identification of new business models and opportunities; • Active participation in flexibility markets; TThe Elektro GoreUnjska Group manages the operation of its own information system • Implementation of smart grid concepts; through the implementation of an information security policy, systematic risk • Management of green transition projects; management, regular audits of information systems conducted by external providers, • Management of e-mobility projects; business continuity planning, and the execution of activities outlined in the information • Internal process improvements to enhance the performance of public utility services; strategy. The Group also mitigates risks by adopting new technological solutions. • Introduction of innovative solutions into operations; • Active management of user relationships, including prosumer engagement; INFORMATION SECURITY • Development and implementation of supporting methodological and software solutions to aid operations within the new business paradigm. In Elektro Gorenjska Group's activities, there is a risk of intentional or accidental misuse, loss, or disclosure of information, which could constitute a legal violation and, in the worst-case scenario, threaten company operations through financial losses, cash flow issues, reputational damage, and breaches of contractual obligations. This risk is managed primarily through legal compliance, ongoing risk monNitoring via the ITY established information security system (ISS), raising employee awareness and providing guidance on managing information risks, systematic identification and control of new information risks, implementation of risk management programmes, maintenance of an ICT backup location, enforcement of security policies, and communication of the corporate security system action plan. 84 85 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 4.5. Integrated Quality Management System at Elektro Gorenjska The Integrated Quality Management System (iQMS) is an essential part of Elektro The iQMS connects all activities that support the company’s vision, strategy, and mission Gorenjska’s management system, through which the company’s leadership commits to while ensuring effective risk management and strong relationships with customers, fulfilling its quality policy. employees, shareholders, and the broader environment. To ensure iQMS effectiveness, Elektro Gorenjska emphasizes strong communication, continuous improvement, and As part of its broader business policy, the quality policy reflects the company’s long- regular monitoring and evaluation of all subsystems within iQMS. term commitment to its vision and strategic objectives. Elektro Gorenjska’s leadership is committed to upholding a company culture grounded in quality leadership, risk Each component of the iQMS (system – QMS, EMS, INFOSEC, Measurement Laboratory, management, information security, employee and environmental protection, investment and OHS) is overseen by a dedicated council responsible for ensuring compliance with in personnel, employee engagement, work-life balance, and continuous improvement. both legislative requirements and the system’s core standards. Key goals of the iQMS include: With its established and actively managed iQMS, Elektro Gorenjska meets: • Monitoring the implementation of Elektro Gorenjska’s 2024–2028 strategy using 35 • The requirements of multiple certification systems, evidenced by the SIQ mark; strategic performance indicators (KPIs); • The accreditation system requirements of its Metrology Laboratory and other • Managing 46 business processes, tracked by 161 performance indicators; standards, including risk management aligned with ISO 31000 and the Family-Friendly • Managing 32 strategic risks (OT); Company certificate. • Managing 16 environmental risks; • Managing 56 ISR – including cyber threats and risks related to essential service providers and critical infrastructure, and • Managing occupational health and safety risks through workplace-specific risk assessments. Elektro Gorenjska Elektro Gorenjska has developed its own software tools to support iQMS implementation, recognizes that its including: success relies on its • A strategic risk management system (OT system); • Tools for inputting and evaluating risk control measures (OT system); people. Employee • A QMS application which oversees changes in documents, processes, risks, and indicators used to monitor both strategic implementation and the performance of engagement and loyalty individual processes; iQMS OF ELEKTRO GORENJSKA GROUP • An internal and external audit and accreditation management tool based on the PDCA are critical to the approach (iQMS system); company’s growth and • An information security risk management system (ISMS system). development. The performance of each business process is reviewed quarterly and discussed in Quality Committee and Management Board meetings, alongside updates from other P-268 INTEGRATED QUALITY MANAGEMENT SYSTEM management systems within the iQMS. This structured approach demonstrates the company’s ongoing commitment to continuous improvement, growth, and sustainable operations. In 2024, employees submitted 56 proposals for improvements and corrective actions, SYSTEM SRO CORPORATE SYSTEM OF which contributed to system enhancements and fostered a proactive approach toward SYSTEM VZD COMMUNICATION CONTINUOUS innovation, environmental responsibility, and business excellence. IMPROVEMENT SYSTEM SVK Elektro Gorenjska recognizes that its success relies on its people. Employee engagement and loyalty are critical to the company’s growth and development. Since 2015, Elektro Gorenjska has implemented 16 family-friendly measures aimed at improving the overall SYSTEM OT SYSTEM SVI well-being of employees in the workplace – aligned with the objectives of the Family- Friendly Company certificate. MEASURING FAMILY-FRIENDLY SOCIAL LABORATORY COMPANY RESPONSIBILITY INTERNAL/EXTERNAL ASSESSMENTS OF MANAGEMENT 86 87 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP .CORIn line with the new sustainable development strategy of the Elektro Gorenjska Group, the owner’s directives, and sustainable operation guidelines, we have initiated the development of Corporate Governance Guidelines. Their goal is to reduce potential unacceptable risks, poor practices, or irregularities that may affect business partners, clients, employees of Elektro Gorenjska, the company itself, and the public interest. By acting lawfully, ethically, and transparently, we aim to preserve the good reputation of our company and firmly reject corruption, anti-competitive behaviour, harm to the company, and unequal treatment of business partners and colleagues. Elektro Gorenjska group adopted a comprehensive approach to corporate governance in ORATaccordance with thEe guidelines of Slovenian Sovereign Holding (S DH). OVER CORPORATE GOVERNANCE 88 89 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 5.1. Statement on Governance The companies within the Elektro Gorenjska Group operate in accordance with applicable Accounting control is based on the principles of responsibility allocation, record accuracy regulations and internal acts. The management of each company represents and acts on and timeliness, reconciliation of accounting records with actual conditions, separation of b ehalf of the compan y, conducting busine ss independently andR at its own responsibility. In doing so, decisions are made in line with the company’s strategic goals and in the interest of shareholders and owners. Group companies adhere to the documents adopted by the Slovenian Sovereign Holding (SDH), that is, the Corporate Governance Code for State-Owned Enterprises, the Recommendations and Expectations of the Slovenian Sovereign Holding, and the Procedures and Criteria for the Conduct of Management and Supervisory Board Members of State-Owned Enterprises. The applicable regulations relevant to operations – especially for the parent company – and the parent company’s Articles of Association are published on our website (www.elektro-gorenjska.si/). Other applicable acts for Group companies are available on the SDH website (www.sdh.si/). In 2024, the companies within the Elektro Gorenjska Group did not significantly deviate from the principles, procedures, and criteria prescribed by the SDH documents. E record-keeping from transaction execution, and the professionalism and independence of accountants. Accounting controls are closely linked to general and application controls in the field of IT, which ensure access restrictions, monitoring, and the completeness and accuracy of data collection and processing. Control mechanisms for specific operational areas are further detailed in the chapter Development of an Integrated Risk and Opportunity Management System. Elektro Gorenjska Group believes that the current internal control system has successfully supported the operations of both the company and the Group, ensured compliance with regulations, and enabled fair and transparent financial reporting. Elektro Gorenjska also declares that the management board of the parent company has, in line with strategic objectives, actively monitored and directly supervised the operations of its subsidiary Gorenjske elektrarne and indirectly the operations of GEK Solar, a subsidiary of Gorenjske elektrarne. In managing these subsidiaries, the parent company The parent company declares that it does not fully adhere to provisions of codes or has applied the same corporate governance standards that are in force for the parent recommendations that are already governed by law or are otherwise regulated by company within the Elektro Gorenjska Group. its Articles of Association in a manner different from the codes, or where non-binding Sconduct is not specified in tPhe company’s acts or not legally required. Elektro Gorenjska will continue to respect the recommendations set forth by SDH and, in line with these, will refine and improve its governance system. In the event of any Members of the supervisory board act professionally, responsibly, and indeOpendently in deviations from the stated declaration regarding compliance with governance codes, the the performance of their duties, and comply with the provisions of the relevant SDH acts. company will ensure timely disclosure. The parent company also informs supervisory board members and committees about updates to SDH acts and about training sessions organized free of charge by SDH, as well as enabling participation in other trainings in the energy sector. The Group does not have a formal diversity policy in place and does not implement it in the context of the Companies Act (ZGD-1). The management board consists of a single member, while supervisory board members representing shareholders are elected by the general assembly, and two worker representatives are elected by the workers’ council. In 5.2. SustNainable Business Policy practice, the Group companies do not discriminate among job candidates or employees based on gender, age, race, or religion. The management board of each company is responsible for maintaining proper business Elektro Gorenjska continuously Elektro Gorenjska continuously strives to improve outcomes in terms of employee records, establishing and ensuring the operation of internal controls, selecting and strives to improve outcomes in satisfaction, occupational health and safety, environmental protection, and quality. applying accounting policies, and safeguarding the company’s assets. SIWhen estabBlishing and operating internal controls, the Elektro GIorenjska Group pursues the following primary objectives: • Accuracy, reliability, and completeness of accounting records and the truthfulness and fairness of financial reporting, • Compliance with legislation, regulations, and internal rules, • Efficiency and effectiveness of operations. Elektro Gorenjska Group strives to ensure that the control system is both effective and efficient in terms of risk management while remaining cost-efficient. To this end, the Group maintains: • A transparent organizational structure; • Clear accounting policies consistently applied throughout the Elektro Gorenjska Group; • An effective and fully staffed accounting function; • A modern and efficient accounting and business information system; L Our operations are grounded in universally accepted principles of ethics and integrity, terms of employee satisfaction, employment, occupational health and safety, environmental and biodiversity protection, and quality, along with related management and governance systems. In doing so, occupational health and safety, Elektro Gorenjska takes responsibility for implementing the principles of sustainable development in daily business operations. environmental protection, Our sustainable business policy encompasses management, social responsibility, and and quality. OIur operations environmental stewardship. At the same time, we are committed to developing a supplier network that operates in line with the principles of sustainable policy. are grounded in universally accepted principles of ethics SUSTAINABLE BUSINESS STRATEGY OF ELEKTRO GORENJSKA and integrity, employment, Elektro Gorenjska’s strategy for 2024–2028 sets a clear course for the company’s business development. Even amid evolving regulatory landscapes, the company remains occupational health and safety, Tfirmly committed to advancing its sustYainability journey – embracing technological innovation and driving the green transition forward. • Regular external and internal audits of business processes and overall operations. environmental and biodiversity protection, and quality, along with related management and governance systems. 90 91 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE BUSINESS REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP SUSTAINABLE BUSINESS GOALS OF ELEKTRO GORENJSKA 5.3. Internal Audit Sustainable business at Elektro Gorenjska considers environmental, social, and governance (ESG) aspects. The Elektro Gorenjska Group has an established internal audit function, organized 1. Environmental Aspect: within the parent company and covering the operations of the entire Elektro Gorenjska • Reducing the carbon footprint: emphasis on reducing carbon emissions and promoting the Group. The audits were carried out by an internal auditor acting as Head of Internal use of renewable energy sources; Audit, in accordance with the International Standards for the Professional Practice • Protection of natural resources: a policy focused on reducing environmental impact; of Internal Auditing and, from 2025 onwards, in accordance with the Global Internal • Energy efficiency: promoting investment in energy-efficient equipment and infrastructure; Audit Standards (hereinafter referred to as the Standards). The Head of Internal Audit is • Encouraging the use of renewable energy sources; functionally accountable to and reports to the Supervisory Board or the Audit Committee • Investing in energy efficiency and low-carbon technologies; of the Supervisory Board and administratively reports directly to the President of the • Implementing policies to reduce pollution and preserve biodiversity; Management Board of the parent company and the Director of the subsidiary. • Supporting the circular economy and recycling. The internal audit function has operated independently within the Elektro Gorenjska 2. Social Aspect: Group since 2012. Its work is based on the Internal Audit Charter, approved by the • Employee health and safety: ensuring safe working conditions, appropriate equipment, and management of the Group companies and endorsed by the Supervisory Board. The policies that support employee health and well-being; function operates in accordance with the Standards and other rules included in • Social responsibility: engaging with the communities in which the company operates and the International Professional Practices Framework (hereinafter referred to as the contributing to local development; Framework), as well as with the Internal Audit Rule Hierarchy. • Diversity and inclusion: fostering diversity among employees and ensuring equal opportunities for all; Internal auditing enhances Elektro Gorenjska Group’s ability to create, protect, and • Introducing policies to combat social inequality; sustain value by providing independent, risk-based assurance, advisory services, insights, • Promoting gender equality; and foresight to the supervisory and management bodies. It contributes to achieving the • Protecting labour rights and encouraging decent working conditions; company’s objectives through systematic and methodical evaluation and enhancement • Education and training for sustainable development. of risk management, internal controls, and governance processes, in accordance with principles of integrity, professionalism, due professional care, impartiality, and 3. Governance: independence. • Commitment to ethics and integrity: setting high standards for ethical conduct and integrity across all business practices; Internal auditing enhances Activities are focused on areas where significant risks exist or may arise for the company • Sound governance: establishing an effective governance system that includes transparency, and the Elektro Gorenjska Group, where internal audit can contribute to improved accountability, and effective risk management; Elektro Gorenjska Group’s operations, increased business security, and benefits for the company and the Group. • Monitoring and reporting: recording, measuring, and regularly reporting on the These are areas where operational weaknesses and threats to the company's long-term implementation of ESG goals and initiatives. ability to create, protect, and viability and development may be present, or where there are opportunities for fraud, errors, avoidance, or disputes – with the goal of fostering more successful, economical, 4. Innovation and Technology: sustain value by providing and efficient operations. • Continuously seeking and introducing innovations and technological solutions that contribute to a sustainable electricity distribution system; independent, risk-based In 2024, internal audit activities were conducted in line with the approved annual work • Monitoring technological advances that enable better management and efficiency of the plan. All eight planned internal audits were completed, alongside other internal audit electricity distribution network. assurance, advisory services, tasks such as periodic monitoring of recommendation implementation, audit planning, insights, and foresight methodology-related activities, and more. The internal auditor regularly reported MANAGEMENT COMMITMENT audit findings and other activities to the relevant auditees and the management, and to the supervisory and periodically to the Audit Committee and the Supervisory Board. The Management Board of Elektro Gorenjska commits to doing everything necessary to ensure the implementation of all defined sustainable business goals, including the provision management bodies. An external quality assessment of the internal audit function was also successfully of resources, implementation of measures, progress monitoring, and the engagement of all carried out during the year, confirming full conformance with the Standards and other employees. To this end, the management will: mandatory elements of the Framework. • Allocate and provide the necessary financial and human resources for implementing sustainability measures; • Develop and carry out concrete actions to achieve the defined sustainability goals; • Regularly monitor and measure progress towards these goals and adapt strategies and actions as needed; • Involve all levels of employees in the sustainable development process by encouraging their participation, education, and awareness; • Ensure transparency and accountability in implementing sustainability policies through regular reporting and communication with all stakeholders. The Management Board affirms its strong commitment to sustainable business practices based on responsible environmental stewardship, respect for social responsibility, and the establishment of effective governance practices. The Sustainable Business Policy of Elektro Gorenjska entered into force on August 1, 2024. 92 93 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAIN ABILI TY SUSTAINABILITY REPORT OF R ELEKTRO GORENJSKA – COMPANY AND GROUP 94 EPORT 95 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP . OUN DA FOUNDATIONS FOR Sustainability stands as the cornerstone of our collective future—both for society and for the planet. It extends beyond environmental responsibility; PREPARATION it is a profound obligation to generations yet to come. Every decision we make today shapes the world our children and grandchildren will inherit. To leave behind not just a liveable world, but a better one, we must act now – embracing sustainable practices as a shared responsibility. This is more than a business imperative; it is a moral commitment to fostering a more just, cleaner, and resilient future for all. 96 97 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP FRAMEWORK FOR SUSTAINABILITY REPORTING THE CONCEPT OF DOUBLE MATERIALITY Sustainability calls for a comprehensive, integrated approach – one that weaves together environmental, social, and economic considerations to promote long-term responsibility IMPACT MATERIALITY and resilience. A company's success is no longer measured solely by its financial (inside-out) performance, but increasingly by its broader impact on the environment and society. True sustainability seeks to achieve a societal optimum that respects the interests of all stakeholders. Within this evolving landscape, the recent amendment to the Slovenian Companies Act (ZGD-1M) incorporates the Corporate Sustainability Reporting Directive (CSRD) into national legislation. This directive introduces mandatory disclosure of ESG factors, representing a vital step toward enhanced transparency, accountability, and a DOUBLE MATERIALITY deeper integration of sustainability into corporate strategies – unlocking new pathways for transformation and growth. 6.1. Double Materiality Assessment FINANCIAL MATERIALITY (outside-in) Within the Elektro Gorenjska Group, the impacts of business activities on people and the environment, as well as potential risks to operations, have been identified and assessed. The value chain, including its impacts and associated risks, was also evaluated – primarily focusing on direct suppliers and drawing on internal expertise. IMPACT MATERIALITY FINANCIAL MATERIALITY The double materiality assessment process began with the identification of key internal experts possessing in-depth knowledge and experience relevant to the new European Sustainability Reporting Standards (ESRS). A total of 54 experts from various fields A sustainability topic is considered material from an impact perspective if A sustainability topic is considered material from a financial perspective if it it relates to actual or potential significant positive or negative impacts on triggers or may trigger significant financial effects on the company, creating participated from the outset, ensuring a consistent and integrated approach to people or the environment over the short, medium, or long term. risks or opportunities that materially affect cash flows, development, performance, position, cost of capital, or access to financing. evaluating the relevance of different sustainability topics. Workshops were held to present the objectives and requirements of the Corporate Sustainability Reporting Directive (CSRD), along with the methodology used by the company to conduct the double materiality assessment. Key inputs for the double materiality assessment: DOUBLE MATERIALITY MATRIX DEVELOPMENT PROCESS • Elektro Gorenjska’s 2024–2028 Sustainable Development Strategy, • National Energy and Climate Plan of the Republic of Slovenia (NEPN), • National Energy Report for Slovenia, 01 02 03 04 FOUNDATIONS STAKEHOLDERS SUSTAINABILITY IMPACT • ISO 9001 Quality Management, ANALYSIS OF INTERNAL IDENTIFICATION OF TOPICS ASSESSMENT AND SCIENTIFIC DATA STAKEHOLDERS ESRS TOPICS (OVERVIEW OF THE SUSTAINABILITY • ISO 14001 Environmental Management, SOURCES AND METHODS OF 16+) AND ORGANIZATION- TEAM CARRIES OUT THE ENGAGEMENT SPECIFIC TOPICS ASSESSMENT • Environmental Risk Register, • ISO 45001 Occupational Health and Safety, • ISO/IEC 27001 Information Security, • ISO 31000 Risk Management, 07 08 05 06 DOUBLE INTEGRATION OF • HR and Communications Strategy, RISK & STAKEHOLDER MATERIALITY MATERIAL TOPICS • Recommendations by Slovenian Sovereign Holding (SDH), OPPORTUNITY MERGING THE INVOLVEMENT INTO STRATEGY ASSESSMENT ORGANISATION’S STAKEHOLDERS PARTICIPATE MANAGEMENT  • Identified risks and opportunities from EDP workshops, THE SUSTAINABILITY TEAM AND STAKEHOLDERS’ IN THE IRO MANAGEMENT APPROVAL PERFORMS ASSESSMENTS INTO A ASSESSMENT AND INTEGRATION OF • Climate change projections to the end of the 21st century, THE EVALUATIO MATRIX AND DEFINING MATERIAL TOPICS INTO MATERIAL TOPICS GOVERNANCE • REDOS Study. STAKEHOLDER IDENTIFICATION AND ENGAGEMENT The process began with an assessment of inside-out impacts on the environment and society, based on previously identified and evaluated sustainability-related impacts One of the key strategic sustainability challenges is reconciling short-term stakeholder of operations and the value chain. In parallel, an outside-in financial assessment was interests – which may vary or even conflict – with the long-term interests of all conducted to evaluate sustainability-related risks to the business. Where feasible, these stakeholders and society as a whole. effects were quantified and supplemented with qualitative evaluations. The ESRS double materiality principle, which encompasses both the organisation’s Given the prior work in assessing sustainability impacts and the complexity involved in impacts on the environment and the environment’s impacts on the organisation, reflects quantifying sustainability-related risks to the business, the initial phase focused primarily a structured approach to addressing Impact-Risk-Opportunity (IRO) requirements. on impact assessment. Detailed stakeholder-specific risks, opportunities, engagement methods, and identified impacts are presented in the accompanying table. Considering the extensive scope of the ESRS double materiality principles and assessment requirements, the evaluation of sustainability-related impacts and risks was limited to internal experts. 98 99 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP KEY STAKEHOLDERS KEY RISKS AND OPPORTUNITIES FORMS OF PROACTIVE KEY IDENTIFIED IMPACTS 3. Partner Organizations and Risks: Pursuit of fragmented 1. Development partnerships across - Joint solutions implemented in ENGAGEMENT Professional Associations solutions/interests, disagreements various projects support of green ESG goals; lower (including electricity distribution on technological and organizational development costs and risks 1. Network Users (consumers, Risks: Higher short-term operating 1. Participation in development - Lower investment costs, reduced companies, transmission system solutions 2. Collaboration on joint projects, producers, and electricity suppliers, costs; lack of understanding of ESG projects environmental burden, and lower operators, CIGRE, CIRED, Chamber training, and promotional events… - Reduced development costs and aggregators) initiatives financing costs for stakeholders, of Commerce and Industry Opportunity: Willingness to shared implementation of solutions 2. Promotion of community (GZS), educational and research collaborate and reduce development 3. Systematic agreements on Opportunity: More active users self-sufficiency models; raising - Accelerated sustainable institutions) risks and poor decision-making staff development based on clear - Sufficient number and competency contribute to a more stable and user awareness about optimal development (ESG); the company’s ethical and professional standards; of staff for stakeholders; enhanced sustainable network; enhanced consumption capacity, efficient carbon footprint (Scope 1 and Scope Risk: Implementation of incorrect or agreements on personnel exchange reputation and easier realization social reputation electricity use, and appropriate 2) is expected to be reduced by 55% irrational solutions of stakeholders' missions; more sizing of self-supply systems by 2030, Opportunities: Joint problem-solving 4. Participation in projects through competent employees Risk: Suboptimal network and knowledge transfer … already established groups and development due to difficulties in - Reduced carbon footprint, lower wider networks - Reduced development costs anticipating future user needs maintenance and investment costs, Risk: Talent poaching (loss of key through joint solution deployment increased connection capacity, personnel) Opportunity: Growing electricity higher revenues and returns consumption; increased interest Opportunity: Collaboration on in investing in personal renewable developing competent personnel energy sources (RES) Risks: Coordination requiring more 2. Employees (Internal Risk: Resistance to cooperation or 1. Implementation of a - Faster implementation of time Stakeholders) change comprehensive innovation system meaningful sustainability-related changes, higher added value, Opportunities: Sharing knowledge Opportunities: Interest in 2. Employee involvement potentially higher wages, smart and solutions; shared development modern solutions, expansion of through collective innovation investments, reduced CAPEX and costs competencies and employability, systems, training, and internal OPEX, increased profitability 4. Suppliers and Development Risks: Lack of understanding of the - Modern solutions with profitability meaningful work aligned with the communication channels … Companies specific needs of the distribution potential in multiple market company’s mission - Reduced operating costs (e.g. (including their employees) operator (DO), strong bargaining segments; more prudent investment 3. Internal and external training, commuting), higher employee power of large suppliers, instability decisions Risks: Opposition to change, structured two-way communication, engagement and satisfaction, lower of startup companies intergenerational non-cooperation, regular meetings with the Works absenteeism-related costs - Support for corporate disagreements with trade unions Council, timely/prior coordination Opportunities: Interest or need decarbonisation; joint development and the works council, incompetent of interests, inclusion in decision- for development collaboration in leading to short-term reductions in leadership making new areas, high “test” potential of financing costs solutions for various purposes Opportunities: Improved 4. Training and optimization of - Opportunity to involve a wider competencies and employability, existing staff performance, timely Risks: Higher short-term operating range of providers; clearer and more higher engagement, satisfaction recruitment of suitably qualified costs, misunderstanding of ESG timely information; better pricing in due to inclusion and dynamic work new employees, appropriate digital initiatives public tenders environment support Opportunities: More long-term - Modern solutions with profitability Risks: Increased workload, staff 5. Workshops, meetings, and and stable partnerships, long-term potential across multiple (diverse) shortages, and overburdened targeted training sessions cost reductions, enhanced company market segments, more prudent existing personnel reputation investments, and lower CAPEX and 6. Systematic and gradual OPEX. Opportunity: Engagement in development involving key optimizing project management employees already in the early 5. Municipalities, Local Risks: Higher short-term costs, 1. Involvement of local communities - More optimal solutions for both implementation, enhancing stages of designing changes (e.g. Communities, and Civil Society misunderstanding of project goals and civil society in investment and nature and people; shared savings meaningfulness of work and "design thinking" workshops) other joint projects from the earliest in comprehensive investment reducing workload Opportunities: Easier acceptance of planning stages evaluations new investment projects, smoother Risks: Understaffing, poor spatial integration … 2. Timely and transparent - Fewer disruptive interventions organizational structure, coordination of investment plans in the environment; greater resistance to change due to lack of Risks: Spatial planning challenges, stakeholder satisfaction due to understanding of initiatives increased costs due to additional inclusion local community demands Opportunity: More engaged and efficient employees because of Opportunities: Optimised better work organization shared construction of energy infrastructure, willingness to pursue timely and optimal solutions 100 101 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP DEFINITION OF THE LIST OF IDENTIFIED IMPACTS/FACTORS, RISKS, 6. National Institutions and Risks: Inadequate financial 1. Proactive dialogue with the -- Stable and adequately sized AND OPPORTUNITIES BY PROCESS, STAKEHOLDER GROUP, AND ESG Regulators (Government of the resources for development and regulator to amend regulations and network infrastructure, integration TOPIC Republic of Slovenia, ministries, financial stability, regulatory with legislators to ensure systemic of renewable energy sources, AGEN) environment that hinders timely funding sources for development fewer penalties for unmet national investment plans commitments, higher investments, The next step involved determining the scope of impacts and risks for the factors increased revenues (returns, Opportunities: Securing or 2. Proactive cooperation with the amortisation, and connection covered by various ESRS topics and subtopics (ESRS 1 AR16). At this stage, relevant obtaining additional funding, regulator to ensure appropriate power) data were collected, including internal company impact reports, existing risk and Willingness to implement changes regulatory changes, and with the environmental management systems, past materiality assessments, and other analyses driven by national commitments to legislator to secure a suitable - Fulfilment of national sustainability international bodies (EU, UN, etc.) systemic funding source for RDI commitments, lower long-term previously conducted. These data served as the basis for the preliminary identification (Research, Development, and development and maintenance of key impacts and risks to be further assessed in the following phases of the process. Risk: Lack of financial resources Innovation) activities. costs, modern solutions, and Additional factors and risks related to business operations were also evaluated during for implementation of development improved long-term profitability joint workshops and included in the preparation. plans, reduced network tariff - revenue Systemic solutions enabling Slovenia to meet its ESG obligations In line with the company’s strategic orientation, the focus is placed on the principles Opportunities: Calls for without facing penalties, full co-financing regulatory compliance of social responsibility and the needs of the communities in which it operates. The starting point of the sustainability strategy is an analysis of stakeholder expectations - Alignment of development plans and strategies, including potential latent interests and the ways in which stakeholders with investment strategy; more efficient and timely fulfilment express their influence. A deep and holistic understanding of stakeholder needs is being of national decarbonisation actively and systematically developed. All stakeholder groups relevant to the company’s commitments operations and capable of influencing its sustainability objectives have been identified. 7. Financial Community and Risk: Decline in revenue and 1. Partnership with banks (including - Development of a sustainable Shareholders profitability due to insufficient or international) to secure “green” network in line with the DO Stakeholder engagement is a key tool for creating long-term shared value and for (shareholders, SDH – Slovenian inadequate financial resources loans, enabling access to grants development plan will allow for achieving a just transition. To capture stakeholder needs and expectations, continuous, Sovereign Holding) and compliant dividend payments increased renewable energy Opportunities: Possibility of (as defined in the dividend policy) in connection capacity and active, and open dialogue is encouraged through a range of listening initiatives, led by obtaining non-repayable funds, line with legislation, the company’s decarbonisation various corporate functions with distinct roles, levels of involvement, and responsibilities. improved financial and capital mission, and long-term value position, and long-term financial - Network undergrounding enhances stability of the company 2. Partnership-based climate resilience; long-term ASSESSMENT OF THE MATERIALITY OF IMPACTS/FACTORS, RISKS AND communication, exemplary financial stability enables dividend Risks: Short-term investment and sustainable corporate governance payments and loan repayments; OPPORTUNITIES, AND FINANCIAL MATERIALITY restructuring costs aligned with ESRS standards positive financial outcomes As part of the preparation process, a methodology was selected that included criteria Opportunities: Lower bank - Greater long-term business and financing costs, potential to secure financial stability and profitability such as the severity of impacts, the likelihood of risks, and the relevance to the company non-repayable funds and its stakeholders. Each assessment was documented, including the rationale behind 8. Media Risk: Misunderstanding and Transparency and openness, - Better conditions for increased the assigned rating. This ensured transparency and traceability throughout the entire possible negative interpretations proactive messaging, invitations to public understanding of distribution process. actively participate in promotional activities and their importance; Opportunity: Broader events higher media reach and support for understanding and development sustainable development ASSESSMENT METHODOLOGY: of wider coalitions supporting necessary changes - Greater public interest and understanding of the role of In accordance with ESRS guidelines, three parameters were assessed: scale, severity, and Risk: Misunderstanding of electricity distribution in society irremediability. initiatives, unrealistic expectations Opportunity: Building broader 1. For “severity”, the extent of the impact on the environment or people was evaluated, public support considering the mitigating measures already in place. 2. For “scale”, the assessment considered how widespread the impact was, based on indicators such as the percentage of locations, employees, or financial expenditure affected. 3. For “irremediability”, the difficulty of reversing the damage was assessed in terms of cost and timeframe. 102 103 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 6.2. Double Materiality Matrix RISK AND OPPORTUNITY ASSESSMENT The company’s impacts on the environment and society (impact materiality assessment), as well as the sustainability-related risks it is exposed to (financial materiality In assessing risks, the potential financial impact was evaluated based on various assessment), have been identified. The results are grouped by ESRS topics and show that triggers, including EBITDA, CAPEX, and OPEX – these accounted for half of the score. the most material sustainability topics are: E1 (Climate Change), E5 (Resource Use and The probability of occurrence made up the other half. The assessments also considered Circular Economy), S1 (Own Workforce), S2 (Workers in the Value Chain), S4 (Consumers mitigation measures already implemented. The nature of these effects was assessed and End Users), and G1 (Business Conduct). under different scenarios using assumptions based on input parameters prepared by subject matter experts. The environmental impacts and risks identified under E1 (Climate Change) and E5 (Resource Use and Circular Economy) are closely linked to the company’s strategic Risk assessment covered the impact on the environment, society, and governance, as well efforts to rapidly expand renewable energy sources. While the deployment of new as financial impact and likelihood. renewable energy capacities helps reduce climate impacts, it also requires significant investment in the expansion and reinforcement of the distribution network. Opportunities were assessed in the same way, with the scoring scale adapted to reflect positive impacts. For financial aspects, the annual value of the risk or opportunity was recorded. DOUBLE MATERIALITY MATRIX CALIBRATION OF ASSESSMENT RESULTS After the workshops, all collected data were analysed and used to calculate results, 7 1. E1 - Climate change including the determination of a 'materiality level' for each impact and risk. Additional calibrations were carried out at this stage, incorporating feedback from workshop 2. E2 - Pollution participants and validating the results with internal leadership. The aim of calibration 6 was to ensure that the outcomes accurately reflected the real significance of the impacts 3. E3 - Water and marine resources and risks for the company. 5 6 1 4. E4 - Biodiversity and ecosystemsi REVIEW AND EVALUATION OF RESULTS WITH EXECUTIVE 9 10 5. E5 - Resource use and circular economy MANAGEMENT 4 7 5 6. S1 - Own workforce The final step in the process involved reviewing and evaluating the assessment results with the company’s top management. This step is critical to ensure that all material 7. S2 - Workers in the value chain 3 impacts and risks are appropriately assessed and will be adequately addressed in future strategy and reporting. 8. S3 - Affected communities 4 2 2 8 9. S4 - Consumers and end users USE OF ASSESSMENT RESULTS FOR FURTHER PLANNING 10. G1 - Business conduct The results of the double materiality assessment will be used to refine corporate 1 3 strategies, particularly in the areas of sustainability and reporting. Based on these findings, future activities will be adapted to effectively address the most material topics relevant to the company and its stakeholders. 0 1 2 3 4 5 6 7 IMPORTANCE OF IMPACTS FOR THE COMPANY AND THE ENVIRONMENT 104 105 FINANCIAL MATERIALITY FOR THE COMPANY 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP .ENVIn today’s world, marked by increasing challenges posed by climate change and the depletion of natural resources, sustainable business practices have become essential in the corporate sphere. Nature is reminding us of the urgent need for more responsible and respectful conduct. In the coming decades, only those companies that pursue not only their own gain but also contribute to the welIl-being of nature, people, and broader society will thrive. At Elektro Gorenjska Group, sustainable thinking forms a core part of the company’s orientation. ONMReducing the carbon footprint – both in daily operations and across the supply chain – is a key priority. Measures are being actively implemented to boost energy efficiency, expand the use of renewable energy sources, and limit greenhouse gas emissions. The business strategy is firmly focused on sustainable development, with a continuous search for innovative ways to reduce environmental impact. Protecting natural resources such as water, air, and soil is also recognized as essential. Actions are in place to manage resources efficiently and to help preserve biodiversity. Efforts include reducing NTAwaste, encouraLging separate collection, recycling, and material reuse, and identifying environmentally friendlier packaging options. Cooperation with local communities, suppliers, partners, and organizations supports projects aimed at safeguarding nature for future generations. Every step matters – and through joint efforts, a more sustainable world can be built for the benefit of all. ENVIRONMENTAL ASPECTS 106 107 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 7.1. Guidelines for Responsible Environmental Management ENVIRONMENTAL MANAGEMENT COUNCIL The Environmental Management System (EMS) at Elektro Gorenjska ensures compliance The Environmental Management Council is responsible for implementing Elektro with environmental legislation and effective control of environmental aspects associated Gorenjska’s environmental policy. It is led by a coordinator, with members tasked with operational processes. with overseeing specific environmental aspects and carrying out the objectives of environmental programmes. Environmental responsibility is a core component of the company’s strategy, grounded in its environmental policy and sustainability guidelines. Progress is monitored through The Council’s key priorities include: measurable indicators. • Preventing environmental pollution at locations with energy infrastructure and related Key environmental commitments, aligned with ISO 14001:2015 recommendations, are operations (e.g., hazardous oil spills); demonstrated through: • Monitoring specific environmental impacts through measurements to ensure compliance with noise, radiation, and light pollution limits; • Setting strategic and operational environmental goals that reflect the specifics of the • Using energy, raw materials, and natural resources efficiently; business and its development; • Promoting waste separation and recycling to reduce the volume of residual waste, and • Preventing and reducing environmental and spatial impacts; • Providing continuous employee education. • Continuously improving environmental protection measures; • Monitoring resource use, particularly energy consumption and related costs; By consistently carrying out its tasks and programmes, the Council aims to prevent • Transferring best practices in environmental management across the Elektro Gorenjska or mitigate long-term environmental impacts, respond effectively to the expectations Group; of business partners, owners, and the wider public, and contribute to the company’s • Ensuring compliance with Slovenian and EU legislation, and sustainable development. • Upholding environmental and ethical standards that go beyond legal requirements. 4 The EMS consists of 14 core activities, including: • Collaboration with external institutions and stakeholders; • Development of environmental policy and operational scope; • Identification of environmental aspects; • Assessment of environmental aspects; 7.2. Disclosure of Material Environmental • Definition of improvement measures for EMS; • Monitoring of environmental programmes and targets of EMS; Information – Elektro Gorenjska Group • Regular system performance reviews (by the Environmental Management Council); • Management of environmental emergencies; in 2024 • Implementation of internal and external audits, and Environmental Management • Preparation of reports. In 2024, activities contributing to the overall reduction of the environmental impact of The core principles guiding the companies of Elektro Gorenjska Group in relation electricity distribution continued. Sixteen key environmental aspects were monitored to climate change are alignment with the EU’s energy and climate objectives and through annual assessments, tracked using 14 environmental indicators – two focused responsible environmental management. on electromagnetic radiation and emissions, two on waste, six on energy use, and one each on noise and soil. Environmental legislation is continuously monitored, and operational processes are updated accordingly to ensure alignment with regulatory requirements. New infrastructure and energy facilities are designed to comply with environmental standards and support the transition to a low-carbon society. Increasing use of underground networks reduces vulnerability to climate change and extreme weather events. State-of-the-art technologies are employed to ensure operational efficiency and minimize environmental risks. 108 109 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 7.3. Carbon Footprint Reduction Strategy The carbon footprint reduction approach is strategic and systematic. The methodology Scope 3 includes indirect emissions resulting from activities related to sources not used to calculate the Group’s carbon footprint has been carefully developed with two owned or controlled by the company. Reporting for Scope 3 is not mandatory; however, main objectives: emissions are determined in accordance with the Greenhouse Gas Protocol and other technical guidelines, where relevant data is available. The following categories are • To provide accurate and internationally comparable data aligned with the Greenhouse included in Scope 3: Gas Protocol and Corporate Accounting and Reporting Standard (GHG Protocol); • To enable comprehensive measurement, management, and reporting of the Group’s • Employee commuting; carbon footprint. • Waste; • Electricity generation for resale; All companies in which Elektro Gorenjska holds more than a 50% ownership share are • Heat generation for resale. included. Operational boundaries are defined in accordance with the GHG Protocol to ensure consistency across emission scopes. Elektro Gorenjska Group has set a goal to reduce greenhouse gas (GHG) emissions. This aligns with the European Union’s efforts to fulfil the Paris Agreement commitment to Direct emissions are calculated based on fuel consumption from sources owned or reduce GHG emissions by 55% by 2030. controlled by the Group. Reporting includes emissions of CO₂, CH₄, N₂O, and CO₂- equivalents. The core target is to reduce CO₂ emissions from Scope 1 and Scope 2 by 55% by 2030. In line with this, a set of short-term measures has been prepared to meet the Scope 1 includes the organization’s direct greenhouse gas (GHG) emissions resulting decarbonisation targets through 2026, including: from its own consumption of fuels in combustion devices, the use of company-owned vehicles, process emissions, and fugitive emissions of greenhouse gases (so-called • Annual calculation of the carbon footprint of Elektro Gorenjska Group for the previous F-gases: hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride year in accordance with a harmonised methodology; (SF₆)). In the case of Elektro Gorenjska Group, Scope 1 accounts for direct emissions from • Inclusion of “climate sustainability” as a mandatory criterion in procurement, tenders, sources owned or controlled by the company (e.g., boilers, furnaces, vehicles). and other decision-making processes; This category includes: • Procurement of vehicles with lower emissions and fuel consumption (e.g., EURO7 engines, hybrids, low rolling resistance tyres); • Direct emissions from the consumption of fossil fuels; • Reducing energy consumption for heating and cooling office premises; • Fuel use for heating and hot water preparation; • Reducing energy consumption for lighting office premises; • Fuel use for in-house generation of electricity and heat (if the company consumes • Minimising the need for business travel through virtual meetings and online event/ 100% of the generated electricity and heat); meeting organisation; • Emissions from the use of fugitive emissions, and • Regular servicing and replacement of outdated air conditioning systems with more • Use of refrigerant gases. environmentally friendly options; • Implementing measures to reduce electricity losses; Scope 2 includes indirect emissions from purchased electricity and heat—whether from • Upgrading hallway and restroom lighting systems with timers or motion sensors; external or affiliated sources, or partially self-produced and sold. This scope includes: • Improving building energy efficiency (renovations, replacing outdated lighting with energy-saving options, self-supply systems); • Distribution network losses; • Purchasing electricity from suppliers that provide green energy; • Purchased electricity from external or affiliated companies; • Exploring waste reduction options, including recycling and reuse where possible; • Purchased district heating from external or affiliated companies. • Promoting remote work and environmentally friendly commuting (walking, cycling, public transport); The calculation includes the total consumption of electricity and thermal energy used for • Raising employee awareness of their ability to reduce their own CO₂ emissions; activities under our direct responsibility. Emissions are reported for CO₂, CH₄, N₂O, and • Increasing environmental awareness among employees to promote responsible waste CO₂ equivalents. management; • Phasing out bottled water and encouraging the use of tap water; • Using toilet paper made from recycled materials. Our key objective is to reduce CO₂ emissions by 55% by 2030. 110 55% 111 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 7.5. Greenhouse Gas Emissions In addition, a set of long-term measures has been defined to reduce emissions and Since 2022, Elektro Gorenjska Group has been monitoring its overall carbon footprint, achieve climate-neutral operations, such as: representing the total amount of greenhouse gas emissions generated. This is done with the aim of reducing CO₂ emissions over which the company has influence. Emissions are • Use of SF6-free switchgear in secondary and primary substations tracked in relation to: • Full electrification of the vehicle fleet; • Establishing an energy management information system for energy tracking and • Fuel used for business transport and operations; optimisation; • Energy sources for heating; • Appointment of an energy manager; • Greenhouse gases; • Use of LCA (Life Cycle Assessment) in key business processes; • Electricity consumption; • Heating and cooling exclusively with renewable energy sources; • Other indirect emissions stemming from employee commuting; electricity losses, and • Decarbonisation of the entire value chain; waste generated by the company’s operations. • GHG reduction projects financed through carbon credits. The carbon footprint calculation is harmonized at the national level across Slovenian The following projects and measures are currently underway: electricity distribution companies and is carried out in accordance with an established methodology. • Preparation of a plan for the phased replacement of SF6-containing switchgear; • Establishment of partial self-supply for the office building using PVPP + CHP systems; CARBON FOOTPRINT VERIFICATION OF ELEKTRO GORENJSKA GROUP • Use of green electricity for internal consumption; • Analysis of electricity losses in the distribution network to evaluate system efficiency The carbon footprint of Elektro Gorenjska Group was verified by the external and compared to advanced systems; independent institution SIQ – Slovenian Institute of Quality and Metrology. • Exploration of alternative heating options for HVAC systems; • Preparation of a project for upgrading external building fittings; • Preparation of a project for installing a ventilation system with waste heat recovery. ELEKTRO GORENJSKA GROUP Unit Year % of Emissions Year % of Emissions Year % of Emissions GHG Emissions 2021 2021 (%) 2022 2022 (%) 2023 2023 Scope 1 Fuel for transport (t CO₂ eqv.) 422.26 69.90% 422.81 2.31% 431.66 69.90% Combustion in stationary devices (t CO₂ eqv.) 46.92 7.77% 153.58 0.84% 76.03 12.31% 7.4. Energy Consumption and Resource Fugitive emissions from refrigeration devices (t CO₂ eqv.) 17.43 2.89% 13.00 0.07% 9.24 1.50% Other fugitive and process emissions (t CO₂ eqv.) 117.50 19.45% 17,678.11 96.77% 100.58 16.29% TOTAL SCOPE 1 (t CO₂ eqv.) 604.11 100.00% 18,267.50 100.00% 617.51 100.00% cope 2 Elektro Gorenjska Group is connected to the public water supply network. After being Electricity (t CO₂ eqv.) 26.75 0.07% 24.30 0.14% 58.43 0.48% used in business operations, a portion of the water becomes municipal wastewater. Proper treatment of this wastewater is ensured, considering the geographical specifics of District heating (heat/cooling) (t CO₂ eqv.) 135.15 0.37% 133.99 0.79% 105.44 0.86% each facility. At locations where connection to the public sewage system is not feasible Electricity – losses (t CO₂ eqv.) 36,757.98 99.56% 16,814.77 99.07% 12,114.47 98.67% and no staff are permanently present; wastewater is collected in sealed septic tanks. TOTAL SCOPE 2 (t CO₂ eqv.) 36,919.89 100.00% 16,973.06 100.00% 12,278.34 100.00% Where technically possible, small municipal wastewater treatment plants are installed Scope 3 during the reconstruction of energy facilities. Connection to the public sewage system is arranged at locations where it is technically and economically viable. Commuting (t CO₂ eqv.) 200.81 24.16% 268.09 3.26% 282.03 2.29% Waste (t CO₂ eqv.) 6.42 0.77% 7,389.98 89.91% 11,765.51 95.37% Sale of electricity (t CO₂ eqv.) 300.42 36.15% 258.18 3.14% 148.57 1.20% ENERGY CONSUMPTION IN ELEKTRO GORENJSKA GROUP IN 2023 AND 2024 Sale of thermal energy (t CO₂ eqv.) 323.45 38.92% 303.17 3.69% 141.10 1.14% Environmental Aspect Type Unit 2023 2024 TOTAL SCOPE 3 (t CO₂ eqv.) 831.10 100.00% 8,219.42 100.00% 12,337.21 100.00% Water Public water supply (m³) Office Premises 2,464 2,267 TOTAL SCOPE 1, 2, 3 (t CO₂ eqv.) 38,355.10 43,459.98 25,233.06 Electricity usage Consumption in kWh Office Premises 625,444 562,450 Gas usage Consumption in kWh Office Premises 822,296 739,636 EXAMINATOR’S OPINION Based on the independent verification process described herein declaration, SIQ Ljubljana, Mašera-Spasićeva ulica 10, 1000 Ljubljana gives a positive opinion on the methodology for calculating the carbon footprint of the company Elektro Gorenjska, d. d. and Elektro Gorenjska Group in declares that the methodology is: FUEL CONSUMPTION OF COMPANY VEHICLES WITHIN THE ELEKTRO GORENJSKA GROUP IN 2023 AND 2024 Unit Source 2023 2024 • prepared in accordance with the requirements of the GHG protocol (guidelines for reporting on scope 1, 2 and 3 emissions) and ISO 14064-3 standard Greenhouse gases – Part 3: Specification with guidelines for validation Fuel in litres (petrol and diesel) Company Vehicles 172,265 164,148 and verification of reports on greenhouse gas emissions; • content correctly and fairly represents the method of calculation carbon footprint to prepare a carbon footprint Fuel in litres (LPG) Company Vehicles 1,933 194 report for the volume 1, 2 and selected categories of volume 3 for the period of the calendar year (January 1 to December 31 of the reporting year) of Elektro Gorenjska, d. d. and the Elektro Gorenjska Group. 112 113 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP USE OF ENVIRONMENTALLY FRIENDLY SERVICES, PRODUCTS, AND TECHNOLOGIES IN ENERGY PROCESSES AND FACILITIES The fluorinated greenhouse gas SF₆ (hereinafter referred to as SF₆ gas) is used in Waste is separated at on-site ecological stations and handed over to licensed waste hermetically sealed components of high-voltage electrical switchgear. It functions as management providers. Enhanced separation of waste in office buildings has led to a an insulator, thereby ensuring the proper operation of energy equipment. As a result, reduction in mixed municipal waste requiring landfill disposal, resulting in lower pollution properly functioning devices do not produce greenhouse effects on the environment. and optimized disposal costs. Through monitoring – especially regular maintenance – leakage of SF₆ gas from high- voltage equipment is minimized to the greatest extent possible. Servicing and upgrades WASTE BY TYPE 2023–2024 are carried out by authorized professional providers. Waste Type Source 2023 2024 Recyclable waste (revenue in €) Construction / Investments 28,470 35,638 Non-recyclable waste (disposal cost in €) Construction / Investments 12,765 17,580 Municipal waste (disposal cost in €) Office Premises 9,780 9,793 7.6. Measures to Reduce Environmental Electronic waste (toners, cartridges in kg) Office Premises 55 72 Impact TOTAL SF6 IN ENERGY DEVICES AND ELECTRICITY LOSSES IN DISTRIBUTION IN 2023 AND 2024 Type Source 2023 2024 SF6 gas (kg) Energy facility insulation (Primary Substation, PDU, TS) 6,398 7,336 Reducing environmental impact plays a vital role in preserving the natural environment Electricity losses in distribution (kWh) 39,715,986 44,232,685 for future generations. The path to this goal is complex and long-term, requiring coordinated efforts across all levels – from individuals to institutions. A sustainable future can only be achieved through collaboration and integration. Elektro Gorenjska Group implements a range of measures across various areas to contribute to this goal. PROTECTING WATER RESOURCES AT HYDROPOWER PLANTS ENCOURAGING REDUCED ENERGY USE AND EFFICIENT RESOURCE Managing watercourses requires the determination of an ecologically acceptable flow, MANAGEMENT which is necessary to meet the ecological needs of water-dependent organisms along the river corridor. An ecologically acceptable flow represents the volume of water Water, electricity, and heat consumption are monitored across the companies. Elektro required to maintain the natural balance within and around watercourses in the vicinity Gorenjska Group uses natural gas for heating and operates a gas unit for the combined of hydropower plants (hereinafter HPPs). generation of electricity and heat. Gorenjske elektrarne relies on a heat pump for heating. HPPs must be integrated into the environment in a way that minimizes ecological impact. Their operation involves regulating water flow during both low and high-water REDUCING AIR EMISSIONS levels, which can yield environmental benefits. For example, water regulation during periods of high flow can also improve flood safety in the area affected by the HPP. Efforts to improve air quality focus primarily on reducing emissions from heating. Modern systems and devices in the fields of cooling, air conditioning, and heating Gorenjske elektrarne is subject to the payment of a Water Fee, as stipulated by the are installed in facilities. Emission control is ensured through regular inspections by Slovenian Water Act, Official Gazette of the Republic of Slovenia, No. 76/02 with authorized providers, alongside emission monitoring. The vehicle fleet remains the amendments (Zakon o vodah, Uradni list RS 76/02 s spremembami). The fee is largest source of greenhouse gas emissions; therefore, only low- CO2 vehicles are calculated according to the water potential of each individual plant as defined in the purchased. The transition to electric vehicles is already underway, in line with the relevant water permit. In 2024, the total cost of these fees amounted to €16,456. Alternative Fuels Infrastructure Act (in Slovenian: Zakon o infrastrukturi za alternativna In order to obtain and maintain a water permit for each HPP, hourly water level goriva in spodbujanju prehoda na alternativna goriva v prometu). In 2024, seven new measurements must be conducted at the intake to ensure the biological minimum is electric vehicles were acquired, and five new charging stations were installed. Additional maintained. These measurements are carried out regularly. stations are planned in the coming years, following an integrated sustainability approach that includes environmental, technological, innovative, and safety Gorenjske elektrarne also works in partnership with the Fisheries Research Institute of considerations. Slovenia and local fishing associations when managing watercourses in areas affected by HPP operations. In the event of construction in riverbeds or channels, the Institute COMPREHENSIVE WASTE MANAGEMENT AND RECYCLING grants approval for fish removal, which is carried out by the relevant local fishing association. In 2024, support was provided to these associations through financial Operations generate both recyclable and non-recyclable waste – such as construction donations, materials, and services. debris, municipal and non-municipal waste (paper, packaging, cardboard, plastic, electronic waste), and hazardous waste. 114 115 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 8.PR SERVING BIODIVERSITY AND ECOSYSTEMS REDUCING NOISE Operational noise monitoring and professional assessments are used to evaluate PRE When constructing energy infrastructuEre, existing roads and paths are used as much environmental noise levels. as possible in cooperation with subcontractors. Construction site areas are limited to minimize negative impacts on the surrounding environment, vegetation, and forests. Transformers in low- and medium-voltage substations operate within legal noise limits, so periodic measurements are not required. n the construction of overhead or underground power lines, all prescribed measures are implemented, with an emphasis on the reuse of excavated soil, planting of native shrub At high-voltage/medium-voltage substations (HV/MV), noise measurements are and tree species to restore forest edges and creating replacement forest patches in conducted every three years where required. selected areas. MONITORING ELECTROMAGNETIC RADIATION To prevent birds from becoming entangled in conductors, visible markers are placed on transmission line towers and safety cables. Electromagnetic radiation (EMR) is regularly monitored at high-impact sites. EMR from transformers in medium- and low-voltage substations remains within regulatory limits. Before carrying out maintenance on power line corridors, permits for interventions in Past measurements have shown no excessive values outside protected areas, making nature are obtained from the locally competent unit of The Institute of the Republic of additional protective measures unnecessary. Slovenia for Nature Conservation (IRSNC). These permits specify the conditions and time periods during which works are permitted. Kljub temu po RTP-jih izvajamo periodične meritve EMS in osveščamo javnost o elektromagnetnih sevanjih. Informacije objavljamo na naši spletni strani v rubriki Vplivi SEI Prior to interventions in forestedR areas, landowners and local foresters from the Slovenia na okolje. Forest Service are notified. Nevertheless, EMR measurements are carried out at substations, and the public is Maintenance of power line corridors on forest land includes clearing undergrowth and informed. Information is published on Elektro Gorenjska's website under the section cutting vegetation with a trunk diameter of less than 10 cm at chest height within the Vplivi na okolje (Environmental Impacts). safety zone. Undergrowth is also cleared along watercourses and drainage channels. All maintenance is conducted in accordance with the Rules on Logging, Handling Logging MANAGING LIGHT POLLUTION Residues, Timber Extraction and Stacking of Forest Products (Uradni list RS, št. 83/13 s spremembami, Eng. Official Gazette of the Republic of Slovenia, No. 83/13 with Exterior lighting complies with national regulations on light pollution limits. amendments) and in a way that does not endanger natural biodiversity. USE OF BIODEGRADABLE OILS Wherever possible, PANOLIN HLP SYNTH biodegradable oils are used in HPPs. In areas where an oil spill would cause significant environmental damage, conventional oils have been replaced with biodegradable alternatives. NO ENVIRONMENTAL INCIDENTS IN 2024 VI In 2024, no environmental incidents occurred within Elektro Gorenjska Group. No negative reports or complaints were submitted by stakeholders or the public. 116 117 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP ELECTRICITY PRODUCED (IN MWH) IN THE PERIOD 2020–2024 (EXCLUDING HPP SAVA) 9. 60,000 52,520 50,000 45,948 45,106 49,789 40,000 35,958 RENEWABLE ENERGY GENERATION 30,000 20000 BY GORENJSKE ELEKTRARNE 10,000 0 2020 2021 2022 2023 2024 Gorenjske elektrarne actively contributes to energy savings, CO₂ reduction, and the overall sustainable development of society by producing clean electricity from HPP SMALL PHOTOVOLTAIC CHP hydropower plants (HPPs), small photovoltaic power plants (PVPP), and combined heat POWER PLANT (PVPP) and power plants (CHPs), and by expanding its portfolio of energy efficiency projects. ELECTRICITY PRODUCTION (IN MWH) BY HPPS BY MONTH IN 2024 ENVIRONMENTAL CO₂ EMISSION SAVINGS AND RENEWABLE ENERGY PRODUCTION IN 2021, 2022, 2023, AND 2024 3305 2961 4483 5044 5836 5478 3083 1349 3812 5218 2116 1081 Electricity Production (MWh) 2021 2022 2023 2024 6,000 HPP 51,060 35,696 43,781 43,764 5,000 Small Photovoltaic Power Plant (PVPP) 3,544 4,606 4,675 7,376 4,000 CHP 1,913 1,797 1,332 1,375 3,000 2,000 In 2024, the total production of environmentally friendly electricity from renewable energy sources (RES) reached 52,520 MWh, resulting in a CO₂ emission reduction of 1,000 25,735 tons. To calculate the CO₂ emission savings from electricity generation in power plants using renewable energy sources, the reference value used is the CO₂ emission 0 factor calculated by the Jožef Stefan Institute (0.49 kg CO₂/kWh). In 2024, Gorenjske elektrarne produced and sold 52,520 MWh of electricity, marking a 5.49% increase compared to 2023. ELECTRICITY PRODUCTION (IN MWH) BY SMALL PHOTOVOLTAIC POWER PLANTS AND CHP UNITS BY MONTH IN 2024 1,200 162 263 445 782 831 954 1153 1127 702 425 293 239 Extended periods of rainfall led to slightly lower-than-planned production from solar power plants. However, for the second consecutive year, the share of electricity 1,100 generated from solar sources increased and accounted for just over 14% of total production in 2024. 1,000 No major unplanned outages were recorded at HPPS in 2024, and favourable 900 weather conditions allowed for continuous operation with only minor interruptions. HPPs contributed 83% to total production and exceeded the annual production plan. 800 Compared to the 10-year average, production in 2024 was 9% above average (adjusted 700 In 2024, the total for the shutdown of HPP Sava due to a 2022 fire). production of 600 The operation of CHPs was largely influenced by high market prices of primary energy environmentally sources, resulting in economically constrained operation. CHPs contributed the smallest 500 share to total production, accounting for just under 3%. friendly electricity 400 from renewable 300 energy sources 200 (RES) reached 100 52,520 MWh 0 199 197 195 88 57 57 66 50 42 81 157 185 HPP CHP 118 119 [MWh] [MWh] [MWh] JAN JAN FEB FEB MAR MAR APR APR MAY MAY JUN JUN JUL JUL AUG AUG SEP SEP OCT OCT NOV NOV DEC DEC 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 10. MANAGING IMPACTS, RISKS AND OPPORTUNITIES The majority – 83.34% – of total electricity sales revenue in 2024 was generated by The Elektro Gorenjska Group’s operations affect the environment in ways that may result Gorenjske elektrarne through HPPs. This was followed by solar power plants with a in soil, air, and water pollution, as well as psychological and physiological impacts on 14.05% share, while CHP units accounted for the smallest share at 2.62%. humans and animals. Risk factors that may lead to harmful environmental effects include non-compliance with legislation, internal guidelines, environmental regulations and inspectorate decisions, SHARE OF GORENJSKE ELEKTRARNE'S ELECTRICITY SALES REVENUE (%) BY PRODUCTION SOURCE IN 2024 equipment failures, handling of hazardous substances and waste, and external factors such as weather conditions, third-party damage, and natural or other disasters. 2.6% Environmental risks are managed primarily through ongoing monitoring and compliance with environmental legislation, implementation of the ISO 14001:2015 environmental 14.0% management standard, employee awareness and training on how to manage environmental aspects, systematic identification of new impacts, and appropriate insurance coverage for EEI and non-energy-related facilities and equipment. Recognizing the opportunities embedded in environmental risks allows for better utilization of positive developments, including: • Construction and use of in-house renewable energy sources; 83.3% HPP • More efficient energy management; • Installation of new renewable energy systems; SMALL PHOTOVOLTAIC • Development of a robust grid using advanced operational and maintenance POWER PLANT (PVPP) technologies; CHP • Comprehensive management of hazardous substances; • Integration of best available technology (BAT); • Gradual replacement of fleet vehicles with electric vehicles; • Development of new HPP projects; • Participation in EU co-funded municipal projects in cooperation with municipalities; • Securing grants for fish passage infrastructure projects; • Use of advanced vehicles and machinery; • Securing non-refundable funds for the construction of new generation facilities. The majority of total electricity sales revenue in 2024 was generated by Gorenjske elektrarne through HPPs. 83.34% 120 121 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 1.RE Every action taken has an impact on the community in which it takes place. Elektro Gorenjska Group is aware of its responsibility to the broader social environment and therefore approaches its mission holistically, considering all key stakeholders. This responsibility is demonstrated through open, timely, and transparent communication, as well as through support for activities that contribute to the sustainable development of both the social and economic environment. Efforts are focused on creating value that benefits the wider community. Responsible decisions are made to help build a better future for all. PONSThe Elektro GorenjsIka Group strives to act with care, fairness, and responsibility toward the social environment in which it operates. The goal is to align environmental integration with business success while improving the quality of life for employees, local communities, and society at large – without disregarding the interests of shareholders. ILI Emphasis is placed on open, regular, and clear communication with the public. All activities and their impacts are presented transparently, especially when interventions in space are involved. Plans are published regularly on the website, and continuous dialogue with stakeholders is maintained. When siting power infrastructure and building the grid, the aim is to consider the interests of local communities. The Group is not merely a producer and distributor of electricity – it seeks common ground for quality coexistence with both the environment and society. Transparency is a key principle, demonstrated through the publication of data and information on the corporate website. Operations are conducted in accordance with best practices in corporate governance, and governance codes are respected. The importance of a responsible relationship with employees is also recognized. The working environment is built on respect, mutual YSOCIAL support, and care for well-being and professional development. Through RESPONSIBILITY collaboration, open communication, and opportunities for personal and career growth, the Group fosters employee engagement and long-term internal relationships. Supporting those in need is also a core responsibility. For decades, the Group has supported organizations that assist vulnerable individuals and has helped create opportunities for people facing difficult life circumstances. There is a strong awareness of the importance of providing hope and support to those on the margins of society. 122 123 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP • Suppliers and Development Companies (including their employees) 11.1. Stakeholder Interests and Perspectives Fair treatment, mutual respect, and stable, long-term contractual relationships are ensured with suppliers and development companies, including their employees. Key to these relationships are payment discipline and the establishment of development partnerships In line with its strategic orientation, Elektro Gorenjska Group focuses on the principles based on the confidentiality of personal data and the provision of reliable and credible of social responsibility and the needs of the social environment in which it operates. The information regarding requested services. Clear environmental requirements are also starting point of its sustainability strategy is an analysis of stakeholder expectations and set for material deliveries, service execution, and waste management, contributing to strategies, including potential unconscious interests and the ways in which stakeholders sustainable practices. The relationship is marked by responsiveness, long-term cooperation, express their influence. The Group is committed to developing a deep sense of empathy respect for workers’ rights, and a commitment to health and safety across the entire supply and a comprehensive understanding of these needs. chain. Strategic stakeholder segments include: Dialogue with the business environment relies on a blend of personal engagement and digital communication. • Network Users (consumers, producers and electricity suppliers, aggregators) • Municipalities, Local Communities, and Civil Society The primary focus is to ensure stable and reliable electricity supply. Cooperation with network users is encouraged through development projects, as well as the promotion of The Group’s role in relation to municipalities, local communities, and civil society is key community-based self-sufficiency. Users are educated on optimal consumption capacity, to promoting sustainable green transformation and the development of local areas. As efficient electricity use, and appropriate system sizing for self-supply. Regular updates development partners, efforts are made to adapt quickly to changes and actively engage in and active communication are maintained regarding new developments and innovative development initiatives. Development projects are implemented using cohesion funds, with solutions tailored to user needs. an emphasis on partnership with local communities and civil society, thereby contributing to the sustainable development of the Gorenjska region. At the initiative of Elektro The Elektro Gorenjska website serves as a key communication tool with various Gorenjska and in collaboration with all municipalities in Gorenjska, an Action Plan for stakeholders, especially users. It offers a web application for notifying users of planned Measures in the Field of Energy Infrastructure for the Sustainable Transition of Gorenjska electricity outages at their metering points. Notices of scheduled outages are published until 2030 was prepared in 2024. The plan represents a major step toward advancing on the company’s website and broadcast via local radio stations. Gorenjska’s energy infrastructure to a more sustainable level. Users also have access to a free call centre for handling complaints, meter error reports, • National Institutions and Regulators (Government of the Republic of Slovenia, meter readings for annual billing, planned outage updates, general inquiries, and ministries, AGEN) ongoing communication with field teams and electricity suppliers. By ensuring mutual respect, stable relationships, and long-term contractual frameworks, Digital engagement is being strengthened. In 2024, users were encouraged to use the trust and sustainable cooperation with national institutions and regulators are maintained. Moj elektro app (https://mojelektro.si/login), and communication was maintained on Reliable and credible access to information is guaranteed, while efforts are made to Facebook and LinkedIn. To further improve information access, 2024 saw the launch of foster links between industry and academia. Direct business communication, public a modern new communication channel: the virtual assistant EGON, Elektro Gorenjska’s consultations, and broad consensus-building are core elements of this engagement. chatbot, which provides information 24/7 to both users and employees. • Financial Community and Shareholders • Employees Efforts are made to ensure dividend stability and growth in company value. This includes A supportive, safe, and well-organized work environment is provided, enabling personal active participation in governing bodies such as the general assembly and supervisory and professional development. Employees are seen as drivers of positive change, so board, as well as offering direct recommendations to majority state-owned companies. clear instructions for safe and healthy work practices and information protection are prioritized. Necessary resources are provided to carry out work effectively and safely, Communication with shareholders and the financial public takes place in writing and in with attention to work–life balance. person, in line with applicable regulations. Information shared with shareholders covers business performance and the company’s strategic direction. Publicly available data • Partner Organizations and Professional Associations (other electricity (annual reports, quarterly reports, concluded contracts, general assembly proceedings distribution companies, transmission system operators, CIGRE, CIRED, Chamber of and materials) is published on the website www.elektro-gorenjska.si. Shareholder Commerce and Industry of Slovenia, Electrotechnical Association, etc.) communication follows the recommendations of the Slovenian Sovereign Holding (SDH) and OECD guidelines on corporate governance of state-owned enterprises, which As part of the broader professional community responsible for electricity supply in emphasize three key principles: transparency, efficiency, and accountability. Slovenia, the Group strives to be a reliable and forward-thinking member. It ensures compliance with contractual obligations, legal regulations, and operational standards The annual report is the primary communication tool for shareholders and the financial while remaining responsive to business changes. Active participation in development community, where transparency, timeliness, and accuracy of information on business projects helps shape Slovenia’s energy future. performance and planning are of utmost importance, in accordance with the relevant regulations. • Media The aim is to provide regular and up-to-date information about the company’s operations, corporate topics, developments in the network, completed major energy infrastructure projects, as well as socially responsible activities and other relevant topics related to the organization’s work. Regular contributions are made to the Slovenian power industry magazine Naš stik, where current news and articles are published. 124 125 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 11.2. Responsibility Towards Employees Responsibility, continuous innovation, and openness are the core values that guide Recognizing the critical role of human capital, HR management remains a central pillar day-to-day operations and hiring practices. A carefully planned recruitment policy, of every business strategy. As the most frequently recruited roles are often those facing encouragement of ongoing development and employee education, an effective reward the greatest talent shortages, ongoing employer branding efforts are essential to boost system, a culture of agility, and regular monitoring of employee engagement and attractiveness and position the organization as an employer of choice. These efforts aim satisfaction are key pillars of workforce management. Staffing and training needs are to enhance visibility, reputation, and the ability to attract and retain skilled professionals. identified annually in the human resources and education plan. When filling open positions, internal transfers are often utilized – including promotions to more demanding To that end, 2024 marked the third consecutive year of organizing the Transformator roles. All candidates are given equal opportunity regardless of gender, age, or other Summer School, a bridge to young talent and potential future employees. This initiative personal circumstances. represents an innovative HR practice and a unique example of a multidisciplinary approach that fosters interaction and collaboration with students in the electricity Employees are viewed as a strategic advantage and are encouraged to align with the distribution sector. business strategy, seek out new opportunities, and explore innovative approaches. This enables the organization to quickly recognize emerging trends and respond to change. The business strategy also recognizes the importance of building a strong employer brand, leading to a systematic and strategic approach to its development. Through The importance of human resource management has also been embedded in Elektro various activities, the company aims to strengthen employee engagement and cohesion, 32 Gorenjska’s new sustainable business strategy, where talent development and building support the execution of the business strategy, attract promising new colleagues, an agile organizational culture are defined as core strategic initiatives. To attract, improve recruitment and talent development processes, and enhance both internal develop, and retain top talent essential for implementing strategic and development communication and communication among employees. plans, these initiatives are supported by concrete objectives and activities. The company culture is being developed in the direction of agility, inclusion, collaboration, These efforts are brought together under the Transformator project, which symbolizes accountability, innovation, and goal orientation. Values are actively lived, and the a commitment to transformation – both within the company and in the broader strategy is implemented through operational plans and projects. environment in which it operates. employees in the Commitment to equality, transparent communication, and mutual collaboration is DEMOGRAPHIC STRUCTURE IN THE ELEKTRO GORENJSKA GROUP Elektro Gorenjska upheld. Emphasis is placed on motivation and open dialogue. Through teamwork and mutual support, an excellent working environment is actively cultivated, enabling both Group as at 31 As of 31 December 2024, the Elektro Gorenjska Group employed 332 individuals, individual and collective goals to be more easily achieved. Each employee is encouraged including 69 women, representing 20.8% of the total workforce. Compared to 31 December 2024 to focus on what they do best. December 2023, the total number of employees decreased by 4. The average number of employees in 2024 was 334.8. Recognizing that skilled and competent employees are the most valuable resource and a competitive advantage, the organization actively addresses the national shortage On the same date, 3.3% of employees had fixed-term contracts, all of whom were men. of professionals, particularly in the fields of energy and IT. Attracting and retaining This figure is slightly more than one percentage point lower than at the end of 2023. qualified talent remains one of the major ongoing challenges. Three employees worked part-time: two men and one woman. The men were employed part-time under pension and disability insurance regulations, while the woman worked reduced hours due to parental leave. Additionally, two women worked six-hour days, also   under parental leave provisions. EMPLOYEE DATA AT ELEKTRO GORENJSKA GROUP 2023 2024 Number of employees as of 31 December 336 332 The chart presents employment figures for Elektro Gorenjska, Gorenjske elektrarne, and the Elektro Gorenjska Group. GEK Solar had no employees during the reporting period. Average number of employees 322.9 334.8 Share of male employees 79.4% 79.2% Share of female employees 20.6 % 20.8 % EMPLOYMENT TRENDS IN THE ELEKTRO GORENJSKA GROUP IN 2023 AND 2024 Average age 45.3 45.0 Average length of service (in years) 22.5 22.3 350 336 332 Share of employees who participated in training and education 94.7% 95.22% 302 300 300 Average training hours per employee 27.29 24.46 Percentage of engaged employees 31% 39% 250 Number of employees with disabilities 9 9 200 Average education level (scale) 6.35 6.39 150 Share of lost days due to sick leave (per employee) 4.20% 4.78% 100 Employee turnover rate 6.48% 5.95% 50 34 32 Share of held annual evaluations 98.15% 95.41% 0 Number of activities and measures promoting workplace health 11 11 2023 2024 ELEKTRO GORENJSKA GORENJSKE ELEKTRARNE GROUP 126 127 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 11.4. Occupational Health and Safety EMPLOYEE TURNOVER RATE IN ELEKTRO GORENJSKA GROUP Employee turnover within the Group remains low. In 2024, 21 employees left the organization – a number consistent with previous years. Most exits were due to retirement, The Group is committed to providing a safe working environment for all employees with fewer resulting from the end of fixed-term contracts and only a small portion from and workers operating on company premises. Its occupational health and safety voluntary resignations. management system is based on compliance with legislative and regulatory requirements and adheres to the ISO 45001:2018 international standard. This standard is designed to prevent work-related injuries, illnesses, and other risks. Acceptable EMPLOYEE TURNOVER RATE IN THE ELEKTRO GORENJSKA GROUP 2023 2024 workplace risks are managed through the Safety Statement and Risk Assessment to help prevent workplace accidents, employee injuries, occupational diseases, and work-related Elektro Gorenjska 3.46% 5.66% illnesses. Gorenjske elektrarne 32.43% 8.57% COVERAGE OF THE HEALTH AND SAFETY MANAGEMENT SYSTEM Elektro Gorenjska Group 6.48% 5.95% The health and safety management system covers 100% of the internal workforce and includes all employees. It is based on statutory legal requirements, internal corporate regulations, and the ISO 45001:2018 international standard. 11.3. WORK-RELATED INJURIES, ILLNESSES, AND FATALITIES Gender Equality and Diversity During the reporting period, the following cases of work-related injuries, illnesses, and fatalities were recorded among employees and workers at company sites: Regardless of the sector in which operations take place, all employees and other • In 2024, three workplace accidents occurred at Elektro Gorenjska. All incidents were stakeholders are provided with equal opportunities, irrespective of gender, race, religion, minor. No injuries related to electric shock were reported. sexual orientation, nationality, or other cultural differences. The organization follows its • The injury frequency rate, indicating the percentage of injured workers, stood at Gender Equality Action Plan. 0.99%. The lost time injury rate, indicating the number of lost workdays per injury, was 18.75 days. As at 31 December 2024, women accounted for 20.8% and men for 79.2% of the workforce within Elektro Gorenjska Group. Among the five sector directors, one is a woman. AGE STRUCTURE OF EMPLOYEES IN THE ELEKTRO GORENJSKA GROUP NUMBER OF WORKPLACE INJURIES AT ELEKTRO GORENJSKA FROM 2020 TO 2024 1.5% 7 17.2% 15.7% PERSONS AGED 25 AND UNDER 6 5 PERSONS AGED 26–35 4 3 PERSONS AGED 36–45 2 1 32.8% 32.8% 4 1 1 7 3 PERSONS AGED 46–55 0 2020 2021 2022 2023 2024 PERSONS AGED 55 AND OVER 128 129 WORKPLACE INJURIES 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP DETAILS OF WORK-RELATED ACCIDENTS AND ILLNESSES SEVERITY OF WORKPLACE INJURIES AT ELEKTRO GORENJSKA FROM 2020 TO 2024 The number of work-related accidents includes all incidents that occurred in the workplace or during the performance of work duties. The calculation of the percentage of injured workers and lost workdays is based on the standard formula – i.e., the number of cases per 1,000,000 hours worked. In the case of work-related illnesses, acute, chronic, and recurring conditions directly linked to 80 working conditions are included, in accordance with ILO (International Labour Organization) guidelines. These illnesses include musculoskeletal disorders, respiratory diseases, skin 70 conditions, and mental health disorders, confirmed by the occupational health service provider. 60 50 Audit and Certification of the Occupational Health and Safety Management System The occupational health and safety management system has been (internally audited/certified 40 by an external auditor) in accordance with the requirements of the international standard 30 ISO 45001:2018. 20 EMPLOYEE ABSENCES DUE TO SICK LEAVE 10 11.4 0 75 54.1 18.8 0 Absenteeism, or prolonged absence from work due to sick leave and parental leave, is monitored 2020 2021 2022 2023 2024 annually. In the parent company, the total share of these absences was higher in 2024 than in the previous year. Compared to 2023, average non-reimbursed absences at Elektro Gorenjska increased by 31%, while reimbursed absences rose by 8%. In 2024, 179 employees took sick leave at least once, 14 fewer than the year before. The average number of sick leave days per FREQUENCY OF WORKPLACE INJURIES AT ELEKTRO GORENJSKA FROM 2020 TO 2024 employee increased by 1.5 days compared to 2023. Employees at Elektro Gorenjska were absent due to illness for an average of nearly 12 days in 2024. In Gorenjske elektrarne, overall sick leave in 2024 was lower than the previous year. However, non-reimbursed absences increased by 57%, while reimbursed absences decreased by 70%. Sick leave was used by 27 employees, accounting for over 84% of all employees. Due to the small number of employees in this subsidiary, each absence has a significant impact on the average 4 values. 3,5 WORK–LIFE BALANCE 3 2,5 Efforts are made to support employees in balancing professional and private life, including the provision of family-related leave. 2 1,5 In accordance with national legislation, collective agreements, and internal policies, all employees – regardless of gender – are entitled to family-related leave, including maternity, 1 paternity, parental, and caregiver leave. 0.35 0.34 0,5 1.4 2.33 0.99 As part of the Family-Friendly Company Certificate, various measures and activities are 0 implemented to encourage work–life balance, including a time bank system and a children’s time 2020 2021 2022 2023 2024 bonus for kindergarten adaptation and first-grade school entry. COMPLAINTS AND SERIOUS IMPACTS ON HUMAN RIGHTS Transparency and the safeguarding of human rights are key principles of business conduct. In 2024, no work-related incidents or complaints were recorded. No complaints were received through official channels. During the reporting period, there were no serious incidents involving human rights violations such as forced labour, human trafficking, or child labour. The company did not violate the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises. Should such incidents occur, the company would immediately implement corrective measures to protect affected individuals and ensure compliance with legal obligations and international standards. 130 131 INJURED (%) NUMBER OF LOST WORKDAYS PER INJURY 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 11.5. Creating a Positive Work Environment Employees of the Elektro Gorenjska Group are supported in a variety of ways, including Acknowledging that health is a valuable investment for both individuals and the through activities beyond the workplace. Special attention is given to the company’s company, Elektro Gorenjska introduced various activities in 2024: employees could sports association, initiatives under the Family-Friendly Company certificate to support consult a physician to check pigmented moles, receive vaccinations against tick-borne work–life balance, and health promotion activities in the workplace. Various insurance encephalitis and seasonal flu, and take part in 15-minute active breaks, offered twice schemes ensure social security for employees. The Group also supports the Association weekly online. Health awareness is promoted through posters in the “healthy corner” and of Elektro Gorenjska Retirees. posts on the intranet. ELEKTRO GORENJSKA SPORTS ASSOCIATION – A HEALTHY MIND IN A STAYING CONNECTED WITH RETIREES HEALTHY BODY The Group continues to support and finance the activities of the Elektro Gorenjska port has long been an invisible thread that binds colleagues together, as reflected in the Retirees Association, established in 2006. Members organize various outings, achievements of our athletes at the traditional summer and winter games of Slovenian informative and sports trips, visit sick and elderly members, and help families in need. electricity distribution companies. The Elektro Gorenjska Sports Association, active for many years, brings together over 200 members – employees of the Elektro Gorenjska Group as well as retirees. Depending on financial resources, the association provides various exercise sessions, 11.6. Strategic Guidelines for Human Resource indoor sports, and opportunities for social sports activities. The aim is to offer options that members enjoy and are eager to participate in. Management The association includes 14 different sections covering a wide range of sports. Among outdoor activities, the cycling section is the most active, organizing two annual trips. Winter sports are also popular, with several cross-country skiing courses held for STRATEGIC EMPLOYMENT APPROACH employees last year. Football and volleyball are the most popular indoor sports, with bowling (kegljanje), shooting, and ten-pin bowling also available. Human resource planning is an integral part of both the strategic and annual business plan. The goal is to attract ambitious and professional new team members. During PROUD HOLDER OF THE FAMILY-FRIENDLY COMPANY CERTIFICATE the recruitment and selection process, all candidates are given equal opportunities regardless of gender or other personal circumstances. The enforcement and protection Belief in the idea that a company’s success stems not only from leadership but also from of employee rights, obligations, and responsibilities are governed by applicable laws, the the contributions of all employees – who play a vital role in core processes – drives the collective agreement, and internal regulations. All employees are entitled to the rights set commitment to supporting work-life balance. The Family-Friendly Company certificate forth in these documents. has been shown to positively influence employee engagement. Ongoing development, advanced technologies, changes, and operational needs Since 2011, Elektro Gorenjska has held this certificate, which encompasses a broad set increasingly demand a high level of knowledge and expertise. As a result, recruitment of measures designed to help employees align their professional and private lives more primarily focuses on highly educated personnel. Due to the strong connection between effectively. Currently, sixteen tailored measures are in place and are regularly updated to technical expertise and core business activities, a consistently high proportion of reflect evolving employee needs. The certificate is held by the parent company, while the employees have backgrounds in electrical or mechanical engineering – particularly subsidiary has committed to applying the same measures as part of its corporate social within Gorenjske elektrarne. responsibility efforts. WORKPLACE HEALTH PROMOTION To maintain health, wellbeing, and mental and physical balance, a Workplace Health Promotion Team operated throughout 2024. With six key measures, it encourages employees to actively take part in health-supportive activities, access mental health information, and participate in preventive screenings and vaccinations. The implementation and success of these health measures are reviewed annually by the health promotion team, which meets in line with current issues. Updates are reported to management, and the effectiveness of measures is evaluated through employee surveys. >200The Elektro Gorenjska The programme is reviewed and adapted each year to reflect financial capacity and Sports Association current circumstances. brings together over 200 memb ers 132 133 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 11.7. Employee Training and Development A company can only operate sustainably if its employees do so as well. For this reason, EDUCATIONAL STRUCTURE OF EMPLOYEES IN THE ELEKTRO GORENJSKA GROUP AS OF 31 DECEMBER 2024 special attention is given to employee education in the field of sustainability. Elektro Gorenjska Gorenjske elektrarne Group Sustainability training equips experts and managers with the tools needed to address complex sustainable development challenges, supporting the design of strategies and Education Level as of 31 December 2024 Number Share (%) Number Share (%) Number Share (%) projects that contribute to a more sustainable future. Such training fosters knowledge, skills, and competencies required for successful participation in modern society. This Doctorate (Level 8/2) 3 1.00 0 0.00 4 0.90 includes understanding the concept of sustainability, the ability to analyse complex problems, think critically, communicate effectively, collaborate, and resolve conflicts. The Master's Degree (Level 8/1) 17 5.67 2 6.25 18 5.72 training also encourages behaviour change toward more sustainable practices, such as reducing resource consumption, using renewable energy sources, minimizing waste, Master's-Level Education (Second Bologna Cycle) (Level 6/2) 66 22.00 10 31.25 78 22.89 supporting circular economy principles, and promoting social and economic equity. Bachelor's-Level Education (First Bologna Cycle) (Level 6/2) 49 16.33 2 6.25 49 15.36 Sustainability education supports the development of a sustainability-driven culture based on respect for nature, people, and future generations. It helps shift values, beliefs, Post-Secondary Vocational Education (Level 6/1) 66 22.00 7 21.88 68 21.99 norms, and behaviours of individuals and communities, contributing to a more balanced and harmonious society. Secondary School (Level 5) 67 22.33 11 34.38 82 23.49 Sustainability To increase engagement and job satisfaction while improving work quality, the company Three-Year Vocational programme (Level 4) 32 10.67 0 0.00 37 9.64 education supports offers employees various benefits. Creative potential and development opportunities are actively sought and supported. Employee knowledge and capabilities are rewarded Two-Year Vocational programme (Level 3) 0 0.00 0 0.00 0 0,00 the development through competency assessments, coaching, and career development, helping maintain of a sustainability- high motivation levels and strengthen the competitiveness of the internal labour Primary School (1) 0 0.00 0 0.00 0 0.00 market. All ambitious employees are given the opportunity to take part in assessments driven culture of leadership and interpersonal skills. Those who best match leadership profiles are Total Employees 300 100.00 32 100.00 332 100.00 based on respect assigned to more demanding positions. for nature, Annual performance evaluations have been conducted for over a decade. These include people, and future a review of goal achievement, tasks, and competencies from the previous period, as well as setting new goals for the year ahead. Training and career development plans are also generations. It discussed. In 2024, over 95% of employees participated in performance appraisals, a helps shift values, slight decrease compared to the previous year. 11.8. Internal Communication beliefs, norms, Individual work performance is assessed following the annual appraisal process, and behaviours evaluating how well each employee has met the agreed-upon criteria. of individuals and Ensuring the exchange of information and opinions among the companies within the Performance is assessed annually for all employees except senior management and Elektro Gorenjska Group is particularly important due to the different locations and communities, department directors, covering 323 employees in 2024. In accordance with internal working arrangements. Effective internal communication also contributes to unified rules, employees may be promoted or receive performance-based incentives. contributing to a external messaging and a positive public image of the company. more balanced Considerable emphasis is placed on appropriate training. Employees are encouraged to Internal communication is planned and managed strategically, with annual operational participate in a variety of educational and professional training programs, particularly and harmonious plans and regular responsiveness assessments among employees. Both direct and in the field of occupational health and safety. Given the industry-specific requirements, indirect methods of communication are employed, and employee feedback is gathered society. regular recertification is necessary for work with electrical power systems. In 2024, through surveys and voting. employees participated in a total of 8,193 training hours. A notable shift occurred in 2023 with the adoption of a new e-learning platform, offering access to a wide range of content. Participation in webinars and other digital learning formats increased. In 2024, leadership training continued, focusing on soft skills development. As of December 31, 2024, the average education level within Elektro Gorenjska Group was 6.39, with level 6 corresponding to post-secondary education. 134 135 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP RTAhe following communication tools are used for internal communication: THE EMPLOYEE ENGAGEMENT LEVEL MEASURED IN 2024 IS COMPARED TO BOTH, ORGANIZATIONS IN SLOVENIA AND THE BEST GLOBAL COMPANIES. • Središče Intranet portal, which provides accessN to information, content from various fields, and all applications employees need for their work processes and effective task performance; • Email updates providing timely information; ELEKTRO GORENJSKA SLOVENIAN AVERAGE GALLUP TOP 33% • Notice boards, highlighting longer-term points of interest; • Monthly e-newsletter, presenting key updates from within the company; • Elgo – a quarterly printed newsletter, offering in-depth content of interest to employees 4% 4% – from project developments to department activities – and intended for retired colleagues; 16% • Naš stik magazine, published six times a year by ELES, covering broader topics in the 33% FOenergy sector; • Various social and educational events for employees; 39% 15% • Additional tools introduced as needed (e.g. brochures). 57% 63% By signing the Commitment to Respect Human Rights, the Group has pledged to uphold 69% these rights throughout all business processes and to avoid and prevent any potential negative impacts on human rights. 11.9. Corporate Culture R ACTIVELY ENGAGED ACTIVELY DISENGAGED NOT ENGAGED In line with the business strategy, special attention was given in 2024 to the development Aof human resources and an agile organizational culture. The goals of this strategic direction include developing a culture of agility, enhancing the employer brand, and recruiting, developing, and retaining promising and key employees. 11.10. Compensation Policy A systematic effort is made to foster an environment where employees embody the company’s values, leaders recognize the strengths of their team members, and provide personalized guidance, all of which contribute to the successful execution of the strategy. The Group ensures that all employees receive fair wages, aligned with the reference Feedback on the work environment and relationships within the company is gathered values defined by international standards and legislation where applicable. A fair wage through an anonymous satisfaction survey conducted every three years, and an annual is fundamental for ensuring social justice and maintaining employee satisfaction. It is employee engagement survey. This approach actively shapes optimal working conditions, defined as a wage that supports the decent livelihood of the employee and their family making it easier to achieve personal and business goals. members, covering basic living expenses, social services, and financial security. Wage compliance with these standards is continually monitored, and any discrepancies are Employee engagement is measured according to Gallup’s methodology. Engagement addressed with corrective actions. levels are assessed for the entire Elektro Gorenjska Group, and for individual companies within the Group, the percentage rank is compared to the global database of All employees in the company receive fair wages, as determined by the reference values OengagemenRt. Based on these measurements, the Group shows a higher percentage of in the Republic of Slovenia. engaged employees compared to other organizations in Slovenia. To assess fair wages, the EGP methodology was used. This includes minimum wages set Through comprehensive and systematic management of employee relations, the by Directive (EU) 2022/2041 on adequate minimum wages or, where relevant, 60% of employee engagement level has significantly improved over the past six years, with the the national median wage or 50% of the national gross average wage. results of the most recent survey showing a ninefold increase compared to previous years. This positions Elektro Gorenjska Group among the best organizations. 136 137 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 11.11. Social Protection All our employees are covered by social protection measures against income loss due to major life events (such as illness, unemployment during the period of employment, work-related injuries and disabilities, parental leave, and retirement), in accordance with applicable labour legislation, the Collective Agreement for the Slovenian Power Industry (KPES), and the Company Collective Agreement (PKP). Our employees are offered the option to participate in voluntary pension insurance. In addition, all employees are included in collective accident insurance and the Specialisti z asistenco (Specialists with Assistance) health insurance plan. Social protection ensures access to healthcare and income support in the event of the life events. Elektro Gorenjska Group is committed to providing adequate protection for employees against risks that may affect their income and overall well-being. 11.12. EmplAoyment of Persons with Disabilities As at 31 December 2024, the EleRktro Gorenjska Group employed 10 persons with disabilities (nine men and one woman), the same number as in the previous year. In accordance with the mandatory employment quota for persons with disabilities – which is set at 6% for the electricity supply sector – the parent company Elektro Gorenjska would be required to employ 18 persons with disabilities monthly. In the case of Gorenjske elektrarne, where the quota is 5%, the requirement is one person. Companies that are obligated to meet the disability employment quota have the option of fulfilling it through substitute quotas by entering contracts and commissioning services from INdisability enterprises. In 2024, by concluding contracGts with two such enterprises, the Group made use of this substitute option for a total of 36 persons with disabilities. 138 139 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 2. Workers in the value chain are recognized as an important group of stakeholders significantly affected by business activities. Attention is paid to the needs of employees and other stakeholders. Trust from clients is considered essential, which is why only realistic and achievable commitments are made – and fulfilled. Errors and complaints are addressed promptly and diligently. O K 140 RWORKESRS IN THE VALUE CHAIN 141 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP SAProactive collaboration is maintained with supplieFrs to ensure compliance with social and environmental standards. Suppliers regularly inform the company of potential technological improvements, thereby helping to ensure a stable electricity supply, compliance with standards, and enhanced quality and customer satisfaction. In unforeseen situations (e.g. disrupted supply chains or reduced financial resources), efforts are made to maintain strong business relationships with suppliers and service providers. In such cases, written notifications are issued, and appropriate measures are taken to preserve contractual relations. KEY IMPACTS, RISKS, AND OPPORTUNITIES AND THEIR CONNECTION ETThe company’s sustainability-Yfocused strategy identifies several key risks and opportunities related to value chain workers. Major risks include workplace safety for fieldwork and non-compliance with labour standards by suppliers. Incidents or non- compliance could affect operational performance and reputation. Another risk involves dependency on a single contracting party, which may result in financial losses and disruption if cooperation is terminated during contract execution. Constant regulatory changes also pose risks, requiring quick adaptation and ongoing upgrades to meet evolving legal and sector-specific demands. Despite stable ordering of materials, services, and construction – and reliable payments – there remains a minor risk of order volatility. For example, strategic shifts could reduce TO STRATEGY AND BUSINESS MODEL the volume or duration of orders. Acknowledging the interdependence among stakeholders, particular attention is Transitioning to more sustainable technologies and network modernization is seen as an given to suppliers whose quality and technically compliant supplies and services help opportunity to create new jobs and improve working conditions across the value chain. position the company as the preferred energy solutions provider in Gorenjska and a recognized partner abroad. Ensuring decent working conditions and the protection This may enhance efficiency and safety while also contributing to regional economic of human rights for workers in the value chain is of key importance. As these workers development where suppliers are based. In addition to internal workforce development, often face demanding working conditions – such as working at heights, with high- efforts are made to establish joint training programmes to raise competencies and voltage equipment, or during adverse weather or emergency situations – principles of improve employment prospects. responsible business conduct have been integrated into the company’s strategy. This includes consideration of all stakeholders when defining job requirements (materials, Opportunities in the broader environment are identified and pursued by seeking service types, etc.) and the development of technical specifications, requirements, innovative ways to enhance both internal and stakeholder-related processes and services. and conditions with a life cycle perspective. Respect for labour standards, technical The adoption and development of new technologies can support suppliers in improving adequacy, professionalism, and the qualifications of contractual partners is essential efficiency and competitiveness. Through collaboration, workers in the value chain gain to ensure proper working conditions and human rights protection throughout the value valuable experience with advanced systems and technologies, boosting their labour chain. Emphasis is placed on the use of appropriate safety and work equipment, the market prospects. Gaining specialised knowledge may also allow them to collaborate proper training of personnel, and the performance of work during regular working with other companies in the energy sector, enabling them to contribute to sustainable hours. Technologies and methods that improve worker safety, health, and well-being are development. promoted. As a family-friendly company, the organization does not require value chain workers to work overtime or on public holidays. Numerous vulnerable worker groups are involved in the value chain. These include those in low-skilled positions and workers dependent on a single employer. Due to their Workers in the value chain are affected by a range of factors depending on their roles financial dependence and limited qualifications, such individuals may face inferior and responsibilities. The key affected groups include production workers, transportation working conditions and restricted access to rights. Their tasks typically involve physically staff ensuring timely delivery of essential equipment and materials, and external demanding work in power system installation, often on a seasonal or project basis, contractors – whether working independently or in teams – who participate in various resulting in employment instability and lower wages. phases of electricity distribution (e.g. production, construction, maintenance, renovation, and cleaning). POLICIES RELATED TO WORKERS IN THE VALUE CHAIN Despite adherence to labour standards and efforts to ensure workplace safety, negative A Code of Business Conduct and Ethics of the Elektro Gorenjska Group has been impacts on value chain workers may still arise. Health and safety risks have been adopted, with the aim of promoting business ethics and etiquette in interpersonal identified, especially for those working at heights or with electrical equipment, who face relations, defining clear behavioural standards, offering inspiration and support hazards linked to injury and occupational health issues. Extensive attention is devoted to to employees in their conduct, and drawing a distinct line between acceptable training—both for internal employees and value chain workers. A dedicated on-site safety and unacceptable actions, behaviours, and practices. Adherence to human rights, engineer conducts periodic inspections and monitors compliance with labour standards compliance with rules and order, and the avoidance of unethical or illegal conduct are throughout the supply chain during contract execution. External contractors are bound required. In accordance with the highest ethical principles and standards, appropriate by written agreements to follow safety protocols, including coordination among multiple conduct towards colleagues, users, and business partners – including workers in the contractors on shared worksites, adherence to safety plans, use of protective equipment, value chain – is expected. and written reports of violations submitted to the appropriate departments. 142 143 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP EVA Commitment to Respect for Human Rights inO Business has also been signed . By doing coordination of operational activities. Some contracts specify time periods during which so, a commitment was made to uphold human rights throughout all business processes workers must be available, and when certain tasks are not permitted (e.g. on Saturdays, and to avoid and prevent potential adverse impacts on those rights. The implementation Sundays, or public holidays). As a holder of ISO standards, providers are, where feasible, of related measures has been initiated and is being introduced gradually. required to hold a relevant ISO certification or an equivalent standard. An Integrated Management System (iSVK) has been established to meet the In material supply contracts, the right is reserved to carry out inspections – both upon requirements of the following standards: ISO 9001:2015 (Quality Management initial delivery and during contract execution. These may include audits of the supplier’s Systems), ISO 14001:2015 (Environmental Management Systems), ISO/IEC 27001:2013 production processes, supply chain reviews, and inbound quality control of delivered (Information Security Management), and ISO 45001:2018 (Occupational Health materials conducted by independent accredited institutions. and Safety Management Systems). When objectively justified, it is required in tender documentation that bidders comply with specific quality standards. Currently, no consultation activities are carried out with representatives of service providers that would allow for the views of value chain workers to be considered in Supplier Evaluation Guidelines have been adopted to support regular annual internal managing actual or potential impacts. No designated person has been appointed to reviews of contractual suppliers and service providers. The guidelines define criteria ensure collaboration with workers in the value chain. Moreover, no agreements are in based on which contract managers or ordering parties complete supplier evaluation place with suppliers that would enable the incorporation of worker perspectives related forms. Suppliers are assessed on criteria including: meeting delivery deadlines, number to the right to collective bargaining and other human rights standards. of compla ints, response to com plaints, compliance wi th health and safety measures, adherence to environmental requirements, and observance of information security regulations. External (unannounced) quality checks of supplier products are planned to be introduced, to be conducted by independent accredited institutions. Currently, no additional policies related to workers in the value chain have been adopted. A supplier code of conduct is being developed gradually, with an emphasis on respect for human rights, prohibition of child and forced labour, and the prevention of any violations of fundamental labour rights within the value chain. No instances of non-compliance have been identified to date in the value chain that The primary activity would be linked to violations of the UN Guiding Principles, ILO Declarations, or OECD of Elektro Gorenjska Guidelines regarding fundamental human rights of workers. Group as an electricity Employees are regularly informed through internal newsletters about the adopted distributor involves the policies, the obligation to respect human rights in business conduct, and th e expectation LUCORRECTIVE PROCEDURES FOR NEGATIVE IMPACTS AND CHANNELS FOR RAISING CONCERNS BY WORKERS IN THE VALUE CHAIN Negative impacts on workers in the value chain are primarily prevented through a strong emphasis on preventive measures. In the area of occupational health and safety, it is required that contractors, prior to the commencement of work, carry out an induction jointly with the site supervisor and project manager, inspect the site, and review the relevant technical documentation. The consistent use of safety equipment, certified and calibrated tools, and adequately trained workers is mandated. Regular medical check- ups and professional training are required for value chain workers, and valid proof must be provided for designated personnel. Safety inspections are conducted regularly at worksites. In the event of an environmental, occupational, or safety incident, the matter is handled with the utmost responsibility and care. An online form and contact details are provided on the company’s website through to act in accordance with ethical principles. Up-to-date information and news are provision of long-term which both employees and workers in the value chain may submit concerns, complaints, published on the company’s website. An e-learning system has been established to and reliable operations. opinions, and suggestions, or assert their rights and report possible violations. enable employees to deepen their understanding (e.g., the Code of Business Conduct Submissions are processed anonymously and handled diligently and responsibly. The Tand EthIics is presented in an e-learOning format). NThis requires continuous current system is considered effective, and no additional grievance mechanisms are development, deemed necessary. PROCEDURES FOR ENGAGING WITH WORKERS IN THE VALUE CHAIN REGARDING IMPACTS reinforcement of the MEASURES TAKEN IN RESPONSE TO SIGNIFICANT IMPACTS ON existing energy network, WORKERS IN THE VALUE CHAIN, RISK MANAGEMENT APPROACHES, Engagement with workers in the value chain primarily takes place during the AND OPPORTUNITIES FOR IMPROVEMENT implementation phase of contractual agreements. Prior to contract signing, service/ and investment in new construction providers operating in high-risk environments are required to declare that infrastructure. As The primary activity of Elektro Gorenjska Group as an electricity distributor involves the medical examinations have been conducted for their workers, that appropriate training provision of long-term and reliable operations. This requires continuous development, has been completed, and that in the event of worker replacement, the same conditions internal staffing is reinforcement of the existing energy network, and investment in new infrastructure. As will be ensured for the substitute. Before work begins, a written agreement is signed to insufficient, external internal staffing is insufficient, external contractors are engaged for service delivery. The confirm that conditions for ensuring safe and healthy working environments at the site influence on workers in the value chain is significant, as uninterrupted electricity supply will be provided. Continuous monitoring of the use of mandatory protective equipment is contractors are engaged can only be ensured through their engagement. These needs are carefully defined, and also carried out. At the worksite, prior to commencement, workers are introduced to the for service delivery. The the requirements for their fulfilment are thoughtfully determined, with strong emphasis tasks through activities such as a joint site inspection, authorization and explanation of placed on workplace safety, as well as the knowledge and competence of both internal access restrictions near electrical installations, handover of documentation, and mutual influence on workers in the staff and value chain workers. value chain is significant, as uninterrupted electricity supply can only be ensured through their engagement. 144 145 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP To identify potential negative impacts and recognize good practices, annual internal evaluations of suppliers and contractors are conducted. Based on the results, recommendations for further action are presented to management, in accordance with internal regulations. Through the established Integrated Management System (iSVK), internal and external audits of employee practices are carried out at least once a year. These indirectly influence the approach toward workers in the value chain, as the application of quality standards is generally expected from contractual suppliers as well. In cases where violations or inadequate fulfilment of legal or contractual obligations are identified, actions are taken responsibly and with due diligence. OBJECTIVES FOR MANAGING SIGNIFICANT NEGATIVE IMPACTS, PROMOTING POSITIVE IMPACTS, AND MANAGING KEY RISKS AND OPPORTUNITIES Occupational health and safety have been identified as a key negative impact of the company’s operations on workers in the value chain. Therefore, a high level of diligence will continue to be maintained in this area, with the implementation of additional safety measures aimed at fostering safer work and improved working conditions. In the future, risks related to human error may be reduced through the development of technology, such as digital meters and other tools that ease operational burdens. The contribution of employees is acknowledged and respected, with continuous investment in the expertise and experience of senior staff. Knowledge and experience are exchanged both internally and with external partners. Efforts are being made to establish long-term, reliable relationships with educational institutions, recognizing that experienced staff can support the development of young professionals. In return, young professionals – particularly in the digital era – can test and implement their own ideas and solutions for innovative and high-quality improvements to internal processes and services involving external stakeholders. Experiences and good practices enable continuous growth, strengthen the company’s reputation, support proactive engagement, and foster initiative-taking. Trust is maintained by making realistic and achievable promises – and by delivering on them. Dedication and perseverance are consistently demonstrated in pursuit of set objectives, which enables timely and committed responses to errors and complaints. Problems are resolved efficiently and proactively. Through internal oversight, progress on previously identified shortcomings in services or tasks is also monitored. Experiences and good practices enable continuous growth, strengthen the company’s reputation, support proactive engagement, and foster initiative-taking. Trust is maintained by making realistic and achievable promises – and by delivering on them. 146 147 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 3. OCALElektro Gorenjska holds a unique position in the Gorenjska region, as it connects municipalities across the region. For over six decades, primary commitment has been given to caring for Gorenjska. The opportunity to support the region with expertise, experience, and innovation is regarded as a great responsibility. With the goal of becoming a green Gorenjska, a model of good practice within Europe is being pursued, along with the creation of a competitive environment for all stakeholders. To achieve this, close partnerships are being formed with local organizations, communities, and municipalities. ARTNAt the initiative of EleEktro Gorenjska, and in close cooperation with Rall municipalities in the region, the Action Plan for Measures in the Field of Energy Infrastructure for the Sustainable Transition of Gorenjska by 2030 (referred to as the Action Plan for Gorenjska) was developed in 2024. This pioneering strategic document serves as a comprehensive roadmap for the region’s green transition. As the first plan of its kind to be prepared by a Slovenian electricity distributor in partnership with local municipalities, it stands as a testament to our role as a key facilitator of sustainable development. More than just a plan, it is a unifying project, bringing together all municipalities of Gorenjska in a coordinated effort to shape the region’s energy future. We take great pride in Elektro Gorenjska’s central role in driving this landmark collaboration. In 2025, the Action Plan for Gorenjska officially entered its implementation phase. Also launched at the initiative of Elektro Gorenjska, twelve partners joined the initiative for the sustainable development of the Julian Alps Biosphere Reserve in November 2024. This forward-looking pilot project focuses on achieving green self-sufficiency in electricity and has the potential to become a replicable model – not only across other regions of Slovenia but also in protected natural areas worldwide. 148 HLOCAL PARTNERSIHIPS PS 149 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 4. In line with strategic priorities, Elektro Gorenjska adheres to the principles of social responsibility and responds to the needs of the local environment. Support is extended to regional non-profit organizations, associations, institutions, and clubs active in sports, culture, education, healthcare, humanitarian efforts, and other socially beneficial areas. These projects present opportunities to contribute – through expertise, financial support, or other resources – to the broader development of society and the Gorenjska region. PON OR SPONSORSHIPS AND DONATIONS 150 HIPS 151 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP >10 years Sponsorship initiatives are selected based on internal regulations that outline criteria for quality and societal impact. Both short-term and long-term effects on the company, local communities, and the surrounding environment are carefully considered. of support for the Neodvisen.si programme, helping raise In 2024, a total of €77,517 was allocated for sponsorships and donations. More than half of this amount supported sports projects, which play a vital role in promoting the awareness of the risks healthy development of all generations. of addiction among To ensure transparency and openness, all sponsorship and donation projects are young people. published on the company’s website at the following link: https://www.elektro-gorenjska.si/o-skupini/elektro-gorenjska/katalog-informacij-javnega- znacaja-javne-objave/objave-po-11-odstavku-10-a-clena-zdijz DISTRIBUTION OF SPONSORSHIP AND DONATION FUNDS BY CATEGORY IN THE ELEKTRO GORENJSKA GROUP IN 2024 4.0% 14.0% SPORTS SPONSORSHIPS 10.0% CULTURE In 2024, the Elektro Gorenjska Group allocated €38,967 to sponsorship projects, with the majority of funds directed toward sports initiatives in the Gorenjska region. CHARITY Longstanding partnerships were maintained with organizations such as Kranj Cycling Club Kranj, Triglav Kranj Basketball Club, Triglav Kranj Volleyball Club, 72.0% Jesenice Ice Skating and Hockey Association, Triglav Kranj Football Club, as well as SCIENCE & RESEARCH various smaller sports clubs and associations. Sport continues to play a vital role in promoting core values such as fair play, healthy lifestyles, equality, and a positive attitude toward society and the environment. DONATIONS A total of €38,550 was allocated to donations in 2024. In response to numerous adverse weather events and the resulting natural disasters, financial assistance was provided to various volunteer fire brigades and mountain rescue associations throughout Gorenjska – organizations that are often the first to respond when people’s safety, health, or lives are at risk. The support contributed to the purchase of urgently needed equipment and vehicles. Each year, support is also extended to non-profit, non-governmental, and non- political organizations. For over a decade, Elektro Gorenjska has collaborated with the Neodvisen.si programme, which raises awareness across generations about the dangers of addiction, presents real-life scenarios, and – most importantly – offers professional support to individuals and families in crisis. Together with business partners, the Group provides annual financial backing for the programme. In 2024, Elektro Gorenjska allocated €8,000 for its continued operation. 152 153 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 5.REResponsibility to users of the electricity distribution network forms the foundation of Elektro Gorenjska’s operations. Acknowledging the impact that high-quality, reliable, and uninterrupted electricity supply has on daily life, a consistent effort is made to ensure a high level of service. Trust is built through respectful, transparent, and open communication, enabling users to stay well-informed about all relevant developments. This dedication is reflected in ongoing efforts to enhance service quality and to deliver a dependable, trustworthy energy supply. PONOdgovSornost do uporabnikov elektrodistribucijskega omrežja je temelj našega delovanja. Zavedamo se, da kakovostna, Izanesljiva in stalna oskrba z električno energijo vpliva na vsakodnevno življenje uporabnikov, zato se trudimo zagotavljati visoko raven storitev. S spoštovanjem, transparentnostjo in odprto komunikacijo ustvarjamo zaupanje ter omogočamo uporabnikom, da se vedno pravočasno seznanijo z vsemi pomembnimi informacijami. Naša predanost uporabnikom se kaže v nenehnem prizadevanju za izboljšanje kakovosti naših storitev in zagotavljanje zaupanja vredne, stabilne oskrbe z energijo. ILI RESPONSIBILITY TO NETWORK USERS 154 Y 155 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 15.1. Investments 15.2. Electricity Distribution Volume in 2024 In 2024, the Elektro Gorenjska Group invested a total of €30.9 million, of which €24.0 million In 2024, a total of 1,142 GWh of electricity was distributed through the network. was invested by Elektro Gorenjska. Of this amount, €20.3 million from Elektro Gorenjska and €6.8 million from Gorenjske elektrarne qualified as green investments under Commission Regulation (EU) 2021/2139. KEY INVESTMENTS IN 2024 The Elektro 1200 Gorenjska A total of €6.9 million was invested in distribution transformer substations, with the most notable projects including: 1000 368 379 360 350 339 Group’s 800 investments • RTP 110/20 kV Primskovo: In 2024, construction work on the reconstruction of the 110 kV switchyard was continued and completed. Work on replacing the 20 kV secondary 600 in 2024 equipment was finalized, and most of the primary GIS and secondary 110 kV equipment 400 752 799 822 802 803 installation was also completed. A total of €4.1 million was invested in this project; 200 • RTP 110/20 kV Tržič: Replacement of the 20 kV primary and secondary switchyard equipment began in 2024, with approximately 90% completed. The project is expected to be 0 finalized in the first quarter of 2025. €1.7 million was invested in 2024; 2020 2021 2022 2023 2024 • RTP 110/20 kV Radovljica: Replacement of transformer TR 1 with a capacity of 40 MVA progressed to 50% completion in 2024, in accordance with contractual milestones. The BUSINESS CUSTOMERS HOUSEHOLD CUSTOMERS project, including the transformer’s installation, is expected to be completed by March 2025. €0.8 million was invested in 2024. In 2024, the electricity distribution volume for business consumers remained comparable Investments in medium- and low-voltage networks and the construction/renovation of to 2023. A noticeable decline was observed among household consumers, primarily transformer stations (TP) totalled €13.1 million in 2024. Significant construction efforts were due to the increasing number of solar power plant connections under the net-metering carried out over the course of the year. Despite challenges related to equipment delivery system. (including failed incoming inspections for low-voltage cables) and extended lead times, most investments – focused on rehabilitating critical sections of the network, enabling new connections, and expanding the grid – were successfully implemented. A significant portion of financial resources was again allocated in 2024 to the construction of cable ducting, which was carried out as part of joint infrastructure projects alongside other municipal utility networks in individual municipalities. 15.3. Electricity Losses in the Network Strengthening of the low-voltage network continued, particularly to support conditional connections for small solar power plants using the annual net-metering system. In 2024, further investments were made to repair damage caused by the 2023 flood and to enhance In 2024, electricity losses in the network amounted to 3.73%. the resilience of the network for the future. ELECTRICITY LOSSES IN THE NETWORK (%) FOR 2020–2024 A total of 19 km of medium-voltage (MV) cable lines were laid, 30 new transformer stations were constructed, and major reconstructions were carried out at 15 transformer stations. Additionally, 80 km of low-voltage (LV) cable lines were installed – some to support the expansion of the LV network, while most of these investments were aimed at strengthening 5.0 the network to accommodate increased consumption (e.g., heat pumps) and the integration 3.99 4.0 3.71 3.54 3.73 of self-supply generation units. 3.45 3.0 Investments in hydropower plants amounted to €5.4 million, with the largest share going toward the comprehensive restoration of the Sava hydropower plant following a fire in 2022. 2.0 The investment is expected to be completed in 2025. 1.0 Other key investments in 2024 included: 0 2020 2021 2022 2023 2024 • Goodyear Small Photovoltaic Power Plant (€594,000); PERCENTAGE OF LOSSES IN THE NETWORK • Sečnik Small Photovoltaic Power Plant (€426,000); • Upgrade of server and user IT equipment (€450,000); • New network tariff billing system (€300,000); • Overhaul of the generator at Mojstrana hydropower plant (€133,000); This indicator has improved due to additional grid reinforcement, the installation of new • Completion of business intelligence (BI) tool implementation (€120,000); AMI meters, the correction of errors at metering points, and the rising share of electricity • New document management system (€110,000). supplied from self-generation systems. 156 157 €30.9 million GWh 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP VOLTAGE QUALITY COMPLIANCE ACCORDING TO SIST EN 50160 ON HV LEVEL (CONTINUOUS MONITORING) – 2024 OVERVIEW SHARE OF METERING POINTS (MP) IN THE REMOTE METERING SYSTEM (%) FOR 2020–2024 Compliance with Location Number of non-compliant weeks PQS (Power Quality of the Number Standards) Distribution Weeks Number 100 Transformer monitored of voltage of voltage Magnitude 90 Station sags swells Number of Number of supply Harmonics Flicker Imbalance Signalling (RTP 110/X) voltages Frequency compliant of non- 90.4 92.3 voltage weeks compliant weeks 80 87.8 84.8 70 79.2 RTP Tržič 110 kV 51 0 0 10 0 0 0 112 23 41 10 60 RTP Železniki 50 110 kV 52 0 0 5 0 0 0 107 21 47 5 40 RTP Škofja Loka 110 kV 52 0 0 2 0 0 0 112 22 50 2 30 DV Kleče 20 RTP Radovljica 50 0 0 12 0 0 0 115 18 38 12 10 110 kV 0 RTP Primskovo 2020 2021 2022 2023 2024 110 kV 52 0 0 7 0 0 0 100 14 45 7 SHARE OF MP IN THE REMOTE METERING SYSTEM (%) RTP Jesenice 110 kV 52 0 0 12 0 0 0 108 13 40 12 RTP Bohinj 110 kV 50 0 0 8 0 0 0 105 19 42 8 RTP Zlato polje 110 kV 51 0 0 12 0 0 0 122 25 39 12 15.4. Voltage Quality in Electricity Supply RTP Labore 110 kV 52 0 0 11 0 0 0 112 11 41 11 DV Mavčiče Voltage quality slightly declined in 2024 compared to the previous year, mainly due to The data indicates that overall voltage quality within the Elektro Gorenjska region is the reappearance of so-called flicker phenomena across the Elektro Gorenjska area. good. New construction, upgrades, and maintenance of the distribution system – includ- ing metering and communication infrastructure at the low-voltage level – continue to The limit values of parameters defined by the SIST EN 50160 standard were largely in improve monitoring and resolution of voltage irregularities. compliance with the specified requirements. Flicker originating from the metalworking industry remains present in the RTP Jesenice area and is transmitted to the RTP Kranjska Gora area. According to its definition, this phenomenon does not affect device functionality; its impact – subjective in nature – appears as brightness fluctuations in conventional lighting. This effect is observable only at the 20 kV level. In 2024, 14 complaints related to low-voltage power quality were received, of which two were justified. Nonconformities are addressed as quickly as possible and in accordance with legal deadlines. 158 159 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 15.5. Supply Continuity in Electricity Delivery Ensuring a high-quality and reliable electricity supply remains a top priority. As such, SAIDI – SYSTEM AVERAGE INTERRUPTION DURATION INDEX continuous attention is given to monitoring and improving quality indicators. 120.00 Electricity supply quality is reflected in the performance at over 92,000 metering points 110.00 across the network. 100.00 Power supply quality is evaluated based on: 90.00 • Continuity of supply, referring to the frequency and duration of interruptions 80.00 experienced by users; 70.00 • Commercial quality, reflecting service interactions between the system operator and 60.00 users; • Voltage quality, representing technical voltage parameters measured at user delivery 50.00 points. 40.00 Minimum standards for supply continuity are expressed as either guaranteed or system 30.00 standards, as defined by the regulator. Guaranteed standards apply to individual 20.00 metering points and define acceptable limits for the number and duration of unplanned long and short interruptions per year. System standards are expressed through SAIDI, 10.00 SAIFI, CAIDI, CAIFI, MAIFI, and MAIFI-e indicators. The regulator AGEN also defines 0 target values for SAIDI and SAIFI for each regulatory period. 2020 2021 2022 2023 2024 Unplanned – Internal Cause 19.83 22.22 11.57 32.80 18.79 The tables and charts below display the values of system continuity indicators that are monitored by Elektro Gorenjska and submitted, in compliance with applicable legislation, Unplanned – Force Majeure 1.05 0.00 0.00 38.60 0.00 to the regulator’s information system (AGEN). Unplanned – External Cause 0.37 0.87 0.53 1.66 1.91 Planned 30.46 39.92 30.06 33.33 30.04 UNPLANNED LONG-DURATION POWER SUPPLY INTERRUPTIONS IN 2024 Own Foreign Force Majeure SAIFI – SYSTEM AVERAGE INTERRUPTION FREQUENCY INDEX SAIFI SAIDI CAIFI CAIDI SAIFI SAIDI CAIFI CAIDI SAIFI SAIDI CAIFI CAIDI interr./ min/ interr./ min/ interr./ min/ interr./ min/ interr./ min/ interr./ min/ cust. cust. cust. interr. cust. cust. cust. interr. cust. cust. cust. interr. 1.60 Total rural 0.22 11.30 0.85 51.34 0.00 0.99 0.07 268.28 0.00 0.00 0.00 0.00 1.40 Total urban 0.27 7.48 1.03 56.15 0.06 0.92 1.09 31.21 0.00 0.00 0.00 0.00 1.20 Total 0.49 18.79 1.89 38.66 0.06 1.91 1.16 30.17 0.00 0.00 0.00 0.00 1.00 0.80 0.60 PLANNED LONG-DURATION POWER SUPPLY INTERRUPTIONS IN 2024 0.40 SAIFI SAIDI CAIFI CAIDI 0.20 interr./cust. min/cust. interr./cust. min/interr. 0 Total rural 0.13 20.36 0.62 157.93 2020 2021 2022 2023 2024 Total urban 0.11 9.68 0.53 201.80 Planned 0.19 0.26 0.22 0.22 0.24 Total 0.24 30.04 1.16 125.96 Unplanned – External Cause 0.02 0.06 0.01 0.05 0.06 Unplanned – Force Majeure 0.04 0.00 0.00 0.30 0.00 Unplanned – Internal Cause 0.66 0.55 0.45 0.78 0.49 Short-Duration Power Supply Interruptions in 2024 Rural Urban Total 2024 MAIFI 2.54 1.68 4.22 160 161 INTERRUPTIONS / USER MINUTES / USER 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP MAIFI – MOMENTARY AVERAGE INTERRUPTION FREQUENCY INDEX 7 6 5 4 3 2 1 0 2020 2021 2022 2023 2024 MAIFI 3.9 3.4 2.32 6.35 4.22 Elektro Gorenjska The values of the SAIFI and SAIDI indicators for planned long-duration interruptions in continues to achieve 2024 are comparable to those of previous years, as the scope of maintenance activities on the electricity distribution network has remained consistent. results in power supply continuity that remain The SAIDI and SAIFI values for unplanned long-duration interruptions also show consistency with past years, apart from 2023, which is excluded from the comparison below the threshold due to extreme weather conditions that significantly affected the results. Although the limits prescribed by the number of short-duration interruptions in 2024 was notably lower, the MAIFI indicator is slightly higher than in previous years. This suggests that medium-voltage feeders regulator AGEN. supplying a larger number of customers experienced more frequent disturbances. Elektro Gorenjska Group continues to achieve results in power supply continuity that remain below the threshold limits prescribed by the regulator AGEN. 15.6. Commercial Quality For most commercial quality indicators in 2024, the average values achieved were generally significantly better than the minimum standard threshold values. Certain challenges arose due to changes in sectoral legislation – on one hand due to the introduction of the new network charge act and its associated IT support, and on the other due to the extension of the deadline for users to connect individual self-supply installations under the EZ-1 legislation. However, these issues began to diminish toward the end of the year. 162 163 INTERRUPTIONS / USER 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP OVERVIEW OF COMMERCIAL QUALITY PARAMETERS FOR 2024 Minimum Quality Standards (MQS) Achieved Values Share of Services Performed Notes Commercial Quality Parameter Systemic Required Total Number Number p to and (S) or Level of Threshold f Required of Justified U ard Including the Above the Guaranteed Compliance Value Unit o or Performed Exceptions Parameter Stand viation Threshold Value Threshold Value (G) Standard [%] Services (Force Majeure, Value De [%] External Cause) [%] 1.1 Average time required to issue a connection consent S 95 20 Working day 3,637 0 48.0 44.0 33.10 66.90 1.2 Average time required to issue a cost estimate or quotation for simple works G 100 8 Working day 122 0 6.6 3.2 88.00 12.00 1.3 Average time required to issue a connection contract for low-voltage system S 95 20 Working day 0 0 0.0 0.0 0.00 0.00 The connection contract is no longer being issued. 1.4 Average time required to activate a connection in the system G 100 8 Working day 3,275 0 6.3 11.5 79.00 21.00 2.1 Average time required to respond to written enquiries, complaints, or user requests G 100 8 Working day 81 0 6.4 7.9 76.00 24.00 2.2 Average call holding time in the call centre - 0 0 - 57,583 0 15.0 10.3 2.3 Call centre service level parameter - 0 0 - 57,583 0 86.7 3.1 Average time to restore power supply in the event of a fault on the load-limiting device (6 AM –10 PM) G 100 4 Hour 2,731 0 0.8 0.5 100.00 0.00 3.1 Average time to restore power supply in the event of a fault on the load-limiting device (10 PM – 6 AM) G 100 6 Hour 32 0 0.8 0.5 100.00 0.00 3.2 Average time required to respond to a complaint regarding voltage quality S 95 30 Working day 14 0 12.7 5.4 100.00 0.00 The threshold for the cases in question is 3.3 Average time required to resolve voltage quality deviations S 50 6 Month 2 0 23.0 0.7 100.00 0.00 24 months and the issue was resolved within the deadline. 4.1 Average time required to repair a meter fault G 100 8 Working day 778 0 2.9 12.4 94.00 6.00 4.2 Average time required to restore power supply following disconnection due to non-payment by the user G 100 3 Working day 412 0 0.1 0.6 100.00 0.00 164 165 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP For Parameter 1.1 – Average time required to issue a connection consent, the share NUMBER OF COMMERCIAL QUALITY COMPLAINTS FROM 2021 TO 2024 of services performed above the threshold value was due to the increased number of applications for individual self-supply installations submitted in 2023 and processed during the first half of 2024. Although the backlog began to decrease in the second half 140 of the year, the parameter remained above the threshold due to the impact of the earlier 123 120 period. 100 For Parameter 1.2 – Average time required to issue a cost estimate or quotation for 80 simple works, delays in issuing certain quotations were mainly due to an insufficient number of staff. The team was reinforced toward the end of 2024, and better results are 60 43 expected for this indicator in the coming year. 34 40 Data for Parameter 1.3 – Average time required to issue a connection contract for low- 20 5 voltage systems – is not reported, as contracts of this type ceased to be issued in 2023 0 in accordance with legislation. 2021 2022 2023 2024 For Parameter 1.4 – Average time required to activate the connection in the system, the NUMBER OF JUSTIFIED COMPLAINTS NUMBER OF UNJUSTIFIED COMPLAINTS reason for services exceeding the threshold value was the increased number of requests for individual self-supply connections, which could not be processed within the required timeframe due to limited staffing. In 2024, more than 80% of complaints were related to delays in meter fault repairs and delays in responses to written inquiries, complaints, or user requests. The share of services exceeding the threshold for Parameter 2.1 – Average time required to respond to written inquiries, complaints, or user requests – was primarily due to the increased volume of complaints triggered by the implementation of the new network charge act. It became evident that many users did not understand the new regulations. Additionally, issues with the billing IT system complicated the resolution of billing complaints and claims. 15.7. Maintenance of the Electricity Energy Infrastructure (EEI) COMPLAINTS RELATED TO COMMERCIAL QUALITY IN 2024 Complaints Area Subarea Reason for Complaint Total Number Share of Elektro Gorenjska Group fully performs all tasks of a distribution system operator within Number of of Justified Justified its geographical area. Among these, the maintenance of the public electricity distribution Complaints Complaints Complaints [%] infrastructure is especially important for ensuring a high-quality and uninterrupted Delay in Issuing the Cost Estimate (Quotation) for Simple power supply to users. Works 0 0 0 Connection to the System Delays Delay in Issuing the Connection Consent 1 1 100 Thanks to strong organization and efficient operational and maintenance processes, Delay in Issuing the Connection Contract for the Low- Familiarity with the these tasks were successfully carried out within the planned budget. The commitment Voltage System 1 1 100 local environment, and competence of employees, who are closely connected with daily field operations, Meter Reading Failure to Perform Regular Annual Meter Reading by the were essential. Familiarity with the local environment, conditions, and stakeholders Metering Authorized Company 0 0 0 conditions, and involved in organizing and making decisions about all aspects of maintenance is crucial Meter Operation Delay in Resolving a Meter Malfunction 2 0 0 stakeholders for ensuring a consistent and high-quality electricity supply. Exceeding the Deadline for Responding to a Complaint Regarding Voltage Quality 0 0 0 Voltage Quality involved in organizing In 2024, preventive maintenance was primarily carried out on the electricity distribution Exceeding the Maximum Time Allowed to Resolve Voltage Deviation Non-Conformities 0 0 0 and making decisions infrastructure to reduce the likelihood of failure of any system component. This was achieved through an effective planning process and execution of maintenance activities Quality of Supply Exceeding the Maximum Permitted Duration and Number of Unplanned Long Interruptions (Applies Only to Final Users 0 0 0 about all aspects of according to predefined criteria and procedures. Continuity of Supply on the Medium-Voltage System) maintenance is crucial Exceeding the Maximum Permitted Duration of an The effects of preventive maintenance activities are long-term and, under normal Individual Unplanned Long Interruption 0 0 0 for ensuring a operating conditions, typically result in fewer faults and consequently lower corrective Activation of a New Exceeding the Time Limit for Activating a System Connection Connection 0 0 0 consistent and maintenance costs. Activation of Exceeding the Time Limit for Restoring Supply in Case of a Connections high-quality electricity Corrective maintenance – such as fault repair – differs from planned maintenance Reconnection After Malfunction of the Current Limiting Device 0 0 0 Disconnection Incorrect Disconnection Due to Maintenance Staff Error 1 1 100 supply. mainly in that it is unpredictable and typically occurs unexpectedly. In 2024, major faults were again caused by storms and flooding, which are natural phenomena. Other causes Disconnections Due to included electrical and mechanical overloads of lines and equipment, as well as damage Non-Payment or Late Exceeding the Time Required to Restore Supply Following to the electricity infrastructure caused by third parties. Payment Disconnection Due to Non-Payment 0 0 0 Missed or Delayed Pre-Arranged Visits 0 0 0 Customer Services Late Notification of Planned Interruptions to Users 3 0 0 Billing & Invoicing and Debt Collection Unclear Invoices Delay in Responding to Users’ Written Inquiries, Complaints, or Requests 26 9 35 166 167 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP By continuously SHARE OF TOTAL EEI MAINTENANCE COSTS IN 2024 BY MAINTENANCE TYPE monitoring By continuously monitoring technological trends and implementing related IT solutions technological trends in the electricity system, Elektro Gorenjska Group significantly contributes to meeting increasingly stringent power supply quality criteria, integrating distributed energy and implementing sources, ensuring operational safety, and indirectly lowering maintenance costs. These 21.2% PREVENTIVE MAINTENANCE related IT solutions innovations include modern electrical devices and equipment, advanced data acquisition and remote-control systems operated from the control centre, grid automation with in the electricity remotely operated switches, voltage quality monitoring systems in substations, CORRECTIVE MAINTENANCE system, Elektro telecommunication systems, modern software solutions, and other advanced technologies. 78.8% Gorenjska Group significantly contributes As part of preventive maintenance, regular inspections of power lines and equipment were performed, including corridor clearing around electrical lines, audits of HV/ to meeting MV substations, switchgear, transformers, and protection devices, as well as control increasingly stringent measurements and protection testing. SHARE OF TOTAL EEI MAINTENANCE COSTS IN 2024 BY ASSET TYPE power supply quality Great importance is placed on diagnostics of medium-voltage (MV) cable lines, which criteria, integrating provides insight into the condition of the lines and equipment – an essential basis for 3.6% PRIMARY SUBSTATION, DISTRIBUTION predictive maintenance planning and necessary investment into the electricity network. SUBSTATION distributed energy 8.3% 19.0% sources, ensuring For many years, Elektro Gorenjska Group's qualified in-house teams have been using TS live-line working (LLW) methods as part of preventive maintenance. During regular operational safety, substation audits, this includes cleaning of LV and MV electrical equipment and devices 20.2% MV/HV LINES and indirectly lowering while under voltage. This approach, combined with ongoing training in LLW methods, will 9.7% continue in the future, further reducing the impact of maintenance work on the reliability LV NETWORK maintenance costs. and continuity of electricity supply to network users. 39.3% MEASURING AND CONTROL EQUIPMENT SHARE OF SUBSTATION AUDITS BY METHOD OF IMPLEMENTATION IN 2024 ICT SHARE OF PREVENTIVE EEI MAINTENANCE COSTS IN 2024 BY ASSET TYPE LIVE-LINE WORK (DPN METHOD) 9.0% PRIMARY SUBSTATION, DISTRIBUTION 40.0% 60.0% SUBSTATION WORK IN DE-ENERGISED STATE 24.1% 16.6% TS MV/HV LINES 11.5% LV NETWORK 38.8% MAINTENANCE COST TRENDS FOR ELECTRICITY INFRASTRUCTURE FROM 2020 TO 2024 (IN €1,000) ICT 1400 1200 SHARE OF CORRECTIVE EEI MAINTENANCE COSTS IN 2024 BY ASSET TYPE 1000 472 230 5.8% 2.9% 800 203 161 600 166 TS 400 546 735 727 683 856 16.9% MV/HV LINES 200 41.1% 0 LV NETWORK 2020 2021 2022 2023 2024 33.4% MEASURING AND CONTROL EQUIPMENT PREVENTIVE MAINTENANCE CORRECTIVE MAINTENANCE ICT 168 169 In €1,000 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 6. OVE RNA 170 CCORPORATE GOVERNANCE AT Sustainability is increasingly framed through the lens of ESG – Environmental, ELEKTRO Social, and Governance – criteria. While environmental and social considerations often receive the most attention, the governance dimension remains a GORENJSKAE fundamental pillar of long-term corporate responsibility. Governance encompasses the structures and processes that guide corporate management and decision- making. It includes a commitment to transparency, ethical conduct, stakeholder accountability, and full compliance with applicable laws and regulations. 171 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 16.1. Business Conduct Policies and Corporate Culture THE ROLE OF MANAGEMENT AND SUPERVISORY BODIES IN BUSINESS MANAGING IMPACTS, RISKS, AND OPPORTUNITIES CONDUCT In accordance with applicable labour legislation and the recommendations and The company places great importance on the role and responsibility of its management expectations of its owner, Elektro Gorenjska has established a system for shaping and supervisory bodies regarding ethical business conduct. These bodies are directly and developing its corporate culture. A Compliance Officer has been appointed and involved in the development, implementation, and oversight of policies and strategies is responsible for advancing corporate culture through the adoption of internal rules related to ethical and compliant operations, including anti-corruption measures, legal and acts, proposing measures, reporting to the Management Board, and educating compliance, and the promotion of transparency. and raising awareness among all employees regarding integrity and ethical business practices. The Management Board, together with the Supervisory Board, is responsible for overseeing all aspects of ethical conduct. This includes approving ethical business The company has adopted: conduct policies, monitoring their implementation, and ensuring alignment with best practices and applicable legislation. • A Compliance Policy that defines key principles, guidelines, and objectives for business operations; The Supervisory Board regularly reviews compliance reports and any investigations into • An Integrity Plan, which identifies and assesses risk factors and proposes mitigation potential violations of business conduct standards. It also holds the authority to approve measures in areas such as conflicts of interest, the improper acceptance of gifts, measures addressing risks related to unethical conduct, particularly in areas such as lobbying contacts, protection of trade secrets, and other elements of corporate integrity. corruption, bribery, and other integrity-related issues. Elektro Gorenjska has adopted a Code of Business Conduct and Ethics, which is By embodying the values, they promote, the management and supervisory bodies communicated to all employees and made permanently available on the company’s play a pivotal role in cultivating a corporate culture rooted in ethical behaviour and a intranet and website for access by both internal and external stakeholders. The Code strong commitment to compliance. Their conduct serves as a benchmark for the entire sets out a framework of conduct and behavioural standards expected of employees and organization, setting the tone from the top. Through consistent leadership by example, the company. It serves as a guide for all employees, who reflect the company’s values executives influence employees to internalize and mirror these standards in their and principles through their work and conduct, thereby influencing its reputation. All everyday work. employees are expected to comply with the Code. The company also encourages users, business partners, and other stakeholders to adhere to similar principles that are EXPERTISE OF MANAGEMENT AND SUPERVISORY BODIES IN BUSINESS important to the company. A commitment to the Code is incorporated into all contracts CONDUCT concluded with business partners, suppliers, and contractors. Anyone who suspects a breach of the Code may report the violation to the company’s Compliance and Internal Integrity Officer. Reports can be submitted anonymously and with full protection of the The Management Board and members of the Supervisory Board possess professional whistleblower's identity. knowledge and experience in business conduct. Among them are individuals with expertise in corporate governance, ethics, and compliance. Several members have As the company is subject to Directive (EU) 2019/1937 and the Slovenian Whistleblower experience in risk management, particularly in establishing effective control systems and Protection Act (Zakon o zaščiti prijaviteljev, short: ZZPri), it has adopted internal rules— mechanisms for preventing corruption and bribery. the Rules on Handling Alleged Irregularities or Violations in the Field of Corporate Integrity. The President of the Management Board has appointed a trusted person and The majority shareholder of electricity distribution companies regularly provides free a commission to receive and review internal reports under ZZPri. By establishing this training sessions for management and supervisory bodies to keep them informed of the internal reporting mechanism, the company ensures full anonymity and protection from latest trends and best practices in business conduct across various subject areas. retaliation for potential whistleblowers. Elektro Gorenjska defines the expertise of its governing bodies in the following documents: • Articles of Association of the joint-stock company, • Compliance Policy, • Code of Business Conduct and Ethics, • Integrity Plan. Members of the Supervisory Board possess appropriate professional knowledge, experience, and skills. Their complementary expertise ensures effective oversight of company operations. Key areas of knowledge include the electricity system, law, finance and accounting, management, risk management, and internal controls. 172 173 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 16.2. Compliance Management 16.4. Supplier Relationship Management Ensuring compliance is a continuous activity that permeates all processes and As a contracting authority, Elektro Gorenjska adheres to public procurement legislation. operational areas of the company. Primary responsibility lies with the company’s It strives to build strong and fair partnerships with suppliers while mitigating supply leadership, which plays a central role in: chain risks. Procurement documentation includes financial and technical participation requirements to ensure supplier capability. Contracts contain provisions such as O• Upholding the company’s commitment to opMerating in alignment with its values, retention money, penalties, termination clauses, and financial guarantees in the event of objectives, and strategy; non-compliance. Real-time monitoring of order status is facilitated through internal web • Raising awareness and motivating employees to uphold compliance; applications, allowing for rapid response in critical situations. • Encouraging understanding and implementation of compliance goals, and soliciting suggestions for improving the compliance system; Suppliers are regarded as key stakeholders in ensuring the stability and efficiency of • Fostering a strong compliance culture within the organization; As a socially the supply chain. Systematic oversight of payment due dates ensures that all financial • Promoting effective internal and external communication that supports transparency obligations to suppliers are settled punctually and consistently. All suppliers are and accountability. responsible company, treated equally, with transparency in procurement procedures and a commitment to Elektro Gorenjska cost-effective and efficient operations. Market competition is actively maintained, and Elektro Gorenjska’s approach to compliance and integrity is aligned with Chapter 6 of opportunities are provided for small and medium-sized enterprises to participate in the Slovenian Sovereign Holding Act (SDH), the Companies Act, and the Integrity and supports the public procurement procedures. Prevention of Corruption Act. sustainable Elektro Gorenjska places strong emphasis on compliance with environmental, social, Compliance efforts span all areas of the company’s operations and legal obligations, development of the and labour legislation. Any violations are addressed with the highest level of diligence with particular focus on corporate law, data protection, labour law, competition law, and local and broader and responsibility. Where feasible, green public procurement principles are also applied. electricity distribution regulations. In such cases, goods and services are selected based on their lower environmental community. Where impact across their life cycle, resource and energy efficiency, and equivalent or superior To this end, Elektro Gorenjska has adopted a Compliance Policy that outlines its possible, vulnerable functionality. Lobjectives, principlIes, key compliance areas, operating methods, integration into the broader risk management framework, and responsibilities for implementing compliance suppliers are included Quality management systems are used to regularly monitor, review, and enhance measures. in the supply chain. processes for managing supply chain risks. These efforts include tracking potential risks associated with global challenges, such as natural disasters, political instability, or Compliance is further ensured within all internal organizational units through changes in legislation. established internal controls, internal and external audits, and internal reviews. As a socially responsible company, Elektro Gorenjska supports the sustainable development of the local and broader community. Where possible, vulnerable suppliers are included in the supply chain. For instance, a long-standing partnership has been established with a local disability enterprise to produce promotional materials and business gifts. Landscaping and minor outdoor maintenance tasks are regularly contracted to a local employment centre. The company also responds to invitations from 16.3. Regulatory Compliance educational institutions, contributing knowledge and expertise to young people and other interest groups. Elektro Gorenjska operates in a highly regulated environment. Regulatory conditions are Ndefined by AGEN in accordance with the EnergCy Act (ZOEE) and related bylaws. These regulations directly impact revenues generated under the Distribution System Operator (DSO) contract, which account for nearly 72% of the company’s revenue and 62% of the Group’s total. Regulatory frameworks must be continuously monitored and adapted to, as changes can significantly affect business operations. The company actively participates in shaping future regulatory developments. E 174 175 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 16.5. Data Protection In accordance with the provisions of the General Data Protection Regulation (GDPR), which In addition to specific obligations, good business practices and ethical principles outlined came into force on 25 May 2018, stricter data protection measures have been defined. in the publicly available Code of Business Conduct and Ethics are binding for both the Since 2018, a Data Protection Officer (DPO) has been appointed, reporting directly to the company and its employees. Compliance is further supported across all organizational President of the Management Board. The primary responsibility of the DPO is to ensure the units through internal control mechanisms, internal and external audits, and internal company’s compliance with GDPR requirements regarding the protection of personal data. reviews. Particular attention is given to employee education on the protection and processing of personal data. Regular internal training sessions are organized, specifically for key To strengthen corporate integrity and minimize the risk of corruption and unethical employees who handle personal data. All employees receive a GDPR information leaflet upon conduct, the company has appointed a Compliance and Integrity Officer. This role is Nonboarding. carried out independently and autonomously, with full protection against retaliatory actions. To reduce corruption and bribery risks in relation to business partners, all In line with legal requiTrements, a dedicated email address hasE been established to allow contracts include anti-corruption clauses – non-compliance with which renders the users to submit GDPR-related requests or provide comments on data protection. Each agreement null and void – as well as a written declaration of ownership by legal and message is treated as a potential security incident and is documented in a security incident natural persons and a contractual obligation to adhere to the company’s Code of report. The content of the message is reviewed within the prescribed timeframe, as defined Business Conduct and Ethics. by GDPR, and a response is sent to the sender. If any deficiencies are identified in the personal data protection system, corrective and preventive measures are implemented under Throughout the previous reporting period (for 2023), there were no reported or the supervision of the DPO. substantiated cases of employee involvement in corruption or bribery. 2024 likewise remained incident-free in this regard. In accordance with the directive, the DPO participates in data protection impact assessments for all new applications and major changes to existing applications involving personal data. INDEPENDENCE OF THE INVESTIGATION PROCESS Through this involvement, the DPO helps prevent data loss, misuse, or potential breaches of data protection regulations. The appointed DPO also regularly exchanges best practices with To detect any potential acts of bribery, corruption, or other integrity violations, Elektro other DPOs within the relevant industry association and participates in a data protection Gorenjska encourages whistleblowers to report suspected cases of bribery. To this end, working group dedicated to knowledge sharing and continuous improvement. anonymous reporting is made possible through multiple secure channels. Reports of alleged violations or irregularities are reviewed by an appointed officer and a three- R member committee. Persons whose impartiality may be questioned or who are directly involved in the report may not be appointed to the committee. The committee handles reports independently and is not subject to any instructions, thereby ensuring a fair and 16.6. Corporate Integrity objective investigation. In accordance with applicable regulations, whistleblowers are guaranteed protection against retaliation. POLITICAL INFLUENCE AND LOBBYING Elektro Gorenjska is committed to the higheIst standards of ethical conduct and has Elektro Gorenjska is committed to transparency in all its activities involving political established a comprehensive system for the prevention, detection, and management of influence, lobbying, and political contributions. Our efforts in this area are aimed at legal corruption and bribery. This system includes a set of policies, procedures, and tools designed compliance and the promotion of a sustainable and responsible business environment. to provide effective protection against such risks and ensure transparent handling of all Focus is placed on issues relevant to our industry and those affecting long-term business reported incidents. operations. PROCEDURES FOR PREVENTING, DETECTING, AND ADDRESSING Lobbying activities are governed by the Rules on Conflict of Interest, Lobbying, and Other CORRUPTION AND BRIBERY ALLEGATIONS Corporate Integrity Measures, which define conditions for lawful lobbying, other rules, and obligations of employees in case of lobbying contacts. Internal acts – such as the Rules on Gift Acceptance and the Rules on Conflicts of Interest, TLobbying, and Other Measures Related Yto Corporate Integrity – define procedures aimed Compliance oversight of lobbying contacts is the responsibility of the Compliance Officer, at preventing and avoiding conflicts of interest, unauthorized giving or receiving of gifts, who maintains a register of lobbying contacts and authorizations for lobbying activities. and corrupt practices, as well as mechanisms for detecting and addressing violations by The Compliance Officer is responsible for reporting to the supervisory board and other employees and management. These rules require all employees to conduct business in national oversight bodies. compliance with applicable laws, regulations, and internal policies. In 2024, no lobbying contact was made with any employee of the company. The As a tool for managing corruption risks and risks related to integrity breaches, Elektro company also made no financial or in-kind political contributions. Gorenjska has adopted an Integrity Plan. The plan includes an assessment of the exposure of individual work processes and employees to corporate integrity violations and corruption risks, identification of risk factors for corrupt and other unlawful or unethical conduct, and the definition of measures to mitigate these risks. 176 177 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP 16.7. Cybersecurity Elektro Gorenjska is a member of the Economic Interest Association of Electricity Elektro Gorenjska Group recognizes the importance of ensuring and maintaining a high Distribution (GIZ distribucije električne energije), which includes other electricity level of cybersecurity throughout all aspects of its operations. distribution companies. The primary objectives of the association are to facilitate, coordinate, and promote the activities of the public utility services of the Distribution A frequently used or interchangeable term with cybersecurity is information security, System Operator (DSO) and electricity distribution and supply, improve industry which refers to the protection and defence of information systems against unauthorized performance without generating profit for the association, and to facilitate and access and use – ensuring confidentiality, authenticity, integrity, and availability. coordinate other relevant activities or interests, ensuring that mutual competition rules Cybersecurity, by contrast, encompasses a broader set of activities, rules, devices, tools, are not violated. In 2024, the company paid €123,840 in membership fees. and measures designed to protect information systems from cyber threats, attacks, and misuse. The company does not approve sponsorships or donations for religious or political organizations. With the goal of developing a responsible and positive relationship To maintain a high level of information security, the organization has implemented an with society and supporting sustainable business development, the company uses Information Security Management System (ISMS) that is integrated into all business sponsorships and donations to support and promote sports, cultural, scientific, processes and supports the achievement of strategic objectives. The effectiveness of the educational, humanitarian, and environmental projects. ISMS is monitored according to the ISO/IEC 27001:2013 standard, under which the organization is certified. Compliance with all other applicable sector-specific legislation is REPORTING TO ADMINISTRATIVE AND SUPERVISORY AUTHORITIES also ensured. Outcomes of reports concerning corruption, bribery, or other integrity violations are A high standard of cybersecurity has been achieved in recent years through a regularly communicated to the management board and the supervisory board. This combination of organizational and technical measures: allows company leadership to monitor incidents in real-time and assess the effectiveness of preventive and corrective measures taken. 1. Organizational measures identify risks, define the criticality of individual information assets, and establish procedures for detecting and responding to security events or POLICY AWARENESS AND ACCESSIBILITY incidents. These include: The company regularly informs relevant stakeholders about adopted internal acts related • Information risk assessments, to corporate integrity, anti-corruption, and anti-bribery. Several communication channels • Business Impact Analysis (BIA), are used, such as internal announcements, intranet updates, company newsletters and • Incident response planning, magazines, meetings, internal audits, websites, and workshops. Content is tailored to • Business continuity planning, different target audiences. HR ensures that new employees are introduced to relevant • Periodic employee training and awareness-raising, policies upon onboarding, and all policies always remain accessible on the company’s • Integration with the Security Operations Centre. intranet. 2. Technical measures involve implementing logical and technical security controls to EMPLOYEE TRAINING ON ANTI-CORRUPTION AND ANTI-BRIBERY protect, manage, and monitor the performance of information assets and networks. General controls include: The company provides regular training for all employees, particularly those in functions • Vulnerability management; with higher exposure to corruption and bribery risks. These trainings cover risk • Provision of appropriate data backups; identification, ethical conduct, and procedures for reporting suspicious activities. • Security assessments and penetration testing; Training programme are delivered through interactive workshops, webinars, and real-life • Centralized endpoint management and monitoring. case simulations. Their purpose is to provide a deep understanding of risks and tools for prevention. Network controls include: Nearly all functions with higher exposure to corruption and bribery risks are included, • Firewall implementation with security mechanisms between network segments; including procurement, sales, investments, finance, and legal affairs. • Network segmentation; • Access control mechanisms (e.g., NAC, VPN, MFA). The management board participates in annual training sessions on identifying and managing corruption risks, ensuring that key leadership remains informed about the Detection and response activities include: latest trends and regulations. • Detection of security events (ADS, monitoring systems, endpoints, etc.), • Logging, analysis, and centralized storage of logs (SIEM and JIRA), • Forwarding of logs to the Security Operations Centre for further correlation and analysis. 178 179 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE SUSTAINABILITY REPORT: ELEKTRO GORENJSKA – COMPANY AND GROUP Ensuring the security of information systems is vital for maintaining uninterrupted operations. Cybersecurity considerations are embedded in the planning, implementation, and maintenance of ICT systems to ensure a consistently high level of protection. Cybersecurity is a continuous process requiring constant attention – it cannot be achieved through a one-time effort. As ICT systems become more complex, the likelihood of vulnerabilities increases, demanding ongoing vigilance and appropriate response. 16.8. Sustainability Management System Sustainable operations refer to a business approach that considers economic, social, and environmental aspects, with a focus on long-term viability. The aim of sustainable operations is to create value not only for the company’s owners but also for society and the environment. This involves balancing the achievement of business objectives with minimizing environmental impacts, fostering social responsibility, and managing resources and energy in a sustainable manner. 5. Corporate governance and business integrity policies 4. Economic aspects of 1. Definition operations 6. Setting of of the sustainable indicators, 7. Monitoring and operations policy objectives, and reporting performance 3. Social targets responsibility 2. Environmental impact of operations 8. Annual evaluation P-268 Integrated P-3P0-03 0M0 aVnoadgeenmjee nt P-101 Environmental P-268 Integriran P-101 Sistem Quality P-P6-644 S iCstoenmti nsutaolunsih odfe tlnhieš kjoei ndtr-ustžobcek Management sistem vodenja ravnanja z okoljem kMakaonvaogstiem - eiSnVtK Imipzbroovlješmavent company S-y sStReOm System System 180 181 PP-2-20990 SSuisstteamin tarabjlneo Ostpneergaat idoenlos vSaynsjtaem 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE 7. INAN C IAL RFINANCIAL EP RTE R O OF THE ELEKTRO GORENJSKA COMPANY 182 183 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.1. Management Statement of 17.2. Auditor’s Report Responsibility The Management Board of Elektro Gorenjska hereby confirms the accounting statements, and all other components published and presented in this annual report. The annual report provides a true and fair view of the company’s financial position. The Management Board affirms that appropriate accounting policies have been applied in the preparation of the financial statements and that accounting estimates have been made based on the principles of prudence and sound management. The Management Board of Elektro Gorenjska approved the company’s financial statements for the 2024 financial year on 1 April 2025. The Management Board of Elektro Gorenjska is responsible for the proper maintenance of the company’s accounting records, for taking appropriate measures to safeguard assets and other property and confirms that the financial statements have been prepared on the assumption of the company’s going concern and in accordance with applicable legislation and Slovenian Accounting Standards. The tax authorities may, at any time within five years after the end of the year in which tax should have been assessed, review the company’s operations. This may result in additional tax liabilities, default interest, and penalties under corporate income tax or other taxes and levies. The management is not aware of any circumstances that could give rise to a material liability in this respect. Kranj, 1 April 2025 President of the Management Board dr. Ivan Šmon, MBA 184 185 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 186 187 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 188 189 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.3. Financial Statements of Elektro Gorenjska for the Financial Year Ended 31 December 2024 STATEMENT OF FINANCIAL POSITION OF ELEKTRO GORENJSKA AS AT 31 DECEMBER 2024 in € Item Note 31 Dec 2024 31 Dec 2023 IV. Long-Term Financial Investments 4 13,982,256 13,982,256 ASSETS 1. Long-Term Financial Investments, Excluding Loans 13,839,458 13,839,457 A. Long-term Assets 252,483,821 243,742,456 a) Shares and Interests in Group Companies 13,715,303 13,715,303 I. Intangible Assets and Long-Term Deferred Costs and Accrued Revenues 1 3,122,256 3,114,109 b) Shares and Interests in Associates 124,155 124,154 1. Long-Term Property Rights 3,002,484 3,053,708 2. Long-Term Loans 142,798 142,799 5. Other Long-Term Deferred Costs and Accrued Revenues 119,772 60,401 b) Long-Term Loans to Others 142,798 142,799 II. Property, Plant and Equipment 2 231,922,824 222,548,993 V. Long-Term Operating Receivables 5 155,550 722,341 1. Land and Buildings 167,638,632 164,859,697 2. Long-Term Trade Receivables 48,476 613,688 a) Land 6,979,301 7,282,780 3. Long-Term Receivables from Others 107,074 108,653 b) Buildings 160,659,331 157,576,917 VI. Deferred Tax Assets 1,545,854 1,591,900 2. Production Plant and Machinery 51,041,831 52,097,889 B. Short-Term Assets 14,705,211 14,974,313 3. Other Plant and Equipment 65,744 66,865 II. Inventories 6 1,428,961 1,295,369 4. Property, Plant and Equipment Under Acquisition 13,176,617 5,524,542 1. Material 1,189,317 1,295,369 a) Property, Plant and Equipment Under Construction and Production 13,140,183 5,483,278 4. Advances for Inventories 239,644 0 b) Advances for Acquisition of Property, Plant and Equipment 36,434 41,264 IV. Short-Term Operating Receivables 7 10,368,705 7,300,535 III. Investment Property 3 1,755,081 1,782,857 1. Short-Term Trade Receivables from Group Companies 31,500 19,910 2. Short-Term Trade Receivables from Customers 9,803,964 7,064,339 3. Short-Term Income Tax Receivables 175,468 0 4. Short-Term Receivables from Others 357,773 216,286 V. Cash and Cash Equivalents 8 2,907,545 6,378,409 C. Short-Term Accrued Expenses and Deferred Income 177,555 1,480,087 TOTAL 267,366,587 260,196,856 190 191 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY in € Item Note 31 Dec 2024 31 Dec 2023 Č. Short-Term Liabilities 14,229,100 19,601,979 EQUITY AND LIABILITIES II. Short-Term Financial Liabilities 12 7,123,688 10,847,735 A. Capital 9 174,345,788 170,315,507 1. Short-Term Operating Liabilities To Group Companies 0 171 I. Subscribed Capital 104,136,615 104,136,615 2. Short-Term Financial Liabilities To Banks 6,944,084 9,058,406 1. Share Capital 104,136,615 104,136,615 4. Other Short-Term Financial Liabilities 179,604 1,789,158 II. Capital Reserves 45,973,479 45,973,479 III. Short-Term Operating Liabilities 13 7,105,412 8,754,244 III. Profit Reserves 23,067,946 18,847,158 1. Short-Term Operating Liabilities To Group Companies 51,119 40,380 1. Legal Reserves 4,320,411 4,109,421 2. Short-Term Operating Liabilities To Suppliers 3,056,670 5,257,485 5. Other Profit Reserves 18,747,535 14,737,737 4. Short-Term Operating Liabilities Based On Advances Received 130,488 84,197 V. Fair Value Reserves -214,130 -196,358 5. Short-Term Income Tax Liabilities 0 293,955 VI. Retained Earnings 992 1,028 6. Other Short-Term Operating Liabilities 3,867,135 3,078,227 VII. Net Profit For The Financial Year 1,380,886 1,553,585 D. Short-Term Accrued Expenses And Deferred Income 14 1,682,694 1,203,184 1. Unallocated Portion Of Net Profit For The Current Year 1,380,886 1,553,585 TOTAL EQUITY AND LIABILITIES 267,366,587 260,196,856 B. Provisions And Long-Term Accrued Expenses And Deferred Income 10 22,068,899 18,147,227 The notes to the financial statements are an integral part of the financial statements and should be 1. Provisions For Retirement Benefits And Similar Obligations 3,551,527 3,457,557 read in conjunction with them. 2. Other Provisions 7,431,385 6,335,008 3. Long-Term Deferred Income 11,085,987 8,354,662 C. Long-Term Liabilities 11 55,040,106 50,928,959 I. Long-Term Financial Liabilities 54,688,957 50,633,042 2. Long-Term Financial Liabilities To Banks 54,688,957 50,633,042 II. Long-Term Operating Liabilities 139,914 67,751 4. Long-Term Operating Liabilities Based On Advances Received 139,914 67,751 III. Deferred Tax Liabilities 211,235 228,166 192 193 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY STATEMENT OF PROFIT OR LOSS OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € Item Note 2024 2023 8. Other Operating Expenses 8 1,462,067 515,719 1. Net Sales Revenue 1 37,972,194 37,160,207 9. Financial Income From Equity Interests 9 3,500,000 1,580,000 a. Net Sales Revenue From Domestic Market 37,963,461 37,152,257 a. Financial Income From Equity Interests In Group Companies 3,500,000 1,580,000 b. Net Sales Revenue From Foreign Market 8,733 7,950 10. Financial Income From Loans Granted 23,139 38,990 3. Capitalised Own Products And Services 2 6,261,655 5,921,213 b. Financial Income From Loans Granted To Others 23,139 38,990 4. Other Operating Income (Including Revaluation Operating Income) 3 1,536,599 1,884,865 11. Financial Income From Operating Receivables 19,036 25,711 5. Cost Of Goods, Material And Services 11,739,051 11,071,419 b. Financial Income From Operating Receivables From Others 19,036 25,711 a. Cost Of Goods Sold, Cost Of Material Used 4 6,196,686 6,518,245 13. Financial Expenses From Financial Liabilities 2,170,318 1,698,344 b. Cost Of Services 5 5,542,365 4,553,174 a. Financial Expenses From Loans Received From Group Companies 2,680 1,116 6. Labour Costs 6 16,175,542 15,353,221 b. Financial Expenses From Loans Received From Banks 2,167,638 1,697,228 a. Salaries And Wages 11,547,661 10,937,132 14. Financial Expenses From Operating Liabilities 102,926 106,679 b. Social Security Contributions 2,483,780 2,308,107 b. Financial Expenses From Liabilities To Suppliers And Bills Payable 227 166 - Of Which Pension Insurance Contributions 1,607,937 1,495,575 c. Financial Expenses From Other Operating Liabilities 102,699 106,513 c. Other Labour Costs 2,144,101 2,107,982 15. Other Income 18 21 7. Depreciation And Amortisation 7 13,243,861 12,551,555 16. Other Expenses 36,096 69,764 a. Amortisation 12,982,136 12,060,784 17. NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD BEFORE TAX 4,382,780 5,244,306 b. Revaluation Operating Expenses For Intangible Assets And Property, Plant And Equipment 255,675 485,477 18. Income Tax 10 136,538 293,955 c. Revaluation Operating Expenses For Current Assets 6,050 5,294 19. Deferred Taxes 10 26,447 -435,221 20. NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD 4,219,795 5,385,572 The notes to the financial statements are an integral part of the financial statements and should be read in conjunction with them. 194 195 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY STATEMENT OF OTHER COMPREHENSIVE INCOME OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € Item 2024 2023 B CASH FLOWS FROM INVESTING ACTIVITIES NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD 4,219,795 5,385,572 a. Receipts From Investing Activities 5,581,625 1,833,734 Other Components Of Comprehensive Income -16,780 -234,315 1. Receipts From Interest And Profit Shares From Others 3,543,496 1,642,910 TOTAL COMPREHENSIVE INCOME 4,203,015 5,151,257 3. Receipts From Disposal Of Property, Plant And Equipment 1,723,160 190,824 The notes to the financial statements are an integral part of the financial statements and should be 4. Receipts From Disposal Of Investment Property 314,969 0 read in conjunction with them. b. Payments For Investing Activities -26,544,325 -22,036,541 1. Payments For Acquisition Of Intangible Assets -2,395,581 -1,095,219 CASH FLOW STATEMENT OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € 2. Payments For Acquisition Of Property, Plant And Equipment -24,126,300 -20,892,230 Item 2024 2023 3. Payments For Acquisition Of Investment Property -22,444 -49,092 A. CASH FLOWS FROM OPERATING ACTIVITIES c. Net Cash From Investing Activities (Positive Or Negative) -20,962,700 -20,202,807 a. Receipts From Operating Activities 52,901,469 47,204,451 C. CASH FLOWS FROM FINANCING ACTIVITIES 1. Receipts From Sales Of Products And Services 48,614,250 42,402,717 a. Receipts From Financing Activities 13,150,000 14,150,000 2. Receipts From Income Tax 0 402,070 2. Receipts From Increase In Financial Liabilities 13,150,000 14,150,000 3. Other Receipts From Operating Activities 4,287,219 4,399,664 b. Payments For Financing Activities -15,163,531 -12,246,599 b. Payments For Operating Activities -33,396,102 -27,183,974 1. Interest Paid Relating To Financing -2,334,062 -1,688,348 1. Payments For Purchase Of Materials And Services -13,545,068 -10,429,627 3. Repayment Of Financial Liabilities -11,274,856 -10,558,251 2. Payments For Salaries And Profit Shares To Employees -11,683,094 -10,828,661 4. Dividend And Profit Share Payments -1,554,613 0 3. Payments For Income Tax -605,960 0 c. Net Cash From Financing Activities (Positive Or Negative) -2,013,531 1,903,401 4. Payments For Other Duties -3,599,240 -2,697,718 Č. CLOSING CASH BALANCE 2,907,545 6,378,409 5. Other Payments For Operating Activities -3,962,740 -3,227,968 x. Net Cash Flow For The Period -3,470,864 1,721,071 c. Net Cash From Operating Activities (Positive Or Negative) 19,505,367 20,020,477 y. Opening Cash Balance 6,378,409 4,657,338 The notes to the financial statements are an integral part of the financial statements and should be read in conjunction with them. 196 197 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY STATEMENT OF CHANGES IN EQUITY OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € From 1 January 2024 to 31 December 2024: Subscribed Reserves Arising From Capital Capital Reserves Profit Reserves Fair Value Retained Net Profit Net Profit for the Measurement Financial Year I II III V VI VII MOVEMENTS WITHIN INDIVIDUAL EQUITY ITEMS Capital TOTAL EQUITY Share Paid-In Reserves General rom Revaluation Reserves Arising from Capital Capital F rves Fair Value Retained Net Profit Net Profit for the Surplus Reduction of Adjustment Legal Reserves Other Profit Rese Financial Year Share Capital of Capital Measurement I/1st II/1st II/2nd II/3rd III/1st III/5th V VI/1st VII/1st A.1. BALANCE AS AT 31 DECEMBER 2023 104,136,615 1 28,581 45,944,897 4,109,421 14,737,737 -196,358 1,028 1,553,585 170,315,507 A.2. BALANCE AS AT 1 JANUARY 2024 104,136,615 1 28,581 45,944,897 4,109,421 14,737,737 -196,358 1,028 1,553,585 170.315.507 B.1. CHANGES IN EQUITY – TRANSACTIONS WITH OWNERS 0 0 0 0 0 1,381,878 0 -1,554,613 0 -172,735 g) Dividend Payment 0 0 0 0 0 0 0 -1,554,613 0 -1,554,613 i) Other Changes in Equity 0 0 0 0 0 1,381,878 0 0 0 1,381,878 B.2. TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 0 0 0 0 0 0 -16,780 0 4,219,795 4,203,015 a) Total Comprehensive Income for the Reporting Period 0 0 0 0 0 0 0 0 4,219,795 4,219,795 č) Other Components of Comprehensive Income for the Reporting Period 0 0 0 0 0 0 -16,780 0 0 -16,780 B.3. CHANGES IN CAPITAL 0 0 0 0 210,990 2,627,919 -992 1,554,577 -4,392,494 0 a) Allocation of the Remaining Part of Net Profit of the Comparative Period To Other Components Of Equity 0 0 0 0 0 0 0 1,553,585 -1,553,585 0 b) Allocation of Part of Net Profit of The Reporting Period to Other Components of Equity Based 0 0 0 0 210,990 2,627,919 0 0 -2,838,909 0 on Management and Supervisory Body Decision f) Other Changes in Capital 0 0 0 0 0 0 -992 992 0 0 C. BALANCE AS AT 31 DECEMBER 2024 104,136,615 1 28,581 45,944,897 4,320,411 18,747,535 -214,130 992 1,380,886 174,345,788 Note 9 – Equity in the section The notes to the financial statements are an integral part of the financial statements and should be read in conjunction with them. 198 199 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY STATEMENT OF CHANGES IN EQUITY OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 in € From 1 January 2023 to 31 December 2023 Subscribed Reserves Arising Capital Capital Reserves Profit Reserves From Fair Value Retained Net Profit Net Profit for the Financial Year Measurement I. II. III. V. VI. VII. MOVEMENTS WITHIN INDIVIDUAL EQUITY ITEMS General Reserves TOTAL EQUITY Share Paid-In Capital eserves From Revaluation Capital Capital R rves Other Profit Arising from Retained Net Profit for the Net Loss for the Surplus Reduction of Adjustment Legal Rese Reserves Fair Value Net Profit Financial Year Financial Year Share Capital of Capital Measurement I/1st II/1st II/2nd II/3rd III/1st III/5th V VI/1st VII/1st VII./2nd A.1. BALANCE AS OF DECEMBER 31 2022 104,136,615 1 28,581 45,944,897 3,865,679 13,042,103 38,985 0 0 -510,732 166,546,129 A.2. BALANCE AS OF JANUARY 1 2023 104,136,615 1 28,581 45,944,897 3,865,679 13,042,103 38,985 0 0 -510,732 166,546,129 B.1. CHANGES IN EQUITY CAPITAL – TRANSACTIONS WITH OWNERS 0 0 0 0 0 -1,381,878 0 0 0 0 -1,381,878 g) Dividend payment 0 0 0 0 0 -1,381,878 0 0 0 0 -1,381,878 B.2. TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 0 0 0 0 0 0 -234,315 0 5,385,572 0 5,151,257 a) Total Comprehensive Income for the Reporting Period 0 0 0 0 0 0 0 0 5,385,572 0 5,385,572 č) Other Components of Comprehensive Income for the Reporting Period 0 0 0 0 0 0 -234,315 0 0 0 -234,315 B.3. CHANGES IN CAPITAL 0 0 0 0 243,742 3,077,513 -1,028 1,028 -3,831,987 510,732 0 a) Allocation of the Remaining Part of Net Profit of the Comparative Period To Other Components Of Equity 0 0 0 0 0 0 0 0 0 510,732 0 b) Allocation of Part of Net Profit of The Reporting Period to Other Components of Equity Based on Management and 0 0 0 0 243,742 3,077,513 0 0 -3,831,987 0 0 Supervisory Body Decision f) Other Changes in Capital 0 0 0 0 0 0 -1,028 1,028 0 0 0 C. BALANCE AS AT 31 DECEMBER 2023 104,136,615 1 28,581 45,944,897 4,109,421 14,737,737 -196,358 1,028 1,553,585 0 170,315,507 Note 9 – Equity in the section The notes to the financial statements are an integral part of the finan- cial statements and should be read in conjunction with them. ACCUMULATED PROFIT (NET PROFIT CARRIED FORWARD) OF ELEKTRO GORENJSKA FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € Item 2024 2023 1. Net Profit for the Financial Year 4,219,795 5,385,572 2. + Retained Net Profit / Retained Net Loss (Deductible Item) 992 -509,704 4. - Increase (Additional Formation) of Profit Reserves Based on the Decision of Management and Supervisory Bodies: a) Legal Reserves 210,990 243,742 5. - Increase (Additional Formation) of Profit Reserves Based on the Decision of Management and Supervisory Bodies: a) Other Profit Reserves 2,627,919 3,077,513 7. BALANCE SHEET PROFIT 1,381,878 1,554,613 The notes to the financial statements are an integral part of the financial statements and should be read in conjunction with them. 200 201 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.4. Basis of Preparation of Financial Statements GENERAL ACCOUNTING FRAMEWORK SEGMENT REPORTING BY GEOGRAPHICAL AND BUSINESS AREAS Elektro Gorenjska maintains its accounting records and prepares its financial statements in Elektro Gorenjska Group reports on the following geographical segments: Slovenia, other EU accordance with the Slovenian Accounting Standards (SAS), the Companies Act (ZGD-1, Official countries, and non-EU countries. Gazette of the Republic of Slovenia, No. 65/09 with amendments), and the Electricity Supply Act (ZOEE, Official Gazette of the Republic of Slovenia, No. 172/21). The preparation of the financial A business segment is a distinguishable component of the company engaged in providing a statements is based on the two fundamental accounting assumptions: the going concern assumption particular service or group of related services, whose risks and returns differ from those of other and the accrual basis of accounting. In developing the accounting policies used in the preparation business segments. of the financial statements, the company’s management primarily considers understandability, relevance, reliability, and comparability. For the financial year 2024, i.e. the period from 1 January 2024 to 31 December 2024, the company presents its operations by the following business segments: In accordance with Article 56 of the Companies Act (ZGD-1), a company with its registered office in Slovenia that is a parent company of one or more subsidiaries in Slovenia or abroad must prepare • Activities under the contract with the Distribution System Operator (Pogodba z DO), and consolidated annual financial statements. The Elektro Gorenjska Group consists of the following: • Other activities. • Parent company: Elektro Gorenjska, Ulica Mirka Vadnova 3a, Kranj The Statement of Financial Position and the Income Statement by business segments are presented • Subsidiary: Gorenjske elektrarne, Stara cesta 3, Kranj, wholly owned by the parent company. As in the chapter Disclosures in Accordance with the Electricity Supply Act. at 31 December 2024, the equity of this company amounted to €25,247,088 and its net profit for 2024 was €2,998,242. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES • Subsidiary: GEK Solar, Stara cesta 3, 4000 Kranj, wholly owned by the subsidiary Gorenjske elektrarne. As at 31 December 2024, the equity of this company amounted to €939,766 and its net Elektro Gorenjska Group did not change its accounting policies in 2024. The key accounting policies profit for 2024 was €118,934. and estimates are as follows: • Associate: Soenergetika, Stara cesta 3, Kranj, in which Gorenjske elektrarne holds a 25% stake. As at 31 December 2024, the equity of this company amounted to €1,310,804 and its net profit for Property, Plant and Equipment 2024 was €180,482. Property, plant and equipment are assets owned, leased, or otherwise controlled by the company, In addition to the above companies, the Elektro Gorenjska Group also includes the company used in the production or supply of goods or services, for rental (excluding investment property), or Informatika, in which Elektro Gorenjska holds a 10.50% share. Due to its immateriality, this company for administrative purposes, and are expected to be used over more than one accounting period. is not included in the consolidated financial statements. The cost of property, plant and equipment comprises: The company does not disclose information which it reasonably believes could result in significant harm to the company if disclosed. The company’s financial year is identical to the calendar year. The • The purchase price (expenditures related to acquisition, construction, or upgrade); reporting accuracy is to the nearest euro. • Import duties and non-refundable purchase taxes, and • Directly attributable costs necessary to bring the asset to its intended use: FOREIGN EXCHANGE DIFFERENCES RECOGNITION ѓ Expenses for project and construction documentation; ѓ Site preparation costs (excavation, backfilling, drainage); The reference exchange rate of the European Central Bank, published on the website of Banka ѓ Costs of obtaining permits for utility connections (energy, water, sewage, telecommunications, Slovenije (Bank of Slovenia) on the date of each individual business transaction, is used to translate lightning protection); asset and liability items originally denominated in foreign currencies. Closing balances of monetary ѓ Transportation and installation costs; items are translated using the exchange rate published on the balance sheet date. ѓ Testing costs, reduced by any income from the sale of test outputs; ѓ Legal fees (e.g. land registry); Exchange differences arising from the translation of financial assets denominated in foreign ѓ Brokerage commissions; currencies that qualify as monetary items are recognised in profit or loss. Translation of other ѓ Other transaction-related costs that would not have been incurred otherwise; financial assets in foreign currencies is recognised in accordance with their classification. • Costs related to leased assets used in the construction or upgrade of property, such as depreciation of right-of-use assets; Exchange differences arising on the settlement of monetary items or on the translation of monetary • Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, items at exchange rates different from those used at initial recognition are recognised in profit or provided the asset takes more than one year to be ready for use. loss in the period in which they arise. For property, plant and equipment constructed internally by the company, the cost includes directly attributable costs and an appropriate portion of general construction costs. Costs not related to the construction or not recognised by the market are excluded. The cost also includes borrowing costs incurred in the construction or production of the asset. The cost must not exceed the market value of comparable assets. Internally constructed asset cost components include direct labour hours, material costs (valued at the weighted average moving price at the level of organisational units), and other direct production costs (e.g. administrative and legal fees, notary services). 202 203 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Intangible Assets and Long-Term Deferred Costs and Accrued Revenues Borrowing costs are capitalised upon project completion. If the investment is not completed within An intangible asset is an identifiable non-monetary asset without physical substance. The company the reporting year, borrowing costs are capitalised as of the year-end to the investment items named recognises intangible assets at cost, less accumulated amortisation and accumulated impairment in the loan agreement or unnamed project items exceeding a planned value of €400,000. losses. Impairment of intangible assets with a finite useful life is assessed in the same manner as for property, plant and equipment. Elektro Gorenjska Group assesses that it has no significant obligations for dismantling, restoration, or similar commitments. A right-of-use asset is recognised at the lease commencement date and is The company also recognises right-of-use assets under intangible assets. depreciated on a straight-line basis over the lease term. The straight-line amortisation method is applied. The useful lives and amortisation rates of major Energy infrastructure leased to ELES under the contract with the Distribution System Operator categories of amortisable intangible assets are as follows: (Pogodba z DO) is recognised under property, plant and equipment and not as investment property. Elektro Gorenjska Group considers this presentation appropriate based on the nature of the assets, as they are used for own operations and not held to earn rentals or other income. Major Categories of Amortisable Assets Estimated Useful Life (in years) Amortisation Rate (%) After initial recognition, property, plant and equipment are measured using the cost model. At year- Computer Software 3–7 14.29–33.33 end, the company assesses whether there is any indication of impairment, considering both external and internal information sources. Other Rights 33–100 1–3.33 The depreciation base of depreciable assets equals their cost less any impairment losses. Subsequent expenditures that increase the future economic benefits of the asset beyond those originally assessed are added to the asset’s carrying amount. If the expenditures extend the asset's Investment Property useful life, the asset’s cost and useful life are adjusted accordingly. Maintenance and repair costs necessary for the normal operation of the asset are recognised as expenses. Investment property is property held by the company to earn rental income and/or for capital appreciation. The straight-line depreciation method is used. Average useful lives and depreciation rates of major asset groups are as follows: These primarily include: • Land held for long-term capital appreciation rather than for short-term sale in the ordinary course of business; Major Groups of Depreciable Assets Estimated Useful Life (in Years) Depreciation Rate (%) • Land for which no future use has been determined; • Buildings leased out under one or more operating lease agreements; Energy Infrastructure Buildings 25–50 2–4 • Vacant buildings held for future lease under operating lease agreements; • Property under construction or development for future use as investment property. Other Buildings 20–50 2–5 The following are not classified as investment property: Energy Infrastructure Equipment 10–35 2.86–10 • Property used by employees (e.g. housing provided under operating leases); Computer Hardware 3 33.33 • Property leased on a long-term basis to ELES the contract with the Distribution System Operator Other Equipment 2–20 5–50 (Pogodba z DO); • Property forming part of the Sava hydropower plant, currently under denationalisation Vehicles 7–12 8.33–14.29 proceedings and leased long-term to the subsidiary Gorenjske elektrarne. Such properties are instead treated as property, plant and equipment. After initial recognition, investment properties are measured at cost, less accumulated depreciation and impairment losses. The straight-line depreciation method is used. Useful lives of significant classes of depreciable investment property range between 25 and 50 years, with depreciation rates from 2% to 4%. 204 205 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Financial Investments Inventories Financial investments are assets recognised in the Statement of Financial Position as long-term or Inventories of materials include quantities held in storage that will be used in the production of short-term financial investments. goods or the provision of services. Equity investments and loan investments are broken down into those relating to subsidiaries within Each unit of material inventory (including small tools and packaging) is initially recognised at the Group, associates, joint ventures, and others. Other financial investments are classified at initial acquisition cost, which comprises the purchase price, import duties, and other non-refundable taxes, recognition based on the company’s business model for managing the financial assets subject to along with direct procurement costs. classification and the characteristics of the contractual cash flows of the financial asset. The cost of materials held in inventory prior to use is reported using the weighted average cost In accounting for a regular purchase or sale of a financial asset, such an asset is recognised in the method at the level of organisational units. The weighted average cost is calculated daily. The accounting records and in the Statement of Financial Position based on the trade date – the date on company regularly – at least once annually during the inventory count – reviews the net realisable which the company commits to purchase or sell the asset. value of inventories and writes them down when their carrying amount exceeds their net realisable value. At initial recognition, a financial investment is measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of the financial asset are added to the initially Cash and Cash Equivalents recognised amount, unless the asset is measured at fair value through profit or loss. Investments in subsidiaries, associates, and joint ventures are measured and accounted for at cost only. Cash and cash equivalents include: If there is objective evidence that a financial investment measured at amortised cost or cost has • Cash held in transaction accounts with banks or other financial institutions that can be used for been impaired, the impairment loss is measured as the difference between the asset’s carrying payment, and amount and the present value of expected future cash flows, discounted at the original effective • Cash equivalents. interest rate of the financial investment. The impairment loss is recognised in profit or loss as a revaluation financial expense. Cash equivalents are short-term investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of changes in value. The company treats short-term Receivables deposits and bank balances, as well as intercompany loans within the Group with maturities of up to three months from acquisition, and proceeds from their disposal, as cash equivalents. Receivables represent rights arising from proprietary or other legal relationships that entitle the All transaction accounts are held in euros. The account with Gorenjska Banka is also maintained in company to demand payment of a debt from another party or, in the case of advances, the delivery other currencies. of goods or the performance of services. A receivable is recognised when the company obtains control over the contractual rights associated with it and when the inflow of economic benefits is Revaluation of cash is the adjustment of the carrying amount, which may be performed at year-end probable. or during the year. It applies only to cash denominated in foreign currencies, if the exchange rate changes after initial recognition. The resulting exchange difference may increase or decrease the At initial recognition, receivables are measured at the amount stated in the supporting documents, originally recognised value. In the first case, the difference is recognised as financial income, and in assuming they will be paid. Subsequently, receivables may be increased or reduced due to the second as a financial expense related to cash. subsequent discounts, payments received, or other forms of settlement. After initial recognition, receivables are measured at amortised cost. Equity In the Statement of Financial Position, long-term receivables that have already matured (but remain Total equity of the company comprises called-up capital, capital reserves, profit reserves; revaluation unpaid) and long-term receivables falling due within one year from the balance sheet date are reserves (arising from fair value measurements); retained earnings or loss from previous years and presented as short-term receivables. undistributed net profit or unrecognised loss for the current financial year. At least quarterly – before the preparation of financial statements – the appropriateness of each The company’s share capital is divided into registered ordinary shares, each with an equal share receivable’s carrying amount is reviewed. Receivables for which full or partial settlement is deemed and nominal value. unlikely are classified as doubtful, if more than 90 days past due, or disputed, if legal proceedings have been initiated or the payment is contested. For both categories, the company establishes a Revaluation reserves relate to the increase or decrease of actuarial gains or losses on retirement 100% impairment allowance. For this purpose, appropriate internal records are maintained. benefit obligations. Disputed receivables include all those subject to: All components of equity other than share capital belong to the shareholders in proportion to their shareholding in the company’s share capital. • Enforcement proceedings based on an enforceable title; • Enforcement based on credible accounting documents (e.g. lawsuits), and • Insolvency proceedings (compulsory settlement, simplified compulsory settlement, or bankruptcy). Receivables overdue by more than 90 days are classified as doubtful receivables. However, the company may reduce the impairment allowance for a specific receivable based on payment received by the data preparation date, agreed payment deferrals, collateral held, or other justified reasons. Based on sound reasoning, the company may also classify as doubtful receivables those not yet 90 days overdue, if it is unlikely that they will be settled in full. 206 207 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Liabilities Liabilities represent recognised obligations related to the financing of own assets, which must be At the reporting date, the company determines and recognises in the income statement the income settled—typically in cash. Deferred tax liabilities are treated as a distinct category of liabilities. or expense arising from the remeasurement of retirement benefit provisions, including: In the Statement of Financial Position, long-term liabilities that are either already due but not yet settled or will mature within one year after the reporting date, are presented as short-term liabilities. • The amount of additional provisions for current service costs related to retirement benefits for the current year; Liabilities may be financial (e.g. loans obtained under loan agreements, lease liabilities under finance • Increases or decreases in previously recognised provisions due to the introduction or amendment leases), or operating (e.g. trade payables to suppliers, liabilities to employees, liabilities to the state, of benefit plans (past service cost); and liabilities to customers for received advances and security deposits). • Accrued interest cost on the provisions (as an additional provision expense); • The impact of curtailments or settlements of retirement benefit obligations. After initial recognition, liabilities are measured at amortised cost. Their carrying amount increases by accrued interest and decreases by repayments or other forms of settlement, provided a settlement Actuarial gains and losses on retirement benefits are not recognised in the income statement, but agreement exists. A liability is derecognised when contractual rights to the related cash flows expire are instead recognised directly in equity, under revaluation reserves. These reserves may also be (e.g. due to statute of limitations) or when the liability is transferred along with all associated risks negative. Revaluation reserves from this source are transferred proportionally to retained earnings and rewards. as the retirement benefit provisions for retired employees are utilised. Provisions Jubilee awards are classified as other long-term employee benefits. At the reporting date, the company determines and recognises in the income statement the related income or expenses, Provisions are recognised for present obligations arising from binding past events, which are including actuarial gains and losses, from the remeasurement of provisions for jubilee awards. expected to result in an outflow of resources in an uncertain period, and whose settlement amounts Termination benefits for fixed-term employment contracts are recognised as short-term accrued can be reliably measured. Provisions serve to accumulate future costs or expenses in advance to expenses (short-term deferred costs) rather than as provisions. cover obligations that will require economic outflows. Contingent liabilities are not recognised as provisions. The carrying amount of a provision equals its original value, reduced by amounts Provisions are derecognised in the accounting records and the Statement of Financial Position used, until a reassessment indicates the need to increase or decrease the provision. A provision is when the obligations for which they were established are no longer probable or no longer exist. recognised in the accounting records and the Statement of Financial Position if: Provisions for anticipated costs or expenses are reduced directly by the related expenditures for which they were originally formed. Accordingly, when provisions are used, no additional expenses • A present legal or constructive obligation exists due to a past event; are recognised in the income statement. • It is probable that an outflow of resources will be required to settle the obligation, and • The amount of the obligation can be reliably estimated. Accruals and Deferrals An obligation exists when, under applicable rules and regulations, the company has no realistic Accruals and deferrals represent receivables and liabilities in a broader sense and can be either alternative but to settle it. If it is not clear whether a present obligation exists, it is assumed to exist prepaid/accrued assets (active) or deferred/accrued liabilities (passive). They include deferred if it is more likely than not (i.e. probability >50%) based on all available evidence as at the reporting income and expenses, prepaid expenses and accrued costs and temporarily unbilled revenues as a date. specific type of receivable or liability. If the probability is lower, the company discloses a contingent liability instead. A contingent liability is Accruals and deferrals expected to be realised within one year are classified as short-term; those also disclosed in the rare event that the amount of the obligation cannot be reliably estimated. expected to be realised over a longer period are classified as long-term. Provisions also include long-term employee benefits, in accordance with IAS 19, and are classified as: The company also includes the following under long-term deferred income: • Jubilee benefits (classified as other long-term employee benefits); • Government grants received for the acquisition of property, plant and equipment or for covering • Retirement benefits (classified as post-employment benefits), and specific costs; • Termination benefits. • Free-of-charge acquisition of property, plant and equipment; • Funds received in the form of connection fee contributions; Provisions for jubilee and retirement benefits are based on actuarial valuations of future obligations, • Earmarked funds for the co-financing of fixed asset construction. discounted to the reporting date, in line with SAS 10, and applying principles from IAS 19 where SAS 10 lacks detailed guidance. The difference between SAS 10 and IAS 19 lies in the treatment of Short-term deferred expenses (passive deferrals) also include accrued unused annual leave. actuarial gains/losses: under SAS 10, these are proportionally transferred to retained earnings for employees for whom retirement benefit provisions are no longer required. The calculation of provisions for retirement benefits and jubilee awards is performed by a certified actuary. Provisions are recognised in the amount of future expected payments, discounted to the reporting date. The following components are considered in the calculation: current service cost, interest cost, and actuarial gains or losses arising from changes in actuarial assumptions or experience adjustments. 208 209 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Deferred Tax Assets and Liabilities, and Corporate Income Tax Expenses Deferred tax assets and liabilities are calculated using the balance sheet liability method, which Expenses are categorised as operating expenses, financial expenses, and other expenses. Operating focuses on temporary differences. and financial expenses are considered regular (recurring). A deferred tax asset is recognised for deductible temporary differences, carried forward unused tax Operating expenses include all incurred costs for the period, and revaluation operating expenses, losses, and unused tax credits, if it is probable that sufficient taxable profit will be available in the which arise primarily from impairments of property, plant and equipment, impairments of intangible future against which they can be utilised. Deferred tax assets and liabilities are not recognised in the assets and investment property, impairments of receivables and inventories and losses on disposal accounting records if the amounts are individually or collectively immaterial to the company. of property or investment property below carrying amount. Deferred taxes are measured using the tax rates and laws enacted by the end of the reporting Financial expenses comprise financing costs and investment-related expenses. The former mainly period, which are expected to apply when the related deferred tax assets are realised or liabilities consist of interest expenses, while the latter primarily represent revaluation financial expenses. are settled. These arise from impairments of financial investments and the sale or other disposal of financial assets at a price lower than their carrying amount. Interest expenses are recognised based on the At each reporting date, the company reassesses unrecognised deferred tax assets and recognises time elapsed and the applicable interest rate. them if it becomes probable that future taxable profit will allow for their utilisation. Current corporate income tax is the amount expected to be paid based on taxable profit using Other expenses consist of unusual items and residual expenses that reduce the company's profit. applicable tax rates at the reporting date. Cash Flow Statement Revenue The cash flow statement is presented in a sequential format and is prepared using the direct method Revenue is recognised when there is an increase in economic benefits, either through asset increases (Variant I). or liability reductions, and this increase can be measured reliably. Revenue is recognised when it is probable that consideration will be received and control over the goods or services has been For the purposes of the cash flow statement, cash equivalents are included under cash and cash transferred to the customer. equivalents. Amounts collected on behalf of the Distribution System Operator (DSO) in transactions executed Cash flows related to self-managed investments are classified under cash flows from investing in the company's name but for the DSO’s account are not recognised as revenue, but as operating activities. liabilities to the DSO, in accordance with the agreement. Income Statement Operating revenue includes sales revenue, capitalised own products and services and other income related to business operations, including revaluation gains, such as: gains on disposal of property, The company prepares the income statement using Variant I, as defined in SAS 21. It is followed by plant and equipment or investment property above their carrying amount, or reversals of previously the Statement of Other Comprehensive Income. impaired receivables. Information on the formation of net profit or loss is presented in the Statement of Changes in Equity. Other income includes irregular items and residual income that increase the profit. Financial income arises from financial investments, receivables, interest income, profit shares, and revaluation financial income. Interest on overdue receivables is not recognised as income but increases the impairment allowance, due to justified doubt regarding collection – until the principal is paid. The company also earns revenue through real estate construction for sale. These contracts typically conclude within 12 months. Accordingly, revenue is recognised progressively during construction, using the input method – based on the ratio of actual incurred costs to estimated total costs. The company assesses that construction contracts do not include a significant financing component. 210 211 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.5. Notes to the Financial Statement Items SIGNIFICANT SOURCES OF ESTIMATION UNCERTAINTY AND APPLIED ASSUMPTIONS AND BASES FOR JUDGEMENTS 17.5.1. Notes to the Statement of Financial Position Items The assumptions and estimates that most significantly affect the amounts recognised in the financial statements include: Note 1 – Intangible Assets and Long-Term Deferred Costs and Accrued Revenues • The determination of useful lives of intangible assets and property, plant and equipment; The value of intangible assets, including long-term deferred costs and accrued revenues, amounted • Impairment adjustments for doubtful receivables; to €3,122,256 as at 31 December 2024. The movements of these items in 2024 and 2023 were as • The estimation of provisions. follows: in € Transactions with the Distribution System Operator 2024 Property Rights Property Rights Under Other Long-Term Deferred Total Intangible Assets and In March 2025, Elektro Gorenjska Group received a preliminary settlement for the 2024 regulatory Acquisition Costs and Accrued Revenue Long-Term Deferred Costs year from the distribution system operator (ELES, d.o.o.). The preliminary settlement was prepared by ELES based on unaudited financial statements. According to this preliminary settlement, the 1 2 3 4 5 = 2+3+4 contractual amount invoiced for services and lease in 2024 exceeded the value determined in the preliminary settlement by €402,141. Based on this, Elektro Gorenjska reduced its revenue for Cost 2024 by €402,141 (recognised as a liability for overcharged revenue in 2024). In 2023, revenue determined according to the preliminary settlement for the 2023 regulatory year was €1,121,182 lower than the amount invoiced during the year. Elektro Gorenjska accordingly increased its revenue Balance as at 31 Dec 2023 8,713,234 165,301 60,401 8,938,935 for 2023 by €1,121,182 (recognised as a receivable for undercharged revenue in 2023). The final settlement for 2024 will be carried out by the distribution system operator based on a decision Additions 0 1,082,647 78,873 1,161,520 issued by AGEN, which will take into account the audited data of both contracting parties. Disposals, Eliminations, Transfers 0 0 –19,503 –19,503 In 2024, Elektro Gorenjska also received the final settlement for 2023. Based on this final settlement, revenue was increased by EUR 782,755. Transfer From Assets Under Construction 908,340 –908,340 0 0 Ongoing Legal Disputes and Related Provisions Balance as at 31 Dec 2024 9,621,574 339,608 119,771 10,080,953 Several legal disputes are currently ongoing, the most significant of which is a denationalisation procedure in which Elektro Gorenjska is acting as the liable party for restitution. Elektro Gorenjska Accumulated Amortisation does not disclose details related to these disputes, as it believes that such disclosure could jeopardise its interests. Balance as at 31 Dec 2023 5,824,827 0 0 5,824,827 Increase (Amortisation) 1,133,870 0 0 1,133,870 Disposals, Eliminations, Transfers 0 0 0 0 Balance as at 31 Dec 2024 6,958,697 0 0 6,958,697 Carrying Amount Balance as of 31 Dec 2023 2,888,407 165,300 60,401 3,114,109 Balance as at 31 Dec 2024 2,662,878 339,607 119,771 3,122,256 212 213 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 2 – Property, Plant and Equipment in € The value of property, plant and equipment as at 31 December 2024 amounted to €231,922,824, 2023 Property Rights Property Rights Under Other Long-Term Deferred Total Intangible Assets and representing 87% of Elektro Gorenjska’s total assets. Compared to the balance as at 31 December Acquisition Costs and Accrued Revenue Long-Term Deferred Costs 2023, the value increased by 4.1% or €9,373,830. The movements in property, plant and equipment in 2024 were as follows: 1 2 3 4 5 = 2+3+4 in € Cost Property, Balance as at 31 Dec 2022 6,549,568 564,060 125,767 7,239,395 2024 Land Buildings Equipment Right-of-Use Plant and Assets Equipment Advances Total Property, Plant Under and Equipment Construction Additions 0 1,780,161 4,710 1,784,871 1 2 3 4 5 6 7 8=2+3+4+5+6+7 Disposals, Eliminations, Transfers –15,254 0 –70,076 –85,330 Cost Transfer From Assets Under Construction 2,178,920 –2,178,920 0 0 Balance as at 31 Dec 2023 7,282,781 330,097,812 140,354,548 208,725 5,483,278 41,264 483,468,408 Balance as at 31 Dec 2023 8,713,234 165,301 60,401 8,938,936 Additions 0 0 0 0 22,912,710 185,496 23,098,205 Accumulated Amortisation Disposals, derecognition, transfers –413,559 –3,411,106 –1,450,849 0 0 –190,326 –5,465,839 Balance as at 31 Dec 2022 4,998,780 0 0 4,998,780 Transfer from assets under construction 110,078 10,678,235 4,467,491 0 –15,255,805 0 0 Increase (Amortisation) 887,989 0 0 887,989 Transfers to investment property 0 0 0 0 0 0 0 Disposals, Eliminations, Transfers –61,943 0 0 –61,943 Impairment 0 0 0 0 0 0 0 Balance as at 31 Dec 2023 5,824,827 0 0 5,824,827 Balance as at 31 Dec 2024 6,979,301 337,364,942 143,371,190 208,725 13,140,182 36,434 501,100,774 Carrying Amount Accumulated Depreciation Balance as at 31 Dec 2022 1,550,788 564,059 125,767 2,240,615 Balance as at 31 Dec 2023 0 172,520,895 88,398,519 0 0 0 260,919,414 Balance as at 31 Dec 2023 2,888,408 165,300 60,401 3,114,109 Depreciation expense 0 6,307,879 5,453,133 41,745 0 0 11,802,757 Intangible assets primarily relate to long-term property rights, representing rights of use for Disposals, derecognition, transfers 0 –2,123,164 –1,421,056 0 0 0 –3,544,220 computer software solutions or licences. Property rights under acquisition comprise investments in the renovation and upgrade of software. As at 31 December 2024, Elektro Gorenjska had no Impairment 0 0 0 0 0 0 0 financial commitments in connection with the acquisition of intangible assets. Balance as at 31 Dec 2024 0 176,705,610 92,430,596 41,745 0 0 269,177,951 Carrying Amount As at 31 Dec 2023 7,282,781 157,576,917 51,956,029 208,725 5,483,278 41,264 222,548,993 As at 31 Dec 2024 6,979,301 160,659,331 50,940,594 166,980 13,140,182 36,434 231,922,824 214 215 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY The movements in property, plant and equipment in 2023 were as follows: New acquisitions are presented in the section Investments. Key individual acquisitions include: in € • Electrical equipment at RTP Primskovo – 20 kV secondary equipment (€482,738); • Cable ducting at Cvelfar (€414,789); Property, • Cable ducting at Sebenje Bled (€272,863). 2023 Land Buildings Equipment Right-of-Use Plant and Assets Equipment Advances Total PPE Under Disposals and derecognition of property, plant and equipment occurred due to new investments, Construction refurbishment and reconstruction of existing assets and sales. Major disposals in 2024 included: 1 2 3 4 5 6 7 8=2+3+4+5+6+7 • Office building at Moste 2a (acquisition value: €1,009,671; carrying amount: €383,299); • Warehouse and garages at Moste 2a (acquisition value: €441,333; carrying amount: €126,631); Cost • External landscaping at Moste 2a (acquisition value: €304,466; carrying amount: €118,908). Balance as at 31 Dec 2022 7,289,770 319,221,053 135,101,820 0 3,460,305 43,342 465,116,291 All listed disposals were related to asset sales. A significant portion of property, plant and equipment comprises electricity distribution Additions 0 0 0 0 21,369,029 2,026,789 23,395,818 infrastructure as defined in the Decree on Energy Infrastructure (Official Gazette of the Republic of Slovenia, No. 22/2016 with amendments). In addition to buildings and equipment, it also includes Disposals, derecognition, transfers –68,492 –1,224,425 –1,211,973 0 0 –2,028,867 –4,533,757 certain land plots. The carrying amount of electricity distribution infrastructure as at 31 December 2024 was €207,664,300 (31 December 2023: €204,724,733). To carry out the tasks of the Transfers from assets under distribution system operator, which ELES performs under a public service concession contract, the construction 82,132 12,590,500 6,464,700 208,725 –19,346,057 0 0 entire electricity distribution infrastructure is leased by ELES from Elektro Gorenjska. Impairment –20,629 –489,315 0 0 0 0 –509,943 All property, plant and equipment is owned by Elektro Gorenjska and is not pledged as collateral for liabilities. Among Elektro Gorenjska’s assets, the hydroelectric power plant HE Sava is also recognised, which is subject to an ongoing denationalisation procedure initiated in previous years Balance as at 31 Dec 2023 7,282,781 330,097,812 140,354,548 208,725 5,483,278 41,264 483,468,408 and not yet concluded as at the date of this report. Elektro Gorenjska also owns certain property, plant and equipment jointly with ELES. The unamortised value of the portions owned by the Elektro Accumulated Depreciation Gorenjska Group as at year-end 2024 amounted to €686,698. To finance the acquisition of new property, plant and equipment, Elektro Gorenjska took out several Balance as at 31 Dec 2022 0 167,740,463 84,490,778 0 0 0 252,231,241 long-term loans in 2024 and in prior years. The balance of these loans as at 31 December 2024 was €61,633,042 (31 December 2023: €59,691,448). Interest in the amount of €169,112 was Depreciation 0 6,104,223 5,023,663 0 0 0 11,127,886 capitalised. Disposals, derecognition, transfers 0 –1,159,699 –1,115,922 0 0 0 –2,275,621 Impairment 0 –164,093 0 0 0 0 –164,093 Balance as at 31 Dec 2023 0 172,520,895 88,398,519 0 0 0 260,919,414 Carrying Amount As at 31 Dec 2022 7,289,770 151,480,589 50,611,042 0 3,460,305 43,342 212,885,049 As at 31 Dec 2023 7,282,781 157,576,917 51,956,029 208,725 5,483,278 41,264 222,548,993 216 217 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 3 – Investment Property The value of investment property at the end of 2024 amounted to €1,755,081. The movement in investment property in 2024 and 2023 was as follows: in € in € 2024 Land Buildings Investment Property Under Construction Total Investment Property 2023 Land Buildings Investment Property Under Construction Total Investment Property 1 2 3 4 5=2+3+4 1 2 3 4 5=2+3+4 Cost Cost As at 31 Dec 2023 474,515 2,123,069 0 2,597,584 As at 31 Dec 2022 474,515 2,081,402 0 2,555,917 Additions 0 0 19,851 19,851 Additions 0 0 41,666 41,666 Disposals, eliminations 0 -58,866 0 -58,866 Disposals, eliminations 0 0 0 0 Transfer from assets under construction 0 19,851 -19,851 0 Transfer from assets under construction 0 41,666 -41,666 0 As at 31 Dec 2024 474,515 2,084,054 0 2,558,569 As at 31 Dec 2023 474,515 2,123,069 0 2,597,584 Accumulated Depreciation Accumulated Depreciation As at 31 Dec 2023 0 814,727 0 814,727 As at 31 Dec 2022 0 769,817 0 769,817 Depreciation 0 45,510 0 45,510 Depreciation 0 44,909 0 44,909 Disposals, eliminations 0 -56,748 0 -56,748 As at 31 Dec 2023 0 814,727 0 814,727 As at 31 Dec 2024 0 803,488 0 803,488 Carrying Amount Carrying Amount As at 31 Dec 2023 474,515 1,308,342 0 1,782,857 As at 31 Dec 2022 474,515 1,311,585 0 1,786,100 As at 31 Dec 2024 474,515 1,280,566 0 1,755,081 As at 31 Dec 2023 474,515 1,308,342 0 1,782,857 The structure of investment property was as follows: in € Item 31 Dec 2024 31 Dec 2023 Apartments 311,661 324,980 Holiday facilities 830,241 837,921 Other buildings 138,664 145,441 Land 474,515 474,515 Total investment property 1,755,081 1,782,857 Based on a valuation carried out in 2020 by a certified property appraiser accredited by the Slovenian Institute of Auditors, the fair value of investment property recognised by Elektro Gorenjska as at 31 December 2024 amounted to €3,527,799. It is assessed that, given current market conditions, the fair value as at 31 December 2024 does not differ materially from the valuation amount. All investment properties are owned by Elektro Gorenjska and are not pledged as collateral for liabilities. Rental income from investment property amounted to €227,861 in 2024 (2023: €217,823). Direct operating expenses arising from investment property that generated rental income in 2024, as well as direct operating expenses not generating rental income in 2024, comprised depreciation costs (€45,510) and material and service costs (€131,357). In 2023, depreciation costs totalled €44,909, while material and service costs amounted to €104,232. 218 219 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 4 – Long-Term Financial Investments Note 6 – Inventories As at 31 December 2024, long-term financial investments amounted to €13,982,256. Compared to The value of materials and small inventory as at 31 December 2024 amounted to €1,428,961. the balance as at 31 December 2023, their value remained unchanged. Compared to 31 December 2023, inventories increased slightly due to advances paid. Elektro Gorenjska assesses that the net realisable value of inventories is at least equal to their carrying amount. Inventories are not pledged as collateral. Movements in material inventories in 2024 and in € 2023 are presented in the following table. Ownership Share Balance in € in € Investment 31. 12. 2023 31. 12. 2024 31. 12. 2023 31. 12. 2024 Item 2024 2023 Investment in share of Gorenjske elektrarne d. o. o. 100.00% 100.00% 13,715,303 13,715,303 Opening balance of material inventories as at 1 Jan 1,295,369 946,922 Purchases 4,931,981 5,384,069 Informatika, d. o. o., Maribor 10.44% 10.50% 124,154 124,154 Write-offs 0 0 Total non-loan long-term financial investments 13,839,457 13,839,457 Sales -7 -33 Long-term invested funds (Eldom Maribor) 142,799 142,799 Consumption -4,891,240 -4,814,848 Total long-term loans 142,799 142,799 Transfer of small inventory into use -146,786 -220,740 TOTAL LONG-TERM FINANCIAL INVESTMENTS 13,982,256 13,982,256 Closing balance of material inventories as at 31 Dec 1,189,317 1,295,369 Long-term financial investments are not pledged as collateral for liabilities. It is assessed that the fair The inventory count as at 31 October 2024 did not reveal any surpluses or shortages. value of long-term financial investments, excluding subsidiaries, equals their carrying amount. Note 7 – Short-Term Operating Receivables Elektro Gorenjska is primarily exposed to the risk of adverse changes in the fair value of these investments. Risk exposures and hedging systems are explained in the chapter Development of a As at 31 December 2024, short-term operating receivables amounted to €10,368,705. The increase Comprehensive Risk and Opportunity Management System. compared to 31 December 2023 is primarily due to higher receivables from ELES.. Note 5 – Long-Term Operating Receivables in € Long-term operating receivables decreased by €567,000 compared to 31 December 2023. The main Item 31 Dec 2024 31 Dec 2023 reason is the planned partial repayment of receivables from ELES in 2025 Short-term receivables from Group companies 31,500 19,910 Short-term trade receivables 9,939,484 7,207,737 Impairment of short-term trade receivables -135,520 -143,399 Short-term trade receivables 9,803,964 7,064,339 Short-term income tax receivables 175,468 0 Other short-term operating receivables 360,453 222,180 Impairment of other short-term operating receivables -2,680 -5,895 Other short-term operating receivables 357,774 216,286 Total short-term operating receivables 10,368,705 7,300,535 220 221 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Short-term operating receivables are unsecured. Risk exposure and hedging instruments are Legal reserves as at 31 December 2024 amounted to €4,320,411 and were formed in accordance described in the chapter Financial Risk Management. A breakdown of short-term receivables from with Article 64 of the Companies Act (ZGD-1). customers (network charges and other market services) and interest receivables by maturity as at 31 December 2024 is shown in the following table. Other profit reserves total €18,747,535. These were formed from the net profit for 2024 and previous years, and part of the 2021 distributable profit that, pursuant to a court decision, was not in € required to be paid out. Elektro Gorenjska uses other profit reserves in accordance with Article 11 of its Articles of Association. Item Not yet due Due up to 30 days Due 31–60 days Due 61–90 days Due over 90 days Total overdue Total receivables Fair value reserves total – €214,130, relating to post-employment benefits – actuarial gains/losses 1 2 3 4 5 6 7=3+4+5+6 8 =2+7 from retirement benefits and the related deferred tax adjustment. Changes in these reserves for 2024 are shown in the table below. Receivables for in € network charges 7,587,286 633,326 7,837 958 1,699,732 2,341,853 9,929,139 and services etained Interest Item Balance as Transfer to R Balance as receivables 1,540 1,972 92 86 6,655 8,805 10,345 at 1 Jan 2024 Reversal New Recognition Earnings (employee expenses 2024) at 31 Dec 2024 Total short-term trade receivables 7,588,826 635,298 7,929 1,044 1,706,387 2,350,658 9,939,484 Actuarial Gains/Losses -184,426 28,083 -42,196 -992 -199,530 Adjustment of Provisions for Deferred Taxes -11,932 0 -2,668 0 -14,600 Total -196,358 28,083 -44,864 -992 -214,130 Receivables from group companies, totalling €31,500 at year-end 2024, were not yet due. Movements in allowances for trade receivables are presented below. in € Net profit for 2024 amounts to €4,219,795 (2023: €5,385,572). Distributable profit for 2024 is €1,381,878. The calculation is shown in the chapter Financial Statements of Elektro Gorenjska for the New formation Use and reversal Year Ended 31 December 2024. The decision on the use of distributable profit lies with the general meeting. Item Balance as at Amounts Balance as 31 Dec 2023 Charged to Charged to Write-offs of collected Reversal at 31 Dec 2024 expenses receivables receivables (reversal to of excess The use of distributable profit for 2023 was determined by a general meeting resolution adopted on income) impairment 20 June 2024. In accordance with that resolution, the full amount of distributable profit (€1,554,613) Impairment of trade was allocated to dividend payments to shareholders. receivables 136,177 6,698 0 14,305 0 0 128,571 Impairment of interest Earnings per share in 2024 amounted to €0.24 (2023: €0.31). As Elektro Gorenjska has no receivables 7,221 173 298 120 623 0 6,949 preference shares, basic and diluted earnings per share are the same. Total impairment of receivables 143,399 6,872 298 14,425 623 0 135,520 The basis for calculating earnings per share is net profit and the weighted average number of ordinary shares outstanding. The calculation is presented in the following table. Note 8 – Cash and Cash Equivalents in € As at 31 December 2024, Elektro Gorenjska held €2,907,545 in cash and cash equivalents. Compared to the previous year-end, this is €3.5 million less, due to higher operating receivables and Item 2024 2023 lower operating liabilities. Net Profit for the Financial Year 4,219,795 5,385,572 Note 9 – Equity Weighted Average Number of Ordinary Shares 17,273,475 17,273,475 Total equity comprises share capital, capital reserves, profit reserves, fair value reserves, Basic/Diluted Earnings per Share 0.24 0.31 retained earnings, and net profit for the year. As at 31 December 2024, total equity amounted to €174,345,788, and the book value per share was €10.09. Elektro Gorenjska’s share capital (€104,136,615) is divided into 17,273,475 ordinary registered no-par value shares. All shares are fully paid up. They are issued in dematerialised form and registered with KDD – Central Securities Clearing Corporation, in accordance with applicable regulations. Capital reserves totalling €45,973,479 were formed on 1 January 2006 pursuant to the transitional provisions (paragraph 15 of the introduction to SAS 2006) from the previously recognised general capital revaluation adjustment. An additional €28,581 results from the cancellation of treasury shares in 2019. 222 223 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 10 – Provisions and Long-Term Accrued Expenses and Deferred Income Note 11 – Long-Term Liabilities As at 31 December 2024, provisions and long-term accrued expenses and deferred income amounted As at 31 December 2024, Elektro Gorenjska recorded €55,040,106 in long-term liabilities, an to €22,068,899, an increase of €3.9 million or 21.6% compared to the prior year. increase of 8.0% over the previous year. The majority relates to long-term financial liabilities to banks (€54,688,957). Maturity of financial liabilities is as follows: Movements in provisions and long-term deferred items in 2024 are shown in the following table: in € in € Item Balance as at 31 Dec 2023 Formation Use Reversal Balance as at 31 Dec 2024 1 year 2–5 years Over 5 years Total Provisions for jubilee benefits and termination benefits 3,457,557 395,710 273,657 28,083 3,551,527 6,944,084 27,566,019 27,122,938 61,633,042 Other provisions 6,335,008 1,096,377 0 0 7,431,385 Long-term deferred income 8,354,662 3,355,421 624,096 0 11,085,987 In 2024, €11 million in new long-term loans were drawn for investment in electricity distribution infrastructure (EEI), while €9,058,413 in principal was repaid. Interest expenses amounted to Total 18,147,227 4,847,508 897,753 28,083 22,068,899 €2,167,638, already reduced by €169,112 in capitalised interest. Loan balance as at 31 December 2024 was €61,633,042 (2023: €59,691,448). Movements in provisions and long-term deferred items in 2023 are shown in the following tables: Financial liabilities totalling €58,490,184 are secured with promissory notes. As at 31 December 2024, 12% of all long-term loans (i.e. €7.3 million) were fixed rate. Loans used to in € finance property, plant and equipment totalled €61,633,042. Item Description Balance as at 31 Dec 2022 Formation Use Reversal Balance as Elektro Gorenjska is exposed to interest rate risk due to variable-rate loans (EURIBOR + margin). Risk at 31 Dec 2023 exposures and mitigation systems are detailed in the chapter Development of a Comprehensive Risk Provisions for jubilee benefits and termination benefits 2,838,300 763,086 139,669 4,159 3,457,557 and Opportunity Management System. Other provisions 6,137,038 197,969 0 0 6,335,008 Elektro Gorenjska has no long-term liabilities to management board members, supervisory board members, or internal stakeholders. Long-term deferred income 6,309,401 2,513,446 468,186 0 8,354,662 Note 12 – Short-Term Financial Liabilities Total 15,284,740 3,474,501 607,855 4,159 18,147,227 As at 31 December 2024, short-term financial liabilities amounted to €7,123,688. These primarily relate to short-term portions of long-term loans and interest payable to banks. Provisions for jubilee benefits and retirement indemnities are based on actuarial valuations under IAS 19. The actuarial calculation as at 31 December 2024 considered the following assumptions: mortality rates (active population, reduced by 10%), declining staff turnover (from 2% at age 18 to 0.0% at age 58 and beyond), retirement in line with legislation and known data, wage growth (inflation + 0.4%, capped at average national wage growth), industry-specific wage growth (same as national), advancement-related wage growth (0.8% for the following year), employer contributions (17.1%, or 16.1% for payments up to 30 June 2025), seniority bonus (0.5% annually) and a discount rate of 3.3%. Other provisions relate to compensation claims arising from denationalisation procedures. Within long-term accrued expenses and deferred income, the following items are recognised: donated property, plant and equipment in the amount of €3,851,230; long-term deferred income related to the GreenSwitch project (€1,993,825); long-term deferred income related to the NOO project (€2,571,999); deferred costs arising from average connection costs (€928,279); long-term deferred income from rentals and usage fees (€697,485); and earmarked funds for covering disproportionate connection costs (€420,813). 224 225 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 13 – Short-Term Operating Liabilities Short-term operating liabilities amounted to €7,105,412 at year-end 2024, down €1.6 million from the prior year. The decline is primarily due to lower trade payables. A more detailed breakdown is shown in the following table. in € Item As at 31 Dec 2024 As at 31 Dec 2023 Liabilities to Suppliers on Own Behalf 3,107,789 5,297,865 – To Group Companies 51,119 40,380 – To Other Suppliers 3,056,670 5,257,485 Liabilities to Suppliers in Own Name and for the Account of Others 2,603,954 1,881,475 – Liabilities to the Company ELES 2,600,376 1,878,137 – To Others 3,578 3,338 Other Liabilities, of Which 1,393,669 1,574,904 – For Salaries 1,164,872 1,092,662 – To the State and Other Institutions 14,749 303,430 – For Received Advances and Security Deposits 130,488 84,197 – Other (Debt Settlements—Cessions, Interest, Employee Withholdings) 83,560 94,616 Total Current Operating Liabilities 7,105,412 8,754,244 Note 14 – Short-Term Accrued Expenses and Deferred Income As at 31 December 2024, short-term accrued expenses and deferred income amounted to €1,682,694, which is €480,000 more than at year-end 2023. The increase is primarily due to a €402,000 liability for overcharged revenues based on the preliminary settlement with the distribution system operator for 2024. Note 15 – Off-Balance Sheet Records Off-balance sheet assets and liabilities totalled €6,543,557 as at 31 December 2024, representing an increase of €959,000 compared to the previous year. in € Item 31 Dec 2024 31 Dec 2023 Received Guarantees and Bills of Exchange 4,985,722 3,944,031 Issued Promissory Notes and Bills of Exchange 69,461 66,533 Property, Plant and Equipment Owned by the Company 1,488,374 1,573,880 Total Off-Balance-Sheet Records 6,543,557 5,584,444 Elektro Gorenjska has no potential off-balance sheet liabilities as defined by the Companies Act (ZGD-1). 226 227 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.5.2. Notes to the Income Statement Items Note 1 – Net Sales Revenue Note 3 – Other Operating Income In 2024, net sales revenue amounted to €37,972,194. Almost all net sales revenue was generated in Other operating income amounted to €1,536,599, comprising: the domestic market. It consists of: in € in € Item 2024 2023 Item 2024 2023 Revaluation Operating Revenues 442,752 86,729 Revenues from the Transfer of Deferred Long-Term Revenues to Revenue From Rent and Services in Relation to the Subsidiary 35,397,826 33,960,924 Regular Operating Revenues: 806,351 511,092 Revenue From Services Rendered to Group Companies 104,749 164,267 – Free Acquisition of Fixed Assets 33,231 33,700 Rental Income: 819,278 784,951 – Free Acquisition of Connections 198,446 198,446 – Rental Income From Group Companies 103,447 44,546 – Average Connection Costs 85,319 85,319 – Rental Income From Others 715,831 740,405 – Other (EU Projects, Other) 489,355 193,627 Revenue From Construction and Installation Work 1,523,032 2,088,670 Insurance Compensation Received 43,232 1,063,978 Revenue From Other Services 127,308 161,396 Government Grants Received – Refunds 211,903 193,637 Total Net Sales Revenue 37,972,193 37,160,207 Other Revenues 32,362 29,429 Total Other Operating Revenues 1,536,599 1,884,865 Most of the net sales revenue in 2024 relates to rental income and services rendered to the distribution system operator (€35,397,826). These revenues were 4.2% higher in 2024 than in 2023. Note 4 – Cost of Goods Sold and Material Used Note 2 – Capitalised Own Products and Services The cost of goods sold, and consumed material consists of: The value of capitalised own work in 2024 amounted to €6,261,655. It primarily represents investments in property, plant and equipment – energy infrastructure.. in € Item 2024 2023 in € Material Costs: 6,196,679 6,518,212 Item 2024 2023 – For Maintenance 323,167 392,765 Direct Costs of Materials 4,163,965 3,905,858 – Related to Capitalized Own Products and Services for the Market 5,048,598 5,014,844 Direct Labour Costs 1,698,282 1,575,216 – For Electricity, Gas, and Thermal Energy 508,515 702,387 Total Direct Costs of Materials and Labour 5,862,247 5,481,075 – Write-Off of Small Inventory 146,786 220,740 Total Indirect Costs of Materials, Labour and Depreciation 399,408 440,139 – Office Supplies 43,090 52,489 Total Costs of Product Manufacturing and Service Provision Related to Capitalized Own Products 6,261,655 5,921,213 – Other Material Costs 126,525 134,986 Cost of Goods and Materials Sold 7 33 Total Cost of Goods Sold and Consumed Materials 6,196,686 6,518,245 228 229 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 5 – Cost of Services Employer contributions and other salary-related levies include pension and disability insurance In 2024, service costs amounted to €5,542,365. The largest share relates to maintenance services contributions: €1,066,679 in 2024 and €989,605 in 2023. for EEI and other property, plant and equipment. A detailed breakdown is provided in the following table. Other labour costs include provisions for jubilee benefits and retirement indemnities, holiday in € allowance, bonuses, employee insurance costs, and payments to pupils and students on work placement. The number of employees, their educational structure, and other employment-related Item 2024 2023 information are detailed in the chapter Social Responsibility. Remuneration of the Management Board and Supervisory Board is detailed in the chapter Related Party Transactions in the financial report. Service Costs Related to the Production of Products and Performance of Services 88,923 80,036 Telephone, Postal, and Other Transport Services 252,659 237,578 Note 7 – Depreciation and Amortisation Services Related to the Maintenance of the Power Infrastructure and Other Property, Plant and Equipment 1,648,082 1,516,922 Depreciation and amortisation expenses in 2024 amounted to €13,243,861, consisting of: in € Payment Transactions, Banking Services and Insurance Premiums 823,548 595,214 Intellectual and Personal Services 921,386 544,301 Item 2024 2023 Advertising and Representation Costs 131,566 108,162 Amortization of Intangible Assets 1,133,870 887,989 Services Provided by Natural Persons Not Performing Business Activities, Amortization of Property, Plant and Equipment 11,802,757 11,127,886 Including Taxes and Contributions on the Company 149,901 160,195 Amortization of Investment Property 45,510 44,909 Information Services 373,409 332,297 Total Amortization Costs 12,982,136 12,060,784 Student Work Services 287,488 222,911 Impairment Losses on Property, Plant and Equipment and Investment Property 255,675 485,477 Other Service Costs 865,402 755,557 Impairment Losses on Current Assets 6,050 5,294 Total Service Costs 5,542,365 4,553,174 Total Impairment and Amortization 13,243,861 12,551,555 Maintenance of EEI is also discussed in the chapter Maintenance of the Electricity Energy Infrastructure (EEI). Note 8 – Other Operating Expenses A key item under payment transactions, banking services and insurance premiums is insurance premiums, which totalled €779,000 in 2024. Other operating expenses totalled €1,462,067, comprising: Intellectual and personal services primarily include research services, consultancy services and in € supplementary professional training. Item 2024 2023 Other services include rental costs as well as membership fees, municipal services, cleaning services, Contribution for the Promotion of Employment of Persons with Disabilities 84,262 73,284 business travel expenses, and others. Contribution for Building Land 82,140 79,977 Pursuant to Article 57 of the Companies Act (ZGD-1), Elektro Gorenjska is required to have its annual report audited. The contractual fee for the audit of the 2024 annual report amounted to €19,830. In Formation of Provisions 1,096,377 197,969 addition, the auditor received €2,339 for assurance services. Other Expenses (Taxes, Contributions etc.) 199,287 164,489 Note 6 – Labour Costs Total Other Operating Expenses 1,462,067 515,719 Labour costs amounted to €16,175,542 and comprise: in € Employment of persons with disabilities is described in more detail in the chapter Social Responsibility. Item 2024 2023 Note 9 – Financial Income from Equity Interests Costs of Wages and Wage Compensations 11,547,661 10,937,132 In 2024, Elektro Gorenjska generated €3.5 in financial income from its equity interest in Gorenjske elektrarne. Costs of Additional Pension Insurance for Employees 540,001 504,673 Employer’s Contributions and Other Contributions on Wages 1,943,779 1,803,435 Costs of Commuting to Work 240,570 241,746 Meal Allowance 735,505 676,323 Other Labour Costs 1,168,026 1,189,914 Total Labour Costs 16,175,542 15,353,221 230 231 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Note 10 – Corporate Income Tax and Deferred Taxes 17.5.3. Notes to the Statement of Other Comprehensive In 2024, income tax including deferred taxes amounted to €162,984, compared to –€141,266 in 2023. Income in € Other components of comprehensive income amounted to –€16,780, of which –€14,112 represents Item 2024 2023 the change in actuarial gains and losses, and –€2,668 relates to deferred tax receivables from retirement benefits. Current Tax 136,538 293,955 Deferred Tax 26,447 –435,221 Total Income Tax 162,985 –141,266 17.5.4. Notes to the Cash Flow Statement Profit Before Tax 4,382,780 5,244,306 The cash flow statement shows cash flows from operating, investing, and financing activities and is Tax Rate 22% 19% prepared using the direct method. Calculated Tax 964,212 996,418 As at 1 January 2024, Elektro Gorenjska held €6,378,409 in bank accounts. As at 31 December Tax Due to Decrease in Income –776,855 –306,121 2024, the balance was €2,907,545. For the period January–December 2024, the Company had a negative net cash flow of €3,470,864. Tax from Tax Relief –232,474 –500,518 Receipts from operating activities exceeded disbursements by €19,505,367 in 2024, indicating Tax from Increase/Decrease in Expenses for Tax Purposes 149,119 130,919 that the core business operations were profitable and generated a positive cash flow. This enabled Tax from Other Items 32,536 –26,743 Elektro Gorenjska to meet all its obligations (payments) for the repayment of principal and interest on long-term loans amounting to €11,458,918. The largest inflows were revenues for services and Deferred Tax Calculated at the 19% Rate 26,386 –374,063 rentals related to EEI under the contract with the DSO. Impact of Change in Tax Rate from 19% to 22% on Deferred Taxes 61 –61,158 Net cash outflows from investing activities amounted to €20,962,700 in 2024. The sector in which Elektro Gorenjska operates is technologically intensive and requires substantial and ongoing Total Income Tax 162,985 –141,266 investments to ensure high-quality supply to customers in the distribution network (explained in the Effective Tax Rate 4% – chapter Investments). New acquisitions of intangible and tangible assets were financed with a long- term loan of €11 million (see Note 11 – Long-Term Liabilities in the Statement of Financial Position Notes). Receipts from financing activities totalled €13.2 million, and disbursements €15.2 million. The movement in deferred tax assets and liabilities in 2024 was as follows: in € Deferred Tax Assets Deferred Tax Liabilities Movement of Deferred Tax Assets and Post-employment Total Liabilities and Other Employee Tax Losses Tax Credits (Reliefs) Small Inventory Benefits Balance as at 1 Jan 2023 254,846 571,951 305,836 203,724 928,908 Recognised in the Income Statement –13,269 90,308 382,623 24,442 435,221 Recognised in Other Comprehensive Income –395 0 0 0 -395 Balance as at 31 Dec 2023 241,182 662,259 688,459 228,166 1,363,734 Balance as at 1 Jan 2024 241,182 662,259 688,459 228,166 1,363,734 Recognised in the Income Statement –25,997 –17,380 0 0 -43,377 Reversed in the Income Statement 0 0 0 16,930 -16,930 Recognised in Other Comprehensive Income –2,668 0 0 0 -2,668 Balance as at 31 Dec 2024 212,517 644,879 688,459 211,235 1,334,618 No deferred tax asset was recognised for unused tax credits totalling €3,499,931, as Elektro Gorenjska estimates that taxable profits in the next five years will not be sufficient to utilise these credits. 232 233 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.6. Related Party Transactions TRANSACTIONS WITH COMPANIES DIRECTLY OR INDIRECTLY OWNED BY THE REPUBLIC OF SLOVENIA The following section presents transactions with related parties, including group companies, the The table below shows major transactions with entities in which the state has a direct or indirect Republic of Slovenia, state-owned companies and members of the Management and Supervisory controlling interest.. Boards. in € TRANSACTIONS WITH GROUP COMPANIES Business Partner Outstanding Receivables as Outstanding Liabilities as of Dec 31, 2024 of Dec 31, 2024 Expenses in 2024 Revenues in 2024 In 2024, Elektro Gorenjska conducted business with its subsidiary Gorenjske elektrarne. ELES d. o. o. 6,503,836 2,608,695 20,508,917 35,397,826 in € Modra zavarovalnica d. d. 0 42,117 464,744 0 Item 2024 Zavarovalnica Sava d. d. 0 52 734,669 0 Dividend Payment to the Owner 3,500,000 SID d. d. 0 10,534 165,666 0 Revenues from Services Rendered and Rent (Costs of Subsidiary) 183,761 NLB d. d. 0 106,844 1,453,116 0 Other Transactions 49,712 Total 6,503,836 2,768,241 23,327,112 35,397,826 Total 3,733,472 Outstanding liabilities to ELES represent payables arising from third-party business transactions. Transactions with other organisations under state control were not of material value. Transactions with Gorenjske elektrarne totalled €3.7 million in 2024, including a €3.5 million dividend payment from the subsidiary to the parent company and revenues from services rendered TRANSACTIONS WITH THE MANAGEMENT AND SUPERVISORY BOARDS and rentals. In 2024, Elektro Gorenjska paid the President of the Management Board the following remuneration All transactions were conducted under normal market conditions. As the parent company, Elektro for performing his duties: Gorenjska did not interfere with the operations of the subsidiary Gorenjske elektrarne nor act to its detriment. in € TRANSACTIONS WITH THE REPUBLIC OF SLOVENIA Recipient Fixed Pay (gross) Performance Bonus Holiday Allowance Reimbursement of Expenses Benefits Key transactions with the Republic of Slovenia in 2024 were as follows: President of the Management Board 123,990 13,417 2,497 2,694 5,353 in € Reimbursed expenses (so-called material costs) include meal allowances, business travel Item Payments in 2024 reimbursements, and mobile phone expenses. These are calculated in accordance with the employment contract and the corporate collective agreement. Benefits include insurance premiums Dividends 1,235,599 and use of a company car. Corporate Income Tax (Tax and Prepayments) 605,960 Other contributions (VAT, Employer Contributions) 5,385,419 Total 7,226,979 234 235 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY Remuneration of Supervisory Board members in 2024 is presented in the following table. Since some In 2024, the Supervisory Board held 14 sessions, including 12 regular and 2 correspondence members also served on Supervisory Board committees, payments for committee work are included. meetings. The Nomination and Human Resources Committee held three regular sessions, while the Audit Committee held eight. Attendance at all meetings was 100%. in € Costs of other benefits for Supervisory Board members in 2024 represent liability insurance, in accordance with Resolution No. 16 of the General Meeting of Shareholders of Elektro Gorenjska. Function Fee (gross) Supervisory Board Committee Meeting These costs are considered a benefit in kind. Meeting Fee (gross) Fee (gross) Total Gross Travel Costs 1 2 3 4=1+2+3 5 in € Representatives of Shareholders Member of the Supervisory Board D&O liability insurance premium Gabrijel Škof 21,188 3,615 660 25,463 782 Representatives of Shareholders Rajko Stanković 15,255 3,740 1,760 20,755 505 Franjo Curanović 15,538 3,740 1,760 21,038 59 Gabrijel Škof 141 Vid Meglič 14,125 3,740 660 18,525 163 Rajko Stanković 141 Employee Representatives Franjo Curanović 141 David Gogala 11,300 3,740 0 15,040 0 Borut Jereb 14,125 3,740 660 18,525 0 Vid Meglič 141 Employee Representatives Remuneration of the external member of the Audit Committee was as follows: David Gogala 141 in € Function Fee (gross) Committee Meeting Fee Borut Jereb 141 (gross) Total Gross Travel Costs 1 2 3=1+2 4 Neither the Management Board nor the Supervisory Board received remuneration for performing External Member of the Commitee duties in subsidiaries. Elektro Gorenjska did not receive or grant advances, loans, or guarantees to Dr. Simon Čadež 5,650 1,760 7,410 235 the persons mentioned in this section, and no receivables are recorded in respect of such items as at 31 December 2024. 236 237 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.7. Financial Risk Management These types of risks at Elektro Gorenjska relate to the capacity to generate financial income, manage financial expenses, maintain the value of financial assets, control financial liabilities, and ensure competitive and long-term solvency. INVESTMENT RISK Failure to achieve planned returns on investments (specifically, the 100% ownership in Gorenjske elektrarne) may result in lower-than-expected dividend yields. Elektro Gorenjska manages this risk by acting as an active owner. CREDIT RISK Under the contract with the Distribution System Operator (Pogodba z DO), Elektro Gorenjska collects payments from consumers in its own name and on behalf of ELES, d.o.o. A higher level of risk arises because the Elektro Gorenjska must settle all obligations to ELES under the agreement and its annexes, even if certain receivables from consumers remain unpaid. Elektro Gorenjska also provides a broad range of commercial services. Unpaid receivables for these services represent the highest credit risk. In both cases, risk is mitigated primarily through close monitoring of receivables and debt collection procedures, entering into payment agreements with customers, expanding advance payment options, and incorporating appropriate financial guarantees into contracts. Elektro Gorenjska’s maximum exposure to credit risk as at year-end 2024 and 2023 was as follows: in € 31 Dec 2024 31 Dec 2023 Long-Term Financial Receivables 142,798 142,799 Long-Term Trade Receivables 48,476 613,688 Short-Term Trade Receivables 9,803,964 7,064,339 Cash and Cash Equivalents 2,907,545 6,378,409 LIQUIDITY RISK Liquidity issues could arise primarily due to uneven cash inflows and outflows, lengthy procedures for obtaining long-term loans, or significant overruns of planned investments. Elektro Gorenjska manages this risk through strict implementation of collection procedures, short- and long-term financial planning, regular monthly meetings with departments whose activities affect risk, intra-Group cash management, timely initiation of borrowing procedures, financial oversight, and adjusting the timing and volume of investments. In more difficult liquidity situations, Elektro Gorenjska would also manage risk through deferred payments, agreements with suppliers, and supplier factoring. 238 239 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.9. Disclosures in Accordance with the Electricity Supply Act 17.9.1. Criteria and Methodologies for Allocation of Indirect INTEREST RATE RISK Costs (Expenses), Revenues, Assets and Liabilities by Activity Elektro Gorenjska holds long-term loans with both fixed and variable interest rates. The latter are strongly influenced by European central bank policies. An increase in interest rates directly and negatively impacts the operating result through higher financing costs. Elektro Gorenjska manages this risk through negotiations with banks to reduce existing margins, refinancing or repaying loans General with unfavourable terms or higher margins, active monitoring of interest rate trends and bank margins, and seeking the most favourable financing terms available on the market. The financial performance and position of individual activities are affected by both direct and indirect revenues and expenses, as well as by assets and liabilities that are allocated to an activity INVESTMENT FUNDING SHORTFALL RISK either directly or indirectly. The allocation methodologies presented below are based on the Elektro Gorenjska’s internal Investment funding shortfall risk arises when a company is unable to secure sufficient funds – organisational units (OEs), which were used to record business events in 2024. All revenues, either due to lack of internal resources or limited borrowing capacity – to implement its planned expenses, assets, and liabilities are originally recognised within the OE where they occur. If this is not investments. The risk may increase if legislative changes reduce profits and complicate access to possible or appropriate, items are allocated across multiple OEs at the point of initial recognition credit. Dividend distributions to shareholders can also reduce available internal funds. Long-term, using pre-established allocation criteria. Primary allocation criteria include: this risk could escalate if insufficient investment in infrastructure leads to voltage quality issues, more frequent outages, and reduced commercial service quality. • The number of employees per activity, and • The floor area of the premises used by the OE within a facility. Elektro Gorenjska manages this risk by adjusting the scope of investments (rebalancing) based on available funds, engaging actively with SDH as the central manager of state assets and majority General Criterion for the Allocation of Indirect Revenues, Expenses, Assets and Liabilities by shareholder, maintaining timely communication with supervisory bodies, and continuously informing Activity employees about the company’s strategic goals. Indirect revenues and expenses are primarily composed of the revenues and expenses of general service departments: the Management, the Corporate Services Sector (CSS), and the Information and Communication Technology Sector (ICT). This excludes revenues and expenses of these departments arising from services rendered to related parties (e.g. legal, human resources, accounting, finance, and other similar services). Revenues generated in relation to related parties 17.8. Events After the Reporting Date are initially recognised under other activities. Expenses incurred in connection with services provided to related parties are directly recorded under those other activities. The resulting indirect revenues and expenses, as well as the assets and liabilities of the general service departments, are allocated to activities based on the following two criteria: In January 2025, Elektro Gorenjska signed an agreement for the sale of its 100% stake in Gorenjske elektrarne. The transaction is conditional upon the fulfilment of certain suspensive conditions, which • Number of employees, and had not been met by the date of approval of the Elektro Gorenjska Group’s financial statements. • Number of fixed assets. As of 31 March 2025, Gorenjske elektrarne became the 100% owner of ALFI SOL 2. Based on these criteria, 91% of the indirect expenses, revenues, assets and liabilities of the general service departments were allocated to the activity under the contract with the DSO, and 9% to other activities. 240 241 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.9.2. Statement of Financial Position by Activity In accordance with the provisions of the Electricity Supply Act (ZOEE), the Company discloses its financial statements by activity.. Other Significant Criteria for the Allocation of Indirect Revenues, Expenses, Assets and STATEMENT OF FINANCIAL POSITION BY ACTIVITY AS AT 31 DECEMBER 2024 in € Liabilities by Activity Item Distribution Activity (DO) Other Activities Elektro Gorenjska Total Interrelationships between organisational units (OUs) or activities primarily include the following: ASSETS • Intangible and tangible assets, long-term deferred costs and accrued revenues, long-term trade receivables, assets held for sale, short-term trade receivables, provisions and long-term accrued A. Long-Term Assets 233,907,042 18,576,779 252,483,821 expenses and deferred income, part of the short-term trade payables, short-term accrued expenses and deferred income, and inventories are originally recognised by individual OUs. An exception I. Intangible Assets and Long-Term Deferred Costs 3,050,044 72,212 3,122,256 applies to intangible and tangible assets that relate to multiple activities (so-called pooled assets). These assets are reallocated from the original OE to the relevant OEs using a defined allocation key. 1. Long-Term Property Rights 2,936,736 65,748 3,002,484 Assets and liabilities recognised under general services (Management, Corporate Services Sector, ICT Sector) are allocated to individual activities based on the allocation key for pooled assets or using the 5. Other Long-Term Deferred Costs 113,308 6,464 119,772 general allocation criteria. II. Property, Plant and Equipment 229,189,342 2,733,482 231,922,824 • All investment property and long-term financial investments are recognised under other activities. 1. Land and Buildings 165,639,007 1,999,625 167,638,632 • Long-term and short-term financial liabilities to banks are allocated to activities based on the purpose for which the loans were obtained. a) Land 6,098,149 881,152 6,979,301 • Interest expenses on bank loans are allocated to activities in proportion to the share of financial b) Buildings 159,540,858 1,118,473 160,659,331 liabilities attributable to each activity, or as defined in the preceding paragraph. 2. Production Equipment and Machinery 50,780,494 261,337 51,041,831 • Cash and cash equivalents are initially recognised under the OE where the corresponding receivable or payable is recorded, or under the OE to which the related cost is charged. If the 3. Other Equipment 59,138 6,606 65,744 payment relates to a liability originally recognised under Management, it is subsequently reallocated appropriately for the purpose of preparing activity-based statements. 4. Property, Plant and Equipment Under Construction 12,710,703 465,914 13,176,617 • Corporate income tax liabilities are recorded in full under Management. However, in the activity- a) Construction in Progress 12,674,269 465,914 13,140,183 based income statement, corporate income tax is allocated to each activity. The amount attributable to each activity is calculated based on data used to prepare the corporate income tax calculation b) Advances for Acquisition of Property, Plant and Equipment 36,434 0 36,434 by OU (a corporate tax computation is prepared at the activity level). Interim corporate income tax prepayments and year-end receivables or liabilities as at 31 December are recorded under III. Investment Property 0 1,755,081 1,755,081 Management. For the preparation of the balance sheet by activity as at 31 December, the corporate income tax liabilities or receivables are allocated based on the actual tax calculation by activity. IV. Long-Term Financial Investments 0 13,982,256 13,982,256 Liabilities and receivables by activity are recognised based on actual tax prepayments by activity and the final corporate income tax computation by activity. 1. Long-Term Financial Investments, Excluding Loans 0 13,839,458 13,839,458 a) Shares and Interests in Group Companies 0 13,715,303 13,715,303 b) Shares and Interests in Associates 0 124,155 124,155 2. Long-Term Loans 0 142,798 142,798 b) Long-Term Loans to Others 0 142,798 142,798 V. Long-Term Trade Receivables 155,550 0 155,550 2. Long-Term Trade Receivables from Customers 48,476 0 48,476 3. Long-Term Trade Receivables from Others 107,074 0 107,074 VI. Deferred Tax Assets 1,512,106 33,748 1,545,854 242 243 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY B. Short-Term Assets -3,129,082 17,834,293 14,705,211 B. Provisions and Long-Term Accruals and Deferrals 13,369,628 8,699,271 22,068,899 II. Inventories 1,426,330 2,631 1,428,961 1. Provisions for Pensions and Similar Obligations 3,068,993 482,534 3,551,527 1. Materials 1,186,686 2,631 1,189,317 2. Other Provisions 0 7,431,385 7,431,385 4. Advances for Inventories 239,644 0 239,644 3. Long-Term Accrued Expenses and Deferred Income 10,300,635 785,352 11,085,987 IV. Short-Term Trade Receivables 9,900,258 468,447 10,368,705 C. Long-Term Liabilities 55,025,663 14,443 55,040,106 1. Short-Term Trade Receivables from Group Companies 5,325 26,175 31,500 I. Long-Term Financial Liabilities 54,688,957 0 54,688,957 2. Short-Term Trade Receivables from Customers 9,527,326 276,638 9,803,964 2. Long-Term Financial Liabilities to Banks 54,688,957 0 54,688,957 3. Income Tax Receivables 54,448 121,020 175,468 II. Long-Term Trade Payables 136,629 3,285 139,914 4. Other Short-Term Trade Receivables 313,159 44,614 357,773 4. Long-Term Advance Liabilities 136,629 3,285 139,914 V. Cash and Cash Equivalents -14,455,670 17,363,215 2,907,545 III. Deferred Tax Liabilities 200,077 11,158 211,235 C. Short-Term Deferred Costs 153,258 24,297 177,555 Č. Short-Term Liabilities 13,768,652 460,448 14,229,100 TOTAL ASSETS 230,931,218 36,435,369 267,366,587 II. Short-Term Financial Liabilities 7,123,688 0 7,123,688 2. Short-Term Financial Liabilities to Banks 6,944,084 0 6,944,084 4. Other Short-Term Financial Liabilities 179,604 0 179,604 III. Short-Term Trade Payables 6,644,964 460,448 7,105,412 in € 1. Short-Term Payables to Group Companies 26,583 24,536 51,119 Item Distribution Activity (DO) Other Activities Elektro Gorenjska 2. Short-Term Payables to Suppliers 2,914,331 142,339 3,056,670 Total LIABILITIES AND EQUITY 4. Short-Term Advance Liabilities 103,997 26,491 130,488 A. Equity 147,250,501 27,095,287 174,345,788 6. Other Short-Term Trade Payables 3,600,053 267,082 3,867,135 I. Subscribed Capital 87,770,535 16,366,080 104,136,615 D. Short-Term Accrued Expenses and Deferred Income 1,516,774 165,920 1,682,694 1. Share Capital 87,770,535 16,366,080 104,136,615 TOTAL LIABILITIES AND EQUITY 230,931,218 36,435,369 267,366,587 II. Capital Reserves 41,584,616 4,388,863 45,973,479 III. Profit Reserves 13,235,285 9,832,661 23,067,946 1. Legal Reserves 3,241,218 1,079,193 4,320,411 5. Other Profit Reserves 9,994,067 8,753,468 18,747,535 V. Reserves from Fair Value Revaluation -179,213 -34,917 -214,130 VI. Retained Earnings 4,182,841 -4,181,849 992 VII. Net Profit for the Financial Year 656,437 724,449 1,380,886 1. Unallocated Profit for the Current Year 656,437 724,449 1,380,886 244 245 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY STATEMENT OF FINANCIAL POSITION BY ACTIVITY AS AT 31 DECEMBER 2023 in € Item Activity DO Other Activities Total Elektro B. Short-Term Assets -295,441 15,269,754 14,974,313 Gorenjska ASSETS II. Inventories 1,291,757 3,612 1,295,369 A. Long-Term Assets 225,358,501 18,383,955 243,742,456 1. Raw Materials 1,291,757 3,612 1,295,369 I. Intangible Assets and Long-Term Accruals 3,048,545 65,564 3,114,109 IV. Short-Term Trade Receivables 6,605,424 695,111 7,300,535 1. Long-Term Property Rights 2,988,390 65,318 3,053,708 1. From Group Companies 0 19,910 19,910 5. Other Long-Term Accruals 60,155 246 60,401 2. From Customers 6,396,171 668,168 7,064,339 II. Property, Plant and Equipment 220,033,150 2,515,843 222,548,993 4. From Others 209,253 7,033 216,286 1. Land and Buildings 162,608,810 2,250,887 164,859,697 V. Cash and Cash Equivalents -8,192,622 14,571,031 6,378,409 a) Land 6,359,013 923,767 7,282,780 C. Short-Term Accrued Revenue and Deferred Costs 1,454,424 25,663 1,480,087 b) Buildings 156,249,797 1,327,120 157,576,917 TOTAL ASSETS 226,517,484 33,679,372 260,196,856 2. Production Plant and Machinery 51,840,324 257,565 52,097,889 3. Other Equipment 60,200 6,665 66,865 in € Item Activity DO Other Activities Total Elektro 4. Property, Plant and Equipment in Progress 5,523,816 726 5,524,542 Gorenjska a) Construction in Progress 5,482,552 726 5,483,278 EQUITY AND LIABILITIES b) Advances for Property, Plant and Equipment 41,264 0 41,264 A. Equity 144,971,651 25,343,856 170,315,507 III. Investment Property 0 1,782,857 1,782,857 I. Subscribed Capital 87,770,535 16,366,080 104,136,615 IV. Long-Term Financial Investments 0 13,982,256 13,982,256 1. Share Capital 87,770,535 16,366,080 104,136,615 1. Long-Term Investments Excl. Loans 0 13,839,457 13,839,457 II. Capital Reserves 41,584,616 4,388,863 45,973,479 a) Shares and Interests in Group Companies 0 13,715,303 13,715,303 III. Revenue Reserves 15,294,478 3,552,680 18,847,158 b) Shares and Interests in Associates 0 124,154 124,154 1. Legal Reserves 3,149,563 959,858 4,109,421 2. Long-Term Loans 0 142,799 142,799 5. Other Revenue Reserves 12,144,915 2,592,822 14,737,737 b) Loans to Others 0 142,799 142,799 V. Revaluation Reserves -161,731 -34,627 -196,358 V. Long-Term Trade Receivables 722,341 0 722,341 VI. Retained Earnings 4,107,730 -4,106,702 1,028 2. Long-Term Receivables from Customers 613,688 0 613,688 VII. Net Profit for the Financial Year 851,109 702,476 1,553,585 3. Long-Term Receivables from Others 108,653 0 108,653 1. Unappropriated Net Profit for the Year 851,109 702,476 1,553,585 VI. Deferred Tax Receivables 1,554,465 37,435 1,591,900 VIII. Adjustment of Equity Between Activities -4,475,086 4,475,086 0 246 247 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 17.9.3. Income Statement by Business Segment B. Provisions and Long-Term Accruals 10,654,255 7,492,972 18,147,227 1. Provisions for Pensions and Similar Obligations 2,995,348 462,209 3,457,557 INCOME STATEMENT BY BUSINESS SEGMENT OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € 2. Other Provisions 0 6,335,008 6,335,008 Item Activity DO Other Activities Total Elektro Gorenjska 3. Long-Term Deferred Income 7,658,907 695,755 8,354,662 1. Net Sales Revenue 35,432,197 2,539,997 37,972,194 C. Long-Term Liabilities 50,916,140 12,819 50,928,959 a. Net Sales Revenue in the Domestic Market 35,432,197 2,531,264 37,963,461 I. Long-Term Financial Liabilities 50,633,042 0 50,633,042 b. Net Sales Revenue in Foreign Markets 0 8,733 8,733 2. To Banks 50,633,042 0 50,633,042 3. Capitalized Own Products and Services 0 6,261,655 6,261,655 II. Long-Term Trade Liabilities 65,327 2,424 67,751 4. Other Operating Income (Including Revaluation Income) 1,016,208 523,558 1,539,766 4. Based on Advances 65,327 2,424 67,751 5. Costs of Goods, Materials, and Services 5,913,397 5,825,654 11,739,051 III. Deferred Tax Liabilities 217,771 10,395 228,166 a. Cost of Goods Sold and Materials Used 1,080,847 5,115,839 6,196,686 Č. Short-Term Liabilities 18,925,730 676,249 19,601,979 b. Cost of Services 4,832,550 709,815 5,542,365 II. Short-Term Financial Liabilities 10,649,817 197,918 10,847,735 6. Labour Costs 12,659,956 3,515,586 16,175,542 1. To Group Companies 0 171 171 a. Wages and Salaries 8,920,677 2,626,984 11,547,661 2. To Banks 9,058,406 0 9,058,406 b. Social Security Costs 1,982,667 501,113 2,483,780 4. Other Short-Term Financial Liabilities 1,591,411 197,747 1,789,158 – Of Which Pension Insurance Contributions 1,302,970 304,967 1,607,937 III. Short-Term Trade Liabilities 8,275,913 478,331 8,754,244 c. Other Labour Costs 1,756,612 387,489 2,144,101 1. To Group Companies 33,214 7,166 40,380 7. Write-Downs 13,016,019 231,009 13,247,028 2. To Suppliers 5,104,617 152,868 5,257,485 a. Depreciation and Amortisation 12,756,728 225,408 12,982,136 4. Based on Advances 63,845 20,352 84,197 b. Impairment of Intangible and Tangible Assets 253,876 1,799 255,675 5. Income Tax Liabilities 267,669 26,286 293,955 c. Impairment of Current Assets 5,415 3,802 9,217 6. Other Short-Term Liabilities 2,806,568 271,659 3,078,227 8. Other Operating Expenses 328,083 1,133,984 1,462,067 D. Short-Term Accruals and Deferred Income 1,049,708 153,476 1,203,184 9. Finance Income from Equity Interests 0 3,500,000 3,500,000 TOTAL EQUITY AND LIABILITIES 226,517,484 33,679,372 260,196,856 a. From Equity Interests in Group Companies 0 3,500,000 3,500,000 10. Finance Income from Loans Granted 0 23,139 23,139 b. From Loans Granted to Others 0 23,139 23,139 11. Finance Income from Operating Receivables 16,981 2,055 19,036 b. From Trade Receivables Due from Others 16,981 2,055 19,036 248 249 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA COMPANY 13. Finance Costs from Financial Liabilities 2,167,638 2,680 2,170,318 7. Depreciation and Amortization 12,295,561 258,023 12,553,584 a. From Loans Received from Group Companies 0 2,680 2,680 a. Depreciation and Amortization 11,841,080 219,704 12,060,784 b. From Loans Received from Banks 2,167,638 0 2,167,638 b. Impairment of Intangible and Tangible Assets 453,206 32,271 485,477 14. Finance Costs from Operating Liabilities 89,201 13,725 102,926 c. Impairment of Current Assets 1,275 6,048 7,323 b. From Liabilities to Suppliers and Bills Payable 143 84 227 8. Other Operating Expenses 281,528 234,191 515,719 c. From Other Operating Liabilities 89,058 13,641 102,699 9. Financial Income from Equity Interests 0 1,580,000 1,580,000 15. Other Income 15 3 18 a. In Group Companies 0 1,580,000 1,580,000 16. Other Expenses 32,849 3,247 36,096 10. Financial Income from Loans Granted 0 38,990 38,990 17. NET PROFIT BEFORE TAX 2,258,258 2,124,522 4,382,780 b. From Loans to Others 0 38,990 38,990 18. Corporate Income Tax 229,656 -93,118 136,538 11. Financial Income from Operating Receivables 20,365 5,346 25,711 19. Deferred Taxes 22,831 3,616 26,447 b. From Other Operating Receivables 20,365 5,346 25,711 20. NET PROFIT FOR THE FINANCIAL PERIOD 2,005,771 2,214,024 4,219,795 13. Financial Expenses for Financial Liabilities 1,697,228 1,116 1,698,344 a. From Loans Received from Group Companies 0 1,116 1,116 In the company’s income statement, the net approach has been applied for the adjustment of receivables (i.e., values arising from intra-organisational postings have been eliminated). As a result, b. From Bank Loans 1,697,228 0 1,697,228 revenue and expenses were reduced by €8,897.   14. Financial Expenses for Operating Liabilities 92,449 14,230 106,679 b. To Suppliers and for Bills Payable 56 110 166 INCOME STATEMENT BY BUSINESS SEGMENT OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 in € c. Other Operating Liabilities 92,393 14,120 106,513 Item Activity DO Other Activities Total Elektro Gorenjska 15. Other Income 17 4 21 1. Net Sales Revenue 33,987,738 3,172,469 37,160,207 16. Other Expenses 63,485 6,279 69,764 a. Net Sales Revenue – Domestic Market 33,987,738 3,164,519 37,152,257 17. NET PROFIT BEFORE TAX 3,374,386 1,869,920 5,244,306 b. Net Sales Revenue – Foreign Market 0 7,950 7,950 18. Corporate Income Tax 267,669 26,286 293,955 3. Capitalized Own Products and Services 0 5,921,213 5,921,213 19. Deferred Tax –448,348 13,127 –435,221 4. Other Operating Revenue (Including Revaluations) 1,015,344 871,550 1,886,894 20. NET PROFIT FOR THE FINANCIAL PERIOD 3,555,065 1,830,507 5,385,572 5. Cost of Goods, Materials, and Services 5,448,117 5,623,302 11,071,419 a. Cost of Goods and Materials Used 1,395,640 5,122,605 6,518,245 In the company’s income statement, the net approach has been applied for the adjustment of receivables (i.e., values arising from intra-organisational postings have been eliminated). As a result, b. Cost of Services 4,052,477 500,697 4,553,174 revenue and expenses were reduced by €7,089. 6. Labour Costs 11,770,710 3,582,511 15,353,221 a. Wages and Salaries 8,232,385 2,704,747 10,937,132 b. Social Security Contributions 1,821,910 486,197 2,308,107 – of which Pension Contributions 1,209,338 286,237 1,495,575 c. Other Labor Costs 1,716,415 391,567 2,107,982 250 251 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE 8. INAN C IAL RFINANCIAL EPORTE R OF THE ELEKTRO GORENJSKA GROUP FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.1. Management Statement of Responsibility 18.2. Auditor's Report The Management Board of Elektro Gorenjska hereby confirms the accounting statements, and all other components of this consolidated annual report as published and presented herein. The consolidated annual report provides a true and fair view of the financial position of the Group. The Management Board of Elektro Gorenjska affirms that the preparation of the consolidated financial statements was carried out in accordance with the International Financial Reporting Standards, appropriate accounting policies, and that the accounting estimates were made prudently and in accordance with the principles of good governance. The Management Board of Elektro Gorenjska approved the Group’s financial statements for the financial year 2024 on 1 April 2025. The Management Board of Elektro Gorenjska is responsible for the proper maintenance of accounting records, the adoption of appropriate measures for the safeguarding of assets and other resources and confirms that the financial statements have been prepared on a going concern basis and in accordance with applicable legislation and the International Financial Reporting Standards as adopted by the European Union. The tax authorities may, at any time within five years following the end of the year in which the tax liability arose, audit the Company’s operations. Such audits may result in additional tax liabilities, late payment interest, and penalties in respect of corporate income tax or other taxes and levies. The Management Board is not aware of any circumstances that could result in a potentially significant liability arising from such audits. Kranj, 1 April 2025 President of the Management Board dr. Ivan Šmon, MBA 254 255 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 256 257 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 258 259 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.3. Financial Statements of the Elektro Gorenjska Group for the Financial Year Ended 31 December 2024 2. Long-Term Loans 171,806 178,768 b) Long-Term Loans to Others 171,806 178,768 STATEMENT OF FINANCIAL POSITION OF THE ELEKTRO GORENJSKA GROUP AS AT 31 DECEMBER 2024 in € Long-Term Operating Receivables 5 162,544 729,336 Item Note 31 Dec 2024 31 Dec 2023 2. Long-Term Trade Receivables 48,476 613,688 ASSETS 3. Long-Term Receivables from Others 114,068 115,648 LONG-TERM ASSETS 262,491,848 248,367,339 Deferred Costs (Long-Term Accruals and Deferrals) 133,212 75,245 Intangible Assets 1 3,007,082 3,075,371 Deferred Tax Assets 1,566,289 1,610,007 1. Long-Term Property Rights 3,007,082 3,075,371 SHORT-TERM ASSETS 26,102,990 31,937,354 Property, Plant, and Equipment 2 255,035,015 240,256,471 Inventories 6 1,645,684 3,257,070 1. Land and Buildings 173,828,749 171,118,648 1. Materials 1,645,684 3,257,070 a) Land 8,170,939 8,469,768 Short-Term Financial Investments 9,282 8,702 b) Buildings 165,657,810 162,648,880 2. Short-Term Loans 9,282 8,702 2. Production Plant and Machinery 59,797,491 58,562,562 b) Short-Term Loans to Others 9,282 8,702 3. Other Equipment 620,317 689,710 Short-Term Operating Receivables 7 13,414,941 13,993,697 4. Property, Plant, and Equipment Under Construction 20,788,458 9,885,551 2. Short-Term Trade Receivables 10,216,573 11,180,315 Investment Property 3 1,727,333 1,754,302 3. Short-Term Receivables from Others 3,198,368 2,813,382 Long-Term Financial Investments 4 860,373 866,607 Income Tax Receivable 1,025,944 0 1. Long-Term Financial Investments, Excluding Loans 688,567 687,839 Contract Assets 8 1,419,290 41,529 b) Equity-Accounted Investments 451,856 451,128 Deferred Costs and Other Short-Term Assets 216,864 403,887 c) Other Shares and Interests 236,711 236,711 Cash and Cash Equivalents 8,370,985 14,232,469 TOTAL ASSETS 288,594,838 280,304,693 260 261 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP STATEMENT OF FINANCIAL POSITION OF THE ELEKTRO GORENJSKA GROUP AS AT 31 DECEMBER 2024 in € Item Note 31 Dec 2024 31 Dec 2023 Deferred Income and Other Long-Term Liabilities 12 12,040,225 8,998,856 EQUITY AND LIABILITIES Deferred Tax Liabilities 211,235 228,166 EQUITY 9 186,621,224 182,985,018 SHORT-TERM LIABILITIES 19,319,068 24,997,168 Subscribed Capital 104,136,615 104,136,615 Short-Term Financial Liabilities 13 8,162,453 11,276,136 1. Share Capital 104,136,615 104,136,615 2. Short-Term Financial Liabilities to Banks 7,972,656 9,486,978 Capital Reserves 45,973,479 45,973,479 4. Other Short-Term Financial Liabilities 189,797 1,789,158 Profit Reserves 25,241,450 19,274,198 Short-Term Operating Liabilities 14 7,962,752 10,350,603 1. Legal Reserves 4,952,369 4,766,467 2. Short-Term Trade Payables 3,790,810 6,088,301 5. Other Profit Reserves 20,289,081 14,507,731 4. Short-Term Advances Received 135,488 84,057 Other Reserves -239,801 -210,051 5. Other Short-Term Operating Liabilities 4,036,454 4,178,245 Retained Earnings 11,509,481 13,810,777 Income Tax Liabilities 0 1,205,922 LONG-TERM LIABILITIES 82,654,546 72,322,507 Short-Term Contract Liabilities 15 1,246,566 439,123 Provisions 10 11,245,643 10,025,806 Accrued Costs and Other Short-Term Liabilities 16 1,947,297 1,725,384 1. Provisions for Pensions and Similar Obligations 3,814,258 3,690,798 TOTAL EQUITY AND LIABILITIES 288,594,838 280,304,693 2. Other Provisions 7,431,385 6,335,008 The notes to the financial statements form an integral part of the financial statements and should be Long-Term Financial Liabilities 11 59,017,529 52,990,185 read in conjunction therewith. 2. Long-Term Financial Liabilities to Banks 59,017,529 52,990,185 Long-Term Operating Liabilities 139,914 79,494 2. Long-Term Trade Payables 0 11,743 4. Long-Term Advances Received 139,914 67,751 262 263 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP INCOME STATEMENT OF THE ELEKTRO GORENJSKA GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € Item Note 2024 2023 Net Revenue from Sales 1 48,268,918 55,075,559 Capitalized Own Products and Own Services 2 6,702,441 6,132,751 Other Operating Income 3 1,964,601 2,035,494 Costs of Goods, Materials, and Services 16,138,946 17,950,830 a. Cost of Goods Sold and Consumed Material 4 8,742,712 10,702,178 b. Cost of Services 5 7,396,234 7,248,652 Labour Costs 6 17,971,591 16,992,984 Depreciation and Amortization 7 14,562,558 14,087,900 Other Operating Expenses 8 1,530,198 628,046 Finance Income from Loans 105,971 55,959 Finance Income from Operating Receivables 22,342 29,568 Finance Expenses from Financial Liabilities 2,229,383 1,726,897 Finance Expenses from Operating Liabilities 110,158 113,453 Recognized Profit of Investments Measured Using the Equity Method 45,121 44,393 TOTAL PROFIT FROM OPERATIONS 4,566,560 11,873,614 Income Tax 9 704,741 1,601,277 Deferred Taxes 9 24,120 –453,328 NET PROFIT FOR THE REPORTING PERIOD 3,837,699 10,725,665 The notes to the financial statements form an integral part of the financial statements and should be read in conjunction therewith. STATEMENT OF OTHER COMPREHENSIVE INCOME OF THE ELEKTRO GORENJSKA GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € Item 2024 2023 1. Net Profit for the Reporting Period 3,837,699 10,725,665 2. Items of Other Comprehensive Income (Excluding Equity-Accounted Amounts), Not to Be Reclassified to Profit: –28,758 –245,536 – Actuarial Gains and Losses –28,758 –245,536 TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 3,808,941 10,480,129 The notes to the financial statements form an integral part of the financial statements and should be read in conjunction therewith. 264 265 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP B. CASH FLOWS FROM INVESTING ACTIVITIES a. Cash Inflows from Investing Activities 2,213,229 2,214,193 1. Interest and Profit Shares Received from Others 169,268 1,014,139 3. Proceeds from Sale of Property, Plant, and Equipment 1,722,611 194,833 4. Proceeds from Sale of Investment Property 314,968 0 5. Proceeds from Sale of Financial Investments 6,382 1,005,221 b. Cash Outflows from Investing Activities –33,256,545 –27,969,203 1. Acquisition of Intangible Assets –2,581,238 –1,108,188 2. Acquisition of Property, Plant, and Equipment –30,652,863 –26,607,295 STATEMENT OF CASH FLOWS OF THE ELEKTRO GORENJSKA GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € 3. Acquisition of Investment Property –22,444 –49,092 Item 2024 2023 4. Acquisition of Financial Investments 0 –204,628 A. CASH FLOWS FROM OPERATING ACTIVITIES c. Net Cash from Investing Activities (a + b) –31,043,316 –25,755,010 a. Cash Inflows from Operating Activities 68,068,678 68,547,536 C. CASH FLOWS FROM FINANCING ACTIVITIES 1. Receipts from Sales of Products and Services 62,243,252 62,028,170 a. Cash Inflows from Financing Activities 14,000,000 16,000,000 2. Income Tax Received 125,498 609,125 2. Proceeds from Borrowings 14,000,000 16,000,000 3. Other Cash Receipts from Operating Activities 5,699,928 5,910,241 b. Cash Outflows from Financing Activities –13,588,784 –11,378,665 b. Cash Outflows from Operating Activities –43,298,062 –38,791,823 1. Interest Paid on Financing –2,480,744 –1,756,128 1. Payments for Materials and Services –16,598,525 –17,984,470 3. Repayment of Financial Liabilities –9,553,427 –9,622,537 2. Payments to Employees and for Profit Participation –13,141,467 –11,975,573 4. Dividends and Other Profit Distributions Paid –1,554,613 0 3. Income Tax Paid –1,956,260 –285,402 c. Net Cash from Financing Activities (a + b) 411,216 4,621,335 4. Other Duties and Taxes –7,265,577 –4,747,008 Č. CLOSING BALANCE OF CASH AND CASH EQUIVALENTS 8,370,985 14,232,469 5. Other Payments from Operating Activities –4,336,233 –3,799,370 x. Net Increase/Decrease in Cash and Cash Equivalents During the Period –5,861,484 8,622,038 c. Net Cash from Operating Activities (a + b) 24,770,616 29,755,713 y. Opening Balance of Cash and Cash Equivalents 14,232,469 5,610,431 The explanatory notes in the section Notes to the Statement of Cash Flows (Financial Report of the Elektro Gorenjska Group) form an integral part of the statement and should be read in conjunction therewith. 266 267 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP STATEMENT OF CHANGES IN EQUITY OF THE ELEKTRO GORENJSKA GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2024 in € a) From 1 January 2024 to 31 December 2024: Subscribed Reserves Arising From Capital Capital Reserves Profit Reserves Fair Value Retained Earnings Measurement I II III IV V MOVEMENTS WITHIN INDIVIDUAL EQUITY ITEMS Capital TOTAL EQUITY Share Paid-In Reserves General Revaluation Reserves Arising from Capital Capital From Legal Reserves Other Profit Reserves Fair Value Retained Retained Surplus Reduction of Adjustment Measurement Net Profit Net Loss Share Capital of Capital I/1st II/1st II/2nd II/3rd III/1st III/5th IV/3rd V/1st V/2nd BALANCE AS AT 31 DECEMBER 2023 104,136,615 1 28,581 45,944,897 4,766,467 14,507,731 -210,051 5,803,769 8,007,008 182,985,018 BALANCE AS AT 1 JANUARY 2024 104,136,615 1 28,581 45,944,897 4,766,467 14,507,731 -210,051 5,803,769 8,007,008 182,985,018 CHANGES IN EQUITY – TRANSACTIONS WITH OWNERS 0 0 0 0 0 1,381,878 0 -1,554,613 0 -172,735 Dividend Payment 0 0 0 0 0 0 0 -1,554,613 0 -1,554,613 Other Changes in Equity 0 0 0 0 0 1,381,878 0 0 0 1,381,878 TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 0 0 0 0 0 0 -28,758 0 3,837,699 3,808,941 Total Comprehensive Income for the Reporting Period 0 0 0 0 0 0 0 0 3,837,699 3,837,699 Items of Other Comprehensive Income (Excluding Those Recognized Using the Equity Method) 0 0 0 0 0 0 -28,758 0 0 -28,758 That Will Not Be Reclassified Subsequently to Profit or Loss Actuarial Gains and Losses 0 0 0 0 0 0 -28,758 0 0 -28,758 CHANGES IN CAPITAL 0 0 0 0 185,902 4,399,472 -992 4,056,788 -8,641,170 0 Allocation of the Remaining Part of Net Profit of the Comparative Period To Other Components Of Equity 0 0 0 0 0 3,951,212 0 4,055,796 -8,007,008 0 Allocation of Part of Net Profit of The Reporting Period to Other Components of Equity Based 0 0 0 0 185,902 448,260 0 0 -634,162 0 on Management and Supervisory Body Decision Transfer of Actuarial Gains/Losses Due to Employee Departures to Retained Earnings 0 0 0 0 0 0 -992 992 0 0 BALANCEAS AT 31 DECEMBER 2024 104,136,615 1 28,581 45,944,897 4,952,369 20,289,081 -239,801 8,305,944 3,203,537 186,621,224 Note 9 – Equity in the section Notes to the Statement of Financial Position forms an integral part of the financial statements and should be read in conjunction therewith. 268 269 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP STATEMENT OF CHANGES IN EQUITY OF THE ELEKTRO GORENJSKA GROUP FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 in € b) From 1 January 2023 to 31 December 2023: Subscribed Reserves Arising From Capital Capital Reserves Profit Reserves Fair Value Retained Earnings Measurement I II III IV V MOVEMENTS WITHIN INDIVIDUAL EQUITY ITEMS Capital TOTAL EQUITY Share Paid-In Reserves General Revaluation Reserves Arising from Capital Capital From Legal Reserves Other Profit Reserves Fair Value Retained Retained Surplus Reduction of Adjustment Measurement Net Profit Net Loss Share Capital of Capital I/1st II/1st II/2nd II/3rd III/1st III/5th IV/3rd V/1st V/2nd BALANCE AS AT 31 DECEMBER 2022 104,136,615 1 28,581 45,944,897 4,222,453 13,115,487 38,667 6,268,943 131,122 173,886,767 BALANCE AS AT 1 JANUARY 2023 104,136,615 1 28,581 45,944,897 4,222,453 13,115,487 38,667 6,268,943 131,122 173,886,767 CHANGES IN EQUITY – TRANSACTIONS WITH OWNERS 0 0 0 0 0 -1,381,878 0 0 0 -1,381,878 Dividend Payment 0 0 0 0 0 -1,381,878 0 0 0 -1,381,878 TOTAL COMPREHENSIVE INCOME FOR THE REPORTING PERIOD 0 0 0 0 0 0 -245,536 0 10,725,665 10,480,129 Total Comprehensive Income for the Reporting Period 0 0 0 0 0 0 0 0 10,725,665 10,725,665 Items of Other Comprehensive Income (Excluding Those Recognized Using the Equity Method) 0 0 0 0 0 0 -245,536 0 0 -245,536 That Will Not Be Reclassified Subsequently to Profit or Loss Actuarial Gains and Losses 0 -245,536 -245,536 CHANGES IN CAPITAL 0 0 0 0 544,014 2,774,121 -3,182 -465,174 -2,849,779 0 Allocation of the Remaining Part of Net Profit of the Comparative Period To Other Components Of Equity 0 0 0 0 0 599,478 0 -468,356 -131,122 0 Allocation of Part of Net Profit of The Reporting Period to Other Components of Equity Based 0 0 0 0 544,014 2,174,643 0 0 -2,718,657 0 on Management and Supervisory Body Decision Transfer of Actuarial Gains/Losses Due to Employee Departures to Retained Earnings 0 0 0 0 0 0 -3,182 3,182 0 0 BALANCEAS AT 31 DECEMBER 2023 104,136,615 1 28,581 45,944,897 4,766,467 14,507,731 -210,051 5,803,769 8,007,008 182,985,018 270 271 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.4. Notes to the Consolidated Financial Statements Functional and Presentation Currency REPORTING ENTITY AND GROUP COMPOSITION The consolidated financial statements of Elektro Gorenjska Group are presented in euros (EUR). In accordance with Article 56 of the Companies Act (ZGD-1), a company with its registered office in The reporting accuracy is to the nearest euro. Slovenia, which is a parent to one or more companies in Slovenia or abroad, is required to prepare consolidated annual financial statements. Elektro Gorenjska is the parent company of the Elektro Exchange rate differences arising from the settlement or retranslation of monetary items at rates Gorenjska Group. The registered office of the parent company is Ulica Mirka Vadnova 3a, Kranj. different from those at initial recognition are recognised in profit or loss in the period in which they The Elektro Gorenjska Group comprises: arise. For currency translation, the Group uses the reference exchange rate of the European Central Bank as published by the Bank of Slovenia. • Parent company: Elektro Gorenjska, Ulica Mirka Vadnova 3a, Kranj • Subsidiary: Gorenjske elektrarne, Stara cesta 3, Kranj (100% owned by the parent company), with Use of Significant Estimates and Judgements equity as at 31 December 2024 amounting to €25,247,088 and net profit for 2024 amounting to €2,998,242 In applying the accounting policies and guidelines presented, the Elektro Gorenjska Group must • Subsidiary: GEK Solar, Stara cesta 3, 4000 Kranj (100% owned by Gorenjske elektrarne), with make certain judgments and estimates concerning the carrying amounts of assets and liabilities, equity as at 31 December 2024 amounting to €939,766 and net profit for 2024 amounting to which are not readily apparent from other sources. Estimates and assumptions are based on €118,934 historical experience and other factors considered reasonable by the Group. These are regularly • Associate: Soenergetika, Stara cesta 3, Kranj (25% owned by Gorenjske elektrarne), with equity as reviewed, but actual results may differ. The review of accounting estimates is recognised in the at 31 December 2024 amounting to €1,310,804 and net profit for 2024 amounting to €180,482 period of the revision and, if applicable, in future periods as well. The following represent the key judgments that have a significant effect on the amounts recognised in the financial statements: The Group also includes the company Informatika, in which Elektro Gorenjska holds a 10.50% share. Due to its immateriality, this entity is not included in the consolidated financial statements. Key Assumptions and Estimates The Group's activities include electricity generation, sales, and distribution. The assumptions and estimates that have the greatest impact on the amounts recognised in the BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS financial statements include: Statement of Compliance • Determination of useful lives of intangible assets and property, plant and equipment; • Impairment of receivables; The accompanying consolidated financial statements have been prepared in accordance with • Estimation of provisions. International Financial Reporting Standards (IFRS) as adopted by the European Union, including interpretations issued by the IFRS Interpretations Committee (IFRS IC), as well as in compliance These are explained in more detail under Significant Accounting Policies. with the Companies Act (ZGD-1, Official Gazette of the RS, No. 65/09 with amendments) and the Electricity Supply Act (ZOEE, Official Gazette of the RS, No. 172/21). Transactions with the Distribution System Operator The consolidated financial statements were approved by the Management Board of Elektro Transactions with the distribution system operator (ELES) and the preliminary and final settlements Gorenjska on 1 April 2025. received in 2024 are described in more detail in the section Basis for the Preparation of Financial Statements in the Accounting Report of Elektro Gorenjska. Basis of Measurement Pending Legal Disputes and Related Provisions The consolidated financial statements have been prepared based on historical cost, except for receivables measured at amortised cost. Methods used to determine fair value are described in the Several legal proceedings are ongoing, the most significant being a denationalisation case in which section on Determination of Fair Value. Elektro Gorenjska is a respondent. The company does not disclose further details due to potential harm to the company's interests. The consolidated financial statements have been prepared on a going concern basis. The Group’s operations are not seasonal in nature. 272 273 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Initial Application of New or Amended Standards Effective as of 1 January 2024 • Changes to the classification and measurement of financial instruments under IFRS 7 and IFRS 9: є Derecognition of financial liabilities: Derecognition of financial liabilities settled through electronic During the reporting period, the following amendments to existing standards and new transfers. interpretations issued by the IFRS IC and adopted by the EU became effective: є Classification of financial assets: Elements of interest in the basic lending arrangement (assessment of payments solely of principal and interest (SPPI test)), contractual terms that change the timing • Amendments to IAS 1 – Presentation of Financial Statements or amount of the contractual cash flows, non-recourse financial assets, investments in contractually linked instruments. a) Classification of liabilities as short-term or long-term. The amendment requires that an entity must є Disclosures: Investments in equity instruments measured at fair value through other comprehensive have the right to defer settlement of the liability for at least 12 months after the reporting date, and income, contractual terms that may change the timing or amount of the contractual cash flows. this right must exist at the end of the reporting period. The classification of liabilities is not affected by the likelihood that the entity will exercise its right to defer settlement for at least 12 months after These amendments may significantly impact how entities account for the derecognition of financial the reporting date. The standard was subsequently amended again. liabilities and how financial assets are classified. The amendments allow entities to early adopt only the amendments relating to the classification of financial assets and related disclosures, b) Long-term liabilities with covenants. If an entity’s right to defer settlement depends on compliance while applying the remaining amendments at a later stage. This would be particularly beneficial with certain conditions, those conditions affect whether the right existed at the end of the reporting for entities wishing to early adopt the amendments for financial instruments linked to ESG period – provided the entity is required to comply with the conditions at or before the end of (environmental, social, and governance) or similar characteristics. the reporting period, and not after it. The amendment also includes a clarification of the term “settlement” for the purpose of classifying liabilities as short-term or long-term. • Annual improvements to IFRS: Annual improvements are limited to amendments that clarify the wording of an IFRS standard or correct relatively minor unintended consequences, oversights, or • Amendments to IFRS 16 – Leases (Lease liability in a sale and leaseback transaction): The conflicts between the requirements of the standards. The proposed improvements are compiled in a amendment requires a seller-lessee to apply the subsequent measurement requirements for lease single document. The annual improvements cycle addresses: liabilities unrelated to a sale and leaseback transaction to lease liabilities arising from a leaseback in є Hedge accounting by a first-time adopter (amendments to IFRS 1 – First-time Adoption of a way that it recognises no amount of the gain or loss related to the right of use that it retains. International Financial Reporting Standards), є Disclosure of deferred differences between fair value and transaction price (amendments to • Amendments to IAS 7 – Statement of Cash Flows and IFRS 7 – Financial Instruments: Disclosures Implementation Guidance of IFRS 7), related to supplier finance arrangements. The amendments require companies to provide certain є Gains or losses on derecognition (amendments to IFRS 7), specific disclosures (both qualitative and quantitative) regarding supplier finance arrangements. The є Introduction and disclosure of credit risk (amendments to Implementation Guidance of IFRS 7), amendments also provide guidance on the characteristics of such arrangements. є Derecognition of lease liabilities (amendments to IFRS 9), є Transaction price (amendments to IFRS 9), The adoption of these changes had no material impact on the consolidated financial statements of є Determining the "agent" relationship (amendments to IFRS 10), Elektro Gorenjska Group. є The cost method (amendments to IAS 7). Standards and Amendments Adopted by the EU but Not Yet Effective • Contracts related to nature-dependent electricity (formerly Power Purchase Agreements) (amendments to IFRS 9 and IFRS 7): IASB issued amendments to improve corporate reporting on As of the date of approval of these financial statements, the following amendments adopted by the the financial effects of contracts for the supply of nature-dependent electricity, often structured EU are not yet effective and will apply to reporting periods beginning on or after 1 January 2025: as power purchase agreements. These contracts help companies secure electricity from wind and solar sources. As the volume of electricity produced under such contracts can fluctuate due • Amendments to IAS 21 – The Effects of Changes in Foreign Exchange Rates: Lack of to uncontrollable weather-related factors, current accounting requirements may not adequately Exchangeability. The amendments introduce requirements for assessing when a currency is reflect how these contracts affect company performance. In response, the IASB developed targeted exchangeable into another currency and when it is not. They require an entity to estimate the spot amendments to IFRS 9 – Financial Instruments and IFRS 7 – Financial Instruments: Disclosures, to exchange rate if it determines that a currency is not exchangeable into another currency. improve the disclosures of these contracts in financial statements. The amendments include: є Clarification on the application of the “own use” exemption, These new standards and interpretations are not expected to have a significant impact on the є Permitting hedge accounting if these contracts are used as hedging instruments, Group's financial statements. є Introducing new disclosure requirements to enable investors to understand the impact of these contracts on an entity’s financial performance and cash flows. Standards and Amendments Issued by the IFRS Board but Not Yet Adopted by the EU Currently, IFRSs as adopted by the EU do not differ significantly from those issued by the IFRS • IFRS 18 – Presentation and Disclosure in Financial Statements: IFRS 18 introduces significant new Interpretations Committee, except for the following standards and amendments that are effective for requirements on how financial statements are to be presented, with a particular focus on: periods beginning on or after 1 January 2026 or 1 January 2027 and not yet adopted by the EU: є The statement of profit or loss, including mandatory intermediate subtotals to be presented. IFRS 18 introduces requirements for categorizing income and expenses into five defined categories within the statement of profit or loss. This categorization necessitates the presentation of certain intermediate subtotals, such as the total of all income and expenses within the operating category, which constitutes the new mandatory subtotal “operating profit,” є Aggregation and disaggregation of information, including the introduction of general principles for aggregation and disaggregation in the financial statements, є Disclosures regarding management performance measures (MPMs), which are financial performance measures based on totals or subtotals required by IFRS standards, adjusted by management (e.g., “adjusted operating profit”). Entities will be required to disclose MPMs in the financial statements, including reconciliations of the MPMs to the most directly comparable subtotal or total specified in IFRS. 274 275 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP d. Assumptions Used in the Preparation of Consolidated Financial Statements • IFRS 19 – Subsidiaries without Public Accountability: Disclosures, issued by the International The following assumptions have been applied in the preparation of the consolidated financial Accounting Standards Board (IASB). Stakeholders asked IASB to permit subsidiaries that report to a statements: parent that applies IFRS in its consolidated financial statements to use IFRS with reduced disclosure requirements in their own financial statements. In response, IASB included a project in its research • The single economic entity assumption (the Group's consolidated financial statements present the plan to provide disclosure relief for subsidiaries without public accountability, which resulted in the assets, financial position, performance, and changes in financial position and equity as if the Group issuance of IFRS 19. IFRS 19 allows eligible subsidiaries to apply the recognition, measurement, and of companies were a single entity); presentation requirements of IFRS with reduced disclosures. To be eligible for IFRS 19, a company • The assumption of presenting a true and fair view of the assets, financial position, and must: performance; є Be a subsidiary as defined in Appendix A of IFRS 10 – Consolidated Financial Statements, • The completeness of the Group; є Not have public accountability (a company has public accountability if its debt or equity • The completeness of the contents of the financial statements and unified inclusion therein; instruments are traded in a public market or it is in the process of issuing such instruments, or it • The assumption of the same reporting date; holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses), • The consistency and stability of consolidation methods; є Have a parent (ultimate or intermediate) that prepares consolidated financial statements available • The assumption of clarity and transparency; for public use and in compliance with IFRS. • The assumption of economic efficiency; • The assumption of materiality. It is expected that the initial adoption of these new standards and amendments to existing standards will not have a significant impact on the financial statements of Elektro Gorenjska Group. SIGNIFICANT ACCOUNTING POLICIES SIGNIFICANT INFORMATION ON ACCOUNTING POLICIES Intangible Assets The consolidated financial statements have been prepared based on the accounting policies outlined An intangible asset is a non-monetary asset without physical substance. It is identifiable when it is below. separable, transferable, or can be sold. The Group controls the intangible assets and has the power to derive future economic benefits from them and restrict others’ access to those benefits. Basis of Consolidation The Group recognizes an intangible asset only when it is probable that the expected future economic The consolidated financial statements have been prepared based on the financial statements of benefits attributable to the asset will flow to the Group and the cost of the asset can be measured Elektro Gorenjska, its subsidiaries, and its associates. reliably. After initial recognition, intangible assets are measured using the cost model. Following initial recognition, the Group measures intangible assets at cost less accumulated amortisation and a. Subsidiaries accumulated impairment losses. Impairment of intangible assets with a finite useful life is accounted for in the same manner as for property, plant and equipment. Subsidiaries are entities controlled by the Group. Control exists when the parent company has the power to govern the financial and operating policies of an entity to derive benefits from its activities. The useful life is the period over which the Group expects the intangible asset to be available for The financial statements of subsidiaries are included in the consolidated financial statements of the use. All intangible assets of the Group have a finite useful life and are amortised. The amortisable Group from the date that control commences until the date that control ceases. amount of an intangible asset with a finite useful life is allocated by the Group on a systematic basis over its useful life. Amortisation of intangible assets is calculated individually using the straight-line The accounting policies of subsidiaries are aligned with those of the Group. method. The amount of amortisation is recognised in profit or loss in each reporting period. b. Associates The useful lives and amortisation rates of major classes of amortisable assets are as follows: Associates are entities over which the Group has significant influence but does not control their financial and operating policies. Significant influence is presumed to exist when the Group holds Major Classes of Amortisable Assets Estimated Useful Life (in Years) Amortisation Rate (in %) between 20% and 50% of the voting rights of another entity. Investments in associates are accounted for using the equity method. The Group’s consolidated financial statements include the Computer Software 3–7 14.29–33.33 Group’s share of the profit or loss of associates from the date significant influence begins until the date it ceases. Other Rights 3–100 1–33.33 c. Transactions Eliminated from the Consolidated Financial Statements In preparing the consolidated financial statements, all intercompany balances, unrealised gains, and For significant items of intangible assets, the Group reviews the amortisation method, the useful life, losses arising from intra-group transactions have been eliminated. Unrealised gains on transactions and the residual value at least once annually. Any effect of a change in estimate is disclosed in the with associates (accounted for using the equity method) are eliminated to the extent of the Group’s notes for the reporting period in which the change occurred. interest in the associate. Unrealised losses are eliminated in the same way as gains, but only to the extent that there is no evidence of impairment. The Group derecognises an intangible asset upon disposal or when no future economic benefits are expected from its use.   276 277 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Property, Plant and Equipment Property, plant and equipment comprise assets owned by the Group that are used in the Property, plant and equipment acquired through government grants or donations are recognised at production or supply of goods or services, for rental to others (excluding investment property), or acquisition cost. Government grants or donations are not deducted from the acquisition cost but are for administrative purposes, and are expected to be used for more than one reporting period. The recognised as deferred income and allocated in line with the calculated depreciation. Group recognises an asset as property, plant and equipment only when it is probable that future economic benefits associated with the asset will flow to the Group, and when the cost of the asset For post-recognition measurement of property, plant and equipment, the Group applies the cost can be measured reliably. model. The carrying amounts of property, plant and equipment, which also serve as the basis for Within property, plant and equipment (excluding investment property), the Group also recognises amortisation, were initially recognised at estimated fair value determined in cooperation with electricity distribution infrastructure leased to ELES under an agreement with the Distribution a certified appraiser, in cases where assets were acquired through in-kind contributions at the System Operator (DSO). The Group considers this classification appropriate based on the nature of establishment of Group companies. the assets, which are used in its operations rather than held to earn rentals or capital gains. Property, plant and equipment that meet the criteria for recognition as an asset are measured by Subsequent costs that increase the future economic benefits of an asset beyond the originally the Group at cost. The cost of an item of property, plant and equipment corresponds to the cash assessed benefits increase the asset’s cost. Where such costs extend the useful life, the cost is added price equivalent at the date of recognition. The cost includes the purchase price, non-refundable to the asset's carrying amount, and its useful life is revised accordingly. purchase duties, discounts, costs incurred to bring the asset to working condition as intended by management, and directly attributable costs. Subsequent expenditures required to maintain the asset in working condition are recognised as maintenance costs. Where payment for an asset is deferred beyond normal credit terms, the difference between the cash price equivalent and the total payment is recognised as interest and capitalised. Accordingly, Depreciation of property, plant and equipment is calculated individually using the straight-line borrowing costs directly attributable to the acquisition of an item of property, plant and equipment method over the estimated useful life of the asset. are capitalised as part of the cost of that asset until it is ready for its intended use, provided that the investment takes longer than one year. The average useful lives and depreciation rates for major classes of depreciable assets are: Borrowing costs are added to the cost of the asset upon completion of the investment. Where the investment is not completed in the current year, the borrowing costs are allocated to project items (investment items) as of the reporting date. These items are identified by name in the credit Major Classes of Depreciable Assets Estimated Useful Life (in years) Depreciation Rate (in %) agreement. Borrowing costs are also allocated to project items not explicitly named but whose Energy infrastructure buildings 25–50 2–4 planned value exceeds €400,000. Hydropower plant buildings 5–40 2.5–20 If an existing building that qualifies as property, plant and equipment is demolished to make way for a new building that also qualifies as property, plant and equipment, the carrying amount of the Solar power plants 7–30 3.33–13.13 existing building is considered a site preparation cost and included in the cost of the new building. Other buildings 20–50 2–5 The cost of property, plant and equipment constructed or produced internally is determined by applying the same principles as for purchased assets. Group companies that construct assets Energy infrastructure equipment 10–35 2.86–10 internally include in the cost those expenses directly related to the asset and a portion of general Computer hardware 3–4 25–33.33 construction or manufacturing costs that can reasonably be allocated. The cost of such property, plant and equipment may not exceed the cost of identical or similar property, plant and equipment Hydropower plant equipment 3–30 3.33–33.33 available on the market. The cost of such assets includes services from external contractors, direct labour hours, material costs (valued using the moving average method at the organisational unit CHP equipment 6–10 10–16.21 level), and other direct costs (depreciation of work equipment, administrative and legal fees, notary services, etc.). Other equipment 2–20 5–50 Investments in third-party-owned property, plant, and equipment 1.5–30 3,33–70 The Group estimates that it has no significant obligations for the dismantling and removal of property, plant and equipment, site restoration, or similar liabilities. Vehicles 6–12 8.33–16.67 278 279 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Assets Leased In and Out The depreciable amount of an asset is equal to its acquisition cost less any impairment losses and is At the inception of a contract, the Group assesses whether the arrangement is, or contains, a lease. systematically allocated over its useful life. A contract is considered a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lessee must have the right to obtain substantially The Group reviews useful lives and residual values of significant items of property, plant and all the economic benefits from the use of the asset and the right to direct its use. equipment annually and adjusts depreciation rates accordingly for current and future periods, if expectations differ materially from previous estimates. For all such lease contracts, the Group recognises a right-of-use asset and a corresponding lease liability at the commencement date. This approach ensures consistent accounting treatment for both At year-end, the Group assesses whether there is any indication that assets may be impaired. Both operating and finance leases. internal and external sources of information are considered. An impairment loss is the amount by which the carrying amount of an asset or cash-generating unit exceeds its recoverable amount and An exception is made for short-term leases and leases of low-value assets. For these, the Group is typically recognised as an operating expense in profit or loss. recognises lease payments as service costs (lease expenses) on a straight-line basis over the lease term or on another systematic basis that better reflects the pattern of benefit consumption. Investment Property The Group classifies leases of assets it provides as either finance leases or operating leases, based on the substance of the arrangement. A lease is classified as a finance lease if it transfers In recognising investment property, the Group applies the same criteria as for property, plant substantially all the risks and rewards incidental to ownership of the asset. Leases that do not meet and equipment, namely the reliability of the purchase cost measurement and the expectation of this criterion are classified as operating leases. Under a finance lease, the lessor recognises finance economic benefits. income over the lease term based on a pattern reflecting a constant periodic rate of return on the net investment. For operating leases, the lessor recognises lease payments as income on a straight- Investment property is property held by the Group to earn rental income, to increase the value of line basis over the lease term, unless another systematic basis better represents the reduction in long-term investment, or both. Investment properties generate cash flows independently of other benefit from the asset's use. assets held by the Group. Assets leased under operating leases are presented as part of the Group’s assets. These assets Investment properties of the Group primarily include: are depreciated in accordance with their acquisition cost and applicable depreciation policy. Lease payments received are recognised as rental income. • Land held to increase the value of a long-term investment and not for short-term sale in the ordinary course of business; All lease contracts in which the Group acts as a lessor are classified as operating leases. The Group • Land for which the Group has not yet determined its future use; recognises the leased assets under its own assets and recognises rental income as part of operating • Buildings leased out under one or multiple operating lease agreements; revenues on a straight-line basis over the lease term. All associated costs, including depreciation, are • Vacant buildings held for future leasing under operating leases; recognised as expenses in the period in which they are incurred. • Properties under construction or development intended to be used as investment properties. Financial Instruments The following are not classified as investment properties: Financial instruments include the following components: • Properties used by employees (e.g., staff housing under business lease); • Properties leased to ELES under long-term lease agreements based on long-term contracts with • Non-derivative financial assets; the Distribution Operator (DO); • Non-derivative financial liabilities, and • Properties comprising the Sava Hydroelectric Power Plant, which is subject to ongoing • Derivative financial instruments. denationalisation proceedings (until resolved, the HPP is leased long-term to the Group’s subsidiary Gorenjske elektrarne). Non-derivative Financial Assets These properties are recognised as part of property, plant and equipment. Non-derivative financial assets include: After initial recognition, investment property is measured at cost less accumulated depreciation and • Financial investments disclosed as either long-term or short-term in the statement of financial any impairment losses. position; • Receivables and loans; Transfers to or from investment property accounts are made only when a change in use occurs and • Cash and cash equivalents. evidence exists of such a change, e.g., when a sale within one year is probable, prompting transfer to assets held for sale. Depreciation is calculated using the straight-line method. The useful life of investment properties is the same as that for similar property, plant and equipment. 280 281 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Financial Investments Cash and Cash Equivalents Upon initial recognition, the Group classifies non-derivative financial instruments into one of the The Group classifies the following as cash and cash equivalents: following categories: financial assets at fair value through other comprehensive income, financial assets at amortised cost, financial assets at fair value through profit or loss. The classification is • Cash held in transaction and foreign currency accounts with banks or other financial institutions based on the purpose for which the financial instrument was acquired. that is available for use in payments, and • Cash equivalents. All long-term loans and short-term investments are classified as financial assets measured at amortised cost. Cash equivalents are short-term investments that can be readily converted into a known amount of cash in the near future and are subject to an insignificant risk of changes in value. The Group In accounting for regular purchases or sales of financial assets, the Group recognises such financial considers short-term deposits and placements with banks, as well as intercompany loans with assets in its accounting records and in the statement of financial position using the trade date (the maturities of up to three months from the date of acquisition, including proceeds from their date the Group commits to purchase or sell the asset). disposal, to be cash equivalents. Upon initial recognition, financial investments are measured at fair value. Transaction costs directly The revaluation of cash is a change in its carrying amount and may be performed at the end of the attributable to the acquisition or issue of the financial asset are added to the initial carrying financial year or during the year. Revaluation occurs only in the case of cash denominated in foreign amount, except for financial assets classified as fair value through profit or loss. currencies, where a change in the exchange rate has occurred after initial recognition. The resulting exchange rate difference may either increase or decrease the initially recognised amount. In the Investments in associates and joint ventures are measured using the equity method. If there is case of an increase, a financial income related to cash is recognised; in the case of a decrease, a objective evidence of impairment, such investments are tested for impairment in accordance with financial expense related to cash is recognised. IAS 36 – Impairment of Assets. Non-Derivative Financial Liabilities Receivables Non-derivative financial liabilities represent recognised obligations related to the financing of the Receivables are rights based on legal or other relationships to receive payment of an obligation, or, Group's own assets, which must be repaid or settled, predominantly in cash. in the case of prepayments, the delivery of goods or services. In the Group's statement of financial position, long-term borrowings that have already fallen due but Receivables are initially recognised at the amounts arising from relevant documents, assuming have not yet been settled, as well as those maturing within one year from the reporting date, are collection is probable. Subsequently, receivables may increase or decrease due to discounts, returns, disclosed as short-term liabilities. payments received, or other settlements. After initial recognition, liabilities are measured at amortised cost. Contract assets represent the right to consideration in exchange for goods or services transferred to a customer. Contract assets also include unbilled revenues. Their carrying amount increases by the amount of accrued interest and decreases by repayments and any other settlements agreed upon with the creditor. Contract liabilities represent the obligation to transfer goods or services to a customer for which the Group has received consideration. These also include advances received. Contract liabilities are Liabilities are derecognised from the accounting records and the statement of financial position recognised as revenue when the Group fulfils its performance obligation. when the contractual or legal obligation is fulfilled, cancelled, or expires (and the Group does not intend to settle it). After initial recognition, receivables are measured at amortised cost. Inventories In the statement of financial position, long-term receivables that have become due and receivables falling due within one year after the reporting date are presented as short-term receivables. Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in production or the rendering of services. At least quarterly and prior to preparing the interim financial statements, the Group assesses the At initial recognition, the Group values each inventory item (including small tools and packaging) at adequacy of individual receivables. Receivables expected not to be collected in full are classified as cost. The cost includes the purchase price, import duties, other non-refundable taxes (including non- doubtful; those subject to legal dispute or contested payment are classified as disputed. Relevant recoverable VAT), and direct procurement costs. records are maintained accordingly. The cost of materials held in inventory before use is measured using the moving average method at Receivables classified as disputed include: the level of organisational units. The moving average cost is calculated on a daily basis. • Those in enforcement proceedings based on enforceable titles, Inventories are measured at original cost. Continuously or at least annually during stocktaking, the • Those in enforcement proceedings based on reliable accounting documents (e.g., lawsuits), and Group verifies the net realisable value of inventories and records an impairment if their carrying • Those subject to insolvency proceedings (compulsory settlement, simplified settlement, amount exceeds the estimated selling price. bankruptcy). Other Assets The impairment of short-term trade receivables from customers within the Group is determined based on the maturity profile and collateralisation of the receivables. The resulting estimate is then Other assets include short-term unbilled revenue and deferred costs or expenses. adjusted using an individual assessment that considers the customer’s creditworthiness and both external and internal indicators of impairment. Unbilled revenue represents income that has been earned but not yet invoiced and, in accordance with IFRS 15, is disclosed as a contract asset. Deferred costs or expenses are amounts that have been incurred but do not yet affect the income statement. 282 283 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Equity Assets Acquired Free of Charge Total equity of the Group comprises subscribed capital, capital reserves, profit reserves, other Assets acquired free of charge include: reserves and retained earnings. • Customer connections that the Group has taken over as part of its property, plant and equipment All other components of total equity belong to the holders of ordinary shares in proportion to their along with the obligation to maintain and renew them, in accordance with the applicable regulations equity interest. at the time – namely the General Terms and Conditions for the Supply and Use of Electricity from the Distribution Network; Provisions • Other property, plant and equipment acquired without consideration; • Assets obtained through government grants or donations, and The Group recognises provisions when it has a legal or constructive obligation arising from past • Dedicated funds for the co-financing of the construction of property, plant and equipment. events, the amount of which can be reliably measured, and a future outflow of resources is probable. Before establishing a provision, the Group assesses the likelihood of a future event. It is considered Assets acquired free of charge are initially recognised in the financial statements as deferred income probable if there is objective evidence (e.g., legal claim or denationalisation request). under other long-term liabilities. Over the useful life of the respective asset, the Group recognises the related portion as other operating income. Provisions are measured at their original amount, reduced by any amounts already used, until a need arises to increase or decrease them. Other Liabilities Contingent liabilities are not recognised as provisions. Under other liabilities, the Group recognises deferred income and accrued costs or expenses. Deferred income represents amounts received to cover expenses and is recognised consistently Significant provisions include long-term employee benefits, divided into: as income in the periods in which the related costs are incurred. Remaining deferred income is recognised when the Group expects to receive corresponding inflows. Accrued costs or expenses refer • Jubilee awards (classified as other long-term employee benefits), and to amounts not yet incurred but already impacting the income statement. • Retirement benefits (classified as post-employment benefits). Deferred Tax Liabilities and Assets, and Income Tax The calculation of provisions for retirement benefits and jubilee awards is performed by a certified actuary. Provisions are recognised at the present value of future payments, discounted to the The Group recognises deferred tax assets and liabilities using the liability method based on the reporting date, taking into account current service cost, interest cost, and actuarial gains or losses statement of financial position, focusing on temporary differences. These differences relate to income due to changes in assumptions and experience adjustments. or expense items that are taxable or deductible in future years. At the reporting date, the Group recognises income or expenses in the income statement arising A deferred tax asset is recognised for deductible temporary differences, carryforward unused tax from the remeasurement of retirement benefit provisions, including: losses, and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deferred tax asset can be utilised. • The amount of additional provisions recognised for current service costs related to retirement benefits for the current year; Deferred tax assets and liabilities are not recognised if their individual or total amounts are • The amount of increase or decrease in previously recognised provisions in the event of a plan immaterial for the Group. initiation or amendment (change in past service costs); • Interest expenses related to the provisions (as an additional cost of provisions); Deferred tax is calculated using tax rates (and laws) enacted by the end of the reporting period and • The effects of any curtailments or reductions in retirement benefit provisions. expected to be in force when the deferred tax assets are realised or deferred tax liabilities are settled. At the end of each reporting period, the Group reassesses unrecognised deferred tax assets and Actuarial gains and losses on retirement benefits are not recognised in profit or loss but directly recognises a previously unrecognised deferred tax asset if it has become probable that future taxable in equity under other reserves, which may be negative. These reserves are reclassified to retained profit will allow for its recovery. earnings when the obligation for a retired or departed employee is settled. Current income tax is the amount of tax payable (or refundable) for the taxable profit (or tax loss) for Jubilee awards are classified as other long-term employee benefits. At the reporting date, the Group the reporting period, calculated using the applicable tax rates as at the reporting date. recognises income or expenses related to the remeasurement of these provisions, including actuarial gains and losses. The recognition of provisions in the accounting records and in the statement of financial position is reversed when the circumstances for which the provisions were initially recognised no longer exist or when the provisions are no longer needed. Provisions established to cover pre-estimated costs or expenses are reduced directly by the actual costs or expenses for which they were intended. As a result, when such provisions are utilised, the related costs or expenses are no longer recognised in the income statement. Government Grants Government grants are recognised at fair value when there is reasonable assurance that the Group will comply with the conditions attached to the grants and that the grants will be received. Government grants are recognised as income over the periods in which the related expenses, which the grants are intended to compensate, are incurred. 284 285 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Revenue Consolidated Statement of Cash Flows The Group recognises revenue when an increase in economic benefits, in the form of asset inflows The Group presents its cash flows from operating, investing, and financing activities in a manner or liability reductions, can be reliably measured. Revenue is recognised upon the transfer of control that best reflects the nature of its operations. The statement of cash flows is prepared using the over goods or services to the customer, in an amount that reflects the consideration to which the direct method. Group expects to be entitled in exchange. Only an insignificant portion of revenue is recognised over time. For the purpose of preparing the statement of cash flows, cash also includes cash equivalents. These Revenue arises from the sale of goods, the provision of services, and the use by others of the Group’s are short-term, highly liquid investments that are readily convertible to known amounts of cash and assets yielding interest, royalties, and dividends. In the accounting records, revenue is divided into are subject to an insignificant risk of changes in value. The Group classifies as cash equivalents operating and financial income. short-term deposits and placements with banks, as well as intercompany loans with a maturity of up to three months from the date of acquisition, including proceeds from their disposal. Operating income includes revenue from sales, capitalised own products and services, and other income associated with the Group’s operations. This also includes income arising from the sale For each class of assets (e.g. intangible assets and property, plant and equipment), purchases are of property, plant and equipment and investment property at amounts exceeding their carrying reported as outflows (expenditures) in the amount of the purchase price of newly acquired assets, amounts, or from the reversal of impairments of receivables. while proceeds from the sale of assets are reported as inflows. Contract revenue refers to contracts with customers for goods or services delivered in the ordinary Cash flows related to the capitalisation of development costs and to property, plant and equipment course of business in exchange for consideration. A counterparty would not be regarded as a constructed internally are classified as cash flows from investing activities. customer if the contract involves collaboration on an activity where parties share risks and benefits, rather than the transfer of goods or services from the Group. Cash flows from interest and dividends received or paid are classified as operating, investing, or financing cash flows depending on the substance of the underlying transaction. Rental income arises from arrangements under which the lessor provides the lessee the right to use an asset for an agreed period in exchange for payment(s). Earnings per Share Financial income is earned on financial investments and receivables, and includes accrued interest, The Group calculates basic earnings per share by dividing the profit attributable to ordinary profit shares in other entities, and revaluation gains. shareholders by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is equal to basic earnings per share, as all shares belong to the Interest on overdue receivables is not recognised as income but increases the allowance for same class of ordinary no-par value shares. receivables, due to justified doubt about settlement until the principal is paid. FAIR VALUE MEASUREMENT The majority of the Group’s revenue is generated under a contract with the Distribution Operator (DO), through lease payments for electricity infrastructure and the provision of services to ELES. Financial instruments are presented at fair value. Fair value is defined as the price that would Amounts collected for the benefit of ELES, where the Group acts in its name but on behalf of ELES, be received to sell an asset or paid to transfer a liability in an orderly transaction between well- are not recognised as revenue but as liabilities to ELES. informed, willing market participants at the measurement date. The Group also generates revenue through real estate development for the market. Such contracts In determining the fair value of financial instruments, the Group applies the following hierarchy of are usually completed within 12 months. Revenue is therefore recognised progressively during fair value measurement levels: construction, based on the stage of completion. The Group uses the input method, which compares costs incurred to total estimated costs. The Group assesses that these contracts do not include a • Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; significant financing component. • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices for similar assets or liabilities in less active or inactive markets) or Expenses indirectly (e.g. inputs derived from quoted prices such as interest rates and yield curves); • Level 3: unobservable inputs for the asset or liability, reflecting the assumptions that market Expenses are broken down into operating and financial expenses. participants would use in pricing the asset or liability, including assumptions about risk. Operating expenses include all incurred costs of the period: costs of goods, materials and services, Quoted market prices are used as the primary basis for determining the fair value of financial labour costs, depreciation and amortisation, and other operating expenses. Impairment expenses instruments. If a financial instrument is not quoted on an active market, or if the market is assessed may also arise from the reduction in value of tangible and intangible assets, investment properties, as inactive, the Group determines fair value using Level 2 or Level 3 inputs. receivables, and inventories, or from disposal of assets below carrying amount. For investment property, the Group discloses fair value. The fair value is derived from property Financial expenses include financing and investment-related expenses. The former mainly consist of valuations conducted every 3 to 5 years. interest expense, while the latter arise from the impairment or disposal of financial investments at below carrying amounts. Interest expenses are recognised based on the passage of time and the Trade and other receivables are not discounted due to their short-term nature. applicable interest rate. 286 287 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.5. Notes to the Financial Statement Items of the Elektro Gorenjska Group 18.5.1. Notes to the Items in the Statement of Financial Position Note 1 – Intangible Assets The following tables present the movement of intangible assets for 2024 and 2023. in € in € 2024 Property Rights Property Rights Under Acquisition Total Intangible Assets 2023 Property Rights Property Rights Under Acquisition Total Intangible Assets 1 2 3 4=2+3 1 2 3 4 = 2+3 Cost Cost Balance as at 1 Jan 2024 8,962,828 165,301 9,128,128 Balance as at 1 Jan 2023 6,803,363 564,060 7,367,423 Additions 3,870 1,082,647 1,086,517 Merger of EGP into ECE 0 1,780,161 1,780,161 Disposals, Derecognition, Transfers –25,193 0 –25,193 Disposals, Derecognition, Transfers –19,455 0 –19,455 Completion of Assets Under Completion of Assets Under Acquisition 908,340 –908,340 0 Acquisition 2,178,920 –2,178,920 0 Balance as at 31 Dec 2024 9,849,845 339,608 10,189,453 Balance as at 31 Dec 2023 8,962,828 165,301 9,128,129 Accumulated Amortization Accumulated Amortization Balance as at 1 Jan 2024 6,052,758 0 6,052,758 Balance as at 1 Jan 2023 5,206,840 0 5,206,840 Increase (Amortization) 1,154,806 0 1,154,806 Increase (Amortization) 912,061 0 912,061 Disposals, Derecognition, Transfers –25,193 0 –25,193 Disposals, Derecognition, Transfers –66,142 0 –66,142 Balance as at 31 Dec 2024 7,182,371 0 7,182,371 Balance as at 31 Dec 2023 6,052,758 0 6,052,758 Carrying Amount Carrying Amount Balance as at 1 Jan 2024 2,910,070 165,301 3,075,371 Balance as at 1 Jan 2023 1,596,523 564,060 2,160,582 Balance as at 31 Dec 2024 2,667,474 339,608 3,007,082 Balance as at 31 Dec 2023 2,910,070 165,301 3,075,371 Intangible assets predominantly relate to long-term property rights representing rights to use software solutions, i.e. licenses. Intangible assets under development include investments in the upgrade and renewal of software. As of 31 December 2024, 44.5% of all intangible assets in use were fully amortised. As of 31 December 2023, the share of fully amortised intangible assets stood at 42.9%. The percentage is calculated based on the acquisition cost of intangible assets. As at 31 December 2024, the Group had no financial commitments related to the acquisition of intangible assets. 288 289 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 2 – Property, Plant and Equipment Movement of property, plant and equipment in 2023: The value of property, plant and equipment as at 31 December 2024 amounted to €255,035,015, in € representing 88.4% of the Group’s total assets. Compared to the balance as at 31 December 2023, this represents an increase of €14.8 million or 6.2%. Property, Property, 2023 Land Buildings Equipment Right-of-Use Plant and Total Movement of property, plant and equipment in 2024: Assets Equipment under Plant and Construction Equipment in € 1 2 3 4 5 6 7=2+3+4+5+6 Property, Total Property, Cost 2024 Land Buildings Equipment Right-of-Use Plant and Assets Equipment under Plant and Construction Equipment Balance as at 1 Jan 2023 8,476,757 331,013,951 151,489,469 0 6,287,281 497,267,457 1 2 3 4 5 6 7=2+3+4+5+6 Additions 0 0 0 0 26,380,944 26,380,944 Cost Impairments -20,629 -489,315 0 0 0 -509,943 Balance as at 1 Jan 2024 8,469,768 343,163,067 158,195,831 208,725 9,885,551 519,922,942 Disposals, Write-offs, Transfers, Impairments -68,492 -1,254,807 -1,892,217 0 0 -3,215,515 Additions 0 0 0 0 29,640,972 29,640,972 Transfers from Assets Under Construction 82,132 13,893,237 8,598,579 208,725 -22,782,674 0 Disposals, Write-offs, Transfers, Impairments -419,568 -3,411,106 -1,636,776 0 0 -5,467,450 Balance as at 31 Dec 2023 8,469,768 343,163,067 158,195,831 208,725 9,885,551 519,922,942 Transfers from Assets Under Construction 120,739 10,944,486 7,672,841 0 -18,738,065 0 Accumulated Depreciation Balance as at 31 Dec 2024 8,170,940 350,696,447 164,231,895 208,725 20,788,458 544,096,463 Balance as at 1 Jan 2023 0 175,398,284 94,839,352 0 0 270,237,637 Accumulated Depreciation Increase (Depreciation) 0 6,443,778 5,859,099 0 0 12,302,877 Balance as at 1 Jan 2024 0 180,514,187 99,152,281 0 0 279,666,468 Impairments 0 -164,093 0 0 0 -164,093 Increase (Depreciation) 0 6,647,613 6,396,894 41,745 0 13,086,252 Disposals, Write-offs, Transfers 0 -1,163,783 -1,546,171 0 0 -2,709,954 Disposals, Write-offs, Transfers 0 -2,123,164 -1,568,110 0 0 -3,691,274 Balance as at 31 Dec 2023 0 180,514,187 99,152,281 0 0 279,666,468 Balance as at 31 Dec 2024 0 185,038,636 103,981,065 41,745 0 289,061,447 Carrying Amount Carrying Amount Balance as at 1 Jan 2023 8,476,757 155,615,666 56,650,116 0 6,287,280 227,029,819 Balance as at 1 Jan 2024 8,469,768 162,648,880 59,043,547 208,725 9,885,551 240,256,471 Balance as at 31 Dec 2023 8,469,768 162,648,880 59,043,547 208,725 9,885,551 240,256,471 Balance as at 31 Dec 2024 8,170,939 165,657,810 60,250,827 166,980 20,788,458 255,035,015 A significant portion of property, plant and equipment consists of electricity distribution infrastructure as defined by the Energy Infrastructure Regulation (Official Gazette of the Republic of Slovenia, No. 22/2016, as amended). In addition to buildings and equipment, it also includes a portion of land. The carrying amount of electricity distribution infrastructure as at 31 December 2024 amounted to €207,664,300 (31 December 2023: €204,724,733). For the purposes of performing the tasks of the distribution system operator, which ELES performs under a concession agreement for the provision of the public utility service of system operation of the distribution network, ELES leases the entire electricity infrastructure from Elektro Gorenjska. As of 31 December 2024, 22.9% of property, plant and equipment in use were fully depreciated (31 December 2023: 23.0%). The percentage is calculated based on the acquisition cost of property, plant and equipment. To finance the acquisition of new property, plant and equipment, the Group has obtained long-term loans in 2024 and previous years. As at 31 December 2024, the balance of these loans amounted to €66,990,185 (31 December 2023: €62,477,162). Interest in the amount of €267,094 was capitalised (2023: €123,955). See also the note "Long-term financial liabilities" later in this section. 290 291 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 3 – Investment Property in € The value of investment property as at the end of 2024 amounted to €1,727,333. All investment 2023 Land Buildings Investment Property Under Construction Total Investment Property property is owned by the Group and is not pledged as collateral for liabilities. The movement in the value of investment property for 2024 and 2023 is presented in the tables below. 1 2 3 4 5=2+3+4 in € Cost 2024 Land Buildings Investment Property Under Construction Total Investment Property Balance as at 1 Jan 2023 474,515 2,041,071 0 2,515,586 1 2 3 4 5=2+3+4 Additions 0 0 41,666 41,666 Cost Transfers from Assets Under Construction 0 41,666 -41,666 0 Balance as at 1 Jan 2024 474,515 2,082,737 0 2,557,251 Balance as at 31 Dec 2023 474,515 2,082,737 0 2,557,252 Additions 0 0 19,851 19,851 Accumulated Depreciation Disposals, Write-offs, Transfers 0 -58,866 0 -58,866 Balance as at 1 Jan 2023 0 758,847 0 758,847 Transfers from Assets Under Construction 0 19,851 -19,851 0 Depreciation 0 44,103 0 44,103 Balance as at 31 Dec 2024 474,515 2,043,722 0 2,577,102 Balance as at 31 Dec 2023 0 802,950 0 802,950 Accumulated Depreciation Carrying Amount Balance as at 1 Jan 2024 0 802,950 0 802,950 Balance as at 1 Jan 2023 474,515 1,282,223 0 1,756,738 Depreciation 0 44,703 0 44,703 Balance as at 31 Dec 2023 474,515 1,279,788 0 1,754,302 Disposals, Transfers 0 -56,748 0 -56,748 The composition of investment property was as follows: Balance as at 31 Dec 2024 0 790,905 0 790,905 in € Carrying Amount Item 31 Dec 2024 31 Dec 2023 Balance as at 1 Jan 2024 474,515 1,279,788 0 1,754,302 Residential Properties 283,912 296,425 Balance as at 31 Dec 2024 474,515 1,252,818 0 1,727,333 Holiday Facilities 830,241 837,921 Other Buildings 138,664 145,441 Land 474,515 474,515 Total Investment Property 1,727,333 1,756,738 Based on a valuation performed in 2020 by a certified property valuer at the Slovenian Institute of Auditors, the fair value of the investment property held by the Group as at 31 December 2024 was €3,416,950. It is assessed that, given the market conditions, the fair value as at 31 December 2024 does not differ significantly from the value determined in the aforementioned valuation. All investment property is owned by the Group and none has been pledged as collateral for liabilities. Rental income from investment property, which is monitored collectively, amounted to €221,076 in 2024 (2023: €217,823). Direct operating expenses (including maintenance and repair costs) arising from investment property that generated rental income in 2024, and those that did not generate rental income in 2024, comprised depreciation charges of €44,703 and material and service costs of €131,357. In 2023, depreciation charges amounted to €44,103 and material and service costs to €104,232. 292 293 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 4 – Long-Term Financial Investments Note 7 – Short-Term Trade Receivables As at 31 December 2024, the Group’s long-term financial investments amounted to €860,373. As at 31 December 2024, short-term trade receivables amounted to €13,414,941. Their structure Compared to the balance as at 31 December 2023, their value did not change significantly. was as follows: in € in € Ownership Share Balance in € Item Description 31 Dec 2024 31 Dec 2023 Investment As at 31 Dec 2023 As at 31 Dec 2024 As at 31 Dec 2023 As at 31 Dec 2024 Short-Term Trade Receivables 10,352,093 11,323,713 Soenergetika, d. o. o. 25.00% 25.00% 326,974 327,701 Impairment of Short-Term Trade Receivables -135,520 -143,399 Informatika, d. o. o., Maribor 10.44% 10.50% 124,155 124,155 Net Short-Term Trade Receivables 10,216,573 11,180,315 Alfi SOL 2, d. o. o. 20.00% 20.00% 236,711 236,711 Short-Term Income Tax Receivables 0 0 Total non-loan long-term financial investments 687,840 688,567 Other Short-Term Operating Receivables 419,335 315,441 Long-term invested funds (Eldom Maribor) 142,798 142,798 Impairment of Other Short-Term Receivables -2,680 -5,895 Long-Term Receivables from Finance Leases 35,970 29,008 Short-Term Advances Paid 2,781,712 2,503,835 Total long-term loans 178,768 171,806 Net Other Short-Term Operating Receivables 3,198,368 2,813,382 TOTAL LONG-TERM FINANCIAL INVESTMENTS 866,607 860,373 Total Short-Term Operating Receivables 13,414,941 13,993,697 Soenergetika, which is consolidated in the financial statements of the Elektro Gorenjska Group All short-term trade receivables are unsecured. The Group’s exposure to risks and hedging using the equity method, concluded the 2024 financial year with a net profit of €180,482. The total instruments is disclosed in the chapter on Financial Risks. comprehensive income for the year equalled the net profit. A breakdown of short-term receivables related to electricity, network charges, and services, as well Note 5 – Long-Term Trade Receivables as interest receivables as at 31 December 2024, by maturity, is presented in the following table. As at 31 December 2024, long-term trade receivables amounted to €162,554. These primarily relate to receivables from ELES. Compared to the balance as at the end of 2023, the amount decreased by in € €567,000, mainly due to the reclassification of a portion of the receivables as short-term. Item Not Yet Due Up to 30 Days 31–60 Days 61–90 Days Over 90 Days Total Past Due Total Receivables Note 6 – Inventories Receivables from Sales of Electricity, As at 31 December 2024, the value of inventories of materials, small tools and merchandise Network 7,837,392 641,681 7,837 958 1,853,154 2,503,630 10,341,022 amounted to €1,645,684. The Group estimates that the net realisable value of inventories is at Charges and Services least equal to their carrying amount. The movement in material inventories for 2024 and 2023 is presented in the table below. Receivables for Default Interest 1,966 2,272 92 86 6,655 9,105 11,071 in € TOTAL 7,839,358 643,953 7,929 1,044 1,859,809 2,512,735 10,352,093 Item 2024 2023 Opening Balance of Material Inventories as at 1 Jan 3,257,070 2,627,207 Purchases 6,073,961 9,298,711 Consumption -6,429,135 -7,718,545 Sales -1,072,863 -669,935 Impairments and Reversals of Impairments -9,115 -59,491 Transfer of Small Inventory to Use -174,234 -220,877 Closing Balance of Material Inventories as at 31 Dec 1,645,684 3,257,070 The Group has not pledged any inventories as collateral for its liabilities. 294 295 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP The movement in the impairment allowance for receivables in 2024 is shown in the table below. The basis for calculating earnings per share is the net profit for the financial year and the weighted average number of ordinary shares outstanding during the period. The calculation is presented in in € the following table. in € New Formation Utilisation and Reversal Opening Item Balance 1 Jan Closing Balance Settlements – Item 2024 2023 2024 31 Dec 2024 (Expense) (Receivables) Write-Offs Recognised as Income Net Profit for the Financial Year (€) 3,837,699 10,725,665 Impairment of Trade Receivables 136,177 6,698 0 14,305 0 128,571 Weighted Average Number of Ordinary Shares 17,273,475 17,273,475 Impairment of Default Interest Receivables 7,221 173 298 120 623 6,949 Earnings per Share, Basic/Adjusted 0.22 0.62 Total Impairment of Receivables 143,399 6,872 298 14,425 623 135,520 Note 10 – Provisions Note 8 – Short-Term Contract Assets As at 31 December 2024, provisions amounted to €11,245,643. Compared to the balance as at 31 As at the end of 2024, short-term contract assets amounted to €1,419,290, compared to €41,529 at December 2023, this represents an increase of 12.2%. the end of 2023. These relate to market-based projects. Overview of the movement in provisions in 2024 Note 9 – Equity in € The Group’s total equity consists of subscribed capital, capital reserves, profit reserves, other Item 1 Jan 2024 Formation Utilisation Reversal 31 Dec 2024 reserves, and retained earnings. As at 31 December 2024, total equity amounted to €186,621,224. Total Provisions for Jubilee Benefits and Termination Benefits 3,690,798 445,901 293,179 29,262 3,814,258 The subscribed capital of Elektro Gorenjska Group is equal to its share capital (€104,136,615), which is divided into 17,273,475 ordinary registered no-par value shares. All shares are fully paid. The Total Other Provisions 6,335,007 1,096,377 0 0 7,431,385 shares are issued in dematerialised form and are registered with KDD – Central Securities Clearing Corporation, in accordance with applicable regulations. Total Provisions 10,025,806 1,542,279 293,179 29,262 11,245,643 Capital reserves in the amount of €45,973,479 were formed on 1 January 2006 in accordance with the transitional provisions (point 15 of the preamble to SAS 2006) from the former general capital Overview of the movement in provisions in 2023: revaluation adjustment. An amount of €28,581 also derives from the cancellation of treasury shares in € in 2019. These reserves are used in accordance with Article 64 of the Companies Act (ZGD-1). Profit reserves amount to €25,241,450, of which €4,952,369 represents legal reserves and Item 1 Jan 2023 Formation Utilisation Reversal 31 Dec 2023 €20,289,081 represents other profit reserves. Total Provisions for Jubilee Benefits and Termination Benefits 3,069,733 822,151 182,529 18,556 3,690,798 Other reserves (–€239,801) relate to revaluation reserves arising from fair value measurement. Total Other Provisions 6,137,038 197,969 0 0 6,335,007 Total Provisions 9,206,772 1,020,120 182,529 18,556 10,025,806 in € Item Opening Balance Closing Balance 1 Jan 2024 Reversal New Formation Transfer to Retained Earnings 31 Dec 2024 Provisions for jubilee benefits and severance payments upon retirement are recognised in the Actuarial Gains/Losses -198,119 28,083 -54,174 -992 -225,201 amount of estimated future disbursements based on an actuarial report on the measurement of long-term employee benefits under IAS 19. Adjustment of Provisions for Deferred -11,932 0 -2,668 0 -14,600 Taxes The actuarial calculation as at 31 December 2024 is based on the following actuarial assumptions: statistical mortality rates (reduced by 10% for the active population); linear declining employee Total -210,052 28,083 -56,842 -992 -239,801 turnover (from 2% at age 18 to 0.0% at age 58, then constant at 0.0%); retirement in accordance with legislation or known data; salary growth in the company (equal to the annual inflation rate, increased by 0.4%, but not exceeding the expected average wage growth in Slovenia); growth of Retained earnings amount to €11,509,481. average wages in the electricity sector (matching average national wage growth); promotions (0.8% annual increase in the following year); employer’s contributions for jubilee benefits and retirement Earnings per share in 2024 amounted to €0.22, compared to €0.62 in 2023. The parent company severance payments (17.1%, or 16.1% for disbursements until 30 June 2025); longevity bonus (0.5% does not have preference shares; therefore, basic and diluted earnings per share are equal. annual increase on base salary); and a discount rate of 3.3%. Other provisions relate to compensation in connection with denationalisation proceedings. 296 297 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 11 – Long-Term Financial Liabilities Structure and movement of other long-term liabilities in 2023: in € As at 31 December 2024, the Group had long-term financial liabilities in the amount of €59,017,529, which is €6.0 million more than on 31 December 2023. The majority of long-term Item Opening Balance 1 Jan 2023 Formation Utilisation Reversal Closing Balance liabilities relate to bank loans, of which €27,122,938 are due after more than five years. Maturities 31 Dec 2023 of financial liabilities to banks as at 31 December 2024 were as follows: Gratuitously Acquired Property, Plant, and Equipment 4,283,851 0 232,146 0 4,051,705 Deferred Income From Average Connection Costs 1,098,917 0 85,319 0 1,013,598 in € Other 1,306,304 2,826,884 199,192 442 3,933,554 Up to 1 Year 2–5 Years More Than 5 Years Total Total Other Long-Term Liabilities 6,689,071 2,826,884 516,656 442 8,998,856 7,972,656 31,894,591 27,122,938 66,990,185 Assets received free of charge comprise customer connections that the Elektro Gorenjska Group has recognised among its property, plant and equipment, together with its obligation to maintain In 2024, the Group drew €14 million in long-term loans to finance investments and repaid and renew them in accordance with regulations, primarily the System Operating Instructions for €9,486,984 in principal. Interest expenses amounted to €2,229,383 and were already reduced by the Electricity Distribution System (Official Gazette of the Republic of Slovenia, No. 7/21 with €267,094 of capitalised interest. The balance of borrowings as at 31 December 2024 amounted to amendments), as well as other fixed assets received free of charge. €66,990,185, compared to €62,477,162 at the end of 2023. Financial liabilities in the amount of €63,847,327 are secured with promissory notes. Deferred income from average connection charges was recognised up to 30 June 2007 in connection with the provision of the Public Utility Service – Distribution System Operator. The As at 31 December 2024, 11% of all long-term loans carried a fixed interest rate, representing a average connection charge is a one-off payment for connection to the electricity network or for value of €7.3 million. The total amount of borrowings received for the financing of property, plant, an increase in the connection capacity. It represents a dedicated source of financing for network and equipment as at 31 December 2024 was €66,990,185. expansion investments. The Group is primarily exposed to interest rate risk in connection with its long-term financial The majority of the “other” item consists of deferred income related to EU and other projects. liabilities, as part of the borrowings are subject to variable interest rates (EURIBOR + margin). Exposure to risks and the Group’s hedging strategies are explained in the chapter “Development of a The Group has no long-term liabilities to members of the management board, the supervisory board, Comprehensive Risk and Opportunity Management System.” or internal stakeholders. The Group has no long-term liabilities to members of the management board, supervisory board, or Note 13 – Short-Term Financial Liabilities related parties. As at 31 December 2024, short-term financial liabilities amounted to €8,162,453. These mainly Note 12 – Deferred Income and Other Long-Term Liabilities comprise short-term liabilities to banks, representing the short-term portion of long-term borrowings and interest. As at 31 December 2024, the Elektro Gorenjska Group recognised other long-term liabilities in the amount of €12,040,225. The structure and movement of long-term liabilities in 2024 and 2023 are Note 14 – Short-Term Trade Payables presented in the two tables below. As at the end of 2024, short-term trade payables amounted to €7,962,752, which is €2.4 million Structure and movement of other long-term liabilities in 2024: lower than at the end of 2023. A more detailed breakdown of short-term trade payables is presented in the following table. in € in € Item Opening Balance 1 Item 31 Dec 2024 31 Dec 2023 Jan 2024 Formation Utilisation Closing Balance 31 Dec 2024 Gratuitously Acquired Property, Plant, and Equipment 4,051,705 0 231,677 3,820,028 Liabilities to Suppliers on Own Behalf 3,790,810 6,088,301 Liabilities to Suppliers on Behalf of and for Account of Others 2,603,954 1,881,475 Deferred Income From Average Connection Costs 1,013,598 0 85,319 928,279 – to ELES, d. o. o. 2,600,376 1,878,137 Other 3,933,554 3,761,107 402,743 7,291,918 – to Others 3,578 3,338 Total Other Long-Term Liabilities 8,998,856 3,761,107 719,739 12,040,225 Other Liabilities 1,567,987 2,380,827 – for Salaries 1,303,221 1,213,560 – to the State and Other Institutions 33,743 979,639 – for Advances and Security Deposits Received 135,488 84,057 – Other (Interest, Employee Deductions, Equity Company, etc.) 95,535 103,571 Total Short-Term Operating Liabilities 7,962,752 10,350,603 298 299 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 15 – Short-Term Contract Liabilities 18.5.2. Explanatory Notes to the Items in the Income As at the end of 2024, short-term contract liabilities amounted to €1,246,566, compared to €439,123 at the end of 2023. These relate to advances received for the execution of market-based Statement projects. Note 16 – Accrued Expenses and Other Short-Term Liabilities Note 1 – Net Sales Revenue Other short-term liabilities as at 31 December 2024 amounted to €1,947,297. These primarily In 2024, net sales revenue amounted to €48,268,918. The structure of net sales revenue is relate to accrued expenses. presented in the following table. Note 17 – Off-Balance-Sheet Records in € As at 31 December 2024, off-balance-sheet assets and liabilities amounted to €12,407,115. Their Item 2024 2023 structure was as follows: Revenue From Sale of Electricity 6,079,610 9,967,430 in € Revenue From Rentals and Services in Relation to Subsidiary 35,397,826 33,960,924 Item 31 Dec 2024 31 Dec 2023 Revenue From Rentals 738,440 761,604 Guarantees Received 6,789,017 5,532,015 Revenue From Construction and Installation Work 5,490,451 9,822,298 Guarantees and Bills Issued 4,129,723 4,235,530 Revenue From Sale of Materials and Services Rendered 208,413 253,217 Property, Plant and Equipment Owned by Subsidiary 1,488,374 1,573,880 Revenue From Sale of Other Operating Effects 354,177 310,088 Total Off-Balance-Sheet Records 12,407,115 11,341,426 Total Net Sales Revenue From Operating Effects 48,268,918 55,075,559 The Group does not have any contingent off-balance-sheet liabilities as defined by the Companies Act The majority of the Group’s net sales revenue (78.6%) was generated by the parent company. The (ZGD-1). largest individual component of the Group’s net sales revenue in 2024 was rental income and services rendered in relation to the public utility service, amounting to €35,397,826. Revenue from contracts with customers amounted to €27,615,000 in 2024, while other revenue totalled €20,654,000. In 2023, revenue from contracts with customers amounted to €35,507,000 and other revenue to €19,586,000. Note 2 – Capitalised Own Products and Services In 2024, capitalised own products and services amounted to €6,702,441. These primarily relate to investments in property, plant and equipment – specifically in energy infrastructure in € Item 2024 2023 Direct Cost of Materials 4,270,758 3,932,372 Direct Labour Cost 1,974,992 1,723,218 Total Direct Cost of Materials, Services and Labour 6,245,750 5,655,580 Indirect Cost of Materials, Services, Labour, and Depreciation 456,691 477,171 Total Capitalised Own Products and Services 6,702,441 6,132,751 300 301 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP Note 3 – Other Operating Income Note 5 – Cost of Services Other operating income amounted to €1,964,601 and consists of: In 2024, the cost of services amounted to €7,396,234. A more detailed structure of service costs is provided in the table below. in € Item 2024 2023 in € Income From Reversal of Provisions 0 11,409 Item 2024 2023 Revaluation Operating Income 444,324 102,004 Services for Production and Service Delivery 1,023,768 1,814,612 Income From Transfer of Deferred Income to Regular Revenue 898,594 553,174 Telecommunications, Postal and Transport Services 272,073 289,674 – Gratuitous Acquisition of Fixed Assets 33,231 33,700 Maintenance of Energy Infrastructure and Other Assets 1,937,780 1,971,742 – Gratuitous Acquisition of Connections 198,446 198,446 Payment Transactions, Banking and Insurance 937,212 710,285 – Average Connection Costs 85,319 85,319 Intellectual and Personal Services 1,050,662 663,848 – Other 581,598 235,709 Advertising and Representation 137,371 113,110 Insurance Compensation Received 340,582 1,080,878 Services by Individuals (Non-Business), Incl. Related Contributions 199,656 197,645 – For Destroyed Assets (e.g., Fire) 0 0 IT Services 373,409 332,297 – Other 340,582 1,080,878 Student Work 287,488 239,055 Government Grants and Refunds 221,125 229,250 Other Services 1,176,814 916,382 Other Operating Income 59,976 58,778 Total Cost of Services 7,396,234 7,248,652 Total Other Operating Income 1,964,601 2,035,494 The largest component within service costs relates to the maintenance of the electricity infrastructure and other items of property, plant and equipment. The maintenance of electricity Note 4 – Cost of Goods Sold and Cost of Materials Used infrastructure is also presented in the chapter Maintenance of Electricity Infrastructure (EEI). The cost of goods sold and the cost of materials used comprise the following: In accordance with Article 57 of the Companies Act (ZGD-1), the company Elektro Gorenjska is required to have its annual report audited. The contractual amount for auditing the annual report of the company and the Elektro Gorenjska Group for 2024 was €29,810. In addition, the auditor who in € audited the annual report was also paid €4,090 for assurance services. Item 2024 2023 Note 6 – Labour Costs Total Cost of Materials 9,486,407 10,702,178 Labour costs in the amount of €17,971,591 comprise the following: – Maintenance Materials 409,825 461,889 – Materials for Internal Investments and Market Services 6,717,593 7,695,977 in € – Energy Costs 807,033 1,051,905 Item 2024 2023 – Small Inventory Write-Offs 174,234 245,920 Wages and Salaries 12,827,229 12,106,628 – Office Supplies 47,894 58,116 Additional Pension Insurance 597,808 555,618 – Other Material Costs 586,134 1,188,370 Employer Contributions and Payroll Taxes 2,159,958 1,997,273 Cost of Goods Sold and Consumed Materials 8,742,712 10,702,178 Other Labour Costs 2,386,596 2,333,464 Total Labour Costs 17,971,591 16,992,984 Other labour costs include reimbursements for transportation and meals during work, provisions for jubilee benefits and retirement severance payments, annual leave allowance (regres), bonuses, employee insurance costs and payments to pupils and students on work placement. The number of employees, their educational structure and other employment-related information are presented in greater detail in the chapter Responsibility to Employees. Remuneration of the management board and the supervisory board is presented in the chapter Related Party Transactions in the financial report of Elektro Gorenjska. 302 303 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP   Note 7 – Depreciation and Impairment In both 2023 and 2024, all companies within the Group recognised a liability for corporate income tax. A detailed calculation of corporate income tax for each year is presented in the table below. Depreciation and impairment charges in 2024 amounted to €14,562,558. The breakdown is as in € follows: in € Item 2024 2023 Item 2024 2023 Current Tax 704,741 1,601,277 Depreciation of Intangible Assets 1,154,806 912,060 Deferred Tax 24,120 –453,328 Depreciation of Property, Plant and Equipment 13,082,611 12,302,071 Total Corporate Income Tax 728,861 1,147,949 Depreciation of Investment Property 45,510 44,909 Profit Before Tax 8,065,833 14,339,793 Tax Calculated at the 22% or 19% Statutory Rate 1,774,483 2,724,561 Total Depreciation 14,282,927 13,259,041 Operating Expenses From the Disposal of Property, Plant and Equipment and Tax Decrease Due to Revenue Reductions –787,253 –484,168 Investment Property. 264,466 764,075 Tax Relief –472,013 –755,616 Operating Expenses Related to the Impairment of Current Assets. 15,165 64,785 Increase / Decrease in Tax-Deductible Expenses 159,104 133,679 Total Depreciation and Impairment 14,562,558 14,087,900 Tax on Other Items 30,420 –17,179 Deferred Tax Calculated at the 19% Rate 24,059 –392,170 Note 8 – Other Operating Expenses Impact of Tax Rate Change From 19% to 22% on Deferred Taxes 61 –61,158 Total Corporate Income Tax 728,861 1,147,949 Other operating expenses amounted to €1,530,198 and comprise the following: Effective Tax Rate 9% 8% in € Item 2024 2023 The movement in deferred tax assets and liabilities in 2024 was as follows: Contribution for Employment of Disabled Persons 84,262 78,339 in € Building Land Use Fee 93,131 90,200 Deferred Tax Assets Deferred Tax Liabilities Wastewater Discharge Fee 16,456 15,138 Movement of Deferred Tax Assets and Post- Liabilities Provisions 1,096,377 197,969 employment Total and Other Tax Losses Tax Credits Financial Employee (Reliefs) Investments Small Inventory Other Costs (Environmental, Legal, Damages, etc.) 239,972 246,400 Benefits Total Other Operating Expenses 1,530,198 628,046 Balance as at 1 Jan 2023 254,846 571,951 305,836 0 203,724 928,908 Recognised in the Income Statement 4,839 90,308 382,623 0 24,442 453,328 Note 9 – Corporate Income Tax and Deferred Taxes Recognised in Other Comprehensive Income –395 0 0 0 0 -395 Corporate income tax recognised for the 2024 financial year amounted to €704,741, while Balance as at 31 Dec 2023 259,289 662,259 688,459 0 228,166 1,381,841 deferred taxes amounted to €24,120. Balance as at 1 Jan 2024 259,289 662,259 688,459 0 228,166 1,381,841 in € Recognised in the Income Statement 23,670 –17,380 0 0 0 -41,050 Item 2024 2023 Reversed in the Income Statement 0 0 0 0 16,930 -16,930 Current Tax 704,741 1,601,277 Recognised in Other Comprehensive Deferred Taxes 24,120 –453,328 Income –2,668 0 0 0 0 -2,668 Total Taxes 728,861 1,147,949 Balance as at 31 Dec 2024 232,951 644,879 688,459 0 211,235 1,355,053 Deferred tax assets were not recognised in the statement of financial position for unused tax credits amounting to €3,499,931. The company estimates that taxable profits over the next five years will not be sufficient to utilise these tax credits. 304 305 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.6. Fair Values Overview of the fair value and carrying amount of assets and liabilities: in € 18.5.3. Explanatory Notes to Items in the Statement of 31 December 2024 31 December 2023 Other Comprehensive Income Carrying Amount Fair Value Carrying Amount Fair Value In addition to the net profit for the reporting period (€3,808,941), total comprehensive income includes actuarial gains and losses of the parent company and subsidiaries in the total amount of Non-Derivative Financial Assets at Amortized Cost –€28,758. Long-Term and Short-Term Financial Receivables 181,088 181,088 187,470 187,470 Individual items of other comprehensive income are also presented in the chapter Explanatory Notes to Items in the Statement of Financial Position, Note 9 – Equity (Table: Movement in Fair Value). Long-Term and Short-Term Trade Receivables from Customers 10,265,049 10,265,049 11,794,003 11,794,003 18.5.4. Explanatory Notes to Items in the Statement of Cash Cash and Cash Equivalents 8,370,985 8,370,985 14,232,469 14,232,469 Flows Total Non-Derivative Financial Assets 18,817,122 18,817,122 26,213,942 26,213,942 In 2024, the Elektro Gorenjska Group recorded cash inflows of €84,281,907 and cash outflows of Non-Derivative Financial Liabilities at Amortized Cost €90,143,391. Inflows and outflows include the relevant amounts of levies, primarily VAT and excise duties, in accordance with issued and received invoices. The net cash result was negative, amounting Bank Loans and Other Financial Liabilities –67,179,982 –67,179,982 –64,266,321 –64,266,321 to –€5,861,484. Short-Term Trade Payables to Suppliers (Own and Third-Party Account) –6,394,764 –6,394,764 –7,969,776 –7,969,776 As at 31 December 2024, the Group held cash and cash equivalents in the amount of €8,370,985 in transaction accounts with banks and in the form of short-term deposits or deposits on demand. On Total Non-Derivative Financial Liabilities –73,574,746 –73,574,746 –72,236,097 –72,236,097 31 December 2023, this amount totalled €8,622,038. Derivative Financial Instruments at Fair Value In 2024, cash inflows from operating activities exceeded cash outflows by €24,770,616, indicating that the Group operated profitably in its core business and generated a positive cash flow. The Derivative Financial Instruments (Assets) 0 0 0 0 largest share of inflows relates to payments received under the contract with the Distribution System Operator (Pogodba z DO) for services rendered and rent for electricity infrastructure. Total Derivative Financial Instruments 0 0 0 0 The negative net cash flow from investing activities in 2024 amounted to –€31,043,316. The Total –54,757,624 –54,757,624 –46,022,155 –46,022,155 sector in which Elektro Gorenjska operates is highly technology-intensive, and ensuring high-quality supply for customers within the company’s distribution network requires significant and continuous investment. The acquisition of new intangible and tangible assets was largely financed through the The estimated fair value of short-term assets and liabilities is equal to their carrying amount. drawdown of long-term loans in the amount of €14 million. Net cash flow from financing activities in the reporting period amounted to €411,216. 306 307 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.7. Capital Management FAIR VALUE HIERARCHY A key success factor of the Elektro Gorenjska Group is its long-term customer orientation and Fair value of assets: continuous adaptability to business conditions (national interest, regulatory and legislative changes, in € major technological shifts, etc.). The main objective of the Group’s capital management is to ensure adequate capital structure, high financial stability, long-term solvency, and appropriate value for 31 Dec 2024 31 Dec 2023 shareholders. Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total The Group monitors its long-term financial stability using the ratio of net financial debt to EBITDA. The Group’s policy is to maintain this ratio below 3.5, which enables long-term stable operations. To Assets Measured at Fair Value monitor capital, the Group uses the financial leverage ratio, which indicates the share of net debt in equity. As at the end of 2024, this ratio remained at a similar level as at the end of 2023, confirming Derivative Financial Instruments 0 0 0 0 0 0 0 0 that the Group manages its capital in a stable manner.. in € Total Assets Measured at Fair Value 0 0 0 0 0 0 0 0 Item Description Explanatory Note in Assets for Which Fair Value Is Disclosed the Statement of Financial Position 31 Dec 2024 31 Dec 2023 Long-Term and Short-Term Financial Receivables 0 0 181,088 181,088 0 0 187,470 187,470 Long-Term Financial Liabilities 11 59,017,529 52,990,185 Long-Term and Short-Term Trade Teceivables From Customers 0 0 10,265,049 10,265,049 0 0 11,794,003 11,794,003 Short-Term Financial Liabilities 13 8,162,453 11,276,136 Cash and Cash Equivalents 0 0 8,370,985 8,370,985 0 0 14,232,469 14,232,469 Total Financial Liabilities 67,179,982 64,266,321 Total Assets for Which Fair Value Is disclosed 0 0 18,817,122 18,817,122 0 0 26,213,942 26,213,942 Equity 9 186,621,224 182,985,018 Total 0 0 18,817,122 18,817,122 0 0 26,213,942 26,213,942 Debt/Equity 0.36 0.35 Fair value of liabilities: Cash and Cash Equivalents 8,370,985 14,232,469 in € Net Financial Liabilities 58,808,997 50,033,852 31 Dec 2024 31 Dec 2023 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Net Debt/Equity 0.32 0.27 Assets Measured at Fair Value Derivative Financial Instruments 0 0 0 0 0 0 0 0 Total Liabilities Measured at Fair Value 0 0 0 0 0 0 0 0 Liabilities for Which Fair Value Is Disclosed Bank Loans and Other Financial Liabilities 0 0 –67,179,982 –67,179,982 0 0 –64,266,321 –64,266,321 Short-Term Trade Payables to Suppliers 0 0 –6,394,764 –6,394,764 0 0 –7,969,776 –7,969,776 Total Liabilities for Which Fair Value Is Disclosed 0 0 –73,574,746 –73,574,746 0 0 –72,236,097 –72,236,097 Total 0 0 –73,574,746 –73,574,746 0 0 –72,236,097 –72,236,097 308 309 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP 18.8. Related Party Transactions TRANSACTIONS WITH COMPANIES DIRECTLY OR INDIRECTLY OWNED BY THE REPUBLIC OF SLOVENIA The table below presents significant transactions in 2024 with companies in which the state has a direct The following section presents related party transactions, including transactions with Group companies, or indirect controlling interest. transactions with the Republic of Slovenia, transactions with companies owned by the Republic of in € Slovenia, and transactions with the management board and the supervisory board. The Group did not engage in transactions with related parties through individuals responsible for management. Business Partner Receivables as Liabilities as at 31 December 2024 at 31 December 2024 Expenses in 2024 Income in 2024 TRANSACTIONS WITH GROUP COMPANIES ELES, d. o. o. 6,503,836 2,608,695 20,508,917 35,397,826 Among the transactions between the parent company and its subsidiary Gorenjske elektrarne, the most Modra zavarovalnica, d. d. 0 44,872 497,565 0 significant were the following: Zavarovalnica Sava, d. d. 0 52 734,669 0 in € SID, d. d. 0 10,534 165,666 0 Item 2024 2023 NLB, d. d. 0 2,463,987 1,514,861 0 Revenue from general services performed (cost to the subsidiary) 80,313 114,985 Total 6,503,836 5,128,139 23,421,678 35,397,826 Rental income (rental expense for the subsidiary) 103,447 44,546 Dividend payment (subsidiary payout) 3,500,000 1,580,000 Open liabilities to the company ELES represent liabilities arising from transactions executed on behalf of third parties. Transactions with other companies in which the state holds a controlling interest are not of material value. Within transactions among the companies Gorenjske elektrarne, GEK Solar, and Soenergetika, the following were considered significant: Significant transactions in 2023 with companies in which the state has a direct or indirect controlling interest were as follows: in € in € Item 2024 2023 Business Partner Receivables as Liabilities as at 31 December 2023 at 31 December 2023 Expenses in 2023 Income in 2023 Sale and purchase of materials (Gorenjske elektrarne and GEK Solar) 509,256 574,928 ELES, d. o. o. 5,078,967 1,877,806 19,989 33,960,924 Profit distribution (Gorenjske elektrarne and Soenergetika) 44,393 931,389 Modra zavarovalnica, d. d. 0 42,825 478,405 0 Zavarovalnica Sava, d. d. 0 11 538,036 0 Other transactions did not reach material values. All transactions with Group companies were conducted under normal market conditions. Elektro Gorenjska, as the parent company, did not hinder SID, d. d. 0 3,974,854 194,764 0 or harm the operations of Gorenjske elektrarne as a subsidiary. NLB, d. d. 0 32,398,862 838,444 0 TRANSACTIONS WITH THE REPUBLIC OF SLOVENIA Total 5,078,967 38,294,358 2,069,639 33,960,924 The most important transactions between the parent and subsidiary companies and the Republic of Slovenia in 2024 and 2023 were as follows: TRANSACTIONS WITH THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD in € In 2024, the Elektro Gorenjska Group made the following payments to the management (employees Item Payments in 2024 Payments in 2023 under individual employment contracts): Dividends 1,235,599 0 in € Corporate income tax (tax and prepayments) 2,794,779 263,386 Recipient Fixed Pay (gross) Performance Bonus Holiday Allowance Reimbursement of Expenses Benefits Other levies (VAT, employer contributions) 6,873,675 5,943,652 President of the Management Board (Elektro Gorenjska) 123,990 13,417 2,497 2,694 5,353 Total 10,904,053 6,207,038 Director of Gorenjske elektrarne 85,966 4,516 2,497 2,299 4,041 Reimbursements of costs (so-called material costs) include meal allowances, reimbursement of business travel expenses, and mobile phone costs. These are calculated in accordance with the employment contract or the company-level collective agreement. Benefits include insurance premiums and the use of a company vehicle. Remuneration of the members of the supervisory board in 2024 is presented in the following table. Since some members also serve on board committees, the remuneration for committee participation is included. 310 311 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP in € 18.9. Financial Risks Member Function Fee (gross) Supervisory Board Committee Meeting Meeting Fee (gross) Fee (gross) Total Gross Travel Costs 1 2 3 4=1+2+3 5 At Elektro Gorenjska Group, risks are recognised as an inherent part of operations. Effective Representatives of Shareholders management requires a comprehensive and systematic approach. Sound risk management is a fundamental condition for the successful and efficient achievement of long-term business objectives. Gabrijel Škof 21,188 3,615 660 25,463 782 Financial risks relate to the Group’s ability to generate financial income, control financial expenses, Rajko Stanković 15,855 3,740 2,392 21,987 544 preserve the value of financial assets, manage financial liabilities, and ensure competitive and long- term solvency. The Group is exposed to several financial risks, most notably: credit risk, liquidity risk, Franjo Curanović 16,438 3,740 2,392 22,570 62 interest rate risk, insufficient investment funding, risks associated with investments in subsidiaries, Vid Meglič 14,125 3,740 660 18,525 163 and risk of non-payment by the transmission system operator ELES. Employee Representatives CREDIT RISK David Gogala 11,300 3,740 0 15,040 0 Under the Lease Agreement for the Electricity Distribution Infrastructure and the Performance of Services for the Distribution System Operator (DSO), the Group collects payments from customers Borut Jereb 14,125 3,740 660 18,525 0 in its own name and on behalf of the DSO. This arrangement carries increased risk, as the Group is required to settle all obligations to the DSO even if customers default on payments. The Group also The remuneration of the external member of the audit committee was as follows: performs market-based services. Outstanding receivables from these services represent the Group’s most significant credit risk. in € A maturity breakdown of short-term receivables related to network charges, electricity, services, Function Fee (gross) Committee Meeting Fee (gross) Total Gross Travel Costs and interest receivables as at 31 December 2024 and 31 December 2023 is shown in the following overview: 1 2 3=1+2 4 External Member of the Commitee in € Dr. Simon Čadež 6,844 2,392 9,236 265 Item 31 Dec 2024 31 Dec 2023 In 2024, the Supervisory Board of Elektro Gorenjska held a total of 14 meetings, including 12 regular and 2 correspondence meetings. The Nomination and Human Resources Committee held 3 regular meetings, the Audit Committee of Elektro Gorenjska held 8 regular meetings, and the Audit Not Yet Due Receivables 7,839,358 10,302,926 Committee of Gorenjske elektrarne held 5 regular meetings. Attendance at all meetings was 100%. Past Due Up To 30 Days 643,953 243,491 The cost of other benefits for supervisory board members in 2024 relates to directors’ and officers’ liability insurance, in accordance with the resolution of the 16th General Meeting of Shareholders of Past Due 31–60 Days 7,929 304,744 Elektro Gorenjska. These costs are considered a benefit in kind for supervisory board members. in € Past Due 61–90 Days 1,044 327,440 Member of the Supervisory Board D&O liability insurance premium Past Due Over 90 Days 1,859,809 145,114 Representatives of Shareholders Gabrijel Škof 141 Total Past Due Receivables 2,512,734 1,020,788 Rajko Stanković 141 Share Of Past Due Receivables In Total Outstanding 24% 9% Franjo Curanović 141 Total 10,352,093 11,323,713 Vid Meglič 141 Employee Representatives David Gogala 141 Borut Jereb 141 The management board and supervisory board did not receive any remuneration in connection with their roles in subsidiaries. The companies within the Elektro Gorenjska Group did not grant or receive any advances, loans, or guarantees to or for the benefit of the persons listed in this section and had no outstanding receivables from them as at 31 December 2024. 312 313 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP LIQUIDITY RISK The movement of impairment allowances for receivables and interest on arrears for 2024 and 2023 Liquidity risk arises from the possibility that the Group might not have sufficient liquid funds at a is presented in the following table: given time to meet its short-term obligations or maintain regular business operations. Potential caus- es of liquidity issues include irregular cash inflows and outflows, lengthy procedures for obtaining in € long-term loans, or significant overruns in planned investment spending. Liquidity risk is closely tied to investment risk. Managing liquidity risk also entails financing investments in accordance with the 2024 2023 business plan, ensuring that sufficient funds are available and investment execution is not delayed, given that borrowing procedures can be time-consuming. Opening Balance as at 1 Jan 143,399 152,990 Elektro Gorenjska Group is recognised for its exemplary payment discipline. In 2024, the Group encountered no liquidity issues. New Formation 7,169 3,813 Liquidity risk from operations is managed through the following activities: Utilisation and Reversal 15,048 13,405 • Monitoring and coordinating all departments involved in the procurement of goods and services or the conclusion of purchase contracts, based on projected available cash resources. This also Closing Balance as at 31 Dec 135,520 143,399 includes prioritisation of procurement needs according to available funds. These principals apply across all areas of the Group’s operations. Receivables are reviewed monthly. Debt collection is carried out consistently and uniformly across • Oversight of the implementation of open purchase orders or signed contracts, particularly in rela- all customers. Late payment interest is also strictly enforced. Our attention to detail in records tion to the expected completion date and the amount and timing of payments due. and recovery efforts has produced strong results. Major network charge debtors are discussed in monthly meetings, during which an individual collection plan is prepared for each debtor to • Monitoring the timely settlement of receivables, especially from key customers, as delays in maximise recoveries. This approach is case-specific. The Group monitors the credit ratings of its payments – due to deteriorating financial discipline, requests for extended payment terms or customers and uses tools such as phone reminders, instalment plans, offsets, debt assignments, and discounts, and increased collection costs – can negatively impact the Group’s liquidity. This also factoring. For instalment agreements, assignment or cession contracts, calculated default interest includes maintaining a suitable information system for overdue receivables and ensuring timely and is always included. Advance invoices are issued for certain services. In settling open receivables, effective communication across departments to support appropriate actions (e.g. timely issuance the provisions of the general part of the network access agreement are followed. When all “soft” of reminders, initiation of legal proceedings). When entering into commercial contracts for services, collection measures are exhausted and network charges remain unpaid, the Group issues a special attention is given to incorporating appropriate payment guarantees. Customers with overdue disconnection notice. If the customer fails to settle the debt within the notice period, the metering receivables are reminded on a monthly basis. point is disconnected. This mitigates further financial damage and prevents deterioration in payment discipline, which could otherwise lead to larger overdue receivables. • Ongoing monitoring of inventory levels. Management has adopted specific decisions regarding inventory tracking. In addition, the Group continues to optimise workflows related to planning, pro- As at 31 December 2024, the Group’s largest single customer accounted for €6,456,860 in short- curement, and implementation. term receivables, representing 63% of all short-term trade receivables. • A Group-level cash management system has been established, allowing for intercompany lending. The highest exposure to credit risk at year-end 2024 and 2023 was as follows: The primary objective of this system is to optimise liquidity across Group companies by managing short-term cash surpluses and deficits internally. in € • Particular attention is paid to the preparation and monitoring of the cash flow plan. Effective 31 Dec 2024 31 Dec 2023 liquidity planning enables optimal management of potential short-term liquidity surpluses or short- falls. Long-Term Financial Receivables 171,806 178,768 The following tables present financial liabilities by maturity: Long-Term Trade Receivables From Customers 48,476 613,688 Short-Term Financial Receivables 9,282 8,702 Short-Term Trade Receivables From Customers 10,216,573 11,180,315 Cash and Cash Equivalents 8,370,985 14,232,469 Short-Term Assets From Customer Contracts 1,419,290 41,529 314 315 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE FINANCIAL REPORT: ELEKTRO GORENJSKA GROUP in € 18.10. Events After the Reporting Date AS PAYMENTS FALL DUE 2024 TOTAL Due Within 1 Year Due in 2 to 5 Years Due After 5 Years In January 2025, Elektro Gorenjska signed a contract for the sale of a 100% ownership stake in Financial Liabilities to Banks 7,972,656 31,894,591 27,122,938 66,990,185 Gorenjske elektrarne. The sale is subject to the fulfilment of certain suspensive conditions, which had not been met by the date of approval of the Group’s financial statements. Undrawn Financial Liabilities 6,625,787 0 0 6,625,787 On 31 March 2025, Gorenjske elektrarne became the 100% owner of ALFI SOL 2 d.o.o. in € AS PAYMENTS FALL DUE 2023 TOTAL Due Within 1 Year Due in 2 to 5 Years Due After 5 Years Financial Liabilities to Banks 11,777,586 34,966,815 28,481,295 75,225,696 Undrawn Financial Liabilities 8,157,404 0 0 8,157,404 Liquidity risk is assessed as significant. However, due to established control mechanisms and imple- mented measures – particularly Group-level cash management – the likelihood of liquidity shortfalls materialising is considered low. Nevertheless, it is recognised that a liquidity shortfall could result in operational disruption or financial loss. INTEREST RATE RISK Interest rate risk refers to the potential adverse effect of changes in interest rates. Since the Group has the majority of its loans arranged at variable interest rates (EURIBOR-based), it is exposed to fluctuations in interest rates. At the end of 2024, 89% of the Group’s cash flows were subject to interest rate variability (compared to 83% at the end of 2023). The Group’s exposure to interest rate risk was as follows: in € 2024 2023 Financial Liabilities With Variable Interest Rate 59,647,327 51,962,876 Financial Liabilities With Fixed Interest Rate 7,342,858 10,514,287 Total 66,990,184 62,477,162 A 50-basis-point change in the interest rate on variable-rate financial instruments as at the reporting date would have increased or decreased the Group’s profit by the amounts indicated below. in € Impact on Profit or Loss 2024 Impact on Profit or Loss 2023 Increase by 50 Basis Decrease by 50 Basis Increase by 50 Basis Decrease by 50 Basis Points Points Points Points Financial Liabilities With Variable Interest Rate -247,873 247,873 -195,924 221,905 Interest rate risk is managed through the following activities: active monitoring of interest rate trends and bank margins; negotiating with banks to lower existing margins; refinancing existing loans; taking out loans with fixed interest rates; and actively seeking the most favourable conditions for accessing external financing. FOREIGN EXCHANGE RISK Operations are conducted in euros; therefore, the Group is not exposed to foreign exchange rate risk. 316 317 2024 ANNUAL REPORT OF ELEKTRO GORENJSKA – COMPANY AND GROUP PERFORMANCE 2024 Annual Report of Elektro Gorenjska – Company and Group Performance Published by: Elektro Gorenjska, d. d., Ulica Mirka Vadnova 3a, Kranj Text: Elektro Gorenjska, d. d. Design: Deidra Jovanovic s.p. Web version ISSN 3023-9192 Kranj, Slovenia July 2025