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ANNUAL REPORT 2025
26 MARCH 2026
2
Notes:
This report is prepared in accordance with the provisions of Law No. 24/2017 on issuers of financial
instruments and market operations, as republished, Annex No. 15 of FSA Regulation No. 5/2018 on issuers
of financial instruments and market operations, and the Bucharest Stock Exchange Code, as well as the
provisions of Emergency Ordinance No. 109 of 30 November 2011 on corporate governance of state-
owned enterprises, with its subsequent amendments and completions.
This report is based on the consolidated financial statements prepared in accordance with the IFRS
Accounting Standards ("IFRS") adopted by the European Union ("IFRS-EU"), separate and consolidated
financial statements prepared in accordance with the Order of the Minister of Public Finance no.
2844/2016 with subsequent amendments ("OMFP no. 2844/2016").
This report does not constitute a recommendation/offer/invitation to purchase shares issued by
Hidroelectrica. This report contains consolidated level information regarding the main operational
indicators of Hidroelectrica Group, thus, these pieces of information reflect the results and financial
position pertaining to the reporting period available as of the date of this report and do not represent
guarantees of the future performance of the Group. The information in this document is selective and may
require updates, revisions, and modifications under certain circumstances. Hidroelectrica assumes no
obligation or commitment to publish any update, revision, or modification of any information contained
in this report unless required by applicable law.
Certain figures included in this Report have been subject to rounding adjustments; consequently, figures
presented for the same category illustrated in different tables may vary slightly. Also, totals presented in
certain tables may not be an arithmetic aggregation of the preceding figures. Additionally, percentages in
tables have been rounded and therefore may not sum up to 100%. Calculations, variances, and other
percentages may slightly differ from their actual calculations due to rounding of underlying financial,
statistical, and operational information.
If this report refers to any information from any external source, this information should not be considered
as adopted/approved by Hidroelectrica as accurate/correct.
This report may contain forward-looking statements. These statements reflect the current knowledge of
the company as well as expectations and forecasts about future events. By their nature, forward-looking
statements are subject to various risks, many of which are beyond the company's control, which could
cause the actual results of the company to differ significantly from the results and performance expressed
or anticipated. None of the future forecasts in this report should be considered as specific promises, nor
should they be considered as implying an assurance or guarantee that the assumptions on which the future
forecasts were based or the information and statements contained in this report are correct, accurate, or
complete.
This report does not contain all the information that may be necessary regarding the company and its
shares. Each person who has access to this report must conduct their own analysis.
The content of this report is the property of Hidroelectrica, and this document or any part of it may not be
reproduced by any other person without the consent of Hidroelectrica.
3
Table of Contents
IDENTIFICATION DATA OF HIDROELECTRICA 5
2025 RESULTS SUMMARY 6
MESSAGE FROM THE CHAIRMAN OF THE SUPERVISORY BOARD 11
MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 12
MANAGEMENT STRUCTURES REPORT FOR 2025 14
I. REPORT OF THE SUPERVISORY BOARD 14
II. CONSOLIDATED REPORT OF THE MANAGEMENT BOARD 31
1. PRESENTATION OF THE GROUP 31
1.1. ORGANIZATIONAL STRUCTURE 31
1.2. MAIN ACTIVITIES OF THE GROUP 33
1.3. MISSION, VISION, VALUES 34
1.4. ELEMENTS OF STRATEGY 34
1.5. PREDICTABLE DEVELOPMENT OF THE COMPANY 36
2. KEY HIGHLIGHTS OF 2025 39
3. KEY EVENTS IN 2025 40
3.1. GENERAL MEETINGS OF SHAREHOLDERS 40
3.2. CHANGES IN MANAGEMENT STRUCTURES 47
3.3. INVESTMENTS 49
3.4. OTHER KEY EVENTS 51
3.5. DIVIDEND DISTRIBUTION 52
3.6. TRANSACTIONS WITH RELATED PARTIES ACCORDING TO ART. 108 OF LAW NO. 24/2017 52
4. HIDROELECTRICA ON THE CAPITAL MARKET 53
4.1. HIDROELECTRICA'S INITIAL PUBLIC OFFERING 53
4.2. SHAREHOLDING STRUCTURE AND SHARE PRICE EVOLUTION 53
4.3. INVESTOR RELATIONS 56
5. C ORPORATE GOVERNANCE 57
5.1. GENERAL MEETINGS OF SHAREHOLDERS 58
5.2. SHAREHOLDERS' RIGHTS 59
5.3. DIVIDEND POLICY 59
5.3.1. DIVIDEND DISTRIBUTION 60
5.4. SUPERVISORY BOARD 61
5.5. THE MANAGEMENT BOARD 61
5.6. REMUNERATION OF THE MEMBERS OF THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD 64
5.7. PROCESS MANAGEMENT 66
5.8. INTERNAL AUDIT 67
5.9. KEY FEATURES OF INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN RELATION TO THE FINANCIAL REPORTING
PROCESS 67
5.10. EVENTS AND SPONSORSHIPS IN 2025 69
5.10.1. COMPLY OR EXPLAIN STATEMENT 71
6. OPERATIONAL DATA 92
4
6.1. OPERATIONAL SEGMENTS 92
6.1.1. ELECTRICITY PRODUCTION ACTIVITY 92
6.1.2. TRADING ACTIVITY – WHOLESALE ELECTRICITY SALES 93
6.1.3. ELECTRICITY SUPPLY ACTIVITY 94
6.2. MAINTENANCE ACTIVITY 96
6.3. MAINTENANCE ACTIVITY – CIVIL WORKS AND MONITORING OF HYDROPOWER STRUCTURES BEHAVIOR (“UCCH")
98
6.4. INVESTMENT ACTIVITY 99
6.4.1. ACTIVITY IN DEVELOPMENT PROJECTS 102
6.4.2. REFURBISHMENT ACTIVITY 105
6.4.3. CAPITALIZED MAINTENANCE ACTIVITY 109
6.5. PROJECT MANAGEMENT 110
6.6. PROCUREMENT 112
6.7. MERGERS AND ACQUISITIONS ("M&A") 112
6.8. HUMAN RESOURCES 113
6.9. DIGITAL TRANSFORMATION AND INNOVATION 115
6.10. TANGIBLE ASSETS 116
6.10.1. LOCATION AND CHARACTERISTICS OF THE MAIN PRODUCTION CAPACITIES 116
6.10.2. DEGREE OF WEAR OF PRODUCTION CAPACITIES 119
6.10.3. OWNERSHIP OF TANGIBLE ASSETS 119
7. FINANCIAL RESULTS FOR 2025 121
7.1. FINANCIAL INDICATORS 121
7.2. REVENUE BREAKDOWN 123
7.3. OPERATING EXPENSES 127
7.4. CASH-FLOW 129
7.5. FINANCIAL POSITION 130
8. LITIGATIONS 136
9. RISK MANAGEMENT 145
10. SUBSEQUENT EVENTS 148
11. SUSTAINABILITY STATEMENT 149
III. MANAGEMENT STATEMENT 304
CONSOLIDATED FINANCIAL STATEMENTS - IFRS-EU 307
CONSOLIDATED FINANCIAL STATEMENTS - OMFP 2844/2016 307
SEPARATE FINANCIAL STATEMENTS - OMFP 2844/2016 307
5
Identification data of Hidroelectrica
Report prepared for the financial year ended 31 December 2025
Report Date: 26 March 2026
Name of the issuer: Societatea de Producere a Energiei Electrice în Hidrocentrale Hidroelectrica S.A.
Registered office: 15 – 17 Ion Mihalache Boulevard, Floors 10-15, District 1, Bucharest, Romania
Phone: +40 21 303 25 00
Unique registration code with the Trade Registry: 13267213
Fiscal Registration Code: RO13267213
Registration number in the Trade Registry: J2000007426409
Legal Entity Identifier (LEI) Code: 787200IISRQX09PRB732
International Securities Identification Number (ISIN): RO4Q0Z5RO1B6
Subscribed and paid-up registered share capital: 4,498,025,670 RON
Main characteristics of the issued securities: 449,802,567 ordinary, nominative, freely transferable
shares, each with a nominal value of 10 RON/share, issued in dematerialized form.
Regulated market on which the issued securities are traded: the Company's shares are listed on the
Bucharest Stock Exchange (ticker: H2O).
6
2025 Results Summary
In a highly challenging environment, marked by severe drought conditions that led to the lowest
hydropower production in Romania’s history—thereby impacting the total volume of energy available for
commercialization—the Hidroelectrica Group delivered strong operational and financial results in 2025,
exceeding the levels set out in the 2025 Budget by 10%, although remaining 20% lower compared to 2024.
The full-year 2025 results were significantly impacted by the declines recorded in the first nine months of
the year, driven by adverse hydrological conditions, although the results in the fourth quarter saw a
notable recovery supported by improved hydrology, but not sufficient to offset the shortfall accumulated
during the first nine months.
In the context of a challenging hydrological regime, the Group’s operating margin and net margin
decreased by 22% compared to 2024, mainly driven by the lower volume of electricity sold.
• The results achieved in 2025 exceeded the expectations set in the revised Budget approved for
2025, driven by stronger production in Q4 2025
• Revenues increased by 5% compared to 2024
• Investments – accelerated growth in 2025, up 32% compared to 2024, reaching RON 781 million
• Electricity production was 14% below the level recorded in 2024
• Operating margin of 39%, down 22% compared to 2024
• Net margin of 35%, down 22% compared to 2024
• Net profit of RON 3,370 million, 18% below 2024, but 10% above the revised Budget
• Earnings per share of RON 7.49, 18% below 2024 (RON 9.18), but 10% above the Budget
Individual financial indicators vs. revised 2025 budget
RON million
Financial indicators*
2025 actual (audited)
2025 Revised Budget
Degree of achievement (%)
Total Revenue
10,110
9,969
101%
Operating income
9,783
9,671
101%
Financial income
327
299
109%
Total expenses
6,262
6,458
97%
Operating expenses
6,165
6,360
97%
Financial expenses
97
98
99%
Profit before tax
3,848
3,511
110%
*The indicators are calculated according to the budget forms of Order 3818/2019 and are aligned with the indicators presented
in the form S1040 - Annual accounting reporting to NAFA, prepared at the level of Hidroelectrica SA.
Source: Hidroelectrica
*The revenue and expenditure budget and the financial indicators presented above are reported on a
standalone basis.
7
Operational indicators
2025
2024
Change (%)
Gross electricity production, of which:
GWh
12,215
14,224
-14%
Electricity production from hydro sources (gross)
GWh
11,945
13,928
-14%
Net electricity production, of which:
GWh
11,847
13,864
-15%
Electricity production from hydro sources (net)
GWh
11,585
13,576
-15%
Electricity production from wind sources
GWh
262
288
-9%
Purchase of electricity GWh
GWh
2,209
802
175%
Total electricity sold GWh
GWh
14,056
14,666
-4%
Source: Hidroelectrica
Financial indicators calculated based on the consolidated financial statements prepared in accordance
with IFRS-EU:
Financial indicators
2025
2024
Change (%)
2023
Revenue
RON million
9,619
9,123
5%
12,160
EBITDA
RON million
4,646
5,503
-16%
8,016
EBITDA margin
%
48%
60%
-20%
66%
Adjusted EBITDA
RON million
4,768
5,517
-14%
8,253
Adjusted EBITDA margin
%
50%
60%
-17%
68%
Operating Margin (operating
profit/revenue*100)
%
39%
50%
-22%
59%
Net margin (Net profit/Revenue*100)
%
35%
45%
-22%
52%
Operating profit
RON million
3,719
4,588
-19%
7,200
Net profit
RON million
3,370
4,128
-18%
6,365
Earnings per share
RON/share
7.49
9.18
-18%
14.17
Source: Hidroelectrica
In 2025, Hidroelectrica’s results were influenced by the decrease in electricity production, the lower
volume of electricity sold, as well as by the decline in both volumes and prices on the balancing market in
Romania.
Full-year 2025 results were significantly impacted by the declines recorded in the first nine months of the
year, driven by the aforementioned hydrological conditions, although the results in the fourth quarter
saw a notable recovery supported by improved hydrology, but not sufficient to offset the shortfall
accumulated during the first nine months.
Although selling prices increased compared to 2024, both in the wholesale market segment and in the
supply segment, they were not sufficient to fully offset the impact of the prolonged drought recorded in
Romania
8
Financial indicators calculated based on the consolidated financial statements prepared in accordance
with OMFP No. 2844/2016
Financial indicators
2025
2024
Change (%)
2023
Revenue
RON million
9,619
9,123
5.44%
12,160
EBITDA
RON million
4,646
5,503
-15.57%
8,016
EBITDA margin
%
48%
60%
-20.00%
66%
Adjusted EBITDA
RON million
4,747
5,517
-13.96%
8,253
Adjusted EBITDA margin
%
49%
60%
-18.33%
68%
Operating Margin (operating
profit/revenue*100)
%
39%
50%
-22.00%
59%
Net margin (Net profit/Revenue*100)
%
35%
45%
-22.22%
52%
Operating profit
RON million
3,719
4,588
-18.94%
7,200
Net profit
RON million
3,370
4,128
-18.36%
6,365
Earnings per share
RON/share
7.49
9.18
-18.41%
14.17
Source: Hidroelectrica
Financial indicators calculated based on the standalone financial statements prepared in accordance
with OMFP No. 2844/2016
Financial indicators
2025
2024
Change (%)
2023
Revenue
RON million
9,623
9,123
5.48%
12,159
EBITDA
RON million
4,604
5,433
-15.26%
7,996
EBITDA margin
%
48%
60%
-20.00%
66%
Adjusted EBITDA
RON million
4,703
5,473
-14.07%
8,225
Adjusted EBITDA margin
%
49%
60%
-18.33%
68%
Operating Margin (operating
profit/revenue*100)
%
38%
50%
-24.00%
59%
Net margin (Net profit/Revenue*100)
%
35%
45%
-22.22%
52%
Operating profit
RON million
3,686
4,527
-18.58%
7,178
Net profit
RON million
3,338
4,072
-18.03%
6,352
Earnings per share
RON/share
7.42
9.05
-18.01%
14.14
Source: Hidroelectrica
The number of consumption sites in the portfolio as at 31 December 2025 reached 1,162,531, compared
to 613,767 consumption sites (CS) in 2024, the increase being driven by the expansion of the supply
portfolio, particularly in the household segment.
This evolution was supported by the legislative changes regarding the removal of electricity price caps
starting from 1 July 2025, which led to increased interest in switching suppliers ahead of the expiry of the
capped pricing scheme. This context supported customer migration, with visible effects across both
market segments, reflecting faster cost-optimization decisions directly driven by market conditions.
9
From a structural perspective, Hidroelectrica’s supply portfolio evolved as follows:
Client Type
CS No.* 31.12.2025
CS No.* 01.01.2025
Change (%)
Household
1,107,715
584,431
90%
Non-household
54,816
29,336
87%
Total
1,162,531
613,767
89%
* the number of consumption sites in the portfolio (excluding those directly supplied from the hydroelectric power plant bars)
Source: Hidroelectrica
In December 2025, according to the monthly report published by ANRE, Hidroelectrica held a market
share of 18.62% on the competitive segment and 17.26% at the level of the total electricity supply market,
ranking first in both categories as at the reporting date.
At the same time, during the period January–December 2025, Hidroelectrica recorded a cumulative
market share of 16.22% on the competitive segment (ranking first among suppliers), respectively 14.88%
at the level of the total electricity supply market (ranking second among suppliers).
Market shares of electricity suppliers in the
competitive market (December 2025)
Market shares by quantity sold at the total level of
the supply market (December 2025)
Source: ANRE Report on the Results of the Electricity Market Monitoring in December 2025
10
Market shares of electricity suppliers in the
competitive market
(January - December 2025)
Market shares by quantity sold at the total
level of the supply market (January -
December 2025)
Source: ANRE Report on the Results of the Electricity Market Monitoring in December 2025
Throughout 2025, Hidroelectrica actively continued its strategic initiatives aimed at diversifying its
renewable energy generation portfolio, with the objective of remaining a 100% green company. The
activities carried out during this period included the identification, analysis and documentation of new
investment opportunities, advancing screening, due diligence and preliminary structuring processes for
potential transactions, both for the acquisition of stakes in existing projects and for the development of
new generation capacities. These initiatives were carried out in parallel with the implementation of
projects within the operational portfolio, reflecting a balanced approach between sustainable growth and
disciplined execution of ongoing projects, with a constant focus on meeting implementation timelines.
This integrated approach – combining the exploration of external growth opportunities with the
consolidation of internal ones – has the potential to strengthen the company’s competitive advantage,
diversify revenue streams and mitigate structural exposure to seasonal and hydrological risks specific
to hydropower generation.
At the same time, in the context of legislative changes regarding the removal of price caps, the Company
anticipated an increase in demand for supply services, adopted a proactive stance and began procuring a
significant share of its energy requirements from the Day-Ahead Market (DAM), dynamically adapting to
market developments.
11
Message from the Chairman of the Supervisory Board
Dear Shareholders,
The year 2025 was marked by a complex environment for the energy sector, characterized by volatility in
energy markets, changes in the regulatory framework, and hydrological conditions that reached historic
lows.
In this operating environment, the Hidroelectrica Group once again demonstrated the resilience of its
business model and its ability to adapt to natural cycles and market dynamics. The Group’s results for
2025 exceeded the levels set out in the budget, confirming the Company’s financial and operational
discipline, as well as the ability of the executive management to respond effectively to a challenging
market environment.
At the same time, the Company’s evolution was also reflected in its performance on the capital market.
At the beginning of 2026, Hidroelectrica’s shares reached an all-time high since listing on the Bucharest
Stock Exchange, confirming investors’ confidence in the strength of its business model and its long-term
growth prospects. Moreover, 2025 also represented a landmark year from the perspective of the
investment program, marking a significant level of investments that support the modernization of existing
capacities, the development of new projects, and the strengthening of Hidroelectrica’s position in the
renewable energy sector.
From the Supervisory Board’s perspective, 2025 was a year in which we continued to place particular
emphasis on strengthening the corporate governance framework, prudent risk management, and
monitoring the implementation of the Company’s strategy. In fulfilling our supervisory mandate, we
closely monitored the Group’s operational and financial performance, as well as how the Management
Board addressed the challenges generated by market volatility and the variability of hydrological
resources.
At the same time, the Supervisory Board continued to support strategic directions aimed at strengthening
Hidroelectrica’s position in the electricity market, including through the diversification of the generation
portfolio, the development of investment projects, and the consolidation of the supply segment.
In the context of the accelerated energy transition at European level, the role of renewable energy
producers is becoming increasingly important for ensuring energy security and achieving decarbonisation
targets. Hidroelectrica, through its position as a leader in renewable energy production in Romania,
remains a key player in this process.
The Supervisory Board will continue to closely monitor the implementation of the Company’s strategy,
the progress of investment projects, and the maintenance of high standards of corporate governance,
with the objective of ensuring the creation of sustainable value for shareholders and all stakeholders.
In conclusion, I would like to thank the Management Board and all Hidroelectrica employees for their
professionalism and dedication throughout 2025, as well as our shareholders for their continued trust.
Silviu-Răzvan AVRAM
Chairman of the Supervisory Board
12
Message from the Chairman of the Management Board
Dear shareholders, partners, and colleagues,
The year 2025 marked a period of
resilience, adaptation, and consolidation
of our strategic position for Hidroelectrica,
in a challenging operating environment
shaped by the lowest hydrological
conditions in Romania’s recent history.
Despite these challenges, the company
once again demonstrated the robustness
of its business model and its ability to
deliver sustainable performance,
exceeding budgeted targets and
maintaining a strong position in the
electricity market.
In 2025, Hidroelectrica recorded
revenues of approximately RON 9.6
billion and a net profit of RON 3.37 billion. These results were impacted by lower hydropower generation,
yet they confirm the company’s financial discipline and operational efficiency. Even under these
conditions, performance exceeded the levels set in the revised budget, highlighting our ability to navigate
a volatile market environment and to swiftly adapt our operational strategies.
One of the key milestones of 2025 was the acceleration of the investment program, which increased by
32% year-on-year, reaching RON 781 million. This elevated level of investment reflects Hidroelectrica’s
commitment to modernizing existing capacities, developing new projects, and strengthening the
company’s position in the renewable energy sector.
At the same time, Hidroelectrica continued to diversify its renewable generation portfolio, advancing the
analysis and development of new projects, as well as identifying strategic acquisition opportunities. This
approach aims to reduce exposure to hydrological variability and to reinforce the company’s competitive
advantage in a rapidly evolving energy sector.
Another defining element of 2025 was the consolidation of the supply segment. Hidroelectrica recorded
a significant increase in its customer portfolio, exceeding 1.16 million consumption sites at year-end,
nearly double compared to the previous year. This evolution confirms consumers’ trust in the company’s
offering and in our efficiency- and competitiveness-driven model.
At the same time, the company further strengthened its leading position in the competitive market,
holding a market share of over 18% in the competitive segment at the end of 2025 and ranking first among
electricity suppliers. This performance reflects the maturation of Hidroelectrica’s business model and its
transformation into an integrated player capable of delivering value across the entire energy value chain.
From a capital markets perspective, 2025 reaffirmed investors’ confidence in the company’s strategy. At
the beginning of 2026, Hidroelectrica’s shares reached a post-listing all-time high, reflecting the strength
of the business model and the company’s favorable growth outlook.
Bogdan Badea, CEO Hidroelectrica
13
Looking ahead, Hidroelectrica aims to accelerate investments in new renewable generation capacities,
continue the modernization of its existing infrastructure, and develop complementary projects, including
in the areas of photovoltaic energy, energy storage, and the digitalization of operations. In this context,
the company is advancing strategic projects such as Nufărul, Hidroelectrica’s first floating photovoltaic
project, with an estimated installed capacity of approximately 10 MWp, which opens the path toward
hybridizing hydropower assets by efficiently leveraging existing water surfaces and integrating energy
storage solutions.
The Lower Olt Floating PV and BESS project will represent Hidroelectrica’s most comprehensive
integrated investment in hybridization, including an installed capacity of 100 MWp in floating
photovoltaic parks on the reservoirs of the Lower Olt cascade, as well as a 200 MW battery system with
a capacity of 800 MWh at the hydropower plants operating along the Lower Olt. This project is designed
to transform the Lower Olt segment into a strategic balancing hub for the National Energy System.
At the same time, the Tudor Vladimirescu photovoltaic project, with an estimated installed capacity of
45.94 MWp, represents one of the company’s most significant solar developments, contributing to the
diversification of its generation portfolio and strengthening Hidroelectrica’s position in the renewable
energy market.
In parallel, Hidroelectrica is accelerating the development of energy storage capacities, which are
essential for the flexibility of the National Energy System and for the integration of renewable sources. In
this regard, the company is developing the Crucea Nord battery storage project, with an estimated
capacity of 36 MW / 72 MWh—the first project of this kind in Hidroelectrica’s portfolio—as well as the
planned storage project at Iron Gates II, estimated at approximately 64 MW / 256 MWh, which will
significantly contribute to system balancing and enhance the efficiency of renewable generation.
Through these investments, Hidroelectrica is reinforcing its development strategy based on the
hybridization of existing assets, the integration of storage solutions, and the expansion of renewable
generation, reaffirming the company’s commitment to the accelerated development of clean energy and
to strengthening its role in Romania’s energy transition..
At the same time, we aim to further strengthen Hidroelectrica’s role as a pillar of Romania’s energy
security and as a regional leader in renewable energy generation. Accelerated energy transition, climate
change, and geopolitical developments require a flexible strategic approach, and Hidroelectrica is
prepared to respond to these challenges through investments, innovation, and operational excellence.
The results of 2025 confirm that Hidroelectrica is a solid, resilient, and forward-looking company. Our
performance is the result of our team’s professionalism, the trust of our shareholders, and a clear strategy
for sustainable development.
On behalf of the Management Board, I would like to thank all employees for their dedication and
professionalism, our partners for their constructive collaboration, and our shareholders for their
continued trust. We are confident that Hidroelectrica will continue to create long-term value, contributing
decisively to the development of Romania’s energy sector and to the transition toward a sustainable
economy.
Bogdan-Nicolae BADEA
Chairman of the Management Board (CEO)
14
Management Structures Report for 2025
I. Report of the Supervisory Board
According to the Articles of Association in force, the Supervisory Board consists of seven members.
Members of the Supervisory Board may also be shareholders of the Company; however, they may not be
members of the Management Board, nor may they simultaneously hold the position of Supervisory Board
member and employee of the Company.
Supervisory Board members proposed by the majority shareholder are selected in accordance with the
legal provisions governing the corporate governance of public enterprises and are appointed by the
Ordinary General Meeting of Shareholders. The Romanian State, represented by the competent authority
in accordance with the law, may not nominate more than six candidates for the position of Supervisory
Board member.
The mandate of the Supervisory Board members is four years and may be renewed by resolution of the
General Meeting of Shareholders, following the evaluation of each member’s activity and subject to the
proper fulfillment of the duties and obligations undertaken under the mandate agreement.
The composition of the Supervisory Board as at 1 January 2025:
No.
Name
Position
Independence
status
according to
Law 31/1990
Independent
status
according to
BSE GC
Start date of
mandate
(*including
provisional
mandate period)
Date of
termination
of mandate
1.
Petre-Iulian
NICOLESCU*
President
independent
-
01.08.2023
21.01.2024
22.01.2024
10.04.2025
2.
Mihai Liviu MIHALACHE
Member
-
-
29.03.2023
10.04.2025
3.
Carmen RADU
Member
independent
independent
29.03.2023
28.03.2027
4.
Cristian Nicolae
STOINA*
Member
independent
independent
18.10.2023
21.01.2024
22.01.2024
10.04.2025
5.
George-Marius TONIUC
Member
independent
independent
29.03.2023
28.03.2027
6.
Silviu-Razvan AVRAM
Member
independent
-
29.03.2023
28.03.2027
7.
Ana-Barbara BOBIRCĂ
Member
independent
independent
27.12.2023
21.01.2024
22.01.2024
28.03.2027
Source: Hidroelectrica
*As a result of the vacancy of three positions following the revocation of Mr. Petre Nicolescu, Mr. Mihai
Mihalache and Mr. Cristian Stoina for reasons not attributable to them, and in order to comply with
Milestone No. 121 of Romania’s National Recovery an d Resilience Plan, in accordance with the provisions
of Article 36.10 of the mandate agreement, the following individuals were appointed as interim members
of the Supervisory Board during 2025:
No.
Name
Position
Independence status
according to Law
31/1990
Independent
status according to
BSE GC
Start date of
mandate
Date of
termination of
mandate
1.
Marius
Persinaru
Provisional
member
independent
independent
10.04.2025
08.09.2025
2.
independent
independent
10.04.2025
08.11.2025
15
No.
Name
Position
Independence status
according to Law
31/1990
Independent
status according to
BSE GC
Start date of
mandate
Date of
termination of
mandate
Ciprian
Mihail Ene
Provisional
member
09.11.2025
20.11.2025
3.
Anca Mitu
Provisional
member
-
-
10.04.2025
08.11.2025
09.11.2025
20.11.2025
Source: Hidroelectrica
Composition of the Supervisory Board as of 31 December 2025:
No.
Name
Position
Independence
status
according to
Law 31/1990
Independent
status
according to
BSE GC
Start date of
mandate
Date of
termination
of mandate
1.
Silviu – Razvan AVRAM
President
independent
-
29.03.2023
21.01.2024
2.
Carmen RADU
Member
independent
independent
28.03.2027
3.
George-Marius TONIUC
Member
independent
independent
29.03.2023
28.03.2027
4.
Ion ARITON
Member
independent
independent
20.11.2025
28.03.2027
5.
Emil MERDAN
Member
independent
independent
20.11.2025
28.03.2027
6.
Catalin Vladut POPESCU
Member
independent
independent
20.11.2025
28.03.2027
7
Ana-Barbara BOBIRCĂ
Member
independent
independent
27.12.2023
21.01.2024
22.01.2024
28.03.2027
Source: Hidroelectrica
Silviu-Răzvan AVRAM has been a member of the Supervisory Board since 29 March 2023.
Over the course of his 20-year career, Mr. Avram has developed valuable executive and management
skills, holding both advisory and leadership roles. He also has experience in public administration, having
served as State Secretary Advisor within the Ministry of Economy (2017–2018).
Ana-Barbara BOBIRCĂ is an experienced professional in investments and corporate governance, having
collaborated over the past 20 years with international investment funds and, for the last 13 years, serving
as a partner in a local private investment firm. Since 2002, she has held and continues to hold positions
as a board member in companies across various sectors (investment management, logistics, transport
and international forwarding, financial services, financial investments, real estate development and
promotion, construction materials, agribusiness, food products, trade and storage, distribution and sale
of electrical equipment, port services), actively contributing within governance and sustainability, audit,
remuneration and risk committees. She has also held and continues to hold positions in the governing or
coordination bodies of professional and business associations, think tanks and business schools.
She currently serves as Chairman of the Board of Directors of Transport Trade Services, member of the
Supervisory Board of Hidroelectrica and Chairman of the Board of Directors of Veranda Mall.
Ana-Barbara Bobircă is an Associate Professor within the Faculty of International Business and Economics
at the Bucharest University of Economic Studies, with relevant academic experience in areas such as
international business and international trade in services. She is also an adjunct professor within the
Romanian-French INDE MBA program, where she teaches Advanced Finance, and Academic Director of
the Board Leadership program within Bucharest Business School.
16
She is the author of four books and over 40 specialized articles. She graduated from the Faculty of
International Business and Economics of the Bucharest University of Economic Studies, holds a PhD in
Economics and has completed executive programs in governance, sustainability and sustainable finance
at The Wharton School, University of Pennsylvania, The Corporate Governance Institute and the
University of Cambridge.
Carmen RADU has been a member of the Supervisory Board of Hidroelectrica since February 2019 and
currently also serves as General Manager of Compania de Investiții și Dezvoltare Sector 1 S.A., a position
she has held since January 2022. Since May 2023, Ms. Radu has also been Vice President and member of
the Steering Committee coordinating the entity’s specific activities within the Romanian Red Cross
National Society (non-governmental organization).
After graduating in Economics from the Bucharest University of Economic Studies (1980–1985), Ms. Radu
worked between 1979 and 1997 as an economist, accountant, Chief Financial Officer and inspector, later
advancing to Deputy General Manager (1997–1999), Deputy Director (1999–2004) and President of
EXIMBANK S.A. (March 2005 – March 2009).
She has held several positions in Supervisory and Administrative Boards of various institutions: member
of the Supervisory Board of the Romanian Counter-Guarantee Fund (August 2012 – March 2015), member
of the Board of Directors of the Romanian Air Traffic Services Administration – ROMATSA (April 2013 –
November 2016) and subsequently Chairman of the Board of Directors of the same company (2016–
2018), member of the Board of Directors of SNN (April 2013 – April 2017), and member of the
management of the European Association of Credit Institutions (2016–2018).
Other key positions held by Ms. Radu include: Advisor to the President and Chief Financial Officer of ASF
(October 2013 – March 2015), President of the Management Board of the Romanian Counter-Guarantee
Fund (March 2015 – November 2017) and member of the Management Board of the same company
(November 2017 – February 2020).
George-Marius TONIUC is a member of the Supervisory Board and has extensive legal experience, with
over 25 years of professional activity. Mr. Toniuc has been a member of the Bucharest Bar since 1998 and
has worked as a lawyer providing legal assistance in areas such as corporate governance, real estate,
labour law and others.
Between 2003 and 2008, he provided a broad range of legal assistance to Romanian and foreign entities
within the Rompetrol Group on matters including corporate governance (including capital markets law),
real estate, consumer protection, mergers and acquisitions, joint ventures, public procurement, labour
law and air transport. Since 2008, Mr. Toniuc has joined Budusan & Associates, a Romanian law firm
specializing in the integrated management of economic, financial and administrative offences, becoming
a partner in 2017. He has provided legal assistance and representation before courts, investigative bodies
and administrative authorities in cases involving tax evasion, money laundering, financial crimes
(including capital markets), fraud involving European funds, public procurement fraud, intellectual
property offences, corruption offences and offshore transactions.
17
Mr. Toniuc graduated in 1998 from the Faculty of Law, University of Bucharest, and has been a member
of the Bucharest Bar since 1998.
Emil MERDAN has been a member of the Supervisory Board of Hidroelectrica since November 2025 and
has over 30 years of experience in the energy sector, including 27 years in top management positions.
He has held key roles in energy sector companies, demonstrating expertise in operational activities,
regulation, business optimization, corporate organization, mergers and business process reorganization.
He graduated from the Technical University of Cluj-Napoca, Faculty of Electrical Engineering, and from
postgraduate academic programs, with various specializations in management, also contributing to
technical publications in the electricity field.
He began his career as an engineer within the Cluj Electric Networks Enterprise, later holding leadership
roles such as Deputy Head of the High Voltage Center Cluj, Head of Distribution Center Cluj, Director of
the Cluj Branch of SDFEE Electrica Transilvania Nord, General Manager of SDFEE Electrica Transilvania
Nord, member and Chairman of the Board of Directors of SDEE Electrica Distribuție Transilvania Nord,
General Manager of SDEE Electrica Distribuție Transilvania Nord and General Manager of Distribuție
Energie Electrică România.
In these roles, he led major projects involving the reorganization of electricity supply and distribution
activities within the Electrica Group, including the merger of three electricity distribution companies into
Distribuție Energie Electrică România, which became the largest operator in Romania, managing up to
198,988 km of electricity lines across 18 counties, covering 40.7% of Romania’s territory, serving 3.8
million users and employing over 6,400 people.
Through his experience and expertise, Mr. Emil Merdan contributes to the activity of the Supervisory
Board of Hidroelectrica, supporting the Company’s development and success within the Romanian energy
sector.
Catalin Vladut POPESCU is a hydrotechnical engineer and academic at the Technical University of Civil
Engineering Bucharest, with over 20 years of experience in hydropower infrastructure, dam safety and
water resource management.
He has been a member of the Supervisory Board of Hidroelectrica since November 2025 and is President
of the Romanian National Committee on Large Dams (ROCOLD), contributing to the sustainable
development and modernization of the hydropower sector and to strengthening corporate governance
in the energy field.
Ion ARITON, member of the Supervisory Board of Hidroelectrica since November 2025, is an economist
with extensive experience in public administration and the energy sector, contributing to sound corporate
governance and economic policy development.
He served as Minister of Economy (2010–2012) and as a Senator of Romania, being involved in specialized
committees in the economic and energy fields. He has also held leadership roles at local level and carried
out managerial activities in the private sector.
The full CVs of the Supervisory Board members are available on the Company’s website,
www.hidroelectrica.ro, in the About us – Management section.
18
Activity of the Supervisory Board during 2025
During the reporting period, the Supervisory Board held a total of 43 meetings and adopted 166
resolutions. These resolutions were related to the Company’s ongoing activities and were adopted within
the limits of competence set out in the Articles of Association in force. A selection of the most relevant
resolutions adopted in order to achieve the objectives set out in the Letter of Expectations and to
implement the provisions of the mandate agreements is presented below, including those related to the
revenue and expenditure budget, preliminary, annual, semi-annual and quarterly financial statements,
the full annual reporting package, as well as various policies and strategies, as follows:
Period
Decision
February
• Approval of the Policy on the self-assessment of the Supervisory Board.
March
• Approval of the Supervisory Board's Self-Assessment Report for 2024.
• Approval of the Draft Income and Expenditure Budget for 2025.
• Approval of the extension until 23.09.2025 of the service and availability contract for 36 wind
turbines concluded with Vestas CEU Romania SRL. Also in March, the initiation of the
procurement procedure "Maintenance services guaranteeing the availability of the Vestas
model V112 3MW MK1A wind turbines, SCADA, PPC and AEOS systems in CEE CRUCEA NORD"
was approved.
• Approval of the investment objective "Refurbishment of the Gogoșu HPP".
• Approval of the Hidroelectrica Policy on information security and information networks and
systems.
• Approval of the Addendum no.1 to the Collective Labor Agreement of S.P.E.E.H. Hidroelectrica
S.A. for the years 2024-2026.
• Approval of the Strategy for the maintenance of installations and equipment in Hidroelectrica
S.A.
• Approval of the various reports issued by the Internal Public Audit Department, directly
subordinated to the Supervisory Board and of the Internal Public Audit Activity Report for 2024.
• Endorsement of the audited individual and consolidated annual Financial Statements for the
financial year ended December 31, 2024, prepared in accordance with O.M.F.P. no. 2844/2016
and the audited Consolidated Annual Financial Statements for the financial year ended 31
December 2024, prepared in accordance with IFRS.
• Approval of the Annual Report of S.P.E.E.H. Hidroelectrica S.A., which includes the Report of the
Management Board and the Report of the Supervisory Board for the financial year ended 31
December 2024, prepared in accordance with the legal provisions in force.
• Approval of the distribution of the net profit for the financial year 2024 in accordance with the
provisions of Government Ordinance no. 64/2001, as subsequently amended and
supplemented, the total value of the gross dividend, as well as the value of the gross dividend
per share, according to the recommendations of the Audit Committee dated 26.03.2025.
• Approval of the Evaluation Report of the Management Board's activity for 2024 according to art.
36 para. (5) of GEO no. 109/2011 Approval of the Remuneration Report of the Supervisory Board
of S.P.E.E.H. Hidroelectrica S.A. and of the Management Board of S.P.E.E.H. Hidroelectrica S.A.
for the financial year 2024, prepared according to the provisions of art. 107 of Law no. 24/2017
and art. 55 para. (3) of GEO no. 109/2011.
19
Period
Decision
April
• Approval of the Evaluation Sheet for 2024 of the Manager of the Internal Public Audit
Department and its performance objectives for 2025.
• Approval of the conclusion of the contracts subsequent to the Framework Agreement with SSH
Hidroserv SA, for the execution of the planned equipment maintenance services/works of the
2025 Annual Maintenance Program of Hidroelectrica SA, starting in the second quarter of 2025.
May
• Considering the change in the composition of the Supervisory Board, starting with 10.04.2025
(see the information above – Structure of the Supervisory Board), the Supervisory Board
appoints Mr. Silviu Razvan Avram as Chairman of the Supervisory Board. At the same time,
advisory committees are set up at the level of the Supervisory Board.
• Approval of the updated procedures regarding the granting of a sponsorship donation, budget
sponsorship donations and Hidroelectrica's Policy on donations and sponsorships.
June
• Approval of the Addendum no. 2 to the Collective Labor Agreement of S.P.E.E.H. Hidroelectrica
S.A. for the years 2024-2026.
• The Supervisory Board approved the conclusion of a credit line agreement for the issuance of
bank guarantee letters and the conclusion of a mortgage agreement on the receivables derived
from electricity sale-purchase agreements associated with the credit line agreement.
• Approval of Revision 1 of Annex 4 2025-2027 and of the list of independent equipment and
equipment.
• Approval of the conclusion of the contracts subsequent to the Framework Agreement with SSH
Hidroserv S.A., for the execution of the planned equipment maintenance services/works from
the Annual Maintenance Program for 2025 of Hidroelectrica S.A. starting in the second half of
2025.
• Approval of the new technical-economic indicators of the investment objective "Răstolița
Hydropower Development".
• Approval of the achievement of the investment objective "Refurbishment of the Râul Mare
Retezat HPP" following the update of the General Estimate and the technical-economic
indicators.
• The Supervisory Board approves and proposes to the General Meeting of Shareholders the
appointment of the financial auditor of S.P.E.E.H. Hidroelectrica S.A., Ernst& Young Assurance
Services SRL, for a period of three years (financial years 2025 - 2027).
July
• Approval of the achievement of the investment objective "Refurbishment of the Râul Mare
Retezat HPP".
• Approval of non-binding offers regarding potential acquisitions in order to diversify the
portfolio.
• Approval of the purchase of electricity from the forward markets necessary to cover the
contractual obligations related to the supply portfolio.
• Approval of the form and content of the Addendum no. 2 to the mandate contract to be
concluded with the members of the company's Management Board containing the key financial
and non-financial performance indicators approved by the OGMS Resolution no. 5/28.07.2025.
20
Period
Decision
August
• Approval of the purchase of electricity necessary to cover the contractual obligations related to
the supply portfolio.
September
• Approval of the conclusion of a contract with the affiliated company, SSH Hidroserv S.A., for the
execution of the level 4 (LN4) maintenance service/work.
• Approval of PPA contracts.
• Approval of the Activity Report of the Internal Public Audit Department for the first semester of
2025
• Termination by agreement of the parties, starting with 19.09.2025, of the mandate contracts
concluded with Karoly Borbely and Marian Fetita having the positions of CEO and CFO of
Hidroelectrica.
• Ensuring the stability of the company's activity until the completion of the selection procedure
according to GEO 109/2011 on corporate governance with subsequent amendments and
completions by allocating, for coordination, the company's activities to the 3 members of the
Management Board.
• Approval of the initiation of the selection and appointment procedure of two members of the
Management Board of Hidroelectrica S.A., CEO and CFO, according to the provisions of GEO no.
109/2011, approved with subsequent amendments and completions. The selection will be made
by an independent expert, specialized in the recruitment of human resources, whose services
are contracted under the law;
• Approval of the Draft Income and Expenditure Budget rectified for 2025.
• Approval of the Report of the Supervisory Board for the first half of 2025, in order to be
submitted for information to the General Meeting of Shareholders.
November
• Approval of the update of the Organization and Functioning Regulation of the Hidroelectric
Supervisory Board.
• Approval of internal public audit reports.
• Approval of the conclusion of a 4-year Framework Agreement with UCMH SRL for the provision
of products/services in order to carry out standard maintenance works on equipment included
in the 2026-2029 annual maintenance programs of S.P.E.E.H. Hidroelectrica S.A.,
• Approval of the initiation of the selection procedure of a member of the Management Board –
CFO Hidroelectrica S.A., according to the provisions of GEO no. 109/2011, approved with
subsequent amendments and completions. The procedure will be carried out by the Supervisory
Board/Nomination and Remuneration Committee with the support and specialized assistance
of an independent expert specialized in human resources recruitment, whose services are
contracted under the law, according to the CNR recommendations of 18.11.2025.
• Taking into account the appointment of 3 new members of the Supervisory Board, the new
composition of the advisory committees is established.
• Maintaining the interim measures regarding the management of the company considering the
fact that the CEO & CFO selection procedures were completed without the appointment of new
members of the Management Board.
• Approval of the initiation of the selection procedure of a member of the Management Board –
CEO of Hidroelectrica S.A., according to the provisions of GEO no. 109/2011, approved with
subsequent amendments and completions.
21
Period
Decision
December
• Approval of the form of the addendum to be signed with the members of the Management
Board, in order to align their mandate contracts with the applicable legal provisions, according
to GEO 109/2011 with amendments and completions in force.
• Approval of Revision 2 and 3 of Annex 4 2025-2027 to the BVC and of the List of Independent
Equipment and Equipment
• Approval of the conclusion of a 4-year Framework Agreement with S.S.H. HIDROSERV SA with
the object "Provision of services/works in order to carry out standard maintenance works on
equipment included in the 2026-2029 annual maintenance programs of S.P.E.E.H. Hidroelectrica
S.A.",
• Approval of the acquisition of legal consultancy services.
• Approval of the establishment by SPEEH Hidroelectrica SA together with EDF Power Solutions
International of a joint venture/joint venture, in equal shares of 50% - 50% each, and approval
of the Shareholders' Agreement to be concluded by SPEEH Hidroelectrica SA with EDF power
solutions International, which defines the terms and conditions regarding the operation of JVC,
which will be established by the parties in order to develop the CHEAP Tarnița project.
• Approval of the Report on the internal public audit activity for 2025
• Approval of the Multiannual / Annual Internal Audit Plan 2026 -2029.
Advisory Committees
Within Hidroelectrica’s Supervisory Board, the following advisory committees have been established:
Nomination and Remuneration Committee (“NRC”)
The Nomination and Remuneration Committee is a permanent advisory committee, independent from
the Company’s executive structures, which reports directly to the Supervisory Board. The Nomination and
Remuneration Committee is composed of members of the Supervisory Board. The majority of the
Committee’s members, including its Chairman, are independent. The Chairman coordinates the
Committee’s activity and reports on its behalf to the Supervisory Board. The Chairman of the Committee
is appointed by its members.
The composition of the Nomination and Remuneration Committee during 2025 was as follows:
Nomination and Remuneration Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 Dec 2025
1
George-Marius Toniuc - President
George-Marius Toniuc – President
George-Marius Toniuc - President
2
Silviu Razvan Avram - Member
Silviu-Razvan Avram – Member
Silviu Razvan Avram - Member
3
Carmen Radu - Member
Carmen Radu – Member
Carmen Radu - Member
4
Petre-Iulian Nicolescu – Member
Ciprian-Mihail Ene – Member
Catalin-Vladut Popescu - Member
5
Ana-Barbara Bobirca - Member
Ana-Barbara Bobirca – Member
Ana-Barbara Bobirca - Member
Source: Hidroelectrica
22
According to the Rules of Organization and Functioning of the Supervisory Board, the Nomination and
Remuneration Committee has the following responsibilities:
• leads the procedure for nominating new members to the Supervisory Board and makes
recommendations to the Board;
• organizes training sessions for Supervisory Board members, formulates proposals regarding the
remuneration of Supervisory Board members and Management Board members, in line with the
remuneration policy, and supports the Board in evaluating its own performance as well as that of the
executive management;
• formulates proposals for the position of Supervisory Board member, develops and proposes to the
Supervisory Board the selection procedure for candidates for Management Board positions and other
management roles, recommends candidates for the above-mentioned positions and formulates
proposals regarding the development of a remuneration policy for Management Board members and
other management positions, in line with the Company’s strategy, objectives, values and interests;
• proposes the selection criteria for Management Board members, corresponding to the identified
profiles, as well as selection criteria for other management positions;
• makes recommendations to the Supervisory Board regarding appointments to Committees (other
than the Nomination and Remuneration Committee);
• oversees the implementation of the remuneration policy for the Management Board;
• during its activity, prepares an annual report on the remuneration and other benefits granted to
Supervisory Board members and Management Board members during the financial year, in
accordance with the Company’s approved remuneration policy and applicable legal provisions. The
remuneration of Supervisory Board members or any other benefits granted to them may only be
established based on a resolution of the Ordinary General Meeting of Shareholders, the mandate
agreement and the applicable legal provisions. The report is submitted to the General Meeting of
Shareholders that approves the annual financial statements;
• ensures that the report is made available to shareholders on the Company’s website and includes at
least the following information: (a) the structure of remuneration, including the proportion of variable
and fixed components; (b) the performance criteria underlying the variable component and the
relationship between achieved performance and remuneration; (c) the rationale for any annual bonus
schemes or non-cash benefits; (d) any supplementary or early retirement pension schemes; (e)
information on contract duration, negotiated notice period and the level of compensation for
dismissal without just cause; (f) the information provided in the remuneration policy approved by the
Company, including those required under Article 107(2) of Law No. 24/2017;
• meets periodically to assess the activity of the Management Board and other persons holding
management positions, in order to determine the proportionality between the set performance
targets and their level of achievement, on the one hand, and the financial or non-financial benefits
stipulated in their contracts (whether or not such benefits have been received), on the other hand.
At the end of each meeting, the Committee submits a report on its activity to the Supervisory Board;
• monitors the level of achievement of financial and non-financial performance indicators resulting
from the management plan for the Company’s Supervisory Board members and Management Board
members;
23
• oversees the annual evaluation process of the Supervisory Board and its advisory committees and
supports the Supervisory Board in the evaluation of the Management Board members. It also
develops the policy/guidelines regarding the evaluation of the Supervisory Board, including the
purpose, criteria and frequency of the evaluation process;
• assesses whether Supervisory Board members can be considered independent, based on relevant
criteria, by examining whether there are business or other personal relationships that could
materially affect their independence and objectivity, as well as their ability to act in the interest of
the Company, its shareholders and stakeholders.
Audit Committee (“AC”)
The Audit Committee enhances the Supervisory Board’s oversight capacity with regard to financial
reporting, the effectiveness and adequacy of the internal control framework, the conduct of internal and
external audit processes, as well as compliance with applicable laws and regulations.
The Audit Committee consists of at least three members, the majority of whom, including the Chairman,
are independent. The Chairman of the Audit Committee is appointed by its members.
The majority of members, including the Chairman, must demonstrate appropriate qualifications relevant
to the Committee’s roles and responsibilities. The Chairman coordinates the Committee’s activity and
reports on its behalf to the Supervisory Board.
The Audit Committee must collectively possess relevant expertise in the Company’s field of activity.
At least one member of the Audit Committee must have expertise in accounting and statutory audit,
supported by relevant qualification documents, and at least one member must have the qualifications
required by law in the field in which the Company operates.
In accordance with ASPAAS Order No. 123/2022 on the composition of audit committees, at least one
member of the Audit Committee must hold the qualification of financial auditor. By way of exception,
pursuant to the same Order, a person may also be considered qualified to serve on the Audit Committee
if they have at least three years of experience in statutory audit, acquired through participation in
statutory audit engagements in Romania, another Member State, an EFTA state, Switzerland or the United
Kingdom of Great Britain and Northern Ireland, or within audit committees established at the level of the
boards of directors/supervisory boards of public-interest entities, as evidenced by supporting
documentation.
The composition of the Audit Committee during 2025 was as follows:
Audit Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 Dec 2025
1
Carmen Radu – President
Carmen Radu – President
Carmen Radu – President
2
George-Marius Toniuc – Member
George-Marius Toniuc – Member
George-Marius Toniuc – Member
3
Silviu-Razvan Avram – Member
Silviu-Razvan Avram – Member
Silviu-Razvan Avram – Member
4
Cristian-Nicolae Stoina – Member
Anca Mitu – Member
Ana-Barbara Bobirca – Member
5
Mihai-Liviu Mihalache – Member
Ana-Barbara Bobirca – Member
Ion Ariton – Member
6
Ana-Barbara Bobirca – Member
-
-
Source: Hidroelectrica
24
According to the Rules of Organization and Functioning of the Supervisory Board, the Audit Committee
has the following responsibilities:
• performs the duties set out under Article 65 of Law No. 162/2017 on the statutory audit of annual
and consolidated financial statements, as subsequently amended and supplemented;
• is informed, through the Supervisory Board, and issues recommendations to the Supervisory Board
regarding the selection of the statutory auditor, the evaluation and monitoring of the statutory
auditor’s independence, as well as the monitoring and outcome o f the statutory audit of the annual
and consolidated financial statements;
• is informed, through the Supervisory Board, and issues recommendations to the Supervisory Board
regarding financial reporting processes and internal managerial control processes within
Hidroelectrica;
• performs an annual assessment of the internal control system, as well as the effectiveness of the
internal control and management systems. This assessment considers the effectiveness and scope of
the internal audit function, the adequacy of risk management and internal control reports submitted
to the Audit Committee, the promptness and effectiveness with which executive management
addresses identified deficiencies or weaknesses, and the submission of relevant reports to the
Supervisory Board;
• monitors the application of legal standards and generally accepted internal audit standards, oversees
the internal audit activity, endorses the internal audit charter, plans and reports, requests periodic
and/or ad hoc internal audit engagements and issues recommendations to the Supervisory Board
regarding the endorsed internal audit charter, plans and reports, without affecting the independence
of internal auditors. Reports or analyses initiated by the Audit Committee are followed by periodic (at
least annual) or ad hoc reporting submitted to the Supervisory Board;
• evaluates conflicts of interest related to transactions of the Company and its subsidiaries with related
parties;
• ensures that the internal audit function has the appropriate authority, resources and procedures to
assist the Supervisory Board in ensuring the effectiveness and efficiency of the Company’s risk
management and internal control framework;
• agrees on an annual internal audit work plan together with the internal auditor, receives internal
audit reports and updates on key audit matters, monitors the implementation of internal audit
recommendations and provides necessary guidance;
• oversees the framework for ensuring the Company’s compliance with applicable legal and regulatory
requirements, as well as with the Company’s internal regulations (such as procedures for reporting
breaches of the law or of the Company’s Code of Conduct), u nless this responsibility is assigned to
another committee;
• monitors the independence and objectivity of the external auditor, approves a policy regarding the
provision of permitted non-audit services by the external auditor in accordance with legal
requirements and ensures its implementation. The Committee’s findi ngs regarding the external
auditor’s independence are disclosed in the annual report;
25
• discusses the annual work plan with the external auditor, covering the scope and materiality of the
audit activities. The Audit Committee meets with the external auditor whenever necessary to discuss
identified issues and to monitor the quality of the services provided;
• meets as often as necessary, but at least twice a year, in connection with the preparation of semi-
annual and annual results, ensuring their proper dissemination to shareholders and the public.
Risk Management Committee (“RMC”)
The Risk Management Committee consists of at least three members. The Chairman of the Committee is
appointed by its members. At least one member is independent. The Chairman coordinates the
Committee’s activity and reports on its behalf to the Supervisory Board.
The composition of the Risk Management Committee during 2025 was as follows:
Risk Management Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 Dec 2025
1
Silviu-Razvan Avram – President
Silviu-Razvan Avram – President
Silviu-Razvan Avram – President
2
Cristian-Nicolae Stoina – Member
Marius Persinaru – Member
George-Marius Toniuc – Member
3
Petre-Iulian Nicolescu – Member
George-Marius Toniuc – Member
Ana-Barbara Bobirca – Member
4
Mihai-Liviu Mihalache – Member
Ana-Barbara Bobirca – Member
Catalin Vladut Popescu –
Member
5
George-Marius Toniuc – Member
Ciprian-Mihail Ene – Member
Emil Merdan – Member
6
Ana-Barbara Bobirca – Member
-
-
Source: Hidroelectrica
Risk Management Committee:
• ensures the alignment of control activities with the risks arising from the activities and processes
subject to control;
• identifies, analyses, assesses, monitors and reports identified risks, the related mitigation or
anticipation measures, as well as other actions taken by executive management;
• is responsible for assessing the solvency of the public enterprise, in relation to its usual duties and
obligations, and informs or, where appropriate, makes proposals to the Supervisory Board;
• receives and evaluates periodic reports submitted by the risk management function regarding the
Company’s risk profile, as well as the implementation status and effectiveness of the risk
management system;
• monitors significant risks and ensures their effective management;
• periodically informs the Supervisory Board regarding the main risks assumed by the Company;
• performs at least an annual assessment of the internal control system, focusing on the adequacy of
risk management and internal control reports, as well as the promptness and effectiveness with
which the Management Board addresses deficiencies identified through internal control;
• informs the Supervisory Board regarding the results of the annual assessment and provides
recommendations/proposals for improving the internal control and risk management system.
26
Governance and Sustainability Committee ("CGS")
The Governance and Sustainability Committee consists of at least three members. The Chairman of the
Committee is appointed by its members. The Chairman and at least one member are independent. The
Chairman coordinates the Committee’s activity and reports on its behalf to the Supervisory Board.
The Governance and Sustainability Committee is an advisory body of the Supervisory Board, playing a key
role in ensuring compliance with good corporate governance practices and in promoting sustainability
principles within the Company’s activities.
The composition of the Governance and Sustainability Committee during 2025 was as follows:
Governance and Sustainability Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 Dec 2025
1
Ana-Barbara Bobirca - President
Ana-Barbara Bobirca – President
Ana-Barbara Bobirca - President
2
Petre-Iulian Nicolescu - Member
Anca Mitu – Member
Emil Merdan - Member
3
George Marius Toniuc - Member
George-Marius Toniuc – Member
George Marius Toniuc - Member
4
Carmen Radu - Member
Carmen Radu – Member
Carmen Radu – Member
5
Mihai Liviu Mihalache - Member
Marius Persinaru – Member
Ion Ariton - Member
Source: Hidroelectrica
Attributions:
• oversees and monitors the implementation and compliance with the Company’s legal and contractual
obligations regarding corporate governance, as well as other applicable governance principles, by
monitoring decision-making processes and adherence to ethics and transparency rules, and makes
recommendations to the Supervisory Board to ensure continuous alignment with national and
international standards;
• periodically reviews the Rules of the Supervisory Board and the Company’s Articles of Association and
formulates recommendations to the Supervisory Board regarding necessary amendments to the
corporate governance policy and related documents;
• submits to the Supervisory Board for approval and subsequently periodically reviews the Company’s
Governance Policy;
• verifies the Company’s compliance with national and international corporate governance regulations,
safeguarding the interests of shareholders and stakeholders;
• oversees the implementation of the Company’s policy on the prevention and management of
conflicts of interest, being responsible for evaluating, monitoring and reviewing its application at the
level of the Supervisory Board, the Management Board and senior management, and formulates
recommendations to ensure transparency, decision-making integrity and the protection of the
Company’s and shareholders’ legitimate interests;
• reviews the principles and policy on delegation of authority within the Company, ensuring the
maintenance of an effective and efficient decision-making process, and makes recommendations to
the Supervisory Board in this regard;
• formulates recommendations to improve the quality of information flows to the Supervisory Board,
the guiding principles for preparing documentation and presentations submitted to the Supervisory
Board, and the adequacy of reporting, including monitoring key performance indicators presented to
the Supervisory Board; develops and monitors sustainability policies and strategies and their
implementation, integrating principles of social responsibility, environmental protection and sound
economic practices into the Company’s activities;
27
• periodically reviews internal policies and regulations that impact sustainability objectives, ensuring
their alignment with the Company’s strategic objectives;
• monitors the quality and compliance of non-financial reporting in accordance with legal requirements
and international standards;
• monitors and evaluates the achievement of key performance indicators related to governance and
sustainability objectives;
• oversees sustainability-related risks, assessing risks associated with sustainability, including the social
and environmental impact of the Company’s operations;
• promotes a climate of trust through ongoing communication with investors, in order to understand
their areas of interest and priorities, with the aim of ensuring effective governance;
• supports the strengthening of relationships with relevant stakeholders;
• promotes a business environment based on ethical values, transparency and integrity, ensuring that
decisions are taken in the long-term interest of the Company and all stakeholders. This Committee
plays an important role in aligning the Company’s activities with investor expectations and global
trends in sustainability and corporate responsibility.
The Supervisory Board may decide to establish additional committees, depending on the Company’s
specific needs and strategic priorities, determining the mandate, composition and responsibilities of each
committee in line with corporate governance objectives.
Information on the meetings of the Supervisory Board and advisory committees in 2025
In 2025, a total of 43 Supervisory Board meetings were held, in compliance with legal and statutory
provisions, of which:
• 20 meetings were held in physical/hybrid format; and
• 23 meetings were held by electronic vote.
The table below presents the attendance of Supervisory Board members (in physical/hybrid/electronic
format) at the meetings of the Supervisory Board and its committees during 2025.
No.
Name
SB
(43 sessions)
NRC
( 14 sessions)
AC
(8 sessions)
RMC
( 2 sessions)
CGC
(5 sessions)
1.
Silviu-Razvan Avram
43
14
8
2
N/A
2.
George Toniuc
43
14
8
2
5
3.
Carmen Radu
43
14
8
N/A
5
4.
Ana-Barbara Bobircă
43
14
8
2
5
5.
Ion Ariton
6
N/A
1
N/A
6.
Emil Merdan
6
N/A
N/A
-
-
7.
Catalin Popescu
6
5
N/A
-
-
8.
Petre Nicolescu
8
1
N/A
1
1
9.
Crisan Stoina
8
N/A
4
1
N/A
10.
Mihai Mihalache
8
N/A
4
1
1
11.
Ciprian Ene
29
8
N/A
1
N/A
12.
Anca Mitu
29
N/A
3
N/A
4
13.
Marius Persinaru
13
N/A
N/A
1
2
Source:Hidroelectrica
Supervisory Board members who did not attend one or more Supervisory Board/committee meetings
granted representation mandates.
During 2025, the Nomination and Remuneration Committee held a total of 14 meetings, both with
physical attendance at the Company’s headquarters and via videoconference or electronic means. Key
items on the agenda included: the annual report of the Nomination and Remuneration Committee for the
28
period 1 January 2024 – 31 December 2024, the consolidated annual report of the Management Board
and the Supervisory Board, the evaluation report of the Management Board’s activity for 2024 and the
evaluation report of the Supervisory Board’s activity for 2024.
The Audit Committee held a total of eight meetings in 2025, both in hybrid format and electronically (via
email), during which it reviewed the report on internal public audit activity for 2024 carried out at the
level of S.P.E.E.H. Hidroelectrica S.A. and submitted recommendations to the Supervisory Board.
The Corporate Governance Committee held a total of five meetings in 2025, both in hybrid and electronic
format, during which the following topics were addressed and analysed: the policy on the self-assessment
of the Supervisory Board of Hidroelectrica S.A. (including the self-assessment questionnaire),
subsequently approved by the Supervisory Board; the Rules of Organization and Functioning of the
Supervisory Board – proposals for update and alignment with best corporate governance practices,
including the provisions of the new BSE Corporate Governance Code; alignment of the objectives set out
in the Management Plan with the results achieved – brainstorming session on strategies to improve the
alignment between objectives and execution; as well as other governance-related matters.
The Risk Management Committee held a total of two meetings in hybrid format, during which various
topics were addressed, such as: the risk management policy, the review/update of strategic risks and the
analysis of risks associated with the energy transition.
Self-assessment of the Supervisory Board’s activity
The annual self-assessment of the Supervisory Board is carried out in accordance with the following
regulatory and governance instruments:
• Government Emergency Ordinance No. 109/2011 on the corporate governance of public enterprises,
as subsequently amended, and its implementing methodological norms;
• the Bucharest Stock Exchange (BSE) Corporate Governance Code, to which the Company adheres as
a listed issuer;
• the OECD Principles of Corporate Governance of State-Owned Enterprises;
• the Company’s Articles of Association and the Rules of Organization and Functioning of the
Supervisory Board;
• best practice standards reflected in the recommendations of the European Corporate Governance
Institute (ECGI).
Pursuant to Article 34(2) of Government Emergency Ordinance No. 109/2011, the Nomination and
Remuneration Committee is mandated to support the Supervisory Board in assessing its own
performance.
The Supervisory Board must continuously assess the balance of its skills mix, review its activity and identify
areas for improvement, in order to ensure that it carries out all actions necessary for the administration
of the Company’s assets in its best interest, for the fulfilment of its object of activity, and exercises the
duties conferred by the Articles of Association and the mandate agreement under conditions of efficiency,
economy, effectiveness, safety and legality.
The purpose of the self-assessment is to improve the supervision of the Company, enhance the
performance of the Supervisory Board, consolidate relevant information, and identify the Board’s
strengths and weaknesses as a collective supervisory body.
On 28 February 2025, the Supervisory Board approved the policy on the self-assessment of the
Supervisory Board, accompanied by a questionnaire structured across eight thematic dimensions, which
was distributed to all members. The process comprised three stages:
(i) individual self-assessment — questionnaires completed independently;
29
(ii) collective evaluation — aggregated analysis and collective discussions on the conclusions;
(iii) improvement plan and reporting — translating the conclusions into an action plan.
The self-assessment questionnaire, annexed to the self-assessment policy, includes eight sections:
• objectives, strategy and mandate;
• performance measurement;
• relationship with key stakeholders;
• governance and decision-making process;
• risk management;
• ethics and compliance;
• Board composition and diversity;
• professional training and Board development.
The sample included all seven members of the Supervisory Board. Six out of seven actively participated.
Emil Merdan, appointed in November 2025, chose not to participate in the evaluation for the full 2025
financial year, considering that the duration of his mandate was insufficient for a thorough assessment of
the entire reference period. Supervisory Board members responded independently, based on the activity
carried out during 2025.
Following the self-assessment process of the Supervisory Board of HIDROELECTRICA S.A., the average
rating awarded by the seven members of the Supervisory Board was 4.63 out of 5.
Scores by dimension:
Rating Size
Score (out of 5)
Rating
Objectives, strategy and mandate
4,59
Beyond expectations
Performance measurement
4,63
Beyond expectations
Relationship with key actors (stakeholders)
4,69
Beyond expectations
Governance and decision-making
4,63
Beyond expectations
Risk management
4,83
Exceptional
Ethics and compliance
4,73
Beyond expectations
Board Membership and Diversity
4,55
Beyond expectations
Training and development of the Council
4,42
Beyond expectations
AGGREGATE GENERAL AVERAGE
4,63
Beyond expectations
*The performance self-assessment used the following ratings: 5 = outstanding, 4 = above expectations/very good, 3 = good, 2 =
needs improvement, 1 = unsatisfactory.
Source: Hidroelectrica
Qualitative evaluation:
Size
Rating 2025
Evolution compared to 2024
Structure and powers of the Council
Good
Stable
Functioning of the Council and quality of meetings
Good
Stable
Quality of information provided to the Council
Suitable
Improving
Strategy oversight
Good
Improving
Financial Performance Monitoring
Very good
Stable
Risk management and governance
Suitable
Improving
Functioning of Council committees
Good
Stable
Institutional relationship with the Management Board
Good
Stable
ESG integration
Suitable
Improving
Source: Hidroelectrica
30
The self-assessment for the 2025 financial year confirms that the activity of Hidroelectrica’s Supervisory
Board is carried out at a high level of effectiveness and governance maturity, with an aggregate score
of 4.63 out of 5.00 and a rating of “Above expectations” across all eight evaluated dimensions.
Key strengths — particularly in Risk Management (4.83), Ethics and Compliance (4.73) and Stakeholder
Engagement (4.69) — reflect the Board’s robust oversight capabilities and its commitment to the
standards of integrity and transparency expected by international investors.
At the same time, the Board has identified clear areas for further development: formalizing the
monitoring of decision implementation, strengthening professional development programs, and more
deeply integrating risk analysis into strategic deliberations.
The Board considers that Hidroelectrica’s governance architecture — comprising specialized committees,
oversight processes, ethical standards and risk governance — is aligned with the OECD Guidelines on
Corporate Governance of State-Owned Enterprises and with the benchmark practices of European listed
energy companies, as reflected in the recommendations of the European Corporate Governance Institute
(ECGI).
The Board remains committed to evolving towards an integrated governance model, characteristic of
sector leaders at European level, and to supporting Hidroelectrica’s long-term sustainable development
for the benefit of all its shareholders and stakeholders.
Hidroelectrica has consistently undertaken actions to ensure gender equality, a principle under which
men and women receive equal remuneration and have equal rights within the Company.
The Company aims to create a working environment in which individual differences are accepted and
valued. Any form of discrimination, whether positive or negative, based on real or perceived individual
attributes, is strictly prohibited.
As at the date of this Report, women represent 29% of the Supervisory Board.
Based on the information available, there are no agreements, arrangements or family relationships
between members of the Supervisory Board and any other person that contributed to their appointment
as members of the Supervisory Board.
As at 31 December 2024, none of the members of the Supervisory Board held shares in Hidroelectrica.
Based on the information available, members of the Supervisory Board have not been involved in any
litigation or administrative proceedings related to their activity within the Group over the past five years,
nor regarding their capacity to perform their duties within the Company over the same period.
Chairman of the Supervisory Board
Silviu-Răzvan AVRAM
31
II. Consolidated Report of the Management Board
1. Presentation of the group
Societatea de Producere a Energiei Electrice în Hidrocentrale Hidroelectrica S.A. (“Hidroelectrica” or the
“Company”) is a joint-stock company operating under a two-tier system, carrying out its activity in
accordance with Romanian legislation. It was established pursuant to Government Decision No. 627 of 13
July 2000 and is registered in Romania with the Trade Register Office attached to the Bucharest Tribunal
under no. J2000007426409. The Company’s registered office is located in Romania, Bucharest, District 1,
15–17 Ion Mihalache Boulevard, floors 10–15. It has a unique registration code 13267213 and LEI code
787200IISRQX09PRB732.
Starting from 12 July 2023, the Company’s shares have been traded on the regulated market operated by
the Bucharest Stock Exchange.
1.1. Organizational structure
Hidroelectrica is the largest electricity producer in Romania and the main provider of ancillary services,
playing a key role in the security of the National Energy System (“NES”).
The Company owns and operates 188 hydropower plants and small hydropower plants (including five
pumping stations), with a total installed hydropower generation capacity of approximately 6.3 GW, as
well as a wind farm with a total installed capacity of 108 MW.
The Company operates seven hydropower branches and one branch managing the Crucea wind farm, as
illustrated below, with Porțile de Fier and Vâlcea being the most significant for the Group in terms of
installed capacity and their contribution to the Group’s total electricity production.
Hidroelectrica branches; *PDF stands for Portile de Fier
Source: Hidroelectrica
Since its establishment, the Company has been committed to generating electricity exclusively from
renewable sources and has played a key role in designing and developing technological and operational
concepts that have become benchmarks in its sector. At the same time, Hidroelectrica operates both as
32
a wholesale electricity seller and as a supplier of electricity directly to end customers, including residential
and non-residential clients (covering businesses across various industrial sectors, such as automotive
manufacturing, telecommunications and construction, among others).
As a producer of hydropower and wind energy, the Company leverages synergies between its generation
and supply portfolios, as well as those arising from the diversification of its generation portfolio (towards
other renewable sources, such as wind and solar), by integrating these with its core hydropower
operations.
As at 31 December 2025, Hidroelectrica has the following subsidiaries (together, the “Group”):
Subsidiary
Activity
Registered
office
% shareholding as of
31December 2025
% shareholding as of
31 December2024
Hidroserv S.A. ("Hidroserv")
Services in the
energy sector
(maintenance,
repairs,
construction)
Bucharest,
Romania
100%
100%
Uzina de Construcţii
Macchine Hidroenergetice
S.R.L. ("UCMH")
Engine & Turbine
Manufacturing
Reșița,
Romania
100%
100%
Source: Hidroelectrica
Hidroserv provides maintenance and repair services for the Group’s hydropower assets, ensuring the
proper functioning of hydropower installations. It offers a wide range of technical services, including
preventive and corrective maintenance works, as well as specialized technical consultancy.
Since October 2016, Hidroserv has been under insolvency proceedings, within which a reorganization plan
was approved in June 2020 by the Creditors’ Assembly and confirmed by the syndic judge. On 23 October
2023, Hidroserv fully settled the claims registered in the creditors’ table, through the early distribution of
amounts related to the final quarters included in the “Final Table of Claims”. As a result of the
implementation of the reorganization plan, Hidroserv exited insolvency on 26 June 2025 and is currently
in the process of preparing for the initiation of a new growth cycle.
UCMH specializes in the manufacturing of equipment and mechanical components for hydropower plants
and other energy installations. UCMH provides technical and production support to Hidroelectrica,
contributing to the implementation of maintenance programs, as well as to the refurbishment and
modernization of hydropower equipment and infrastructure.
On 22 February 2023, the Company was declared the winning bidder in the sale procedure for the ABC
business lines and the Câlnicel platform, previously owned by U.C.M. Reșița S.A. In January 2024, following
the approval of the Extraordinary General Meeting of Shareholders, a new subsidiary, Uzina de
Construcții Mașini Hidroenergetice S.R.L., was established, through which the business of U.C.M. Reșița
S.A. was taken over. The main object of activity of the new subsidiary is the manufacture of engines and
turbines (NACE code 2811).
Share capital and main characteristics of the Company’s shares
The Company’s registered share capital amounts to RON 4,498,025,670, fully subscribed and paid in, and
is divided into 449,802,567 ordinary, registered and freely transferable shares, each with a nominal value
of RON 10 per share, issued in dematerialized form, with ISIN code RO4Q0Z5RO1B6 and traded on the
regulated market operated by the Bucharest Stock Exchange under the ticker symbol “H2O”.
33
1.2. Main activities of the Group
Electricity generation and ancillary services
The Group generates electricity through the operation of 188 hydropower plants and small hydropower
plants (including five pumping stations) and 36 wind turbines of 3 MW each, strategically located across
eight branches throughout Romania. The portfolio of hydropower plants in operation consists of
approximately 54% storage hydropower plants, 46% run-of-river plants and less than 1% pumping
capacities. The main generation assets are Porțile de Fier I and Porțile de Fier II, which together ac count
for approximately 22.75% of installed capacity and 42.6% of total electricity production over the past ten
years.
Hidroelectrica entered the wind energy generation sector through the acquisition of Crucea Wind Farm,
representing 4% of Romania’s total wind capacity as at 2022. Subsequently, the General Meeting of
Shareholders approved its merger by absorption into Hidroelectrica, effective as of 31 December 2022.
The electricity generated by the Company is marketed both on wholesale electricity trading markets and
on the retail market (through supply activities to end customers).
For the operation of its generation capacities, Hidroelectrica operates under License No. 332 dated 24
July 2001, issued by the National Energy Regulatory Authority (ANRE) for the commercial operation of
electricity generation capacities, valid until 24 July 2026, in accordance with the applicable regulations
and sector-specific rules.
Hidroelectrica is also the main provider of ancillary services in Romania, thus ensuring the stability of the
National Energy System (“NES”). The Company provides ancillary services (also referred to as “system
technological services”) to the national system operator, Transelectrica S.A., under the electricity supply
Source: Hidroelectrica S.A., annual reports of ANRE (National Energy Regulatory Authority)
Note:
1. Average market shares between 2020 and 2025, based on total energy delivered to the grid, according to company data
2. Based on suppliers’ market shares in the competitive market, according to the ANRE report from December 2025
3. Energy delivered in 2025
4. Total GHG (greenhouse gas) emissions per net revenue (tCO₂ equivalent/monetary unit)
34
license and the conditions associated with License No. 2215 dated 6 May 2020. Accordingly,
Transelectrica S.A. procures ancillary services from the Company, based on an ANRE-regulated procedure
and contractual arrangements, in order to maintain the operational security of the energy system and the
quality of electricity transmitted in accordance with applicable regulations.
Supply of electricity to end customers
The electricity market for end consumers in Romania is liberalized, allowing all consumers to freely choose
their electricity supplier at negotiated prices. The competitive electricity market enables consumers to
select the supplier and the offer that best meet their needs, at competitive prices.
Revenues from the Group’s supply segment include active energy as well as pass-through costs, such as
green certificates, electricity transmission and distribution costs, costs related to the injection of
electricity into the system, and other fixed costs.
1.3. Mission, vision, values
Hidroelectrica’s Mission: To create value through the generation and commercialization of electricity, in
a manner that is responsible towards the community and the environment, under conditions of quality
and performance.
Hidroelectrica’s Vision: To strengthen its position as a leader in electricity generation and the provision
of ancillary services, while adhering to the principles of sustainable development.
Hidroelectrica’s Values: Performance, integrity, social responsibility, creativity, teamwork.
1.4. Elements of strategy
As the national leader in electricity generation, with sustainable operations in terms of social
responsibility towards the communities it engages with and environmental protection, Hidroelectrica’s
overarching objective is to continuously enhance shareholder value by conducting predictable and
profitable business activities.
Hidroelectrica aims to rank among Europe’s renewable energy producers that operate under high
technical quality and safety standards.
The strategy for Hidroelectrica’s development and evolution is aligned with European policies and
Romania’s ambitious targets for the decarbonisation of the economy by 2030, namely achieving 49%
renewable energy in total consumption. In this context, the Company directly contributes to the
development of new renewable generation capacities, including wind and solar, intended to gradually
replace existing fossil fuel-based capacities scheduled for decommissioning.
The main strategic directions pursued by the Management Board of Hidroelectrica are:
• optimizing existing hydropower assets by enhancing operational efficiency, with a focus on
maintenance activities (equipment and civil works), correlated with refurbishment works across
the asset base, aiming for predictable and stable performance;
• implementing new technologies for hydropower projects at various stages of execution;
35
• promoting growth and diversification through the development of new generation capacities and
the capitalization on potential synergies with other renewable sources, including by exploring
mergers and acquisitions opportunities;
• increasing the Company’s market share in the electricity supply segment;
• focusing on shareholder value through a balanced approach between operational efficiency and
investments to maximize returns, supported by a dividend policy with a payout ratio of at least
90% of profit;
• maximizing cash generation and total shareholder return;
• ensuring reporting in accordance with applicable European legislation and ESG reporting
guidelines;
• obtaining a sustainability rating;
• implementing best practices in corporate governance;
• improving the reporting system and communication with investors and analysts.
Source:Hidroelectrica
Given that the energy sector is expected to undergo an unprecedented transformation in the coming
period, based on Hidroelectrica’s SWOT analysis and in alignment with shareholders’ expectations
regarding the Company’s positioning in the context of the acc elerated energy transition—along with the
opportunity to become a leader of the energy transition in Romania—the achievement of Hidroelectrica’s
strategic objectives will be pursued through the following key directions of action:
1. Organization – Internal efficiency of the Group, essential for optimally positioning the Group to
deliver results. This includes simplifying internal procedures to shorten implementation timelines,
improving cost efficiency and optimizing the workforce structure;
2. Operations – Condition-based maintenance and the adoption of digitalization solutions, aligned
with the refurbishment and modernization program, aimed at increasing the Company’s
operational efficiency and ensuring the timely completion of ongoing investments;
3. Development and diversification – Prioritization of investment projects and monitoring of their
implementation, diversification of the generation portfolio and expansion of the supply portfolio;
36
4. Governance – Alignment of the Group with corporate governance standards applicable to listed
companies. Allocation of resources to implement an integrated reporting system, both at
standalone and consolidated level, enabling dashboard-type customization of information for
real-time monitoring of various flows, with the aim of improving response times and overall
decision-making. Ensuring compliant and transparent reporting, effective communication with
investors, fulfillment of sustainability reporting requirements, and definition and achievement of
ESG targets.
One of the Group’s long-term strategic objectives is to support the professional development of its
employees, through the continuous enhancement of their knowledge and professional competencies.
The Group will continue on its path of sustainable development by upholding the values of its
organizational culture and business principles, while protecting, supporting and continuously improving
its human, natural and financial capital for the future. In this context, the Group can also contribute to
fostering this mindset among the younger generation, who must understand, adopt and apply the
principles of sustainable development.
The Management Board’s vision for the Company’s strategic and sustainable development, with a focus
on increasing Hidroelectrica’s value, in correlation with the current context, trends and opportunities of
the local and regional energy market, as well as with foreseeable projections and perspectives, is to
ensure the continuation of a modern, financially viable and economically sustainable company, capable
of delivering high-quality services to its customers, acting responsibly towards society, all stakeholders
involved in its operations and the environment, in the context of sustainable development.
1.5. Predictable development of the Company
Hidroelectrica continuously pursues the optimal capitalization of the developed hydropower potential by
achieving a high level of performance, reliability and availability of the hydropower units in operation, as
well as by extending their operational lifecycle by 25–30 years at nominal parameters, under conditions
of increased efficiency and safety for modernized and refurbished capacities.
To this end, the Company aims to strengthen Hidroserv’s position within the economic circuit and to
transform UCMH Reșița S.A. into a general contractor for large-scale energy projects at national level,
into a modern, integrated company for the maintenance and modernization of hydropower equipment,
combining in one place both manufacturing and installation capabilities. All these actions are aimed at
securing the existing generation asset portfolio, thus ensuring the Company’s long-term performance.
One of the ongoing priorities of Hidroelectrica’s management is the optimal management of the
Company’s investment budget and investment project portfolio, through the promotion of new projects
and the monitoring of those under execution, in order to develop new renewable generation capacities,
modernize, rehabilitate and refurbish existing assets, advance business diversification projects, as well as
mergers and acquisitions activities.
Business development will primarily be achieved through increasing generation capacity, with a focus on
boosting electricity production both by utilizing the existing hydropower potential and by diversifying the
37
generation portfolio, including through the acquisition and/or development of energy generation
capacities from other renewable sources and/or the acquisition of stakes in other companies.
The optimization of the operation of existing generation capacities must take into account the synergies
that can be achieved by combining multiple renewable energy sources: hydro–wind, hydro–solar, hydro–
solar–hydrogen, hydro–battery storage, wind–battery storage, solar–battery storage. This approach aims
to mitigate the impact of climate-related risks to which the Company is constantly exposed, while
increasing the predictability of generation forecasts, reducing imbalance costs, and optimizing operating
costs. It also generates multiple benefits in energy sales planning and enables the generation of additional
revenues through the use of Virtual Power Plants in the management of energy assets.
Within the process of optimizing electricity generation, the Company aims to analyze and implement pilot
projects that will significantly contribute to increasing generation capacity, as follows:
• pilot project combining wind energy with battery storage at the Crucea wind farm;
• pilot project combining run-of-river hydropower with battery storage, a solution that can be
replicated across similar plants within Hidroelectrica’s portfolio;
• installation of photovoltaic panels at the Company’s own facilities to partially cover internal
technological consumption;
• installation of floating photovoltaic panels operating in tandem with hydropower units within the
same dispatchable unit;
• implementation of an advanced pilot system for production asset management (SAMA), aimed
at optimizing and streamlining the management of critical production assets through the
centralization and utilization of relevant data, with key objectives including operational efficiency,
predictive maintenance, enhanced decision-making capabilities and a high level of equipment
availability.
The integrated production asset management solution will utilize both static and operational data
within Enterprise Asset Management (EAM) systems, covering the entire asset lifecycle—
planning, procurement, commissioning, operation, maintenance, optimization and
decommissioning—as well as Asset Performance Management (APM) solutions. These will
incorporate and model operational data from SCADA, IoT and EAM systems, using advanced
predictive analytics based on statistical models and artificial intelligence/machine learning
(AI/ML) algorithms to identify equipment degradation trends, anticipate failures and support
optimized maintenance decision-making;
• development of a pilot Digital Twin project for a hydropower plant, aimed at optimizing
operational performance through the simulation of various scenarios and identification of
optimal operating parameters, as well as implementing predictive maintenance at asset level;
• operationalization of research and innovation activities within Hidroelectrica, through the
establishment of an Innovation and Asset Health Center, involving, alongside Hidroelectrica
specialists, researchers, academics and other experts.
The diversification of the generation portfolio into other renewable sources focuses on three main
directions of action:
• Organic growth – development of own renewable energy projects, including through
hybridization with existing hydropower plants (“behind-the-meter”);
38
• Growth through acquisitions – through its M&A activity, Hidroelectrica assesses opportunities to
acquire generation capacities at the RTB (“Ready to Build”) stage or at COD (Commercial
Operation Date);
• Strategic partnerships – establishing partnerships with reputable entities with proven capabilities
in operating, building and commissioning renewable energy capacities. These partnerships enable
a rapid transfer of know-how and proven expertise in the areas targeted by Hidroelectrica.
The Company’s strategy to implement measures aimed at accelerating the transition to a green energy-
based society—through research, innovation, analysis, development and the exploration of new business
models—has as its ultimate objective the sustainable growth of Hidroelectrica.
39
2. Key highlights of 2025
In 2025, macroeconomic developments were characterized by a moderate GDP growth pace, below
potential, in a context marked by political uncertainties in the first part of the year, persistent inflationary
pressures—including following the liberalization of electricity prices in April—and the continuation of
restrictive financial conditions. In this environment, fiscal and budgetary policy focused on deficit
consolidation through measures that impacted public investment dynamics and consumption.
Against this backdrop, the economy slowed in the second half of the year, with contractions recorded in
both the third and fourth quarters. At the same time, the elevated budget deficit and the dynamics of
public debt continued to influence sovereign financing costs.
Differences between initial forecasts and actual developments remained significant in both 2024 and
2025. Despite this complex macroeconomic environment, the Romanian capital market delivered solid
performance, with the BET-TR index recording a significant increase throughout the year. At the same
time, the evolution of Hidroelectrica’s adjusted share price reflected the operational specificities of the
year, particularly the unfavorable hydrological conditions, which impacted production levels. This effect
was partially offset by the strong performance of the supply segment, where the Company strengthened
its position as a leader on the competitive market, as well as by the continuation of its investment
programs, despite implementation challenges.
Overall, the Company demonstrated its ability to navigate a complex macroeconomic and operational
environment, maintaining a strong market position and a solid operational base for medium- and long-
term development.
Against the backdrop of recent developments in the renewable energy generation sector (wind and
photovoltaic) at both European and global levels, Hidroelectrica continues to pursue a prudent
development strategy in the renewable energy sector, maintaining its objective of entering new
investment projects only where the return on investment exceeds the cost of capital.
From a commercial perspective, Hidroelectrica maintained its focus on ensuring revenue predictability
through forward energy sales, while adapting its operational and commercial model to the constraints
generated by lower production. In this context, the Company more actively integrated energy
procurement from the market in order to compensate for the shortfall in its own production and to
maintain delivery discipline across its contractual portfolio.
Employees represent Hidroelectrica’s most valuable resource, and retaining, motivating and attracting
qualified personnel remains an absolute priority in the challenging context of workforce availability and
the highly competitive market in which the Company operates.
40
3. Key events in 2025
3.1. General Meetings of Shareholders
On 25 February 2025, the Management Board of Hidroelectrica convened the Ordinary General Meeting
of Shareholders for 31 March 2025, following the request of the shareholder, the Romanian State
through the Ministry of Energy, with the following main items on the agenda:
o approval of the form and content of Addendum No. 2 to the Mandate Agreements concluded with
the members of the Supervisory Board of S.P.E.E.H. Hidroelectrica S.A., as proposed by the
shareholder, the Romanian State through the Ministry of Energy;
o informing the Ordinary General Meeting of Shareholders regarding the Report of the Supervisory
Board of S.P.E.E.H. Hidroelectrica S.A. for the first half of 2024.
All items on the agenda of the Ordinary General Meeting of Shareholders were approved on the date of
the meeting by the Company’s shareholders, with the majority of votes cast.
On 6 March 2025, the Management Board of Hidroelectrica convened the OGMS for 10 April 2025.
Following the request of the shareholder, the Romanian State through the Ministry of Energy, to
supplement the agenda, the main items submitted for approval, as per the supplemented convening
notice, were as follows:
o approval of the Revenue and Expenditure Budget of S.P.E.E.H. Hidroelectrica S.A. for 2025;
o approval of the ratification and confirmation of the acts and/or actions undertaken and/or performed
by KPMG Audit S.R.L., in its capacity as financial auditor for the purpose of limited assurance on
sustainability reporting, in accordance with the requirements of Directive (EU) 2022/2464 on
corporate sustainability reporting (“CSRD”) and Delegated Regulation No. 5303/2023 on the
European Sustainability Reporting Standards (“ESRS”), supplementing the CSRD, transposed into
national legislation through Order of the Ministry of Public Finance No. 85/2024 on sustainability
reporting (“OMFP 85/2024”), for the financial year ended 31 December 2024, based on the Contract
and the applicable legal and professional regulations, up to and including the present date;
o revocation of certain members of the Supervisory Board for reasons not attributable to them, in order
to comply with Milestone No. 121 of Romania’s National Recovery and Resilience Plan, in accordance
with the provisions of Article 36.10 of the mandate agreement;
o appointment of interim members of the Supervisory Board;
o approval of the mandate duration of the interim members of the Supervisory Board, appointed for a
period of five months, in accordance with the provisions of Government Emergency Ordinance No.
109/2011 on the corporate governance of public enterprises, as subsequently amended and
supplemented;
o determination of the gross fixed monthly remuneration of the interim members of the Supervisory
Board, at the level established in accordance with Resolution of the Ordinary General Meeting of
Shareholders No. 10/28 March 2023;
o approval of the form of the mandate agreement to be concluded with the appointed interim
members of the Supervisory Board, as proposed by the Ministry of Energy;
o approval of the initiation of the selection procedure for the vacant positions of members of the
Supervisory Board, in accordance with the provisions of Government Emergency Ordinance No.
41
109/2011 on the corporate governance of public enterprises, as subsequently amended and
supplemented. The selection procedure will be carried out by the Ministry of Energy, in its capacity
as the public tutelary authority.
At the meeting held on 10 April 2025, OGMS resolved the following:
With respect to item 3 on the agenda, namely:
Revocation of members of the Supervisory Board for reasons not attributable to them, in order to comply
with Milestone No. 121 of Romania’s National Recovery and Resilience Plan, in accordance with the
provisions of Article 36.10 of the mandate agreement (secret vote),
OGMS resolved to revoke the following members of the Supervisory Board, for reasons not attributable
to them:
• Mr. Petre-Iulian Nicolescu
• Mr. Mihai-Liviu Mihalache
• Mr. Cristian-Nicolae Stoina
For item 5 on the agenda, namely:
Election of provisional members of the Supervisory Board (secret ballot),
The OGMS appoints the following persons as provisional members of the Supervisory Board:
• Mr. Marius Persinaru
• Ms. Anca Mitu
• Mr. Ciprian-Mihail Ene
The rest of the items on the agenda of the OGMS were approved on the date of the meeting by the
company's shareholders, with a majority of votes cast.
On 26 March 2025, the Management Board of Hidroelectrica convened the Annual OGMS for 29 April
2025, with the following main items on the agenda:
o approval of the audited standalone annual financial statements of S.P.E.E.H. Hidroelectrica S.A. as at
and for the financial year ended 31 December 2024, prepared in accordance with Order of the
Minister of Public Finance (“OMFP”) No. 2844/2016;
o approval of the audited consolidated annual financial statements of S.P.E.E.H. Hidroelectrica S.A.
together with its subsidiary, as at and for the financial year ended 31 December 2024, prepared in
accordance with OMFP No. 2844/2016;
o approval of the audited consolidated annual financial statements of S.P.E.E.H. Hidroelectrica S.A.
together with its subsidiary, as at and for the financial year ended 31 December 2024, prepared in
accordance with the International Financial Reporting Standards (“IFRS”) issued by the IASB;
o the Annual Report of S.P.E.E.H. Hidroelectrica S.A., including the Management Board Report and the
Supervisory Board Report, for the financial year ended 31 December 2024;
o allocation of the net profit for the 2024 financial year, approval of the total gross dividend amount of
RON 4,043,229,023, as well as the gross dividend per share amount of RON 8.988897;
o discharge of liability of the Supervisory Board and the Management Board for the financial year ended
31 December 2024;
42
o the Remuneration Report of the Supervisory Board and the Management Board for the 2024 financial
year;
o information regarding the consolidated Revenue and Expenditure Budget of the Hidroelectrica Group
for 2025;
o setting 4 June 2025 as the Record Date, 3 June 2025 as the “Ex Date”, and 25 June 2025 as the
Payment Date for dividends related to the 2024 financial year;
o the annual evaluation report of the members of the Supervisory Board.
All items on the agenda of the OGMS were approved on the date of the meeting by the Company’s
shareholders, with the majority of votes cast.
On 19 June 2025, the Management Board of Hidroelectrica convened the EGMS for 28 July 2025,
following requests from the shareholder, the Romanian State through the Ministry of Energy, and
subsequently supplemented the agenda with an item regarding the appointment of the financial auditor.
The main items on the agenda were as follows:
o Approval of the financial and non-financial key performance indicators resulting from Hidroelectrica's
Management Plan, which will be an annex to the mandate contracts of the members of the
Supervisory Board and the Management Board of Hidroelectrica.
o Approval of the form and content of the Addendum to the mandate contract to be concluded with
the members of the Supervisory Board of the company in the form and content proposed by the
Ministry of Energy.
o Approval of the full component of the selection plan related to the selection procedure for the vacant
positions on the Supervisory Board.
o Approval of the appointment of the financial auditor of Hidroelectrica, Ernst & Young Assurance
Services SRL, for the provision of the services detailed in the substantiation note presented to the
shareholders, for a period of three years, respectively for the financial years 2025, 2026 and 2027.
All items on the agenda of the OGMS were approved on the date of the meeting by the company's
shareholders, with a majority of votes cast.
On 10 July 2025, the Management Board of Hidroelectrica convened the EGMS for 11 August 2025, with
the following main items on the agenda:
o Informing the GSM regarding the approval by the Supervisory Board of the update of the General
Estimate on 01.09.2024 in prices valid on 31.08.2024 and of the technical-economic indicators of the
investment objective "Pascani Hydropower Development".
o Approval of the new technical-economic indicators of the investment objective "Rastolita
Hydropower Development", according to the values resulting from the documentation "Optimization
and updating of the technical-economic indicators of the investment objective Rastolita Hydropower
Development" – 2025 edition carried out by the Hydroelectric Design Department.
o Approval of the achievement of the investment objective "Refurbishment of the Raul Mare Retezat
HPP" according to the new technical-economic indicators resulting from the update of the General
Estimate and the technical-economic indicators.
o Approval of the documentation on the basis of which the Certificate of Attestation of the Right of
Ownership over the lands in the patrimony of Hidroelectrica occupied by the Premises of the Portile
43
de Fier 1 Hydrotechnical Node and the premises of MHC Baru Mare – Catchment and Compensatory
Basin is to be obtained.
o Informing the General Meeting of Shareholders regarding the conclusion of the contract for the
purchase of services for "Renewal of subscriptions to SAP IS-U, S4HANA, SAP Support Services".
o Informing the General Meeting of Shareholders regarding the conclusion of transactions with other
public enterprises, according to art. 52 of GEO 109/2011 on the corporate governance of public
enterprises, with subsequent amendments and completions.
At the EGMS held on 11 August 2025, all items on the agenda were approved by the Company’s
shareholders, with the majority of votes cast.
On 1 August 2025, the Management Board of Hidroelectrica convened the OGMS for 8 September 2025,
following the request of the shareholder, the Romanian State through the Ministry of Energy, with the
following main items on the agenda:
o Dismissal of a provisional member of the Supervisory Board following the termination of his/her term
of office on 9 September 2025.
o Withdrawal of the discussion of items 2, 3, 4, 5 and 6 from the agenda of the General Meeting of
Shareholders on 08.09.2025.
o Election of a provisional member of the Supervisory Board following the vacancy of the position under
item (1) of the agenda, starting with 10 September 2025.
o Establishing the term of office of the provisional member elected in point (2), for a period of 2 months,
according to the provisions of GEO no. 109/2011 on the corporate governance of public enterprises,
as subsequently amended and supplemented.
o Establishing the monthly gross fixed allowance of the provisional member of the Supervisory Board
elected in point (2), in the amount established in accordance with the Resolution of the Ordinary
General Meeting of Shareholders no. 10/28.03.2023.
o Approval of the form of the mandate contract to be concluded with the provisional member of the
Supervisory Board, elected in point (2), in the form proposed by the Ministry of Energy.
o Extension by 2 months of the term of office for 2 (two) provisional members of the Supervisory Board.
o Approval of the conclusion of the addenda to the mandate contracts regarding the extension of the
term of office of the provisional members of the Supervisory Board by 2 (two) months in the form
proposed by the Ministry of Energy and the establishment of the indemnity in the amount established
in accordance with the Resolution of the Ordinary General Meeting of Shareholders no.
10/28.03.2023.
At the meeting held on 8 September 2025, the OGMS decided the following:
For item 1 on the agenda, namely:
o Dismissal of a provisional member of the Supervisory Board following the termination of his term of
office on 09.09.2025 (secret ballot),
The OGMS revokes Mr. Marius Persinaru.
For item 7 on the agenda, namely:
o Extension by 2 months of the term of office for 2 (two) provisional members of the Supervisory Board,
44
The OGMS extends the term of office of the following persons – members of the Supervisory Board:
• Ms. Anca Mitu
• Mr. Ciprian-Mihail Ene
Items 2-6 were rejected on the date of the meeting by the company's shareholders, with a majority of
votes cast, and the rest of the items (1.1, 9 and 10) were approved on the date of the meeting by the
company's shareholders, with a majority of votes cast.
On 29 September 2025, the Management Board of Hidroelectrica convened the OGMS for 31 October
2025. Following the request of the shareholder, the Romanian State through the Ministry of Energy, to
supplement the agenda, the main items submitted for approval, as per the supplemented convening
notice, were as follows:
o Approval of Hidroelectrica's Rectified Income and Expenditure Budget for 2025, according to the
Substantiation Note presented to shareholders.
o The Ordinary General Meeting of Shareholders is informed about the Report of the Supervisory Board
of Hidroelectrica for the first half of 2025.
o Dismissal of the provisional members of the Supervisory Board of Hidroelectrica, starting with
November 9, 2025, following the termination of their term of office.
o Election of the provisional members of the Supervisory Board of Hidroelectrica, starting with
November 9, 2025.
o Establishing the term of office of the provisional members of the Supervisory Board elected in point
(4), for a period of 5 months, or until the completion of the selection procedure carried out in
accordance with the provisions of GEO no. 109/2011 on the corporate governance of public
enterprises, with subsequent amendments and completions, if the selection is completed before the
mentioned deadline.
o Establishing the monthly gross fixed allowance of the provisional members of the Supervisory Board
elected according to point (4), in accordance with the Decision of the Ordinary General Meeting of
Shareholders of Hidroelectrica no. 10/28.03.2023.
o Approval of the form of the mandate contract to be concluded with the provisional members of the
Supervisory Board elected according to point (4), in the form proposed by the Ministry of Energy.
At the meeting held on 31 October 2025, the OGMS decided the following:
For item 3 on the agenda, namely:
o Revocation of the provisional members of the Supervisory Board of S.P.E.E.H. Hidroelectrica S.A.,
starting with 09.11.2025, following the termination of their term of office (secret ballot),
The OGMS revokes Mrs . Anca Mitu and Mr. Ciprian-Mihail Ene.
For item 4 on the agenda, namely:
o Election of the provisional members of the Supervisory Board of S.P.E.E.H. Hidroelectrica S.A., starting
with 09.11.2025 (secret ballot),
The OGMS appoints Mrs . Anca Mitu and Mr. Ciprian-Mihail Ene.
The rest of the items on the agenda were approved on the date of the meeting by the company's
shareholders, with a majority of votes cast.
45
On 17 October 2025, the Hidroelectrica Management Board convened the OGMS for 20 November
2025. Following the request of the shareholder Romanian State through the Ministry of Energy to
complete the agenda, received on 5 November 2025, the main points subject to approval, according to
the completed convening notice, are the following:
o information on the reasons for, and the mutual termination of, the mandate contracts of Mr. Károly
Borbély – Chairman of the Management Board (CEO) and Mr. Marian Fețița – Member of the
Management Board (CFO), as well as the context and conditions of such termination;
o dismissal of the interim members of the Supervisory Board of Hidroelectrica, effective as of the date
of the meeting, following the completion of the selection procedure;
o election of the members of the Supervisory Board of Hidroelectrica, effective as of the date of the
meeting;
o determination of the term of office of the Supervisory Board members elected under item (3), starting
from the date of the meeting until 28 March 2027, corresponding to the end of the mandate of the
Supervisory Board members appointed by OGMS Resolution No. 10 of 28 March 2023;
o determination of the gross fixed monthly remuneration of the Supervisory Board members elected
under item (3), in accordance with Article 4 of OGMS Resolution No. 10 of 28 March 2023;
o approval of the form of the mandate agreement to be concluded with the Supervisory Board
members elected under item (3), as proposed by the Ministry of Energy.
At the meeting held on 20 November 2025, the OGMS decided the following:
For item 2 on the agenda, namely:
o Revocation of the provisional members of the Supervisory Board of SPEEH Hidroelectrica SA, starting
with the date of the meeting, following the completion of the selection procedure (secret ballot),
The OGMS revokes Mrs . Anca Mitu and Mr. Ciprian-Mihail Ene.
For item 3 on the agenda, respectively:
o Election of the members of the Supervisory Board of SPEEH Hidroelectrica SA, starting with the date
of the meeting (secret ballot):
The OGMS appoints Mr. Catalin Vladut Popescu, Mr. Ion Ariton and Mr. Emil Merdan.
The rest of the items on the agenda submitted to the vote were approved on the date of the meeting by
the company's shareholders, with a majority of votes cast.
On 13 November 2025, the Management Board of Hidroelectrica convened the OGMS for 17 December
2025. Following the request of the shareholder Romanian State through the Ministry of Energy to
complete the agenda, received on November 28, 2025, as well as to complete the Hidroelectrica
Management Board, the main points subject to approval, according to the completed convening notice,
are the following:
o Approval of the form and content of the addendum to the mandate contracts of the members of the
Hidroelectrica Supervisory Board, for the implementation of the amendments brought to GEO
109/2011 on the corporate governance of public enterprises, as amended by Law no. 158/2025, in
the forms proposed by the company.
o Approval of the form and content of the addendum to the mandate contracts of the members of the
Hidroelectrica Supervisory Board, for the implementation of the amendments brought to GEO
109/2011 on the corporate governance of public enterprises, as amended by Law no. 158/2025, in
the form proposed by the Ministry of Energy.
46
The addendum to the mandate contracts of the members of the Hidroelectrica Supervisory Board was
approved on the date of the meeting by the company's shareholders, in the form proposed by the
Ministry of Energy, with the majority of votes cast, the other forms proposed by the company being
rejected in the OGMS. The rest of the items on the agenda were approved on the date of the meeting by
the company's shareholders, with a majority of votes cast.
On 23 December 2025, the Management Board of Hidroelectrica convened the EGMS for 27 January
2026. The main points submitted for approval, according to the completed convening notice, were the
following:
o Approval:
• (i) Establishment by Hidroelectrica together with EDF power solutions International of a Joint
Venture Company (JVC) in equal shares of 50% - 50% each;
• (ii) The Shareholders' Agreement (SHA) to be concluded by Hidroelectrica with EDF power
solutions International, which defines the terms and conditions regarding the operation of a
company (Joint Venture Company - JVC) that will be established by the parties in order to develop
the Tarnița Pumped Storage Hydroelectric Power Plant (CHEAP) project – Proposed
Investment/Opportunity.
o Approval of the acquisition of legal advisory services in connection with the process of increasing the
share capital of Hidroelectrica.
o Approval of the documentation prepared in order to obtain the Certificate of Attestation of the Right
of Ownership over the lands in the patrimony of Hidroelectrica, for six premises, of which five located
in Maramureș County and one enclosure located in Bihor County.
o Approval of the acquisition of legal advisory services considering the acquisition company's objective
at the commissioning of the CHEAP Frasin-Pângărați plant, with an installed capacity of 300 MW to
be developed and built by Hidro Blue Energy SRL.
o Information on the approval by the Supervisory Board of the new technical-economic indicators for
the investment objective "Refurbishment of the Petrimanu, Jidoaia and Lotru-Aval high-power
pumping stations – HP DORIN PAVEL", resulting from the update of the General Estimate and the
technical-economic indicators.
o Information on the approval by the Supervisory Board of the investment objective "Refurbishment of
the Gogoșu HPP", according to the Feasibility Study and the related technical-economic indicators.
o Information on the approval by the Supervisory Board of the new technical-economic indicators for
the investment objective "Refurbishment of the Bradișor HPP", resulting from the update of the
General Estimate and the technical-economic indicators.
o Information regarding the approval by the Supervisory Board of the update of the general estimate
for the investment objective "Refurbishment of the Stejaru HPP", in order to continue the works
"remainder to be executed", according to the new technical-economic indicators resulting from the
documentation "Feasibility study. Update of the general estimate and technical-economic indicators"
- April 2024.
o Information regarding the conclusion of transactions with other public enterprises, according to art.
52 of GEO 109/2011 on the corporate governance of public enterprises, with subsequent
amendments and completions.
Information regarding the resolutions of the EGMS of 27 January 2026 can be found in the chapter
Subsequent events.
47
3.2. Changes in management structures
Composition of the Supervisory Board
At the OGMS held on 10 April 2025, the shareholders approved the revocation of the following members
of the Supervisory Board for reasons not attributable to them, in order to comply with Milestone No. 121
of Romania’s National Recovery and Resilience Plan, in accordance with the provisions of Article 36.10 of
the mandate agreement:
• Mr. Petre-Iulian Nicolescu
• Mr. Mihai-Liviu Mihalache
• Mr. Cristian-Nicolae Stoina
Also, at the same meeting, the OGMS appointed the following persons as provisional members of the
Supervisory Board:
• Mr. Marius Persinaru
• Ms. Anca Mitu
• Mr. Ciprian-Mihail Ene
On September 8, 2025, the OGMS approves the revocation of Mr. Marius Persinaru, following the On 8
September 2025, the OGMS approved the revocation of Mr. Marius Persinaru, following the expiry of his
mandate on 9 September 2025, and extended by two months the mandates of Ms. Anca Mitu and Mr.
Ciprian-Mihail Ene.
On 20 November 2025, the OGMS revoked the interim members of the Supervisory Board and appointed
three members with mandate contracts valid until 28 March 2027, following the completion of the
selection procedure, as follows:
• Mr. Catalin Vladut Popescu
• Mr. Ion Ariton
• Mr. Emil Merdan
Appointment of Chairman of the Supervisory Board and establishment of the composition of the
advisory committees
On 5 May 2025, the Supervisory Board decided to appoint Mr. Silviu-Razvan Avram as Chairman of the
Supervisory Board and decided the composition of the advisory committees.
Following the appointment of the 3 permanent members of the Supervisory Board on 20 November 2025,
a new composition of the advisory committees was established on 24 November 2025. Thus, their
structure during 2025 is as follows:
Nomination and Remuneration Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 dec 2025
1
George-Marius Toniuc - President
George-Marius Toniuc – President
George-Marius Toniuc - President
2
Silviu Razvan Avram - Member
Silviu-Razvan Avram – Member
Silviu Razvan Avram - Member
3
Carmen Radu - Member
Carmen Radu – Member
Carmen Radu - Member
4
Petre-Iulian Nicolescu – Member
Ciprian-Mihail Ene – Member
Catalin-Vladut Popescu - Member
5
Ana-Barbara Bobirca - Member
Ana-Barbara Bobirca – Member
Ana-Barbara Bobirca - Member
48
Audit Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 dec 2025
1
Carmen Radu – President
Carmen Radu – President
Carmen Radu – President
2
George-Marius Toniuc – Member
George-Marius Toniuc – Member
George-Marius Toniuc – Member
3
Silviu-Razvan Avram – Member
Silviu-Razvan Avram – Member
Silviu-Razvan Avram – Member
4
Cristian-Nicolae Stoina – Member
Anca Mitu – Member
Ana-Barbara Bobirca – Member
5
Mihai-Liviu Mihalache – Member
Ana-Barbara Bobirca – Member
Ion Ariton – Member
6
Ana-Barbara Bobirca – Member
-
-
Risk Management Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 dec 2025
1
Silviu-Razvan Avram – President
Silviu-Razvan Avram – President
Silviu-Razvan Avram – President
2
Cristian-Nicolae Stoina – Member
Marius Persinaru – Member
George-Marius Toniuc – Member
3
Petre-Iulian Nicolescu – Member
George-Marius Toniuc – Member
Ana-Barbara Bobirca – Member
4
Mihai-Liviu Mihalache – Member
Ana-Barbara Bobirca – Member
Catalin Vladut Popescu –
Member
5
George-Marius Toniuc – Member
Ciprian-Mihail Ene – Member
Emil Merdan – Member
6
Ana-Barbara Bobirca – Member
-
-
Governance and Sustainability Committee
1 January – 4 May 2025
5 May – 23 November 2025
24 November – 31 dec 2025
1
Ana-Barbara Bobirca - President
Ana-Barbara Bobirca – President
Ana-Barbara Bobirca - President
2
Petre-Iulian Nicolescu - Member
Anca Mitu – Member
Emil Merdan - Member
3
George Marius Toniuc - Member
George-Marius Toniuc – Member
George Marius Toniuc - Member
4
Carmen Radu - Member
Carmen Radu – Member
Carmen Radu – Member
5
Mihai Liviu Mihalache - Member
Marius Persinaru – Member
Ion Ariton - Member
Source: Hidroelectrica
Composition of the Management Board
At the meeting held on 19 September 2025, the Supervisory Board, together with Mr. Károly Borbély –
Chairman of the Management Board/CEO, and Mr. Marian Fețița – Member of the Management
Board/CFO, agreed on the mutual termination of their mandate agreements, effective as of 19 September
2025. The decision was adopted by the Supervisory Board in the interest of the Company and all its
shareholders, taking into account the obligations arising from Milestone 121 (PNRR), the context
established by the European Commission Decision C(2025) 3490/28 May 2025, and Hidroelectrica’s status
as a company listed on a regulated market.
Also, during the meeting of 19 September 2025, the Supervisory Board decided to assign the CEO
responsibilities to Mr. Bogdan-Nicolae Badea, Member of the Management Board, and the CFO
responsibilities to Mr. Radu-Ioan Constantin, Member of the Management Board, as a result of the
vacancy of the two positions within the Management Board and in order to ensure the stability of the
Company’s governance and operations.
49
On 22 September 2025, the Supervisory Board resolved to initiate the selection procedure for the two
vacant positions of CEO and CFO, to be conducted by an independent expert specialized in human
resources recruitment, whose services are contracted in accordance with applicable legal provisions.
Accordingly, on 3 October 2025, the announcement regarding the recruitment and selection of
candidates for the CEO and CFO positions was published, including the eligibility requirements and the
evaluation/selection criteria, in accordance with Article 35(6) of Government Emergency Ordinance No.
109/2011 on the corporate governance of public enterprises, as subsequently amended and
supplemented. The deadline for submitting applications was 4 November 2025.
On 19 November 2025, the procedure initiated by the Supervisory Board Resolution of 22 September
2025 for the position of Management Board member – CFO was declared closed, as no eligible candidate
was identified for nomination, according to the report of the independent human resources recruitment
expert.
On 26 November 2025, the Supervisory Board noted that no candidate fully met the requirements for the
CEO position at that time and, in accordance with Government Emergency Ordinance No. 109/2011 and
the principles of transparency, competitiveness and integrity, decided to immediately relaunch the
selection process. In order to ensure operational continuity until the completion of the selection process,
the Supervisory Board maintained the interim arrangements regarding the delegation of CEO and CFO
responsibilities.
Additional information regarding the composition of the governing bodies, namely the composition of
the Supervisory Board, its advisory committees and the Management Board, can be found in Chapters
the Report of the Supervisory Board and the Management Board of this Report.
3.3. Investments
Completion of the tender for the Li-ion storage system at Crucea Nord
On 7 April 2025, Hidroelectrica announced the completion of the tender procedure for the procurement
of a Li-ion battery storage installation at the Crucea Nord Wind Farm, through the signing of the contract
with the winning bidder, namely the consortium formed by Prime Batteries Technology S.R.L. and Enevo
Group S.R.L. The installation will be deployed within the Crucea Substation of the Crucea Nord Wind Farm,
owned and operated by Hidroelectrica, with an installed capacity of 108 MW.
The main objective of the investment is to reduce internal imbalances within the wind farm in
Hidroelectrica’s portfolio, provide balancing services to the national energy system, improve the
performance of wind turbines and reduce the wear of turbine electromechanical systems.
The contract value amounts to RON 80 million, excluding VAT, and the implementation period is 12
months from the date of contract signing.
Upon commissioning, the storage installation will have a nominal power of 36 MW and a nominal energy
storage capacity of 72 MWh.
50
Contract for photovoltaic project in power plants on the middle and lower sector of the Olt River
On 9 May 2025, Hidroelectrica announced the signing of a works contract for the turnkey implementation
of the project “Harnessing the photovoltaic potential within the electricity generation plants located on
the middle and lower sections of the Olt River.”
The contract was awarded following a competitive procedure, with Servelect S.R.L. designated as the
winning bidder, together with its subcontractor Electroplus S.R.L.
The main objective of the investment is to increase renewable electricity generation capacity by installing
photovoltaic systems on the rooftops of 20 hydropower plants owned by Hidroelectrica, located along
the middle and lower sections of the Olt River.
The contract value amounts to RON 9 million, excluding VAT, with an implementation period of 24 months
(4 months for design and 20 months for execution).
The photovoltaic system consists of 620 W panels, 100 kW inverters and energy optimizers, with a total
installed panel capacity of 2,955.58 kW and an estimated annual energy production of 3,710.87 MWh.
This investment marks a first for the Company, being the first project involving the installation of
photovoltaic panels within Hidroelectrica.
The targeted objectives include leveraging the region’s photovoltaic potential through the development
of renewable energy generation systems, reducing CO₂ emissions, and lowering internal technological
consumption (CPT), thereby optimizing production costs and improving operational efficiency, as a result
of the synergies between photovoltaic and hydropower generation at the same sites.
Signing of the contract for the refurbishment of Stejaru Hydroelectric Power Plant
On 13 October 2025, Hidroelectrica signed the works contract for the project “Refurbishment of Stejaru
Hydropower Plant – Refurbishment of Units HA1–HA4 and Power Plant Installations,” one of the most
significant investment projects in the Company’s portfolio.
The contract, with a value of EUR 97 million excluding VAT, was awarded to Societatea de Servicii
Hidroenergetice HIDROSERV S.A., which will collaborate with the following subcontractors: Uzina de
Construcții Mașini Hidroenergetice, General Design Tech, Compania de Consultanță în Energie și Mediu
S.A., Hydro Proiect Invest, Electromontaj, Nibaco and Electromontaj Carpați S.A.
The investment is financed from Hidroelectrica’s own funds, and the contract was awarded through an
open tender procedure, based on the “best price-quality ratio” criterion, in accordance with the
legislation on sectoral procurement (Law No. 99/2016).
The project aims to fully modernize and refurbish the four type I hydropower units (HA1–HA4), as well as
the general installations of the plant, contributing to increased energy efficiency, enhanced operational
safety and the extension of equipment lifetime. The contract duration is 66 months.
Located in Neamț County, the Stejaru Hydropower Plant (also known as “Dimitrie Leonida HPP”) is part
of the Bistrița River hydrotechnical development and represents a technological landmark of the
Romanian energy industry. The refurbishment works will include design, equipment supply, installation,
commissioning and post-implementation monitoring components.
51
Signing of the contract for the refurbishment of the Petrimanu, Jidoaia and Lotru high-power pumping
stations
On 10 November 2025, Hidroelectrica signed the contract for the implementation of the project
“Refurbishment of High-Power Pumping Stations Petrimanu, Jidoaia and Lotru – downstream of the Dorin
Pavel Hydropower Development,” following the completion of th e award procedure conducted through
competitive negotiation.
The contract, with an estimated value of RON 487 million (EUR 98 million) excluding VAT, was awarded
at a final value of EUR 98 million excluding VAT to ELECTROMONTAJ S.A., together with its subcontractors
ELIN MOTOREN GmbH, VOITH HYDRO GmbH & Co. KG and BUTAN GRUP S.R.L.
The refurbishment of the three high-power pumping stations—Petrimanu, Jidoaia and Lotru—located
downstream of the Dorin Pavel Hydropower Development represents one of Hidroelectrica’s most
significant energy infrastructure investments in recent years, with a direct impact on increasing energy
efficiency, operational flexibility and the balancing capacity of the National Energy System.
The project will extend the operational lifetime of the pumping installations by at least 30 years, improve
the efficiency of electromechanical equipment and control systems, and integrate modern automation
and digital control technologies compatible with the SCADA/EMS standards used within the Company. At
the same time, the refurbishment will contribute to enhancing the rapid response capability of the
National Energy System in situations of energy imbalance and to better integrating renewable energy
generation.
3.4. Other key events
Publication of preliminary key operational indicators
• On 10 February 2025, Hidroelectrica published the preliminary key operational indicators for Q4
2024;
• On 29 April 2025, Hidroelectrica published the preliminary key operational indicators for Q1 2025;
• On 29 July 2025, Hidroelectrica published the preliminary key operational indicators for Q2 2025;
• On 29 October 2025, Hidroelectrica published the preliminary key operational indicators for Q3 2025.
Closure of the insolvency procedure of S.S.H. Hidroserv S.A.
In accordance with the Decision pronounced on 25 June 2025 by the Bucharest Tribunal, in the file no.
36365/3/2016, the court closed the insolvency procedure against the debtor S.S.H. Hidroserv SA, a
subsidiary of Hidroelectrica, by reinsertion into the economic circuit. We remind you that, on 10 October
2016, S.S.H. Hidroserv S.A. entered the general insolvency procedure, in accordance with the provisions
of Law no. 85/2014.
Market Maker Services
Starting from 7 March 2025, Hidroelectrica has benefited from Market Maker services provided by BRK
Financial Group, a participant in the Bucharest Stock Exchange trading system, which has undertaken the
role of supporting the liquidity of the Company’s sh ares. Accordingly, the provider will display firm bid
and ask quotes for a minimum of 11,000 shares, for at least 90% of the trading session, with a maximum
spread of 2.5%.
52
Annual information on gender balance
On 14 July 2025, the Company informed stakeholders regarding gender representation within its
governing bodies. The Supervisory Board consists of seven non-executive members, of whom four are
male and three are female. The underrepresented gender among non-executive members (female)
accounts for 43%. Accordingly, Hidroelectrica meets the objective set out under Article 109^3 letter (a)
of Law No. 24/2017, namely that “members of the underrepresented gender shall hold at least 40% of
non-executive board positions,” with the share of the underrepresented gender among the non-
executive members of the Supervisory Board standing at 43%.
Further information can be found in the chapter Subsequent events.
3.5. Dividend distribution
On 28 April 2025, the General Meeting of Shareholders approved the distribution of dividends from the
2024 profit to shareholders registered as at 4 June 2025, in the amount of RON 4,043 million, representing
100% of the 2024 net profit eligible for distribution in accordance with the Company’s statutory
standalone financial statements.
3.6. Transactions with related parties according to art. 108 of Law no.
24/2017
On 13 February 2025, Hidroelectrica reported the transactions carried out with Exim Banca Românească
during the period 28 June 2024 – 10 January 2025, whose cumulative value exceeded the threshold of 5%
of Hidroelectrica’s net assets. The report was prepared in accordance with the provisions of Article 108
of Law No. 24/2017 on issuers of financial instruments and market operations, republished.
In addition, the independent limited assurance reports of the financial auditor for the second half of 2024
and the first half of 2025 were published on 31 January 2025 and 30 July 2025, respectively.
53
4. Hidroelectrica on the capital market
4.1. Hidroelectrica's Initial Public Offering
Between 23 June and 4 July 2023, the initial public offering (IPO) of shares issued by Hidroelectrica,
representing up to 19.94% of the total shares issued by the Company, was carried out by Fondul
Proprietatea S.A., attracting a total of over 50,000 purchase orders. Following the exercise of the over-
allotment option granted by Fondul Proprietatea to the designated intermediary banks, the entire holding
of the Fund, consisting of 89,708,177 shares, was sold through the transaction conducted on the
Bucharest Stock Exchange.
The first trading day was 12 July 2023.
4.2. Shareholding structure and share price evolution
Shareholding structure as of 31 December 2025
Source: Hidroelectrica, Central Depository
The shareholding structure as of 31 December 2025 is presented in the table below:
Shareholder
Holdings as of
31 December
2025
Percentage of holdings
of the share capital at
31 December 2025
Holdings as of
31 December
2024
Percentage of
holdings of the
share capital at
31 December 2024
The Romanian State
through the Ministry of
Energy
360,094,390
80.0561%
360,094,390
80.0561%
Legal entities
75,600,136
16.8074%
73,287,787
16.2933%
Individuals
14,108,041
3.1365%
16,420,390
3.6506%
Total
449,802,567
100.0000%
449,802,567
100.0000%
Source: Hidroelectrica, Central Depository
54
Starting from 12 July 2023, Hidroelectrica’s shares have been included in a series of BSE indices, including
the BET index (the benchmark index of the local capital market, reflecting the performance of the most
traded companies on the BSE regulated market), as well as the BET-NG index (the sectoral index reflecting
the performance of companies listed on the BSE regulated market operating in the energy sector).
In the period immediately following the listing/IPO, Hidroelectrica was included in international MSCI and
FTSE Russell indices, based on fast-entry mechanisms specific to IPOs, due to the Company’s significant
size.
During the period 1 January – 31 December 2025, according to information published by the BSE,
Hidroelectrica’s shares recorded a minimum closing price of RON 115 per share (8 May 2025) and a
maximum closing price of RON 125 per share (19 December 2025), with an average closing price of RON
121.72 per share.
As at 31 December 2025, Hidroelectrica ranked second among Romanian companies listed on the BSE in
terms of market capitalization, reaching a value of RON 55.9 billion.
During the financial year ended 31 December 2025, there were no transactions related to the acquisition
of treasury shares by Hidroelectrica.
Source:Hidroelectrica, BSE
55
*The adjusted price is calculated by cumulating the closing price of the H2O share with the dividend value of RON 13.99 to reflect
the total yield, including dividends, thus providing a picture of the stock's performance for investors.
Source:Hidroelectrica, BSE
In 2025, Hidroelectrica’s shares and the broader market (BET-TR) recorded predominantly negative
performances in the first part of the year (until May). In the second half, Hidroelectrica saw a strong
appreciation in its adjusted share price up to July, followed by a period of sideways trading until November
and a notable recovery in December, resulting in an overall adjusted price performance of 9.2% for the
full year 2025.
In terms of the adjusted share price return of 9.17% in 2025, this resulted from a 1.80% return of the
share price on the BSE and a 7.37% dividend yield.
As at 31 December 2025, the annualized return of the share (CAGR), including dividends, relative to the
listing price of RON 104, was 15.07%, of which 7.44% was driven by the appreciation of the share price
on the BSE.
As at the same date, the aggregate return of the share (calculated as the ratio between the closing price
as at 31 December 2025, including dividends, and the listing price of RON 104) was 41.52%, resulting from
a 19.42% price appreciation on the BSE and a 22.10% return from dividends.
Indicator
Jul 2023-Dec 2024
2025
2024
2025 vs 2024
Volume traded (number of shares)
63,879,579
12,316,507
21,819,840
-43.6%
Average daily turnover (number of shares)
98,580
49,663
81,115
-38.8%
Value traded (bld. RON)
7,6
1,5
2,7
-45.3%
Average price (RON)
119,73
121,52
125,49
-3.2%
Capitalization - end of the period (bld. RON)
50,9
50,9
50
1.8%
Minimum closing price (RON)
108
115
116
-1.1%
Maximum closing price (RON)
137
125
137
-8.9%
Final closing period price (RON)
124,20
124,20
122,00
1.8%
Dividend(s) H2O (RON)
8,988897
13,99
-35.7%
H2O Yield for Share (%)
19.4%
1.8%
-5.1%
-
Price-adjusted yield* H2O (%)
41.5%
9.2%
5.7%
-
Dividend yield** H2O(%)
22.1%
7.4%
10.9%
-32.3%
Dividend yield** BET-TR (%)
30.6%
9.1%
7.4%
22.8%
Source:Hidroelectrica, BSE
56
Source:Hidroelectrica, BSE
At the General Meeting of Shareholders held on 29 April 2025, the total gross dividend amount of RON
4,043 million was approved, as well as the gross dividend per share of RON 8.988897, corresponding to a
dividend yield* of 7.57%.
*The dividend yield is calculated by dividing the gross dividend per share of RON 8.988897 by the closing price on the ex-date—3
June 2025—of RON 118.8.
4.3. Investor Relations
As a company listed since July 2023, Hidroelectrica has established within its organizational structure a
dedicated function for communication with shareholders and investors (Investor Relations Service, “IR”),
both through capital market-specific channels and through the organization and participation in
conferences presenting the Company’s performance.
In line with the financial calendar, Hidroelectrica organized conference calls to present the financial
results for the year 2025 (March 2025), for the first and third quarters of 2025 (May and November 2025,
respectively), and for the first half of 2025 (August 2025).
During 2025, Hidroelectrica representatives participated in the following conferences:
• “Conviction Equity Investors Conference 2025”, organized by ERSTE, on 29 Jan 2025, in London;
• “WOOD’s EM-E NYC Conference”, organized by Wood & Company, on 3–4 April 2025, in New York;
• “The Finest CEElection Investor Conference 2025”, organized by ERSTE, on 26–29 May 2025, in
Warsaw;
• “Frontier Investor Day”, organized by Wood & Company, on 3 June 2025, in London;
• “Romania Investor Days”, organized by Wood & Company, on 1 October 2025, in Bucharest;
• “European Utilities and Energy Summit 2025”, organized by Morgan Stanley, on 9 Sept 2025.
At the same time, upon specific requests from analysts, shareholders or investors, the IR function
organizes meetings with the Company’s relevant representatives, in order to clarify aspects related to
Hidroelectrica’s activity.
Enhancing transparency and the quality of investor communication through continuous disclosure
remains one of the Company’s key objectives. In this regard, all relevant information required by
stakeholders for investment decision-making is available on the Company’s website,
www.hidroelectrica.ro, within the Investor Relations section. The content of these sections is
continuously updated, in compliance with legal requirements and best practices in the field.
Furthermore, the Company obtained, for the second consecutive time, the maximum score of 10 for the
Vektor indicator, which assesses the implementation of best practices in investor relations and
compliance with the Bucharest Stock Exchange Corporate Governance Code, in line with the expectations
of both institutional and individual investors. This indicator is published on the BSE website, on the issuer’s
page.
57
5. Corporate Governance
Corporate governance in Hidroelectrica is carried out in accordance with the provisions of the Companies
Law no. 31/1990, republished, with subsequent amendments and completions, of Law no. 24/2017 on
issuers of financial instruments and market operations, republished and of the secondary legislation
adopted by the FSA for the application of Law no. 24/2017, of the BSE Code and of the BSE Corporate
Governance Code, as well as in accordance with the provisions of the Articles of Association in force and
the applicable internal regulations.
At the same time, Hidroelectrica falls under the provisions of GEO no. 109 of 30 November 2011 on the
corporate governance of public enterprises, with subsequent amendments and completions, approved
by Law no. 111/2016.
Hidroelectrica shares have been traded, starting from 12 July 2023, on the regulated market operated by
the Bucharest Stock Exchange, Premium category, under the symbol “H2O”.
Hidroelectrica aligns with capital market requirements and best practices in corporate governance by
continuously developing and adapting its corporate governance framework.
All holders of financial instruments benefit from equal treatment, with the Company ensuring efficient,
active and transparent communication with its shareholders through regulated communication channels
(BSE platform, ASF platform), as well as by publishing all relevant documents on its website,
www.hidroelectrica.ro.
The Company has also implemented policies and procedures governing its corporate governance
framework, which are continuously updated in line with the provisions of the BSE Corporate Governance
Code. These can be consulted on the Company’s website, www.hidroelectrica.ro, in the Investor Relations
– Corporate Governance – Corporate Governance Documents section, as follows:
• the Articles of Association, as in force, approved at the EGMS held on 22 June 2023;
• the Procedure on the Organization and Conduct of GMS meetings, which comprehensively sets out
shareholders’ rights in relation to the GMS and facilitates their participation and the exercise of their
rights, including participation by proxy, by correspondence or through electronic voting. It also
specifies the set of documents to be made available to shareholders for each GMS, including, but not
limited to, informational materials for each agenda item;
• the Investor Communication Commitment, which establishes the framework through which
Hidroelectrica ensures open, transparent and effective communication with investors and other
stakeholders, in compliance with capital market regulations and its commitment to the highest
corporate governance standards;
• the Code of Ethics;
• the Related Party Transactions Policy;
• the Corporate Social Responsibility Policy;
• the Sponsorship Policy;
• the Remuneration Policy for the members of the Supervisory Board and the Management Board of
Hidroelectrica;
• the Dividend Policy.
58
5.1. General Meetings of Shareholders
The General Meeting of Shareholders represents the main corporate governance body within
Hidroelectrica, making decisions according to the competences defined in the Articles of Association.
The GSM meetings are convened by the Hidroelectrica Management Board whenever necessary, or by
the shareholders who individually or jointly hold at least 5% of the share capital, in this case the general
meeting of shareholders being convened by the Management Board within 30 days and meeting within
60 days from the date of receipt of the request.
The OGMS convenes at least once a year, within no more than four months from the end of the financial
year.
The OGMS has the following attributions:
• to discuss, approve or amend the annual financial statements, based on the reports submitted by the
Management Board and the Supervisory Board and the statutory auditor, in accordance with the law;
• distribute the profit and fix the dividend;
• appoint and dismiss the members of the Supervisory Board;
• appoint and dismiss the statutory auditor and set the minimum duration of the audit contract;
• to set the general limits of the remuneration of the members of the Management Board;
• to establish the level of remuneration of the members of the Supervisory Board, as well as the terms
and conditions of the mandate contract concluded with each of the members of the Supervisory
Board;
• to pronounce on the management of the members of the Management Board and the members of
the Supervisory Board, to evaluate their performance and to discharge them from management,
under the conditions of the law;
• to decide on the initiation of the liability action against the members of the Management Board and
the Supervisory Board, as well as the financial auditors, for damages caused to the Company by them
by breaching their duties towards the Company;
• approve the revenue and expenditure budget;
• approve the financial and non-financial performance indicators resulting from the Management Plan;
• to approve the reports of the Supervisory Board on the activity carried out;
• to approve the pledge, lease or dismantling of one or more units (work points) of the Company;
• perform any other duties established by law.
The EGMS decides the following:
• changing the legal form of the Company;
• change of the main object of activity;
• increasing and reducing the share capital of the Company or its reunification through the issuance of
new shares, lifting the shareholders' right of preference to subscribe for new shares issued by the
Company and any share buyback;
• merger with other companies, division or spin-off;
• the early dissolution of the Company;
• Convert actions from one category to another.
• the issuance of bonds and the conversion of bonds from one class to another class or into shares;
59
• the conclusion of acts of acquisition, disposal, exchange or provision as collateral of assets in the
category of fixed assets of the Company, the value of which exceeds, individually or cumulatively,
during a financial year, 20% of the total fixed assets, less receivables;
• leases of tangible assets, for a period of more than one year, whose individual or cumulative value
vis-à-vis the same co-contractor or persons involved or acting in concert exceeds 20% of the value of
the total fixed assets, less the receivables at the date of conclusion of the legal act;
• approval of the incorporation or participation in the incorporation of companies or any other type of
for-profit legal entities, subject to prior approval by the Management Board and the Supervisory
Board;
• approval of the admission to trading on a regulated market of any financial instruments issued by the
Company;
• the conclusion by the Company of any contract, the assumption of any obligation or commitment
that could involve expenses or the assumption of any other important obligation by the Company,
according to the limits of competence provided in Annex no. 1 to the Articles of Association;
• approval of the final documents of the transactions related to the merger/acquisition of
shareholdings/transfer of business/asset transfer processes, after the entire procedure has been
carried out beforehand, respectively the submission of non-binding and binding offers, as well as the
negotiation of all contractual clauses that are the basis for the completion of the transaction;
• any amendments to the Articles of Association or any other decision for which the approval of the
extraordinary general meeting is required.
The convening, functioning, voting method, as well as other provisions related to the General
Shareholders' Meeting are detailed in the Company's Articles of Association and in the Procedure for the
Organization and Conduct of the General Shareholders' Meeting Meetings, available on the Hidroelectrica
website, www.hidroelectrica.ro, section Investor Relations - Corporate Governance - Corporate
Governance Documents.
Information regarding the Resolutions of the General Meetings of Shareholders of Hidroelectrica in 2025
can be consulted in the chapters Key events in 2025 and Subsequent events.
5.2. Shareholders' rights
Hidroelectrica respects and protects the rights and legitimate interests of all shareholders, ensuring equal
and non-discriminatory treatment through continuous disclosure regarding General Meetings of
Shareholders, corporate changes and significant events within the Company. The rights of minority
shareholders are protected in accordance with the applicable legal provisions and the Articles of
Association. Relevant documents necessary for the exercise of shareholders’ legitimate rights are
available on Hidroelectrica’s website, www.hidroelectrica.ro, in the Investor Relations section.
5.3. Dividend policy
Hidroelectrica's dividend policy, approved at the OGMS of June 22, 2023, aims to establish the principles
governing the distribution of net profit in the form of dividends, in compliance with the legal provisions
in the field of net profit distribution, dividend declaration, dividend payment, as well as the Articles of
Association.
Being a company with majority state capital, the distribution of Hidroelectrica's net profit must comply
with the provisions of Government Ordinance no. 64/2001 on the distribution of profit in national entities,
60
national companies and companies with full or majority state capital, as well as in autonomous
companies, with subsequent amendments and completions. Thus, according to the provisions of
Government Ordinance no. 64/2001, the minimum dividend distribution rate is 50% of the net profit
remaining after the distributions provided for in art. 1 para. (1) letter a)-e) of OG no. 64/2001.
The proposal for the distribution of dividends formulated by the Management Board is subject to the vote
of the OGMS, in a favorable market environment and with the approval of the OGMS, special dividends
could also be distributed, provided that the Company's investment plans are financed.
When proposing the dividend distribution rate in accordance with the dividend policy, the Management
Board will consider the following:
• at least 90% of the annual distributable net profit, reported on the basis of the audited annual
individual financial statements;
• the distribution, at its sole discretion, of extraordinary dividends from the Company's deferred
earnings, if it is usable and if the Company's investment plans have secured financing;
• Hidroelectrica's investment needs and opportunities;
• contributions of non-monetary items to the reported net profit;
• the financial resources available for the payment of dividends, as well as the degree of
indebtedness of Hidroelectrica;
• dividend yield comparable to that of other listed companies in industry or related sectors;
• the provisions of Government Ordinance no. 64/2001 and any law or norm applicable to
Hidroelectrica
The dividend policy is available on the company's website, www.hidroelectrica.ro, section Investor
Relations – Corporate Governance – Corporate Governance Documents – Policies and other corporate
documents (https://www.hidroelectrica.ro/article/590fab57-1bca-e084-14b3-070d6f43d30c).
5.3.1. Dividend distribution
The table below shows the dividends distributed by the Company in the years 2025, 2024, 2023 and the
distribution rate for the mentioned periods:
RON million
2025
2024
2023
Total dividends distributed to the Company's shareholders
4,043
6,293
4,349
Special dividends distributed from the retained earnings
representing the amortized revaluation reserve to the Company's
shareholders
-
-
435
Normal dividends distributed to the Company's shareholders from
the net profit of the previous year
4,043
6,293
3,914
Net profit according to the Company's individual financial statements
prepared in accordance with OMFP no. 2844/2016 for the previous
year
4,071
6,352
4,394
Legal reserve (5%)
-
-
40
Other reserves representing tax facilities provided for by law
28
59
25
Net profit remaining to be distributed
4,043
6,293
4,329
Payout Rate (Total Dividends/Net Profit to be distributed)
100%
100%
100%
Source: Hidroelectrica
61
5.4. Supervisory Board
Hidroelectrica is a joint-stock company, organized and operating in accordance with Romanian law,
managed under a dualistic system by a Management Board under the supervision of a Supervisory Board.
According to the Articles of Association in force, the Supervisory Board consists of seven members.
Members of the Supervisory Board may also be shareholders of the Company; however, they cannot be
members of the Management Board, nor can they simultaneously hold the position of Supervisory Board
member and employee of the Company.
The members of the Supervisory Board are non-executive and are selected in accordance with the legal
provisions on the corporate governance of public enterprises and the provisions of the Articles of
Association, being appointed by the OGMS. The Romanian State, represented by the competent authority
in accordance with the law, may not nominate more than six candidates for the position of member of
the Supervisory Board.
The mandate of the Supervisory Board members is four years and may be renewed by resolution of the
General Meeting of Shareholders, following the evaluation of the member’s activity and subject to the
proper fulfillment of the duties and obligations undertaken under the mandate agreement.
Information regarding the composition of the Supervisory Board, the members’ CVs, the advisory
committees, their responsibilities, the number of meetings, as well as any other relevant information can
be found in the chapter “Report of the Supervisory Board”.
5.5. The Management Board
The management of the Company is exclusively the responsibility of the Management Board. The
members of the Management Board are elected by the Supervisory Board for a period of 4 years, selected
according to the relevant legal provisions, with the possibility of being re-elected for successive periods.
Composition of the Management Board as of January 1, 2025:
Name
Position
Mandate start date
Date of termination of mandate
Karoly BORBELY*
CEO
7 November 2023
19 September 2025
Bogdan Nicolae BADEA
CIO
7 November 2023
6 November 2027
Radu Ioan CONSTANTIN
CAO
7 November 2023
6 November 2027
Marian FETIȚA*
CFO
7 November 2023
19 September 2025
Ianăș RĂDOI
COO
7 November 2023
6 November 2027
Source:Hidroelectrica
*Considering the Supervisory Board resolution of 19 September 2025 regarding the mutual termination of the
mandate agreements of Mr. Károly Borbély – CEO, and Mr. Marian Fețița – CFO, taking into account the obligations
arising from Milestone 121 (PNRR), the context established by the European Commission Decision C(2025) 3490/28
May 2025, and Hidroelectrica’s status as a company listed on a regulated market, during the same meeting the
Supervisory Board decided to assign the CEO responsibilities to Mr. Bogdan-Nicolae Badea, Member of the
Management Board, and the CFO responsibilities to Mr. Radu-Ioan Constantin, Member of the Management Board,
as a result of the vacancy of the two positions within the Management Board.
62
Thus, the composition of the Management Board as at 31 December 2025 is as follows:
Name
Position
Mandate start date
Date of termination of mandate
Bogdan Nicolae BADEA
CEO (CIO)
7 November 2023
6 November 2027
Radu Ioan CONSTANTIN
CFO (CAO)
7 November 2023
6 November 2027
Ianăș RĂDOI
COO
7 November 2023
6 November 2027
Source:Hidroelectrica
The professional experience of the members of the Management Board is summarized as follows:
Bogdan-Nicolae Badea has been a member of Hidroelectrica’s Management Board since 7 November
2023, having previously served as Chairman of the Management Board. During the period July 2017 –
November 2023, as CEO of Hidroelectrica, he delivered outstanding results for the Company, including
record profits in 2022 (RON 4 billion) and 2023 (RON 6.3 billion), clarification of legacy investment
projects, business expansion into wind energy through the acquisition of the Crucea Wind Farm—the first
M&A transaction of a state-owned energy company—entry into the supply market and significant
expansion of the customer portfolio, implementation of a Mercer-based remuneration system starting in
2018, and the introduction of a project-oriented organizational model. He also oversaw the
commissioning of investment projects (development and refurbishment) between August 2017 and 2023,
with a total value exceeding RON 1.37 billion.
Mr. Badea successfully led Hidroelectrica’s IPO in 2023, considered the third largest globally at the time,
demonstrating strong leadership and business management capabilities. The listing represented a
landmark event for the Romanian capital market, with a transaction value of approximately EUR 2 billion,
through which Fondul Proprietatea fully exited its ~20% stake in Hidroelectrica. The listing process
involved a significant transfer of know-how, preparing the Company to meet the reporting and
governance standards applicable to listed entities.
He has extensive experience in the energy sector, having held key positions such as member of the
Supervisory Board of OMV Petrom (2015–2016), member of the Board of Directors of Rompetrol Rafinare
(2015), General Manager of BNB Renewable Consulting (2009–2013, 2014), Director of Strategy and
Development at Electrica S.A. (2007–2009), Chairman of the Board of Electrica Bio-Heat S.A. (2008–2009),
and member of the Boards of Enel Energie Muntenia and Enel Energie S.A. (2007–2009). He also held the
position of State Secretary for Energy (2014–2015) and State Secretary within the Ministry of Economy
(2013–2014), gaining a comprehensive perspective on the national energy system.
Mr. Badea holds an engineering degree and a Master’s degree in Defence Diplomacy from Lucian Blaga
University of Sibiu (2009), with a thesis on “Globalization, European Integration and Romania’s Energy
Security.”
Radu-Ioan Constantin has been a member of Hidroelectrica’s Management Board since 7 November
2023, following the completion of the selection procedure. Holding dual qualifications as an engineer and
economist, he graduated from the Polytechnic University of Bucharest (German section) and the
Romanian Banking Institute, and holds an MBA from the Bucharest University of Economic Studies and
Gelsenkirchen University (2007–2009).
63
He has built his professional career within Hidroelectrica since 2008. Over 17 years, he has progressed
through various roles, contributing as a department manager to the development and modernization of
key commercial components in trading and supply, supporting the Company’s leading position in the
energy market. He was also a member of the committees involved in the preparation and execution of
the H2O IPO and acted as expert/witness in international arbitration proceedings (ICSID) in Paris and
Luxembourg, representing both the Ministry of Energy and Hidroelectrica.
Ianaș Rădoi has been a member of Hidroelectrica’s Management Board since 7 November 2023. Between
September 2015 and November 2023, he served as Chief Engineer at the Caransebeș Hydropower Plant,
where his responsibilities included plant and branch management, coordination and supervision of
personnel, management of electricity generation processes, maintenance of equipment and
infrastructure, and involvement in development, refurbishment and maintenance projects.
Previously, he held the position of Head of Hydropower Plant at the Caransebeș branch (November 2006
– August 2014), as well as roles as hydropower dispatcher and engineer within Hidroelectrica. He holds
an engineering degree from the Faculty of Energy Engineering, Polytechnic University of Bucharest (2005),
and a Master’s degree in Hydraulic Engineering and Hydropower from the same institution.
The full CVs of the Management Board members are available on the Company’s website,
www.hidroelectrica.ro, in the “About us – Management” section.
The main responsibilities of the Management Board, as defined in the Articles of Association in force, are
as follows:
• develops and implements the Company’s strategies and policies;
• convenes the Ordinary or Extraordinary General Meeting of Shareholders and prepares the
documentation required for holding such meetings;
• implements the resolutions of the General Meetings of Shareholders;
• ensures the management and coordination of the Company;
• approves the Company’s participation/association for the purpose of accessing non-reimbursable
funds;
• submits to the General Meeting of Shareholders and the Supervisory Board the Company’s economic
and financial position, as well as the annual activity report;
• submits for approval to the General Meeting of Shareholders the report on the annual financial
statements and profit and loss account for the previous year, as well as the draft revenue and
expenditure budget for the current year;
• approves the mandates of the Company’s representatives in the General Meetings of
Shareholders/Associates of companies in which Hidroelectrica holds participations, including
mandates granted in creditors’ meetings;
• approves the conclusion by the Company of any type of legal acts regarding the establishment of or
participation in partnerships or non-profit associations, with the Supervisory Board being informed;
• exercises any powers delegated by the Extraordinary General Meeting of Shareholders in accordance
with the law and performs any other duties, except for those assigned by law to the Supervisory Board
and the General Meeting of Shareholders.
64
According to the information available, there is no agreement, understanding or family relationship
between the members of the Management Board and any other person who contributed to their
appointment as administrator.
As of 31 December 2025, the following members of the Management Board hold Hidroelectrica shares:
- Radu-Ioan CONSTANTIN – 32 actions
According to the information available, the members of the Management Board have not been involved
in any litigation or administrative proceedings related to their activity within the Company over the past
five years, nor in relation to their capacity to perform their duties within the Company during the same
period.
5.6. Remuneration of the members of the Supervisory Board and the
Management Board
The Company considers employee remuneration and motivation as essential elements of its long-term
strategy, given the specific nature of its activity and the competitive market in which it operates. In this
context, prior to the Company’s listing on the BSE, a Remuneration Policy for the members of the
Supervisory Board and the Management Board was developed, aligned with the Company’s strategy and
values, providing transparency over the compensation framework and ensuring fair remuneration.
This policy was approved at the OGMS held on 22 June 2023 and is available on the Company’s website,
www.hidroelectrica.ro, in the Investor Relations – Corporate Governance – Corporate Governance
Documents section.
Considering the legislative changes regarding the remuneration of governing bodies, namely the
provisions of Government Emergency Ordinance No. 109/2011 on the corporate governance of public
enterprises, as subsequently amended and supplemented, as well as the new Corporate Governance
Code of the Bucharest Stock Exchange, the Remuneration Policy is currently under review and will
subsequently be submitted for approval to the OGMS.
At the same time, the members of the Supervisory Board and the Management Board have concluded
addenda to their mandate agreements in order to reflect the applicable legal provisions.
The principles governing remuneration and bonus decisions are as follows:
• attracting and motivating competent and experienced people within the Board and the Management
Board; ensuring the long-term sustainability of the profits of the public enterprise and its activity and
generating long-term value;
• remuneration of the members of the Supervisory Board and the Management Board at competitive
levels and with a substantial performance-based component;
• maintaining competitiveness in the remuneration market;
• the consistency of remuneration in relation to the Company's business strategy;
• aligning remuneration with good governance recommendations;
• promoting transparency on remuneration and the criteria for setting it;
• aligning the bonus scheme with international recommendations and practices on good governance;
65
• maintaining a fair balance between the fixed allowance, the variable component of remuneration and
other forms of bonuses in line with good corporate governance practices.
Remuneration of the members of the Supervisory Board
The remuneration of the members of the Supervisory Board consists of a fixed monthly allowance and
other benefits, in accordance with good corporate governance practices.
The monthly fixed allowance may not exceed a maximum of two times the average over the last 12
months of the average gross monthly salary for the activity carried out according to the main object of
activity registered by the company, at class level, according to the classification of activities in the national
economy, communicated by the National Institute of Statistics prior to the appointment.
The members of the Supervisory Board may also receive benefits borne by the Company, such as:
reimbursement of expenses related to the fulfillment of the mandate, provided that the total benefits
granted in one year of mandate do not exceed the value of two monthly gross fixed allowances due to
the members of the Supervisory Board, the provision of equipment for logistical support, the Directors &
Officers Liability insurance policy.
The members of the Supervisory Board may benefit, under the law, from specialized assistance for
substantiating/motivating the decisions taken within the Supervisory Board, as well as legal assistance in
the event of filing claims by a third party and directed against the member of the Board, participation in
a professional training program and other forms of bonuses for specific objectives.
The remuneration of the members of the Supervisory Board is set by the General Meeting of
Shareholders.
Until 17 December 2025, the date of the agreement of the mandate contracts in force with the new
provisions of GEO 109/2011 on the corporate governance of public enterprises, with subsequent
amendments and completions, the members of the SC benefit from the variable component through the
pro-rata application, in relation to the activity carried out prior to the entry into force of the Addendum
of 17 December 2025, depending on the total degree of achievement of the Key Performance Indicators.
Remuneration of the members of the Management Board
The Company grants remuneration to the members of the Management Board consisting of a fixed
component, a variable component and other forms of bonuses, in accordance with the Remuneration
Policy and corporate governance best practices.
The fixed monthly remuneration may not exceed five times the average gross monthly salary over the last
12 months for the activity carried out according to the Company’s main scope of activity, at class level, in
accordance with the national classification of economic activities, as published by the National Institute
of Statistics prior to appointment, and is determined by the Supervisory Board in accordance with the
applicable legal provisions.
The variable component is granted annually and may not exceed two times the average gross monthly
salary over the last 12 months for the activity carried out according to the Company’s main scope of
activity, at class level, as published by the National Institute of Statistics prior to appointment.
66
The variable component is awarded depending on the overall level of achievement of the Key
Performance Indicators (KPIs), established in accordance with Government Decision No. 639/2023, as
amended and supplemented, as negotiated and approved. It is calculated and paid for a completed
financial year after the approval of the financial statements and the Annual Report.
Benefits borne by the Company and granted to members of the Management Board include:
reimbursement of expenses incurred in the performance of the mandate, based on supporting
documents and in accordance with the law (including, but not limited to, accommodation, transport,
telephone, per diem and protocol expenses), as well as any other expenses related to the execution of
the mandate, whether incurred domestically or abroad, provided that the total annual benefits do not
exceed the equivalent of two gross fixed monthly remunerations; coverage of training and professional
development costs; professional liability insurance; reimbursement of legal assistance costs related to
claims brought against them for damages caused to third parties; damages equivalent to all rights under
the mandate agreement; the right to use inventory items/fixed assets necessary for carrying out their
activity; and access to a compensation and benefits package, including medical services and/or health
insurance, as well as other forms of bonuses for specific objectives.
The remuneration of the members of the Management Board is determined by the Supervisory Board.
In accordance with Article 107 of Law No. 24/2017 on issuers of financial instruments and market
operations, republished, Hidroelectrica prepares a Remuneration Report for the members of the
Supervisory Board and the Management Board for the previous financial year, with the purpose of
providing a comprehensive overview of the remuneration and benefits granted and/or due during the
last financial year to each member individually, including newly appointed and former members, in line
with the Company’s Remuneration Policy.
The report is subject to a consultative vote of the shareholders within the OGMS and is available on the
Company’s website, in the Investor Relations – General Meeting of Shareholders section, as of the date
indicated in the convening notice.
The Remuneration Report for 2024 was submitted for approval at the OGMS held on 29 April 2025 and
was approved with 39,119,264 votes, representing 61.059783% of the valid votes cast and 8.696985% of
the share capital.
5.7. Process management
Hidroelectrica has implemented the necessary internal regulations establishing the framework for
analysis and responsibilities related to the maintenance and development of the Process Management
System, in accordance with Order No. 600/2018 issued by the General Secretariat of the Government
approving the Internal Managerial Control Code of public entities, as well as with SR EN ISO 9001:2015
Quality Management Systems – Requirements. The compliance of Hidroelectrica’s Process Management
System with the requirements of SR EN ISO 9001:2015 is certified by SRAC under Certificate No. 325, and
was recertified on 1 November 2024, valid until 31 October 2027 (subject to annual surveillance). The
objectives established at Company/management level include components related to the development
and maintenance of the management system at the level of each department, based on Hidroelectrica’s
Policy.
67
5.8. Internal audit
The internal public audit activity within the Hidroelectrica group is carried out at the level of SPEEH
Hidroelectrica SA through the Internal Public Audit Department, subordinated to the Company's
Supervisory Board (Audit Committee) and at the level of Hidroserv SA through the Internal Public Audit
Department, having as reference the requirements established by Law no. 162/2017 on statutory audit,
Law no. 672/2002 (updated) on internal public audit, OSGG no. 600/2018 updated for the approval of the
Code of Internal Managerial Control of Public Entities and of the ISO 19011:2018 standard – Guidelines
on the auditing of management systems.
The internal public audit activity is carried out based on the Multi/Annual Internal Audit Plans,
developed/updated according to the evolution of risks, so as to ensure the audit of the significant
activities within the group at least once every 4 years. The Multiannual Internal Audit Plan of SPEEH
Hidroelectrica SA is endorsed by the Audit Committee and approved by the Supervisory Board, and that
of Hidroserv SA is approved by the Board of Directors.
The Internal Public Audit Department of SPEEH Hidroelectrica SA carried out assurance and advisory
missions during 2025, with the mission of providing objective assurance and advice to the members of
the Company's management on the effectiveness of the internal management and control system.
Thus, the internal audit missions carried out during 2025 continued to address the electricity supply
activities that recorded a significant increase in the share of the company's revenues, the activities
regarding the recovery of receivables with a deposit payment term and the activities regarding equipment
maintenance. The annual evaluation of the internal control system was also carried out.
The Internal Public Audit Department of Hidroserv SA carried out internal audit missions during 2025
regarding specific transport, accounting, financial and asset management activities.
5.9. Key features of internal control and risk management systems in relation to
the financial reporting process
The financial reporting process within Hidroelectrica is carried out through the implementation, within
internal regulations (the Organization and Functioning Regulation, the Internal Regulation, system
procedures and operational procedures), of managerial internal control tools, with the following ongoing
objectives (in accordance with Order No. 600 of 7 May 2018 approving the Internal Managerial Control
Code of public entities):
a) objectives regarding the effectiveness and efficiency of operation include the objectives related
to Hidroelectrica's purposes and the economical, effective and efficient use of resources,
including the objectives regarding the protection of Hidroelectrica's resources from inappropriate
use or losses, as well as the identification and management of liabilities;
b) objectives regarding the reliability of external and internal information include the objectives
related to the keeping of adequate accounting, the quality of the information used in
Hidroelectrica or disseminated to third parties, as well as the protection of documents against
two categories of fraud: concealment of fraud and distortion of results;
68
c) Compliance objectives with respect to laws, regulations and internal policies comprise objectives
related to ensuring that the entity's activities are carried out in accordance with the obligations
imposed by laws and regulations, as well as compliance with internal policies.
The framework of the company's internal control system is defined by the Sustainability Management
System Regulation, approved by the Supervisory Board, which defines/details at the level of the
Supervisory Board, the Management Board and the functional compartments the way to establish the
objectives/requirements/obligations applicable to the company and the way to analyze and implement
the procedures necessary to ensure the performance of activities.
According to the Regulation on the Process Map & Internal Managerial Control System of Hidroelectrica,
an annual assessment of the functioning of the internal managerial control system is carried out, resulting
in a report on the internal managerial control system. Based on the Report for 2025, approved by the
Company’s management (No. 00012335/09.02.2026) and communicated to the Ministry of Energy
through Address No. 00012419/09.02.2026, it was confirmed that the internal managerial control system
is partially implemented (15 out of 16 standards are implemented), with the completion of the
implementation of all procedures defined in Hidroelectrica’s Process Map still required.
The Internal Managerial Control Department and CFG are responsible for carrying out the activities of
internal managerial control and financial management control.
The internal managerial control activities are carried out based on the service orders issued following the
approval of the Annual Management Internal Control Plan, as well as the decisions of the Management
Board and are completed with internal managerial control reports on the audited activities, approved by
the Management Board, which contain findings, responsible persons and recommendations/measures to
remedy the deficiencies, where applicable. The main internal managerial control missions carried out i n
2025 aimed at implementing and/or complying with the Internal Managerial Control Standards at the
level of the Security, Patrimony, Purchasing, Trading, Legal, Personal Data Protection and Process
Management departments. Punctually, at the level of the entire company, the implementation of
Standard 11 – Business Continuity was achieved, by developing the Business Continuity Plan.
The financial management control (CFG) activities are carried out on the basis of the service orders issued
following the approval of the CFG Annual Plan, as well as the decisions of the Management Board and
end with CFG reports on the audited activities, approved by the Management Board, which contain
findings, responsible persons and measures to remedy deficiencies and recover damages, where
applicable.
The Inspection, Compliance and Prevention Department's prevention-based strategic approach in 2025
During 2025, the Compliance, Inspection and Prevention Department operated under a strategy focused
on identifying and proactively mitigating situations that could generate deficiencies, before they
materialize into significant operational and/or financial issues. During the reporting period, seven
inspection and prevention missions were carried out, of which three were included in the Annual
Inspection and Prevention Plan (PAIP 2025), approved by Decision No. 677/04.03.2025, and four were
initiated on an ad-hoc basis by the Management Board of Hidroelectrica.
69
An essential component of the prevention activity was the monitoring of the supply segment, where
extensive checks led to the implementation of permanent measures. These actions were aimed not only
at correcting specific deviations, but also at establishing robust control mechanisms to prevent recurrence
and to ensure the accuracy of the data underlying financial reporting.
The activity of the Compliance, Inspection and Prevention Department in 2025 represented a significant
step towards the adoption of the COSO framework, through the integration of its five core components:
control environment, risk assessment, control activities, information and communication, and
monitoring. The emphasis on prevention and the implementation of recommendations resulting from
inspection missions confirms the Company’s commitment to aligning its internal control system with
corporate governance principles. By translating findings into concrete preventive measures,
Hidroelectrica strengthens its organizational resilience and ensures a stable and transparent control
environment.
5.10. Events and sponsorships in 2025
Hidroelectrica, as a company operating in the energy sector, assumes responsibility towards the
communities in which it operates and encourages employee involvement in corporate social
responsibility initiatives. The amount of RON 9 million represents Hidroelectrica’s contribution to
sponsorships in 2025, with the main projects including the following:
Engagement for a cleaner environment – “Let’s Do It, Romania!”
In 2025, Hidroelectrica volunteers participated in the national “Let’s Do It, Romania!” campaign, taking
part in environmental clean-up activities carried out in the Hațeg and Subcetate areas. Through this
initiative, the Hidroelectrica team contributed to environmental protection and strengthened a sense of
responsibility towards nature and the community.
Politehnica Timișoara Foundation
Hidroelectrica supported cultural and educational initiatives developed by the Politehnica Timișoara
Foundation, aimed at promoting dialogue between education, technology and innovation. The supported
projects brought together the academic community, students and the general public through events
dedicated to idea exchange, professional development and the promotion of academic culture. Through
this collaboration, the Company reaffirms its commitment to education and the development of future
generations of specialists.
Ascendo Association
Through its partnership with the Ascendo Association, Hidroelectrica supported the development of
scientific projects carried out by high-performing young individuals in the fields of technology and
research. The supported initiative focused on an innovative aeronautical project aimed at using
autonomous technologies to identify high-risk areas. This approach highlights the importance of investing
in education, research and innovation, as well as supporting young people contributing to impactful
societal solutions.
Intelligent Energy Association – “Warm Homes” project
Hidroelectrica supported the “Warm Homes” project carried out by the Intelligent Energy Association, an
initiative aimed at assisting vulnerable families. The program seeks to ensure the resources necessary for
heating homes during the cold season, contributing to improved living conditions for disadvantaged
communities. Through this involvement, the Company reaffirms its social responsibility and commitment
to supporting communities in need.
70
Blondie Association – “Share for Another” project
Hidroelectrica supported the “Share for Another” project carried out by the Blondie Association, an
initiative dedicated to facilitating access for Romanian patients to urgent medical treatments in clinics
across Europe. The project aims to develop a humanitarian air ambulance service capable of providing
specialized medical transport for patients of all ages. Through this partnership, the Company contributes
to saving lives and improving access to essential healthcare services.
Metropolis Philanthropic Foundation
Hidroelectrica supports the initiatives of the Metropolis Philanthropic Foundation aimed at improving
children’s access to medical services. The supported project focuses on developing medical infrastructure
for pediatric mental health treatment, contributing to the creation of a modern and safe environment for
patient care. This initiative reflects the Company’s commitment to supporting the healthcare system and
protecting children’s well-being.
Romanian Rugby Federation
Hidroelectrica supported the activities of the Romanian Rugby Federation, contributing to the
preparation of the national team for international competitions. This support aims to enhance sports
performance and promote the values associated with rugby, such as discipline, teamwork and respect.
Through such initiatives, the Company supports high-performance sports and strengthens Romania’s
image on the international sports stage.
Fii Independent Sports Club Association
Hidroelectrica supported initiatives of the Fii Independent Sports Club Association aimed at social
inclusion and supporting persons with disabilities. The supported project involved organizing educational
activities for students preparing to obtain their driving license, providing guidance and practical
information. Through this involvement, the Company contributes to promoting equal opportunities and
personal autonomy among young people.
“Dear Santa, I wish…” – solidarity for children in communities
In 2025, Hidroelectrica carried out the “Dear Santa, I wish…” campaign, in partnership with the ASSA
Foundation, dedicated to children in local communities. Through the involvement of company employees,
children’s letters were transformed into gifts and moments of genuine joy. The campaign brought smiles
to children in Neamț, Constanța and Ialomița counties, reaffirming the importance of solidarity and
community engagement.
Hidroelectrica alongside students at Career Days 2025
In 2025, Hidroelectrica participated in “Career Days” events organized by technical universities in
Romania, strengthening its connection with the academic environment and promoting career
opportunities in the energy sector. Company representatives engaged with hundreds of students,
presenting Hidroelectrica’s activity, strategic projects and internship and employment programs
dedicated to young professionals.
Support for AIEE initiatives for developing young specialists
Hidroelectrica participated in the first edition of AIEE Energy Day, an event dedicated to professional
dialogue and the development of the next generation of energy specialists. The Company also joined the
educational project “Dispatcher for a Day,” offering young people the opportunity to understand the
responsibilities and processes behind the operation of energy systems.
71
5.10.1. Comply or Explain Statement
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
SECTION A: GOVERNING BODIES
A.1. The Board shall ensure the long-term success and sustainability of the Company, in the interest of the Company and its
shareholders, and taking into account the interests of other stakeholders. The Council must clearly define and make its role
and responsibilities fully public.
A.1., 1
The Board must have an internal regulation that
formalises and clearly specifies its role and
responsibilities. The Articles of Association, the Rules
of Procedure of the Board and other internal
regulations must clearly delineate the role and powers
between the Board, the General ai Meeting of
Shareholders (GSM) and the Executive Management.

The company is managed in a two-tier
system by the Management Board and
the Supervisory Board.
The structure and principles of corporate
governance, as well as the powers and
responsibilities of the General
Shareholders' Meeting, the Supervisory
Board and the Management Board are
described in the Articles of Association,
the Organizational and Operating
Regulations ("ROF") of the AC and the
Management Board's ROF, as well as
other internal procedures.
The Articles of Association can be
consulted on the company's website,
www.hidroectrica.ro, Corporate
Governance – Corporate Governance
Documents section.
A.1., 2
The Rules of Procedure of the Board shall include,
inter alia, the duties of the Board, as well as the
fiduciary responsibilities of the members of the Board
to act in full knowledge of the facts, in good faith, with
due diligence and care and in the interest of the
Company, its shareholders and taking into account the
interests of other interested parties, in accordance
with legal requirements.

The competencies and responsibilities of
the Supervisory Board and the
Management Board are set out in the
Articles of Association, the Supervisory
Board Rules of Procedure and the
Management Board Rules of Procedure,
as well as in other internal procedures.
A.1., 3
To support the Company's long-term viability and
success, the Board should: • Oversee the
development and approval of the Company's strategy
and ensure that it also integrates sustainability
considerations, including social and environmental
(E&S) considerations and climate-related risks and
opportunities; • Appoint and dismiss the Chief
Executive Officer and other members of the
Management Board who have been delegated
executive management responsibilities (referred to as
"Executive Management") ") and ensure succession
planning for them;• Oversee the performance of
executive management, the role of executive
management in addressing material risks and
opportunities related to sustainability, and align
executive management remuneration with the long-
term interests and sustainability of the Company, in
accordance with the provisions of the Company's

The competencies and responsibilities of
the Supervisory Board and the
Management Board are set out in the
Articles of Association, the Supervisory
Board Rules of Procedure and the
Management Board Rules of Procedure,
as well as in other internal procedures.
72
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
remuneration policy;• Ensure that there is a robust
framework for internal control and risk
management;• Ensure that there is a robust
framework for internal control and risk
management;• Ensure that the ensure that the
Company has procedures in place to enable effective
communication with shareholders and other
stakeholders.
A.1., 4
The duration of the appointment of Board members
and executive management should be clearly
established and should, as far as possible, promote
stability and predictability.

According to the Articles of Association,
the members of the SB are appointed for
a period of 4 years
A.2. The Council must have the right balance of competences, experience, gender diversity, knowledge and independence in
order to be able to carry out its duties and responsibilities effectively.
A.2., 1
The Board must have at least five members.

The CS consists of seven members.
Details – in the Annual Report – chapter
of the Supervisory Board Report
A.2., 2
The Board must have a diversity policy on the Board
and executive leadership and ensure that diversity in
terms of gender, age, experience and skills is
incorporated into the Nomination Policy.

The selection procedures for the
members of the Supervisory Board are
carried out by the Ministry of Energy, as
a Public Supervisory Authority, in
accordance with the provisions of GEO
no. 109/2011 on the corporate
governance of public enterprises. Within
this legal framework, the responsibility
for initiating and conducting the
selection process, including establishing
the eligibility and evaluation criteria, lies
with the Public Supervisory Authority, in
compliance with the principles of
transparency, professional competence
and non-discriminatory treatment.
A.2., 3
The Board must develop a profile of the Board
specifying the characteristics and desirable traits of its
members, including factors such as independence,
diversity, integrity, specific skills and experience,
knowledge of industry, ability and willingness to
devote adequate time and effort to the
responsibilities of the Board, in the context of the
needs of the Board and its committees and their
exercise of the strategic and supervisory role of the
Board. The Board's profile may be part of the
Nomination Policy.

According to the provisions of GEO
109/2011 on the corporate governance
of public enterprises, with subsequent
amendments and completions, the
Ministry of Energy, as the Guardianship
Public Authority, issues the Letter of
Expectations establishing the expected
performance from the Company's
management bodies, together with the
Profile of the Supervisory Board.
These documents related to the
selection of CS members are published
on the company's website,
www.hidroelectrica.ro, section
Corporate Governance - Selection of
members of management structures
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Yes
Partial
No
Explanation
A.2., 4
The majority of Board members must be non-
executives. At least one third of the members of the
Board must be independent. Each independent
member of the Board must submit a declaration of
independence at the time of his nomination for
election or re-election, as well as when any change in
his statute occurs, in accordance with the
independence criteria provided for in the legislation
and in Annex A to the Code.

According to the Articles of Association,
the Members of the Supervisory Board
cannot be members of the Management
Board.
A.2., 5
The Nomination and Remuneration Committee (or
the entire Board if there is no Nomination and
Remuneration Committee) will assess whether the
members of the Board can be considered
independent on the basis of the factors considered,
examining whether there are any business or other
personal relationships that could significantly affect
the independence and objectivity of the Board
member and his or her ability to act in the interest of
the Company, shareholders and stakeholders.

The NRC's attribution is defined in the
ROF of the Committee.
A.2., 6
The positions of Chairman of the Board and Chief
Executive Officer should be held by different persons.

According to the Articles of Association,
the Members of the Supervisory Board
cannot be members of the Management
Board.
A.2., 7
If the positions of Chairman of the Board and Chief
Executive Officer are held by the same person, it is
advisable that the Company appoint an independent
Vice-Chairman.

This is not the case, according to the
Articles of Association, the Members of
the Supervisory Board cannot be
members of the Management Board
A.3. The Board shall ensure that a formal, rigorous and transparent procedure is put in place for the appointment of new
members to the Board.
A.3., 1
The Society will develop and publish a Board Member
Nomination Policy that shall define the processes and
procedures for nominating, electing, or replacing a
member of the Board. The nomination policy,
approved by the relevant governance body, will
describe how the Company receives and evaluates
nominations from shareholders (including minority
shareholders) or members of the Board, including
with regard to the profile of the Board, independence
and diversity.

According to the provisions of GEO
109/2011 on the corporate governance
of public enterprises, with subsequent
amendments and completions, the
Ministry of Energy, as the Guardianship
Public Authority, issues the Letter of
Expectations establishing the expected
performance from the Company's
management bodies, together with the
Profile of the Supervisory Board.
According to the Articles of Association,
the Romanian State, represented by the
competent authority in accordance with
the law, may not nominate more than six
candidates for the position of member of
the Supervisory Board.
These documents related to the
selection of CS members are published
on the company's website,
www.hidroelectrica.ro, Corporate
Governance - Selection of members of
management structures section
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Yes
Partial
No
Explanation
A.3., 2
The Board, through the Nomination and
Remuneration Committee, if any, shall monitor the
process of nominating candidates for the position of
member of the Board.

The selection procedures for the
members of the Supervisory Board are
carried out by the Ministry of Energy, as
a Public Supervisory Authority, in
accordance with the provisions of GEO
no. 109/2011 on the corporate
governance of public enterprises. Within
this legal framework, the responsibility
for initiating and conducting the
selection process, including establishing
the eligibility and evaluation criteria, lies
with the Public Supervisory Authority, in
compliance with the principles of
transparency, professional competence
and non-discriminatory treatment.
According to the Articles of Association,
the Romanian State, represented by the
competent authority in accordance with
the law, may not nominate more than six
candidates for the position of member of
the Supervisory Board.
A.3., 3
The Company will inform shareholders of the
experience and CV of the candidates for the position
of member of the Board, which they need to make an
informed decision on the appointment or renewal of
the term of office of the members of the Board,
including the following: • the professional
commitments and involvement of the candidates,
including executive and non-executive positions in
companies, public authorities, non-profit
organisations and other organisations; • any existing
or potential conflict of interest, including whether
they have business, family or other relationships that
could affect their performance as a member of the
Board; • which shareholder or member of the Board
has proposed each candidate for the position of
member of the Board.

All information regarding the
experience and CVs of the candidates for
the position of member of the
Supervisory Board are made available to
shareholders, on the company's
website, www.hidroelectrica.ro, the
General Meeting of Shareholders
section.
A.4. The Board shall set up committees to assist it in carrying out its key responsibilities, addressing strategic challenges and
managing sensitive issues with a high potential for conflict of interest.
A.4., 1
The Board will establish an Audit Committee to
enhance its oversight capacity over financial
reporting, the internal control framework, internal
and external audit processes, and compliance with
applicable laws and regulations. If it is not required by
law or a dedicated risk management committee is not
already established, the Audit Committee will also
include responsibilities for monitoring the
effectiveness of the risk management framework.

The SB has set up an Audit Committee
("CA").
AC includes members with qualifications
appropriate to the functions and
responsibilities they hold on the AC.
The president of the Commitee is Mrs.
Carmen Radu.
Details regarding the Audit Committee
are presented in the Annual Report, in
the chapter of the Supervisory Board
Report.
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Yes
Partial
No
Explanation
A.4., 2
It is advisable that the composition of the Audit
Committee should include only the non-executive
members of the Board. It is also advisable that the
majority of the members of the Committee be
independent, including the Chair of the Committee.
The Audit Committee must have, overall, relevant
competences in the field in which the Company
operates. The Committee and its members must
comply with the requirements of the applicable
national and European legislation.
AC is composed of 6 non-executive
members, of which 5 are independent.
Details regarding the Audit Committee
are presented in the Annual Report, in
the chapter of the Supervisory Board
Report.
A.4., 3
The Board of Companies listed in the Premium
Category must establish a Nomination and
Remuneration Committee consisting of the non-
executive members of the Board. It is advisable that
the majority of the members of the Committee be
independent, including the Chair of the Committee.
The Board may also establish a separate Nomination
Committee or a Remuneration Committee, if the
composition of the Board so permits and if it is
justified, given the size and complexity of the business
and the governance structures of the Company.

The CS has set up a Nomination and
Remuneration Committee ("NRC").
The president of NRC is Mr. George-
Marius Toniuc.
NRC has 5 non-executive members, of
which 4 are independent.
Details regarding the Nomination and
Remuneration Committee are presented
in the Annual Report, in the chapter the
Supervisory Board Report.
A.4., 4
In addition to its specific responsibilities as set out in
this Code, the Nomination and Remuneration
Committee:i. Reviews and recommends to the Board
the size and composition of the Board and leads the
creation and ongoing review of the Board's profile; ii.
Identify persons qualified to become members of the
Board and Executive Management, if requested;
evaluates candidates for executive management
positions; evaluates the candidates proposed by
shareholders or members of the Board for positions of
member of the Board and informs the General
Shareholders' Meeting in detail; iii. Makes
recommendations to the Board on appointments to
committees (other than the Nomination and
Remuneration Committee); iv. Coordinate an annual
evaluation of the Board, Board members and
committees in accordance with the provisions of
Principle A.5.; v. Assists the Board in fulfilling its
responsibilities related to the Company's
remuneration policy; vi. Assists the Board in the
development of succession plans for executive
management, as well as emergency succession plans
and the recruitment process for the Director-General,
as appropriate; vii. Oversees the administration of the
Company's compensation and benefits plans.

Regarding points i. and ii.:
The selection procedures for the
members of the Supervisory Board are
carried out by the Ministry of Energy, as
a Public Supervisory Authority, in
accordance with the provisions of GEO
no. 109/2011 on the corporate
governance of public enterprises. Within
this legal framework, the responsibility
for initiating and conducting the
selection process, including establishing
the eligibility and evaluation criteria, lies
with the Public Supervisory Authority, in
compliance with the principles of
transparency, professional competence
and non-discriminatory treatment.
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Yes
Partial
No
Explanation
A.4., 5
The role and responsibilities of the Board committees
shall be defined in separate internal regulations
(operating regulations) and published on the
Company's website. If the Company chooses not to
establish any of the committees of the Board that are
not required by law, the corresponding tasks and
responsibilities shall be carried out by the Board and
shall be duly referred to in the Board's rules of
procedure.

The role and attributions of the advisory
committees set up at the SB level are
defined in the Regulations related to
each committee.
A.4., 6
The assessment of the independence of committee
members, including members of committees
appointed by the AGM, shall be carried out in
accordance with the same procedure as for
independent members of the Board.

All members of the committees are
members of the SC.
Based on the declarations of
independence submitted, 6 out of 7
members are independent.
A.4., 7
The Chairs of the Audit Committee and the
Nomination and Remuneration Committee shall not
be the Chair of the Board or other committees, unless
justified by the size of the Board.

The Presidents of the AC and NRC (Mrs.
Carmen Radu, respectively Mr. Marius-
George Toniuc) are members other than
the President of the SB (Mr. Silviu-
Razvan Avram).
A.5. The Board must put in place robust procedures for the functioning of the Board, as well as mechanisms for the evaluation
and continuous development of the Board in order to improve the competences of the members of the Board and their ability
to carry out their responsibilities effectively.
A.5., 1
The President of the Board is primarily responsible for
ensuring that the Board functions properly. The
Board's Rules of Procedure must contain the role and
responsibilities of the President of the Board, and the
President of the Board must, at least:• Establish the
agenda for Board meetings, chair these meetings and
ensure that minutes of such meetings are drawn up;•
Ensure that the Board receives accurate, timely,
useful, succinct information to enable the Board to
take correct decisions;• Ensure that the Board has
sufficient time for consultation and decision-making;•
To allow for the proper functioning of the committees
and for effective communication with the Board's
committees, including operative and relevant reports
from the committees to the entire Board;• To ensure
that the performance of the Board is evaluated and
discussed at least once a year and publicly
disseminated in accordance with D.1., 3;• To ensure
that the Board has an appropriate working
relationship with the executive management. The
Director General and the Chairman of the Board (if the
positions are held by different persons) meet
regularly;• Address and manage internal disputes and
conflicts of interest concerning the members of the
Board.

All aspects mentioned in requirement
A.5.,1 are provided for in ROF SB
A.5., 2
The Board shall meet whenever necessary, but not
less than six (6) times a year.

During 2025, 43 meetings of the SB took
place.
Details regarding the SB meetings can be
consulted in the chapter the Supervisory
Board Report.
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Yes
Partial
No
Explanation
A.5., 3
The Board may request the appointment of the
Secretary-General to assist the Board in complying
with its obligations under the law, the Board's rules of
procedure and other policies. The Secretary General
shall be a senior expert within the Society, responsible
for assisting the Board and its committees in
organizing their activities, preparing meetings,
annually evaluating the performance of the Board and
committees, and training programs for Board
members, if necessary.

According to ROF SB, the Chairman of
the SB appointed two Secretaries, whose
attributions are defined in the
Regulation.
A.5., 4
The Board must clearly define the rights and
responsibilities, the scope of authority and other
matters relating to the Secretary-General.

According to the ROF SB, the President
of the Council appointed two
Secretaries, whose attributions are
defined in the Regulation.
A.5., 5
The Board and its committees must draw up and
approve an annual internal work plan identifying the
topics to be addressed during the year before the end
of the previous year. The plan must take into account
the decisions required to be proposed to the GSM, the
reporting by the executive management and internal
control functions, the required frequency of Board
meetings and committees, and must be reviewed by
the President with the support of the Secretary
General.

The Supervisory Board carries out its
activity according to the internal work
plan.
A.5., 6
The Board shall carry out an annual evaluation of the
composition, activity and dynamics of the Board and
its committees, individually and as a whole, which
shall be coordinated by the Nomination and
Remuneration Committee.

The SB annually conducts an evaluation
process of its activity based on a self-
evaluation policy whose form has been
approved by the SB. The self-evaluation
is carried out under the direction of the
NRC. Based on the self-assessment
questionnaires (annex of the self-
assessment policy), the Annual Self-
Assessment Report is drafted and
approved by the SB.
The report of this self-assessment for
2025 is presented in the Chapter the
Supervisory Board Report.
A.5., 7
The Nomination and Remuneration Committee must
share the results of the Board's evaluation with the
entire Board and set out follow-up actions, if
necessary, including professional development and
training plans for the Board, to fill the gaps.

The self-assessment report approved by
the SB includes further actions for the
development/improvement of the
activity.
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Provision (detailed)
Yes
Partial
No
Explanation
A.5., 8
The Board's Rules of Procedure shall impose induction
programs for newly appointed Board members,
provided by the Society's internal staff. The Board's
rules of procedure may refer to continuing education
programmes for Board members if necessary. The
implementation of the orientation and continuing
training programmes for Board members (as decided
by the Board) is carried out under the supervision of
the Nomination and Remuneration Committee, with
the support of the Secretary General. Based on the
results of the annual evaluation of the Board, the
Nomination and Remuneration Committee together
with the Chair of the Board will develop professional
development programmes focusing on areas where
capacity should be built among Board members.

Participation in professional training
courses is an obligation of the members
of the Supervisory Board according to
the mandate contracts.
A.6. The executive management is responsible for the day-to-day management of the Company. The Board must ensure that
executive management is able to effectively lead the Company, and the composition, competence, roles, and incentives of
executive management support the successful implementation of the Corporation's strategy and plans.
A.6., 1
The executive management must direct the Society
and be accountable to the Board. The division of
responsibilities between the Board and the executive
management and between the various members of
the executive management must be clearly
articulated in the Company's Articles of Association
and the Company's internal regulations.

The structure, powers and
responsibilities of the Management
Board are described in the Articles of
Association, the Rules of Organization
and Functioning ("ROF") of the
Management Board, as well as other
internal procedures.
The Articles of Association can be
consulted on the company's website,
www.hidroectrica.ro, Corporate
Governance – Corporate Governance
Documents section.
A.6., 2
When the roles of Chairman of the Board and Chief
Executive Officer are exercised by the same person,
the different responsibilities of the Chairman of the
Board and the Chief Executive Officer must be clearly
defined and differentiated in the Articles of
Association of the Company.

According to the Articles of Association,
the Members of the Supervisory Board
cannot be members of the
Management Board.
A.6., 3
The Board must ensure that the executive
management is made up of individuals with the
appropriate knowledge, skills, diversity and
experience to support the success of the Society's
performance, and that there are measures in place to
ensure the orderly succession of executive
management.

The selections carried out by the
Supervisory Board for the election of the
members of the Management Board are
subject to the provisions of GEO no.
109/2011 on the corporate governance
of public enterprises. Within this legal
framework, the responsibility for
initiating and conducting the selection
process, including establishing the
eligibility and evaluation criteria, lies
with the Supervisory Board, in
compliance with the principles of
transparency, professional competence
and non-discriminatory treatment.
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Provision (detailed)
Yes
Partial
No
Explanation
A.6., 4
The Board, with the support of the Nomination and
Remuneration Committee, shall annually assess the
performance of the executive management, the
effectiveness of its cooperation with the Board,
including the information provided to the Board.

The annual evaluation report of the
Management Board is subject to the
approval of the Supervisory Board.
SECTION B: RISK MANAGEMENT FRAMEWORK AND INTERNAL CONTROL
B.1. The company shall have an adequate and effective internal control and risk management framework, taking into account
its strategy, size, complexity of operations and risk profile, including the potential environmental and social impact of its
activities.
B.1., 1
The Board determines the nature and extent of the
risks that the Company is willing to assume as
necessary to achieve the Company's strategic
objectives (i.e. the Company's risk appetite) and must
ensure that clear structures, policies and procedures
are in place to identify, assess, report, manage and
monitor material and emerging risks, including
sustainability-related risks, cybersecurity and the use
of digital technologies. The Board must explain in the
annual report the mechanisms and processes put in
place to identify and manage risks.

The operationalization of the risk
management framework is achieved by:
1. Governance and oversight The Audit
and Risk Committee, established at the
level of the Supervisory Board, shall
ensure the independent oversight of the
risk management system. The
Committee meets quarterly or as
necessary and reports to the Council on
the conclusions of the evaluations
carried out.
2. Risk identification and assessment
The Company maintains a regularly
updated Risk Register, in accordance
with the procedures, which includes
significant and emerging risks classified
by probability, impact and speed of
materialization.
3. Reporting and monitoring The Board
receives regular reports on the evolution
of the Company's risk profile, including
emerging risks identified during the
reporting period. The reporting shall
include the status of significant risk
mitigation measures.
4. Specific risks — sustainability, cyber
and digitalization The company is in the
process of formally expanding its risk
management framework to explicitly
integrate sustainability risks and ESG
factors as well. These categories are
operationally monitored.
B.1., 2
The Board must adopt a formal risk management
policy to ensure the accurate, complete and timely
identification, measurement and reporting of risks,
the existence of adequate and feasible risk control
measures, and the integration of E&S risks into the ris k
management framework in order to implement the
Company's strategy.

The Risk Policy is drafted and is to be
adopted by the SB.
The policy covers the following
elements:
1. Identifying and measuring risks
2. Accurate, complete and timely
reporting
3. Appropriate risk control measures
4. Integration of environmental and
social (E&S) risks
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No.
Provision (detailed)
Yes
Partial
No
Explanation
B.1., 3
The Board and the Audit Committee need to
understand the emerging changes related to
information technology and artificial intelligence so as
to mitigate cybersecurity risks. Time must be given to
the risks and opportunities of AI and cybersecurity on
the Board's agenda to ensure an understanding of
cyber protection.

The Board and the Audit Committee
receive regular briefings from executive
management on the evolution of the
cyber threat landscape, the status of the
protection measures implemented and
the relevant incidents recorded during
the reporting period. These briefings
ensure a continuous flow of relevant
information to the supervisory level.
B.1., 4
It is advisable that the Company establish a risk
management function responsible for ensuring the
accurate, complete and timely identification of risks,
ensuring that appropriate and feasible risk control
measures are in place and risk management
procedures are monitored. The risk management
function, through the Risk Management Officer (CRO),
if any, must have direct communication and
functional reporting to the Board and the Audit
Committee (if there is no dedicated Risk Committee).

The organizational structure of the
Company includes a department
dedicated to risk management – the Risk
Management Department.
B.1., 5
The Board, assisted by the Audit Committee, shall
assess at least annually the adequacy and
effectiveness of the Company's risk management and
internal control framework (including operational and
compliance controls) and make relevant
recommendations. The assessment shall take into
account the effectiveness and scope of the internal
audit function, the adequacy of risk management and
compliance, the internal control reports, if required
by applicable law, addressed to the Board Audit
Committee, the responsiveness and effectiveness of
management in addressing identified weaknesses or
weaknesses in internal control, and the submission of
relevant reports to the Board.

The Risk Management Department
prepares an annual report on the risk
management activity that includes the
evaluation of the risk management
system, which is presented to the Risk
Management Committee of the
Supervisory Board.
B.1., 6
The Board shall develop and make available on the
Company's website, free of charge, a whistleblowing
mechanism that allows employees and other
interested parties to disclose alleged violations or
irregularities under applicable law.

Through the Hidroelectrica Code of
Ethics, a document approved and
updated by the Supervisory Board, a
whistleblowing mechanism is
implemented that allows employees and
other interested parties to make
disclosures regarding alleged violations
or irregularities according to the
applicable legislation in force
(comportament.etic@hidroelectrica.ro).
B.2. The Audit Committee shall assist the Board in ensuring the integrity of financial and non-financial reporting, establishing
an effective risk management and internal control framework, and maintaining an appropriate relationship with the
Company's external auditors.
B.2., 1
In addition to its responsibilities set out in the
legislation and other parts of the Code, the Audit
Committee shall:• Review the Company's internal
controls and risk management framework;• Monitor
the development and implementation of the
Company's policies on conflicts of interest and
transactions with related parties;• Ensure

• The evaluation of the internal
managerial control system (which also
includes the risk management system) is
carried out completely at the level of the
Company within a period of 3 years, in
which the executive and 3 branches are
81
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
independence and review the effectiveness of the
Company's internal audit function and make
recommendations to the Board;• Oversee the internal
audit function;• Oversee the preparation of
sustainability reports and the information included
therein, unless this task is assigned to another
committee;• Oversee the framework for ensuring the
Company's compliance with applicable legal and
regulatory requirements, as well as the Company's
internal regulations (such as procedures for reporting
violations of the law or the Company's Code of
Conduct), unless this task is assigned to another
committee.
evaluated, in turn, in the first year, and
subsequently in the 2nd and 3rd years
the executive and the rest of the
branches. The year 2025 represented
the second year of an ISO recertification
cycle (it is carried out once every three
years, correlated with the requirements
for ISO 9001, ISO 14001, ISO 45001 and
ISO 37001 certification) in which the
Functional Departments within the
Executive and the Bistrita and Portile de
Fer branches were evaluated. Following
these evaluations, the Internal Audit
Report on the status of the
implementation of the Internal
Managerial Control System / ISO was
issued, registered with no.
123139/12.11.2025, which was
presented to the Audit Committee on
October 13, 2025 and approved by the
SB by Decision 134/13.11.2025.
The internal public audit activity at the
level of the Company is carried out
through its own audit structure, thus
complying with the requirement
established by Law no. 672/2002, on
internal public audit - art. 10 paragraph
(1), republished with subsequent
amendments and completions.
Taking into account the requirements of
the National Anti-Corruption Strategy
and ISO 37001 Anti-Bribery
Management Systems Requirements
with User Guide, the Internal Public
Audit Department, subordinated to the
Audit Committee, annually conducts the
evaluation of the corruption monitoring
and prevention system and issues an
audit report, endorsed by the Audit
Committee and approved by the
Supervisory Board.
On 10 September 2025, the Internal
Public Audit Department prepared a
report that includes the conclusions in
relation to conflicts of interest, a report
analyzed and endorsed at the meeting of
the Audit Committee on October 13,
2025 and approved by the SB by Decision
134/13.11.2025.
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No.
Provision (detailed)
Yes
Partial
No
Explanation
B.2., 2
Whenever the Code mentions reviews or analyses to
be carried out by the Audit Committee, they must be
followed by periodic (at least annual) or ad-hoc
reports to be submitted to the Board.

For each meeting of the Audit
Committee, a Report of the Audit
Committee is drawn up, which includes,
where appropriate, proposals for
measures, deadlines and those
responsible for meeting certain
requirements or eliminating certain
deficiencies. After the approval of the
measures by the SC, the established
officials inform the SB how to fulfill
them.
The Internal Public Audit Department
prepares a report that monitors the
status of implementation of the
recommendations included in the
internal audit reports, endorsed by the
Audit Committee and approved by the
SC.
The Internal Public Audit Department
prepares the Annual Report of the
internal audit activity within the
Company, in which the operating
framework of the internal audit function
is presented. The report is analysed,
evaluated and endorsed at a meeting of
the Audit Committee and subsequently
approved by the SC.
Each internal audit report, resulting from
the conduct of the internal audit
missions, is presented to the Audit
Committee, which after its analysis,
endorses it and sends it to the SB for
approval.
B.2., 3
The Audit Committee must monitor the independence
and objectivity of the external auditor. The
Committee should approve a policy on the provision
of non-audit services permitted by the external
auditor, in accordance with legal requirements, and
ensure the implementation of this policy. The
Committee's findings on the independence of the
external auditor shall be made public in the annual
report.

According to the updated SB ROF, the
Audit Committee monitors the
independence and objectivity of the
external auditor. The provision of non-
audit services allowed by the external
auditor can be achieved only with the
approval of the Supervisory Board,
based on the recommendation of the
Audit Committee, having as reference
LAW no. 162 of 6 July 2017 on the
statutory audit of the annual financial
statements and consolidated annual
financial statements and REGULATION
(EU) NO. 537/2014 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL of
16 April 2014 on specific requirements
relating to the statutory audit of public-
interest entities. In the next period, the
policy/procedure regarding the
provision of non-audit services allowed
83
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
by the external auditor will be finalized
and implemented.
B.2., 4
The Audit Committee must discuss the annual work
plan with the external auditor, covering the scope and
materiality of the activities to be audited. The Audit
Committee must meet with the external auditor
whenever necessary to discuss the problems
identified and to monitor the quality of the services
provided.

According to the updated SB ROF, the
Audit Committee discusses the annual
work plan with the external auditor,
covering the scope and materiality of the
activities to be audited. The Audit
Committee meets with the external
auditor whenever necessary to discuss
the problems identified and to monitor
the quality of the services provided, but
at least twice a year when preparing the
half-yearly and annual results, when
ensuring their dissemination to
shareholders and the general public.
B.3. The Board shall ensure the independence of the internal audit function. The Company's internal audit function must
provide independent and objective assurance on the effectiveness of the risk management and internal control framework.
B.3., 1
The Board must ensure that internal audit has the
appropriate authority, resources and procedures to
assist the Board in ensuring the effectiveness and
efficiency of the Company's risk management and
internal control framework.

The internal audit is carried out,
according to the Hydroelectrica
Organization Chart and ROF through the
Internal Public Audit Department, a level
that ensures the necessary authority at
the company level. According to Law no.
672 of 19 December 2002
(*republished*)
regarding the internal public audit, the
specific resources and procedures are
ensured based on the multiannual
evaluations, reflected by the
Multi/Annual Internal Public Audit Plans,
approved by the Supervisory Board (for
the year 2025 The Annual Plan was
approved by Decision no. 90/30.10.2024
B.3., 2
In order to ensure that the core functions of internal
audit are carried out, the person responsible for this
function must be appointed and report functionally
directly to the Board through the Audit Committee,
which is responsible for approving his or her
appointment and dismissal. This is without prejudice
to administrative reporting to the Chief Executive
Officer and the exchange of information with the
Company's executive management, in accordance
with legal requirements and professional standards.

The internal public audit activity at the
level of the Company is carried out
through the Internal Public Audit
Department, functionally subordinated
to the Supervisory Board / Audit
Committee, according to the
Organizational Chart and ROF, thus
complying with the requirement
established by Law no. 672/2002, on
internal public auditing - art. 10
paragraph (1), republished with
subsequent amendments and
completions, by the BSE Regulation and
by the International Standards of
Internal Auditing.
84
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
B.3., 3
The internal audit function must be established in
accordance with applicable legal requirements and
industry standards (e.g. the Institute of Internal
Auditors). The internal audit authority, composition,
remuneration, annual budget, working procedures
and other relevant matters will be regulated in an
internal internal audit regulation, approved by the
Board, following the recommendation of the Audit
Committee.

The internal public audit activity at the
level of the Company is carried out
through the Internal Public Audit
Department, functionally subordinated
to the Supervisory Board / Audit
Committee, according to the
Organizational Chart and ROF, thus
complying with the requirement
established by Law no. 672/2002, on
internal public auditing - art. 10
paragraph (1), republished with
subsequent amendments and
completions, by the BSE Regulation and
by the International Standards of
Internal Auditing.
B.3., 4
The Audit Committee must agree on an annual
internal audit work plan with the internal auditor,
receive internal audit reports, updates on key audit
aspects, monitor the implementation of internal audit
recommendations and provide the necessary
guidance.

According to the specific internal public
audit procedures, the annual audit plan
is established according to the
aforementioned legal requirements, by
the manager of the internal public audit
department, with prior consultation
with the Audit Committee. The annual
audit plan is approved by Decision of the
Supervisory Board, and its progress is
reported periodically and annually.
C: PERFORMANCE, MOTIVATION AND REWARD
C.1. The members of the Board shall receive remuneration commensurate with the volume and importance of their duties
and responsibilities, rather than the performance of the management or the Company. The structure and amount of
remuneration for the Board member shall enable the Company to attract, retain and motivate competent and qualified Board
members.
C.1., 1
Board members must receive remuneration,
according to the Company's Remuneration Policy.
Members who are also members of the Board's
committees must receive additional remuneration for
this activity. But in no case will the remuneration be
linked to the number of meetings of the Board or the
Committee.

According to the provisions of GEO no.
109/2011 on the corporate governance
of public enterprises, the remuneration
of the members of the Supervisory
Board consists of a fixed monthly
allowance and other benefits. The
monthly fixed allowance may not exceed
a maximum of two times the average
over the last 12 months of the average
gross monthly salary for the activity
carried out according to the main object
of activity registered by the company, at
class level, according to the classification
of activities in the national economy,
communicated by the National Institute
of Statistics prior to the appointment.
C.2. The Board shall ensure that there is a formal and transparent policy and procedure for determining executive
management remuneration that is aligned with the Company's long-term interests and the Company's strategy. This policy
will be presented to the GSM, by way of approval, in accordance with legal requirements.
85
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
C.2., 1
The Board shall determine the annual remuneration
of executive management, based on the
recommendations of the Nomination and
Remuneration Committee and in accordance with the
Company's Remuneration Policy. The remuneration
policy must be drawn up in accordance with the
relevant legal requirements.

According to the provisions of GEO no.
109/2011 on the corporate governance
of public enterprises, the members of
the Management Board benefit from a
remuneration composed of a fixed
monthly allowance, a variable allowance
and other benefits.
The monthly fixed allowance may not
exceed a maximum of 5 times the
average over the last 12 months of the
average gross monthly salary for the
activity carried out according to the main
object of activity registered by the
company, at class level, according to the
classification of activities in the national
economy, communicated by the
National Institute of Statistics prior to
the appointment and established by the
Supervisory Board in accordance with
the legal provisions in force.
The variable component is granted
annually and cannot exceed a maximum
of twice the average over the last 12
months of the average gross monthly
salary for the activity carried out
according to the main object of activity
registered by the company, at class level,
according to the classification of
activities in the national economy,
communicated by the National Institute
of Statistics prior to the appointment.
C.2., 2
The levels of remuneration for the members of the
executive management and the key performance
indicators taken into account in determining the
variable (performance-based) part of the
remuneration must be established in advance and be
measurable and appropriate in relation to the agreed
strategy and risk appetite, the economic environment
in which the Company operates, and the
remuneration and conditions of the Company's
employees. In particular, they should include
indicators relating to non-financial performance and
appropriate sustainability targets.

According to the provisions of GEO no.
109/2011 on the corporate governance
of public enterprises, the total degree of
achievement can be:
i. below expectations, if the total
degree of achievement of the KPI is
up to 85%;
ii. as expected, if the total degree of
implementation of the KPI is
between 85% and 100%;
iii. beyond expectations, if the total
degree of achievement of the KPI is
over 100%.
The PCI weights, which together
represent a percentage share of 100%,
are established according to the model
below:
a) 50-75% financial KPIs;
b) 25-50% non-financial – operational
KPIs.
86
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
C.2., 3
The Company's shares and/or stock options must
represent a significant portion (e.g. not less than 10%)
of the total variable remuneration of the executive
member.

Not Applicable
D: REPORTING AND INVESTOR RELATIONS
D.1. The Company shall ensure adequate communication with shareholders, investors, regulators and other stakeholders and
establish appropriate systems for financial and sustainability reporting.
D.1., 1
The Company shall ensure that it provides accurate,
complete and timely financial and operational
information, including quarterly, half-yearly and
annual reports, as well as current reports. Companies
must ensure that all relevant information is easily
accessible to investors, including through the
Company's website and other sources of public
information, as appropriate.

Information relevant to investors,
including periodic reports, is published
in accordance with the Financial
Calendar and is available on the
company's website,
www.hidroelectrica.ro, Investor
Relations section.
D.1., 2
It is advisable for the Company to have an Investor
Relations (IR) function and must appoint a dedicated
person responsible for the IR function. The contact
details of the person or persons responsible for the IR
function will be available on the Company's website.
The IR function will report directly to the Chief
Executive Officer/Chief Financial Officer, emphasizing
his importance in the Company's hierarchy and
emphasizing his central role in managing and
communicating the Company's commitments and
status on the capital market. The company must
organize periodic initiation and training courses, if
necessary, for the IR function, adapted to its specific
needs and responsibilities.

The company has an Investor Relations
Service, which is indirectly subordinated
to the Chairman of the Management
Board, through the M&A and Investor
Relations Department.
D.1., 3
The Company must include on its website a section
dedicated to Investor Relations, with all relevant
information of interest to investors, available in both
Romanian and English.

On the Company's website, there is a
section dedicated to this activity,
Investor Relations, which contains all
relevant documents, in Romanian and
English.
D.1., 3
The Company must include in the Investor Relations
section:• The main corporate regulations: the
updated Articles of Association, the procedures of the
General Shareholders' Meeting, the internal
regulations of the Board and the internal regulations
of the Board committees;

The Articles of Association and the
Procedure regarding the Organization
and Conduct of the GSM Meetings are
availableon the Company's website,
Investor Relations – Corporate
Governance – Corporate Governance
Documents section.
D.1., 3
The company must include in the section dedicated to
Investor Relations:• List of current members of the
Board, of the Board committees and of the Executive
Management, mentioning their updated status of
independence, professional CVs (containing at least:
name, surname, gender, nationality, age; professional
experience by years, position and company; studies,
field of study and academic or professional institution
awarding the degree), other professional

Available on the Company's website,
About Us – Management section.
87
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
commitments, including executive and non-executive
positions on boards of directors in companies, non-
profit organizations and state institutions; the
relationship with the shareholders who hold at least
5% of the voting rights/shares issued by the Company;
the duration of the appointment of the members of
the Board, the committees and the executive
management, specifying the date from which they
were appointed;
D.1., 3
The Company must include in the section dedicated to
Investor Relations:• Current and periodic reports
(quarterly, half-yearly and annual reports);

Available on the Company's website,
Investor Relations – Results and Reports
section.
D.1., 3
The Company must include in the section dedicated to
Investor Relations:• Information regarding the
General Shareholders' Meeting: agenda, supporting
materials and decisions taken; procedure for holding
the General Shareholders' Meeting; The Nomination
Policy, together with the professional CVs (containing
at least: name, surname, gender, nationality, age;
professional experience by years, position and
company; studies, field of study and academic or
professional institution awarding the diploma), as well
as any other information specified in A.3., 3;
communication channels through which shareholders
can ask questions to the Company; replies to
shareholders' questions related to the agenda; the
declarations of independence of the candidates to the
Board and the assessments made by the Nomination
and Remuneration Committee/Board for the
candidates, including on their compliance with the
independence criteria;

Available on the Company's website,
Investor Relations – General Meeting of
Shareholders section.
D.1., 3
The Company must include in the section dedicated to
Investor Relations:• Information on the Board's
evaluation, carried out in accordance with A.5., 7
including the evaluation criteria and process, as well
as a summary of the results of the evaluation and the
actions that have been or will be taken as a result of
the evaluation;

Information regarding the annual
evaluation of the Supervisory Board is
included in the chapter Supervisory
Board Report.
D.1., 3
The Company must include in the Investor Relations
section:• Information about corporate events, such as
the payment of dividends and other distributions to
shareholders or other events that lead to the
acquisition or limitation of a shareholder's rights,
including the terms and principles applied to such
transactions. This information must be published in a
timeframe that allows investors to make investment
decisions;

Available on the Company's website,
Investor Relations section.
88
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
D.1., 3
The Company must include in the Investor Relations
section:• Corporate policies, including the Code of
Conduct, the Dividend Policy, the Remuneration
Policy, the Forecasting Policy, the Investor
Communication Policy, the Social Responsibility (CSR)
/ Sponsorship Policy, the Related Party Transactions
Policy, the Diversity Policy, equity and inclusion and
the Whistleblowing Policy (if not already part of the
Code of Conduct);

Available on the Company's website,
Investor Relations – Corporate
Governance – Corporate Governance
Documents.
D.1., 4
The company must hold at least two
meetings/conference calls with analysts and investors
each year. The information presented on these
occasions must be published in the IR section of the
Company's website at the time of
meetings/teleconferences.

The Company organizes teleconferences
with analysts and investors for each
financial reporting, minimum 4
teleconferences/year. The related
information, as well as the login details
are available on the Company's website,
Investor Relations – Results and Reports
section.
D.1., 5
The Company must disclose significant and reportable
non-financial and sustainability issues, with a focus on
environmental, social and governance (ESG) issues of
its business and operations, in accordance with the
recognized sustainability reporting standard. The
Company's sustainability statements will be published
on its website.

The Sustainability Statement is an
integral part of the Annual Report and is
published on the company's website on
the date of the Annual General Meeting
of Shareholders.
D.1., 6
The company must have a CSR/sponsorship policy to
guide the activity in the field of supporting CSR
activities and sponsorship.

Available on the Company's website,
Investor Relations – Corporate
Governance – Corporate Governance
Documents.
D.2. The Company shall ensure the fair and equitable treatment of all shareholders, as well as the availability of the means
and information necessary to enable shareholders to exercise their rights in relation to the Company.
D.2., 1
The Company must have a dividend policy as a set of
directions that the Company intends to follow in
terms of distributing net profit.

Available on the Company's website,
section Investor Relations – Corporate
Governance – Corporate Governance
Documents.
D.2., 2
The procedure for holding the General Shareholders'
Meeting must not restrict the participation of
shareholders in the General Shareholders' Meeting
and the exercise of their rights. The amendments to
the procedure for holding the GSM must enter into
force, at the earliest, from the next GSM.

The Company has adopted the
Procedure regarding the organization
and conduct of the General
Shareholders' Meetings, through which
shareholders have the opportunity to
participate in the meetings by all legal
means, including through electronic
means, through the eVote platform.
D.2., 3
External auditors must attend the General
Shareholders' Meeting where the reports are
presented to them, in order to answer shareholder
questions.

The external financial auditor will be
present at the general meeting of
shareholders where the financial
statements will be approved and the
related audit reports will be presented.
D.2., 4
The Board shall submit to the Annual General Meeting
a summary of the assessment of the adequacy and
effectiveness of the risk management and internal
control framework, in accordance with the incidental
information included in the annual report.

-
89
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
D.2., 5
The Company must foster engagement with
shareholders and investors by: • Encouraging active
shareholder participation in General Meetings of
Shareholders, including ensuring the conditions for
virtual participation;• Organising regular investor
briefings and updates, especially during significant
corporate events;• Establishing channels through
which shareholders can provide feedback and ask
questions, ensuring that answers are provided at the
time and comprehensive.

The Company's shareholders have the
opportunity to participate in the General
Meetings of Shareholders through the
electronic voting platform, eVote.
Shareholders are informed about the
relevant news through the official
channels and through the distribution
list.
Also, shareholders can ask questions
during the OGMS meetings, or to the
email address ir@hidroelectrica.ro.
D.2., 6
Any professional, consultant, expert or financial
analyst may participate in the GSM at the prior
invitation of the Chairman of the Board. Accredited
journalists may also participate in the GSM, unless the
President decides otherwise.

Accredited journalists may participate in
the general meeting of shareholders
provided that the Chairman of the
Management Board approves their
attendance.
E: SUSTAINABILITY AND STAKEHOLDERS
E.1. The company shall integrate sustainability aspects into its strategy and mitigate any adverse material, social and
environmental impacts of its operations, to the extent possible.
E.1., 1
The Board must ensure that sustainability,
environmental and social considerations are
integrated into the Company's strategy and
operations, risk management and remuneration
practices and oversees this integration. A specialised
sustainability committee or one of the Board's
standing committees assists the Board in carrying out
these tasks.

Sustainability aspects are integrated into
the Company's strategy and business
model, including through the 2023–2027
Management Plan and the Sustainability
Strategy. The Governance and
Sustainability Committee operates at
the level of the Supervisory Board, which
monitors the implementation of the ESG
strategy, the analysis of impacts, risks
and opportunities (IRO) and their
integration into decision-making and risk
management processes.
E.1., 2
The Board must ensure that the Company's
operations are conducted in accordance with national
and international E&S standards and that the
Company's E&S policies are consistent with its long-
term objectives. In particular, the Company must have
internal documents relating to its environmental and
social responsibilities, as well as policies and
procedures that enable it to identify significant factors
and assess the impact on the Company's activities.

The company conducts activities in
accordance with national and
international environmental and social
standards, including ESRS requirements,
EU legislation and relevant ISO standards
(ex. ISO 14001, ISO 45001). There are
internal policies and procedures that
allow for the identification and
assessment of environmental and
societal impacts, including through
double materiality analysis and the
integrated management system.
E.1., 3
Whenever a decision to be taken by the Board has a
potential significant and negative impact on the E&S
sphere, the Board shall receive from the Executive
Management (i) an analysis of how this decision is
aligned with the Company's sustainability objectives
and E&S policies or (ii) the proposal of measures to
mitigate the negative E&S impact.

Environmental and social impacts are
analysed in internal processes, in
particular through double materiality
analysis and regulatory and approval
procedures. The results of this analysis
are progressively integrated into
business strategy and decision-making
processes. The full integration of ESG
impacts into all decision-making
90
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
processes and the risk management
system is being strengthened.
E.2. The Company must have a process for identifying stakeholders affected by the Company's operations. The Board must
take into account the interests of stakeholders and ensure that there is active communication between the Company and
stakeholders.
E.2., 1
The Board must ensure that there is a formal process
in place to identify the Company's stakeholders,
including investors, creditors, customers, employees
and suppliers, as well as specific approaches for
engaging priority stakeholders.

The company has a structured process
for identifying and involving
stakeholders, including employees,
investors, customers, suppliers,
authorities, local communities and
NGOs. This process is carried out in
particular through the double
materiality analysis, which includes
direct consultation with stakeholders
(e.g. questionnaires, workshops,
interviews) and the integration of the
results into the sustainability strategy
and business model.
E.3. The Board shall adopt a Code of Conduct (Code of Ethics) with an appropriate scope, including guiding principles
reflecting the Company's commitment to ethics, integrity and quality of performance.
E.3., 1
The Board must develop a statement of purpose and
a vision statement, as well as articulate the values of
the Society so that the entire organization
understands the strategic direction of the Society.

The company has defined strategic
directions and operating principles
through relevant internal documents,
including the 2023–2027 Management
Plan and the Sustainability Strategy,
which reflect the organization's vision,
objectives and values. These are
complemented by policies and
commitments assumed at group level
(e.g. the UN Global Compact principles,
the UN Sustainable Development Goals
and the BSE Corporate Governance
Code), which promote ethics, integrity
and responsibility in carrying out
activities. These elements are
communicated at the organizational
level and contribute to the alignment of
employees with the strategic direction
of the Company.
E.3., 2
The Board must adopt a Code of Conduct for Board
members, executive management and employees of
the Society, with clear provisions aimed at preventing
and sanctioning fraud and bribery. The Board shall not
allow any derogation from the ethics requirements for
any member of the Board, executive management or
employee.

The Company has adopted a Code of
Conduct (Code of Ethics) applicable to
members of management bodies,
executive management and employees,
which sets out the principles of integrity,
professional ethics and legal
compliance. The Code includes
provisions on preventing and combating
91
Prev
No.
Provision (detailed)
Yes
Partial
No
Explanation
corruption, fraud and bribery, as well as
rules of conduct in business relations.
Compliance with the Code of Conduct is
mandatory throughout the organization,
and violation of its provisions is subject
to disciplinary measures according to
internal regulations. The company
promotes an organizational culture
based on ethics and does not tolerate
deviations from established principles.
E.3., 3
The Board must ensure that the policies in the Code of
Conduct are integrated into the Company's practices
and incorporated into the process of integrating new
employees into the Company. The Board must ensure
the effective implementation and monitoring of
compliance with the Code of Conduct and review it
regularly.

The principles and policies set out in the
Code of Conduct are reflected in the
Company's current practices and are
supported through internal policies,
operational procedures and employee
training programs. The company carries
out training and awareness activities in
the field of ethics, compliance and
sustainability, including for existing staff.
The implementation and compliance
with the principles of conduct are
monitored through internal control and
governance mechanisms, including
internal audit and compliance processes.
Internal policies are subject to processes
of continuous updating and
improvement, depending on
developments in the regulatory
framework, internal practices and
compliance requirements.
92
6. Operational data
6.1. Operational segments
6.1.1. Electricity Production Activity
Management of energy reserves in large storage facilities
The management of the energy reserve was done in conditions of deficient hydraulics for the entire
period of 2025. The main objectives regarding the management of reserves were the inclusion in the
programs agreed monthly with ANAR and the possibility of inclusion in the winter program approved by
HG1222/02.10.2024 and HG916/30.10.2025.
The gross energy production of the Hidroelectrica Group in 2025 amounted to 12,215 GWh, representing
a decrease of 2,009 GWh compared to the previous year, when total production reached 14,224 GWh.
Status of cascade headworks
Filling level
In usable volume (%)
Usable volume
Total (million cubic meters)
Energy reserve
(GWh)
2025
66.14%
1,723.94
2,099.27
2024
56.49%
1,472.31
1,858.63
Source:Hidroelectrica
Availability coefficient (%) of PI>MW 10 hydropower units for 2025
2025
2024
SH CLUJ
55.19%
87.92%
SH CURTEA DE ARGEȘ
68.39%
86.71%
SH HAȚEG
87.42%
89.57%
SH P.de FAIR
86.96%
85.91%
SH RÂMNICU VÂLCEA
91.75%
91.78%
SH SEBEȘ
91.46%
92.85%
Total HIDROELECTRICA
85.67%
90.54%
Source:Hidroelectrica
Available and assured power
(GW)
Power
Installed
Discounts
Permanent
Available power
Power
Ensured
2025
6.2
0.2
6
5
2024
6.2
0.2
6
5.1
*Reporting is for 10 MW Pi > 10 MW HPPs under commercial exploitation license
Source: Hidroelectrica
93
6.1.2. Trading Activity – Wholesale Electricity Sales
In 2025, electricity trading on the wholesale market recorded a downward trend, reflecting both the
decrease in available generation (in the context of the most hydrologically challenging year recorded in
the past 30 years) and the implementation of a prudent portfolio management strategy, focused on
securing obligations within the retail portfolio.
In the short term, electricity was traded on the Day-Ahead Market (DAM) in order to optimize the
operating schedule and to efficiently manage deviations from hydrological forecasts. In 2025, the total
volume sold on this segment accounted for 29% of the total quantity delivered on the wholesale market.
Hidroelectrica also traded electricity forward in a transparent and competitive manner, both through
platforms operated by the two market operators (OPCOM and BRM), as well as through directly
negotiated bilateral contracts (NC).
Against the backdrop of extremely low hydrological conditions, the trading team continuously monitored
market acquisition opportunities in order to optimize and protect the primary resource. At the same time,
through specialized analysis of profiled sales offers received from counterparties, essential technical
support was ensured to reduce procurement costs for covering retail contractual obligations.
The structure of electricity sales on the wholesale market in 2025 is presented in the charts below:
Source: Hidroelectrica
94
6.1.3. Electricity Supply Activity
Hidroelectrica carries out its electricity supply activity based on Supply License No. 2215/2020, updated
by ANRE Decision No. 718/06.06.2020, valid for a period of 10 years. In this context, the Supply
Department operates in compliance with the rights and obligations set out in the license.
Electricity supply includes the processes of offering, contracting, billing, collection, customer information,
handling and resolution of complaints/requests/inquiries related to the services provided, as well as
receivables recovery. All these processes are aligned with primary legislation and ANRE regulations.
Currently, the supply activity is undergoing a significant growth and transformation process, aimed at
improving operational performance, in a period when the energy market itself has experienced
substantial changes.
Increase in electricity volumes
The monthly contracted volumes for 2025 recorded a significant increase, driven by the onboarding of
customers with high monthly electricity consumption, as well as a large number of household customers.
Source: Hidroelectrica
The evoluon of the number of consumpon sites registered as at 31 December 2025 compared to
1 January 2025 is presented as follows:
Source: Hidroelectrica
538
521
548
505
518
550
700
626
622
652
677
711
480
426
412
380
375
413
527
504
488
497
528
541
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Contracted supply quantity
(GWh)
2025 2024
1,107,715
584,431
54,816
29,336
1,162,531
613,767
31 Dec 20251 Jan 2025
Retail Wholesale
95
Source: Hidroelectrica
Source: Hidroelectrica
The number of prosumers increased exponenally following the implementaon of the automated
contracng system within the contracng portal.
Source: Hidroelectrica
186
173
162
143
134
138
165
174
161
194
211
265
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sold Energy - Household - 2025 (GWh)
352
348
386
362
384
412
535
452
461
458
466
446
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sold Energy - Non-household - 2025 (GWh)
43,997
45,454
46,798
47,886
49,270
52,433
56,339
59,550
63,007
71,592
72,170
76,462
Prosumers evolution - 2025
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
96
6.2. Maintenance Activity
Maintenance Activity – Equipment
In 2025, maintenance services/works were scheduled for execution on equipment and installations within
hydropower developments and those related to the Crucea Wind Farm, amounting to RON 454 million.
The planned value corresponded to 5,225 scheduled maintenance works, in addition to unplanned
(corrective) maintenance works.
The contracted value amounted to RON 447 million, corresponding to 5,184 scheduled and unplanned
(corrective) maintenance works, while maintenance services/works on equipment totaling RON 386.6
million were settled, corresponding to 4,962 scheduled and unplanned (corrective) maintenance works.
The Company’s main provider of equipment maintenance services is Societatea de Servicii
Hidroenergetice “Hidroserv” S.A., as an affiliated entity. The contracted value with SSH Hidroserv
amounted to RON 350 million, of which RON 307 million was settled.
Unplanned (corrective) maintenance services/works settled in 2025, both with Hidroserv and other
contractors, amounted to RON 56.45 million (of which RON 29.76 million represented additional works
to planned maintenance), out of the total settled value of RON 386.6 million in 2025.
It is worth noting that, as at 31 December 2025, all maintenance works necessary to ensure the safe
operation of installations and equipment within hydropower developments had been completed.
Equipment maintenance achievements in 2025 – physical progress, compared to 2024
Branch
2025
2024
Number of
estimated
works
Number of
contracted
works
Number of
works
completed
Percentage of
achievement
Number of
estimated
works
Number of
contracted
works
Number of
works
completed
Percentage of
achievement
PORTILE DE
FIER
768
763
741
96.48%
768
762
733
95.44%
HATEG
445
445
439
98.65%
585
578
565
96.58%
BISTRITA
356
355
353
99.16%
410
406
406
99.02%
COURT OF
ARGES
1,129
1,121
1,039
92.03%
1,224
1,222
1,125
91.91%
RAMNICU
VALCEA
1,180
1,161
1,097
92.97%
1,019
979
894
87.73%
CLUJ
605
604
590
97.52%
690
679
645
93.48%
SEBES
537
531
499
92.92%
530
528
520
98.11%
WIND
203
202
202
99.51%
197
161
159
80.71%
EXECUTIVE
2
2
2
100.00%
3
3
3
100.00%
TOTAL
5,225
5,184
4,962
94.97%
5,426
5,318
5,050
93.07%
Source: Hidroelectrica
97
Value-based achievements of equipment maintenance in 2025, compared to 2024
RON million
Branch
2025
2024
Estimated work
value
Value of contracted
works
Value of completed
works
Estimated work
value
Value of contracted
works
Value of completed
works
TOTAL
Of
which
HIDRO
SERV
TOTAL
Of
which
HIDRO
SERV
TOTAL
Of
which
HIDRO
SERV
TOTAL
Of
which
HIDRO
SERV
TOTAL
Of
which
HIDRO
SERV
TOTAL
Of
which
HIDRO
SERV
PORTILE DE
FIER
125.76
98.62
122.98
98.27
102.81
85.19
100.45
86.36
99.79
86.32
91.83
76.21
HATEG
49.44
37.25
48.97
37.18
39.93
32.93
34.17
32.46
33.24
32.3
26.74
25.91
BISTRITA
45.22
36.79
44.94
36.79
41.77
33.76
37.2
32.68
36.67
32.68
33.86
30.12
CURTEA DE
ARGES
66.95
48.11
66.88
48.09
53.14
35.98
39.86
37.58
38.83
37.56
32.39
31.54
RAMNICU
VALCEA
67.89
59.78
65.51
58.70
60.88
54.78
78.79
66.61
75.62
65.71
63.15
54.27
CLUJ
31.99
31.69
32.01
31.69
28.31
28.01
38.11
36.99
36.8
36.06
30.77
30.08
SEBES
41.97
39.79
41.11
39.58
38.02
36.60
36.35
31.56
36.03
31.56
29.98
25.53
WIND
24.91
-
24.80
-
21.75
-
22.63
0
21.27
0
15.03
0
EXECUTIVE
0.006
-
0.006
-
0.006
-
0.008
0
0.007
0
0.007
0
TOTAL
454.12
352.02
447.21
350.29
386.60
307.26
387.56
324.24
378.25
322.18
323.76
273.66
Source: Hidroelectrica
In 2025, maintenance works were scheduled for a total of 78 hydropower units, with all planned
maintenance works being contracted. As at 31 December 2025, 64 maintenance works on hydropower
units had been completed, 13 were under execution, and one maintenance work was rescheduled for
2026.
Thus, out of the total RON 386.6 million of equipment maintenance works carried out in 2025, RON 145
million (see table below) represents maintenance related to works performed on hydropower units.
Physical and value-based achievements of maintenance works on hydropower units in 2025 compared
to 2024
RON million
BRANCH
Maintenance at Hydro Aggregates – 2025
Maintenance at Hydro Aggregates – 2024
ESTIMATE
CONTRACTED
DONE
ESTIMATE
CONTRACTED
DONE
Number
Value
Number
Value
Number
Value*
Number
Value
Number
Value
Number
Value*
PORTILE DE
FIER
16
47.52
16
47.38
16
41.59
20
44.64
20
44.68
17
18.55
HATEG
9
22.93
9
22.93
9
17.51
11
9.36
11
9.36
11
8.93
BISTRITA
15
17.87
15
17.87
15
17.52
14
13.83
14
13.83
13
8.50
CURTEA DE
ARGES
7
30.37
7
30.37
6
31.06
12
9.67
12
9.67
11
6.46
RAMNICU
VALCEA
18
18.40
18
18.38
18
19.00
24
24.68
24
24.68
21
17.28
CLUJ
5
8.19
5
8.19
5
5.75
5
13.11
5
12.79
3
4.61
SEBES
8
11.76
8
11.76
8
12.66
8
15.10
8
15.1
6
4.3
TOTAL
78
157.04
78
156.88
77
145.08
94
130.39
94
130.11
82
68.63
* the realized value includes the additional works performed, settled from corrective maintenance funds
Source: Hidroelectrica
98
6.3. Maintenance Activity – Civil Works and Monitoring of Hydropower
Structures Behavior (“UCCH")
For 2025, the civil works maintenance program was prepared in the amount of RON 86.06 million, to be
executed by third parties, covering a total of 275 maintenance works. As at 31 December 2025, works
contracted with third parties amounted to RON 77.40 million, while civil maintenance works executed by
third parties reached RON 57.50 million.
From a capitalization (CAPEX) perspective, as at 31 December 2025, works amounting to RON 31.64
million were completed, representing 79.11% of the estimated capitalized works.
Construction maintenance works carried out in 2025, compared to 2024
Physical Stage
Crt.
No.
Branch
Cumulative 2025
Cumulative 2024
Number of
works
estimated
according to
the WFP 2025
Number of
contracted
works
Number
of works
completed
Percentage of
achievement
2025
Number of
works
estimated
according to
the PAM 2024
Number of
contracted
works
Number of
works
completed
Percentage of
achievement
2024
1
PORTILE
DE FIER
42
41
38
90.48%
32
32
32
100.00%
2
HATEG
34
32
31
91.18%
36
36
36
100.00%
3
BISTRITA
17
14
14
82.35%
28
28
28
100.00%
4
CURTEA DE
ARGES
41
40
37
90.24%
40
39
34
85.00%
5
RAMNICU
VALCEA
83
79
77
92.77%
15
15
14
93.33%
6
CLUJ
20
18
12
60.00%
29
26
24
82.76%
7
SEBES
34
31
25
73.53%
42
39
35
83.33%
8
WIND
4
3
3
75.00%
6
2
2
33.33%
TOTAL
275
258
237
86.18%
228
217
205
89.91%
Source: Hidroelectrica
Value Achievements RON million
No.
Crt.
Branch
Cumulative 2025
Cumulative 2024
Estimated
value of
works PAM
2025
Value of
contracted
works
Value of
completed
works
Percentage of
achievement
2025
Estimated
value of works
PAM 2024
Value of
contracted
works
Value of
completed
works
Percentage of
achievement
2024
1
PORTILE
DE FIER
12.12
11.29
10.16
83.81%
24.68
22.86
17.74
71.88%
2
HAȚEG
18.89
17.80
17.11
90.59%
15.29
15.19
10.63
69.52%
3
BISTRITA
9.62
8.72
3.16
32.87%
7.8
7.47
7.27
93.21%
4
THE
COURT
OF ARGEȘ
14.78
14.40
8.81
59.56%
6.54
6.15
5.84
89.30%
5
RÂMNICU
VÂLCEA
18.66
14.81
12.73
68.21%
6.28
5.02
3.83
60.99%
6
CLUJ
5.60
5.01
1.75
31.31%
2.48
1.28
0.74
29.84%
7
SEBEȘ
5.42
5.18
3.60
66.39%
5.98
5.74
5.57
93.14%
8
WIND
0.96
0.19
0.18
18.65%
0.89
0.28
0.23
25.84%
TOTAL
86.06
77.40
57.50
66.81%
69.94
63.99
51.86
74.15%
Source: Hidroelectrica
99
6.4. Investment Activity
The Investment Strategy of S.P.E.E.H. Hidroelectrica S.A. includes ongoing hydropower projects, new
projects aimed at diversifying the business portfolio, as well as refurbishment and modernization projects
covering structures, installations/systems, assemblies/sub-assemblies, equipment and components of
electricity generation capacities, classified as fixed assets.
In recent years, Hidroelectrica has reaffirmed its commitment to maintaining its focus on renewable
energy, with preserving its status as a 100% green company being at the core of its values.
In this context, all development projects are centered around environmentally friendly and sustainable
generation technologies. While a significant share of these projects is focused on hydropower and the
development of the national hydrological potential, they are not limited to this area. The Company is also
pursuing investments in onshore and offshore wind farms, photovoltaic parks, and hydrogen production
through electrolysis.
Hidroelectrica acknowledges the priorities of the National Energy System (NES), as well as the urgent need
to add new capacity to the national energy infrastructure and is prepared to mobilize the necessary
resources in this regard. Accordingly, the Company is making sustained efforts to complete investment
projects currently at various stages of execution, which are expected to contribute a significant additional
volume of energy to the NES in the short to medium term.
The 2025 investment program was achieved at a rate of 95% relative to the allocated budget; the
comparison with the previous year is presented in the table below:
RON million
Activity
Approved
2025
Achieved
2025
Degree of
achievement
2025 (%)
Approved
2024
Achieved
2024
Degree of
achievement
2024 (%)
Development
199
208
105%
183
102
56%
Refurbishment
433
428
99%
279
270
97%
Equipment capitalization
maintenance
108
81
75%
74
51
69%
Capitalized maintenance of
hydrotechnical constructions
40
32
79%
43
32
74%
Maintenance with
capitalization of rehabilitation
works, administrative
constructions
1
1
83%
12
0.70
6%
Acquisitions of shares
0
0
-
315
120
38%
Facilities
41
31
77%
62
16
26%
TOTAL
822
781
95%
968
591
61%
*The degree of achievement represents the ratio of the values achieved to those allocated
Source: Hidroelectrica
Total CAPEX investments increased in 2025 compared to 2024, from RON 591 million to RON 781 million.
Notable achievements relative to the allocated budget were recorded in refurbishment and
modernization projects—where both the budget and the actual investments increased by more than RON
150 million—as well as in development projects.
100
The percentage variation of investment project achievements as at 31 December 2025 compared to 31
December 2024 is presented as follows:
2025
2024
Variation
RON million
RON million
%
Investments in Development Projects
208
102
103%
Investments in Refurbishment
428
270
58%
Investments in Maintenance
113
83
37%
Independent equipment and machinery
Other capital investments
31
0
16
120
97%
-100%
TOTAL INVESTMENTS
781
591
32%
Source: Hidroelectrica
The investments presented above were fully financed from own sources.
In 2025, investments in development and refurbishment/modernization projects amounted to a total of
RON 636 million. The portfolio includes investments in hydropower development projects, photovoltaic
projects, storage capacities, as well as refurbishment and modernization initiatives.
Source: Hidroelectrica
101
A share of 24% of total investments in construction and installation works, equipment deliveries or other
expenditures related to development and refurbishment/modernization projects—amounting to RON
107 million out of RON 444 million (excluding advances)—was executed through contracts concluded with
Hidroelectrica’s two subsidiaries, Hidroserv and UCMH Reșița S.R.L.
The dynamics of investment execution were significantly influenced by factors external to the Company,
mainly procedural, administrative and legislative, which do not reflect Hidroelectrica’s operational
capacity, but rather the regulatory context and the complexity of the strategic projects under
implementation.
Investments in development, refurbishment and modernization have been impacted by delays in
execution, suspension or even discontinuation of certain projects, largely due to constraints and
conditions beyond the control of project managers or contract responsible parties, such as:
• procurement procedures cancelled due to the absence of bidders, bids exceeding the value allocated
through the approved general estimate, or offers not meeting the required commissioning deadlines;
• extension of procurement procedures due to additional ex-ante verification stages carried out by
ANAP, leading to delays in contract signing but ensuring, over the medium term, compliant and
transparent execution;
• contractors in insolvency or bankruptcy, as well as the absence of a general designer, leading to
difficulties in contract execution according to agreed timelines and lack of responses to requests for
quotations;
• unfavorable resolution of certain litigations pending before courts and suspension of works through
injunctions, with such cases currently under legal resolution;
• delays or suspension of deforestation activities, generating knock-on effects on the continuation of
works;
• delays in the issuance of environmental approvals for certain major projects, requiring rescheduling
and timeline adjustments, without affecting the commitment to complete these investment projects;
• suspension or cancellation of environmental approvals for certain major projects (e.g., Răstolița HPP,
Livezeni–Bumbești HPP);
• lack of Government decisions regarding land expropriations;
• overlap with other road or railway infrastructure projects;
• constraints related to connection to the National Energy System (NES);
Despite these constraints, the investment plan has maintained its integrity and delivery outlook, while
the remedial measures adopted (rescheduling, relaunching procurement procedures, updating technical
documentation and intensifying dialogue with authorities) enabled an acceleration of execution in Q4
2025, a trend expected to continue into 2026.
102
6.4.1. Activity in development projects
In 2025, investment achievements in development projects amounted to a total of RON 208 million,
representing a +103% increase compared to the previous year.
Source: Hidroelectrica
Investments under development: In 2025, a total of 9 projects were carried out, with aggregate
investments exceeding RON 86 million:
• Pașcani HPP – ongoing project, with subcontracts progressing according to schedule (reservoir works,
Pașcani HPP, grid connection to the NES, dam equipment), with no significant constraints or
conditions that could jeopardize the project completion date;
• Vânători HPP – ongoing contract, progressing in line with the schedule;
• Răstolița HPP – project facing constraints due to: unfavorable resolution of court litigations
(deforestation and removal from the forestry fund), the general contractor Hidroconstrucția S.A.
being in insolvency, and the absence of a general designer (ISPH Project Development S.A. –
bankrupt). Works not dependent on deforestation and forestry clearance are ongoing. Until the
litigations are resolved, the project completion/commissioning date remains uncertain;
• Surduc–Siriu HPP – ongoing contracts for construction works and equipment related to Surduc Dam,
pressure node and headrace; lack of bids for Nehoiașu II HPP equipment and the 110 kV substation
may generate delays. Constraints depend on the resolution of court actions initiated by the Declic
Association regarding the construction continuation permit;
• Cerna–Belareca HPP – ongoing project; urban planning certificate, Environmental Approval and
Water Management Permit have been obtained. Ongoing: steps for NES connection, land acquisition
and procurement of construction and installation works (non-binding offers requested);
• Bistra–Poiana Mărului HPP – ongoing project, with remaining works for Ruieni and Râul Alb sections.
Ongoing: preparation of procurement procedures for cadastral documentation related to
expropriations (issuance of the Urban Planning Certificate is conditional upon completion of
expropriations) and steps to obtain Government approval for updating technical-economic indicators;
• Cerna–Motru–Tismana Hydrotechnical and Energy Complex – Phase II – as at 31 December 2025,
ongoing: issuance of Environmental Approval (obtained in March 2026), update of the Feasibility
Study in line with the solution established through the Environmental Approval, as well as preliminary
stages required for negotiating the contract for the remaining works;
183
199
102
208
2024 2025
Actual vs. Budget Development Projects 2024 vs. 2025 (RON million)
Budget Actual
103
• Jiu River HPP (Livezeni–Bumbești sector) – ongoing project; Water Management Permit obtained;
EA, SEICA and RIM documentation prepared. Ongoing contracts include: technical expertise for
equipment and civil works, NES connection for Dumitra HPP, and preparation of cadastral
documentation for registration of the expropriation corridor related to the grid connection of Dumitra
HPP and Livezeni SHPP. Critical dependencies include: litigations regarding suspension and
cancellation of the Environmental Approval; obtaining construction permits (Gorj County Council,
Hunedoara County Council, Aninoasa Municipality); completion of negotiations for remaining works;
registration of expropriated land based on court decisions; and removal from the forestry fund for
land related to the 110 kV substation;
• Olt River HPP (Cornetu–Avrig gorge sector – Lotrioara–Câineni–Racovița) – ongoing SEICA, EA and
RIM service contracts. The project is currently under update and cost-benefit reassessment,
considering received offers and multiple constraints: inability to obtain the construction permit in the
absence of Environmental Approval and Government decision on expropriation;
contracting/negotiation of remaining works is conditional upon revision of the Environmental
Approval and issuance of the Government decision; the project is partially located within five
protected areas; overlap with the A1 motorway project (Lotrioara and Câineni), as well as railway
bridges downstream of Racovița tailrace canal impacting completion of Section II of the tailrace canal;
general designer bankrupt and general contractor in insolvency; NES connection constraints due to
evacuation limitations in the Olt Valley gorge, with connection solutions being highly costly and borne
entirely by Hidroelectrica.
New investments in photovoltaic and energy storage projects carried out in 2025 exceeded RON 121
million. Hidroelectrica continues the structural transformation of its generation portfolio, focusing on
complementary green energy technologies and enhancing resilience to hydrological variability driven by
climate change. These projects mark a further step in Hidroelectrica’s transition from a predominantly
hydropower-based model to a diversified portfolio incorporating new green energy technologies—
hybrid, flexible and adaptable—addressing both the objective of technological diversification and the
need to mitigate systemic risks, particularly hydrological risk.
• Tudor Vladimirescu PV Plant – ongoing project. The general estimate and technical-economic
indicators have been updated, and the grid connection agreement to the NES has been signed based
on the obtained connection permit (ATR). Steps are currently underway to obtain the construction
permit and to award/sign the turnkey contract (appeal under review by CNSC). Installed capacity:
45.94 MW; estimated annual output: 59.21 GWh/year.
• “Țara Hațegului” Photovoltaic Park – Hunedoara County – ongoing project, contract signed and
under implementation in line with the schedule. Installed capacity: 8.9 MW; estimated annual output:
11.83 GWh/year.
• Floating photovoltaic system – Nufărul pilot project – ongoing project. The construction permit has
been obtained. The following contracts have been signed and are under execution, in line with the
schedule: design and execution services (currently in design phase), environmental monitoring
services, grid connection agreement, and biodiversity/environment monitoring services. Installed
capacity: 10 MW; estimated annual output: 13.48 GWh/year.
• Harnessing photovoltaic potential within hydropower plants located on the middle and lower Olt
River sector – ROOFTOP project – ongoing project. The general estimate and technical-economic
indicators have been updated. The execution contract is under implementation, in line with the
schedule. The photovoltaic system consists of 620 W panels, 100 kW inverters and energy
104
optimization solutions, with an installed capacity of 2,955.58 kW and estimated annual production of
3,710.87 MWh/year. This project represents a first for the Company, being the first deployment of
photovoltaic panels within Hidroelectrica.
• Battery energy storage system at Porțile de Fier II HPP – under procurement procedure; pending
resolution of an appeal filed with CNSC. Upon commissioning, estimated in H1 2027, a storage
capacity of 256 MWh will be achieved.
• Li-ion battery storage system at Crucea Nord Wind Farm – ongoing project. The construction permit
has been obtained, and the turnkey contract is under execution in line with the schedule. Following
commissioning, starting April 2026, the installation will have a nominal power of 36 MW and a
nominal storage capacity of 72 MWh.
Pre-investment activity in development objectives
Design services are currently underway for feasibility study documentation related to investment
objectives proposed under Hidroelectrica’s Investment Strategy, aimed at increasing photovoltaic
generation capacity and adding battery energy storage capacities at hydropower plants on the lower Olt
River sector, with a generation capacity of 100 MWp and a storage capacity of 200 MW / 800 MWh (HPPs:
Ipotești, Drăgănești, Frunzaru, Rusănești, Izbiceni).
At the same time, Concept Notes, Design Briefs and Feasibility Studies are being prepared for the
installation of battery storage capacities at hydropower plants along river courses, with an estimated total
storage capacity of approximately 2,000 MWh (HPPs: Subcetate, Bretea, Retezat, Ruieni).
The integration of storage systems and solar generation into existing infrastructure strengthens
Hidroelectrica’s position as a 100% green energy provider, while also enhancing its capability to ensure
continuity and security of electricity supply, as well as the safe and stable operation of the National Energy
System (NES), regardless of natural conditions or market volatility.
Securing land for investments represents a critical component of development projects, whether related
to land leasing, reinstatement into or removal from agricultural or forestry use, land registration, or
expropriations.
Leases. Lease negotiations with landowners for land temporarily occupied by investment projects were
formalized through negotiation minutes, and payments were made for temporarily occupied land related
to Pașcani HPP, Surduc–Siriu HPP and Răstolița HPP.
Reinstatement into agricultural or forestry use. Actions were initiated to return land temporarily
occupied by investment projects to rightful owners, for Surduc–Siriu HPP and Făgăraș HPP.
Land registration (intabulation). Procedures were completed for awarding service contracts related to
the registration of expropriation corridors and preparation of individual cadastral documentation, aimed
at clarifying the legal status of properties within expropriation corridors and enabling the payment of
compensations approved under Government Decisions No. 1138/2024, No. 1364/2024 and No. 3/2025.
Expropriations. Compensation values for properties located within the expropriation corridors of Pașcani
HPP, Olt River HPP (Cornetu–Avrig gorge sector) and Siret River HPP (Cosmești–Movileni sector, Movileni
HPP) were updated. Updated valuation reports for 2025 and the related expropriation corridor
documentation were submitted to the Ministry of Energy for the promotion of the normative acts
provided under Law No. 255/2010.
105
For the completion of works at Răstolița HPP, the following Government Decisions were adopted by the
Government of Romania:
• GD 3/2025, for supplementing the amount provided as fair compensation, approved by Government
Decision no. 900/2017 on the approval of the site and the initiation of the procedures for the
expropriation of privately owned buildings that constitute the expropriation corridor located on the
site of the public utility work of national interest "Răstolița Hydropower Development", as well as for
the completion of Annex no. 2 to Government Decision no. 900/2017.
• GD 327/03.04.2025, regarding the approval of the definitive removal from the national forest fund of
the land with an area of 37.5263 ha, by the Company for the Production of Electricity in Hydropower
Plants "Hidroelectrica" — S.A., for the realization of the public utility work of national interest
"Răstolița Hydropower Development", published in the OFFICIAL GAZETTE OF ROMANIA, PART I, No.
314/9.IV.2025.
During 2025, compensation was paid to the owners or their heirs in the total amount of RON 9,2 million,
for the properties expropriated by Expropriation Decisions.
Removal of land from the forestry or agricultural fund:
• AHE Răstolița. Based on the documentation for the transmission of the forest lands included in the
corridor of the work according to GD 900/2017, OS Răstolița issued the approved forest sheets to the
Mureș Forestry Department, RNP Romsilva approved the definitive remova l from the forest fund of
the forest lands necessary for the Rastolița AHE (Opinion no. 334/2019) and the documentation was
submitted to the Brașov Forest Guard for issuing an opinion. The Brașov Forest Guard issued a
favorable opinion for obtaining the Environmental Agreement for the deforestation of the areas
necessary for the works and the Mureș MPA issued the Environmental Agreement no. 6/28.10.2024
for the first stage of commissioning of the Răstolița HPP at minimum energy, in the sense i n which
the Romanian Government adopted Decision no. 3/2025.
• CEF Tudor Vladimirescu. The topographic plan with the areas requested for the definitive or
temporary removal from the agricultural circuit of the land located in the site of the Tudor
Vladimirescu Photovoltaic Power Plant project, in Brăila county, was received by minutes no. 1745 of
10/11/2025 by OCPI Brăila.
Efforts to obtain Certificates attesting land ownership rights are ongoing. From 2001 until the end of
2025, Hidroelectrica S.A. obtained a total of 703 such certificates, covering an area of 2,473.45 ha, with
the land valued at RON 112.5 million at the time the certificates were issued.
In 2025, Certificates attesting land ownership rights were obtained for an area of 4.62 ha, with a total
value of RON 4 million, related to Baru Mare SHPP – intake and balancing reservoir (0.13 ha) and the
Porțile de Fier I hydrotechnical node (4.49 ha).
6.4.2. Refurbishment activity
The refurbishment activity is carried out in accordance with the approved Refurbishment Strategy,
aligned with Hidroelectrica’s Investment Strategy, and aims at implementing the program for the
promotion and execution of modernization and refurbishment projects for hydropower assets. This is
reflected in the preparation and advancement of refurbishment and modernization projects for power
plants, hydropower units, installations and associated substations, as well as the continuation of projects
already under implementation, at various investment stages (procurement, design, execution,
commissioning, warranty monitoring, etc.).
106
The investment, equipment and financing program for the period 2025–2027 includes a total of 28
refurbishment and modernization projects, of which 16 projects had CAPEX allocations in 2025.
Investments in refurbishment and modernization projects in 2025 amounted to approximately RON 428
million, representing a +58% increase compared to 2024.
Source: Hidroelectrica
Budgetary achievements
All 16 refurbishment and modernization projects carried out in 2025 exceeded a degree of achievement
of 90% of the budget allocated for works scheduled for 2025, as follows:
• Stejaru HPP refurbishment – 99.87%
• Vidraru HPP refurbishment – 96.52%
• Mărișelu HPP refurbishment – 100%
• Refurbishment of high-power pumping stations Petrimanu, Lotru Downstream, Jidoaia – 99.99%
• Vaduri HPP modernization: Unit No. 2, 110 kV substation, and mechanical and electrical
equipment of the plant and dam – 100%
• Modernization of Unit No. 2 at Remeți HPP, including the 110 kV substation, general plant
installations, pressure node and Drăgan Dam – 92.16%
• Modernization of Unit No. 2 at Arcești HPP – 99.82%
• Modernization of the 110 kV substation at Stânca HPP – 100%
• Modernization of the 110/20/0.6 kV substation at SHEN Porțile de Fier – Ostrovul Mare – 99.99%
• Modernization of 110 kV, 20 kV and 6.3 kV substations at Târgu Jiu HPP and Vădeni HPP – 99.78%
• Modernization works of electrical installations related to hydromechanical equipment and
hydraulic actuation systems of the spillway dam at SHEN Porțile de Fier I – 98.51%
• Modernization works of electrical installations related to hydromechanical equipment and
hydraulic actuation systems of the spillway dam at Gogoșu HPP, Porțile de Fier II – 99.84%
• Rehabilitation works of the Romanian lock within SHEN Porțile de Fier I – 100%
• Modernization of SCADA system for DHE Olt – 100%
• Modernization of VIR actuation system at Porțile de Fier I HPP – 97.56%
• Modernization of automation, protection, auxiliary services and security systems at Upper Olt
hydropower plants – 100%
Completed projects
In 2025, 5 modernization / refurbishment projects were completed:
• Modernization of the 110 kV substation at Stânca HPP
279
433
270
428
2024 2025
Actual vs. Budget Refurbishment Projects 2024 vs. 2025 (RON million)
Budget Actual
107
• Modernization of the 110/20/0.6 kV substation at SHEN Porțile de Fier – Ostrovul Mare
• Modernization of 110 kV, 20 kV and 6.3 kV substations at Târgu Jiu HPP and Vădeni HPP
• Modernization works of electrical installations related to hydromechanical equipment and the
hydraulic actuation system of the spillway dam at SHEN Porțile de Fier I
• Rehabilitation of the metal structure, mechanical components and sealing system of the
6x6/31.5m upstream left-bank gate of the Porțile de Fier I lock, within the investment project
“Rehabilitation works of the Romanian lock at SHEN Porțile de Fier I”
New or reapproved investment targets
New investment objectives have been approved:
• Refurbishment of the Gogoșu HPP
• Modernization of the Vadu pump station - CHE Hațeg
Also, new technical-economic indicators resulting from the update of the general estimates were
approved, determined by the cancellation of the award procedures carried out and for which no bids
were submitted or the submitted bids exceeded the procurement budget:
• Retehnologizare CHE Râul-Mare Retezat
• Retehnologizare stația 6,3kV CHE Vânători
• Modernizare stații electrice de: 110 kV CHE Golești, CHE Merișani, CHE Băiculești; 6,3 și 110 kV
CHE Budeasa
• Modernizare Stații pompare în spatele digurilor 8 buc (Bratia, Topolog, Olanu, Bistrița, Teslui,
Teslui-Fărcașele, Olteț, Poganu)
Award procedures
The main projects in progress or at various stages of the award procedures are:
Completed award procedures
During 2025, in the process of acquiring the works for the realization of the investment objects, 5 award
procedures were completed, contracts being signed as follows:
• Modernization of SCADA system for DHE Olt – contract signed with the consortium S.C. ENEVO
Group S.R.L. and S.C. EXIMPROD Engineering S.R.L., at a contract value of RON 60.7 million, with
works to be carried out over a period of 24 months, in accordance with the execution schedule;
• Refurbishment of Stejaru HPP – Pressure Node – contract signed with Electromontaj S.A., at a
contract value of EUR 15.95 million, with works to be carried out over a period of 34 months, in
accordance with the execution schedule;
• Refurbishment of Stejaru HPP – Units 1–4 – contract signed with S.S.H. Hidroserv S.A., at a
contract value of EUR 97.49 million, with works to be carried out over a period of 66 months, in
accordance with the execution schedule;
• Refurbishment of high-power pumping stations Petrimanu, Lotru Downstream, Jidoaia – contract
signed with Electromontaj S.A., at a contract value of EUR 97.88 million, with works to be carried
out over a period of 64 months, in accordance with the execution schedule.
Within the signed contracts, advances totaling RON 202 million were granted.
Award procedures in progress / cancelled / resumed
• Refurbishment of Retezat HPP – procurement procedure through competitive negotiation
cancelled (two candidates qualified at the technical and financial proposal stage; only one bid
submitted, exceeding the allocated budget) / procedure relaunched through open tender – one
bid submitted, currently under evaluation (ESPD stage and technical offer analysis);
108
• Refurbishment of Brădișor HPP – procurement procedure through competitive negotiation
cancelled (two candidates qualified at the technical and financial proposal stage; only one bid
submitted, exceeding the allocated budget);
• Refurbishment of Mărișelu HPP – procurement procedure through open tender cancelled due to
lack of bids;
• Installation and commissioning of Unit No. 1 and its auxiliary systems at Porțile de Fier II HPP –
procurement procedure cancelled (only one bid submitted, exceeding the allocated budget) /
procedure relaunched through open tender, with bid submission deadline set for early 2026;
• Rehabilitation of clamp assemblies related to the Service Emergency Gate Technical Unit at the
downstream end of the Romanian lock at Porțile de Fier I, within the investment project
“Rehabilitation works of the Romanian lock at SHEN Porțile de Fier I” – procurement procedure
ongoing – one bid submitted, currently under evaluation;
• 6.3 kV substation at Vânători HPP – procurement procedure through open tender cancelled due
to lack of bids / procedure relaunched under the same conditions and subsequently cancelled
again due to lack of bids;
• Modernization of substations: 110 kV Moroieni HPP; 6.3 kV and 110 kV Dobrești HPP; 6.3 kV and
20 kV Scropoasa HPP – procurement procedure through open tender cancelled due to lack of
bids;
• Modernization of substations: 110 kV Golești HPP, Merișani HPP, Băiculești HPP; 6.3 kV and 110
kV Budeasa HPP – procurement procedure through open tender cancelled due to lack of bids /
relaunch of procurement under preparation;
• Modernization of 20 kV substation at Gilău I HPP – procurement procedure through open tender
cancelled due to lack of bids / relaunch of procurement under preparation;
Pre-investment activity
The design services of the Feasibility Study phase documentation are carried out, within the signed design
service contracts, for the proposed investment objectives, as follows:
• Refurbishment of Hydroelectric Power Plants in the Oesti-Noapteș sector – the SF development
stage in progress
• Intelligent control system for the waterfall CHE Subcetate, CHE Plopi and CHE Bretea – SF
development stage in progress
• Modernization of the Vadu pump station – investment objective approved based on the
Feasibility Study developed
• Modernization of the Gâlceag pump station – SF development stage in progress
• Procedures for awarding design services:
• Modernization in order to increase the availability and degree of safety in operation of the hydro
aggregates in the Portile de Fier I HPP: award procedure (ET+SF) – cancelled and resumed only
for ET (one bid submitted – under analysis)
In 2025, investments amounting to RON 47.24 million were recognized as fixed assets, following the
signing of acceptance certificates for completion of works or commissioning of equipment, recorded in
accordance with contractual provisions:
109
Branch
Investment Project – PIF Objective
Fixed Asset Value
RON million
The Portile de Fier
Modernization works of electrical installations related to
hydromechanical equipment and hydraulic actuation installation
related to the SHEN Portile de Fier II spillway dam - Camp Deversor 5
5.01
The Portile de Fier
Rehabilitation of metal construction. mechanical parts and flat valve
sealing system 6x6/31.5 m. upstream end. left bank - Romanian Portile
de Fier I Lock
1.25
The Portile de Fier
Modernization works of electrical installations related to
hydromechanical equipment and hydraulic actuation installation
related to the SHEN Portile de Fier I spillway dam - Camp Deversor 12
13.84
The Portile de Fier
Modernization works of electrical installations related to
hydromechanical equipment and hydraulic actuation installation
related to the SHEN spillway dam Portile de Fier I - Camp Deversor 4
4.76
The Portile de Fier
Modernization works of the 110/20/6 kV Portile de Fier II Substation
(Ostrovul Mare) – 110kV AT cells
5.80
Bistrita
Modernization of the 110 kV Stanca HPP Substation (110kW
substation. 12-25MVA transformer. Hydroelectric Power Plant.
Earthing Installation. Power Plant)
8.62
Bistrita
Refurbishment of Stejaru CHE (110kW substation – partially)
4.56
Cluj
Modernization of HA2 CHE Remeti (Crane 100/32 tf -12m. Vacuum
cleaner handling system A1-4.2*2.7/6.5)
3.40
Total fixed assets from ongoing investments (refurbishment/modernization) 2025:
47.24
Source: Hidroelectrica
6.4.3. Capitalized maintenance activity
In 2025, capitalized maintenance investments in hydropower civil works, equipment and
administrative buildings amounted to a total of RON 113 million, representing a 37% increase
compared to 2024.
Source: Hidroelectrica
Investments in capitalized maintenance works – hydropower civil constructions carried out in 2025,
amounting to RON 31.6 million, represent a total of 26 completed works out of 30 hydropower civil
maintenance works in progress. Intervention works on civil constructions are complex in nature and fall
entirely under the provisions of Law No. 10/1995 on construction quality, requiring technical
129
149
83
113
2024 2025
Actual vs. Budget Maintenance with Capitalization2024 vs. 2025 (RON million)
Budget Actual
110
assessments, technical design, obtaining permits and approvals, as well as execution by certified
construction companies.
Investments in capitalized maintenance works – equipment carried out in 2025 exceeded RON 80
million, representing a +58% variation compared to 2024 achievements. At the same time, the
Maintenance and Hydropower Civil Works Department manages the investment project “Structural
rehabilitation (metal structures, mechanical components, sealing systems and embedded parts),
associated installations (gate heating, guide heating and lubrication systems), and anti-corrosion
protection of double-hook gates at Porțile de Fier I spillway dam”, with a contractual completion deadline
in 2031. In 2025, works amounting to RON 5.3 million were carried out, with the project progressing in
line with the agreed execution schedule.
Investments in capitalized maintenance works – rehabilitation of administrative buildings carried out in
2025 amounted to RON 1 million, representing a +56% variation compared to 2024. Capitalized
maintenance works on administrative buildings were carried out in the Curtea de Argeș, Hațeg and Sebeș
branches and represent 3 works out of a total of 4 scheduled works, as follows:
• Curtea de Argeș: Fencingworksof the perimeter of the "Statue of Prometheus";
• Ha
ț eg
: Parking rehabilitation works (pavement replacement and parking layout);
• Sebeș: Installation of air conditioning equipment for the SH Sebeand headquarters (chiller and fan
coils).
Independent equipmentand machinery
In addition to investments in development, refurbishment, modernization and capitalized maintenance
projects, Hidroelectrica S.A.’s investment program for 2025 also included investments in acquisitions of
independent equipment and machinery, totaling over RON 31 million, representing a 97% increase
compared to 2024.
6.5. Project Management
Hidroelectrica's Project Management Department ensures the professional management of complex
projects through the team of specialists within the Program and Project Management Service. The
company coordinates the company's strategic investment projects, using specific project management
methodologies, provides the necessary expertise for the rigorous management of complex programs,
being composed of project managers dedicated to achieving the strategic objectives of the investment
portfolio.
In 2025, the Project Management managed 22 projects, of which 9 development projects and 13
refurbishment/modernization projects, namely:
• Hydropower Arrangementof Pa şcani onthe Siret river
• Surduc-Siriu Hydropower Development
• Rastoli
Hydropower
Development
• Cerna - Belareca Hydropower Development
• Hydropower Arrangementof Bistra - Poiana Merului
• Hydropower Arrangementof the Jiu River on the Livezeni - Bumbești sector
• The Hydropower Arrangementof the Olt River is a gorge on the Cornetu-Avrig sector. Lotrioara,
Câineni, Racovi
ț
a
111
•
Li-ion storage
installation in the Crucea NORD Wind Farm
• Electronic security system forthe network of SPEEH Hidroelectrica units
• Refurbishment of Stejaru Hydroelectric Power Plant
• Refurbishment of the Vidraru Hydroelectric Development
• Refurbishment of the Râul Mare Retezat HPP
• Refurbishment
of
high-power pumping stations Petrimanu, Lotru Aval, Jidoaia
• Installation andcommissioningof hydro aggregate 1 and
its auxiliary installations in the U.H.E.
Iron Ore II
• Modernization of the Vaduri HPP: HA no. 2,110kV Station and Mechanical and Electrical
Equipment Power Plant and Dam
• Modernizationof the HA2 CHE Reme
,
including the110 kV substation, general installations related
to the power plant, the pressure node and the Dragan Dam
• Modernization of HA2 CHE Arcești and replacement of the automation and monitoring system
related to HA1
• Modernization of the110 kV Stnca hydroelectric power plant
•
Works for the modernization of electrical installations
related to the hydromechanical
equipment and the
installationof
hydraulic actuation related to the SHEN Portile de Ferro I
spillway dam
• Works for the modernization of electrical installationsrelated to the hydromechanical equipment
and the installation
of
hydraulic actuation relatedto the CHE Gogo spillway dam
• Modernization of theautomation, protection, general services and security installations of the Olt
Superior hydroelectric power plants
• Refurbishment of CHE Gogosu
Compared to 2024, in 2025 the portfolio of projects coordinated by the Project Management Department
increased from 14 to 22 projects, with achieved investments amounting to RON 532 million, representing
83% of total investments in development and refurbishment/modernization projects, and reflecting a
+109% increase compared to the previous year.
Source: Hidroelectrica
427
526
354
532
2024 2025
Actual vs. Budget Project Management Dep.
2023 vs. 2024 (RON million)
Budget Actual
112
6.6. Procurement
Procurement activities within the Hidroelectrica Group are carried out in accordance with the applicable
legal provisions, as well as with internal procedures and regulations, as appropriate, with the objective of
ensuring the timely provision of goods, services and works necessary for the proper conduct of the
Group’s operations.
Hidroelectrica complies with sectoral procurement legislation, primarily Law No. 99/2016 on sectoral
procurement and Government Decision No. 394/2016 approving the methodological norms for the
application of provisions related to the award of sectoral contracts/framework agreements under Law
No. 99/2016 on sectoral procurement.
General portfolio — key indicators
458
Proceedings initiated
SEAP published
announcements
3.81 bln.
Estimated Value
Total estimated RON
60.5%
Assigned procedures
277 procedures completed
10.1%
Assigned Value
384.6 thousand. RON
101
Ongoing
procedures
22,1% · val. 2,029
thousand. RON
80
Annulled
proceedings
17,5% · val. 1,392
thousand. RON
8.31
thousand.
Average Value /
Procedure
RON (compared to 5.32
million in 2023)
979.6
thousand.
Maximum Contract
RON — CHE Raul-Mare
Retezat
6.7. Mergers and Acquisitions ("M&A")
One of Hidroelectrica's strategic pillars is represented by diversified growth, through which the company's
access to new business segments and technologies in the energy sector is pursued. The diversification of
the business aims to increase the production and supply of green energy, new sources of income and
profit for shareholders, as well as to increase the company's adaptability to the new realities of the energy
market.
The company aims to diversify its existing portfolio of assets by developing new production capacities
from solar and wind sources. One of the ways to implement this strategy is to identify and capitalize on
the acquisition (M&A) opportunities in the market, of mature and high-quality projects, with efficient grid
connection solutions and high-efficiency production, projects at the RTB ("ready to build") or COD
("turnkey") stage.
113
The mixing of owned hydro sources with other renewable energy production capacities from solar and
wind renewable sources, together with electricity storage solutions, generates a series of synergies for
the company's activity, including the optimization of existing production capacities and the development
of the supply portfolio.
Hidroelectrica aims to acquire projects with renewable production capacities of at least 500 MW, with
commissioning by 2027. The investment budget through M&A and partnerships for the next 3 years
amounts to RON 2.1 billion.
The company has a flexible balance sheet position, with a good financing capacity, which creates a
significant advantage for the acquisition of such projects. By using financial leverage, the premises are
created to increase the return on equity.
6.8. Human Resources
The human resources activity is carried out in accordance with the Company's Management Plan and
aims to maintain and develop professional expertise by developing technical and engineering skills,
especially for key positions, attracting and retaining a highly qualified workforce, optimizing and
streamlining the company's organizational structure, increasing human capital and continuous
training/training of employees, introducing an integrated performance management system for
employees and improving measures to identify talent, encourage feedback, promote successors, evaluate
and reward employees.
In order to achieve the objectives listed above, in 2025 the company has taken actions in the following
directions:
Optimization and efficiency of the organizational structure
Starting from June 2025, actions were undertaken to revise and optimize the Company’s organizational
structure; these were suspended as of October 2025, following changes in the composition of
Hidroelectrica’s Management Board.
As of 22 July 2025, Hidroelectrica’s organizational structure was amended through the re-establishment
of the Financial Directorate and the position of Director, reporting directly to the Management Board, in
order to implement a court ruling. The current organizational structure comprises a total of 3,900
positions, of which 724 are within the Executive structure and 3,176 within the branches.
Amendments to the CCM and negotiations with the union
In 2025, negotiation meetings were held with the Hidroelectrica Hidrosind Trade Union, following which
Addendum No. 1 and Addendum No. 2 to the Hidroelectrica Collective Labour Agreement (CLA) for the
period 2024–2026 were concluded.
Additionally, in 2025, negotiation meetings were held within the Joint Administration–Trade Union
Committee, as a result of which the Committee approved the granting of medical aid and support for
employees affected by adverse events.
The unionization rate of employees within the Hidroelectrica Group exceeds 82% and is distributed across
the Group’s companies as follows:
114
Society
Percentage of employees who are union members
Hidroelectrica
87.5%
Hidroserv
78.6%
UCMH
46.1%
Source: Hidroelectrica
Evolution of the number of staff
As at 31 December 2025, the total number of employees at Group level was 5,302, while Hidroelectrica
had 3,601 employees.
As at 31 December 2024, the total number of employees at Group level was 5,236, while Hidroelectrica
had 3,582 employees.
Employees structure
Number of employees of the group:
Number of employees as of
31 December 2025
Number of employees as of
31 December 2024
Hidroelectrica
3,601
3,582
Hidroserv
1,289
1,210
UCMH
412
444
Total
5,302
5,236
Source: Hidroelectrica
Gender distribution of the group's employees:
Gen
Number of employees as of
31 December 2025
Number of employees as of
31 December 2024
Female
824
796
Male
4,478
4,440
Total
5,302
5,236
Source: Hidroelectrica
Age distribution of the group's employees:
Group staff structure as of 31
December 2025
Group staff structure as of 31 December
2024
Age groups
No. of
employees
Weighting
No. of
Employees
Weighting
<30 years old
320
6.04%
265
5.06%
30 – 50 years old
2,296
43.30%
2,109
40.28%
>50 years
2,686
50.66%
2,862
54.66%
Total
5,302
100%
5,236
100%
Source: Hidroelectrica
Securing the company with qualified personnel
In 2025, Hidroelectrica conducted and finalized a total of 439 recruitment processes
(competitions/interviews/practical assessments) for 612 positions. The position fill rate resulting from
these recruitment processes was approximately 67.81%, with an average of 2.14 candidates per position.
115
Implementation of social responsibility programs meant to attract young people to the hydropower
profession (granting private scholarships, organizing professional competitions)
In 2025, the social responsibility programs continued to be carried out, as follows:
• Granting of private scholarships, Hidroelectrica supporting a number of 18 scholarship holders and
running a scholarship selection program for 34 places
• Involvement in the organization of internships for students, having concluded agreements with higher
education institutions for a number of over 800 internship places
• Internship, the company having provided in the 2026 Training Plan a number of 50 programs
• Starting with November, Hidroelectrica is part of the Consortium for Integrated Dual Education -
Center of Expertise in the Bucharest-Ilfov Region and financially supports a number of 15 students
and master's students from the National University of Science and Technology POLITEHNICA
Bucharest.
In 2025, Hidroelectrica participated in a series of events organized by technical higher education
institutions in Bucharest and in the country, with the aim of identifying future specialists and promoting,
among them, the image of society, and the collaboration programs it proposes to students.
Human Resource Development (Training and Professional Development)
Employee training and development activities, carried out through internal and external training
programs for initiation, upskilling, qualification, requalification, authorization and re-authorization, aim
to ensure and adapt employees’ professional competence to the Company’s needs and to market
developments.
In 2025, Hidroelectrica delivered external professional training programs in accordance with the
Professional Training Plan, annexed to the Company’s Collective Labour Agreement, addressed to all
categories of personnel, totaling 2,799 employees.
The professional competition "Energetician's Trophy"
The professional contest "Energetician's Trophy" aims to stimulate the interest and concern of employees
for the increase of professional mastery and continuous improvement of their own training, as well as to
promote the organizational culture and improve the image of the participating company, as they are
employees of the entire Hidroelectrica group.
6.9. Digital Transformation and Innovation
In 2025, the Digital Transformation and Innovation Department continued the process of modernizing the
technological infrastructure, with the objective of increasing operational efficiency, digitalizing internal
processes and strengthening cybersecurity. T he department’s activity focused on developing stable and
scalable digital services, aligned with the current requirements of the energy sector and the Company’s
operational needs.
A strategic project implemented during the year was the migration of the SAP system from on-premise
infrastructure to the cloud. This step enhanced the availability of critical business platforms, improved
system scalability and ensured greater resilience of IT services supporting the Company’s operational
processes.
116
Another key project was the implementation of a DMS (Document Management System) for electronic
registry operations. This system digitalizes internal document workflows, ensures document traceability
and automates approval processes. As a result, the volume of paper-based documentation was reduced
and control over information flows within the organization was improved.
As part of the strategy to modernize and digitalize operational infrastructure, the Digital Transformation
and Innovation Department (DTDI) acquired advanced technologies aimed at strengthening the
Company’s communication, monitoring and asset management c apabilities. In this context, Starlink
satellite communication terminals were acquired to ensure connectivity in remote or uncovered areas,
as well as Thuraya satellite mobile phones, used to maintain operational communications in critical
situations or challenging field conditions, particularly for real-time communication and data transmission
from and to field operations.
At the same time, DTDI integrated specialized aerial drones into operational activities, used for equipment
inspections, high-voltage line monitoring, as well as mapping and topographic surveying of infrastructure
and Company assets.
In order to comply with legislative requirements on cybersecurity, the Company continued implementing
dedicated systems for protecting its IT infrastructure. Mechanisms were developed for identity
management, threat monitoring and incident response, in line with national regulations and European
directives on network and information systems security.
In parallel, internal applications were developed to automate operational and administrative processes.
These solutions were tailored to the Company’s specific needs and contributed to improving internal
efficiency, reducing dependence on external applications and optimizing workflows.
The adoption of these technologies contributes to enhanced operational resilience, improved monitoring
and analysis capabilities of infrastructure, and optimization of maintenance, planning and asset
management processes, while supporting the Company’s strategic objectives related to operational
efficiency and digital transformation.
6.10. Tangible assets
6.10.1. Location and characteristics of the main production capacities
The company has seven hydroelectric branches:
- SH Bistrita,
- SH Cluj,
- SH Curtea de Argeș,
- SH Hațeg,
- SH Portile de Fier,
- SH Râmnicu Vâlcea,
- SH Sebeș,
and a branch that manages the Crucea wind farm, the most important for the Group in terms of their
energy production capacities and shares in the Group's total energy production being Porțile de Fier and
Râmnicu Vâlcea.
117
SH Portile de Fier
Portile de Fier I Hydropower and Navigation System
Hydropower and Navigation System ("S.H.E.N.") The Portile de Fier I is located on the Danube at km 943
and was designed and executed in collaboration with the Serbian side.
The construction of the Portile de Fier I System began on September 7, 1964, with the official inauguration
of the construction site. The objective is symmetrical to the Danube axis and is composed of two
hydroelectric power plants with six hydroelectric power plants with high capacity Kaplan turbines, two
locks with dimensions of 310 m x 34 m (one for each side) and a spillway dam with 14 spillway fields (7
for each side). The first objective put into operation on the Romanian side was the lock, on August 14,
1969.
Due to their size and installed power, the aggregates in the plants were the largest of their type in the
world. Likewise, due to the size of the axes and the fall, the locks at the Portile de Fier I are included in
the list of the largest constructions of this kind in the world.
Both at the plant and at the lock, refurbishment programs have been carried out in the last 15 years,
which have led to an increase in the installed power from 175 to 194.4 MW per aggregate in the plant, an
increase in the technical performance of equipment and installations, as well as an increase in operational
safety.
The Portile de Fier I Hydroelectric Power Plant has, after refurbishment, an annual project electricity
production of 5.241 GWh in the average hydrological year, which represents about 10% of the national
production. In addition, the plant provides almost half of the system technology services in Romania.
Portile de Fier II Hydropower and Navigation System
The Portile de Fier II Hydropower and Navigation System is located on the Danube at km 853, in the area
of the Romanian island of Ostrovul Mare and was also designed and executed in collaboration with the
Serbian side. The construction of the Portile de Fier II System began in 1977.
The objective has an asymmetrical configuration, the Danube being crossed into two fronts (the main one
on the main arm of the Danube and the second on the Gogoșu arm). The objective is composed of a basic
power plant with 16 bulb aggregates (8 for each part put into operation between 1984 and 1986), tw o
additional power plants (functional since 1994, the Romanian one, respectively since 2000, the Serbian
one), three locks (two on the Romanian side and one on the Serbian side) and two spillway dams (the
Romanian one on the Gogoșu arm, the Serbian one in the main barrage front).
The Romanian part of the base plant is at the last aggregate of the refurbishment program, the installed
power increasing from 216 Mw before the refurbishment to 251.2 Mw after the refurbishment.
The additional Romanian power plant, located on the secondary arm of the Danube, is equipped with 2
bulb hydrounits, identical in interior layout and constructive solutions with those in the base plant, it has
an installed capacity of 54 MW. The Gogoșu power plant, whose hydro aggregates will be refurbished,
will reach an installed capacity of 62.8 MW after refurbishment.
The main parameters of the hydroelectric power plants in the Danube Development are presented below:
118
- Portile de Fier I Hydropower and Navigation System: Pi = 6x194.4 MW, Kaplan turbines, average
production (GWh/year) = 5241;
- Portile de Fier II Hydropower and Navigation System (base plant): Pi = 8x31.4, bulb turbines,
average production (GWh/year) = 1240;
- Portile de Fier II – Gogoșu Hydropower and Navigation System (additional power plant): Pi = 2x27,
bulb turbines, average production (GWh/year) = 84.
Tismana Hydroelectric Power Plant
The largest hydropower objective in terms of installed power within U.H.E. Targu Jiu, the Portile de Fier
branch is the Tismana hydroelectric power plant, an underground power plant equipped with two
hydropower units with a total installed capacity of 106 MW and an average annual energy production of
262 GWh.
Hydropower development of the Lotru River
The development of the hydropower potential of the Lotru River was carried out between 1965 and 1985
and is of particular importance because, through the 160 kilometers of adduction galleries and through a
complex system of catchments and diversions, it concentrates the flows from the neighboring basins in a
single accumulation, the Vidra.
The average annual potential of the Lotru basin is 1,243 GWh, the energy recovery of the accumulated
flows in Lake Vidra being achieved in three stages of fall located between 1289 m and 300 m elevations,
in the Ciunget, Malaia and Bradisor power plants.
The main elements of the Lotru hydropower development are:
- 3 hydropower plants (Ciunget, Malaia, Brădișor) with a total installed capacity of 643 MW;
- 3 energy pumping stations (Petrimanu, Jidoaia, Lotru-Aval) with a total installed capacity of 61.5
MW;
- 7 dams, of which 5 concrete arch dams (Petrimanu, Galbenu, Jidoaia, Lotru-Aval, Bradisor) with
heights between 42 and 62 m, a rockfill dam (Vidra) and a dam made of local materials (Malaia);
- 82 secondary catchments with a network of 160 km of galleries.
Hydropower development of the Olt River – middle and lower sector
The hydropower potential of the Olt River is estimated at 1.9 GW, which represents 17% of the potential
of inland rivers. The installed flow in hydropower plants increases progressively from upstream to
downstream, reaching 330 cubic meters / s in the middle sector and 500 cubic meters / s in the lower
sector.
On the middle sector of the Olt River there are 12 hydropower plants-dam type, equipped with Kaplan
turbines (Cornetu, Gura Lotrului, Turnu, Calimanesti, Daești, Râmnicu Vâlcea, Răureni, Govora, Babeni,
Ionesti, Zavideni, Drăgășani), a micro-hydropower plant and 4 pumping stations behind the dam, with a
total installed capacity of 501.9 MW and a project electricity production of 1,475.32 GWh/year.
On the lower sector of the Olt River there are 8 hydropower plants, of which 2 hydropower plants
equipped with Kaplan turbines (Strejesti and Arcesti) and one hydropower plant equipped with 2 Bulb
turbines. The other five hydropower plants on the Lower Olt (Ipotesti, Draganesti, Frunzaru, Rusanesti
and Izbiceni) are identical from a constructive point of view, each being equipped with four reversible
Bulb type hydrounits of 13.25 MW each.
119
6.10.2. Degree of wear of production capacities
Hidroelectrica currently has in operation a number of 420 hydrounits, which can be structured according
to the average age from commissioning and refurbishment, respectively, according to the following
figures:
Average age - installed power
Source: Hidroelectrica
Average age - number of aggregates
The installed power of new or refurbished hydro units in the last 20 years represents about 23% of the
total installed hydro power.
It is noted that most of the hydro units (61%) were installed between 1976 and 2006 (they are between
20 and 50 years old from commissioning), 15% being put into operation respectively refurbished after
2006 and 24% are put into operation before 1976.
6.10.3. Ownership of tangible assets
In November 1998, Law no. 213/1998 which regulates the status of the public domain. This law provides
that the right of ownership of public property belongs to the state or local authorities, which can rent
publicly owned property. In accordance with the provisions of Law no. 213/1998 and Law no. 219/1998,
the Ministry of Economy and Trade (currently the Ministry of Energy) leased to the Company the
hydropower facilities (dams, dams, locks, reservoirs) and the land on which they are located. Thus, in
December 2004, the concession contract no. 171/27.12.2004 between the Ministry of Economy and
Trade (currently the Ministry of Energy) (grantor) and the Company (concessionaire) for the hydropower
assets in the public patrimony on December 31, 2003.
The main clauses of the concession contract and its subsequent amendments are as follows:
• The State, through the Ministry of Economy and Trade (currently the Ministry of Energy), owns
the ownership of the public domain assets that are the subject of the contract;
120
• The Company has the right to use these assets for a period of 49 years from the date of signature
(the period may be extended in accordance with the provisions of the Concessions Law, by half
of the initial period, by the joint agreement of the parties), for the purpose of exploitation,
rehabilitation, modernization, refurbishment, as well as the construction of new hydropower
facilities, according to the investment programs;
• The company pays an annual royalty of 1/1000 of the annual revenues from the production of
electricity and system services produced in hydropower plants;
• Upon termination of the contract, certain assets that have been used by the concessionaire in the
performance of the concession will be returned to the grantor, as explained below;
• The company has the obligation to use the assets in accordance with the provisions of the
concession contract and the operating license.
The concession contract provides for the following types of assets:
• Return goods – assets in the public domain that belong to the grantor and that are returned to
the grantor fully, free of charge and free of any encumbrances, upon termination of the
concession contract. The return goods are assets in the public domain such as dams, dams, locks,
which are subject to the concession/lease, as well as those resulting from
investments/modernizations of these assets carried out by the Company during the concession
contract period. The company amortizes these investments/upgrades for the minimum period
between the remaining period of the concession contract and the useful life of these assets.
• Takeover goods – assets that belong to the concessionaire and are used by the concessionaire
during the concession period and that are similar in nature to the above public domain assets
(landscaping, constructions, special installations and technological equipment), on which, at the
end of the concession contract, the grantor has the option to take over in exchange for a payment
equal to the 'present book value' at the date of takeover. In the Company's interpretation, the
"present carrying amount" is the net carrying amount at the date of the takeover and, given that
the Company uses the revaluation model, this value will be the revalued value on that date. These
assets are depreciated over their estimated useful life.
• Own assets – assets that, at the end of the concession contract, remain the property of the
concessionaire. Own assets are the assets (constructions, special installations, technological
equipment, measuring and control devices, means of transport, furniture, office equipment,
protective equipment and other tangible assets) that belong to the concessionaire and are used
by it during the concession period, apart from takeover assets. These assets are depreciated over
their estimated useful life.
121
7. Financial Results for 2025
7.1. Financial Indicators
A. Financial indicators calculated on the basis of consolidated financial statements prepared in
accordance with IFRS-EU
RON million
Indicators
2025
2024
Change (%)
2023
Revenue
9,619
9,123
5%
12,160
EBITDA
4,646
5,503
-16%
8,016
Operating profit
3,719
4,588
-19%
7,200
Net profit
3,370
4,128
-18%
6,365
Earnings per share (RON)
7,49
9,18
-18%
14,17
Source: Hidroelectrica
Indicators
Calculation method
2025
2024
2023
Current liquidity indicator
Current Assets/Current Liabilities
4.49
6.69
7.50
Leverage indicator
Borrowed capital/Equity x 100
1.28
1.66
1.84
Leverage indicator
Borrowed Capital/Committed Capital x 100
1.27
1.64
1.80
Turnover speed of customer flows
Average Customer Balance/Turnover x 365
63.22
93.65
66.02
Turnover speed of fixed assets
Turnover/fixed assets
0.48
0.46
0.58
Source: Hidroelectrica
Adjusted net debt/(cash)
RON million
2025
2024
Change (%)
2023
Bank loans
213
301
-29%
394
Liabilities related to leasing contracts
72
79
-10%
66
Cash and cash equivalents
(1,188)
(1,582)
-25%
(408)
Short-term investments (Investments in deposits)
(3,732)
(3,476)
7%
(4,349)
Adjusted net debt/(cash)
(4,635)
(4,677)
-1%
(4,297)
Adjusted EBITDA
4,746
5,517
-14%
8.253
Adjusted Net Debt/(Cash) to Adjusted EBITDA Ratio
(0.98)
(0,85)
15%
(0.52)
Source: Hidroelectrica
B. Financial indicators calculated on the basis of the consolidated financial statements prepared
in accordance with OMFP no. 2844/2016
RON million
Indicators
2025
2024
Change (%)
2023
Revenue
9,619
9,123
5%
12,160
EBITDA
4,646
5,503
-16%
8,016
Operating profit
3,719
4,588
-19%
7,200
Net profit
3,370
4,128
-18%
6,365
Earnings per share (RON)
7.49
9.18
-18%
14.17
122
Indicators
Calculation method
2025
2024
2023
Current liquidity indicator
Current Assets/Current Liabilities
4.49
6.69
7.50
Leverage indicator
Borrowed capital/Equity x 100
1.28
1.66
1.83
Leverage indicator
Borrowed Capital/Committed Capital x 100
1.27
1.63
1.83
Turnover speed of customer flows
Average Customer Balance/Turnover x 365
63.22
93.66
66.01
Turnover speed of fixed assets
Turnover/fixed assets
0.48
0.46
0.58
Source: Hidroelectrica
Adjusted net debt/(cash)
RON million
2025
2024
Change (%)
2023
Bank loans
213
301
-29%
394
Liabilities related to leasing contracts
72
79
-10%
66
Cash and cash equivalents
(1,188)
(1,582)
-25%
(408)
Short-term investments (Investments in deposits)
(3,732)
(3,476)
7%
(4,349)
Adjusted net debt/(cash)
(4,635)
(4,677)
-1%
(4,297)
Adjusted EBITDA
4,746
5,517
-14%
8,253
Adjusted Net Debt/(Cash) to Adjusted EBITDA Ratio
(0.98)
(0.85)
15%
(0,52)
Source: Hidroelectrica
C. Financial indicators calculated on the basis of the individual financial statements prepared in
accordance with OMFP no. 2844/2016
RON million
Indicators
2025
2024
Change (%)
2023
Revenue
9,623
9,123
5%
12,159
EBITDA
4,604
5,433
-15%
7,996
Operating profit
3,686
4,527
-19%
7,178
Net profit
3,338
4,072
-18%
6,352
Earnings per share (RON)
7.42
9.05
-18%
14.14
Indicators
Calculation method
2025
2024
2023
Current liquidity indicator
Current Assets/Current Liabilities
4.23
6.41
7.46
Leverage indicator
Borrowed capital/Equity x 100
1.29
1.67
1.84
Leverage indicator
Borrowed Capital/Committed Capital x 100
1.27
1.64
1.80
Turnover speed of customer flows
Average Customer Balance/Turnover x 365
63.16
93.62
65.96
Turnover speed of fixed assets
Turnover/fixed assets
0.48
0.45
0.58
Source: Hidroelectrica
Adjusted net debt/(cash)
RON million
2025
2024
Change (%)
2023
Bank loans
213
301
-29%
394
Liabilities related to leasing contracts
72
79
-10%
66
Cash and cash equivalents
(816)
(1,357)
-40%
(378)
Short-term investments (Investments in deposits)
(3,732)
(3,476)
7%
(4,349)
Adjusted net debt/(cash)
(4,263)
(4,452)
-4%
(4,268)
Adjusted EBITDA
4,703
5,473
-14%
8,225
Adjusted Net Debt/(Cash) to Adjusted EBITDA Ratio
(0.91)
(0.81)
11%
(0.52)
Source: Hidroelectrica
123
7.2. Revenue breakdown
A. According to the consolidated financial statements prepared in accordance with IFRS-EU
2025
2024
Change (%)
2023
Energy produced and sold (net)
GWh
11,847
13,864
-15%
17,639
Purchase of electricity
GWh
2,209
802
175%
1,699
Total energy sold
GWh
14,056
14,666
-4%
19,338
Quantity of electricity – wholesale
GWh
6,347
8,185
-22%
12,325
Average wholesale price
RON / MWh
548
476
15%
493
Wholesale Markets Revenue
RON million
3,476
3,894
-11%
6,078
Quantity of electricity Supply
GWh
7,244
5,572
30%
6,046
Average supply price (without transfer costs
- e.g. pass through)
RON / MWh
481
418
15%
568
Revenue from Supply
RON million
3,485
2,329
50%
3,434
Pass through costs
RON million
1,998
1,501
33%
1,498
Balancing quantity
GWh
186
511
-64%
433
Average price Balancing
RON / MWh
1,438
1,689
15
1,310
Income from Balancing
RON million
267
863
-69%
567
System Services Revenue (STS)
RON million
248
303
-18%
334
Other revenues from contracts with
customers, of which:
RON million
145
233
-38%
249
Income from positive imbalances*
RON million
(13)
(263)
-95%
99
Revenue from power reduction services
RON million
56
416
-87%
87
Redistribution of additional income
RON million
51
78
-35%
63
Revenue
RON million
9,619
9,123
5%
12,160
* The amount of positive imbalances recorded in 2025 is 278 GWh (2024: 399 GWh, 2023: 533 GWh)
Source: Hidroelectrica
Energy produced and sold (net)
The energy produced and sold (net producon) decreased by approximately 15% in 2025 compared to
2024, in the period January-December 2025 this amount being 11,847 GWh. Aer a start of the year
marked by a sharp reducon in producon, amid unfavorable hydrological condions, respecvely a
period of severe hydrological drought, with an average ow of the Danube in the rst quarter of 2025 of
only 4,257 cubic meters/s, down approximately 40% compared to the same period of 2024, the company
managed a signicant recovery in Q3-Q4, supported in parcular by energy purchases and the migaon
of the decrease in producon, respecvely an increase in producon in Q4 due to favorable hydrological
condions.
Wholesale Revenue
Between January and December 2025, the average wholesale sale price in the wholesale segment
registered a signicant increase of approximately 15% compared to the same period of the previous year.
124
This increase was mainly from trading on the forward markets, following the eliminaon of the MACEE
regulated mechanism as of 1 January 2025. Trading in the forward markets allowed the company to obtain
beer prices for the electricity sold, thus helping to migate the impact of low hydrology on revenues in
the wholesale segment. In the short term, especially compared to the rst quarter of 2025, the decrease
in the quanes available for sale limited the company's ability to fully capitalize on the increase in
revenues on the wholesale market.
However, Hidroelectrica quickly adapted by opmizing the producon-trading mix, which had a
signicant impact on increasing the average selling price, ensuring the protecon of the commercial
margin in a period of low volumes. This approach oset the decit in Q1, leading to a 22% decrease in
revenues related to the wholesale market segment compared to the same period of 2024, compared to
53% in Q1.
Revenue from Supply to end consumers
Revenues from the electricity supply activity increased by 50%, to RON 3,485 million revenues achieved
in 2025, from RON 2,329 million revenues achieved in 2024.
This evolution reflects both an increase in the customer base and the efficiency of the adjustment of trade
policy in difficult competitive conditions. The increase in revenues was generated by a higher volume of
electricity supplied to final consumers (30%), corroborated by an increase in the average price of supply
tariffs by 15%, the result of a commercial adaptation to the market context and the maintenance of
competitiveness.
Against the background of the decrease in own production, the expansion of the supply segment
constitutes a strategic repositioning: the company moves from an "asset-centric" profile (high margins,
hydrological volatility) to a "customer-centric" one (stability of revenues, but greater exposure to market
and operational risk and integration with the trading activity). The strategic significance of such a
development comes from:
• diversification of hydrological risk: a higher share of supply combined with increased RES
purchases, when the price is beneficial, mitigates dependence on hydrology and seasonality.
Revenues become less correlated with hydrology, but more exposed to the purchase price and the
efficiency of the trading activity.
• commercial anchoring: a larger portfolio of customers (household and non-household) means
recurring demand and long-term bargaining power, facilitating forward contracting and optimizing
the average cost of energy.
• RES integration platform: supply creates demand that can be strategically covered through
acquisitions and/or developments of new production capacities, structurally reducing price risk and
exposure to the spot market. The increased volatility of the electricity market, which has led to
significant fluctuations in the level of tariffs applicable to final consumers.
Another relevant factor is the change in the tax framework applicable to energy producers, by removing
the value ceiling from which the additional income tax is applied, which has indirectly contributed to
easing the pressure on prices in the supply chain.
Revenue from Balancing
Revenues from Balancing decreased by 69%, to RON 267 million recorded in the year ended December
31, 2025, from RON 863 million recorded in 2024, mainly driven by the 64% reduction in the volume sold
125
on the Balancing Market in 2025 compared to 2024. The decrease is directly proportional to the evolution
of the balancing market in Romania, which quantitatively had a decrease of 53% in the first 11 months of
2025 (according to data published by ANRE) from 1,493 GWh in 2024 to 797 GWh in 2025.
Other revenue from customer contracts
Other revenue from customer contracts decreased by 38% to RON 145 million in 2025, from RON 231
million in 2024.
The evolution of these revenues is influenced by the behavior of the other participants in the electricity
market in terms of managing imbalances. The increase in prices recorded on the market for positive
imbalances resulted in an increase in revenues from positive imbalances at Group level in the first six
months of 2025 by RON 230 million compared to the same period of 2024. At the same time, power
reduction services recorded in the production segment decreased by RON 315 million compared to the
same period of 2024.
B. According to the consolidated financial statements prepared in accordance with OMFP
2844/2016
2025
2024
Change (%)
2023
Energy produced and sold (net)
GWh
11,847
13,864
-15%
17,639
Purchase of electricity
GWh
2,209
802
175%
1,699
Total energy sold
GWh
14,056
14,666
-4%
19,338
Quantity of electricity – wholesale
GWh
6,347
8,185
-22%
12,325
Average wholesale price
RON / MWh
548
476
15%
493
Wholesale Markets Revenue
RON million
3,476
3,894
-11%
6,078
Quantity of electricity Supply
GWh
7,244
5,572
30%
6,046
Average supply price (without transfer costs -
e.g. pass through)
RON / MWh
481
418
15%
568
Revenue from Supply
RON million
3,485
2,329
50%
3,434
Pass through costs
RON million
1,998
1,501
33%
1,498
Balancing quantity
GWh
186
511
-64%
433
Average price Balancing
RON / MWh
1,438
1,689
15
1,310
Income from Balancing
RON million
267
863
-69%
567
System Services Revenue (STS)
RON million
248
303
-18%
334
Other revenues from contracts with
customers, of which:
RON million
145
233
-38%
249
Income from positive imbalances*
RON million
(13)
(263)
-95%
99
Revenue from power reduction services
RON million
56
416
-87%
87
Redistribution of additional income
RON million
51
78
-35%
63
Revenue
RON million
9,619
9,123
5%
12,160
Source: Hidroelectrica
126
C. According to the individual financial statements prepared in accordance with OMFP
2844/2016
2025
2024
Change (%)
2023
Energy produced and sold (net)
GWh
11,847
13,864
-15%
17,639
Purchase of electricity
GWh
2,209
802
175%
1,699
Total energy sold
GWh
14,056
14,666
-4%
19,338
Quantity of electricity – wholesale
GWh
6,347
8,185
-22%
12,325
Average wholesale price
RON / MWh
548
476
15%
493
Wholesale Markets Revenue
RON million
3,476
3,894
-11%
6,078
Quantity of electricity Supply
GWh
7,244
5,572
30%
6,046
Average supply price (without transfer costs
- e.g. pass through)
RON / MWh
481
418
15%
568
Revenue from Supply
RON million
3,485
2,330
50%
3,434
Pass through costs
RON million
1,999
1,502
33%
1,498
Balancing quantity
GWh
186
511
-64%
433
Average price Balancing
RON / MWh
1,438
1,689
15
1,310
Income from Balancing
RON million
267
863
-69%
567
System Services Revenue (STS)
RON million
248
303
-18%
334
Other revenues from contracts with
customers, of which:
RON million
145
231
-37%
248
Income from positive imbalances*
RON million
(13)
(263)
-95%
99
Revenue from power reduction services
RON million
56
416
-87%
87
Redistribution of additional income
RON million
51
78
-35%
63
Revenue
RON million
9,619
9,123
5%
12,159
Source: Hidroelectrica
127
7.3. Operating expenses
A. According to the consolidated financial statements prepared in accordance with IFRS-EU
2025
2024
Change
2023
Costs breakdown
RON
million
RON
million
%
RON million
Turbinated water
445
518
-14%
639
Employee benefits expenses
1,020
885
15%
717
Transport and distribution of electricity
1,635
1,228
33%
1,208
Electricity purchased
911
209
336%
456
Green certificates expenses
354
274
30%
297
Depreciation and amortization
883
905
-2%
799
Impairment loss on property, plant and equipment and intangible
assets, net
99
39
152%
237
Impairment loss on trade receivables, net
37
79
-53%
80
Repair, maintenance, materials and consumables
112
92
21%
85
Tax for electricity producers
123
235
-48%
225
Other operating expenses
408
307
33%
251
Own work capitalized
(86)
(49)
75%
-
Source: Hidroelectrica
Turbinated water
Expenses for turbinated water usage decreased by 14%, amounting to RON 445 million for the year ended
31 December 2025, compared to RON 518 million in 2024. This reduction was driven by the lower volume
of electricity produced in 2025 versus 2024, as a result of unfavorable hydrological conditions.
Employee benefits expenses
Employee benefits expenses increased by 15%, reaching RON 1,020 million for the year ended 31
December 2025, compared to RON 885 million in 2024. This increase primarily reflects the salary
adjustments resulting from negotiations with the employees’ union, applicable starting July 2024 and May
2025, as well as a 3% rise in the Group’s actual number of employees (driven mainly by the acquisition of
UCM Reșița in March 2024).
Transport and distribution of electricity
Electricity transport and distribution expenses increased by 33%, reaching RON 1,635 million for the year
ended 31 December 2025, compared to RON 1,228 million in 2024. This increase was driven by the 30%
rise in the volume of energy supplied and by successive increases in regulated tariffs during 2025.
Electricity purchased
Electricity purchased increased by 336% in 2025, reaching RON 911 million, compared to RON 209 million
in the same period of 2024. This development is mainly attributable to the lower electricity production
and to the higher volume of electricity required for the supply segment. Impairment loss on property,
plant and equipment and intangible assets, net
128
Impairment loss on trade receivables, net
Impairment losses on property, plant and equipment and intangible assets increased to RON 99 million
as of 31 December 2025, up from RON 39 million for the year ended 31 December 2024. This increase is
mainly attributable to changes in the assumptions used, specifically the application of future cash flows
for the main projects by estimating the operating expenses specific to each project.
B. According to the consolidated financial statements prepared in accordance with OMFP
2844/2016
2025
2024
Change
2023
Costs breakdown
RON million
RON million
%
RON million
Turbinated water
445
518
-14%
639
Employee benefits expenses
1,200
866
18%
728
Transport and distribution of electricity
1,635
1,228
33%
1,208
Electricity purchased
911
209
336%
456
Green certificates expenses
354
274
30%
297
Depreciation and amortization
883
905
-2%
799
Impairment loss on property, plant and equipment and
intangible assets, net
99
39
152%
237
Impairment loss on trade receivables, net
32
66
-51%
80
Repair, maintenance, materials and consumables
112
92
21%
85
Tax for electricity producers
123
235
-48%
225
Other operating expenses
408
326
25%
240
Own work capitalized
(86)
(49)
75%
-
Source: Hidroelectrica
C. According to the individual financial statements prepared in accordance with OMFP
2844/2016
2025
2024
Change
2023
Costs breakdown
RON million
RON million
%
RON
million
Turbinated water
445
518
-14%
639
Employee benefits expenses
778
677
15%
605
Transport and distribution of electricity
1,635
1,228
33%
1,208
Electricity purchased
911
209
336%
456
Green certificates expenses
354
274
30%
297
Depreciation and amortization
872
896
-3%
795
Impairment loss on property, plant and equipment and
intangible assets, net
99
39
152%
236
Impairment loss on trade receivables, net
32
68
-52%
80
Repair, maintenance, materials and consumables
341
303
12%
246
Tax for electricity producers
123
235
-48%
225
Other operating expenses
381
298
28%
229
Source: Hidroelectrica
129
7.4. Cash-flow
A. According to the consolidated financial statements prepared in accordance with IFRS-EU
2025
2024
Change
2023
RON million
RON million
%
RON million
Net cash from operating activities
4,300
6,353
-33%
5,425
Net cash from investing activity
(549)
1,207
-147%
(1,229)
Net cash used in financing activities
(4,144)
(6,386)
-35%
(4,448)
Net increase/(decrease) in cash and cash equivalents
(394)
1,174
-134%
(253)
Cash and cash equivalents at 1 January
1,582
408
288%
661
Cash and cash equivalents at 31 December
1,188
1,582
-25%
408
Source: Hidroelectrica
Net cash from operating activities
Net cash generated from operating activities amounted to RON 4,300 million in 2025, compared to RON
6,353 million in 2024. This decrease is mainly attributable to the increase in the balance of trade
receivables as at 31 December 2025 and was also negatively influenced by the decline in net profit in 2025
compared with 2024, resulting in a 33% reduction in net cash from operating activities in 2025 versus
2024.
Net cash from investing activity
Net cash from investing activities amounted to RON (549) million in 2025, compared to RON 1,207 million
in 2024. This decrease was primarily driven by higher investments in the acquisition of property, plant
and equipment and intangible assets, as well as increased placements in deposits aimed at maximizing
returns on available liquidity.
Net cash used in financing activities
Net cash used in financing activities amounted to RON 4,144 million for the year ended 31 December
2025, compared to RON 6,386 million in 2024. This reduction is due to the dividends paid in 2025,
reflecting the financial performance achieved in the 2024 financial year.
B. According to the consolidated financial statements prepared in accordance with OMFP
2844/2016
2025
2024
Change
2023
RON million
RON million
%
RON million
Net cash from operating activities
4,300
6,353
-32%
5,425
Net cash from investing activity
(545)
1,207
-145%
(1,229)
Net cash used in financing activities
(4,144)
(6,386)
-35%
(4,448)
Net increase/(decrease) in cash and cash equivalents
(394)
1,174
-134%
(253)
Cash and cash equivalents at 1 January
1,582
408
288%
661
Cash and cash equivalents at 31 December
1,188
1,582
-25%
408
Source: Hidroelectrica
130
C. Conform situațiilor According to the individual financial statements prepared in accordance
with OMFP 2844/2016
2025
2024
Change
2023
RON million
RON million
%
RON million
Net cash from operating activities
4,058
6,335
-36%
5,407
Net cash from investing activity
(459)
1,030
-145%
(1,224)
Net cash used in financing activities
(4,140)
(6,386)
-35%
(4,447)
Net increase/(decrease) in cash and cash equivalents
(540)
979
-155%
(263)
Cash and cash equivalents at 1 January
1,357
378
259%
642
Cash and cash equivalents at 31 December
816
1,357
-40%
378
Source: Hidroelectrica
7.5. Financial position
A. According to the consolidated financial statements prepared in accordance with IFRS-EU
31 December
31 December
Change %
31 December
2023
RON million
2025
2024
Active
Non-current assets
Property, plant and equipment
19,428
19,848
2%
20,427
Intangible assets
35
22
59%
6
Restricted cash
23
-
100%
-
Investment in corporate bonds
-
-
0%
353
Other non current assets
373
277
35%
284
Total active imobilizate
19,859
20,148
1%
21,069
Current assets
Inventories
123
94
31%
71
Trade receivables
1,697
1,634
4%
3,048
Investments in deposits
3,731
3,476
7%
4,349
Cash and cash equivalents
1,187
1,582
-25%
408
Restricted cash
31
21
48%
101
Other current assets
65
22
195%
63
Total current assets
6,834
6,829
0%
8,040
Total active
26,692
26,977
-1%
29,109
Equity and liabilities
Equity
Share capital
5,527
5,527
0%
5,527
Revaluation reserve
11,084
11,549
-4%
12,039
Other reserves
1,030
1,026
0%
1,024
Retained earnings
4,539
4,749
-4%
6,432
Total equity
22,180
22,851
-3%
25,021
Liabilities
Non-current liabilities
Bank borrowings
118
208
-43%
300
Lease liabilities
62
70
-11%
61
Deferred income
192
202
-5%
177
131
31 December
31 December
Change %
31 December
2023
RON million
2025
2024
Current tax liabilities
1,397
1,460
-4%
1,504
Deferred tax liabilities
8
8
0%
-
Employee benefits
140
129
9%
128
Provisions
1,009
944
7%
837
Other payables
58
53
9%
8
Total non-current liabilities
2,984
3,074
-3%
3,016
Current liabilities
Bank borrowings
96
93
3%
93
Lease liabilities
11
9
22%
5
Trade payables
778
430
81%
408
Contract liabilities
49
98
-50%
42
Current tax liabilities
182
60
203%
145
Deferred income
7
6
17%
6
Employee benefits
156
147
6%
100
Provisions
104
82
27%
165
Tax for electricity producers
2
-100%
1
Other payables
146
125
17%
107
Total current liabilities
1,529
1,052
45%
1,072
Total liabilities
4,513
4,125
9%
4,087
Total equity and liabilities
26,693
26,977
-1%
29,109
Source Hidroelectrica
Other non-current assets
Other non-current assets outstanding as at 31 December 2025 increased by 35%, reaching RON 374
million compared to RON 277million as at 31 December 2024. The increase was driven mainly by advances
paid for the refurbishment of the Stejaru HPP, Vidraru HPP, and the Lotru pumping stations.
Trade receivables
Trade receivables increased by 4%, reaching RON 1,698 million as at 31 December 2025, compared to
RON 1,634 million as at 31 December 2024. The increase is driven by the specific timing of invoice issuance
in the fourth quarter, as well as by the non-banking days in December.
Investments in deposits
The balance of deposits increased by 7%, reaching RON 3,731 million as at 31 December 2025, compared
to RON 3,476 million as at 31 December 2024. This increase was mainly driven by the establishment of
deposits with maturities longer than three months, which are presented as deposit investments, whereas
deposits with shorter maturities are classified as cash and cash equivalents.
Bank borrowings – long term
The balance of bank borrowings decreased by 43%, to RON 118 million as at 31 December 2025, from
RON 208 million as at 31 December 2024. This decrease is due to loan repayments amounting to RON
89 million made during 2025.
132
Provisions – long term
Long-term provisions increased by 7%, reaching RON 1,009 million as at 31 December 2025, compared to
RON 944 million as at 31 December 2024. This increase was mainly driven by the change in assumptions
and unwinding decomissioning provisions in 2025.
Other long-term payables
The balance of other long-term liabilities did not record significant changes during the period. These
liabilities represent guarantees established by the Hidroconstrucția SA and Romelectro SA consortium
(contractors for the Bumbești–Livezeni investment project), deposited in bank accounts as a result of the
non-extension of the guarantee letters.
Trade payables
Trade payables increased by 81%, reaching RON 778 million as at 31 December 2025, compared to RON
430 million as at 31 December 2024. This increase is mainly driven by higher payables to fixed‑asset
suppliers (RON 107 million to Electromontaj and Prime Batteries), the accumulation of payables to
prosumers (up RON 44 million versus 31 December 2024), and higher electricity purchases made in
December 2025 compared with December 2024, which had not been settled by 31 December 2025.
Another factor contributing to the increase in trade payables is the higher volume of purchases made in
the latter part of December 2025 for which suppliers had not yet issued invoices by year‑end, resulting in
amounts recognized as “suppliers – invoices to be received.”
Current Tax Liabilities
The balance of current income tax liabilities increased by 217%, reaching RON 190 million as at 31
December 2025, compared to RON 60 million as at 31 December 2024. This increase was mainly driven
by the significantly better results recorded in the fourth quarter of 2025, compared with the decline in
profit before tax in the fourth quarter of 2024.
Employee Benefits
Short-term employee benefits increased by 6%, amounting to RON 156 million as at 31 December 2025,
compared to RON 147 million as at 31 December 2024. This increase primarily reflects salary adjustments
and the growth in the Group’s actual number of employees.
Provisions
Short-term provisions increased by 27%, reaching RON 104 million as at 31 December 2025, compared to
RON 82 million as at 31 December 2024. This increase was mainly driven by the rise in the current portion
of litigation provisions, based on management’s estimates regarding the value and expected settlement
dates of these cases.
133
B. According to the consolidated financial statements prepared in accordance with OMFP
2844/2016
31 December
31 December
Change %
31 December
2023
RON million
2025
2024
Assets
Non-current assets
Property, plant and equipment
19,399
19,816
2%
20,393
Intangible assets
67
54
59%
39
Restricted cash
23
-
100%
-
Investment in corporate bonds
-
-
-
353
Other non current assets
374
68
35%
284
Total active imobilizate
19,863
19,938
1%
21,069
Current assets
Inventories
124
94
32%
71
Trade receivables
1,698
1,634
4%
3,048
Investments in deposits
3,732
3,476
7%
4,349
Cash and cash equivalents
1,188
1,582
-25%
408
Restricted cash
32
21
52%
101
Other current assets
65
232
172%
63
Total current assets
6,839
7,039
0%
8,040
Total assets
26,702
26,977
-1%
29,109
Equity and liabilities
Equity
Share capital
4,498
4,498
0%
4,498
Inflation adjustment of share capital
1,029
1,029
0%
1,029
Public patrimony
45
45
0%
45
Revaluation reserve
11,111
11,580
-4%
12,077
Other reserves
1,030
1,026
0%
1,024
Retained earnings
4,512
4,718
-4%
6,394
Total equity
22,225
22,896
-3%
25,067
Liabilities
Non-current liabilities
Bank borrowings
118
208
-43%
300
Lease liabilities
62
70
-12%
61
Deferred income
147
157
-6%
132
Deferred tax liabilities
8
8
-4%
-
Current tax liabilities
1,397
1,460
9%
1,504
Employee benefits
140
129
7%
128
Provisions
1,009
944
9%
837
Trade payables
15
-
100%
-
Other payables
58
53
10%
8
Total non-current liabilities
2,953
3,029
-2%
2,971
Current liabilities
Bank borrowings
95
93
2%
93
Lease liabilities
10
9
10%
5
Trade payables
777
430
81%
408
Contract liabilities
48
98
-51%
42
Current tax liabilities
181
60
199%
145
Deferred income
6
6
-9%
6
Employee benefits
113
105
8%
76
134
31 December
31 December
Change %
31 December
2023
RON million
2025
2024
Provisions
147
125
17%
189
Tax for electricity producers
-
2
-100%
1
Other payables
146
124
18%
107
Total current liabilities
1,523
1,052
45%
1,072
Total liabilities
4,477
4,081
10%
4,043
Total equity and liabilities
26,702
26,977
-1%
29,109
Source: Hidroelectrica
C. According to the individual financial statements prepared in accordance with OMFP
2844/2016
31 December
31 December
Variație
%
31 December
2023
RON million
2025
2024
Assets
Non-current assets
Property, plant and equipment
19,293
19,686
2%
20,324
Intangible assets
48
36
59%
39
Investments in subsidiaries
315
315
0%
71
Restricted cash
23
-
100%
-
Investment in corporate bonds
-
-
-
353
Other non current assets
472
67
35%
281
Total active imobilizate
20,152
20,105
1%
21,067
Current assets
Inventories
70
69
2%
61
Trade receivables
1,698
1,633
4%
3,047
Investments in deposits
3,732
3,476
7%
4,349
Cash and cash equivalents
816
1,357
-40%
378
Restricted cash
33
21
55%
101
Other current assets
58
230
167%
61
Total current assets
6,406
6,785
-3%
7,998
Total assets
26,558
26,890
-1%
29,065
Equity and liabilities
Equity
Share capital
4,498
4,498
0%
4,498
Inflation adjustment of share capital
1,029
1,029
0%
1,029
Public patrimony
45
45
0%
45
Revaluation reserve
11,089
11,555
-4%
12,048
Other reserves
1,018
1,018
0%
1,018
Retained earnings
4,432
4,671
-4%
6,399
Total equity
22,111
22,816
-3%
25,037
Liabilities
Non-current liabilities
Bank borrowings
118
208
-43%
300
Lease liabilities
62
70
-12%
61
135
31 December
31 December
Variație
%
31 December
2023
RON million
2025
2024
Deferred income
147
156
-6%
131
Deferred tax liabilities
8
8
-4%
-
Current tax liabilities
1,394
1,456
8%
1,498
Employee benefits
126
116
7%
121
Provisions
1,009
944
9%
837
Trade payables
15
1
100%
Other payables
55
55
0%
7
Total non-current liabilities
2,933
3,014
-3%
2,956
Current liabilities
Bank borrowings
95
93
2%
93
Lease liabilities
10
9
10%
5
Trade payables
819
475
72%
427
Contract liabilities
48
98
-51%
42
Current tax liabilities
175
57
209%
145
Deferred income
6
6
-9%
6
Employee benefits
87
80
9%
62
Provisions
146
124
18%
187
Tax for electricity producers
-
2
-100%
1
Other payables
127
115
11%
104
Total current liabilities
1,515
1,059
45%
1,072
Total liabilities
4,447
4,073
43%
4,028
Total equity and liabilities
26,558
26,890
-1%
29,065
Source: Hidroelectrica
136
8. Litigations
Litigation with tax authorities
Potential exposure: RON 64 million as at 31 December 2025 and 31 December 2024
Claimant: Hidroelectrica
Case files: No. 638/2/2024 and No. 1962/2/2024
Subject matter: Annulment of Tax Assessment Decision No. A-DAF 6890/11.05.2023
In 2022, the tax applicable to electricity producers was subject to frequent amendments regarding its
calculation methodology. One such amendment was introduced by Law No. 357/2022, published on 16
December 2022. The Company applied the provisions of this law starting from 16 December 2022.
The Company was subject to tax inspections regarding the electricity producer tax carried out by the
General Directorate for Fiscal Antifraud within ANAF. According to the report issued on 11 April 2023, the
tax authorities applied the legislative amendments retroactively starting from 1 September 2022 and,
consequently, assessed an additional tax amounting to RON 62 million.
On 28 April 2023, the Company received a tax assessment decision for the amount of RON 62 million. The
Group challenged the decision, but the appeal was rejected by the General Directorate for the Settlement
of Appeals within the Ministry of Finance.
In its statement of claim, the Company argued that successive amendments to the legal framework
governing the calculation of the electricity producer tax can only apply prospectively, from the date of
publication of the amendments, and not retroactively, as interpreted by the tax authorities.
On 17 December 2024, the court issued a favorable ruling for Hidroelectrica, annulling both the appeal
resolution decision and the tax assessment decision, and ordering the reimbursement of RON 62 million
to the claimant.
On 7 August 2023, the Company received a decision regarding ancillary obligations amounting to RON 1.6
million, in connection with the aforementioned tax assessment decision. The Group also challenged this
decision, resulting in case file No. 1962/2/2024, which is currently suspended pending the final resolution
of case file No. 638/2/2024. In light of the ruling in case file No. 638/2/2024, the Group considers that the
litigation in case file No. 1962/2/2024 will also be resolved in its favor.
Litigation with Hidroconstrucția S.A.
1. Potential exposure: RON 99 million as at 31 December 2025 and 31 December 2024
Claimant: Hidroconstrucția S.A.
Case file: No. 12257/3/2022
Subject matter: Termination of Contract No. 672/1989 regarding the complex hydropower development
of the Olt River (Făgăraș–Hoghiz sector); damages.
Hidroconstrucția S.A. claimed damages amounting to RON 99 million, representing lost profits allegedly
resulting from the suspension by Hidroelectrica of construction works related to the Făgăraș–Hoghiz
investment project. The claimant also requested the court to terminate the relevant contract.
137
In January 2023, the court issued a ruling in favor of the Company, rejecting the claims of Hidroconstrucția
S.A. as inadmissible. This ruling was subsequently appealed by Hidroconstrucția S.A.
On 12 October 2023, the appellate court annulled the first-instance decision and ordered a retrial on the
merits. On 14 December 2023, the court ordered a technical expert assessment, with the next hearing
scheduled for 10 April 2025.
Based on the legal analysis of the claims, Management considers the action to be unfounded. Accordingly,
Management estimates that the litigation will be resolved in favor of the Group and, therefore, no outflow
of resources is considered probable.
2. Potential exposure: RON 33 million as at 31 December 2025 and 31 December 2024
Claimant: Hidroconstrucția S.A.
Case files: No. 44443/3/2016, currently No. 11314/3/2021
Subject matter: Claims – recovery of costs generated by the suspension of construction works related to
ongoing investment projects
Hidroconstrucția S.A. seeks recovery of costs incurred as a result of the suspension of construction works
performed prior to Hidroelectrica’s insolvency. The Group maintains that such claims are unfounded,
given Hidroelectrica’s insolvency proceedings and the fact that the claimant lost its right to assert such
claims by failing to register them in the creditors’ table.
In March 2018, the first-instance court rejected the claims of Hidroconstrucția S.A. This ruling was
appealed by the claimant. The Group also appealed the decision insofar as it imposed administrative costs
on Hidroelectrica.
In April 2019, the Court of Appeal remanded the case to the first-instance court for retrial. The case was
reopened under file No. 11314/3/2021.
In April 2022, the court ordered the preparation of a hydropower construction expert report and an
accounting expert report by independent experts. These reports are currently in preparation, with the
next hearing scheduled for 1 April 2025.
Based on the initial ruling of the first-instance court, Management estimates that the litigation will be
resolved in favor of the Group and, therefore, no outflow of resources is considered probable.
138
Litigations over complex investments
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
1
AHE LIVEZENI
BUMBESTI
The le no.
40314/3/2013**
The execuon contract
no. 21DI/26.01.2004
regarding the
achievement of the
investment objecve
Hydropower
development of the Jiu
river on the Livezeni-
Bumbes sector
Bucharest
Court of
Appeal
08.05.2026
Hidroelectrica
S.A.
The associaon of
Romelectro S.A.,
Hidroconstruca
S.A. and ISPH
Project
Development S.A.
File no.
653/33/2025
Suspension of
environmental
agreement no.
2/17.06.2025 unl the
ruling of the trial court
in File no.805/33/2025
Cluj Court of
Appeal
Postponement
of
pronouncement
20.03.2026
MMAP
Hidroelectrica
SA
Bankwatch
Romania
Associaon-Cluj
Branch
Dosar nr.
805/33/2025
Cancellaon of
environmental
agreement no.
2/17.06.2025
Court of
Appeal of
Alba Iulia
18.03.2026
MMAP
Hidroelectrica
SA
Bankwatch
Romania
Associaon - Cluj
Branch
File no.
958/33/2025
Suspension of
environmental
agreement no.
2/17.06.2025 unl the
nal resoluon of the
le no.805/33/2025
Cluj Court of
Appeal
16.03.2026
MMAP
Hidroelectrica
S.A.
Bankwatch
Romania
Associaon - Cluj
Branch
File no.
1004/42/2025
Suspension and
cancellaon of the
environmental
agreement no.
2/17.06.2025
Ploies
Court of
Appeal
Trial term: not
yet set
MMAP
Hidroelectrica
S.A.
Ecolegal
Associaon
File
no.72/1/2026
Request for relocaon
le 958/33/2025
ICCJ
12.02.2026 -
admits the
request for
relocaon and
moves the trial
of the case to
the Court of
Appeal of Alba
Iulia
Bankwatch
Romania
Associaon -
Cluj Branch,
MMAP
Hidroelectrica SA
2
AHE
RASTOLITA
File no.
476/289/2023
Cancellaon of tle
deed no.
12968/28.10.2022
issued in favor of
Bany Josika Imre
Laszlo
Judecatoria
Reghin
The court
ordered The
suspension of
the case unl
the nal
judgment of
Bany Eva
Maria
Rozalia Helena
Johana
Bany Josika
Imre laszlo
Hidroelectrica S.A.
139
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
the case no.
3584/289/202
0, (NB: le
3584/289/202
0 is the subject
of this Report)
Local
Commission for
the
Establishment of
the Private
Property Right
on Rastolita
Land
Local
Commission for
Establishing the
Private Property
Right on Vatava
Land
County
Commission for
Establishing the
Private Property
Right on Mures
Land
File
no.5945/2/2022
Paral annulment of
GD no. 1284/2007 and
GD no. 1143/2007
Bucharest
Court of
Appeal
On 12.06.2025,
the Bucharest
Court of Appeal
rejected the
acon promoted
by
Hidroelectrica.
We are waing
for the
communicaon
of the sentence
of the Bucharest
Court of Appeal,
in order to
formulate the
appeal request.
The decision has
not been
communicated
so far.
The
Government of
Romania
through the
General
Secretariat of
the Government
intervenient:
MMAP
Hidroelectrica S.A.
140
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
File no.
3584/289/2020
Annulment of the
minutes of possession
issued in favor of
Bany Josika Imre
Laszlo
Mures Court
An appeal was
led on
22.08.2025,
seng a trial
deadline of
22.09.2026.
Bany Josika
Imre Laszlo
Local
Commission for
Establishing the
Private Property
Right on
Rastolita Land
Local
Commission for
Establishing the
Private Property
Right on Vatava
Land
County
Commission for
Establishing the
Private Property
Right on Mures
Land
Mayor of
Rastolita
commune
Hidroelectrica S.A.
File no.
454/117/2025
Annulment of the
Environmental
Agreement no. 6/2024
issued for AHE
Răstolița
Cluj Tribunal
19.05.2026
Environmental
Protecon
Agency Mureș
Hidroelectrica
S.A.
Calimani
Naonal Park
Administraon
Naonal Agency
for Natural
Protected Areas
Naonal
Administraon
of Romanian
Waters-Mureș
Water Basin
Administraon
Declic Associaon,
Bankwatch
Romania
Associaon-Cluj
Branch
File no.
365/33/2025
Suspension of the
eects of GD no.
327/2025 on the
approval of the
denive removal
from the naonal
forest fund of the land
with an area of
Cluj Court of
Appeal
At the trial
deadline of
11.08.2025, the
court ordered
the suspension
of the case unl
the nal
resoluon of the
Government of
Romania
MMAP
Accessory
Intervenon:
Hidroelectrica
Declic Associaon
141
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
37.5263 ha, by the
Company for the
Producon of
Electricity in
Hydropower Plants
"Hidroelectrica" - S.A.,
for the realizaon of
the public ulity work
of naonal interest
"Răstolița Hydropower
Development"
case no.
552/33/2025.
File no.
2176/117/2025
Finding the expiry of
the Building Permit no.
304/1990 and the non-
existence of Annex no.
6703/1997, the
denive stop of the
works at the Răstolița
AHE.
Cluj Tribunal
02.04.2026
Președintele CJ
Mureș
UAT Mures
Hidroelectrica
SA
Declic Associaon,
Bankwatch
Romania
Associaon-Cluj
Branch
File no.
552/33/2025
1. Suspension of GD
no. 327/2025 unl the
nal resoluon of the
case based on the
provisions of Arcle 15
of Law no. 554/2004;
2. Request for
annulment of GD no.
327/2025;
3. To oblige
Hidroelectrica to
restore the previous
situaon, respecvely
to reforest the
deforested area at its
own expense, as well
as to take all the
necessary technical
and administrave
measures to restore
the land aected at its
previous natural state
Cluj Court of
Appeal
On 05.12.2025,
it was ordered
to suspend the
case unl the
nal resoluon
of the case no.
454/117/2025
having as object
the annulment
of the
environmental
agreement
issued for
Răstolița
Government of
Romania
MMAP
Hidroelectrica
SA
Declic Associaon,
Bankwatch
Romania
Associaon-Cluj
Branch
File
no.552/33/2025
/a1
Appeal against the
decision to suspend
the eects of GD no.
327/2025
ICCJ
20.05.2026
Government of
Romania
MMAP
Hidroelectrica
SA
Declic Associaon
Bankwatch
Romania
Associaon-Cluj
Branch
142
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
Dosarul
97/33/2026
Applicaon for
revision against
Decision no.
972/2025,
pronounced in the le
3053/117/2025, by
which the request for
the issuance of a
presidenal order to
stop the works "to be
executed" at the
Răstolita Hydropower
Arrangement unl the
nal resoluon of the
le no.
2176/117/2025
Cluj Court of
Appeal
30.03.2026
President of the
Mureș County
Council
UAT Mures
Hidroelectrica
SA
Declic Associaon
Bankwatch
Romania
Associaon-Cluj
Branch
Dosar nr.
277/1/2026
File relocaon request
97/33/2026
ICCJ
24.03.2026
Declic
Associaon
Bankwatch
Romania
Associaon-Cluj
Branch,
President of CJ
Mureș, UAT
Mures, Ministry
of Energy
Hidroelectrica SA
3
AHE
COSMESTI-
MOVILENI
File no.
17808/3/2019*
The paral
cancellaon of the
Water Management
Authorizaon no.
223/11.09.2018
regarding the
"Movileni Hydropower
Development-Movileni
Accumulaon Lake",
Vrancea County, and
the removal from the
Chapter "The holder of
the authorizaon is
obliged" of the
obligaon regarding:
(i). Item 8: "To take
measures to ensure
the sanitaon of the
surface of the water
surface and to clean
the oats by collecng
and transporng them
Bucharest
Court of
Appeal
On 19.01.2026,
the court
rejected the
request for
summons led
by
Hidroelectrica
by which we
requested the
cancellaon of
the gloss
sanitaon
obligaon of
Water. With
appeal within 15
days from the
communicaon.
The decision has
not yet been
draed and
communicated
to the pares
ABA Siret
Hidroelectrica S.A.
143
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
to specially arranged
places.".
4
AHE SURDUC
SIRIU
File no.
3757/117/2022
Refusal to sele the
request for the
issuance of demolion
authorizaon works
Cluj Tribunal
An appeal was
led on
23.12.2025, and
the case will be
sent to the Cluj
Court of Appeal
for resoluon.
President of
Covasna County
Council
Covasna County
through the
President of the
Covasna County
Council
Hidroelectrica
SA
Declic Associaon
File no.
4715/117/2025
Presidenal Ordinance
for the cessaon of
works of the Surduc
Siriu AHE
Cluj Tribunal
18.03.2026
President of
Covasna County
Council
Covasna County
through the
President of the
Covasna County
Council
Hidroelectrica
S.A.
The Mayor of
Zagon
Commune
Declic Associaon
File no.
158/117/2026
Ascertainment of non-
existence/cancellaon
/ascertainment of the
expiry of the Building
Permit no.
73/01.07.2024 and
stopping the works
unl they enter into
legality
Cluj Tribunal
Trial term: not
yet set
President of the
Buzau County
Council
Buzau County
through the
President of the
Buzau County
Council
Hidroelectrica
SA
Declic Associaon
File no.
209/117/2026
Suspension of the
eects of the Building
Permit no.
73/01.07.2024 unl
the nal resoluon of
the le no.
158/117/2026; in the
alternave, the
stopping of the Surduc
Nehoiasu adducon
works unl the
Cluj Tribunal
26.03.2026
President of the
Buzau County
Council
Buzau County
through the
President of the
Buzau County
Council
Declic Associaon
144
NO.
INVESTMENT
OBJECTIVE
FILE NUMBER
SUBJECT OF THE FILE
COURT
THE NEXT TRIAL
TERM
PARTIES TO THE FILE
READY
CLAIMANT
resoluon of the le
no. 158/117/2026
Hidroelectrica
SA
5
AHE CERNA -
BELARECA
File no.
6710/208/2025
Real estate claim
Caransebeș
Court
17.09.2026 hour
11
Vișescu Ion
Vișescu Ioana
Hidroelectrica S.A.
File no.
6711/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Sorescu Lazar
Sorescu
Veronica
Hidroelectrica S.A.
File no.
6712/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Caniceanu
Daniela
Caniceanu
Grigore
Hidroelectrica S.A.
File no.
7077/208/2025
Acon for declaraon
Caransebeș
Court
Deadline: not
yet xed
UAT Cornereva
Commune
Hidroelectrica S.A.
File no.
7078/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Rădoi Ana
Iusna
Hidroelectrica S.A.
File no.
7079/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Bugărin Ana
Hidroelectrica S.A.
File no.
7080/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Rădoi Ion
Hidroelectrica S.A.
File no.
7081/208/2025
Real estate claim
Caransebeș
Court
Deadline: not
yet xed
Marcu Ana
Hidroelectrica S.A.
File no.
7082/208/2025
Acon for declaraon
Caransebeș
Court
Deadline: not
yet xed
GO
Romanian State
Ministry of
Public Finance
Hidroelectrica S.A.
145
9. Risk Management
Global geopolitical and economic context
In 2025–2026, economic risk is driven by geopolitical uncertainty, supply chain reconfigurations and
volatility in commodity and energy markets. The IMF projects a gradual slowdown in global growth over
2025–2026, which amplifies demand-side risks and increases pressure on payment discipline across the
economy (IMF WEO, Oct. 2025).
Romania: macroeconomic, fiscal and financial context
The National Institute of Statistics (INS) indicates modest annual GDP growth in 2025, with a deterioration
toward year-end in quarterly terms; at the same time, the National Bank of Romania (NBR) describes an
external environment characterized by high uncertainty and a slow/uneven global recovery. The
implication for the Company is an increased counterparty risk and a higher risk of non-collection in
segments sensitive to macroeconomic shocks (INS; NBR – Inflation Report, Nov. 2025).
Energy sector: Europe and Romania
At European level, ENTSO-E indicates generally adequate conditions for winter 2025–2026 but highlights
risks under adverse scenarios (cold weather combined with outages), as well as a structural trend of
increasing renewable energy share and decreasing conventional generation. This evolving mix increases
the importance of flexibility and system balancing (ENTSO-E WOR 2025–2026).
In Romania, hydropower continues to play a critical role in providing system services and covering peak
demand; however, dependence on hydrology and precipitation patterns means that climate-related
physical risk is directly transmitted into market risk (price/volume) and supply risk (procurement needs).
Hidroelectrica: transmission of macro risks into company-specific risks
For Hidroelectrica, the main transmission channels are:
(i) hydrology, influencing production with visible effects on energy procurement from the market;
(ii) regulation/legislation, impacting compliance costs and operational constraints;
(iii) geopolitical factors, leading to price and credit volatility, as well as insolvency risk across the
economic chain.
Preliminary operational indicators for 2025 confirm sensitivity to hydrological conditions: net production
decreased compared to 2024, while market purchases increased significantly to cover the supply portfolio
(BVB – 2025 operational indicators, Feb. 2026).
This section provides the context for the risks detailed below: each risk is addressed from the perspective
of its drivers (macro/sectoral/operational), its effects and the control measures implemented, with
measurable impact.
2026 Outlook – Emerging Risks and Mitigation Programs
Emerging risks (2026):
• persistence/increase of hydrological risk (drought) and its impact on production, procurement and
margins;
• increasing intensity of cyberattacks targeting the energy sector (including supply chains) and
heightened risk of digital identity compromise;
146
• growing compliance pressure (data protection, consumer protection, transparency/reporting
requirements) and associated reputational risk.
Recommended strategic measures (2026):
• IAM & cyber hygiene program: mandatory MFA, periodic access recertification, license and endpoint
security management, tested backups and incident response exercises;
• Data quality and compliance program: end-to-end controls over billing/reporting, GDPR
DPIAs/registers, thematic internal audits and remediation actions;
• Resilience to production variability program: hydrological scenario planning, portfolio optimization,
investments in and integration of balancing and flexibility capacities;
• Operational continuity risk in case of major plant unavailability (unforeseen failures, force majeure)
— including impact scenarios on supply obligations and PPAs;
• Supply chain risk for critical equipment (transformers, turbines, hard-to-procure spare parts) —
relevant in the context of geopolitical tensions and extended delivery timelines;
• Regulatory risk related to changes in market mechanisms (price caps, new taxes, amendments to
emergency ordinances) — with direct impact on cash flow and financial predictability.
Outlook – Energy Sector and Hidroelectrica (2026–2030)
The analysis of current risks cannot be separated from the context of the structural transformations that
the European and Romanian energy sector is undergoing. The 2026–2030 horizon is shaped by three
concurrent forces: the acceleration of the energy transition driven by Fit for 55 and REPowerEU, increased
price volatility following the restructuring of natural gas flows post-2022, and the growing pressure of
extreme climate events on hydrological resources. For Hidroelectrica, these forces generate both
significant opportunities and new risks that must be proactively integrated into the ERM framework.
European sector context: transition, energy security and decarbonization
The European Union maintains its target of 42.5% renewable energy by 2030 (revised RED III Directive,
2023), with an indicative target of 45%. In this context, flexible hydropower becomes a “strategic asset”
for system balancing, with an increasingly important role as the share of intermittent wind and
photovoltaic generation rises. The IEA estimates in Electricity 2025 that global electricity demand will
grow by approximately 4% annually until 2026, driven primarily by AI/data centers, transport
electrification and heating electrification.
In Romania, the revised NECP (2024–2025) targets the installation of 5 GW of photovoltaic capacity and
3 GW of new wind capacity by 2030, which will intensify the need for flexibility and storage—a niche
where Hidroelectrica holds an intrinsic competitive advantage.
On wholesale markets, spot and forward prices remain volatile in the context of the reconfiguration of
gas supply sources, regulatory interventions (price caps, CfDs) in several Member States, and hydrological
cyclicality. ACER studies (2024–2025) indicate a potential partial convergence of prices in the range of
EUR 60–90/MWh as a medium-term equilibrium level, with episodes of extreme volatility associated with
heatwaves and droughts. In this environment, hedging strategies and contractual portfolio management
become critical drivers of financial performance.
147
Risks and opportunities specific to Hidroelectrica
Hidroelectrica enters the 2026–2030 horizon with a strong competitive position—the largest electricity
producer in Romania, with a largely amortized generation fleet and structurally low variable costs—but
also with structural vulnerabilities that need to be strategically addressed:
• Amplified hydrological risk: Climate change is altering the seasonal distribution of precipitation and
snowmelt, with a direct impact on basin inflows. IPCC AR6 scenarios for the Carpathian basin indicate
an increased frequency of hydrological drought periods and a compression of the high-flow season.
Hidroelectrica must update its hydrological forecasting models and recalibrate production risk limits
accordingly.
• Opportunity in pumped storage and BESS: Pumped storage hydropower (PSH) and battery energy
storage systems (BESS) represent the highest-potential growth vectors. The proposed Electricity
Market Regulation (2024) and Romania’s capacity mechanism (under implementation) create the
economic framework for remunerating flexibility. Investment in new PSH capacities (e.g., the Tarnița–
Lăpuștești project) could become bankable in the 2027–2029 horizon if the capacity mechanism is
appropriately calibrated.
• Regulatory and price cap risk: Temporary interventions such as windfall taxes and price caps (OUG
27/2022 and subsequent amendments) have reduced revenue predictability. Although measures
implemented during 2022–2024 have been partially relaxed, the risk of their reactivation during
periods of high prices remains significant and should be explicitly included in medium-term financial
planning scenarios.
• Digital transition and cybersecurity risk: The integration of SCADA/OT systems with corporate IT
systems, cloud adoption and the implementation of predictive maintenance solutions (AI/ML) expand
the attack surface of critical infrastructure. The NIS2 Directive (transposed through Law No. 58/2023)
imposes enhanced security and incident governance standards aligned with the systemic risk level of
an “essential entity” operating critical infrastructure.
• Human capital and succession risk: The shortage of specialists in hydropower engineering,
automation and cybersecurity is increasing at national level. In the context of modernization plans
and NIS2/GDPR compliance requirements, attracting and retaining critical competencies becomes a
key operational risk, requiring structured succession planning programs and academic partnerships.
Recommended strategic directions for the 2026–2030 horizon
In light of the sectoral context and the vulnerabilities identified in the present report, the following
strategic directions are recommended for discussion at the level of the Management Board and the
Supervisory Board:
• Updating the risk appetite and the ERM framework to explicitly reflect the climate, cybersecurity and
NIS2 compliance dimensions, with quarterly monitoring indicators reported to the Board.
• Developing an investment program in flexibility and storage, with prioritization of PSH projects and
system services (primary/secondary balancing), leveraging the capacity mechanism and European
funds (RRF, CEF Energy).
• Implementing an integrated OT/IT cybersecurity framework in line with NIS2, with the formal
appointment of a CISO with cross-functional authority, a dedicated budget and direct reporting to the
Management Board.
• Strengthening hydrological forecasting capabilities through a partnership with INHGA and the
adoption of high-resolution climate models for operational planning over a 3–5 year horizon.
• Developing a GDPR+NIS2 compliance plan with clear targets, an external audit in Q1 2026 and
remediation measures finalized by Q3 2026, including the update of DPIAs for SCADA systems
involving personal data.
148
Hidroelectrica is at a strategic inflection point: its historical competitive advantages – fully amortized
hydropower infrastructure, low production costs, dominant position in the balancing market – remain
valid, but become insufficient in the absence of active adaptation to the new architecture of the energy
market and to increasing compliance requirements.
The utility companies that will perform in the 2026–2035 decade will be those that combine traditional
operational excellence with cybersecurity resilience, agility in the face of climate change and the ability
to mobilize financing for the transition to a flexible energy mix.
Risk management, as structured in the present report, represents the decision-making infrastructure
necessary to navigate this transition in a controlled and transparent manner for all stakeholders.
10. Subsequent Events
On 23 December 2025, Hidroelectrica’s Management Board convened an Extraordinary General Meeting
of Shareholders (EGMS) for 27 January 2026. All items on the agenda were approved at the date of the
meeting by the Company’s shareholders, with the majority of votes cast. Further information reg arding
the agenda items submitted for approval can be found in the Key Events section.
On 22 January 2026, the 2026 Financial Calendar was published.
On 19 February 2026, Hidroelectrica announced the signing of the turnkey contract for the “Țara
Hațegului Photovoltaic Park” project, representing a new strategic step towards diversifying the
production portfolio and strengthening the Company’s position in the renewable energy market.
The contract, amounting to RON 24 million excluding VAT, was awarded following an open tender
procedure, in which four bids were submitted. Following their evaluation, the winning bid was submitted
by the consortium ELECTRO-ALFA INTERNATIONAL S.A. and GENERAL ME.EL ELECTRIC S.R.L., with
ELECTRO-ALFA INTERNATIONAL S.A. acting as consortium leader. The project предусматри the
development of a photovoltaic park with an installed capacity of 8.9 MWp and an estimated average
annual production of approximately 11 GWh/year. The investment will contribute to increasing
renewable generation capacity, reducing carbon emissions and supporting national and European energy
transition objectives.
The project will be executed on a turnkey basis and will include design, equipment supply, construction
works, testing, commissioning and technical assistance during the warranty period. The contract duration
is 12 months, of which 2 months will cover the design phase and 10 months the execution phase.
On 26 February 2026, the preliminary financial results for 2025 were published.
149
11. Sustainability Statement
CONTENTS
GENERAL DISCLOSURE .............................................................................................................. 150
CLIMATE CHANGE .................................................................................................................... 175
EU TAXONOMY ........................................................................................................................ 189
BIODIVERSITY AND ECOSYSTEMS.............................................................................................. 196
OWN WORKFORCE ................................................................................................................... 221
AFFECTED COMMUNITIES......................................................................................................... 249
CONSUMERS AND END-USERS .................................................................................................. 256
BUSINESS CONDUCT ................................................................................................................. 275
ANNEXES ................................................................................................................................. 292
150
GENERAL DISCLOSURE
ESRS 2
Basics of preparation
General basis for preparing the sustainability statement
BP-1
The Electricity Generation Company in Hydropower Plants Hidroelectrica S.A. (hereinafter referred to as
‘Hidroelectrica SA’ or ‘the Company’) and its wholly owned subsidiaries — the Hydropower Services
Company Hidroserv SA (hereinafter ‘Hidroserv’) and the Hydropower Machinery Manufacturing Plant
UCMH SRL (hereinafter ‘UCMH’) — together form the Hidroelectrica Group (hereinafter ‘the Group’). The
activities of the Group’s entities are carried out in Romania.
This Sustainability Statement (Sustainability Report) is prepared in accordance with the European
Sustainability Reporting Standards (ESRS) as set out in Annex 1 to Delegated Regulation (EU) 2023/2772
of 31 July 2023, supplementing Directive 2013/34/EU of the European Parliament and of the Council,
transposed into local law by Order of the Ministry of Finance No 85/2025. The year 2025 represents the
second reporting year of the Hidroelectrica Group carried out in accordance with the ESRS requirements.
The Sustainability Statement was prepared on a consolidated basis, covering the reporting period January
1 – December 31, 2025, aligned with the financial reporting period.
The scope of consolidation of the Sustainability Statement is the same as that of the consolidated financial
statements.
The Sustainability Statement is not limited only to the Group's own operations, but also includes relevant
information from the value chain, both upstream and downstream. The double materiality analysis
included the assessment of the impacts, risks and opportunities associated with its own operations,
products and services, as well as the Group's business relationships. Sustainability policies, actions and
targets cover its own operations.
The Group did not use the exemption from disclosure of imminent developments or issues under
negotiation as provided for in Articles 19a(3) and 29a(3) of Directive 2013/34/EU.
The Group did not use the option to omit certain information that corresponds to intellectual property,
know-how or innovation results.
Disclosures in relation to specific circumstances
BP-2
For the preparation of the Sustainability Statement, the Group used the short, medium or long-term time
horizons, as defined in ESRS 1 section 6.4 as follows: the short-term time horizon is considered one year,
the medium-term horizon up to 5 years, and the long-term horizon over 5 years.
With regard to the sources used for the estimates and the uncertainty of the results, the Hidroelectrica
Group acknowledges the uncertainties associated with the estimates, in particular with regard to the
significant inherent uncertainties regarding the determination of greenhouse gas emissions generated by
both scientific and estimation uncertainties, such as those related to emission factors, which are used in
151
mathematical models for estimating emissions. Where appropriate, the assumptions and reasoning used
to make the estimates in determining the quantitative indicators were presented.
For the presentation of the environmental indicators presented in ESRS E1 – Climate Change, the
methodologies provided for by the applicable national legislative framework and the requirements of the
ESRS standards were used.
For the presentation of greenhouse gas emissions data, all assumptions, approximations and reasoning
used in situaons where no direct data were available are described in detail in ESRS chapter E1 – Climate
change and are in line with the GHG Protocol methodology.
The comparative data presented are for 2024, the first reporting year according to the ESRS, which is
considered a reference year.
With regard to environmental, quality, and occupational health and safety aspects, specific policies for
the Integrated Management System have been adopted at the level of each entity within the Group.
The presentation of additional information stemming from other legislation is included in the report
where relevant, and references to additional documents or thematic standards are mentioned to ensure
full context.
The applicable standards and legislation specific to the Group's field of activity are set out in the text of
the report, where appropriate, including through references to supplementary documents or references
to information presented in other thematic standards.
For the year 2025, the applicable requirements for the second reporng year have been reported, the
applicaon of the phased implementaon provisions, according to Annex C of ESRS 1 which sets out the
reporng requirements gradually introduced. Although the 'Quick-x' Delegated Act provides for the
postponement of the reporng of certain informaon for some standards, the Group has included in this
report all the data presented in the reference year 2024.
In accordance with the list of disclosure requirements subject to phase in provisions and the provisions of
the “quick x” Delegated Act, the disclosure requirements related to ESRS S1-7, S1-11, S1-13, S1-15 and
E1-9 were not reported for the current reporng period.
Changes in preparaon or presentaon of sustainability informaon
For ESRS S1-16 – Remuneraon related indicators (pay gap and total remuneraon), the company revised
the calculaon methodology, and the indicators for the 2024 reporng period were recalculated
accordingly.
For E1‑6 – Indicators on gross GHG emissions for Categories 1, 2, and 3, as well as total GHG emissions,
the company revised the calculaon methodology for Scope 3 Categories 3.3 and 3.9, and the indicators
for the 2024 reporng period were recalculated.
Role of administrative, management and supervisory bodies
GOV-1
Hidroelectrica SA is managed in a dualist system, by a Board of Directors consisting of 5 members with
executive functions, under the supervision of the Supervisory Board, consisting of 7 members. The
members of the Supervisory Board are appointed by the General Meeting of Shareholders for a four-year
152
term, and the members of the Management Board are appointed by the Supervisory Board for a four-
year term.
The Governance and Sustainability Committee operates within the Supervisory Board, with an advisory
role and monitoring of corporate governance and sustainability issues, including the implementation of
the ESG strategy and the non-financial reporting process.
Hidroelectrica's Management Plan for the period 2023 - 2027 reflects the company's general strategic
directions, representing the implementation framework and commitments. The plan has as main pillars
of the promoted strategy: human resources, efficiency and financial and operational performance, return
on investment, commitment to environmental standards, sustainability and corporate governance.
On 09.05.2024, in B.P.I. no. 8661, the Report on the proposal to close the procedures provided for by Law
no. 85/2014, drawn up by the Judicial Administrator and registered under no. 659, in which it was held
that S.S.H. Hidroserv S.A. does not register current debts and does not have unpaid current debts, thus
cumulatively meeting the conditions provided by art. 175 para. (1) of Law no. 85/2014 for the closure of
the insolvency procedure.
On 25.06.2025, by Civil Sentence no. 3742, the Bucharest Tribunal ordered the closure of the insolvency
procedure, pursuant to art. 175 para. (1) of Law no. 85/2014, noting the fulfillment of 100% of the
obligations assumed by S.S.H. Hidroserv S.A. through the Reorganization Plan, with the consequence of
the discharge of the Judicial Administrator and the reintegration into the business activity.
In these considerations, after the closure of the insolvency procedure, S.S.H. Hidroserv S.A. started a
complex process of reintegration into the business activity, focused on the gradual resumption of
commercial operations, the consolidation of contractual relations with traditional partners and the
regaining of the execution capacity in its specific fields of activity. The post-insolvency phase was marked
by an intense dynamic of administrative, financial and operational processes, aimed at restoring the full
functionality of the company and ensuring its compliance with the requirements applicable to public
enterprises governed by G.E.O. no. 109/2011.
After exiting insolvency, the structure of the administrative and management bodies of Hidroserv S.A. is
as follows:
• General Meeting of Shareholders (GSM) - the management body that decides on its activity and
its economic policy;
• The Board of Directors (BoD) – exercises the general management power, except for the powers
reserved to the General Shareholders' Meeting according to the provisions of the Articles of
Association or by law;
• The Chief Executive Officer, appointed by the Board of Directors, provides executive direction and
implements the strategy and policies established by the Board of Directors.
The management structure of the UCMH SRL subsidiary is:
• The Sole Shareholder (Hidroelectrica S.A.), which exercises the powers of the General Assembly
and represents the main decision-making body;
• Administrators, who ensure the administration and representation of the company, according to
the Articles of Incorporation;
• The General Manager, who coordinates the operational and production activities, based on the
mandate contract.
Composition and diversity of the members of the Management Board and the Supervisory Board
153
Number of members with execuve posions in the Management
Board as of 31.12.2025
3
Number of non-execuve members (members of the Supervisory
Board) as at 31.12.2025
7
Percentage by gender (Management Board and Supervisory Board)
(calculated as rao of female/male members in total members) as of
31.12.2025
20% female people,
80% male
Percentage of independent members of the Supervisory Board
according to the BSE Code
86%
During 2025, the composition of the Management Board varied. Until September 19, 2025, the
Management Board was composed of 5 members, subsequently operating with 3 members. The values
presented in the table reflect the situation as of December 31, 2025.
The members of the Management Board and the Supervisory Board of Hidroelectrica SA are selected in
accordance with the legal provisions on the corporate governance of public enterprises. Non-executive
members are appointed based on their experience in key areas, such as strategic management of utility
companies, sustainability, environmental regulations and finance, while executive members are selected
based on their experience in Romania's economic area (each with a minimum of 15 years of experience),
in the areas of hydropower and renewable technologies, coordination of modernisation projects and
management of operational and environmental risks. The CVs of the members of the Management Board
and the Supervisory Board can be accessed on the company's website, in the Management section.
Considering the nature of the services offered, as well as the market share recorded in the main field of
activity, as well as the fact that Hidroelectrica SA is listed on the Stock Exchange, the interaction with
stakeholders or key actors such as public authorities is periodic (reporting, obtaining authorizations, etc.).
According to the regulations in force, the Hidroelectrica Group complies with the principle of employee
representation at the level of management and supervisory bodies, the employees being represented
through the advisory committees, as well as through the trade union, which participates in the
negotiations on working conditions and the protection of employees' rights.
According to the Group's operating model, the governing bodies and management structures within the
entities have duties and responsibilities in the field of sustainability, established by the Internal
Organization Regulations. Their leadership is responsible for approving and implementing the objectives
set out in the Sustainability Strategy.
Advisory committees are set up at the level of the Supervisory Board – these committees and their role
are described in the chapter "Supervisory Board Report of the Annual Report".
The Management Board has the responsibility to approve the Result of the double materiality analysis
and the Sustainability Report, part of the Annual Report; it is subject to the approval of the General
Meeting of Shareholders (GSM), together with the approval of the annual financial statements. The
Management Board and the Supervisory Board are responsible for identifying environmental, social and
governance impacts, risks and opportunities and for drawing up strategies, policies, actions and targets
to address the identified impacts, risks and opportunities.
As a result of the Double Materiality Analysis, carried out in accordance with the requirements of the
ESRS standards, material impacts, risks and opportunities (IROs) were identified. These are taken into
account in the Group's internal risk management processes. Although the Group committed last year to
setting targets for material themes in 2025, and progress was made in preparing strategic approaches, it
was decided to postpone the adoption of targets. Depending on the evolution of the volatile regulatory
framework applicable to the Energy sector and the finalization of the amendments to the ESRS standards,
154
the Group will analyze the opportunity to set or adapt the targets associated with the identified material
themes. The performance of these targets, to the extent that they will be defined, will be reported
annually in the Sustainability Report.
The supervision of environmental, social and governance impacts is integrated into the internal processes
of Hidroelectrica SA, through:
• Specific controls and procedures: Hidroelectrica SA applies, through the Procedure - Risk Register
Administration, internal controls to assess and manage risks, through the Internal Audit
Department. The controls do not yet apply to sustainability risks as they have not yet been added
to the register.
• Reporting lines: Designated officials from the environmental, legal, human resources, finance,
development departments as well as members of the board of directors will report annually to
the Management Board on progress in achieving sustainability targets.
Hidroelectrica SA ensures its access to expertise in the field of sustainability through the following
mechanisms:
• Continuous training: The members of the Management Board and the Supervisory Board
participate in training programs organized on sustainability topics, including environmental
legislation and sustainable development.
• Training activities carried out: In 2024, the members of the Management Board and the
Supervisory Board were trained on sustainability issues in the context of the CSRD during an
external training session. Also, employees of Hidroelectrica SA, together with representatives of
Hidroserv and UCMH, were trained through a series of workshops that addressed the material
topics of the Hidroelectrica Group: such as the EU Taxonomy, climate change, environment and
biodiversity, social issues and corporate governance. They contributed to the internal
consultations analysing the double materiality and to the identification of significant impacts,
risks and opportunities, as well as to the reporting of related policies, actions and measures.
• External consultancy: The company works with sustainability experts to ensure that best
practices are integrated into its activities.
In addition, Hidroelectrica SA collaborates with universities, research institutions and international
organizations, in order to monitor relevant developments in the field of renewable energy and
sustainability. These collaborations include participation in training programs, conferences and
workshops both nationally and internationally.
These include the Hidroelectrica R&D&Innovation Center in the field of renewable energies,
Hidroelectrica's bilateral cooperation with SINTEF Networking, for the exchange, sharing and transfer of
knowledge, technology, experience and practices in the field of electricity production in hydropower
plants; implementation of the Digital Twin project in Hidroelectrica; implementation of the Asset Health
and Monitoring Center Hidroelectrica project. Through collaboration with various entities in the energy
sector, research institutions and NGOs, the Society promotes the direction of a low-carbon economy.
Among these collaborations, we mention the bilateral cooperation between Hidroelectrica – SINTEF
Energi As, one of the largest independent research institutes in Europe and the partnership with the
Polytechnic University of Bucharest – Faculty of Energy.
155
Information provided to and sustainability matters addressed by the undertaking’s administrative,
management and supervisory bodies
GOV-2
The Management Board, together with the Supervisory Board, annually analyzes the Sustainability
Report, which highlights the progress on the strategic priorities and objectives set by the Sustainability
Strategy approved in 2023.
The Governance and Sustainability Committee operates at the level of the Supervisory Board, which
supports the Board in monitoring sustainability issues, including the analysis of relevant impacts, risks and
opportunities and their integration into the company's business strategy. The Supervisory Board, with the
support of this committee, oversees Hidroelectrica's business strategy, including the integration of the
sustainability strategy after its adoption, as well as decisions on major transactions and the associated
risk management processes.
In 2025, the Sustainability Strategy was updated in more detail to include the topics idened as material
in the context of ESRS reporng. Although the Group committed last year to setting targets for material
themes in 2025, and progress was made in preparing strategic approaches, it was decided to postpone
the adoption of targets. Depending on the evolution of the volatile regulatory framework applicable to
the Energy sector and the finalization of the amendments to the ESRS standards, the Group will analyze
the opportunity to set or adapt the targets associated with the identified material themes.
Hidroelectrica SA ensures that the management and supervisory bodies are informed annually, as often
as necessary, about the significant impacts, risks and opportunities of its activities.
A list of material impacts, risks and opportunities (IROs) identified in the current year as a result of the
Double Materiality Analysis and associated responsibilities was defined in 2025, together with the actions
for updating the existing Sustainability Strategy, so that they are coordinated and monitored at the
decision-making level. The inclusion of IROs in the Strategy will lead to the consideration of IROs in the
process of establishing the Group's consolidated strategy and major decisions, in order to be integrated
into the analysis of important transactions and risk management processes, taking into account both
financial, environmental and social aspects.
The Hidroserv and UCMH entities follow the strategic directions of the Hidroelectrica Group, and the
procedures for providing information are similar to those of Hidroelectrica SA, without any specific
differences. Relevant information is provided to the Group's administrative, management and
supervisory bodies, including the sustainability issues addressed by them.
Integration of sustainability-related performance in incentive schemes
GOV-3
At the level of the Hidroelectrica Group, the Remuneraon Policy for the members of the Supervisory
Board and the Management Board of Hidroelectrica SA was developed, approved by the Decision of the
General Meeng of Shareholders no. 17 of June 22, 2023.
The legal framework governing the remuneraon policy includes several laws and regulaons, such as the
Government Emergency Ordinance no. 109/2011 on the corporate governance of public enterprises and
Law no. 31/1990 of commercial companies. The policy is subject to approval by the General Meeng of
Shareholders and is reviewed at least every four years. If shareholders do not approve a new remuneraon
policy, the exisng one remains in force unl a revised version is approved. The review process takes into
156
account shareholder feedback and aims to avoid conicts of interest, ensuring compliance with applicable
laws and internal regulaons.
The remuneraon of the members of the Management Board and the Supervisory Board includes a xed
component and a variable component, as detailed in Note 33 – Related Pares in the Consolidated
Financial Statements and in the Remuneraon Report.
The calculaon of the value of the variable component of the remuneraon of the members of the
Management Board and the Supervisory Board depends on the degree of fulllment of the key
performance indicators set out in the mandate contracts. For the nancial year 2025, both the members
of the Management Board and the members of the Supervisory Board had as a sustainability performance
objecve the measurement of the Purpose 1, 2 and 3 carbon footprint (which was carried out and
presented in this report) and which has a share of 4% of the total indicators. For 2025, the key performance
indicators of the Management Board and the Supervisory Board did not include emission reducon
targets. Another sustainability-related performance indicator is the number of hours of training. Details
about the performance indicators and their weights in determining the variable remuneraon of the
management can be found on the company's website in the secon About us, Management, Form of the
CS and Execuve Mandate Contract, including addenda that include the performance indicators.
(hps://www.hidroelectrica.ro/arcle/11)
Within Hidroelectrica SA, the approval and updang of the performance indicators and the condions of
the incenve schemes is carried out at the level of the Ordinary General Meeng of Shareholders (OGMS)
in accordance with the internal regulaons and applicable legislaon.
Currently, for the two member enes of the group, Hidroserv and UCMH, there are no sustainability-
related incenves implemented in the remuneraon of management members.
Risk management and control systems
Statement on due diligence
GOV-4
In order to fulll its mission in a sustainable way, as well as in order to increase the company's
performance, Hidroelectrica SA undertakes to idenfy and comply with the applicable laws and
regulaons specic to companies majority-owned by the Romanian state, the requirements of companies
listed on the Bucharest Stock Exchange and those specic to the ISO standards for which the company
holds cercaons. The Hidroelectrica Policy was assumed , which includes the Sustainable Development
Scopes issued by the UN (The United Naons's 17 Sustainable Development Scopes), the Global Compact
Principles issued by the United Naons (UN Global Compact 10 Principles), the Corporate Governance
Code of the Bucharest Stock Exchange and the specic requirements of the ISO standards for which the
Company holds cercaons.
The due diligence process is integrated into the governance structure and operational activities, as
follows:
157
a) Integration of due diligence into governance, strategy and business model
Following the identification of material IROs, the Supervisory Board will ensure that they are
integrated into the business strategy and implemented by the Management Board.
b) Integration of due diligence into the procurement process: The Company applies public
procurement legislation, the Company requires its contractual suppliers to comply with the
Company's Code of Ethics.
Additional details: Governance Chapter - G1
c) Involvement of affected stakeholders: Hidroelectrica SA maintains a continuous dialogue and
active collaboration with employees, shareholders, suppliers and local communities.
Further details can be found above, in the materiality section and in chapters S1 – Own workforce,
S3 – Affected communities, S4 – Users and end consumers.
d) Identification and assessment of adverse impacts
The double materiality assessment (DMA) identifies significant adverse impacts in its own
operations and in the value chain. Systematic impact assessments, risk screenings and value chain
code of conduct assessments are also carried out.
Additional details: General ESRS 2, G1.
e) Taking action to address adverse impacts
The Company implements measures to reduce the negative impact of its activities as described
in detail, for each material theme identified in each chapter
1
.
f) Monitoring the effectiveness of these measures and communicating progress
The company annually reports the main indicators, the effectiveness of the measures and the
progress achieved in the annual report.
Hidroserv and UCMH, as members of the Hidroelectrica Group, follow the strategic directions of the
Group. These entities ensure compliance with relevant regulations and work with stakeholders to identify
and manage impacts.
Risk management and internal controls over sustainability reporting
GOV-5
The Hidroelectrica Group is considering the integration of the risks associated with sustainability reporting
into the existing internal risk management system, in order to an integrated approach, based on the
experience gained in ESRS reporting for the years 2024 and 2025. The implementation of this integration
will be analysed in the light of the clarification of the applicable regulatory framework and the assessment
of the relevant risks. For the sustainability reporting for 2025, the process was maintained by which the
necessary data is requested directly from the relevant contributors within the Group, which are
subsequently internally verified by the members of the Sustainability Commission to reduce the risk of
reporting errors. In specific situations, external consultants are involved to support ensuring the accuracy
and completeness of the information collected.
The data holders in each department concerned are responsible for preparing the related information.
The Management Board and the Supervisory Board are responsible for the information presented in the
Sustainability Report, which is subject to the same approval procedures as the financial statements.
1
For certain material topics, the company has not yet implemented dedicated measures or action plans, fully aligned with ESRS
requirements, the information presented reflecting the actions and practices in place at the time of reporting.
158
Company, business model and stakeholder engagement
Strategy, business model and value chain
SBM-1
The Hidroelectrica Group has a business strategy with a focus on operational efficiency and diversified
growth of the green energy production activity, with financial prudence.
The Group's general objectives in the field of sustainability are to develop the activity of producing green
energy through diversified growth. The sustainability strategy also includes objectives on the following
ESG pillars for Hidroelectrica SA:
The main groups of products and services (outputs) of the Group are:
• Wholesale of electricity produced in hydropower plants and wind resources;
• Supply of electricity to the end user (retail);
• Realization of system services for the National Energy System.
At the end of 2025, the Group had a total number of 5303 employees.
The total revenues for the financial year 2025, as included in the IFRS-EU consolidated financial
statements of the Hidroelectrica Group, are presented in the table below:
2025 (one thousand
RON)
Wholesale of electricity
3,864
Supply of electricity to final consumers (retail)
5,504
System Services
248
Other Revenue from Customer Contracts
3
Total
9,619
The Hidroelectrica Group did not benefit from any exception granted to entities from a Member State of
the European Union that would allow exemption from the disclosure of information according to Article
18, paragraph 1, point (a) of Directive 2013/34/EU.
In terms of inputs, the Group focuses on collecting, developing and securing the resources necessary for
the production of electricity from hydroelectric and wind sources. This includes the efficient use of natural
resources, such as water, and the implementation of advanced technologies for the
modernization/refurbishment of production capacities.
159
In the upstream segment, the Group collaborates with suppliers of equipment and technical services
necessary for the maintenance and modernization of production capacities. The main suppliers are from
the Romanian market, but also from the European market, mainly of equipment and services.
The Group also provides part of the maintenance and repair and modernization works of the assets
through the Hidroserv subsidiary, as well as the production and repair of hydromechanical and
hydropower equipment, the development and implementation of technical solutions for optimizing the
operation of hydropower facilities through the UCMH subsidiary.
In the downstream segment, the Hidroelectrica Group serves a diverse range of customer groups,
including industrial consumers, energy distributors and suppliers, and household customers, with the
Company operating throughout the Romanian market.
At the level of the Hidroelectrica Group, the impact on the environment comes mainly from the support
activities and by-products (maintenance, repairs, constructions, works), rather than from the main
product – the green energy produced. Therefore, the sustainability targets will primarily target these
activities, given that the production of electricity from renewable sources has a minimal impact on the
environment. The adoption of sustainability targets was postponed because the company wanted the
assumption of long-term commitments to be correlated with the final version of the simplified ESRS
reporting standards following the adoption of Omnibus in the review and approval process.
Interests and views of stakeholders
SBM-2
The Hidroelectrica Group's collaboration with stakeholders involves various interactions and
consultations with investors, trade unions, employees, customers, local communities, as well as
authorities and regulators. This includes regular meetings with investors, negotiations with trade unions
for fair working conditions, internal communication channels for employee feedback, and gathering
feedback from customers to improve services. Thus, the interests, views and rights of individuals within
its workforce, the views and rights of consumers and end-users, including respect for human rights, are
noted and contribute to the Group's strategy and business model.
The Hidroelectrica Group participates, in accordance with the applicable legal framework, in the public
debates organized by the competent environmental authorities within the regulatory procedures (e.g.
obtaining the environmental agreement), in which local communities and other interested parties are
involved. In this context, the views, observations and concerns expressed by communities are analysed
by the competent authorities as part of the decision-making process.
Also, the Group's representatives participate in the meetings of the Technical Analysis Committees (TAC)
organized by the environmental authorities, together with the relevant public institutions (e.g.
environmental authorities, energy, development, transport authorities, managers of protected natural
areas, etc.), in order to analyze the technical documentation and ensure the compliance of the projects
with the legal and regulatory requirements. The requirements of the stakeholders, as well as the
applicable legal and regulatory requirements, are integrated into the processes, activities and strategy of
the group, and the overall consultation activities aim not only to meet these requirements, but also to
maintain a collaborative relationship with stakeholders. The dual materiality process included an analysis
of the interests of key stakeholders, through their consultation, and the prepared sustainability strategy
will be based on the IROs resulting from the materiality analysis and integrated into the business strategy
after adoption. No further steps are planned after adoption.
160
The administrative, management and supervisory bodies are informed about the opinions and interests
of the interested parties, as part of the presentation of the results of the double materiality analysis
subject to approval.
Material impacts, risks and opportunities and their interaction with strategy and business model model
SBM-3
Information on the significant impacts, risks and opportunities identified by the Hidroelectrica Group is
provided in each ESRS thematic chapter and in the following chapter - IRO-1 Double Materiality Analysis.
Impacts, risks and opportunities related to environmental, social and governance issues were identified
and assessed in 2024 as part of the dual materiality review process, in an internal workshop and
consultation of other relevant sources, such as the permits required for the proper functioning of sites.
The ESG risks identified in the double materiality analysis have been analysed and will be integrated into
the Risk Register and the Group's internal regulatory framework, following the adoption of the final ESRS
standards at the time of reporting in the review and approval process and the subsequent reassessment
of these risks. After integrating these risks, the Group will develop a concrete action plan and specific
targets.
To date, a detailed quantification of the anticipated financial effects in medium and long-term monetary
terms has not been achieved. The climate resilience analysis carried out is presented in Chapter E1.
The Hidroelectrica Group aims to base its strategy and business model on resilience principles, with the
intention of developing the capacity to manage significant impacts and risks and to capitalize on
opportunities that may arise.
The Impact, Risk and Opportunity Management (IRO) process is to be integrated into the business
strategy, to facilitate the alignment of sustainability priorities with the overall development objectives.
The financing of specific initiatives and measures for the implementation of this strategy is mainly carried
out from its own sources, using the revenues generated by the group's current operations.
The double materiality analysis helps to prioritize risks in the annual review process. The analysis included
both the direct and indirect impacts and dependencies of the Hidroelectrica Group, as well as the risks
and opportunities in the upstream and downstream value chain, as well as its own operations. The link
between the identified impacts and the associated risks and opportunities (IROs) are presented for each
theme/sub-theme according to the ESRS, but so far no detailed quantification of the anticipated financial
effects in monetary terms has been carried out. The company has assessed the level of impact and
established specific risk mitigation and management measures, and the effectiveness of these measures
is analysed at the end of the year, in relation to the risk incidents manifested during the reference period,
to the extent that incidents have been identified.
The material risks and opportunities identified above did not have a material impact on the Group's
current financial position at the level of 2025, or on financial performance and cash flows, given the
control measures implemented
161
Impact, risk and opportunity management
Description of the processes to identify and assess material impacts, risks and opportunities
IRO-1
Double Materiality Analysis
The double materiality analysis was carried out for the first time in 2024 by an internal team, with the
assistance of a specialized consultant and approved by the Management Board and the process is presented
below.
For the current reporting period, the double materiality process was reassessed internally, during an internal
workshop after which it was concluded that there were no major changes that would require the resumption
of the entire process, respectively, no new categories of stakeholders emerged, and according to the final
results of the double materiality analysis, in 2025 the following changes in materiality results occurred:
▪ S1: Potential negative impact of workplace accident risk – potential impact if safety measures and
training are not properly implemented in day-to-day activities. Thus, it increases the risk of
accidents, injuries and affects the long-term health of employees.
▪ S3: Potential indirect negative impact – Possible temporary interruptions in the raw drinking water
supply of some beneficiaries who extract water from hydropower facilities operated by
Hidroelectrica, these beneficiaries having the responsibility of supplying drinking water to the
communities including in exceptional situations and including the responsibility of ensuring the
backup source.
▪ S4: The positive impact is no longer material
▪ G1: Whistleblower protection: Positive impact: the company can develop whistleblower protection
mechanisms that have a positive impact in the early prevention of potential integrity-related
incidents, contributing to the construction of an honest work environment.
Double materiality analysis carried out in 2024 and reconfirmed in 2025
In the analysis process, the Company complied with the fundamental principles of the double materiality
analysis, i.e. it analyzed:
• The materiality of the positive and negative short, medium and long-term impacts that the
Hidroelectrica Group has or may have on the environment and society. Both current and potential
impacts were considered.
• Financial materiality, to determine how sustainability issues can influence the Group's financial
performance and future cash flows in the short, medium and long term.
In accordance with ESRS 1, in order to assess impacts, the Group took into account three parameters: the
scale (magnitude) of the impact, the purpose (scope/scope) of the impact, and the irremediability of the
impact (for adverse impacts) and the likelihood (for potential impacts). For each of these parameters, scores
were awarded as follows:
• Between -5 for major negative impact and +5 for major positive impact,
• Between 1 for small-scale scale-out impacts on the population and ecosystem, with negligible
economic costs, and 5 for large-scale scale-up impacts on the population and the vast ecosystem,
with high economic costs;
• Between 1 for impacts with very high remediability and 5 for impacts with very low remediability;
• Between 1 for impacts with a very low probability of occurrence (only once in the next 10 years) and
5 for impacts with a very high probability of occurrence (in less than 1 year).
With regard to the scores for assessing the financial effects of risks and opportunities that may influence the
Group's financial performance and future cash flows, they have been established as follows:
162
Score
Explanaons
0
There is no nancial impact
1
Minimum nancial impact (less than 0.1% of turnover)
2
Moderate nancial impact (above 0.1%, but below 0.7% of turnover)
3
Signicant nancial impact (above 0.7% but below 2.0% of turnover)
4
High nancial impact (over 2.0% but below 3.0% of turnover)
5
Very high nancial impact (over 3.0% of turnover)
Qualitative criteria were also analyzed, such as the location of the impacts in the Group's value chain
(upstream, at the level of the Group's own activities or downstream), the time horizon (i.e. short, medium
or long term), and in the event of a potential negative impact on human rights, according to the ESRS, the
severity of the impact (determined by the scale, purpose and irremediability) prevails over its probability.
Based on the scores, quantitative thresholds were established to determine the relevant/material impacts,
risks and opportunities, and the qualitative criteria provided context for interpreting the results.
The process of analyzing the double materiality included:
• Coverage of all activities carried out by the Group described in section BP-1 and also included the
upstream and downstream value chain;
• Identification of relevant internal and external stakeholders;
• Conducting an internal consultation, during a workshop, with the management representatives of
each relevant department, during which:
o Representatives are consulted for each potential material topic in the ESRS, on the Group's
impact on environmental, social and governance issues, as well as on the assessment of
potential financial effects on the Group as a result of potential risks and opportunities arising
from sustainability issues. The nature of the current and potential, negative and positive,
short, medium and long-term impacts generated on environmental, social and governance
aspects was analyzed. The potential financial effects were also analyzed, and the probability
of occurrence and the potential magnitude of the financial effects contribute to the
assessment of the significance of the risks and opportunities within the Group;
o The hypotheses used in the analysis are based on the information available to the workshop
participants, as well as on that obtained from relevant press sources and literary studies. In
particular, in order to assess the impact on the value chain, the analysis focused on these
data sources, including by mapping the value chain impacts identified by other operators in
the industry and the studies mentioned. These were discussed during the workshop to
decide their applicability to the Group's entities;
o The significance assessment was also based on the contributions of the employees of the
Hidroelectrica Group who have responsibilities regarding environmental protection,
occupational health and safety, social responsibility, human resources, diversity and
inclusion, compliance with the related provisions and risk management, financial;
• Distribution of a questionnaire to representatives of all categories of stakeholders. Following the
conclusion of the survey session, it was found that 391 responses were received, of which 275 were
submitted by its own employees, and 116 responses were submitted by the other categories of
stakeholders.
• Double materiality analysis carried out for other operators in the industry (peers analysis);
• Evaluation of the strategic documents prepared by the group;
• Benchmarking on global trends in the literature, material topics identified by ESG rating agencies for
the industry to which the Hidroelectrica Group belongs, as well as data collected regarding the
history of the Hidroelectrica Group or other relevant sources as the case may be;
• Interviews with representatives of the Management Board and the Supervisory Board during which
the results of the analyses were presented for confirmation, following which the management
approved the result of the materiality assessment.
163
Theme
Sustainability Topics - Sustainability Report 2025 ("RS")
Theme
Subtopic
Sub-subtopics
Explanaons
ESRS E1
Climate
change
Climate change
mitigation
Climate change
adaptation
Energy
—
Material theme - addressed in E1
ESRS E2
Pollution
Pollution of air
—
The group's activity does not involve a direct impact
on air pollution.
Pollution of water
—
The group's activity does not involve a direct impact
on water pollution.
Pollution of soil
—
The group's activity does not involve a direct impact
on soil pollution.
Pollution of living
organisms and
food resources
—
The group's work does not involve a direct impact on
living organisms or food resources.
Substances of
concern
—
Following the analysis carried out, no uses or
generations of substances of particular concern – i.e.
substances considered very dangerous – were
identified.
Substances of very
high concern
—
Following the analysis carried out, no uses or
generations of substances of particular concern – i.e.
substances considered very dangerous – were
identified.
Microplastics
—
Following the analysis carried out, no uses,
generations or commercializations of microplastics
were identified in the activity carried out.
ESRS E3
Water and
marine
resources
Water
Water
consumption
Water consumption is not significant.
Water
withdrawals
Water withdrawals are minimal within the Group's
activity.
Water discharges
This is not the case, as there are no discharges into
surface waters.
Marine resources
Water discharges
in the oceans
Extraction and use
of marine
resources
This is not the case, water from marine sources is not
used and water is not discharged into the oceans.
ESRS E4
Biodiversity
and
ecosystems
Direct impact
drivers of
biodiversity loss
Climate change
Material theme - addressed in E4
Land-use change,
fresh water-use
change and sea-
use change
Material theme - addressed in E4
Direct
exploitation
There are no activities to exploit biodiversity or
ecosystems.
Invasive alien
species
This is not the case in the areas where the
Hidroelectrica group operates.
Pollution
No material emerged
Impacts on the
state of species
Species
population size
Material theme - addressed in E4
Species global
extinction risk
Material theme - addressed in E4
Impacts on the
extent and
Land degradation
No material emerged
Desertification
No material emerged
164
Theme
Sustainability Topics - Sustainability Report 2025 ("RS")
Theme
Subtopic
Sub-subtopics
Explanaons
condition of
ecosystems
Soil sealing
No material emerged
Impacts and
dependencies on
ecosystem services
—
No material emerged
ESRS E5
Circular
economy
Resources inflows,
including resource
use
—
No material emerged
Resource outflows
related to products
and services
—
No material emerged
Waste
—
The waste resulting from operations is not
significant.
ESRS S1
Own
workforce
Working
conditions
Secure
employment
Material theme - addressed in S1
Working Time
Material theme - addressed in S1
Adequate wages
Material theme - addressed in S1
Social Dialogue
Material theme - addressed in S1
Freedom of
association, the
existence of
works councils
and the
information,
consultation and
participation
rights of workers
Material theme - addressed in S1
Collective
bargaining,
including rate of
workers covered
by collective
agreements
Material theme - addressed in S1
Work-life balance
Material theme - addressed in S1
Health and safety
Material theme - addressed in S1
Equal treatment
and opportunities
for all
Gender equality
and equal pay for
work of equal
value
Material theme - addressed in S1
Training and skills
development
Material theme - addressed in S1
Employment and
inclusion of
persons with
disabilities
Material theme - addressed in S1
Measures against
violence and
harassment at
work
Material theme - addressed in S1
165
Theme
Sustainability Topics - Sustainability Report 2025 ("RS")
Theme
Subtopic
Sub-subtopics
Explanaons
Diversity
Material theme - addressed in S1
Other work-
related rights
Child labour
No material emerged
Forced labor
No material emerged
Adequate housing
No material emerged
Privacy
Material theme - addressed in S1
ESRS S2
Workers in
the value
chain
Working
conditions
Secure
employment
No material emerged
Working Time
No material emerged
Adequate wages
No material emerged
Social Dialogue
No material emerged
Freedom of
association,
including the
existence of
works councils
No material emerged
Collective
bargaining
No material emerged
Work-life balance
No material emerged
Health and safety
No material emerged
Equal treatment
and opportunities
for all
Gender equality
and equal pay for
work of equal
value
No material emerged
Training and skills
development
No material emerged
Employment and
inclusion of
persons with
disabilities
No material emerged
Measures against
violence and
harassment in the
workplace
No material emerged
Diversity
No material emerged
Other work-
related rights
Child labour
No material emerged
Forced labor
No material emerged
The right housing
No material emerged
Privacy
No material emerged
ESRS S3
Affected
communities
Communities’
economic,
social and
cultural rights
Adequate housing
Material theme - covered in S3
Adequate food
No material emerged
Water and
sanitation
No material emerged
Land-related
No material emerged
166
Theme
Sustainability Topics - Sustainability Report 2025 ("RS")
Theme
Subtopic
Sub-subtopics
Explanaons
impacts
Security impacts
Material theme - covered in S3
Communities’
civil and
political rights
Freedom of
expression
Material theme - covered in S3
Freedom of
assembly
Material theme - covered in S3
Impact on human
rights defenders
Material theme - covered in S3
Rights of
indigenous
peoples
Free, prior and
informed consent
Self-
determination
Cultural rights
This is not the case – it is not the subject of the
activity. There are no indigenous populations in
Romania
ESRS S4
Consumers
and end-users
Informationrelated
impacts for
consumers and/or
endusers
Privacy
Material theme - covered in S4
Freedom of
expression
Material theme - covered in S4
Access to (quality)
information
Material theme - covered in S4
Personal safety of
consumers and/or
endusers
Health and safety
This is not the case – it is not the subject of the
activity.
Security of a
person
This is not the case – it is not the subject of the
activity.
Protection of
children
This is not the case – the activity does not involve
interaction with children.
Social inclusion of
consumers and/or
endusers
Non-
discrimination
No material emerged
Access to
products and
services
No material emerged
Responsible
marketing
practices
No material emerged
ESRS G1
Business
conduct
Corporate culture
—
Material theme - addressed in G1
Protection of
whistle-blowers
—
No material emerged
Animal welfare
—
This is not the case. The group does not conduct
animal experiments.
Political
engagement
and lobbying
activities
—
No material emerged
167
The double materiality analysis process also involved stakeholder consultation. According to the internal
procedure, the consultation of stakeholders is carried out at least every 3 years or annually for groups of new
stakeholders identified in the double materiality analysis process.
For the 2024 sustainability reporting year, the following categories of stakeholders were consulted, as part
of the double materiality review process:
▪ Employees
▪ Management
▪ Shareholders
▪ Trade unions
▪ Financial institutions
▪ Customers
▪ External consultants
▪ Public Administrations and Communities
▪ Suppliers
▪ Media
▪ Industrial/professional associations
▪ Regulators
▪ NGOs
In order to consult the stakeholders in the double materiality analysis, the Hidroelectrica Group distributed
a form through which it consulted their opinion on the potential material issues in the environmental, social
and governance spheres.
Prioritization of impacts is achieved by carefully assessing the magnitude and likelihood of each impact. The
identified impacts are directly correlated with risks and opportunities, which are then ranked according to
their strategic relevance.
The identified risks and opportunities were analyzed in the process of double materiality analysis to
understand whether they arise from dependencies or impacts. The assessment also included qualitative
aspects such as the analysis of continued resource use, resource dependency and critical relationships within
the value chain, and other effects on future cash flows.
Theme
Sustainability Topics - Sustainability Report 2025 ("RS")
Theme
Subtopic
Sub-subtopics
Explanaons
Management of
relationships
with suppliers
including
payment
practices
—
Material theme - addressed in G1
Corruption and
bribery
Prevention and
detection,
including training
Material theme - addressed in G1
Incident
Material theme - addressed in G1
Additional
sub-theme
(part of the
Governance
chapter)
Cybersecurity
Material theme - addressed in G1
168
The process of identifying, assessing and managing impacts and risks is not fully integrated into the overall
risk management process at the level of the Hidroelectrica Group. Its integration is analysed in the context
of the continuous development of the internal risk management framework and the evolution of the
applicable requirements of ESRS standards. The risks identified in accordance with the ESRS requirements
are taken into account in the internal risk management processes of Hidroelectrica SA and its affiliated
entities. The internal control procedures related to the Risk Register include periodic checks and internal
audits, in order to ensure compliance. Also, the process of identifying, evaluating and managing
opportunities is currently not fully integrated at the level of the organization.
The table below shows the themes, sub-themes and sub-sub-themes that have been revalidated as material
and a brief justification for the non-material themes that were not taken into account in the content of the
report.
An additional sub-theme has been identified – Cybersecurity, which will be addressed in the Governance
chapter, given its importance both for society (from the perspective of employees and customers) and for
national energy security.
The following table presents the impacts, risks and opportunities identified and assessed as material in the
double materiality analysis:
169
Subtopic
Impact
Value chain
Actual/
Potential
Time
horizon
Risk/Opportunity (R/O)
Physical/
Transition
Actual/
Potential
Time
horizon
ESRS E1
Climate change
mitigation
Hidroelectrica SA: By its nature, it
produces low-carbon electricity, which
contributes positively to climate change
mitigation. The positive impact itself is
the production of green energy, which is
the company's main activity.
Hidroserv: Through the efficient
maintenance of the installations, it
contributes to the maximization of the
production of renewable energy
because through the efficient
maintenance of the installations, it
contributes to the maximization of the
production of green energy and the
protection of the environment and the
climate.
UCMH: The provision of technological
solutions, in particular electric
generators and other equipment for
hydropower plants, supports the
production of clean energy.
Upstream, Own
operations
Current
Current
Hidroelectrica Group
Financial risk: Failure to align with the EU's
emission reduction trajectories, if future
investments are not in low- or zero-emission
production, can have a negative effect on
revenues and costs. The costs of subsequent
alignment can be substantially higher, and the
lack of investment can reduce the revenues
resulting from reduced production.
Transitional
Current
Current
Hidroelectrica Group
Opportunity: The increase in demand for
renewable energy gives Hidroelectrica the
opportunity to attract investments in the
diversification of renewable energy sources
(solar/wind), and to increase revenues.
Transitional
Current
Current
ESRS E1
Climate change
adaptation
Negative impact: Climate change is
associated with operational losses or
large annual fluctuations caused by
climatic phenomena related to the
availability of water for production at
hydropower plants.
Own operations
Current
Current
Hidroelectrica Group
Financial risk:
1. The decrease in water resources due to
prolonged droughts, which would reduce the
production of hydropower plants, and
therefore the decrease in revenues generated
from the sale of electricity.
2. Infrastructure exposed to extreme events
(floods, landslides) can lead to high repair costs
and production interruptions.
Transitional
Current
Current
170
ESRS E1
Energy
Hidroelectrica SA: Positive impact
resulting from the fact that
Hidroelectrica provides clean and
renewable energy, without polluting
emissions. It is flexible and contributes
to the stability of the electricity grid. It
provides cheaper energy in the long
term and supports local economic
development.
Hidroserv: Through efficient plant
maintenance and repair, Hidroserv
ensures optimal operation and reduces
potential production interruptions.
UCMH: Contributes to the
modernization of energy infrastructure
Own
operations,
Downstream
Current
Current
Hidroelectrica Group
The financial risk associated with reliance on
water for energy production can make
Hidroelectrica vulnerable in times of drought
or extreme climate change. Delayed
investment costs can be substantially higher,
and a lack of investment can reduce revenues
resulting from reduced production.
Transitional
Current
Current
Hidroelectrica Group
Opportunity: Diversifying the energy mix with
the integration of solar and wind energy
sources can reduce risks and increase
production capacity, resulting in an increase in
revenue.
Transitional
Current
Current
ESRS E4
Direct impact
drivers of
biodiversity loss
-
-
-
-
Financial risk: This risk could only affect
possible delays in the completion of projects
under construction. Currently, there are no
new projects and we refer strictly to the
projects under development, which amount to
approx. 200 MW new installed capacity,
(compared to the total operating capacity of
approx. 6300 MW). Delays are associated with
additional costs on investment projects.
Transitional
Potential
Medium,
Long
ESRS E4
Impact on species
characteristics
Potential negative impact:
1. Hydropower: Failure to ensure the
downstream easement flow could
influence the welfare of aquatic species.
2. Wind energy: There is a potential
impact on the avifauna from wind farms,
with the mention that they have been
built recently, in accordance with
European Directives with strict
assessment on the environment and
biodiversity, mainly avoiding bird
migration routes.
Own
operations,
Upstream
(UCMH only)
Potential
Medium,
Long
Financial risks
1. Potential regulatory risks (e.g. green flows)
could generate financial risks in the sense of
reducing electricity production and revenues,
as well as possible investment works with
associated costs.
2. Other equipment production activities: Risk
of non-compliance with regulatory acts
(approvals, agreements, authorizations),
which is reflected in the costs for fines.
Transitional
Potential
Medium,
Long
171
3. Other production activities: UCMH's
equipment production activities can
affect biodiversity if the entire value
chain is taken into account (from the
extraction of metals, used in the
production process)
ESRS S1
Working
conditions
The positive impact generated by the
values promoted by the group is
manifested by respecting employees'
rights and supporting safe working
conditions. Also, the active involvement
of union leaders ensures continuous and
effective communication with
employees, thus contributing to their
overall well-being.
Own operations
Current
Current
-
-
-
-
ESRS S1
Working
conditions
Potential negative impact generated by
the risk of accident at work – potential
impact if safety measures and training
are not properly implemented in day-to-
day activities. Thus, it increases the risk
of accidents, injuries and affects the
long-term health of employees.
Own operations
Potential
Short,
Medium,
Long
-
-
-
-
ESRS S1
Equal
treatment and
opportunities
for all
Positive impact - The Hidroelectrica
Group recruits employees of all genders
(male, female, etc.), gender equity is
carefully managed in hiring, promotion
and retention practices, increasing
workforce attractiveness, retention and
performance.
Own operations
Current
Current
-
-
-
-
ESRS S1
Other work
related rights
Positive impact - The Hidroelectrica
Group, through the existence of internal
employment, promotion and retention
policies periodically reviewed and
improved, increases the attractiveness
of the workforce, retention and
performance.
Own operations
Current
Current
-
-
-
-
ESRS S3
Communities’
economic,
Positive impact, through affordable
energy supply. In addition, hydropower
developments play a role in mitigating
Own operations
Current
Current
Opportunity: Hidroelectrica SA can invest in
the development of sustainable projects that
directly benefit local communities, such as
N/A
Current
Current
172
social and
cultural rights –
Adequate housing
flood waves, water supply to localities,
irrigation, fish farming, navigation
through locking, recreation and tourism,
stimulating the local economy (jobs and
road connectivity).
education, health or vocational training. It can
also work with local authorities to support the
preservation of cultural identity and the
protection of heritage. Local reputation
attracts high-performing employees and
increases their retention, which reduces
recruitment and training costs.
Potentially indirect negative impact –
Possible temporary interruptions in the
raw drinking water supply of some
beneficiaries who extract water from the
hydropower facilities operated by
Hidroelectrica, these beneficiaries
having the responsibility for supplying
drinking water to the communities
including in exceptional situations and
including the responsibility of ensuring
the backup source.
Own operations
Current
Current
-
-
-
-
ESRS S3
Communities’
civil and
political rights –
Community
Security Impact
Positive impact, Hidroelectrica's projects
and activities are subject to the
procedures for obtaining environmental
regulatory acts with public consultation,
respecting all the civil and political rights
of the communities in which it operates.
Own operations
Current
Current
-
-
-
-
ESRS S4
Information-
related impacts
for consumers
and/or end-
users
Negative impact, if the company fails to
deliver according to customer
expectations related to transparency,
public information and awareness of the
benefits of renewable energy.
Own operations
Current
Current
Potential financial risk generated by the loss of
some final consumers and implicitly of the
related revenues, if the improvement of the
processes applicable to the supply segment of
Hidroelectrica is not implemented.
Physical
Current
Current
ESRS G1
Corporate
culture
Positive impact in terms of developing a
fair and healthy organizational culture
and developing codes of ethics for
Hidroelectrica Group companies
Own
operations,
Upstream
Current
Current
Opportunity: improving internal processes and
procedures in order to ensure an efficient
management of the company's activity, as well
as ensuring fair remuneration, ensuring
working conditions, contributes to the
execution of the company's development plan,
implicitly to financial stability.
N/A
Current
Current
173
ESRS G1
Protection of
whistle-blowers
Positive impact: the company can
develop whistleblower protection
mechanisms that have a positive impact
in the early prevention of potential
integrity-related incidents, contributing
to the construction of an honest work
environment.
Own
operations,
Upstream
Potential
Medium,
Long
-
-
-
-
ESRS G1
Management of
relationships
with suppliers
including
payment
practice
Moderate potential negative impact if
internal procedures are not followed in
relation to suppliers, including if
payments are not made in a timely
manner.
Potential negative impact on the
relationship with suppliers and the
stability of the supply chain.
Potential negative impact on bargaining
power and completion time.
Own
operations,
Upstream
Potential
Long
-
-
-
-
ESRS G1
Corruption and
bribery
Moderate negative impact if internal
codes and procedures regarding
corruption and bribery with
environmental/societal effects related
to reduced trust in institutions,
distortion of competition and
perpetuation of social inequalities are
not followed.
Own
operations,
Upstream
Potential
Long
-
-
-
-
Additional topic
– Digital security
Computer data
protection
Moderate potential negative impact in
case of incidents or accidents related to
IT data security. Exposing personal data
involves major security and financial
risks, the main dangers being identity
theft, financial fraud and the
exploitation of information for criminal
purposes.
Own operations
Potential
Medium,
Long
Financial risk is related to the security of
technical data - essential services in electricity
production. In the event of incidents, both
revenues and remediation costs can be
affected. The risk of compromising customer
data as a result of cyberattacks has additional
financial and reputational effects, with
additional costs related to potential litigation,
or reduced revenues caused by reputational
degradation.
Transitional
Potential
Medium,
Long
ESRS reporting requirements covered in the report
Disclosure requirements in ESRS covered by the undertaking’s sustainability statement
IRO-2
Information on the significant impacts, risks and opportunities of the Hidroelectrica Group is provided in each chapter
dedicated to ESRS topics.
Also, a detailed table including the presentation requirements can be found in Annex 2 of the Benchmarks Regulation
and the Climate Law, highlighting in the MDR-T section the data points stemming from these EU pieces of legislation
to ensure compliant reporting.
The list of presentation requirements for this report is included in the table in Annex 1. Minimum disclosure
requirements for policies and actions
Policies adopted to manage material sustainability matters
MDR-P
The policies and actions required for each material topic are presented in sections E1, S1, S3, S4 and G1 of the ESRS
report. In cases where there are no formalized policies or actions included in internal documents, the Group has stated
this and, where applicable, indicated a timeframe for their adoption.
Actions and resources on significant sustainability issues
MDR-A
The actions required for each material theme are presented in ESRS report sections E1, S1, S3, S4, and G1.
In 2025, Hidroelectrica SA's sustainability actions were based on the fulfillment of the Strategic Sustainability Plan
adopted in 2023 and focused on 22 initiatives, which can be found in the 2023 Sustainability Report, next to the
identified material topics. In 2025, Hidroelectrica SA did not revise the Strategic Sustainability Plan to align it with the
requirements of the ESRS standard and the identified material IROs because it was decided to wait for the entry into
force of the revised ESRS standards, and to make decisions based on their requirements. The Strategic Sustainability
Plan is expected to be revised after the revision of the ESRS standards, currently in the process of review and approval.
Metrics and targets
Metrics in relation to material sustainability matters
MDR-M
Indicators and targets on significant sustainability issues are presented in the sections of the report (ESRS E1, S1, S3,
S4, and G1), which are allocated to each material theme. If there are no indicators and targets adopted, the Group
presents this aspect and may present a timeframe in which it intends to adopt them.
Tracking effectiveness of policies and actions through targets
MDR-T
The indicators for each material theme are presented in ESRS report sections E1, E4, S1, S3, S4, and G1. The
sustainability targets adopted in 2023 will be updated in accordance with the material IROs identified as a result of
the double materiality analysis and will be aligned with the revised ESRS standard, after its adoption.
Data points from other EU legislation can be found in the table in Annex 1.
175
CLIMATE CHANGE
ESRS E1
Strategic orientation and concepts for climate protection
Climate change has the potenal to generate risks with both short-term (acute) and long-term (chronic) eects for
many industries. In the case of the Hidroelectrica Group, these risks are mainly manifested by changes in the
precipitaon regime, heat waves, prolonged periods of drought, res, storms, oods and other extreme weather
phenomena, as well as by variaons in the availability of water resources. These developments may inuence the
Group's acvies and require appropriate management measures. The Hidroelectrica Group integrates environmental
protecon consideraons into the conduct of its acvies, in accordance with the applicable regulatory framework
and the adopted internal policies. Hidroelectrica SA produces electricity from renewable sources and aims to limit its
environmental impact, as well as improve environmental performance, in accordance with the Group's regulatory acts
and strategic objecves.
In the context of climate change, a number of potenal measures have also been idened, such as the development
of investment programmes in energy producon units in order to maintain or improve the eciency of electricity
producon from hydropower plants, as well as the assessment of investment needs in new producon capacies from
other renewable sources, including solar and wind to maintain the level of producon, as well as storage baeries.
Transion plan for climate change migaon
ESRS E1-1
Although the transion plan is not yet nalized, being in dra form, given its eld of acvity, namely the producon of
electricity from renewable sources, the Hidroelectrica Group contributes to the transion to a low-carbon energy
system and to the European Union's objecves on climate neutrality by 2050. At the level of the 2025 reporng year,
the Hidroelectrica Group has an Acon Plan included in the 2023-2030 Sustainability Strategy approved in 2023. In the
context of the evolving ESRS reporng requirements, the Group is considering the need to align and update this plan
and the associated strategy, depending on the applicable changes in the standards. Also, during 2025, the
Hidroelectrica Group prepared a dra Transion Plan for climate change migaon, which describes the general
direcons of acon to reduce greenhouse gas emissions and support the energy transion.
Certain strategic steps and components of the Transion Plan were developed in 2025, but, nevertheless, a
reassessment of them is envisaged in the next period and the approval of the plan. "The development of the transion
plan for climate change migaon is a measure to combat risks related to future water availability and other signicant
transion risks"
The dra transion plan includes a number of exisng and planned measures outlined below as part of the resilience
analysis.
The Hidroelectrica Group is not subject to the exclusions provided for in the European Union Reference Framework
aligned with the Paris Agreement, in accordance with the exclusion criteria set out in art. 12 para. (1) leers (d)–(g)
and art. 12 para. (2) of the Climate Reference Standards Regulaon (Delegated Regulaon (EU) 2020/1818).
Material impacts, risks and opportunies and their interacon with strategy and business model
ESRS 2 SBM-3, IRO-1
The signicant impacts, risks and opportunies associated with climate change are presented in the table below, as
idened and assessed in the double materiality analysis described in Secon ESRS 2 – IRO 1. The climate risk
assessment and the climate vulnerability study, including the analysis on global warming scenarios, were carried out
in 2025, according to the calendar set out in the 2023-2030 Sustainability Strategy.
176
Subtopic
Impact
Risk/Opportunity (R/O)
ESRS E1
Climate change
mitigation
Hidroelectrica SA: By its nature, it produces low-carbon electricity,
which contributes positively to climate change mitigation. The
positive impact itself is the production of green energy, which is the
company's main activity.
Hidroserv: Through the efficient maintenance of the installations, it
contributes to the maximization of the production of renewable
energy because through the efficient maintenance of the
installations, it contributes to the maximization of the production of
green energy and the protection of the environment and the climate.
UCMH: The provision of technological solutions, in particular electric
generators and other equipment for hydropower plants, supports the
production of clean energy.
Hidroelectrica Group
Financial risk: Failure to align with the EU's emission reduction
trajectories, if future investments are not in low- or zero-
emission production, can have a negative effect on revenues and
costs. The costs of subsequent alignment can be substantially
higher, and the lack of investment can reduce the revenues
resulting from reduced production.
Hidroelectrica Group
Opportunity: The increase in demand for renewable energy gives
Hidroelectrica the opportunity to attract investments in the
diversification of renewable energy sources (solar/wind), and to
increase revenues.
ESRS E1
Adaptation to
climate change
Negative impact: Climate change is associated with operational losses
or large annual fluctuations caused by climatic phenomena related to
the availability of water for production at hydropower plants.
Hidroelectrica Group
Financial risk:
1. The decrease in water resources due to prolonged droughts,
which would reduce the production of hydropower plants, and
therefore the decrease in revenues generated from the sale of
electricity.
2. Infrastructure exposed to extreme events (floods, landslides)
can lead to high repair costs and production interruptions.
ESRS E1
Energy
Hidroelectrica SA: Positive impact resulting from the fact that
Hidroelectrica provides clean and renewable energy, without
polluting emissions. It is flexible and contributes to the stability of the
electricity grid. It provides cheaper energy in the long term and
supports local economic development.
Hidroserv: Through efficient plant maintenance and repair, Hidroserv
ensures optimal operation and reduces potential production
interruptions.
UCMH: Contributes to the modernization of energy infrastructure
Hidroelectrica Group
The financial risk associated with reliance on water for energy
production can make Hidroelectrica vulnerable in times of
drought or extreme climate change. Delayed investment costs
can be substantially higher, and a lack of investment can reduce
revenues resulting from reduced production.
Hidroelectrica Group
Opportunity: Diversifying the energy mix with the integration of
solar and wind energy sources can reduce risks and increase
production capacity, resulting in an increase in revenue.
The Hidroelectrica Group has carried out a study according to the criteria set out in Appendix A of Commission
Delegated Regulaon (EU) 2021/2139 of 4 June 2021 supplemenng Regulaon (EU) 2020/852 of the European
Parliament and of the Council by establishing the technical screening criteria to determine the condions under which
an economic acvity qualies as an acvity that contributes substanally to climate change migaon or adaptaon
to climate change and to determine whether the economic acvity signicantly harms any of the other environmental
objecves. Following the study, the Group assessed the impact of climate change on its operaons, including the
resilience analysis of the strategy and business model, taking into account dierent climate scenarios, including high-
emission climate scenarios and climate scenarios in line with liming global warming to 1.5 degrees Celsius, and will
develop an updated Strategy and Acon Plan, as set out in the Climate Change Migaon Transion Plan chapter
above. The analysis of the producon of the last 25 years indicated that, under severe drought condions, electricity
producon can register a decrease of up to 24.42% compared to the average of the analyzed period. This result
highlights the importance of water resources management and the assessment of opons for diversifying energy
sources.
Climate risks were also considered when establishing the company's strategic direcons related to the diversicaon
of energy sources, opmizaon for each branch, being acvely analyzed in outlining commitments, and relevant
acons.
Hidroelectrica adapts its business model to climate change in the short, medium and long term Mainly by ensuring
connuous access to funds for diversicaon, for the modernizaon of exisng assets and the modicaon of the
porolio of products and services, investments being budgeted annually.
177
The resilience analysis, carried out between September and December 2025, is based on the net risks from the climate
scenario analysis, shows that Hidroelectrica can adequately address the risks idened in dierent climate scenarios
and maintain its resilience. Net risks are the risks remaining aer taking into account migang factors, such as the
implementaon of risk migaon measures. The resulng potenal impacts are reected for the years 2030, 2040 and
2050, covering both transion and physical risks. For the idened gross material transion risks, the appropriate main
migaon measures are included in Hidroelectrica's business strategy. These measures, mainly to diversify the
renewable energy source or storage, are designed to reduce both the likelihood of occurrence and the magnitude of
potenal impacts, thus strengthening the company's resilience.
The analysis includes all branches of Hidroelectrica SA, but does not include subsidiaries Hidroserv and UCMH, as the
signicant risk of resource availability due to climate change is applicable to Hidroelectrica SA, the purpose being to
analyze the resilience to this signicant risk. The main objecve is to understand the future situaon related to the
climate risk factors that may disrupt Hidroelectrica's acvity, the uncertaines being related to the IPCC climate models.
The climate risk and vulnerability assessment was carried out for Hidroelectrica's locaons and acvies, including
hydropower plants, micro-hydropower plants, wind and photovoltaic farms. Thus, a number of 183 hydropower plants
and micro-hydropower plants (CHE and MHC) were included, located on the territory of Romania and organized within
7 branches of Hidroelectrica: Bistrita (28 plants), Curtea de Argeș (44 plants), Cluj (23 plants), Hațeg (30 plants), Porțile
de Fier (11 plants), Râmnicu Vâlcea (24 plants) and Sebeș (23 plants). These include both run-of-the-river and storage
plants. By reservoir plants we mean those waterfall head plants that process the ow from a large reservoir, as well as
the plants downstream of them, which do not benet from signicant input from other hydrographic basins. As for the
wind farms, they are located on the territory of Constanta County.
Commission Delegated Regulaon (EU) 2021/2139, which complements the EU Taxonomy Regulaon and sets out the
technical screening criteria for economic acvies with climate impact, denes a number of relevant climate risks, also
included in the ESRS Direcve, in the ESRS standard E1 – Climate change. These risks are classied into two broad
categories: acute climate risks, associated with extreme events (such as oods, storms, heat waves), and chronic
climate risks, associated with gradual changes in climate parameters (such as an increase in average temperature, a
decrease in rainfall or a change in the hydrological regime). In addion, the risks are grouped according to the main
climac factor: temperature, wind, water, respecvely solid mass. These categories of risk phenomena were used, their
potenal being evaluated in relaon to the acvies carried out.
• Chronic temperature-related risks are: Temperature change (air, freshwater, seawater), Heat stress,
Temperature variability, and Melng permafrost
• Acute temperature-related risks are Heatwave, Cold/Freeze Waves, and Forest Fires.
• Chronic wind-related risks refer to the change in wind paerns.
• Acute risks related to wind include phenomena such as Cyclone / Hurricane / Typhoon, Tornado and Storms
respecvely (including blizzards and dust and sand storms).
• Chronic water-related risks refer to: Change in precipitaon paerns and precipitaon paerns (rain, hail,
snow/ice), Precipitaon or hydrological variability, Water stress, Ocean acidicaon, Saline intrusion and Sea
level rise.
• Acute water-related risks include Drought, Heavy rainfall (rain, hail, snow/ice), Flooding (coastal, river, rainfall
or underground) and Sudden emptying of glacial lakes.
A preliminary screening of the 28 risks in the ESRS was carried out. Thus, only material risks have been the subject of
a detailed analysis for which the measures established will be highlighted.
The transion risk analysis carried out under the 1.5°C Net Zero Emissions (NZE) scenario indicates that Hidroelectrica
faces some relevant net transion risks. The most signicant risk lies in potenal increases in diversicaon investment
costs. These are at the same me opportunies to occupy the capacity of the transmission network before competors,
the electricity from photovoltaic panels produced can be mixed with that from hydropower before the introducon
into the transmission network on exisng delivery agreements.
• Legal compliance risks: Costs related to the change in environmental legislaon and/or stakeholder opposion
or Compliance with water use regulaons
178
• Technological risks: Inconsistent availability of renewables for hydropower generaon, Inconsistent availability
of renewables for wind power generaon, Increased downme and maintenance costs of hydropower plants,
Increased costs through investments in baeries for storage, Unsuccessful investments in other energy sources
• Market risk: Compeve disadvantage due to asymmetric ESG regulaons related to carbon intensity.,
Compeve advantage to all competors due to storage capacity
• Reputaonal risk: Costs associated with greenwashing ligaon, Hidrolelectrica's image aected by the failure
to meet the objecves and commitments regarding the producon of renewable energy
As part of the physical risk analysis, all relevant gross risks for each site have been idened and appropriate adaptaon
measures have been dened. Based on these adaptaon measures (such as ood preparedness and diversicaon of
sources or infrastructure improvements for electricity storage and transmission), the inial gross risk assessments were
adjusted and the resulng net transion risks were assessed. This demonstrates that the potenal impact of certain
material risks can be reduced and the net risks reect the residual exposure of each site aer adaptaon eorts.
Exisng and planned measures
Risks are reduced by the resilience measures implemented in each Branch – by opmizing water processing and
centrally by invesng in diversicaon. Connuous monitoring and up-to-date data analysis remain essenal to address
the dynamic nature of climate change, applicable to Hidroelectrica. Annual producon plans are made based on
historical ow averages, and hydropower plant maintenance budgets are designed to cover weather events such as
oods.
The opmizaon of energy producon is carried out using the SCADA (Supervisory Control and Data Acquision)
system, which allows real-me monitoring of operang parameters, automated control of equipment and installaons,
as well as the collecon and transmission of operaonal data to the dispatcher and management, taking into account
hydrological condions, imposed restricons and energy market dynamics.
Hidroelectrica has operang plans and regulaons for dierent operang situaons such as the normal state, drought
or ood condions. Thus, during periods of severe drought, the use of water from lakes is opmized to maintain energy
producon at an opmal level and make the most of the water resource. Among the measures taken at Hidroelectrica
level for the ecient management of climate risks, we menon the connuous monitoring of hydrological and
meteorological data, such as upstream and plant ows, daily temperatures, lake levels and precipitaon, with
measurements made at each hydropower plant and forecasts received from the Naonal Instute of Hydrology and
Water Management (INHGA). The data are transmied daily to the Naonal Administraon of Romanian Waters
(ANAR), and in case of oods, the reservoirs are emped prevenvely to prevent oods and to opmize the use of
water resources. There are defense plans and populaon alarm systems, and the riparian protecon works and
structures designed for extreme ows ensure the safety of exploitaon.
Climate risk management involves working closely with authories. Compliance with minimum ecological ows is
established in water management permits, where applicable, in compliance with the legislaon in force that gives
priority to human consumpon of water and energy.
Hidroelectrica, a tradional hydropower company, has started diversifying renewable energy sources since 2021 with
the acquision of the Crucea Nord wind farm located in Constanta County, with an installed capacity of 108 MW, added
to the Hidroelectrica - Wind Branch porolio by merger starng with 2023.
Investments are also being made in energy storage baeries, with the aim of migang the nancial impact by
opmizing the introducon of energy into the transmission system.
Investments in renewable energy include projects on the installaon of photovoltaic panels on lake surfaces and on all
power plants on the Olt River.
According to the Law on Electricity and Natural Gas no. 123/2012, the Naonal Electricity Transmission Company
"Transelectrica" S.A. plans the development of the RET, taking into account the current stage and the forecasted
evoluon of the consumpon, producon park and electricity exchanges and develops every 2 years a Development
Plan for the next 10 successive years. Transelectrica invests in transmission capacity, ensuring the correlaon of the
179
European Ten-Year Network Development Plan (TYNDP) with the Naonal Ten-Year Electricity Transmission Network
Development Plan.
A series of measures are also provided at the river basin level The updated Naonal Management Plan for the poron
of the Danube River Internaonal River Basin that is included in the territory of Romania (2021), which demonstrates
the concern at the river basin level for adaptaon to climate change related to water availability.
The qualitave assessment of the transion risks before and aer the measures leads to the conclusion that, in the
case of Hidroelectrica, the most signicant risk is related to the future water scarcity, which is the main resource
needed, with a potenally signicant gross eect on revenues in addion to the price cap that can also contribute. The
measures implemented or envisaged will keep all these risks at a low or medium level.
In 2025, the Hidroelectrica Group carried out a corporate carbon footprint assessment (CCF) that includes Scopes 1, 2,
3, using the GHG Protocol, an internaonally recognized methodology. The results of this assessment support the
monitoring of emissions and the idencaon of opportunies for improvement. Further informaon is presented in
ESRS secon E1-6.
Policies related to climate change migaon and adaptaon
ESRS E1-2
At Group level, a separate policy dedicated to climate change, impacts, risks, opportunies related to climate has not
been formulated because the sustainability strategy based on updated materiality has not yet been nalized.
Acons and resources in relaon to climate change policies
ESRS E1-3
The Hidroelectrica Group implements acons and uses operaonal, human, nancial, technical and logiscal resources
in order to manage the risks and impacts associated with climate change. With regard to physical risks, such as
prolonged droughts and extreme weather events (oods, landslides), the Group has infrastructure and technical
soluons in place to help adapt its acvies, including dams and reservoirs for water storage. The operaonal acvies
also include measures to control and migate ood waves for the transit of high ows through the hydropower
objecves under administraon, as well as specic lock-in acvies to ensure navigaon on the Danube River.
Hidroelectrica SA also carries out acvies of ow regulaon, ood protecon and ecological ow insurance, in
accordance with the applicable regulatory acts.
In addion, the Hidroelectrica Group is considering opons for diversifying the energy mix through
complementary renewables, such as solar and wind energy, which can help reduce exposure to risks
associated with dependence on water resources, depending on the applicable strategic and regulatory
framework.
Prior to the "Net Zero GHG Emissions" Plan, two main actions were established, in line with the Company's objective
to be a local and regional leader in the production of "green energy" and in supporting the transition to an energy-
efficient economy, based on renewable energy. These are:
(i) increasing and diversifying the production of electricity from renewable sources, through the
development or acquisition of new energy production capacities and
(ii) refurbishment/modernization of existing production capacities.
The actions carried out in 2025 include feasibility studies, the design of green energy investments consisting of
photovoltaic parks and dam refurbishment projects.
180
Targets related to climate change migaon and adaptaon
ESRS E1-4
For the reporng year 2025, Hidroelectrica Group calculated its greenhouse gas (GHG) emissions, in accordance with
the GHG Protocol Corporate Accounng and Reporng Standard (GHG Protocol) methodology
2
.
The year 2025 represents the group's second reporng year carried out in accordance with ESRS requirements, and
the year 2024 has been established as the reference year for reporng GHG emissions. The GHG emission reducon
targets (direct emissions – Scope 1 and 2 and indirect emissions – Scope 3) are to be dened in the next reporng year,
once the Sustainability Strategy is nalized.
Transion plan - The „Net Zero GHG Emissions Plan", a dra was prepared during 2025, addressing direct emissions
from energy producon and alignment with the EU trajectory for the sector, but targets related to climate change
migaon and adaptaon and resource budgets have not yet been nalized. Targets for Scope 2 emissions will be
subsequently set and monitored according to the "market-based" criterion. The transion plan in dra form has not
yet been approved.
Energy and emissions
Energy consumpon and mix
ESRS E1-5
In 2025, the energy consumpon at the level of the Hidroelectrica Group was 383,113MWh, the consumpon of
electricity from renewable sources (internally generated) was 368,009MWh, and the energy consumpon from fossil
sources was 15,102MWh, including both thermal energy and natural gas.
The table below shows the total energy consumpon for 2025 at the level of the Hidroelectrica Group.
Energy consumption and energy mix
Year
2024
Year 2025*
(1) Fuel consumption of coal and coal products (MWh)
-
0
(2) Fuel consumption from crude oil and petroleum products
(MWh)*
8,749
8,508
(3) Fuel consumption from natural gas (MWh)
7,273
6,574
(4) Fuel consumption from other fossil sources (MWh)
-
-
(5) Consumption of purchased or acquired electricity, heat,
steam and cooling from fossil sources (MWh)
73
19.93
(6) Total fossil energy consumption (MWh) (calculated as the
sum of lines 1 to 5)
16,095
15,102
Share of fossil sources in total energy consumption
(%)
4.3%
3.94%
(7) Consumption from nuclear sources (MWh)
-
2.74
Share of consumption from nuclear sources in total
energy consumption (%)
0%
0%
(8) Fuel consumption for renewable sources, including biomass
(also comprising industrial and municipal waste of biologic
origin, biogas, renewable hydrogen, etc.) (MWh)
-
-
(9) Consumption of purchased or acquired electricity, heat,
steam, and cooling from renewable sources (MWh)
-
8.66
(10) The consumption of self-generated non-fuel renewable
energy (MWh)
362,178
368,000
(11) Total renewable energy consumption (MWh) (calculated
as the sum of rows 8 to 10)
362,178
368,009
2
https://ghgprotocol.org/corporate-standard
181
Share of renewables in total energy consumption
(%)
95.7%
96.06%
Total energy consumption (MWh) (calculated as the sum of
rows 6, 7 and 11)
378,273
383,113
*2025 is the second year of reporng at group level, ESRS.
For electricity, the allocaon of purchased and consumed energy per type of source is carried out based on the energy
label, the last one available and published at the me of the report, the one from 2024.
*DECC's GHG Conversion Factors for Company Reporng, and Digest of UK Energy Stascs (DUKE) was used to convert the volume of fuel into
MWh.
Energy intensity per net income
2024
2025
% N / N-1
Total energy consumption from activities in high climate impact
sectors per net revenue from activities in high climate impact
sectors (MWh/thousand RON)
41.46
39.83
-4%
Total energy consumption from activities in climate-intensive
economic sectors (MWh)
378,273
383,113
1%
Net revenue from activities in climate-intensive economic sectors
used to calculate energy intensity (RON million)
9,123
9,619
5%
Net revenue from other activities in economic sectors with a high
climate impact (monetary unit)
0
0
0
Total Net Revenue
(financial statements-operating income) (million RON)
9,123
9,619
5%
The calculaon of consumpon has not been validated by an external body, other than the insurance provider.
Linking energy intensity based on net revenue with nancial reporng informaon
Net revenue from activities in climate-high impact sectors
used for the calculation of energy intensity* (RON million)
9,619
Net revenue (other)
0
Total net revenue** (financial statements) (RON million)
9,619
* 'High impact climate sectors' means the sectors listed in Secons A to H and Secon L of Annex I to Regulaon (EC) No 1893/2006
of the European Parliament and of the Council **Income according to the Consolidated Financial Statements prepared in
accordance with IFRS-EU
The Group's revenues are obtained from the producon and supply of electricity, which are high-impact climate sectors
according to secons A-H and L of Annex I to Regulaon (EC) no. 1893/2006 of the European Parliament and of the
Council.
2024
2025
Electricity production from non-renewable sources (MWh)
0
0
Electricity production from renewable sources* (MWh)
14,224
12,215
Electricity Supply Quantity (MWh)
5,572
7,244
*includes intragroup consumpon
The energy data have not been veried by any external body other than the assurance provider.
182
Gross Scopes 1, 2, 3 and Total GHG emissions
ESRS E1-6
Methodologies, signicant assumpons and emission factors used to calculate or measure GHG emissions
For the calculaon of CO
2
e emissions (CO
2 equivalent
), the following were used:
• Calculaon tools according to the GHG Protocol Standard
• Supported emission factors: Use for cross-sectoral and sector-specic emission sources, with the possibility of
adaptaon to specic locaons. Where there was no specic emission factor, the closest available factor,
depending on expenditure or quanty, was used by accessing the DEFRA and DENSZ 2025 databases.
For the calculaon of CO
2
e emissions, the Hidroelectrica Group used calculaon tools according to the GHG Protocol
Standard, which are available on the GHG Protocol website.
Local factors or DEFRA/DENZ
3
factors from public databases used internaonally were used in the calculaon
methodology. The GHG Protocol recognises the conversion factors for company reporng developed by the UK
Government (DEFRA/DENZ) and includes them as a recommended source in its calculaon tools.
These tools include the use of formulas that facilitate the calculaon of emissions based on acvity data and specic
emission factors. For example, for emissions from staonary and mobile sources, widely accepted emission factors,
expressed in units such as kilograms of CO
2
e per unit of fuel consumed, were used. These factors are selected to reect
local condions, such as the type of fuel used. In addion, direct or mass balance measurement methods have been
applied to ensure the accounng of emissions, taking into account signicant sources of emissions from the Group's
acvies. These tools also help determine emissions from transporng employees or purchasing goods and services.
The assessment of signicance follows the criteria established by the GHG Protocol for idenfying relevant acvies
under Goal 3, based on the following aspects:
● Size: Acvies that contribute signicantly to the company’s total ancipated emissions.
● Inuence: Acvies for which there is potenal to reduce emissions, which could be implemented or
inuenced by the company.
● Risk: Acvies that contribute to the company’s exposure to risks (e.g. climate change risks, nancial risks,
regulatory risks, supply chain risks, product risks, customers, ligaon risks and reputaonal risks).
● Stakeholders: Acvies considered crical by relevant stakeholders (e.g. customers, suppliers, investors or
civil society).
● Sectoral guidelines: Acvies idened as material according to sector-specic guidelines.
● Other: Acvies that meet any addional criteria for determining relevance, established by the company or
industry sector.
● Within the Hidroelectrica Group, it was decided to exclude Scope 3 categories from the GHG calculaon,
which do not exceed the threshold of 1% of the total expenses with suppliers of goods or services, excluding
taxes paid or salaries. The exclusion permission applies to categories where the relevance of the respecve
category can be calculated or esmated. Also, if it is esmated that the emissions are below 1% of the total
Scope 3 emissions, they are excluded in the signicance decision, becoming insignicant. The 1% threshold in
the reporng of Scope 3 emissions helps the organizaon to focus on the signicant emission categories, saving
resources and simplifying the reporng process. It ensures the relevance of the data and priorizes eorts to
reduce emissions, excluding insignicant emissions.
3
https://carbonsaver.org/tools/carbon_factors_database.php
183
The greenhouse gas emissions inventory includes all the acvies of the Hidroelectrica Group, selected based on the
criterion of 100% operaonal control by the Hidroelectrica Group and a materiality threshold of 1% of the total
expenses, in the case of emissions calculated on an expense basis. They come mainly from the operaon of
hydroelectric power plants, respecvely from the use of vehicles and operaonal equipment.
In order to avoid double reporng, the limits of Scope 1, 2 and 3 emissions, their signicance and the allocaon method
for each category have been dened, as follows: The costs and consumpons used in the calculaon of emissions are
at a consolidated level; intra-group electricity consumpon, i.e. Hidroelectrica SA's own consumpon and
Hidroserv/UCMH's electricity consumpon, supplied by Hidroelectrica SA, were excluded. The costs for spend-based
calculaons were considered at the consolidated level (categories included in Scope 3), excluding intra-group
transacons. No contractual instruments such as: guarantee of origin, renewable energy cercates, public private
partnership, (GOs/RECs/PPA) were used.
Scope 1 – Direct emissions from the Group's acvies at its own sites
Scope 1 emissions refer to all direct greenhouse gas emissions from sources controlled by the Group. They were
calculated on the basis of data on the consumpon of natural gas (for heang, domesc hot water supply, etc.), fuels
(gasoline and diesel) consumed by the vehicles in its own eet (owned or leased) and by various equipment and
machinery. In addion, fugive emissions from the use of air condioners were also taken into account.
Scope 2 – Emissions from the purchase of electricity used for own purposes
Scope 2 emissions include all indirect GHG emissions resulng from the consumpon of electricity purchased from
third pares. Hidroelectrica consumpon is excluded, being considered self-consumpon. There are no steam
purchases. The quanes of electricity purchased were associated with the emission factors corresponding to the
suppliers, found in their energy label.
The allocaon of purchased energy / energy from the mix and emission factors is carried out based on the energy label,
the last one available and published at the me of the report, the one from 2024.
Scope 3 – Other GHG emissions
This secon includes emissions from the following categories:
• Purchased goods and services: This category includes indirect emissions associated with the purchase of
products and services that have embodied emissions. All products and services purchased during the reporng
period are taken into account.
• Capital goods: Emissions in this category come from the purchase of capital goods, such as large equipment
(e.g. hydroelectric turbines), vehicles and electrical infrastructure. Emissions are related to the producon,
transport and installaon of these goods.
• Fuel and energy related acvies (not included in purpose 1 or 2): This refers to energy purchased and
subsequently sold, such as electricity traded on various markets (Day-Ahead Market, Balancing Market, etc.).
Emissions are calculated on the basis of the emissions factor for electricity transmission and distribuon
network losses for the energy traded as well as on the basis of the WTT (well-to-tank) factor for fuels.
• Waste generated in operaons: This category includes emissions associated with waste management
generated by operaonal acvies. The waste register is a legal requirement, and quanes are available and
taken into account based on tonnage.
• Business travel: This category includes indirect emissions from employee travel for business purposes.
• Employee commung: This category refers to indirect emissions generated by employees' daily commutes
between their homes and workplaces. Emissions were esmated on the basis of an average distance, the type
of transport used (e.g. personal car, public transport) and the specic emission factors of each mode of
transport.
• Downstream transmission and distribuon: This includes emissions associated with the transmission of
electricity to nal customers. Emissions depend on the amount of energy transported and the eciency of the
distribuon infrastructure used.
184
Juscaon of exclusions - The assessment of the signicance of Scope 3 resulted in the following categories not being
considered relevant for the Hidroelectrica Group:
Category Scope 3
Reason for exclusion
4: Upstream transportation and distribution
Not significant, below the 1% threshold.
8: Upstream leased assets
Not applicable; no upstream leased assets exist.
9: Downstream transportation and
distribution (excluded only for Hidroserv
and UCMH)
Not significant for Hidroserv and UCMH, below the 1% threshold.
10: Processing of sold products
Not applicable to the Group’s activities.
11: Use of sold products
Not applicable; Hidroelectrica only produces electricity. Other products
are used within the reporting boundaries, intra-group.
12: End-of-life treatment of sold products
Not applicable, as electricity does not have a “life cycle” that would involve
end-of-life treatment (as in the case of physical products), and other
products are used within the reporting boundaries, intra-group.
13: Downstream leased assets
Not applicable; no leased assets.
14: Franchises
The company does not operate any franchise activities.
15: Investments
Not applicable.
Addional exclusion statement: Regarding the capital expenditure (CAPEX) associated with advances paid for
unnished projects, these will be included in category 2 – Capital goods, once the respecve equipment is delivered
and installed. In 2025, some expenses were not included, as the delivery of the goods and the provision of the related
services have not yet taken place.
Consideraons
The accounng and reporng of Scope 3 greenhouse gas emissions must be in accordance with the "Corporate
Standard of the GHG Protocol" and the "Corporate Value Chain Accounng and Reporng Standard (Scope 3)". The
following table presents the relevance of the Scope 3 emission categories for the Hidroelectrica group and the
inclusion/exclusion in the greenhouse gas inventory at enty level:
Signicance for the Enes of the Hidroelectrica Group
Scope 3 Category
Hidroelectrica
S.A.
Hidroserv S.A.
U.C.M.H. S.R.L
1: Purchased goods and
services
Signicant
Signicant (part of the
expenses reported by
Hidroelectrica S.A.)
Signicant (part of the expenses
reported by Hidroelectrica S.A.)
2: Capital goods
Signicant
Signicant (part of the
expenses reported by
Hidroelectrica S.A.)
Signicant (part of the expenses
reported by Hidroelectrica S.A.)
3:Fuel- and
energy‑related acvies
(not included in Scope 1
or 2)
Signicant
Not signicant
Not signicant
4:Upstream
transportaon and
distribuon
Not signicant
Not signicant
Not signicant
5: Waste generated in
operaons
Signicant
Signicant
Signicant
185
6: Business travel
Not signicant
Not signicant
Not signicant
7:Employee commung
Signicant
Signicant
Signicant
8: Upstream leased
assets
Not signicant
Not signicant
Not signicant
9: Downstream
transportaon and
distribuon
Signicant
Not signicant
Not signicant
10: Processing of sold
products
Not applicable
Not applicable
Not signicant
11: Use of sold products
Not applicable
Not applicable
Not signicant
12: End‑of‑life
treatment of sold
products
Not applicable
Not applicable
Not signicant
13: Downstream leased
assets
Not applicable
Not applicable
Not applicable
14: Franchises
Not applicable
Not applicable
Not applicable
15: Investments
Not applicable
Not applicable
Not applicable
The requirements for reporng biogenic emissions do not apply within the Hidroelectrica Group, there are no idened
biogenic emissions of greenhouse gases Scope 1, Scope 2 or Scope 3.
Hidroelectrica Group
Retrospective
Milestones and target years
Year Value
2024
Comparative
2024
N
2025
% 2025
vs 2024
2025
2030
2050
Target %
Annual /
Base Year
Scope 1 GHG emissions
Gross Scope 1 GHG emissions (tCO2eq)
3,544.59
3,544.59
3,237.75
-9%
-
To be
establis
hed
To be
establis
hed
-
Percentage of Scope 1
GHG emissions from regulated
emission trading schemes (%)
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
Scope 2 GHG emissions
Gross location-based Scope 2 GHG
emissions (tCO2eq)
26.37
26.37
5.63
-80%
-
To be
establis
hed
To be
establis
hed
-
Gross market-based Scope 2 GHG
emissions (tCO2eq)
28.49
28.49
6.25
-76%
-
To be
establis
hed
To be
establis
hed
-
Significant scope 3 GHG emissions
Total Gross indirect (Scope 3) GHG
emissions (tCO2eq)
31,157.04
31,157.04
40,123.21
29%
-
To be
establis
hed
To be
establis
hed
-
1 Purchased goods and services
5,355.38
5,355.38
7,803.61
46%
-
To be
establis
hed
To be
establis
hed
-
2 Capital goods
14,800.65
14,800.65
21,066.39
42%
-
To be
establis
hed
To be
establis
hed
-
3 Fuel and energy-related
Activities (not included in Scope1 or
Scope 2)
778.43
778.43
806.07
4%
-
To be
establis
hed
To be
establis
hed
-
4 Upstream transportation and
distribution
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
5 Waste generated in operations
2,289.67
2,289.67
2,834.01
24%
-
To be
establis
hed
To be
establis
hed
-
6 Business travel
127.45
127.45
281.21
121%
-
To be
establis
hed
To be
establis
hed
-
186
Hidroelectrica Group
Retrospective
Milestones and target years
Year Value
2024
Comparative
2024
N
2025
% 2025
vs 2024
2025
2030
2050
Target %
Annual /
Base Year
7 Employee commuting
693.28
693.28
717.50
3%
-
To be
establis
hed
To be
establis
hed
-
8 Upstream leased assets
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
9 Downstream transportation
7,112.18
7,112.18
6,614.42
-8%
-
To be
establis
hed
To be
establis
hed
-
10 Processing of Sold Products
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
11 Use of Sold Products
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
12 End-of-life treatment of sold
products
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
13 Downstream leased assets
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
14 Franchises
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
15 Investments
-
-
-
-
-
To be
establis
hed
To be
establis
hed
-
Total GHG emissions
Total GHG emissions (location- based)
(tCO2eq)
34,728
34,728
43,367
25%
-
To be
establis
hed
To be
establis
hed
-
Total GHG emissions (market- based)
(tCO2eq)
34,730
34,730
43,367
25%
-
To be
establis
hed
To be
establis
hed
-
*Total GHG emissions
by site
(tCO2 equivalent) = Gross GHG emissions Scope 1 + Gross GHG emissions Scope 2
by site
+ Gross GHG emissions Scope 3
**Total Market-Based GHG Emissions (tCO2 Equivalent) = Gross GHG Emissions Scope 1 + Gross Market-Based GHG Emissions Scope 2 + Gross GHG Emissions
Scope 3
The data related to Scope 1 have not been subject to vericaon by another external body, outside the assurance
provider.
The data related to Scope 2 have not been subject to vericaon by another external body, outside the assurance
provider
The data related to Scope 3 have not been subject to vericaon by another external body, outside the assurance
provider.
As part of the assessment of progress towards sustainability objecves, the Hidroelectrica Group chose 2024 as the
base year. No data normalizaon methods or three-year averages were applied. Seng 2024 as a benchmark allows
for future monitoring and evaluaon of whether it connues to be an appropriate basis for sustainability analysis.
In terms of carbon distribuon, the group is not an intensive consume
r of electricity, which means that the consumpon acvity, namely Scope 2 and Scope 3 emissions (the most signicant)
do not depend signicantly on climate variaons.
187
GHG intensity per net revenue
Comparative
2024
N
2025
% N / N-1
Total GHG emissions (location-based) per net revenue
(tCO2eq/Monetary unit)
3.29
4.51
37%
Total GHG emissions (market-based) per net revenue
(tCO2 equivalent/RON million)
3.29
4.51
37%
Correlaon of GHG intensity on income with informaon from nancial reporng
2024
2025
Net revenues used for the calculate GHG intensity (RON
million)
9,123
9,619
Net revenue (other)
0
0
Total net revenue (in financial statements) (RON million)
9,123
9,619
The Hidroelectrica Group does not have a primary data collecon system in place for Scope 3, categories 3.1 and 3.2.
These emission categories esmated based on secondary data represent approximately 80% of total Scope 3 emissions,
20% being calculated with primary data.
Regarding the magnitude and sources of uncertainty associated with energy and emission calculaons, special menon
can be made of the esmaon methods applied using secondary (nancial) data where primary data are not available.
Mainly when esmang Scope 3 emissions, categories 3.1 and 3.2, all input data are secondary, and spent-based
emission factors vary signicantly between regions and from year to year.
The DENZ/DEFRA factors vary from one year to another, the factors used in the calculaon for the 2025 reference year
being those accessed in March 2026, for acvity in 2025.
A supplier's energy label as well as the naonal energy mix vary from year to year. The following table provides general
details of the variaons from the previous year that are signicant as a result of the amount of emissions reported.
Scope
2025 - tones CO2e
2024 - tones CO2e
Variaon
Main drivers of the
variaon
Scope 1
3,237.75
3.544,59
-9%
Increase in natural
gas and fuel
consumpon
(UCMH)
Scope 2
locaon-based
5.63
26.37
-80%
Decrease in
electricity
consumpon from
third pares
(Hidroserv)
Scope 2
market-based
6.25
28.49
-76%
Decrease in
electricity
consumpon from
188
GHGremovals and GHG mitigation projects financed through carbon credits
ESRS E1-7
There have been no removals or storage of GHGs within the operaons of the Hidroelectrica Group, or to which it has
contributed within its value chain, neither upstream, downstream nor outside the value chain.
There have been no GHG absorpon acvies to be converted into carbon credits and there is no strategy to implement
these types of acvies.
Internal carbon pricing
third pares
(Hidroserv)
Scope 3.1
Purchased
goods and
services
7,803.61
5,355.38
46%
Approx. +6%
increase in
purchase volumes
Increase in the EF
values used for
2025 vs 2024
Scope 3.2
Capital goods
21,066.39
14,800.65
42%
Approx. +18%
increase in
purchase volumes
Increase in the EF
values used for
2025 vs 2024
Scope 3.3
Fuel- and
energy-related
acvies (not
included in
Scope 1 and 2)
806.07
778.43
4%
Increase of the grid
RO emission factor
2024 vs 2023;
increase in fuel
quanes
consumed
Scope 3.5
Waste
generated in
operaons
2,834.01
2,289.67
24%
Increase in
quanes of waste
generated/handed
over to collectors
Scope 3.6
Business travel
281.21
127.45
121%
Increase in business
travel costs
Scope 3.7
Employee
commung
717.50
693.28
3%
Employee
commung
behavior
Scope 3.9
Transport and
distribuon
6,614.42
7,112.18
-8%
Increase in the
emission factor
from
Hidroelectrica’s
energy label: 4.332
g CO₂e/kWh (2024)
vs 1.298 g
CO₂e/kWh (2023)
189
ESRS E1-8
The Hidroelectrica Group does not use internal carbon pricing systems.
Ancipated nancial eects from material physical and transion risks and potenal climate-related opportunies
ESRS E1-9
The ancipated nancial eects
4
of signicant physical and transion risks and potenal climate-related opportunies
were not assessed or quaned in detail by the Group, but their relevance and signicance were noted in the double
materiality analysis. They are planned to be assessed and included in a rst esmate in the climate risks and
opportunies study, which will be carried out in the course of 2025 and will be reported the following year. Quantave
esmates have not been nalized, the reason being that the volale regulatory environment in the energy sector in
2025 makes this esmate not yet feasible.
Integraon of sustainability-related performance in incenve schemes
ESRS 2 GOV 3
This informaon is presented in ESRS Chapter 2 - GOV 3.
EU TAXONOMY
Introduction
This secon presents the key performance indicators set out in Arcle 8 of the EU Taxonomy, EU Regulaon 2020/852
5
and the related delegated and implemenng regulaons
6
. The EU Taxonomy is a classicaon system that denes
economic acvies that can be considered environmentally sustainable. The Taxonomy Regulaon is a key element of
the European Commission's acon plan, which aims to redirect capital ows towards a more sustainable and greener
economy. This regulaon denes the criteria and standards necessary to classify sustainable investments, thus
facilitang the allocaon of nancial resources to projects and economic acvies that contribute to achieving
sustainability and environmental protecon objecves. The EU Taxonomy sets out six environmental objecves:
• climate change migaon
• adaptaon to climate change
• sustainable use and protecon of water and marine resources
• The transion to a circular economy
• polluon prevenon and control
• protecon and restoraon of biodiversity and ecosystems
An 'eligible' economic acvity is an acvity that corresponds to the descripon of one of the acvies dened in
Delegated Regulaons (EU) 2021/2139, 2022/1214, 2023/2485 and 2023/2486. An 'eligible' acvity has the potenal
to be considered environmentally sustainable (i.e. 'aligned') if it also fulls the addional criteria listed in the delegated
acts under the Regulaon. More specically, an economic acvity is eligible regardless of whether it already meets one
or all of the technical screening criteria laid down. An 'aligned' acvity must cumulavely comply with the following 4
condions, as set out in Arcle 3 of EU Regulaon 2020/852:
• contributes substanally to one or more of the six environmental objecves;
• does not cause signicant harm to any of the other ve environmental objecves;
4
According to the new Quick Fix delegated act which includes a number of reporting requirements are introduced gradually: the company can comply with ESRS
E1-9 by reporting only qualitative information in the first three years of the preparation of the sustainability statement, if it is not possible to prepare
quantitative disclosures.
190
• respects minimum social safeguards
7
relang to human rights due diligence, the ght against corrupon and
bribery, fair taxaon and fair compeon;
• complies with the technical examinaon criteria established by the EU Commission in accordance with Arcle
10 of EU Regulaon 2020/852.
For the nancial year 2025, the Hidroelectrica Group has the obligaon to report its contribuon in terms of "eligible"
and "aligned" acvies, according to the reporng obligaons for non-nancial enterprises. Alignment is made
towards all six objecves and the reported contribuon refers to 'eligible' acvies for at least one of the
environmental objecves (climate change migaon, adaptaon to climate change, transion to a circular economy,
and protecon and restoraon of biodiversity and ecosystems).
Also, as part of the European Commission's eorts to simplify sustainability reporng under the Omnibus package, we
have adjusted our reporng on the EU Taxonomy to the Simplicaon Regulaon (EU Regulaon 2026/73) and have
chosen to use the updated reporng forms. In accordance with these amendments, we carried out an eligibility
assessment based on an analysis of economic acvies in relaon to those listed in the Annexes to the Climate and
Environment Delegated Acts. The EU Taxonomy framework allows enes to oponally apply the threshold of 10% of
the related turnover, CAPEX or OPEX for reporng eligible or aligned acvies.
Following the evaluaon of operang expenses (OPEX), we found that they are not signicant from the perspecve of
the EU Taxonomy. In accordance with the applicable provisions, the OPEX KPI numerator is presented with zero value,
being below the 10% threshold and exempt from the calculaon, and the total OPEX value is provided separately,
according to the reporng requirements.
Overview
This report includes the enes of the Hidroelectrica Group (hereinaer referred to as the "Hidroelectrica Group"),
consisng of:
• Societatea de Produce a Energiei Electrice în Hidrocentrale, Hidroelectrica S.A, (hereinaer referred to as
Hidroelectrica S.A., "Hidroelectrica S.A.")
• Hidroserv S.A. (hereinaer referred to as Hidroserv S.A) "Hidroserv")
• Uzina de Construcţii Macchine Hidroenergece SRL (hereinaer referred to as the "UCMH")
The Hidroelectrica Group is the largest electricity producer in Romania. The main acvies of the group include:
• Electricity producon in hydropower and wind turbines;
• Sale of electricity, as well as supply of electricity to end users;
• Realizaon of system services for the Naonal Energy System.
The Hidroelectrica Group carried out the assessment for the nancial year 2025 using the acts under the EU Taxonomy
Regulaon and the related documentaon, the addional guidance issued by the European Commission in the form of
frequently asked quesons (FAQs) and, where the criteria and guidelines sll leave room for interpretaon, its own
analysis of the criteria. The EU Taxonomy is itself subject to regular review, and the interpretaon of the Taxonomy and
its criteria may change over me, which could lead to dierent outcomes in terms of eligibility and alignment with the
EU Taxonomy in future reporng periods
Description of activities
Assessment of eligibility for the EU taxonomy for the nancial year ended 31 December 2025
The evaluaon of the acvies carried out by the Hidroelectrica Group was carried out for each of the three nancial
indicators (Turnover, CAPEX and OPEX) based on the consolidated nancial statements prepared in accordance with
the provisions of the Internaonal Financial Reporng Standards adopted by the European Union, for the nancial year
191
ended December 31, 2025. The double counng of the values underlying the calculaon of the indicators was avoided
by eliminang the values of transacons concluded within the group, according to the requirements of IFRS 10
Consolidated Financial Statements.
In order to assess whether the acvies of the Hidroelectrica Group are eligible under the EU taxonomy, the
descripons of the acvies and/or services oered were analyzed with the descripons of the acvies in the
taxonomy that can contribute to one of the 6 objecves. Thus, we examined all the economic acvies carried out by
the group to see which of them are eligible and aligned according to Annexes I and II of the Climate Delegated Act.
Below are described the potenally eligible acvies and the analysis of the environmental objecve for which they
can qualify as eligible, idened at the level of Hidroelectrica SA.
Assessment of the alignment of acvies
2 eligible acvies of Hidroelectrica SA were idened in 2025, for which there are signicant CAPEX revenues or
expenses incurred at the level of the Hidroelectrica Group. In order to assess their alignment, the following were
carried out:
• Assessment of the substanal contribuon
• Assessment of contribuon to objecves and DNSH
• Verifying the fullment of the minimum social guarantees.
For Hidroserv and UCMH, no eligible acvies were idened for which there are signicant CAPEX revenues or
expenses at the level of the Hidroelectrica Group.
Main acvity
The main acvity of Hidroelectrica SA consists of the producon of electricity from hydropower sources, according to
NACE code 3511 (NACE equivalent D35.11), thus the main revenues of the Hidroelectrica Group come from its own
producon and sale of electricity from hydropower sources, with most of the revenues coming from the producon of
hydropower renewable electricity.
The main acvity of Hidroelectrica SA corresponds to Acvity 4.5. Electricity generaon from hydropower, in Annex
no. 1 of the Delegated Regulaon no. 2021/2139, being an acvity that can substanally contribute to the
environmental objecve of Climate Change Migaon. This involves operang hydroelectric power plants to
generate electricity from renewable sources (water), managing water resources (dams and reservoirs), and ensuring
the stability of the electricity grid. The company also invests in the maintenance and modernizaon of the hydropower
infrastructure.
According to the analysis of the technical criteria on the substanal contribuon to the environmental objecve
Climate Change Migaon and the results of the Do No Signicant Harm ("DNSH") analysis, the acvity does not meet
the technical criteria for substanal contribuon to the environmental objecve and not to cause signicant harm to
all the other ve environmental objecves, according to the assessment carried out.
Secondary acvity
A rst secondary acvity is represented by the producon of wind energy, which corresponds to Acvity 4.3 - Electricity
generaon from wind power in Annex no. 1 of Delegated Regulaon no. 2021/2139, being an acvity that can
substanally contribute to the environmental objecve Climate change migaon.
According to the analysis of the technical criteria on the substanal contribuon to the environmental objecve
Climate Change Migaon and the results of the Do No Signicant Harm ("DNSH") analysis, the acvity does not meet
the technical criteria for substanal contribuon to the environmental objecve and not to cause signicant harm to
all the other ve environmental objecves, according to the assessment carried out.
Evaluaon results
To be aligned with the EU Taxonomy, eligible acvies must meet all the criteria for substanal contribuon to an
environmental objecve, not cause signicant harm to any of the other ve environmental objecves (DNSH) and
192
comply with minimum social guarantees. For each of the 2 eligible economic acvies, we failed to meet these criteria.
In view of these aspects, the nal step towards aligning the taxonomy in line with the minimum social guarantees has
not been taken either.
Turnover, CAPEX and OPEX Performance Indicators
For the Hidroelectrica Group, the total amounts (KPIs) have been dened and calculated as follows:
Key performance indicators ("Indicators") include turnover, CAPEX and OPEX. For the 2025 reporng period, indicators
must be submied for both Taxonomy-eligible/Taxonomy-aligned and ineligible acvies.
We determine the indicators eligible for taxonomy in accordance with legal requirements and describe our accounng
policy in this regard as follows:
Turnover
Eligibility denion – The share of Taxonomy-eligible economic acvies in our total turnover was calculated as part
of the net turnover derived from products and services associated with Taxonomy-eligible economic acvies
(numerator) divided by net turnover (denominator), in each case for the nancial year from 1 January 2025 to 31
December 2025.
Alignment denion – The share of Taxonomy-aligned economic acvies in our total turnover was calculated as part
of the net turnover derived from products and services associated with Taxonomy-aligned economic acvies
(numerator) divided by net turnover (denominator), in each case for the nancial year January 1, 2025 – December 31,
2025.
The denominator of the turnover indicator is based on the net turnover recognized in the Consolidated Financial
Statements prepared in accordance with IFRS-EU for the nancial year ended 1 January 2025 – 31 December 2025
based on the accounng policies. The consolidated turnover, in the total amount of 9,619,010,000, is reconciled to the
Consolidated Financial Statements prepared in accordance with IFRS-EU for the nancial year ended 31 December
2025, Note 11.
The numerator of the indicator for eligible turnover shall be dened as the net turnover derived from products and
services associated with economic acvies eligible for the Taxonomy, as follows:
• Acvity 4.5 - Electricity generaon from hydropower belongs to the company Hidroelectrica SA and generates
turnover by producing energy from hydropower sources. The amount is idened at the group level by using analycal
accounng accounts/cost centers.
• Acvity 4.3 - Electricity generaon from wind power belongs to the company Hidroelectrica SA and generates
turnover by producing energy from wind sources. The amount is idened at the group level by using analycal
accounng accounts/cost centers.
KPI CAPEX
Denion - The CAPEX indicator is equal to the Taxonomy-aligned/Taxonomy-aligned CAPEX (numerator) divided by
the total CAPEX (denominator must include both intangible and tangible assets) is recognised in the Consolidated
Financial Statements prepared in accordance with IFRS for the nancial year ended December 31, 2025 based on the
accounng policies presented. Capital expenditures are reconciled with the amounts presented in Note 22 of the
Consolidated Financial Statements prepared in accordance with IFRS-EU for the nancial year ended December 31,
2025, totalling 591,071,000. RON. This value represents addions to tangible and intangible assets, including leases
(IFRS 16) during the nancial year under review before depreciaon, amorzaon and any revaluaons. The value of
intangible assets is 17,576,000 RON and is not disclosed separately in the Notes to the nancial statements. The
numerator of the CAPEX indicator shall be dened as investments associated with economic acvies eligible for the
Taxonomy as follows:
Associated investments (CapEx a)
193
• Acvity 4.5 - Electricity generaon from hydropower belongs to the company Hidroelectrica SA and generates
turnover by producing energy from hydropower sources. The amount is idened at the group level by using
analycal accounng accounts/cost centers.
• Acvity 4.3 - Electricity generaon from wind power belongs to the company Hidroelectrica SA and generates
turnover by producing energy from wind sources. The amount is idened at the group level by using analycal
accounng accounts/cost centers.
• Acvity 4.1 - Electricity generaon using solar photovoltaic technology belongs to Hidroelectrica SA and will
generate turnover by producing energy from photovoltaic sources. The amount is idened at the group level
by using analycal accounng accounts/cost centers.
KPI OPEX
Denion – The OPEX indicator is dened as Taxonomy-eligible/aligned OPEX (numerator) divided by total OPEX. The
expense accounts for external benets (maintenance and repair expenses, royalty expenses, third-party service
expenses) are recognised in the Consolidated Financial Statements prepared in accordance with IFRS for the nancial
year ended December 31, 2025, based on the accounng policies presented on the basis of the accounng policies.
The operang expenses related to the OPEX indicator analysed for the purpose of the taxonomy are included in the
prot and loss presentaon of the Consolidated Financial Statements prepared in accordance with IFRS-EU for the
nancial year ended 31 December 2025. These expenses are mainly found on the line "Repairs, maintenance, materials
and consumables", but are not presented separately. The total value of operang expenses for the reporng period,
as dened in the EU Taxonomy, amounts to 80,571,741RON.
Operaonal expenses, as dened by the EU Taxonomy, have a low weight and are insignicant compared to the other
indicators (CapEx and turnover). Following the analysis carried out, the company did not idenfy any operaonal
expenses (OpEx) eligible or aligned with the EU Taxonomy that would be directly associated with specic
decarbonizaon acons. Thus, operaonal expenses are not considered a signicant vector of the climate transion in
the context of the OpEx KPI indicator in the EU Taxonomy. Consequently, the OpEx indicator is presented as having an
insignicant value, and the company's decarbonizaon acons are mainly reected in capital investments (CapEx), in
line with the strategy of developing producon capacies from renewable sources.
194
Proporon of turnover, CapEx, OpEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic acvies – disclosure
covering year 2025 (summary KPIs)
Proporon of turnover from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic acvies – disclosure covering year 2025
(acvity breakdown)
Turnover
9,619,010,000
Financial year (N)
2025
Environmental objecve of Taxonomy-aligned acvies
Economic acvies
Code
Taxonomy-eligible
KPIs (Proporon of
taxonomy-eligible
turnover)
Taxonomy-aligned
KPI (monetary
value of turnover)
Taxonomy-
aligned KPIs
(Proporon
of
Taxonomy-
aligned
turnover)
Climate
change
migaon
Adaptaon to
climate
change
Water
Circular
economy
Polluon
Biodiversity
Facilitaon
acvity
Transion
acvity
Ratio of
taxonomy-
aligned part of
the activity to
taxonomy-
eligible activity
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
Text
%
RON
%
%
%
%
%
%
%
(F, as the case
may be)
(T, as
applicable)
%
Producon of electricity
from hydropower
CCM 4.5
71.7%
-
0%
-
-
-
-
-
-
No
No
-
Electricity producon from
wind energy
CCM 4.3
1.5%
-
0%
-
-
-
-
-
-
No
No
-
Sum of acvity or aligned part per objecve
-
-
-
-
-
-
Total KPI (turnover)
73.2%
0%
0%
-
-
-
-
-
-
-
-
-
Financial year
(N)
2025
Breakdown by environmental objecves of Taxonomy-aligned acvies
KPI
Total
Proporon of
Taxonomy-
eligible
acvies
Taxonomy-
aligned
acvies
Proporon of
Taxonomy-
aligned
acvies
Climate Change
Migaon
Climate
Change
Adaptaon
Water
Circular
Economy
Polluon
Biodiversity
Proporon of
enabling
acvies
Proporon of
transional
acvies
Not assessed
acvies
considered non-
material
Taxonomy-aligned
acvies in
previous nancial
year (2024)
Proporon of
Taxonomy-
aligned
acvies in
previous
nancial year
(2024)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
Text
RON
%
RON
%
%
%
%
%
%
%
%
%
%
RON
%
Turnover
9,619,010,000
73.2%
-
0%
-
-
-
-
-
-
-
-
-
-
0%
CapEx
591,071,000
98.1%
-
0%
-
-
-
-
-
-
-
-
-
-
0%
OpEx
80,571,741
0%
-
-
-
-
-
-
-
-
-
-
-
-
-
195
Proporon of CapEx from products or services associated with Taxonomy-eligible or Taxonomy-aligned economic acvies – disclosure covering year 2025
(acvity breakdown)
CapEx
591,071,000
Financial year (N)
2025
Environmental objecve of Taxonomy-aligned acvies
Economic acvies
Code
Taxonomy-eligible KPIs
(Proporon of
taxonomy-eligible
CapEx)
Taxonomy-
aligned KPI
(monetary value
of CapEx)
Taxonomy-
aligned KPIs
(Proporon of
Taxonomy-
aligned CapEx)
Climate
change
migaon
Adaptaon
to climate
change
Water
Circular
economy
Polluon
Biodiversity
Facilitao
n acvity
Transion
acvity
Ratio of taxonomy-
aligned part of the
activity to
taxonomy-eligible
activity
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
Text
%
RON
%
%
%
%
%
%
%
(F, as the
case may
be)
(T, as applicable)
%
Producon of electricity from
hydropower
CCM 4.5
77.9%
-
0%
-
-
-
-
-
-
No
No
0%
Electricity producon from wind
energy
CCM 4.3
10.5%%
-
0%
-
-
-
-
-
-
No
No
0%
Electricity producon from solar
photovoltaic energy
CCM 4.1
9.8%
-
0%
-
-
-
-
-
-
No
No
0%
Sum of acvity or aligned part per objecve
-
-
-
-
-
-
Total KPI (Capex)
98.1%
-
0%
-
-
-
-
-
-
-
-
0%
BIODIVERSITY AND ECOSYSTEMS
ESRS E4
The Hidroelectrica Group manages a signicant porolio of electricity generaon capacies, including
hydropower plants and wind farms. In carrying out its acvies, the Group takes into account potenal
impacts on the environment and biodiversity, in accordance with the applicable regulatory framework. For
the operated sites, the Group applies measures for the protecon of aquac, terrestrial and aerial
ecosystems established by the environmental regulatory acts issued by the competent authories (e.g.
environmental agreements, water management permits), in accordance with European Union and
naonal legislaon. Also, acvies are carried out to monitor the quality of abioc and bioc factors,
where these obligaons are provided for in the regulatory acts. Projects for the development,
modernisaon and retrong of energy infrastructure are subject to environmental impact assessment
procedures, including the assessment of potenal impacts on biodiversity and ecosystems, in accordance
with the applicable legislaon. Impacts on biodiversity associated with hydropower acvies can occur
mainly in the construcon and operaon stages of projects. These impacts are idened and managed
through avoidance, migaon measures, where appropriate, as set out in the regulatory acts and
described in secon E4 IRO-1.
Material impacts, risks and opportunies and their interacon with strategy and business model
SBM-3
The Hidroelectrica Group integrates the consideraons regarding the protecon of biodiversity and
ecosystems in the planning and implementaon process of investment projects. For projects that may
have an inuence on protected natural areas, prevenon and reducon measures are applied, where
appropriate, as established by the environmental agreements issued by the competent authories. At the
strategic and planning level, the Group's investment projects are subject to the procedures for assessing
the impact on environmental factors and establishing the environmental protecon condions applicable
both in the construcon and operaon phases, and the condions provided for in the environmental
permits are applicable for operaon. Based on environmental impact assessments carried out prior to the
implementaon of the projects, environmental agreements and environmental permits issued by the
competent authories, no signicant negave impacts on threatened species generated by the Group's
operaons were idened during the reporng period.
The implementaon of the measures and the compliance with the condions of the regulatory acts are
monitored through periodic acvies, with the frequencies established by the competent authories
(monthly, quarterly, half-yearly, annually).
The Hidroelectrica Group manages the sites in accordance with the applicable environmental regulatory
acts, with the objecve of liming the impact on environmental factors and responsible management of
the associated opportunies. The Group's acvies are carried out in accordance with the requirements
of the applicable regulatory acts, which include prevenve measures, reducon of the impact on
biodiversity, as well as periodic monitoring obligaons. Compliance with these requirements is veried
through monitoring programmes and reporng to the competent authories. The acons include
monitoring biodiversity and ensuring ecological ows, as detailed in ESRS Secon E4-5. This approach
197
contributes to the long-term sustainability of operaons and the fullment of environmental
requirements.
Potenal impacts on biodiversity, including species and habitats, were assessed as material in the dual
materiality analysis, given the nature of hydropower acvies, which involve the presence of dams and
reservoirs and may inherently lead to changes in the hydrological regime or temporary disturbance of
habitats, in parcular in the case of maintenance and modernisaon works. The materiality of this impact
reects the risk and potenal impact inherent in the acvies, assessed before the applicaon of
prevenon, reducon and control measures. In pracce, these impacts are managed by applying the
measures set out in environmental agreements and permits, drawn up on the basis of environmental
impact assessments and agreed with the competent authories, including specic measures to protect
species and habitats. As a result of the implementaon of these measures, residual impacts are generally
limited, temporary and monitored in accordance with applicable legal requirements. Signicant negave
impacts on soil degradaon, desercaon and soil sealing were not assessed as material.
The menoned posive impacts are of a historical nature and are associated with the existence of
reservoirs created prior to the reporng period, represenng characteriscs of the sites and not the result
of current deliberate intervenons of the Hidroelectrica Group aimed at creang or improving habitats.
Aer their construcon, certain areas were designated by the competent authories as protected natural
areas or Natura 2000 sites, as a result of the ecological value acquired over me. These eects do not
derive from current operaonal acvies and are not managed as deliberate posive impacts under
general environmental protecon procedures applicable to the Group's acvies.
Therefore, in the double materiality analysis, these aspects were considered contextual characteriscs of
the sites and were not assessed as posive material impacts, according to the methodological criteria
applied.
The Hidroelectrica Group operates an extensive porolio of hydropower infrastructures, which includes:
• Over 180 hydroelectric power plants (examples: Porle de Fier I and II – on the Danube, one of
the largest hydropower plants in Europe; Vidraru – on the Argeș River; Lotru-Ciunget – on the
Lotru River, high-capacity underground power plant)
• Reservoirs (examples: Bicaz Lake (Izvorul Muntelui) – on the Bistrita River, also used for navigaon;
Râureni Lake – on the Olt River);
• Dams and other auxiliary infrastructures (examples: Gura Apelor Dam (on the Râul Mare) – the
largest rockll dam in Romania; Vidraru Dam – contributes to the stabilizaon of the hydrological
regime).
The table below shows the Hidroelectrica Group's projects under development, on whose sites protected
natural areas were subsequently established (totally or parally). For the hydropower objecves in
operaon whose locaons have been included in the network of protected natural areas, the operaon is
carried out based on the environmental regulatory acts issued by the competent authories.
198
The assessment of the impacts on biodiversity, dependencies and ecological status of the protected
natural areas for the Hidroelectrica Group's projects is carried out within the framework of the
environmental impact assessment and appropriate assessment procedures, nalized by environmental
agreements issued by the competent authories, in accordance with the applicable legislaon.
These assessments include the analysis of the inial state of ecosystems, the idencaon of potenal
impacts on species and habitats, and the establishment of prevenon, reducon or compensaon
measures, where appropriate. The competent authories involved include the Ministry of Environment,
Water and Forests, the Naonal Agency for Environment and Protected Areas – ANMAP and the
administrators of protected natural areas, according to the applicable legal framework.
The sustainability report presents a summary at the material site level, and detailed informaon on the
types of impacts, dependencies and ecological status of the areas is documented in the environmental
agreements and impact studies related to each project, which are ocial public documents. Relevant
examples can be found at the following ocial links:
AHE Pașcani – Ministry of Environment: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-
impact-asupra-mediului-pentru-proiecte/amenajari-hidrotehnice-in-romania/ahe-pascani/
AHE Cerna-Belareca: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-impact-asupra-
mediului-pentru-proiecte/amenajari-hidrotehnice-in-romania/ahe-cerna-belareca/
AHE Livezeni-Bumbeș: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-impact-asupra-
mediului-pentru-proiecte/amenajari-hidrotehnice-in-romania/ahe-livezeni-bumbes/
AHE Surduc-Siriu: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-impact-asupra-mediului-
pentru-proiecte/amenajari-hidrotehnice-in-romania/ahe-surduc-siriu/
AHE Cornetu-Avrig: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-impact-asupra-
mediului-pentru-proiecte/amenajari-hidrotehnice-in-romania/ahe-cornetu-avrig/
CHE Cerna-Motru-Tismana etapa II: hps://mmediu.ro/domenii/mediu/evaluare-impact/evaluare-
impact-asupra-mediului-pentru-proiecte/amenajari-hidrotehnice-in-romania/che-cerna-motru-smana-
etapa-a-ii-a/
These documents include the descripon of the impacts, the assessment of the ecological status of the
areas and the measures established for the protecon of biodiversity, in accordance with the applicable
requirements.
Crt.
no.
Hidroelectrica
Project
Descripo
n
Naonal/Natural Park and
Natura 2000 Site (number
and name)
Locaon to
Natura 2000
sites *
Types of
impacts/depend
encies idened
Competent
authority
199
1
Secondary
catchment
removal works –
Vâlcea
accumulaons
Unclogging
of
secondary
catchments
ROSAC0085 Frumoasa;
ROSPA0043 Beauful;
ROSAC0188 Parâng;
ROSAC0128 North of East Gorj
On sites
They do not
generate material
impacts on
biodiversity, the
acvies are
carried out based
on regulatory
acts, in
compliance with
the protecon
condions
imposed by the
competent
authories.
DJM Vâlcea
2
Unclogging works
CHEmp Șebeș –
Făgăraș
Threshold
unclogging
ROSPA0098 Făgăraș
Piedmont
On site
It does not
generate material
impacts on
biodiversity; The
works are carried
out on the basis
of the decision of
the competent
authority, without
the need for an
environmental
impact
assessment.
DJM Brașov
3
Rehabilitaon of
Dobreș CHP
installaons
Rehabilitao
n of water
installaons
ROSCI0013 Bucegi
On site
It does not
generate material
impacts on
biodiversity; The
works shall be
carried out in the
exisng
infrastructure, in
accordance with
the applicable
regulatory acts.
APM
Dâmbovița
4
Rehabilitaon of
the Scropoasa
adducon gallery
Rehabilitao
n of the
adducon
gallery
ROSCI0013 Bucegi
On site
It does not
generate material
impacts on
biodiversity; The
acvies are
carried out within
the exisng
APM
Dâmbovița
200
infrastructure,
without direct
interacons with
natural habitats.
5
Rehabilitaon of
the Porle de Fier
I stables
Equipment
rehabilitao
n
Porle de Fier Natural Park
ROSCI0206 The Porle de
Fier
ROSPA0026 Danube Course -
Baziaș - Porle de Fier
within
protected
natural areas
It does not
generate material
impacts on
biodiversity; The
works are carried
out on the
exisng
equipment, based
on the decision of
the competent
authority.
DJM
Mehedin
6
Long River Polder
Repair Works
Polder
repairs
-
–
It does not
generate material
impacts on
biodiversity; The
maintenance
works are carried
out outside the
protected natural
areas.
DJM Caraș-
Severin
7
Unclogging of the
Olt Mijlociu
counter-canal
Counter-
channel
unclogging
ROSPA0106 Lower Olt Valley
On site
It does not
generate material
impacts on
biodiversity; The
acvies shall be
carried out in
compliance with
the condions set
by the competent
authories.
DJM Vâlcea
8
Connecon works
DMD – CHE
Govora
Conneco
n works
ROSPA0106 Lower Olt Valley
On site
It does not
generate material
impacts on
biodiversity; the
works are carried
out on the basis
of the agreement
issued by the
competent
authority, in
compliance with
ANANP ST
Vâlcea
201
the condions of
protecon.
9
Leveling of the
crown of the Olt
dams
Filling and
leveling
works on
the canopy
of
ROSPA0106 Lower Olt Valley
On site
It does not
generate material
impacts on
biodiversity; the
works are carried
out on the basis
of the agreement
issued by the
competent
authority, in
compliance with
the condions of
protecon.
DJM Vâlcea
10
Regularizaons
Strejeș –Arceș
–Frunzaru
Downstream
regularizao
ns
ROSPA0106 Lower Olt Valley
On site
It does not
generate material
impacts on
biodiversity; The
works are carried
out based on the
agreement issued
by the competent
authority, in
compliance with
the imposed
condions.
ANMAP
11
Unclogging of the
lower Olt canal
Counter-
channel
unclogging
ROSPA0106 Lower Olt Valley;
ROSAC0376 Olt River
between Mărunței and
Turnu Măgurele
On site
It does not
generate material
impacts on
biodiversity; The
acvies are
carried out based
on regulatory
acts, in
compliance with
the protecon
condions.
ANMAP
12
Channeling of the
Costeș stream
bed
Bed ducng
works
Buila-Vânturarița Naonal
Park
ROSAC0015 Buila –
Vânturarița
Within
protected
natural areas
It does not
generate material
impacts on
biodiversity; The
Buila-
Vânturarița
Naonal Park
Administraon
202
ROSPA0025 Cozia – Buila
Vânturarița
works are carried
out based on the
agreement issued
by the
Administraon of
the Protected
Natural Area, in
compliance with
the specic
condions.
13
Refurbishment of
the Vidraru AHE
Refurbishmen
t and
upgrading of
exisng
capacies
ROSAC0122 Făgăraș
Mountains
On site
The acvies are
carried out on the
basis of the
environmental
agreement,
without aecng
the conservaon
status of habitats
and species of
community
interest; measures
established by the
environmental
agreement being
implemented.
APM Argeș
*Note: The informaon presented in the table reects the analysis carried out based on the environmental
documentaon issued by the competent authories for the projects analyzed. According to them, the
acvies carried out do not generate material impacts on biodiversity, being carried out within the exisng
infrastructure and in compliance with the condions provided for in the applicable regulatory acts.
Descripon of processes to idenfy and assess material biodiversity and ecosystem-related impacts, risks
and opportunies
IRO-1
The process of idenfying and assessing impacts, risks and opportunies related to biodiversity and
ecosystems is integrated into the exisng environmental management systems and regulatory procedures
applicable to the acvies of the Hidroelectrica Group, including environmental impact assessment
procedures, environmental agreements and permits and internal compliance monitoring processes.
The impact and risk assessment includes both own operaons and relevant elements of the upstream and
downstream value chain, insofar as they are associated with the Group's acvies, such as the design and
execuon of works carried out by contractors, which are subject to the requirements of environmental
203
agreements, the operaon of accumulaons and ow management, with potenal impact on ecosystems
and downstream water users.
The assessment is based on environmental impact assessments, condions in environmental agreements
and monitoring of their compliance.
Dependencies are mainly idened through environmental impact assessments and appropriate
assessments, hydrological studies, condions set out in environmental agreements and permits,
monitoring of ecological ows and environmental parameters.
These assessments shall include the analysis of relevant ecosystem services, in parcular the availability
of water resources, the funconing of aquac ecosystems and the stability of habitats, as well as the
idencaon of situaons in which these services may be disturbed.
The process includes the idencaon and assessment of physical and transional risks associated with
biodiversity, including regulatory risks, associated with changes to the legislave framework on
biodiversity protecon, operaonal risks, associated with environmental restricons or condions in
regulatory acts, opportunies associated with the implementaon of protecon and modernisaon
measures that contribute to reducing environmental impact.
The assessment of these risks is carried out within the framework of the double materiality analysis and
the environmental impact assessment processes.
The assessment shall also take into account relevant systemic risks, in parcular those associated with
changes in hydrological and climac condions, which may aect aquac ecosystems and the availability
of water resources, including in the climate risk and vulnerability study, where appropriate.
Consultaons with local communies and other stakeholders are carried out within the framework of
environmental impact assessment procedures organised by the competent authories, in accordance with
the applicable legislaon.
The results of these consultaons are analysed in the environmental documentaon and may lead to the
compleon of the impact assessment or the establishment of addional measures to prevent and reduce
the impact on biodiversity and ecosystem services. The relevant informaon resulng from these
processes was also taken into account in the double materiality analysis, in parcular at the stage of
idenfying and assessing potenal impacts on water-dependent ecosystems and communies.
For example, in the case of hydropower projects located in or in the vicinity of protected natural areas
(e.g. Livezeni–Bumbeș HPA or Cerna-Belareca HPA), consultaons carried out in the framework of
environmental impact assessment procedures have contributed to the establishment of measures and
condions regarding the protecon of aquac habitats, the maintenance of ecological ows and the
monitoring of relevant species and habitats. These measures are reected in the environmental
agreements and operang condions of hydropower objecves.
204
The process described is supported by environmental agreements and environmental permits,
environmental impact studies and appropriate assessments, double materiality analysis carried out
according to ESRS requirements.
The responsibility for the applicaon of this process lies with the internal structures responsible for
environmental management, as well as with the structures involved in the development and operaon of
the projects, in accordance with the tasks established by the internal regulaons and applicable regulatory
acts.
The assessment shall be carried out on a regular basis, including as part of the processes of compliance
with environmental regulatory acts, as well as whenever new projects are developed or relevant changes
in operang condions occur.
The assessment of impacts, risks and opportunies takes into account criteria such as the severity of the
impact, duraon, reversibility, likelihood of occurrence, sensivity of the aected ecosystems and the
requirements of the applicable regulatory framework.
Currently, these elements are integrated into the environmental management system and the exisng
operaonal procedures, and the Group is considering consolidang and formalizing them in a dedicated
procedure, in the context of the implementaon of ESRS requirements.
Thus, following the double materiality analysis, the process of which is described in ESRS Chapter 2 Secon
IRO-1, potenal impacts on biodiversity associated with the determinants of the direct impact on
biodiversity decline were idened for the acvity of the Hidroelectrica Group, including changes in land
use in the context of projects under development. However, following the applicaon of the materiality
assessment criteria, these impacts were not assessed as material for the acvies of the Hidroelectrica
Group.
The impacts assessed as material are those related to the sub-heading 'Impact on species characteriscs',
including potenal impacts associated with ensuring green ows and operang energy infrastructure, as
presented in the table below. The topic of biodiversity and ecosystems was assessed as material for
Hidroelectrica SA, not for Hidroserv and UCMH, its subsidiaries. This delimitaon is due both to the eld
of acvity of Hidroelectrica SA and to the specicity of the acvies of Hidroserv and UCMH, which are
oriented towards services and equipment producon, without a signicant impact on the ecosystems in
which they operate. Thus, the aspects presented in the chapter on biodiversity and ecosystems are
relevant to the operaons of Hidroelectrica SA.
The conclusions of the double materiality analysis are summarized in the table below and the relevant
topics are addressed in the following secons:
205
Biodiversity and
ecosystems
Impact
Locaon
on the
value
chain
Risk/Opportunity (R/O)
Determinants of direct
impact on biodiversity loss
No material impacts were idened.
Potenal impacts were idened, but
they were assessed as non-material
following the double materiality
analysis.
Own
operaons
Financial risk: This potenal risk could only produce
eects on possible delays in the compleon of
projects under construcon. Currently, there are no
new projects and we refer strictly to the projects
under development, which amount to approx. 200
MW new installed capacity, (compared to the total
operang capacity of approx. 6300 MW).
Impact on species
characteriscs
Potenal negave impact:
1. Hydropower: Failure to ensure the
downstream easement ow could
inuence the welfare of aquac species.
2. Wind energy: There is a potenal
impact on the avifauna from wind farms,
with the menon that they have been
built recently, in accordance with
European Direcves with strict
assessment on the environment and
biodiversity, mainly avoiding bird
migraon routes.
3. Other producon acvies: UCMH's
equipment producon acvies can
aect biodiversity if the enre value
chain is taken into account (from the
extracon of metals, used in the
producon process)
These impacts are assessed as potenal
and are managed by complying with
environmental ows and measures set
out in environmental regulatory acts.
Own
operaons
and
upstream
value
chain
Financial risks
1. Potenal regulatory risks (e.g. green ows) could
generate nancial risks in the sense of reducing
electricity producon and possible investment works.
2. Other equipment producon acvies: Risk of non-
compliance with regulatory acts (approvals,
agreements, authorizaons).
For the Group's projects at an advanced stage of implementaon, the environmental impact assessment
procedures, carried out under the coordinaon of the competent authories for environmental
protecon, included the idencaon and assessment of current and potenal impacts on biodiversity
and ecosystems. The results of these assessments were also taken into account in the double materiality
analysis. The evaluaons were carried out on the basis of clear criteria, which include:
• Signicance of impact: Analysis of the intensity and magnitude of impacts on biodiversity,
including idencaon of protected species and habitats of conservaon interest in potenally
aected areas.
• Duraon and reversibility of impact: Assessing short-, medium- and long-term impacts and
determining the capacity of ecosystems to regenerate from intervenons.
• Compliance with environmental legislaon: Compliance with the requirements established by
GEO no. 57/2007 on the regime of protected natural areas, conservaon of natural habitats, wild
206
ora and fauna, with subsequent amendments and compleons, as well as by the Habitats
Direcve and the Birds Direcve.
• Use of monitoring tools: Field analyses to assess the conservaon status of habitats/species and
biodiversity and the use of standardised methodologies for monitoring species and habitats (e.g.
Guide on unitary protocols and methodologies for monitoring the conservaon status of species
of community interest in Romania, Guide on monitoring protocols and unitary methodologies for
monitoring the conservaon status of habitats of Community Interest in Romania, Standard
Guide for the Monitoring of Bird Species of Community Interest in Romania).
The assessments carried out at the level of the operated sites are carried out by cered persons, in
accordance with the applicable legal requirements. The documentaon and environmental impact studies
related to projects under development or refurbishment are also prepared by cered persons. Regular
monitoring, including those on biodiversity, water and sediment quality, as well as noise levels, shall be
carried out by authorised providers, with the frequency set out in the regulatory acts, and the results shall
be reported to the competent authories.
For ongoing projects, public consultaons/debates were carried out in accordance with the environmental
impact assessment procedure.
The table below shows the projects in dierent stages of development or regulatory procedures, as well
as the (target) installed capacity related to them and the status of obtaining the environmental agreement,
at the date of reporng:
Site name
Capacity (Installed Target)
Status of obtaining environmental
agreement
AHE of the Jiu River on the Livezeni -
Bumbești sector
65 MW
The Environmental Agreement no.
2/17.06.2025; The agreement is
challenged in court, and until the
dispute is resolved, no activities are
carried out within the project.
Cerna-Motru-Tismana hydrotechnical
and energy complex, stage II
The project does not change the already
installed power (10 MW), only the
storage capacity and the energy
produced (the equipment is already
installed)
The environmental agreement no.
2/09.03.2026.
AHE Răstolița
35.2 MW
The environmental agreement related
to the Răstolița AHE project was
suspended by a final court decision. As
a result of this decision, no project
implementation activities were carried
out during the reporting period. At the
207
same time, the environmental
agreement is the subject of a dispute
regarding its annulment, pending
before the Cluj Tribunal.
Floating system arrangement -
photovoltaic panels - pilot project
Nufărul
10 MW
The environmental agreement no.
8/25.06.2024 and is currently being
implemented.
Photovoltaic Power Plant – CEF Tudor
Vladimirescu
45.94 MW
The environmental agreement
no.910/27.01.2025 was issued
Pașcani AHE, on the Siret River
9.4 MW
The Environmental Agreement no.
3/10.10.2025 and the project is
currently in the implementation stage.
Râul Mare Retezat AHE – secondary
adduction Râu Bărbat-outlet (part of
the Râul Mare Upstream AHE)
To be established
For the project HE Râul Mare Retezat –
secondary adduction Râu Bărbat –
outlet, the procedure for obtaining the
environmental agreement was not
initiated by the date of reporting, as
there was no administrative act issued
by the competent authority in this
regard.
CHEMP Poneasca
1.8 MW
In the recruitment phase at DJM Caraș-
Severin
AHE Cerna – Belareca. Cădere Belareca
14.7 MW
The Environmental Agreement no.
1/16.04.2025At the date of reporting,
the project is in the preparation stage of
implementation, and the procedure for
obtaining the building permit is
underway.
AHE a râului Olt defileu, sector Cornetu-
Avrig. CHE Câineni
40.5 MW
At the stage of the issuance of the
environmental agreement by the
MMAP
AHE Surduc -Siriu
55 MW
At the stage of the issuance of the
environmental agreement by the
MMAP
At the me of reporng, for the projects presented in the table, no construcon acvies or physical
intervenons were carried out on the sites in 2025, as they are in dierent stages of the environmental
208
regulatory procedures, the perming process or in the preparaon stage of the implementaon of
investments.
The comments and observaons made by the public were analyzed and dealt with during the consultaons
carried out as part of the environmental impact assessment procedures carried out by the competent
authories for environmental protecon, in accordance with the requirements of Law no. 292/2018.
Consultaons with potenally aected communies, carried out in the framework of regulatory
procedures for projects, included dialogue with local communies and environmental organisaons in
order to idenfy relevant biodiversity issues. Experts and local groups were also involved to beer
understand dependencies and potenal impacts on common ecosystems.
As part of this process, biodiversity-sensive areas have been idened, where operaons could
generate impacts, as well as possible eects on communies dependent on ecosystem services,
including acvies such as shing or ood protecon funcons. Measures to migate the impact on
biodiversity
The Hidroelectrica Group has carried out studies to assess the impact on biodiversity and ecosystems,
especially for projects under development for the compleon of objecves in advanced stages of
achievement and for the modernizaon of exisng facilies. The list of projects and their installed
capacies are presented in the previous secons of the report. The studies were carried out by cered
independent experts and covered, where appropriate, issues related to water quality, protected species,
habitats of community interest and measures to manage impacts on biodiversity. Following the
assessments carried out, no signicant negave impacts on endangered species were idened, in
compliance with the measures provided for in the regulatory acts.
Biodiversity migaon measures, idened as necessary in the environmental impact assessment studies
for projects in progress, include:
• Construcon of structures to ensure the longitudinal connuity of watercourses (e.g. sh ladders),
as well as monitoring their eecveness, in accordance with the requirements set out in the
regulatory acts,
• Maintaining the ecological ows downstream of the dams for new projects, according to the
applicable legal provisions, including Government Decision no. 148/2020, as detailed in ESRS
Secon E4-5the analysis and, where appropriate, the adopon of alternave soluons for carrying
out projects in order to reduce the impact on species and habitats;
• Biodiversity monitoring, carried out through eld acvies, in accordance with the approved
monitoring programs;
• carrying out consultaons with local communies in the framework of environmental impact
assessment procedures.
209
The Hidroelectrica Group owns objecves included in or in the vicinity of protected natural areas (natural
and naonal parks, Natura 2000 sites, etc.). The acvies carried out at these sites are regulated by
environmental agreements and permits issued by the competent authories, following the compleon of
the environmental impact assessment procedures and, where appropriate, the appropriate assessment
according to the Habitats Direcve and the Birds Direcve. Following these assessments, it was not
concluded that there were signicant adverse eects on the integrity of the protected natural areas,
namely the deterioraon of natural habitats or the disturbance of the species for which they were
designated, within the meaning of the applicable legislaon.
The regulatory acts include condions and measures for prevenon and monitoring, but no compensatory
measures were imposed, as no signicant impact was idened within the meaning of those direcves.
For the acvies that are carried out within the limits of the protected natural areas, the competent
authories (ANMAP, the administrators of the protected natural areas) are noed, and the monitoring
is carried out according to the requirements established by the regulatory acts, where applicable. The
documentaon and studies necessary to obtain the environmental regulatory documents are developed
by cered external experts. Environmental permits and other regulatory acts are issued by the
competent authories, under the condions provided for by naonal and European legislaon, and may
include, where appropriate, specic measures or condions to prevent or reduce the impact on
biodiversity. Depending on the requirements of the competent authories and the conclusions of the
environmental assessments, the Hidroelectrica Group may adjust certain technical soluons or design
elements, including hydropower development plans, in order to ensure an adequate integraon of the
projects into the natural environment. No compensaon measures are established in the regulatory acts
issued.
Transion plan and consideraon of biodiversity and ecosystems in strategy and business model
E4-1
Water is an essenal natural resource for the operaons of the Hidroelectrica Group and for the
producon of electricity. The risks associated with the availability of water resources, including those
arising from drought and climate change, are taken into account in the Group's operaonal acvies with
a view to the responsible use of this resource. The Group monitors water levels and ows of watercourses,
in accordance with the requirements set out in the applicable regulatory acts and operang regulaons,
in order to support the operaon of the facilies and the management of water resources. It also assesses
technological opons that can contribute to increasing the eciency of water use in the electricity
generaon process, including through energy storage soluons or the integraon of complementary
renewables, depending on the applicable strategic and regulatory framework. The acvity of the
Hidroelectricase Group is carried out in compliance with the condions provided in the environmental
regulatory acts held. For the exisng objecves, the operaon is carried out on the basis of valid
210
environmental permits. Projects under development are implemented in accordance with the condions
set out in environmental agreements or framing phase decisions issued following environmental impact
assessment procedures, which may include, where appropriate, appropriate assessment and impact
assessment on water bodies. The Hidroelectrica Group integrates the protecon of biodiversity and
ecosystems into its strategy and business model through:
The impacts, dependencies, risks and opportunies related to biodiversity and ecosystems derive directly
from the Hidroelectrica Group's business model, which is mainly based on the use of water resources for
the producon of electricity. Hydropower acvity involves direct interacon with aquac ecosystems and
the hydrological regime, generang both dependencies on ecosystem services (availability of water
resources, funconing of aquac ecosystems) and potenal impacts on habitats and species.
The risks idened, including those related to restricons on ecological ows, addional regulatory
requirements or limitaons imposed in protected natural areas, have led to the integraon of biodiversity
consideraons in investment planning, reservoir exploitaon regulaons and priorisaon of projects
under development.
Specically, these elements have led to:
– adaptaon of exploitaon programs to ensure ecological ows;
– the inclusion of environmental condions in the design and modernizaon phases;
– re-evaluang the ming or structure of projects under development according to the requirements of
the appropriate evaluaon procedures;
– integrang regulatory and biodiversity risks into double materiality analysis and investment decision-
making.
Thus, biodiversity is not treated exclusively as a conforming element, but as a factor that directly inuences
the Group's operaonal and investment strategy.
During the reporng period, the impacts, dependencies, risks and opportunies related to biodiversity
and ecosystems did not lead to changes in the business model of the Hidroelectrica Group, which remains
based on the producon of electricity from renewable sources, mainly hydropower. These elements have
mainly led to operaonal and investment planning adjustments, such as the integraon of environmental
requirements into the design and implementaon of projects, the adaptaon of exploitaon programmes
and the inclusion of regulatory and biodiversity risks in internal analysis and decision-making processes.
The Group has not yet carried out a formal assessment of the resilience of its business model and strategy
to biodiversity and ecosystem risks. In the context of the progressive implementaon of ESRS requirements
and the strengthening of the internal ESG risk analysis framework, the Group intends to iniate such an
211
assessment in a medium me horizon, i.e. in the period 2026–2027, aer the stabilizaon of the applicable
regulatory framework.
Taking into account the legislave changes that postponed the obligaon to report certain informaon, as
well as the revision of the ESRS standards, the company decided to postpone the compleon of the
adopon of a Transion Plan in the coming period.
Policies related to biodiversity and ecosystems
E4-2
The Hidroelectrica Group has not adopted formalized policies or commitments related to biodiversity and
ecosystems, an environmental policy with commitments exists prepared in the dra and is to be adopted
aer the compleon of the revision of the ESRS standards. The monitoring of environmental performance
and the management of impacts on biodiversity and ecosystems are integrated into the Group's overall
environmental management framework and operaonal and investment planning processes.
However, in pracce, the Hidroelectrica Group ensures the protecon of biodiversity and ecosystems in
the operaonal areas owned, leased/leased or managed, including those located within or in the vicinity
of biodiversity-sensive areas, through biodiversity monitoring measures, established in regulatory acts
(environmental agreements, environmental permits, water management permits and permits), impact
assessments in environmental impact assessment procedures.
The group's acvity is aligned with relevant naonal regulaons, including environmental protecon
legislaon, transposed at naonal level from European Union direcves
8
. The competent authories
(GNM, ANAR and other competent instuons carry out periodic checks on the Group's objecves, in
accordance with their own inspecon programs. No sancons were applied during the reporng period
as a result of these controls.
The Group's approach to biodiversity is aligned with the general principles promoted by the Convenon
on Biological Diversity (CBD), including the sustainable use of natural resources and consideraon of the
interests of local communies. Consultaons with potenally aected communies are integrated into
environmental impact assessment procedures, in line with legal requirements, to ensure public
8
Council Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora and Directive
2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild
birds
212
informaon and parcipaon in the regulatory process. The concrete measures adopted by Hidroelectrica
S.A. in order to manage the impacts on biodiversity and ecosystems are presented in ESRS Secon E4-3 –
Acons and resources related to biodiversity and ecosystems.
Acons and resources related to biodiversity and ecosystems
E4-3
No key acons aligned with the ESRS reporng standard (ESRS 2 MDR-A) in the eld of biodiversity and
ecosystems have been established. The Hidroelectrica Group has not adopted a separate strategy
document dedicated exclusively to biodiversity and ecosystems, nor a key acon plan with quantave
targets specic to this area. The acons presented below represent operaonal and compliance measures
implemented based on the applicable regulatory acts and/or within the Group's overall environmental
management system. . The management of biodiversity and ecosystem issues shall be carried out within
the framework of the general approach to environmental protecon, in accordance with the principles of
the applicable environmental legislaon. In this context, the acvies carried out by the Group in the eld
of environmental protecon (and implicitly those related to biodiversity and ecosystems) take into account
the principles of biodiversity conservaon and ecosystem protecon specic to the natural
biogeographical framework, including the conservaon of natural habitats and species of wild ora and
fauna, as provided for by naonal and European legislaon. In order to reduce the impact on biodiversity,
in parcular in the case of projects under development, measures to avoid the impact on protected natural
areas are applied, where possible, as well as measures to reduce or manage the impact on the
environment and through regulatory acts issued by the competent authories. Under the law, all relevant
comments received from experts or the community during legal proceedings are taken into account. As
regards local knowledge, it is integrated into environmental impact assessment procedures, through
consultaon with local communies, public authories and expert experts. The relevant comments made
during the public consultaons shall be analysed and, where appropriate, integrated into the technical
documentaon and under the condions laid down in the regulatory acts issued by the competent
authories. Among the categories of measures applied by the Group are:
• Carrying out environmental impact assessments, by developing studies and technical
documentaon before the implementaon of projects, in order to idenfy potenal eects on
natural habitats and protected species.
• Monitoring of biodiversity, in accordance with the condions laid down in regulatory acts, for
species and habitats of Community interest, including regular reporng of results to the
competent authories.
implemenng measures to ensure ecological connecvity, such as the construcon of structures for the
longitudinal connuity of watercourses (e.g. sh ladders), when they are provided for in environmental
agreements or water management permits; allocang nancial resources for the implementaon of
biodiversity protecon measures, including for the preparaon of studies, the applicaon of established
measures and monitoring acvies. At the date of reporng, no situaons were idened requiring the
213
applicaon of measures to remedy signicant negave impacts on biodiversity or compensatory
measures, based on the environmental agreements issued for the Group's projects.
Within the Hidroelectrica Group there are organizaonal structures with responsibilies in the eld of
environmental protecon at the level of each enty, which ensure the implementaon and monitoring of
the measures provided for in the regulatory acts. The Group's acvies and projects are managed in
accordance with the requirements established by the environmental regulatory acts, with the objecve of
liming the impacts on habitats and species of community interest in protected natural areas. In order to
reduce the impact on biodiversity, measures to avoid and manage impacts are applied from the planning
and development stages of the projects, within the framework of the environmental impact assessment
procedures. Examples of iniaves and acvies carried out by the Group include:
1. The Nufărul floating photovoltaic park – Hidroelectrica Group has obtained the environmental
agreement for the construction of the floating photovoltaic park, with a capacity of 10 MW, on the
Ipotesti reservoir. This project aims to produce green energy and reduce the evaporation of water
from reservoirs, contributing to the protection of water resources and aquatic ecosystems. The project
is being implemented.
2. Biodiversity monitoring at the Racovița Hydroelectric Power Plant – The Hidroelectrica Group runs a
monitoring program for species in the Oltul Mijlociu-Cibin-Hârtibaciu protected natural area, upstream
and downstream of the Racovița hydroelectric power plant. The purpose is to assess the impact of the
activities on the local fauna and ensure the conservation of protected species.
3. Biodiversity monitoring in the vicinity of the Crucea Nord wind farm – The Group implements a
monitoring program in order to carry out activities at the work site with minimal impact on
environmental factors and without generating significant impacts.
4. Monitoring of abiotic and biotic environmental factors in the area of the project "Refurbishment of
the Vidraru hydropower development"
The Group implements the monitoring program for abiotic and biotic environmental factors, in
accordance with the requirements set out in the environmental agreement. The monitoring aims to assess
the potential impacts on the quality of the environment and biodiversity during the execution of the
works.
The scope of the Hidroelectrica Group's main actions on biodiversity and ecosystems can be described by
referring to the following dimensions:
• Coverage by type of activities (Design and construction of infrastructure: Environmental actions
are integrated into the design phase by assessing the impact on biodiversity in the framework of
environmental impact assessment procedures, including measures to protect species and habitats
of Community interest; Operation of hydroelectric and wind power plants: The operating
activities are carried out in compliance with the conditions provided in the environmental
permits, being accompanied by the monitoring of environmental factors according to the
requirements established by the regulatory acts; Adaptation and impact reduction:
214
environmental impact management measures, including adaptation measures to variable
hydrological conditions, are applied in accordance with operating regulations and regulatory acts;
Modernization of installations - within the framework of modernization and refurbishment
projects, technical solutions are evaluated and, where appropriate, integrated aimed at reducing
the impact on the environment and affected habitats..)
• Geographical coverage in relation to watercourses (Upstream areas: water catchment areas are
managed to minimise erosion and degradation of riparian habitats; Downstream areas: measures
to maintain ecological connectivity are implemented, including structures for ichthyofauna
migration – e.g. fish ladders or alternative solutions – in accordance with the requirements set
out in regulatory acts.)
• Affected stakeholder groups (Local communities: potential impacts on communities are analysed
in environmental impact assessment procedures, and management measures aim to limit adverse
impacts on the use of natural resources and ecosystem services; Natural resource users: farmers
and fishermen: support for downstream natural resource users by ensuring a minimum ecological
flow for irrigation and fisheries; Research institutions and experts: The Group collaborates, where
appropriate, with experts and specialized institutions in the framework of evaluation and
monitoring studies, in order to substantiate the measures for the protection of biodiversity).
Hidroelectrica SA considers dierent me horizons for acons related to biodiversity and ecosystems,
depending on the nature, complexity and stage of implementaon of the projects. In the short and
medium term, the acons are mainly aimed at:
• Implementation of biodiversity monitoring projects, in accordance with the requirements
established by the environmental regulatory acts, in the areas where the Group carries out
activities (e.g.: the monitoring program related to the Racovița HPP, located in the Oltul Mijlociu-
Cibin-Hârtibaciu protected natural area).
• Implementation of measures to ensure ecological connectivity, such as the construction of
structures for the migration of ichthyofauna (e.g. fish ladders), for projects in progress, when they
are provided for in the regulatory acts.
Long-term: The Hidroelectrica Group is considering integrating biodiversity and ecosystem considerations
into projects to adapt to climate change and streamline the use of water resources in energy production.
In this context, options such as the modernisation of existing plants, hybridisation projects with battery
storage solutions or the integration of complementary renewables (e.g. floating or ground-mounted
photovoltaic plants) are assessed, depending on the applicable strategic and regulatory framework.The
long-term approach aims to ensure the continuity of electricity production, in compliance with
environmental protection requirements and in line with the relevant objectives of the EU Biodiversity
Strategy.
The financial resources necessary for the implementation of environmental measures are included in the
Group's operational and capital budgets (Opex and Capex), financed from internal funds. Given the
215
current status of projects and the structure of investment budgets, the costs related to biodiversity
protection measures are not highlighted separately, being integrated into the total costs of development
or modernization projects.
As part of the procedures for obtaining environmental regulatory acts, alternative technical options are
analysed, including from the perspective of the impact on biodiversity, and the costs associated with the
measures established by the competent authorities are included in the respective projects. All measures
are agreed with the competent authorities following studies carried out by certified external experts and
are included in the development projects.
The Hidroelectrica Group applies the hierarchy of migaon measures in the management of project
impacts on the environment and to ensure a balance between the development of energy infrastructure
and the protecon of biodiversity. This approach is used systemacally in all phases of projects, including
planning, construcon and operaon.
At the date of reporng, no compensatory measures were established against Hidroelectrica S.A.
through the regulatory acts issued for the projects carried out. As part of the regulatory procedures,
alternave soluons have been analysed so that the residual impact of the projects is not signicantly
negave. No biodiversity and ecosystem targets have been set. Depending on the evoluon of the volale
regulatory framework and the compleon of the amendments to the ESRS standards, the Group will
consider seng or adapng biodiversity and ecosystem targets. The performance of these targets, to the
extent that they will be dened, will be reported annually in the Sustainability Report.
Targets related to biodiversity and ecosystems
E4-4
No biodiversity and ecosystem targets have been set. A strategy for the protecon of biodiversity and
ecosystems with a transion plan is to be drawn up in the next period, depending on the reporng
requirements of the revised ESRS standards.
The acvity of the Hidroelectrica Group is carried out in compliance with the applicable naonal legislaon
on environmental protecon and water management
9
and the condions established by the regulatory
acts issued by the competent authories.
9
GEO no. 195/2005 on environmental protection, with subsequent amendments and completions approved by
Law no. 265/2006 on environmental protection, with subsequent amendments and completions and the Water
Law no. 107/1996 with subsequent amendments and completions
216
Protection of biodiversity and the ecosystem
Impact metrics related to biodiversity and ecosystems change
E4-5
Sites located within or near protected natural areas are managed in accordance with the regulatory acts
held. For projects that may have an impact on protected natural areas, specic measures to prevent and
reduce the impact are established at site/project level.
The ESG pillar "Environment and biodiversity", included in the Hidroelectrica Group Management Plan
2023-2027, aims to prevent and migate potenal impacts on areas of high ecological value, generated by
new projects or exisng acvies. In this context, the following direcons of acon have been considered:
1. determinaon and calculaon of easement ows with ecological ow component;
2. Determinaon of concrete measures in accordance with the requirements for alignment with the
technical screening criteria on biodiversity and water resources, provided in the Taxonomy for new
investments.
The key performance indicators dened in this context are:
1. Conducng 103 studies on the operaons covered by the Water Baseline Study by 2026;
2. 100% operaons aligned with the criteria of the Taxonomy in the case of new investments unl 2027.
The measurement of the 2 indicators is not validated by an external body, other than the auditor.
As for the baseline water studies, the objecve was met in 2024. The studies were developed by
contracng the Naonal Instute of Hydrology and Water Management (INHGA) in accordance with the
requirements of naonal and European legislaon on the protecon of aquac ecosystems. These studies
were carried out for the dam secons, taking into account naonal and European regulaons relang to
the protecon of aquac ecosystems and the maintenance of an adequate ow of water downstream. The
studies are the basis for establishing the value of the ecological component easement debts by the
authories, debt values that will have to be respected, and will be included by the authories in the
regulatory acts.
However, according to the legislaon in force, there is a possibility that the value of the easement ow
with an ecological component that will be provided for in the water management authorizaons will be
adjusted to the value of the ow resulng from the above-menoned studies, if it has been found that the
threshold values regarding the signicant negave eect on water use are exceeded, i.e. represenng the
loss of energy producon by more than 2%/year at the level of a single hydropower plant or by more than
5%/year for the hydropower development as a whole. In the event that, as a result of the technical-
economic studies carried out, disproporonate costs have resulted for the implementaon of the
217
technically feasible construcon soluon, the regulatory authority in the eld of water management will
decide, on a case-by-case basis, to establish less severe objecves regarding the ow of easements with
an ecological component, or to exempt the damming or water abstracon works from the applicaon of
GD no. 148/2020, thus preserving the inial regulatory condions. The company is in the process of
updang the water management authorizaons, taking into account the aspects considered above.
Following the analysis of the acvies carried out, the Hidroelectrica Group concluded that the operaon
of the exisng hydroelectric infrastructure and the development of new projects do not directly generate
signicant impact factors associated with changes in land use or freshwater, as dened in ESRS E4-5 para.
38. This conclusion is based on the fact that the project sites are selected on the basis of environmental
studies carried out prior to implementaon, avoiding areas of high ecological value, and the operaon of
exisng acvies is carried out in accordance with the applicable environmental requirements, including
by respecng the ecological ows established by specialized studies. Consequently, the Group considers
that the metrics set out in ESRS E4-5 para. 38 leers (a) to (e) are not applicable for the reporng exercise.
In 2025, the acvies carried out by the Hidroelectrica Group consisted exclusively of maintenance,
maintenance, repair and rehabilitaon works of the exisng infrastructure (e.g. unclogging, rehabilitaon
of adducons, safety works of the exisng arrangements).
The results are summarized in the table below:
Crt.
no.
Project/Site
Type of
activity
Type of
environmenta
l document
Issuing
authority
Conclusi
on of
the
environ
mental
docume
nt
There
are
monitori
ng
obligatio
ns
(YES/NO)
Type of
impact on
biodiversity
Impa
ct
mate
rial
(ESRS
E4-5)
1
Works for the
unclogging of
secondary catchments
- Vâlcea accumulations
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works
18514/25.11.
2025
DJM
Vâlcea
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
2
Unclogging works at
CHEmp Sebeș Făgăraș
Constructio
n
maintenanc
e
Classification
stage decision
141/21.07.20
25
DJM
Brașov
Not
subject
to
environ
mental
impact
assessm
ent
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
3
Rehabilitation of
installations with
running water, cooling
Rehabilitati
on/existing
works -
318/05.08.20
24
APM
Dâmboviț
a
Not
subject
to
No
Does not
generate
material
No
218
water and fire related
to the Dobrești HPP
(Dobrești HPP site,
Ialomita river)
Constructio
n
maintenanc
e
environ
mental
impact
assessm
ent
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
4
Rehabilitation of the
Scropoasa adduction
gallery (site of the
Scropoasa HPP,
Ialomita River)
Constructio
n
maintenanc
e
Classification
stage decision
67/18.02.202
5
APM
Dâmboviț
a
Not
subject
to
environ
mental
impact
assessm
ent
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
5
Structural
rehabilitation (metal
construction,
mechanical parts, seals
and embedded parts)
and related
installations (heating
of the dam body,
heating of guides and
lubrication) and anti-
corrosion protection
of double hook
spillways Portile de
Fier I spillway dam
(site
CHE Portile de Fier I)
Equipment
maintenanc
e
Classification
stage decision
51/05.06.202
5
DJM
Mehedint
i
Not
subject
to
environ
mental
impact
assessm
ent
NO
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
6
Long River Polder
Repair Works (SH
Hațeg)
Constructio
n
maintenanc
e
Classification
stage decision
390/13.10.20
25
DJM
Caraș -
Severin
Not
subject
to
environ
mental
impact
assessm
ent
NO
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
7
Unclogging of the
Middle Olt Counter-
Canal (site of the
Ionești/Zăvideni
HPP/Drăgășani/Olt
River HPP)
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works
570/VL/23.06.
2025
DJM
Vâlcea
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
8
Works to rep the DMD
connection area with
the GOVORA HPP
(Govora/Olt River HPP
site)
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works 303/ST
ANANP -
ST Vâlcea
Activity
allowed
with
protecte
d
No
Does not
generate
material
impacts on
biodiversity
(in the
No
219
VL/03.04.202
5
conditio
ns
sense of
ESRS E4-5)
9
Leveling of the dike
crown and filling of
ravines DMD Băbeni,
Ionești, Zăvideni,
Drăgășani (site of the
Băbeni HPP/Ionesti
HPP/Zăvideni
HPP/Drăgășani/Olt
River HPP)
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works 589/ST
VL/04.07.202
5
DJM
Vâlcea
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
10
Repair works for the
regularization
downstream of
Strejești, Arcești,
Frunzaru
(Slatina/Strejești,
Arcești, Frunzaru/Olt
River HPP site)
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works
53156/20.10.
2025
ANMAP
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
11
Counter-canal
unclogging works in
the Olt Inferior sector
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works
50145/06.05.
2025
ANMAP
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
12
Paving works for the
Costești stream
riverbed
Constructio
n
maintenanc
e
Agreement
with
conditions for
carrying out
works
1619/FOM/19
.11.2025
Buila -
Vânturari
ța
National
Park
Administr
ation
Activity
allowed
with
protecte
d
conditio
ns
No
Does not
generate
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
13
Refurbishment of the
Vidraru AHE
Refurbishm
ent
Environmenta
l Agreement
no.
07/11.04.202
2
APM
Argeș
90% of
the
works
are
carried
out in
the
existing
premise
s of AHE
Vidraru
The
impleme
ntation
of the
project
Yes
The
activities
are carried
out on the
basis of the
environmen
tal
agreement,
without
material
impacts on
biodiversity
(in the
sense of
ESRS E4-5)
No
220
will not
affect
the
conserv
ation
status of
the
habitats
and
fauna
species
that
constitut
e the
conserv
ation
objectiv
es of the
N2k site
ROSCI01
12 the
Făgăraș
Mountai
ns
The acvies presented above reect exclusively maintenance, repairs and works on the exisng
infrastructure, carried out based on the regulatory acts issued by the competent authories.
These acvies do not involve the occupaon of new areas, changes in land use, the fragmentaon of
habitats or the loss of ecological connecvity.
As for the project "Refurbishment of the Vidraru AHE", it is parally located in the Natura 2000 protected
natural area ROSCI0122 the Făgăraș Mountains. Potenal impacts on biodiversity and ecosystems were
assessed through the Appropriate Assessment Study (EA) and the Environmental Impact Report (EIA),
which analysed, inter alia, eects on habitats and species of Community interest, temporary changes in
the hydrological regime, and ecosystem integrity and funconality.
The conclusions of these assessments show that the works are mainly for the rehabilitaon of the exisng
infrastructure, that any changes in environmental factors are temporary, controlled and subject to
prevenon, reducon and monitoring measures, and that there are no signicant residual or material
impacts on biodiversity, the status of species or the extension and condion of ecosystems.
Based on the available informaon and environmental documentaon related to the acvies carried out
in 2025, no material impacts on biodiversity and ecosystems were idened within the meaning of ESRS
E4-5 requirements.
221
Consequently, the reporng requirements of quantave indicators set out in ESRS E4-5 (paras. 33–41)
are not applicable for the reporng year 2025, their absence reecng the nature of the acvies carried
out and not a limitaon of the informaon analysed.
OWN WORKFORCE
ESRS S1
Strategy and concepts related to one's own workforce
Interests and views of stakeholders
ESRS 2 SBM-2
Human capital is essenal for achieving the objecves of the Hidroelectrica Group, by aracng and
retaining qualied personnel and opmizing the organizaonal structure, developing human capital,
connuous training of employees, implemenng a performance management system.
In line with its vision of creang a sustainable future, the Hidroelectrica Group is constantly concerned
with ensuring a safe and healthy work environment, promong fair work pracces, respecng dignity and
providing opportunies for professional development.
The employees of Hidroelectrica SA are represented by the Hidroelectrica "Hidrosind" Trade Union, which
covers approximately 85% of the employees. Within Hidroelectrica there is also the Union of Hydroelectric
Power Plant Operators, which has a number of members represenng approximately 2% of the company's
sta. Also, at the level of Hidroserv and UCMH, trade unions are established, the Naonal Hydropower
Union and, respecvely, the Resita 1771 Union.
Hidroelectrica SA has the legal obligaon to inform and consult the trade union regarding recent
developments, as well as the prospects of the Company's acvies and economic situaon, in accordance
with the applicable legal provisions. In general, any change in the strategy or business model of
Hidroelectrica SA also involves the adjustment of the organizaonal structure, so that it is aligned with the
new strategic direcon. As part of this change process, employees are consulted through their
representaves. At the same me, Hidroelectrica SA annually evaluates the level of sasfacon and
involvement of employees, through a survey conducted at the beginning of each year for the previous
year, the quesonnaires being sent to all employees.
Among the ESG pillars of the Sustainability Strategy 2023 – 2030, there is also the Occupaonal Health
and Safety pillar, with the objecve of zero work accidents and the Organizaonal Culture Pillar, with the
222
strategic objecve of improving the culture in which employees work, through diversity, inclusion and non-
discriminaon and by developing employees' skills. During 2025, a process of updang the Sustainability
Strategy was started so as to include in a more detailed measure the social sub-themes idened as
material in the context of ESRS reporng for scal year 2024. As part of this process, the exisng policies
at Group level, a series of acons, targets and indicators were evaluated, as well as the way of monitoring
and evaluang them, but the nal version of the Strategy will be approved aer the adopon of the revised
ESRS standards and aer assessing the implicaons generated by the recent legislave volality.
Material impacts, risks and opportunies and their interacon with strategy and business
model
ESRS 2 SBM-3
The impacts on its own workforce idened and assessed in the double materiality analysis process are
summarised in the table below. In the double materiality analysis process, no material risks or
opportunies were idened.
Own workforce
Impact
Locaon on the
value chain
Risk/Opportunity (R/O)
Working condions
The posive impact
generated by the values
promoted by the group is
manifested by respecng
employees' rights and
supporng safe working
condions. Also, the acve
involvement of union
leaders ensures connuous
and eecve
communicaon with
employees, thus
contribung to their overall
well-being.
Own operaons
No material risks or opportunies idened
Potenal negave impact
generated by the risk of
accident at work –
potenal impact if safety
measures and training are
not properly implemented
in day-to-day acvies.
Thus, it increases the risk of
accidents, injuries and
Own operaons
No material risks or opportunies idened
223
aects the long-term
health of employees.
Equal opportunies and
treatment for all
Posive impact - The
Hidroelectrica Group
recruits employees of all
genders (male, female,
etc.), and if gender equity is
not carefully managed in
hiring, promoon and
retenon pracces, this
could negavely aect
workforce aracveness,
retenon and
performance.
Own operaons
No material risks or opportunies idened
Other rights related to
the work of its own
employees
Posive impact - The
Hidroelectrica Group,
through the existence of
internal employment,
promoon and retenon
policies periodically
reviewed and improved,
increases the
aracveness of the
workforce, retenon and
performance.
Own operaons
No material risks or opportunies idened
The posive impacts on its workforce, such as adequate working condions and respect for employees'
rights, come from the fact that the Hidroelectrica Group wants to be a responsible employer in the energy
sector, and contributes to the adaptaon of the business model by increasing producvity and retaining
talent.
All employees of the Hidroelectrica Group who could be signicantly aected are included in the scope of
the presentaon of the informaon. The Hidroelectrica Group's own workforce includes hydroelectric
power plant employees, technical and engineering sta, IT specialists and administrave sta, all of whom
are direct employees of the Group.
Hidroelectrica carries out its acvity in accordance with the standards and pracces imposed on listed
companies, having implemented a series of regulaons and procedures aimed at generang a posive
impact on employees on mulple aspects, such as those regarding employees' rights, freedom of
associaon and negoaon, social dialogue, secure workplaces, adequate salaries, work-life balance. The
Group's employees benet from the provisions of the Collecve Labor Agreement which regulates the
224
reciprocal rights and obligaons related to the employment contract, working and rest me, working
condions, salary rights and other rights of a salary nature or assimilated to them, social protecon of
employees, dignity at work, equal opportunies and treatment, professional training. Also included in the
CCM are provisions related to trade union organizaons that have the right to use specic means of acon
(negoaons, protests, strikes, etc.), to represent their members in socio-professional and economic
maers, to be informed about changes aecng employees, to defend members' rights before the courts,
to make proposals for improving the acvity, to organize educaonal acvies and acons according to
the statute, as well as to organize congress acvies, general assemblies during working hours, with the
prior informaon of the employer.
In addion to the basic salary, employees also receive allowances, bonuses and other addions. To these
are added the indexaons and/or legal compensaons, as well as the increases as a result of the
negoaons.
The Internal Regulaon – Code of Conduct in Hidroelectrica SA establishes all the provisions regarding
occupaonal safety and health, non-discriminaon, the rights and obligaons of the pares, labor
discipline and aspects related to disciplinary misconduct, the procedures for amicable selement of
individual labor conicts, individual requests and complaints of employees, as well as the criteria and
methodology for evaluang their professional acvity.
No signicant widespread or systemic negave impacts have been idened in the contexts in which the
Hidroelectrica Group operates. The only potenal negave impact idened is related to safety at work,
but this is migated by the implementaon of prevenve measures and internal protecon procedures,
as well as by systemac training of workers, which reduces exposure to risks and helps to ensure a safe
working environment.
The Romanian Constuon and legislaon expressly provide for the prohibion of forced labor as well as
the exploitaon through labor of children. Taking into account the fact that the Hidroelectrica Group
complies with the legislaon in force, there are no operaons with a signicant risk of forced or
compulsory labor incidents, or operaons with a signicant risk of child labor incidents. Hidroelectrica's
policy (paragraph Labor) also states that any form of forced labor or exploitaon of children is strictly
prohibited.
Policies related to own workforce
ESRS S1-1
Policies have been adopted to manage material impacts related to one's own workforce, in line with the
minimum reporng requirements set out in the ESRS 2 MDRP. The Management Board is responsible for
the implementaon of procedures related to its own workforce.
225
Through the Hidroelectrica SA Policy on the main objecves in terms of the relaonship with stakeholders,
social aspects (human rights, working condions), environmental and governance, the Company describes
its commitments in terms of human rights policies (Human Rights secon) that are relevant to one's
workforce, processes and mechanisms for monitoring and correcng and migang adverse impacts in
order to comply with the UN Guiding Principles on Business and Human Rights, the ILO Declaraon on
Fundamental Principles and Rights at Work. The policy is aligned with the aforemenoned internaonal
instruments and its applicaon is guaranteed by the Management Board. The company ensures the
idencaon and compliance with the legal regulaons on the prevenon and sanconing of all forms of
discriminaon and equal opportunies and treatment between women and men through the Human
Resources Department.
Through the Code of Ethics, approved by the Hidroelectrica Supervisory Board, the rules of ethical
behavior in Hidroelectrica are adopted:
Discriminaon (Chapter 3.1) – Society aims to create a working environment in which individual
dierences are accepted and appreciated. Posive or negave discriminaon of any nature based on
actual or alleged aributes of the given person, including, but not limited to, skin color, gender, naonality,
sexual or ideological belief, sexual identy, ethnicity, disability, sexual orientaon, polical or other views,
marital status, and so on is prohibited.
Harassment (Chapter 3.2):
a) The company prohibits and does not tolerate unprofessional language and abusive,
discriminatory, threatening behaviour based on inmidaon or physical or mental harassment of
employees.
b) Any verbal, non-verbal or physical form of behavior that aims at or leads to the injury of the dignity
of the person concerned or that creates a humiliang and oensive environment, is prohibited.
c) If an employee feels that he or she has fallen vicm to harassment in one of the above forms, he
or she will nofy the company's harassment case recepon and resoluon commiee, which will
then invesgate the case and propose to the Company's Management Board to take the necessary
measures.
In order to idenfy and reduce the risks associated with various acvies and work processes, to prevent
accidents and occupaonal diseases, the OSH Prevenon and Protecon Plan is developed. Human rights
principles are also incorporated into Internal Regulaons or collecve agreements and other related
documents. All these documents have received the approval of the Board of Directors or the Boards of
Directors of our companies.
At the same me, by adopng the aforemenoned Hidroelectrica SA Policy (Labor secon), the Company
undertakes to respect the employees' right to associaon and collecve bargaining, according to Principle
3 of the Global Compact. The company strongly condemns and prohibits any form of forced or compulsory
226
labour, in line with Principle 4 of the Global Compact. Any form of child exploitaon is also prohibited,
according to Principle 5 of the Global Compact.
In accordance with Principle 10 of the Global Compact and the ISO 37001 standard, the Company strongly
prohibits and condemns any form of corrupon and is commied to adopng ethical behavior, based on
fairness, imparality and transparency, ensuring full compliance with domesc and internaonal
legislaon and norms prohibing such pracces (An-Corrupon/An-Bribery secon)
At the level of Hidroelectrica SA, these policies are provided for:
• Collecve Labor Agreement of Hidroelectrica SA for the years 2024-2026;
• Internal Regulaon – Code of Conduct in Hidroelectrica SA;
• Code of Ethics of Hidroelectrica SA.
These commitments aim to maintain a transparent and accountable business environment. The company
remains commied to the ght against corrupon and bribery, promong an organizaonal culture based
on sound ethical values.
To ensure compliance with these commitments, Hidroelectrica SA has implemented internal policies and
procedures aimed at monitoring and evaluang performance in terms of employee, human rights and
labor standards.
The Code of Ethics specically addresses Hidroelectrica SA's policy commitment on discriminaon (chap.
3.1 Discriminaon), posive or negave of any nature based on actual or alleged aributes of the given
person – including but not limited to skin color, gender, naonality, sexual or ideological belief, sexual
identy, ethnicity, disability, sexual orientaon, polical or other views, marital status, and so on.
The processing and disclosure of employees' personal data is carried out in accordance with the applicable
legal bases, in compliance with the principles of legality, condenality and data minimizaon, and
disclosure to third pares takes place only to the extent jused and permied by the applicable legal
framework.
The measures, respecvely the documents within Hidroelectrica through which remedies are provided or
facilitated in case of negave impacts on human rights:
- The Collecve Labor Agreement of Hidroelectrica SA, which provides for the rights of employees
and measures to protect them;
- Internal Regulaon – Code of Conduct in Hidroelectrica SA;
- Guide on prevenng and combang harassment based on sex, as well as moral harassment in the
workplace (Hidroelectrica SA) developed to ensure equal opportunies and treatment between
women and men, guaranteeing a working environment free of violence and harassment and
promong a culture of respect, dignity and professionalism. The main objecve is to create an
opmal working environment, based on equal respect and trust, and applies to all employees and
the people with whom they interact.
227
- The main objecve: to create an opmal working environment, based on equal respect and trust.
At the level of Hidroelectrica, the Joint Administraon-Trade Union Commission is created, in
which both the employer and the Hidroelectrica Hidrosind Union have an equal number of
members and which has among its dues the resoluon of requests, nocaons or complaints
received from employees.
- In the Hidroelectrica units, personnel commissions are constuted, in which both the employer
and the Hidroelectrica Hidrosind Union have an equal number of members and whose aribuons
are:
o developing proposals for solving the requests, nocaons, complaints or appeals of the
employees under the competence of the administrave bodies;
o Developing proposals for aempng an amicable selement of requests, nocaons,
complaints or appeals that fall within the competence of the courts.
Hidroserv has implemented the Code of Ethics and Integrity, which regulates the rules of professional
and social conduct within the company, promong the moral responsibility of all employees for the
achievement of the company's major objecves. The Code prohibits any form of direct or indirect
discriminaon, harassment or vicmisaon based on criteria such as race, naonality, ethnicity, colour,
language, religion, social origin, sex, sexual orientaon, age, disability, chronic illness, polical choice,
family status, trade union membership or membership of a disadvantaged category (Chapter 7.1.4). This
Code acts as a policy commitment and applies to all employees and management of the company.
UCMH has also implemented a Code of Ethics and Professional Conduct that emphasizes respect for
employees' rights, including equal and non-discriminatory treatment (chapter 2.9), and promotes
professional and transparent behavior. The Code promotes an organizaonal climate based on mutual
respect, collaboraon and professional support between employees and management and constutes the
company's policy commitment.
The company includes provisions in the Collecve Bargaining Agreement (CCM), which reect posive
measures for employees with disabilies, who are entled to an addional 3-day leave each calendar year,
in addion to the leave days provided by the legal regulaons. The company grants this right to all
employees with disabilies, based on the presentaon of a copy of the disability cercate.
Based on the history of the Group's acvity, the current acvies carried out by the Human Resources and
OSH departments, the connuous relaonship with the trade unions as well as the history of complaints,
no vulnerable groups of employees were idened.
Also, through the provisions of the procedure M01.021 Analysis. In the public interest, the right of any
employee to report and report any violaon of the law or ethical norms (including related to
discriminaon) is guaranteed, and the company has dened the necessary reporng framework and the
company's responsibilies for solving them.
228
The collaboraon acvies with the Union are carried out at the level of each enty, including the
negoaon of the Collecve Labor Agreement (CCM) and the addenda, as well as the implementaon of
the recruitment, selecon and evaluaon processes, along with the disciplinary invesgaon of the
employees. Employees and trade unions work together through informaon and consultaon sessions.
The Collecve Labor Agreement includes provisions regarding the respect of the condenality of
employees' personal data, in accordance with the applicable legal framework and the Group's internal
regulaons.
Hidroelectrica SA, Hidroserv and UCMH have implemented an integrated management system in terms of
occupaonal safety and health, aligned with internaonal standards. The occupaonal health and safety
management system is cered according to the SR EN ISO 45001 or 45001 standard, as the case may be,
by the SRAC.
The Hidroelectrica Group allocates nancial and human resources to support collaboraon with
employees and trade unions, and to facilitate a construcve dialogue.
The recruitment of personnel within the Hidroelectrica Group is carried out through a process that allows
the evaluaon of candidates' skills, professional and behavioral performances. Emphasis is placed on
professional competence and their compability with the system and work environment of the Company.
The Hidroelectrica Group rejects any form of favorism in hiring, evaluaon, promoon or distribuon of
job tasks, according to the Code of Ethics and the Internal Recruitment Procedure.
Hidroelectrica SA aaches importance to the development of its employees, promong the improvement
of professional training through internal programs supported by internal lecturers or external authorized
trainers, according to the procedure "S05.210 Planning of personnel development training acvies".
Processes for engaging with own workers and workers’ representatives about impacts
ESRS S1-2
In order to ensure a genuine commitment, Hidroelectrica SA adopts several measures, such as:
• Creaon of communicaon channels – If a member of the Management, an employee of the
Company or a partner, wishes to communicate a violaon of the law or the rules of ethical
behavior, as a whistleblower in the public interest, including anonymously, he must submit a
wrien report to the comportament.ec@hidroelectrica.ro address managed by the Manager of
the Internal Public Audit Department, subordinated to the Supervisory Board of Hidroelectrica
SA.
• Providing transparent and accessible informaon about the Company's acvies, performance
and impact, through sustainability reports, press releases and through SharePoint, social media
pages, corporate events;
• Responding to employee quesons, concerns, and complaints.
229
The negoaon of the Collecve Labor Agreements (CCM) with the unions Hidroelectrica SA, Hidroserv
and UCMH is carried out by a commission designated at the level of each enty. The CCM negoaon
process starts at least 60 calendar days before the expiry of the contract in force. The negoaon of
addenda to the CCM takes place whenever there are legislave changes that require it or when one of the
pares requests an amendment or compleon.
The collaboraon with the employees through their representaves, respecvely the Trade Unions, is
carried out connuously, and the duraon of this collaboraon varies depending on the specic object of
the collaboraon.
The interacon with the employees' representaves, respecvely the unions within Hidroelectrica, takes
the form of the following forms:
- meengs/meengs for the negoaon of the Collecve Bargaining Agreement and its addenda,
following these meengs resulng in these documents applicable to all the company's employees;
- meengs within the joint administraon-union commission, as a result of which there are
regulaons on granng rights to employees, granng material aid to employees with serious
illnesses;
- meengs within the Joint Notes commissions as a result of which the following are established:
the start and end me of the working hours, the way of ensuring transport to and from the
workplace;
- meengs for the joint elaboraon of documents applicable to all the company's employees such
as: internal regulaons, recruitment procedure, employee evaluaon procedure, award
regulaons, promoon protocol, protocol for establishing days o;
- sending replies to trade union requests (through wrien addresses).
-
Hidroelectrica SA annually measures the degree of employee sasfacon and involvement, the evaluaon
taking place at the beginning of the year for the previous year.
The eecveness of the collaboraon with employees is evaluated annually through a tool with a role in.
measuring employee sasfacon with the job, commitment and overall morale. The results of these
evaluaons are taken into account for the improvement of the working environment and the general
working climate.
Within the Company, the salary rights of employees, regardless of gender, are established according to the
salary system implemented in collaboraon with the Trade Unions. The rights of persons with disabilies
are also respected, which include addional annual leave, exible working hours, and nancial support for
prostheses and expensive treatments.
In the rst quarter of 2025, Hidroelectrica SA held a training session to improve employees' awareness of
diversity, inclusion and non-discriminaon.
As for the acvity of UCMH and Hidroserv, they comply with the legislave norms on Occupaonal Health
and Safety (OSH) in the implementaon of the OSH management system.
230
Within each enty, according to the regulaons of the CSSM (Occupaonal Health and Safety Commiee),
there is a separate commiee that organizes at least quarterly meengs of the commiees in which the
social aspects aecng employees are analyzed. Through the CSSM meengs, the workers' representaves
express the employees' points of view, according to the agenda or addionally at the request of the CSSM
secretary, various other possible problems are exposed. This commiee is a joint body made up of
representaves of employees with responsibilies in the eld of OSH, on the one hand, and the employer,
on the other hand; guests can also take part, if necessary. On the agenda, problems can be noced directly
by employees regarding any aspects related to the safety and health at work of employees, but also
through employee representaves.
Processes to remediate negative impacts and channels for own workers to raise concerns
ESRS S1-3
The employees of Hidroelectrica SA have the opportunity to address complaints to the company and can
send peons or complaints, which will be answered within the deadline established by law. The
applicable procedure is S05, entled 'Dealing with a complaint'.
The company has implemented a system for assessing and remediang negave impacts on employees.
This system includes:
• Prompt and imparal invesgaon of complaints
• Implemenng appropriate correcve measures (e.g. modifying a process, correcng a procedural
violaon or updang exisng procedures, improving reporng processes)
• Monitoring the eecveness of measures through feedback from employees and performance
indicators.
The complaint, depending on its specicity, is assigned to a responsible department according to the
specics of the complaint, and according to the procedures for solving complaints, they are invesgated
according to the specics of the complaint and are monitored by the designated responsible. The
correcve measures are proposed for adopon by the management, and the performance indicator is to
respond to all nocaons.
The Company also implemented procedure M01.021, entled "Analysis/Resoluon of whistleblower
reporng in the public interest". If employees nd violaons of the code of ethics, they can send wrien
complaints to the comportament.ec@hidroelectrica.ro email address. Whistleblowings in the public
interest are managed by the Manager of the Internal Public Audit Department.
The company has implemented a Code of Ethics, and employees can report any violaon of it to
comportament.ec@hidroelectrica.ro's email address. The process of analyzing the reports made on
possible violaons of the Code of Ethics is presented in Secon G1 Professional Conduct.
231
A Guide to prevenng and combang gender-based harassment and psychological harassment at work
was also adopted. A commission has been set up to deal with and deal with cases of sexual and moral
harassment. Employees can contact the commission by phone at a dedicated number or by e-mail
provided for this purpose.
The company has instuted a policy of protecon against retaliaon for employees who use the
whistleblowing mechanisms, guaranteeing condenality and prohibing any form of discriminaon or
harassment as a result of expressing concerns.
In order to encourage the use of these channels, Hidroelectrica SA:
• Informs all employees about the existence and use of hiring mechanisms
• Displays channel informaon in visible locaons at work
• Regularly trains sta on the possibilies of addressing.
Complaints on these channels are monitored and analyzed according to internal regulaons.
Hidroelectrica SA assesses employees' knowledge and trust in these mechanisms by analyzing the rate of
use of reporng channels.
Evaluaon of the eecveness of the reporng channels is carried out through: periodic analysis of the
recurrence of incidents and resoluon mes; verifying how correcve measures have been implemented;
direct feedback from the employees involved; involvement of relevant stakeholders, such as members of
the Commiee of Inquiry, trade union representaves or other users of the mechanisms.
Through these processes, Hidroelectrica ensures that the reporng mechanisms remain accessible,
ecient and oriented towards protecng employees, and the measures applied contribute to prevenng
the repeon of incidents."
Hidroserv management encourages employees and other stakeholders to report any ethics and integrity
incidents. If an employee of the Company or a partner wishes to communicate a violaon of the provisions
of the Code of Ethics and Integrity, he must send a wrien report to the email address, managed by the
ethics advisor.
Failure to comply with the aspects related to the Code of Ethics and Professional Conduct at UCMH is
considered a disciplinary oense and is sanconed according to the legal provisions and internal
regulaons in force. If there are complaints regarding the violaon of the provisions of the Code of Ethics
and Professional Conduct by the branch sta, administrave invesgaons are carried out according to
the legislaon in force by a Disciplinary Commission.
UCMH has an An-Harassment and An-Discriminaon Policy and a dedicated channel through which
employees can directly express their concerns or needs, as well as a procedure through which complaints
and nocaons can be submied, following which they are resolved through the mechanism established
in the policy. UCMH has not yet nalized its internal procedure regarding the Public Interest Whistleblower,
and unl such procedure is completed, it is not covered by Hidroelectrica’s procedure.
232
The process of analyzing the reports made on possible violaons of the Code of Ethics and Integrity is
presented in Secon G1 Professional Conduct.
Taking action on material impacts on own workforce, and approaches to mitigating material risks and
pursuing material opportunities related to own workforce, and effectiveness of those actions
ESRS S1-4
The Group's current human resources pracces support the generaon of posive impacts on employees
by the fact that the majority are full-me employees, which provides nancial stability to them and their
families, by supporng freedom of associaon, conducng collecve bargaining, organizing regular
consultaons with employee representaves, promong work-life balance and implemenng rigorous
health and wellness programs. safety at work.
The Group also addresses aracng new talent by implemenng strategic acons, such as oering private
scholarship programs, organizing internship programs and conducng internship programs for students.
These iniaves are meant to aract young talents and provide them with opportunies for professional
development within the company, with parcipants having the opportunity to be selected as future
employees according to specic rules. In addion, the Company is commied to supporng the
professional development of its employees through various methods of movaon, both intrinsic and
extrinsic, thus ensuring a smulang and innovave work environment.
The company introduced a salary system in collaboraon with the social dialogue partner, which resulted
in reduced sta turnover. Recruitment and selecon processes include: S05.120, which refers to the
recruitment of an employee; S05.240, for the selecon of a scholarship; and S05.250, which aims to carry
out the contracts for granng private scholarships. There are also specic instrucons for hiring interns or
dual educaon students.
The eecveness of these acons is assessed through the analysis of the targets set as part of the 2023
Sustainability Strategy (presented in the next secon) and internal audits of human resources processes,
but also through the implementaon of mechanisms for the prevenon of OSH risks (risk assessments,
audits, worker involvement), ethical/whistleblowing channels with certain response and informaon
deadlines, as well as HR and OSH operaonal indicators that are regularly monitored and consolidated
annually. The eecveness of the acons implemented on its own workforce is assessed through regular
monitoring in the eld of human resources and occupaonal safety and health, including indicators on
sta turnover, sta recruitment and retenon, parcipaon in training programmes, as well as OSH-
specic indicators (e.g. frequency of accidents at work, results of risk assessments and internal audits).
The evaluaon of these indicators is carried out periodically at the level of human resources and OSH
structures and is reinforced annually at the level of execuve management.
233
Unl the adopon of the new sustainability strategy aligned with ESRS standards, the evaluaon of
performance in these areas shall be carried out through the exisng operaonal mechanisms, including
periodic internal reporng, internal audits and the analysis of indicators specic to the areas of human
resources and occupaonal safety and health. These processes are applicable at the level of the Group
enes (Hidroelectrica SA, Hidroserv SA and UCMH SRL), depending on the specics of the acvity of each
enty.
In the case of Hidroserv, within the integrated management system for quality, environment and
occupaonal health and safety, cered according to the SR EN ISO 9001, SR EN ISO 14001 and SR EN ISO
45001 standards, Hidroserv has established a methodology for idenfying and managing risks and
opportunies. These aspects are detailed in the operaonal procedure "Risk management", code PO-M3-
07, edion/revision in force. As part of the risk management process, risks related to one's own workforce
are also analyzed. The ISO 45001 standard also contains provisions regarding the relaonship with
contractors, such as the assessment of risks and hazards related to them, their selecon and evaluaon,
training, incident reporng.
The acons implemented within the occupaonal safety and health (OSH) management and risk
management systems are directly correlated with the material negave impact idened by the double
materiality analysis, namely the risk that employees do not benet from safe working condions. In this
regard, the Hidroelectrica Group applies prevenve and migaon measures such as periodic assessment
of occupaonal risks, implementaon of prevenon and protecon plans, periodic training of employees
in the eld of OSH, internal audits and eld checks, as well as monitoring of indicators on incidents and
accidents at work. These mechanisms are applied at the level of the Group enes, depending on the
specics of the acvies carried out.
In relaon to contractors and other business partners, the Group imposes specic occupaonal health and
safety requirements, including the prior assessment of the risks associated with the acvies carried out
by them, mandatory training on the OSH rules applicable at the company's sites, the inclusion of
contractual clauses on compliance with OSH requirements and the performance of eld checks and
controls to ensure compliance with these requirements.
Internal funcons involved in managing workforce impacts include human resources and occupaonal
safety and health departments, as well as structures responsible for internal audit and compliance.
Hidroserv develops and implements prevenon and protecon plans (PPPs) for each secon, and
dedicated expenditure plans are established annually for their applicaon. The PPP includes technical,
sanitary, organizaonal and other measures, adapted to the specic working condions in each unit.
At the level of each secon, the following are developed and executed:
• annual OSH control plans to verify compliance with the legal requirements in the eld;
234
• Annual audit programs of the integrated management system in the eld of OSH to verify
compliance with the condions of ISO 45001 cered standard;
• Annual internal public audit programs.
Both within Hidroelectrica SA, Hidroserv, and at UCMH, various measures were implemented in 2025 with
the main aim of having posive impacts on their own workforce:
• Occupaonal health and safety measures: Implementaon of standards such as SR EN ISO 45001
to ensure a safe and healthy working environment.
• Sta Movaon and Retenon Programs: Providing benets, bonuses, and career advancement
opportunies to keep valuable employees within the company.
• Training and professional development programs: Organizing courses and trainings to improve
employees' technical and managerial skills.
The acons taken by the Group's companies derive from its current operaonal acvies and exisng
business strategy, without being developed or explicitly correlated with the process of idenfying and
assessing impacts, risks and opportunies in materiality analysis, this correlaon to be achieved with the
adopon of the new Sustainability Strategy.
The Group allocates resources to manage signicant impacts, including a dedicated budget for professional
development programs, investments to improve working condions (OSH), personnel specialized in
human resources management, but these are not quaned and reported in correlaon with the
signicant impacts idened in the materiality analysis. If real impacts on its workforce are idened, the
Hidroelectrica Group applies internal invesgaon and remediaon mechanisms, in accordance with
human resources and occupaonal health and safety procedures. These include the invesgaon of
incidents or accidents at work, the analysis of the causes, the establishment and implementaon of
correcve and prevenve measures, as well as the monitoring of their implementaon. The processes are
documented within the framework of internal OSH procedures, management systems cered according
to the SR EN ISO 45001 standard and incident reporng and analysis processes. Employees have at their
disposal mechanisms for reporng situaons that may have negave impacts on working condions,
including through internal communicaon channels, workers' representaves or social dialogue
mechanisms. Complaints are analyzed by the competent structures (human resources, occupaonal safety
and health), and when necessary, measures to remedy or improve working condions are established.
The results of the implemented acons are monitored through operaonal indicators specic to the areas
of human resources and occupaonal safety and health, such as the evoluon of indicators on
occupaonal accidents, the degree of parcipaon in training and professional development programs or
the level of sta turnover. These indicators are analyzed at the level of the responsible structures and
reported to the management.
235
Targets related to managing material negative impacts, advancing positive impacts, and managing
material risks and opportunities
ESRS S1-5
Hidroelectrica SA has idened a series of indicators and targets, part of the Sustainability Strategy
approved in 2023, to monitor the material impacts on the workforce. The indicators and targets set are
aimed at achieving the assumed objecves. The strategy was developed based on the assessment of the
material ESG aspects idened in 2023, with high relevance for both the company and the stakeholders
from the perspecve of social and environmental impact, as well as from the point of view of nancial
impact. Starng from these material aspects, the company has dened a set of Sustainability Pillars,
represenng the areas for which objecves, indicators and targets have been set. The establishment of
the objecves, indicators and targets of the 2023 Sustainability Strategy also took into account the
prospects of its own workforce, through internal consultaons and dialogue with employee
representaves. The monitoring of performance against these targets and the idencaon of possible
improvements are carried out through internal analysis and reporng processes, which include the
contribuon of human resources, occupaonal safety and health structures and, where appropriate,
consultaon of workers' representaves.
At the me of wring, the targets and indicators are being updated due to the need to align with the ESRS
standard of the IRO material, but the approval of the new strategy has been postponed and will be
approved aer the adopon of the revised ESRS standards.
The indicators and targets reported for 2025 are presented in the table below and reect measures to
manage potenally negave impacts (related to occupaonal health and safety) and promote posive
impacts (diversity, aracng new talent, promoon and retenon).
ESG pillar
Theme
Objective
Initiative/ac
tion
Performance
indicator
Target
Results 2024
Results 2025
Implementa
tion
deadline
Occupatio
nal health
and safety
Work
incidents
Zero
serious
work
incidents
or
fatalities
Annual
update of
the
Occupationa
l Health and
Safety (OHS)
Prevention
and
Protection
Plan
LTIR (Lost Time
Injury Rate, in
the case of own
employees)
LTIR < 1%
0.28
0.28
Annual
No. of serious
work incidents
or deaths
0 serious work
incidents or
fatalities
0
0
236
Identificatio
n of OHS
skills/knowle
dge at all
organisation
al levels
Provision of
ad-hoc
training
initiatives to
improve
both
performance
and general
awareness
of health
and safety at
work
No. of SSO
training hours/
year/ employee
minimum 8 hours
of SSO
training/employee
/year for
operational staff
16
hours/employee
/year for
operational staff
16
hours/employee
/year for
operational staff
Annual
Organizati
onal
culture
Attractiven
ess for
employme
nt
(1)
Increasing
employee
satisfactio
n(2)
Increasing
retention(
3)
Attracting
new talent
and young
profession
als
Identifying
training
needs and
providing an
annual
training
program
No. of training
hours/employee
/year
- minimum 22
h/employee/year
for TESA staff
without access to
facilities -
minimum 102
h/employee/year
for operational
staff
- 20
h/employee/yea
r for TESA staff
without access
to facilities - 117
h/employee/yea
r for operational
staff
- 21
h/employee/yea
r for TESA staff
without access
to facilities -
120x
h/employee/yea
r for operational
staff
Annual
10% increase in
the minimum
number of hours
per employee per
year, for each of
the two categories
20-117
h/employee/yea
r (depending on
the category of
personnel)
21-120
h/employee/yea
r (depending on
the category of
personnel)
2027
Conducting
annual
employee
satisfaction
surveys
% voluntary staff
turnover (FP)
FP < 2%
0,93
0
Annual
Developmen
t of new
projects for
the training
of young
students in
various
specialties
No. of private
scholarships: no.
Employed
scholarship
holders / no.
graduate
scholarship
holders = 1No.
of scholarships
50 scholarships
210 places in dual
education60
internship
programs75
places for practice
for pupils and
students
10 scholarships
awarded for 10
new students;
During the year,
a total of 16
scholarships
were awarded (6
being awarded
18 students
were supported
for the 2024-
2025 school
year, of which 11
students
remained for the
Until the
places
allocated to
these
programs
are filled,
depending
on the
237
for the
hydropower
industry
for the financial
support of
students in the
dual education
program,
awarded /no.
students
enrolled in dual
education who
meet the
conditions for
granting
=1.Expenses
incurred by the
Internship
programs carried
out/amounts
allocated in the
BVC for the
Internship
programs ≤ 1
No. of students
who carry out
their internship
program in
Hidroelectrica/N
o. of internship
programs
provided for in
the Framework
Agreements
concluded with
the university
education units
≤ 1
recurrently from
previous years)
15 graduates
from the dual
education
program were
hired in 2024
55 internship
programs
occupied
29 students
completed
internship
2025-2026
school year.
In October 2025,
a new selection
process was
started for the
granting of 34
scholarship
places (25
students and 9
students).
Following the
selection, 13
students and 4
students were
selected who
will conclude the
scholarship
contracts until
February 2026.
4 graduates
from the dual
education
program were
hired in 2025
15 contracts for
dual university
education were
concluded (10
students and 5
master's
students)
38 programe
internship
demarate
58x students
completed an
internship
annual
approvals
Diversity,
inclusion
and non-
discriminat
ion
0 incident
to
discriminat
e
Developing
and
delivering a
training
session to
improve
managemen
% of
management
trained
100%
100%
100%
Annual
Incident No. to
discriminate
0
0
0
Annual
238
t's
awareness
of diversity,
inclusion
and non-
discriminatio
n
Regarding the implementaon of the ISO 45001 Occupaonal Health and Safety Management System
standard, Hidroelectrica SA has met the target of 100% for the cercaon of its sites in 2025.
No performance indicators and targets have been set for Hidroserv and UCMH.
Characteristics of the undertaking’s employees
ESRS S1-6
The number of employees as of December 31, 2025 was used to present the data. The group considered
as employees the persons with whom it has concluded individual employment contracts, in accordance
with the provisions of Law 53/2003 Labor Code - republicaon. The members of the Supervisory Board
and the Management Board are not included in the table below, as the Company has concluded mandate
contracts with them.
In the consolidated nancial statements, the number of employees as of December 31, 2025 can be found
in Note 16 Employee Benets.
Employee breakdown
Gen
Number of employees as of
December 31, 2024
Number of employees as of
December 31, 2025
Female
796
824
Male
4,440
4,478
Other
0
0
Not reported
0
0
Total
5,236
5,302
The group has employees only in Romania.
Employee breakdown (contract types)
Number of employees
Gen
Permanent
Temporary
Hours denied
239
Number of employees
2024
2025
2024
2025
2024
2025
Female
783
801
13
22
0
0
Male
4,324
4,322
116
157
0
0
Other
0
0
0
0
0
0
Not reported
0
0
0
0
0
0
Total
5,107
5,123
129
179
0
0
Breakdown of employees (by working me)
Gen
Full-me
Part-me
2024
2025
2024
2025
Female
794
821
2
2
Male
4,431
4,471
9
8
Other
0
0
0
0
Not reported
0
0
0
0
Total
5,225
5,292
11
10
Total uctuaon and voluntary uctuaon
2024
2025
Total staff turnover
6.41%
7.32%
Voluntary staff turnover
1.34%
1.36%
The total turnover of the sta is calculated as the rao between the number of employees who have
terminated the individual employment contract, regardless of the cause (either voluntarily or due to
dismissal, rerement or death in the course of service), and the average number of employees in that year.
Thus, with 381 employees leaving out of an average total of 5,204, the total uctuaon is 7.32%. As for
the voluntary sta turnover, this represents the percentage of those who terminated the contract on their
own iniave, being 1.36% in 2025, i.e. 71 employees out of the same average number of 5,204.
240
Percentage of female employees
2024
2025
Total percentage of female persons employed
within the Hidroelectrica Group
15.20%
15.54%
Percentage of women on the Supervisory Board
and Management Board
16.7%
20%
The total percentage of female employees within the Hidroelectrica Group is mainly inuenced by the
specics of the jobs within the Group. These jobs, by the nature of the availability and eort requirements,
are mostly occupied by male people.
Diversity metrics
ESRS S1-9
The Hidroelectrica Group recognizes the importance of diversity and inclusion for creang a posive
workplace culture and is dedicated to promong these values. To this end, iniaves such as bias courses
and employee resource groups have been implemented. The group does not restrict access to posions in
the recruitment, selecon and promoon process, although most of the employees are men due to the
specics of the jobs. The Hidroelectrica Group is commied to creang a working environment in which
individual dierences are respected and valued, prohibing discriminaon and abusive or discriminatory
behavior.
Details on the Group's diversity indicators are highlighted in the tables below.
Gender distribuon at senior management level* (Supervisory Board and Management Board)
Employees
Numeric value
%
2024
2025
2024
2025
Age
< 30
0
0
-
-
30 – 50
10
7
83.3%
70%
> 50
2
3
16.7%
30%
* At Group level, senior management is represented by the Supervisory Board and Management Board
Distribuon of employees by age groups at Group level
Distribuon by age groups at sta level
Employees
Numeric value
%
241
2024
2025
2024
2025
Age
< 30
265
320
5.06%
6.04%
30-50
2,109
2,296
40.28%
43.30%
> 50
2,862
2,686
54.66%
50.66%
Total
5,236
5,302
100%
100%
Fair and safe working conditions
Collecve bargaining coverage and social dialogue
ESRS S1-8
The working condions of the employees are established by the collecve labor agreements, according to
the terms agreed at the level of each enty in the group. Employees obtained through personnel leasing
benet from the same rights as permanent employees of the company.
2024
2025
Percentage of the Group's total employees subject to
collecve bargaining agreements*
100%
100%
*The collecve bargaining agreement is not applicable to the members of the Supervisory Board and the
Management Board, who have mandate contracts for the duraon of their mandate. If they are elected
from among the employees, their individual employment contract is suspended for the duraon of the
mandate.
The Group's acvity is carried out enrely in Romania, and 100% of the employees are covered by
collecve bargaining agreements and employee representaves.
Adequate wages
ESRS S1-10
The Group ensures fair remuneraon for all its employees. All employees of the Hidroelectrica Group are
remunerated according to the salary system established by the Collecve Labor Agreement at the level of
each enty, in compliance with the legislaon in force regarding the minimum wage, social contribuons
and tax. It represents the reference level used to dene the appropriate salary in the context of ESRS
reporng, as there is no ocial alternave for seng it.
There are no employees or persons earning below the reference level of the appropriate salary applicable
at naonal level, i.e. the minimum gross basic salary per country guaranteed in payment.
242
At the level of Hidroelectrica SA, gender equality and equal remuneraon are ensured through a salary
system applied since 2018, based on the Mercer methodology, which evaluates posions on ve
dimensions (impact, communicaon, innovaon, knowledge and risks) and promotes competence. This
methodology is based on comparing posions with objecve market salary data, using external databases
and benchmarks to correctly posion roles in relaon to the market and to ensure a compeve and fair
remuneraon structure, ensures that it implements a compeve and market-aligned salary structure.
Through the applied salary system, Hidroelectrica SA establishes, in the medium and long term, the
following objecves:
• reward employee performance;
• reect the responsibilies of each posion;
• ensure the ecient use of nancial resources;
• oer salaries that aract, movate and retain employees.
The salary system applies to all employees of Hidroelectrica SA with an individual employment contract
and takes into account the following factors:
a) eciency – the reward system must ensure judicious administraon and control of personnel costs;
b) equity that is dened according to 3 dimensions:
• internal fairness – by taking into account job requirements as a result of the job evaluaon
process;
• external equity – by paying a post in relaon to similar posts in other companies;
• individual equity – by taking into account the competences of the person occupying a certain
posion in relaon to persons occupying similar posions in Hidroelectrica SA.
Hidroserv and UCMH, in turn, apply salary systems that comply with the legislaon and promote equity.
Persons with disabilies
S1-12
The Hidroelectrica Group is committed to supporting the inclusion of people with disabilities. However, it
is important to note that certain jobs within the organization have specific health requirements, according
to the applicable legal regulations. The health status of the staff is certified at the time of employment
and periodically, by the specialized occupational medicine service provided by the Company, so that the
health status of the staff is corresponding to the identified occupational risk factors, for each position in
the organizational chart.
As of 31.12.2025, the Group has 75 employees with disabilities, of which 64 men and 11 women. There
are no persons with disabilities among employees who are subject to legal restrictions on data collection.
243
Female
Male
Total
2024
2025
2024
2025
2024
2025
Number of employees with disabilities
11
11
65
64
76
75
2024
2025
Total percentage of employees with disabilities
1.45 %
1.41%
Compensaon metrics (pay gap and total remuneraon)
ESRS S1-16
The remuneraon of the Hidroelectrica Group's sta is regulated, at the enty level, by the applicable
Collecve Labor Agreements (CCM), which includes a hierarchy of funcons and trades within each
company. Here are menoned salary limits for each hierarchical level, established according to the
complexity of the work, the degree of technicality and professional competence specic to the posions
in the organizaonal chart.
When negoang the salary, the requirements contained in the Job Descripon, annexed to the CCM, are
taken into account, a comparave evaluaon with the average levels of income achieved in similar
acvies at naonal level, thus resulng in a salary whose value will be established in accordance with the
limits of the Nomenclature of Hierarchy of Funcons provided for in the CCM.
Gender pay gap - all group sta
Gen
Number of employees
Pay gap*
2024
2025
2024
2025
Female
796
824
-11.01%
-11.02%
Male
4,440
4,478
Total
5,236
5,302
* During 2025, the company revised the calculaon methodology for the indicators in order to comply with
ESRS requirements, and the indicators for the 2024 reporng period were recalculated..
244
The gender pay gap is calculated, according to the ESRS denion, as the dierence between the average
pay levels (average monthly income was used) between female and male employees, expressed as a
percentage of the average pay level of male employees. For the purpose of calculang the total number
of worked hours, the enty used a standard working me of 8 hours per day (equivalent to 160 hours per
month) for each employee, mulplied by the number of months worked during the reporng period. The
hourly earnings used in the calculaon were derived by dividing the total gross remuneraon by the
number of hours thus determined.
The pay gap between women and men in the energy sector, including in companies such as those in the
Hidroelectrica Group, is inuenced by factors such as the dierent distribuon of genders in operaonal
and administrave/technical roles. Thus, the pay gap of -11.02% is jused by the presence of female
people predominantly in technical and administrave posions, and less in the exploitaon area,
predominantly male employees.
* During 2025, the company revised the calculaon
methodology for the indicators in order to meet ESRS
requirements, and the indicators for the 2024 reporng period
were recalculated.
At group level, the rao of the total annual remuneraon for the highest-paid employee to the total annual
median remuneraon for all employees (excluding the highest-paid employee) is 14.59. The calculaon
was made using the annual earnings per employee, composed of the gross basic salary, bonuses and other
benets granted according to the CCM. Only employees who were acve for 12 months during the year
were included (*for 2024, in the case of UCMH, employees who were acve for 10 months of the year
were considered, taking into account the ming of the company’s acquision by Hidroelectrica).
In determining the pay gap and the rao between the total annual compensaon for the highest-paid
employee and the total annual median compensaon for all employees, the Group took into account all
employees.
The members of the Supervisory Board and the Management Board are also included in the calculaon of
the remuneraon indicators.
Protection of human rights
Incidents, complaints and severe human rights impacts
Annual total remuneration ratio
2024
2025
5.58*
14.59
245
ESRS S1-17
The Hidroelectrica Group is commied to combang any form of discriminaon.
By promong an inclusive work environment, the Group aims to create a workplace where all employees
feel valued and supported, thus contribung to a healthy and producve organizaonal culture.
Employees are encouraged to report any form of harassment to the manager of the Human Resources
Department, who will invesgate and propose appropriate measures to the Company's Management
Board.
In 2025, a total of 5 complaints were submied by employees to Hidroelectrica SA, being received on the
e-mail address of the commission for receiving and solving harassment cases, all of which were resolved
according to the Guide on prevenng and combang harassment based on sex, as well as moral
harassment at work. All these 5 complaints were related to potenal situaons of harassment at work.
Following the commiee's analysis, according to the procedure, it was found that 1 of these 5 complaints
fall into the category of "harassment at work".
At UCMH level, an incident of verbal harassment was registered and there were no incidents of
discriminaon. The nocaon was sent in leer format to the General Manager and registered with the
Human Resources Service. The incident was analyzed and solved by the Preliminary Disciplinary
Invesgaon Commission, according to the working procedure Applicaon of disciplinary sancons, code
PL 306-50 and was registered in the UCMH SRL Harassment Register.
In 2025, no incidents of discriminaon or harassment among employees were reported at Hidroserv and
no employee complaints regarding occupaonal safety and health were reported. There were also no
reported work-related incidents and/or complaints or serious human rights impacts (e.g. forced labour,
tracking in human beings or child labour) within their own workforce.
The group has not received any signicant nes, sancons or compensaon in relaon to its human rights
or its workforce.
Total number of incidents of discriminaon, including harassment
2024
2025
Number of complaints led through the channels through which people in the
company's own workforce can express their concerns
16
5
Total number of incidents of discriminaon, including harassment
0
2
Total amount of nes, penales and compensaon for damage caused by incidents
0
0
Remedial acon
0
2
246
Employee welfare and development measures
Health and safety metrics
ESRS S1-14
The situaon of work accidents at the workplaces within the Hidroelectrica Group units, in 2025.
Events
2024
2025
No. of work-related injuries with temporary incapacity for work (own employees)
3
2
No. of work-related injuries and acquired disability (own employees)
0
0
No. of work-related accidents with death (own employees)
0
0
Total events (own employees)
3
2
No. of work-related accidents with death (contracted employees)
0
0
Number of deaths because of work-related injuries and work-related diseases at the level of
Hidroelectrica units
Drive
Deaths of own employees
Contractor deaths
Total work-related
deaths
2024
2025
2024
2025
2024
2025
Locations of the
Hidroelectrica Group
0
0
0
0
0
0
Head Offices
0
0
0
0
0
0
Total
0
0
0
0
0
0
In 2025, at the level of the group, 2 work accidents were recorded. The main causes that generated the
events are:
• Hațeg (Hidroelectrica SA): Moving the generator set from the premises of the dam operator's
house, where, at the me of performing the maneuver to turn the generator to the access gate
(the necessary measures were taken to safely perform the maneuver), the generator entered and
swayed, injuring one of the workers in the right leg, by pressing the sole of the foot, which slipped
when the group was swinging between the xing/riding support and the oor.
• Rm. Vâlcea (Hidroserv): Indirect contact with the electric arc in the 220 kV substaon as a result
of improper control-maneuvering.
Number of occupaonal accidents registered at the level of the Hidroelectrica Group
Event type
2024
2025
No. of work-related injurieswith temporary incapacity for work (own employees)
3
2
No. of work-related injurieswith disability (own employees)
0
0
247
No. of work-related accidents with death (own employees)
0
0
Total events (own employees)
3
2
The number of days lost as a result of work-related injuries and deaths due to work-related accidents,
work-related illnesses and deaths caused by illnesses.
2024
2025
Number of days lost due to work-related injuries
181
301
Incident-related absenteeism rate
2024
2025
Incident-related absenteeism rate
Number of accidents x 1000000 / total number of
hours worked per year
0.28
0.22
The Group has implemented a procedure for organising internal training, detailing all types of training,
their duraons, methods of knowledge vericaon and those responsible for each type of training.
According to the legislave provisions, OSH training is carried out at the me of employment, at the
workplace, periodically (at the latest every 6 months aer the last training) and addionally (for example,
aer a work accident or aer an absence of the employee for more than 30 days). These trainings are
oered free of charge, during working hours, by OSH specialists or job managers, and their eecveness
is evaluated by tesng the knowledge gained.
Employees
Non-employed
Employees in the
value chain
2024
2025
2024
2025
2024
2025
Percentage of people in
its own workforce who
are covered by the
company's health and
safety management
system based on legal
requirements and/or
recognised standards or
guidelines
100%
100%
0
0
0
0
248
Number of deaths as a
result of work-related
injuries and work-related
diseases;
0
0
0
0
0
0
Number and rate of work-
related accidents that can
be recorded
3
2
0
0
0
0
Number of cases of work-
related diseases that can
be registered
0
0
0
0
0
0
Number of days lost due
to work-related injuries
and deaths due to work-
related accidents, work-
related diseases and
deaths due to diseases
181
days
301 days
0
0
0
0
The indicators included in this report have not been veried by any external body other than the insurance
provider.
249
AFFECTED COMMUNITIES
ESRS S3
Strategy and concepts related to affected communities
Interests and views of stakeholders
SBM-2, SBM-3
The Hidroelectrica Group follows a series of processes related to the consultation of the communities that
could be affected by the Group's activities, in particular within the procedures for obtaining
environmental agreements and permits (public information through press announcements, on the
website of the Environmental Protection Agencies and/or on the company's website, public participation,
as the case may be in various public debates, depending on the environmental procedure followed).
The Group has identified as potential affected communities those who live or work around the Group's
sites. No affected communities on the value chain or indigenous peoples were identified to be affected
by the Group's operations.
The Hidroelectrica Group takes into account the impacts on communities, as well as the risks and
opportunities in its strategy and business model, including for vulnerable groups.
The positive impacts on communities derive from the company's business model, in the sense that it is an
affordable energy supplier, and the hydrotechnical facilities protect the localities by controlling water
flows, reducing the risk of flooding and stabilizing watercourses during periods of heavy rainfall.
The potential indirect negative impacts related to possible temporary interruptions in the raw drinking
water supply of some beneficiaries who take water from the hydropower facilities operated by
Hidroelectrica, for delivery to the population in the areas adjacent to these facilities, are isolated cases
and are prevented by prior communication of the need and duration of technical interventions, so that
the respective beneficiaries take technical and legal measures necessary to ensure the continuity of the
population's water supply.
Hidroelectrica has developed a Stakeholder Engagement Plan (SEP) that establishes the framework
through which the company provides a way to communicate consistently with all groups affected or
interested in its activities. The plan aims to ensure continuous dialogue, through the identification and
analysis of stakeholders, regular consultations and adaptation of communication according to the needs
of each group. The SEP is updated during the implementation of the projects and includes clear
mechanisms for collecting and managing complaints, as well as activities dedicated to local communities.
Through this process, Hidroelectrica strengthens constructive relationships, manages risks and
contributes to the success of projects and the development of the communities in which it operates
250
The table below presents the material IROs identified following the conduct of the double materiality
analysis, detailed in ESRS section 2 Double materiality analysis. These IROs refer to communities identified
by the Group as potentially affected communities.
Affected communities
Impact
Location on the
value chain
Risk/Opportunity
The economic, social and
cultural rights of the
communities in which we
operate
Positive impact, through
affordable energy supply.
In addition, hydropower
developments play a role in
mitigating flood waves,
water supply to localities,
irrigation, fish farming,
navigation through locking,
recreation and tourism,
stimulating the local
economy (jobs and road
connectivity).
Own operations
Opportunity: Hidroelectrica SA
can invest in the development of
sustainable projects that directly
benefit local communities, such
as education, health or
vocational training. It can also
work with local authorities to
support the preservation of
cultural identity and the
protection of heritage.
The economic, social and
cultural rights of the
communities in which we
operate
Potentially indirect
negative impact – Possible
temporary interruptions in
the raw drinking water
supply of some
beneficiaries who take
water from the
hydropower facilities
operated by Hidroelectrica,
these beneficiaries having
the responsibility for
supplying drinking water to
the communities including
in exceptional situations
and including the
responsibility of ensuring
the backup source.
Own operations
No material risks or
opportunities have been
identified for this sub-theme.
Civil and political rights of
the communities in which
we operate
Positive impact,
Hidroelectrica's projects and
activities are subject to the
procedures for obtaining
environmental regulatory
acts with public consultation,
respecting all the civil and
political rights of the
Own operations
No material risks or
opportunities have been
identified for this sub-theme.
251
communities in which it
operates.
Policies related to affected communities
S3-1
Hidroelectrica SA's commitment to the affected communities identified is reflected in the corporate
governance policies adopted, among which the Hidroelectrica Policy, the Hidroelectrica Policy on
donations and sponsorships and the Hidroelectrica Social Responsibility Policy are mentioned, as well as
the actions taken mentioned in the subchapter below.
At the level of the other entities in the Group there are also relevant policies for the relationship with the
communities. In the case of UCMH, the UCMH Policy, the Donations and Sponsorships Policy and the
Corporate Social Responsibility (CSR) Policy are applicable, which include provisions on community
involvement and support for social projects.
Hidroelectrica SA does not have a stand-alone policy, aligned with the ESRS standard. The IROs identified
materially are to be integrated into the new Sustainability Strategy, not being specifically addressed in the
current policies. At the time of writing, the targets and indicators are being updated due to the need to
align with the ESRS standard of the IRO material, but the approval of the new strategy has been postponed
and will be approved after the adoption of the revised ESRS standards.
Through the Hidroelectrica Policy, the Company is committed to supporting and respecting the protection
of international human rights (GCP-1) and to ensuring non-involvement in activities that violate/may
violate human rights (GCP-2).
Hidroelectrica's policy on donations and sponsorships establishes principles for providing financial
support. It prioritises environmental protection, health, education, research and sport, supporting
projects that promote sustainable development and social solidarity. The approval process involves a
dedicated committee, and beneficiaries must report on the impact of projects, ensuring that they
contribute significantly to the company's sustainability objectives.
Within Hidroelectrica SA, the responsibility for the implementation of community involvement and
sustainability policies is assumed at the level of the Management Board.
The Hidroelectrica Group invests in education initiatives, facilitating access to modern educational
resources and supporting the development of the skills of future generations. The Society also supports
health projects and the promotion of a healthy lifestyle. In the cultural and sports field, Hidroelectrica SA
finances events and activities that encourage community participation and the valorization of local
traditions.
There were no cases of non-compliance with 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 involving affected communities.
252
Processes for engaging with affected communities about impacts
S3-2
The entities within the Group organize together with the environmental authorities public consultation
sessions within the procedures for obtaining the permits and approvals necessary for the activity.
Consultations with local communities are carried out in particular to obtain environmental agreements
and permits, according to the applicable legal regulations, and their frequency is established in the specific
regulatory procedures. The environmental agreement is issued by the competent authority for
environmental protection and sets out the conditions to be complied with in the case of a development
or modification project. The environmental impact assessment procedure for public and private projects,
as well as the permitting procedure, involves the organisation of public consultations, in accordance with
the EU Directive transposed into national law.
All public consultations and debates are open to community members, regardless of gender, age,
background, or ethnicity. Local organizations and community leaders can be involved in the process to
understand and address the needs of vulnerable communities, including marginalized groups. The
comments are analysed and taken into account in the decision-making process of the authorisation
procedures.
The Hidroelectrica Group collaborates with the affected communities, including representatives of local
authorities and competent organizations, through meetings and through the development and
implementation of various social responsibility projects, depending on the identified needs. Collaboration
takes place throughout the project cycle, from planning to implementation, with regular meetings for
information and consultation. The responsibility for the development of these activities is ensured by the
Public Relations Department, the social responsibility projects being approved by the Management Board.
In 2025, interactions took place mainly in the context of regulatory procedures and specific requests
received from local authorities or communities. Hidroelectrica SA conducts a stakeholder consultation
process within the double materiality analysis in which the communities in which the Company operates
are also involved, through NGOs and other associations. These consultations take place at intervals of no
more than three years, or more frequently if the situation requires it. In 2025, such a process was not
carried out because there were no major changes that would require the resumption of the entire process
of double materiality.
Regarding the evaluation of the effectiveness of the collaboration with the communities through the
double materiality analysis, this consists in measuring the impact of the Group's activities on them, but
also in obtaining direct feedback from the stakeholders.
Processes to remediate negative impacts and channels for affected communities to raise concerns
S3-3
Local communities can use the communication channels made available by Hidroelectrica SA (and detailed
in section S4-3) to address any complaints in the public interest.
253
Another way for affected communities to express opinions and concerns is through media channels. The
public image of an energy company has a significant impact on its relationships with customers, partners
and authorities. In the event of crises or negative events, such as accidents or incidents, media monitoring
can reveal the concerns of the public and NGOs regarding the impact of the activities of the Hidroelectrica
Group. Public and media feedback provides information about the community's perception of the Group's
activity, facilitating the implementation of continuous improvement measures and the adjustment of
corporate social responsibility (CSR) strategies.
Hidroelectrica SA does not currently have a dedicated system for monitoring the progress and solving the
feedback from the affected communities, but it is analyzing the opportunity to develop an internal
procedure dedicated to the management and monitoring of the feedback from the affected communities.
At present, no formal implementation deadline has been set, but this aspect is taken into account in the
process of alignment with the ESRS requirements, after the approval of the Strategy at the company level.
In situations where the activities of the Hidroelectrica Group may generate negative impacts on the
affected communities, such as temporary interruptions in the raw water supply of some users who take
water from hydropower facilities, the company applies prevention and remediation measures in
accordance with the conditions established in the environmental and water management regulatory acts,
as well as with the regulations for the operation of hydropower facilities. The effectiveness of the
measures implemented is assessed by monitoring the operational parameters and conditions set out in
the regulatory acts.
Taking action on material impacts on affected communities, and approaches to managing material risks
and pursuing material opportunities related to affected communities, and effectiveness of those actions
S3-4
No actions are taken in accordance with the provisions of ESRS 2 MDR-A with regard to affected
communities along the value chain. No material risks associated with this theme have been identified.
With regard to the significant negative impacts associated with possible temporary interruptions in the
raw drinking water supply of the communities indirectly served by the beneficiaries (Water Company,
local administrations) that take water from Hidroelectrica's hydropower facilities, the company
implements essential preventive actions, such as the prior communication of the need and duration of
technical interventions, in order to allow the beneficiaries to take the necessary measures to ensuring the
continuity of the drinking water supply and activating alternative sources. This process provides the
framework for the company to establish the appropriate approach for each situation (e.g. scheduling of
technical works in periods of low demand or low hydrological risk, in order to avoid unplanned
interruptions), including when coordination with local authorities or other operators involved in the water
supply is necessary (regular consultations with ANAR, local authorities and water operators for the joint
establishment of protection measures for possibly affected communities).
However, the Group engages in projects of interest to communies. One of the ESG pillars of the 2023
Sustainability Strategy is addressed to local communies, with the strategic objecve of proacve and
254
transparent involvement in projects of local interest, in supporng the community in the areas where
Hidroelectrica operates.
During 2025, the Sustainability Strategy underwent an update process so as to encompass, to a more
detailed extent, the sub-themes idened as material in the context of ESRS reporng for scal year 2024.
As part of this process, the exisng policies at Group level, a series of acons, targets and indicators were
evaluated, as well as the way of monitoring and evaluang them, but the nal version of the Strategy will
be approved aer the adopon of the revised ESRS standards and aer assessing the implicaons
generated by the recent legislave volality.
In the event that, exceponally, the exploitaon acvies or technical works carried out by Hidroelectrica
would lead to temporary interrupons in the raw water supply of downstream users, the company
collaborates with water operators and competent authories to idenfy and implement the necessary
measures to remedy and limit the impact on the aected communies. Depending on the circumstances,
these measures may include adapng the operang schedule, ensuring adequate ows or other technical
soluons agreed with the competent authories. The idencaon and management of these situaons
is achieved through the permanent monitoring of the operang condions of the hydropower facilies,
through collaboraon with the Naonal Administraon "Apele Române", local authories and water
operators. The eecveness of the measures implemented is assessed by monitoring the operaonal
parameters and through dialogue with the authories and operators involved.
The actions that Hidroelectrica SA has undertaken so far, as well as those it has proposed in the medium
term (2024-2026) related to the theme of community involvement are:
• Hidroelectrica SA has developed a Stakeholders Engagement Plan (SEP) in order to address the
needs of local communities, especially vulnerable ones. The main objective of the SEP is to identify
vulnerable communities, assess their needs and establish an action plan to meet them. SEP
emphasizes the importance of providing accessible and meaningful information, ensuring cultural
appropriateness, promoting two-way dialogue and integrating feedback into company programs.
The plan also provides mechanisms to address stakeholders' concerns, ensuring inclusiveness and
transparency throughout the engagement process.
• Conducting a Community Needs Assessment (ENC) to better understand the critical needs of
communities (completed in 2024)
• Preparation of a Community Development Plan detailing the projects agreed with each
community (in 2025 the sponsorship requests for the implementation of the projects included in
the plan were not approved; the plan will be revised according to the approved new Sustainability
Strategy and the updated action plan).
In order to plan and implement future actions related to the Local Community Needs Assessment (ENC),
based on information from the National Register of Houses without Electricity in Romania provided by the
Ministry of Energy, Administrative-Territorial Units (TAUs) were identified in which Hidroelectrica SA
operates and where there are energy-vulnerable groups.
During 2025, Hidroelectrica SA supported various projects in the field of health, sports, culture, education.
The effectiveness of these actions is assessed by monitoring the number of beneficiaries and the results
obtained are used for the continuous improvement of the programmes. In order to monitor the use of
255
the funds granted through sponsorship, according to art. 4.5 of the sponsorship contract, after the
completion of the contract, we ask the beneficiary, within a maximum of 60 days, to submit a report
presenting the results obtained and the impact of the project, accompanied by the supporting documents
related to the expenses incurred.
In 2025, Hidroelectrica SA spent 8,780,060 lei as follows:
• 50,000 lei in the field of environmental protection
• 3,512,760 lei in the field of health
• 2,951,850 lei in the field of sports
• 767,150 lei in the cultural field
• 669,600 lei in the social field
• 828,700 lei in the field of education and research.
Hidroelectrica SA has contributed and will contribute from its own sources through its sponsorships to
support social cohesion, community development, the medical sector, education and culture, the
environment and sports. Annually, Hidroelectrica SA publishes on its website a detailed report on the
sponsorships granted, available here.
In 2025, UCMH invested 49,459 lei in dual education (vocational and university).
In 2025, no significant environmental events have been identified that have generated material impacts
on the affected communities. Consequently, no remedial measures were necessary compared to those
provided for in the normal operating conditions established by the environmental permits, water
management permits and internal emergency plans applicable to the Hidroelectrica Group's sites. No
serious human rights problems and incidents were reported within the communities in the areas of
activity of the Hidroelectrica Group.
Targets related to managing material negative impacts, advancing positive impacts, and managing
material risks and opportunitie
S3-5
From the strategic targets regarding Local Communities, established in 2023 through the 2023
Sustainability Report, Hidroelectrica SA has met the two targets for 2024, by preparing the ENC Report
(Community Needs Assessment) and developing the Program Plan to meet the identified needs, and after
updating the Strategy, we will start the project implementation phase.
256
CONSUMERS AND END-USERS
ESRS S4
Consumer and end-user strategy and concepts
Interests and views of stakeholders
SBM-2
Final consumers are considered essenal stakeholders for the Hidroelectrica Group, being included in the
"Customers" category. The company acts both as a wholesaler and as a supplier of electricity directly to
end consumers, including household and business customers, which comprise businesses in various
industrial sectors, such as automove manufacturing, telecommunicaons and construcon.
The Hidroelectrica Group adapts its strategy to meet the needs and expectaons of customers and
promotes transparent communicaon with customers.
The interests and points of view of Hidroelectrica SA's customers are varied and complex, reecng
economic, social and environmental needs. Hidroelectrica SA integrates the interests and rights of
consumers, i, into its strategy and business model.
In 2025, the idencaon of customer interests and points of view was achieved through the exisng
operaonal mechanisms for interacon with consumers, such as the analysis of requests and complaints
received through customer service channels, interacons in the call center, the acvity of customer service
centers and communicaons received through the company's digital channels. The informaon resulng
from these interacons is periodically analyzed to idenfy the main concerns of customers and to improve
the operaonal processes and services oered.
257
The customer sasfacon quesonnaires were in the tesng phase at the end of 2025 and were not
operaonally used to idenfy customer needs during the reporng period.
Clients' interests can be summarized into several main categories, such as:
● Connuity of service: Customers want uninterrupted access to electricity, demanding stability and
reliability in energy supply.
● Compeve taris: Customers want aordable and compeve taris for electricity, given their
impact on living and producon costs.
● Cost transparency: Customers appreciate transparency in pricing structure and clarity in billing.
● Quality standards: Ensuring a high level of quality of service, including fast response mes to
requests and promptness in solving problems, are appreciated by consumers.
● Reducing emissions: Customers are increasingly concerned about their environmental impact and
prefer companies that take acon to reduce emissions of greenhouse gases and other pollutants.
Hidroelectrica SA responds to these concerns, being a producer of 100% renewable energy.
● Ethics and responsibility: Transparency and ethics in the operaon of society, including respect for
consumer rights and social responsibility, are topics of interest to clients.
● Community impact: Clients are interested in how the company's acvies aect local communies
and the potenal posive contribuon of society to their development.
● Dialogue and collaboraon: The openness of society to communicate and collaborate with local
communies and authories is appreciated by this category of stakeholders.
These views and interests are essenal for Hidroelectrica SA's strategies and operaons, inuencing
customer sasfacon and the long-term success of the company. The company, through its investment
program, current acvies as well as implemented policies and procedures, makes eorts to meet
customer expectaons. Customer interests and feedback are taken into account in dening the company's
priories, including the development of the supply segment, the improvement of customer service
channels and the digizaon of services. Also, the requirements regarding transparency, connuity of
service and the protecon of consumers' rights inuence the way electricity is supplied and the
development of internal procedures regarding the relaonship with customers, helping to adapt the
business model to market expectaons.
The signicant impacts, risks and opportunies related to Hidroelectrica SA's customers are assessed at a
maximum interval of 3 years to ensure alignment with Hidroelectrica SA's strategy and business model,
taking into account both environmental, economic and social aspects. As part of the Strategic
Sustainability Plan (2023), a set of sustainability pillars was dened in 2023 on which the Company focuses
in the short, medium and long term. Among the ESG pillars of the Sustainability Strategy, one is addressed
to customers, with the strategic objecve of guaranteeing access to clean and aordable energy and
permanently improving the relaonship with customers.
An update of the Sustainability Strategy was iniated in 2025, to align with the material IROs idened in
the context of ESRS reporng for scal year 2024, but the nal version of the Strategy will be approved
aer the adopon of the revised ESRS standards and aer assessing the implicaons generated by the
recent legislave changes.
258
Material impacts, risks and opportunies and their interacon with strategy and business mode
SBM-3
The strategy and business model of the Hidroelectrica Group are built in such a way that the impacts on
the nal consumers of electricity are posive in the long term. The Hidroelectrica Group covers the needs
of a wide spectrum of consumers, including large industrial consumers, residenal households and local
communies.
The actual and potenal impacts on consumers, including those related to the transparency of
informaon, the correctness of billing and the connuity of electricity supply, the protecon of personal
data, are directly related to the strategy and business model of the Hidroelectrica Group, which include
both the producon and supply of electricity to nal consumers.
These impacts derive from the operaonal processes, the way the customer relaonship is managed and
the legal and contractual obligaons applicable to the supply acvity.
At the same me, managing these impacts underpins the connuous adaptaon of the business model
and commercial strategy. For example, the Group has implemented digital systems dedicated to customer
relaons (online portal, electronic invoicing, dedicated communicaon channels), as well as mechanisms
for monitoring and correcng any billing errors, in order to ensure the transparency and accuracy of the
informaon provided. Also, the strategy of diversicaon of producon sources and investments in
infrastructure modernizaon contribute to increasing security of supply and reducing the risk of non-
fulllment of contractual obligaons.
The regular assessment of the impacts, risks and opportunies associated with the relaonship with
consumers, including by monitoring operaonal indicators, complaints received and regulatory
requirements, contributes to the connuous adjustment of operaonal and commercial processes,
supporng the adaptaon of the strategy and business model in order to maintain consumer condence
and compliance with the applicable requirements.
The impacts, risks and opportunies associated with consumers, idened as a result of the double
materiality analysis, described in ESRS Secon 2 Double materiality analysis, are summarised in the table
below. The impact, risks and opportunies idened are applicable to all categories of end consumers
menoned above (household and business customers). Please note that the policies, acons, processes
and indicators presented in this chapter reect the current acvity of the company and are not specically
related to the result of the double materiality analysis, however, where possible, the informaon has been
presented in such a way as to meet the requirements of the ESRS standard.
Subtopic
Impact
Locaon on
the value
chain
Risk/ Opportunity
Informaon
impacts
Negave impact, if the company does not
deliver according to customer expectaons
Own
operaons,
Downstream
Potenal nancial risk generated by the loss
of some nal consumers and implicitly of the
259
regarding transparency, public informaon and
awareness of the benets of renewable energy.
related revenues, if the improvement of the
processes applicable to the supply segment
of Hidroelectrica is not implemented.
The topic of sasfacon and needs of end consumers is relevant only for Hidroelectrica SA, not for its
subsidiaries, Hidroserv and UCMH. This is because Hidroelectrica SA focuses on supplying electricity
directly to consumers, while Hidroserv and UCMH provide services and produce equipment for
Hidroelectrica SA, without directly inuencing the experience of end customers.
Impact, risk and opportunity management
Policies related to consumers and end-users
S4-1
Hidroelectrica SA supplies its nal customers mainly with electricity from its own producon, from
renewable energy sources (hydroelectric/wind). The end-users of Hidroelectrica SA in 2025 are
represented by household and business customers. More details about the structure of Hidroelectrica SA's
supply porolio can be found in Chapter 6.1.3 – Electricity supply acvity of the Annual Report.
In order to manage the risks, opportunies and impacts on customers, Hidroelectrica SA has implemented
the following policies and procedures that apply to all end customers:
• Code of ethics: It denes the expected behaviors in customer and consumer relaons, promong
a culture based on compliance with laws and regulaons. The Code reects Hidroelectrica's
values, such as integrity, social responsibility, compeon issues or data privacy and applies to all
employees, regardless of the posion held, as well as in relaons with customers, suppliers, civil
society, local communies and other stakeholders. Its scope covers the enre organizaon and all
its interacons on the value chain, both upstream and downstream.
By establishing these rules of conduct, the Code of Ethics contributes to the management of the
impacts on consumers associated with lack of transparency, non-compliant behaviors or misuse
of informaon and supports the maintenance of trust in the relaonship between the company
and customers.
The implementaon and updang of the Code of Ethics are carried out within the company's
internal governance mechanisms, under the supervision of the execuve management and with
the approval of the Supervisory Board of Hidroelectrica. In this context, an Ethics Counselor is
appointed at the level of the company, responsible for the ethical counseling acvity and for
monitoring the applicaon of the principles and rules of conduct established by the Code of Ethics.
260
The applicaon of the Code of Ethics is also supported by internal mechanisms for reporng
violaons of ethical norms and applicable legislaon, which allow employees and partners to
report any irregularies in condenal condions.
In this way, Hidroelectrica ensures a correct and responsible communicaon with the public and
contributes to reducing the risk of potenal loss of end consumers, by promong an honest and
compliant behavior in the relaonship with customers and other stakeholders.
Hidroelectrica's Policy supports customer orientaon and improving the level of customer
sasfacon, as well as that of other stakeholders, being applicable to all acvies carried out by
the company, and contribung to the permanent improvement of the company's social
performance.
The implementaon of this policy is carried out within the company's internal governance
mechanisms, under the supervision of the execuve management and with the approval of the
Supervisory Board of Hidroelectrica.
The policy takes into account the requirements of the applicable naonal legislaon, the United
Naons SDGs (The United Naons's 17 Sustainable Development Goals), the 10 UN Global
Compact Principles, the Corporate Governance Code of the Bucharest Stock Exchange and the
specic requirements of ISO standards.
By applying these principles, Hidroelectrica contributes to managing the impacts on consumers
associated with the quality of the services provided, transparency in the relaonship with
customers and the company's social responsibility, supporng the development of sustainable and
trust-based relaonships with consumers and other stakeholders.
Hidroelectrica's policy applies to all company employees, contractual partners, aliated enes
(Hidroserv and UCMH), as well as customers, consumers and other stakeholders in the upstream
and downstream value chain. The policy covers customer and public relaons, data protecon of
data subjects, environmental impact management, respect for human rights, working condions,
employee health and safety, as well as integrity and an-corrupon standards applicable in all
internal and external interacons of the company.
Internal Customer Relaonship Management Procedures: These procedures comprise regulaons
for acvies such as pre-contractual negoaon, complaint resoluon, contract management,
invoicing of the supply service, and customer sasfacon assessment. The objecve of these
procedures is to improve relaons with nal consumers of electricity, including in terms of
contracng and billing the electricity supplied, as well as the me to resolve any complaints. These
procedures manage the negave impact generated by insucient, unclear or transparent
261
communicaon to customers and the public, as well as the nancial risk associated with the loss
of end consumers, by standardizing the contracng, invoicing, complaint resoluon and
sasfacon assessment processes, which contribute to the real improvement of the customer
experience. These procedures apply to all acvies carried out within Hidroelectrica S.A. in
relaon to end customers, both domesc and business, covering the contracng, invoicing,
request and complaint management processes, as well as customer sasfacon assessment. The
implementaon and monitoring of these procedures are carried out at the level of the
organizaonal structures responsible for the supply and customer relaons acvity, under the
coordinaon of the company's execuve management.
• Personal Data Protecon Policy: The internal regulatory framework for the protecon of personal
data is established by the Personal Data Protecon Regulaon. It denes the principles, rules and
responsibilies applicable to the processing of personal data within the company and establishes
the organizaonal framework necessary to ensure lawful, fair and transparent processing of data,
as well as to protect its condenality and security, in accordance with Regulaon (EU) 2016/679
and applicable naonal legislaon.
The Regulaon includes, as an integral part, a set of internal policies governing dierent aspects
of the processing of personal data, including the Personal Data Protecon Policy. The
implementaon of these policies is supported by dedicated internal operaonal procedures.
This framework applies to all personal data processing activities carried out within Hidroelectrica
S.A., including the processing of consumer and end-user data in the context of the electricity
supply activity. Consumers are informed about how their personal data is processed and the rights
they enjoy through information notes made available through the communication channels used
in relation to customers, and access to their personal data is limited to authorized personnel,
depending on their specific duties.
At the level of Hidroelectrica S.A., a Data Protection Officer (DPO) is appointed, who performs the
duties provided by the applicable legal framework and supports the organization in ensuring
compliance with the requirements regarding the protection of personal data.
The responsibility for the implementation of the regulatory framework on personal data
protecon lies with the executive management of Hidroelectrica S.A., and the monitoring of
compliance with the applicable requirements is carried out by the DPO, in collaboration with the
organizational structures involved in the personal data processing activities.
In 2025, no cases of non-compliance with the principles of business and human rights in relation to final
consumers were identified.
Hidroelectrica SA has implemented a procedure for measuring customer sasfacon, which involves
sending sasfacon quesonnaires to customers, using two main channels: a QR code included on the
invoice, which directs customers to an online form, and feedback requests sent separately by email. The
selecon of customers for these surveys is done based on criteria such as the type of service contracted
262
and the history of interacons with the company. In addion, for customers who personally visit the
customer service oces, there is a physical feedback system, available through tablets installed in the
recepon area. The feedback collected is centralized monthly and is reported to the Supply Manager and
the Head of Customer Service and Complaints. In 2024, the process of developing the procedure for
monitoring customer sasfacon for the supply acvity was iniated, with the key performance indicator
"Customer sasfacon score for the Supply acvity" being dened, with a target value set at 72%. At the
end of 2025, the CSS tool was being tested, with sasfacon quesonnaires being collected. During this
tesng phase, a sasfacon score of 88.9% resulted. The operaonal implementaon of the CSS (Customer
Sasfacon Survey) system is planned starng with 2026, when the results will be systemacally used in
the processes of evaluang sasfacon and idenfying customer needs.
The procedure aims to monitor customer sasfacon and idenfy opportunies to improve supply
services, helping to manage the impacts associated with the quality of services and communicaon with
end consumers. The procedure applies to the supply acvies carried out by Hidroelectrica S.A. in relaon
to household and business customers. Its implementaon and monitoring are carried out at the level of
the structures responsible for the supply and customer relaons acvity, under the coordinaon of the
company's execuve management. At the level of Hidroelectrica S.A., an internal regulatory framework is
established that supports the applicaon of the personal data protecon policy in relaon to consumers
and end users. This framework is operaonalized through dedicated internal procedures, which aim to
manage the requests of data subjects, the administraon of situaons that may aect the security of
personal data, as well as the recording and monitoring of processing acvies.
The internal framework also includes mechanisms for assessing the impact of processing on data
protecon, adapted to the nature and context of the operaons carried out, including in situaons
involving the use of appropriate legal bases or data transfers to third countries, in accordance with the
applicable legal requirements. This framework applies to all personal data processing acvies carried out
by Hidroelectrica S.A., including in relaon to consumers and end users in the downstream value chain.
The implementaon of related policies and procedures is the responsibility of the execuve management,
and compliance monitoring is carried out by the Data Protecon Ocer (DPO).
Hidroelectrica SA is commied to ensuring fair and non-discriminatory access to electricity for all
consumers, in accordance with the applicable legislave framework and regulaons in the energy sector.
In this regard, the company complies with the provisions on consumer protecon, including vulnerable
consumers, where applicable, and ensures the non-discriminatory applicaon of contractual and
commercial condions.
Hidroelectrica also implements mechanisms for receiving and resolving consumer requests and
complaints, ensuring a structured process for their management. Addional informaon on the reporng
and management mechanisms for complaints is presented in the Whistleblower Protecon Policy and in
secon G1 of this report.
Processes for engaging with consumers and end-users about impacts
S4-2
263
Hidroelectrica SA aaches importance to communicaon and transparency towards customers,
connuously developing its collaboraon processes with customers and their representaves. The
constant updang of the informaon available on the company's website on issues of public interest is an
example, as well as the publicaon of press releases, internal and/or legislave changes.
Collaboraon takes place throughout the dierent stages of the company's operaons - from public
debates in regulatory procedures, to the process of concluding electricity supply contracts, billing
processes and processing customer feedback.
The Hidroelectrica Group collaborates directly with end consumers through dedicated communicaon and
interacon channels, including the online contracng portal, mobile applicaon, customer service centers,
call center, e-mail and other digital channels. These mechanisms allow direct communicaon with
consumers, the management of requests, the transmission of complaints and the collecon of feedback,
helping to understand their perspecves and interests.
The frequency of interacons varies depending on the channel used and the type of request, which are
recorded and managed through internal customer relaonship management systems.
The process includes the following operaonal steps:
• Taking and registering requests within the request and complaint management plaorm, QDesk.
Upon receipt of a request from customers, they receive the request registraon number in order
to ensure its traceability.
• Classicaon of requests, their classicaon according to the allocated issue and allocaon to
the levels and services responsible for handling the request;
• Analysis and resoluon within the deadlines provided by the legislaon in force;
• Communicang the response to the client and closing the case.
The monitoring and analysis of the data resulng from these interacons shall be carried out:
• daily – monitoring of request volumes and response mes;
• monthly – analysis of operaonal indicators and compliance with the deadlines of the ANRE
standard;
• periodically (quarterly / annual) – internal reporng and to the Naonal Energy Regulatory
Authority regarding the acvity of solving customer requests and complaints.
The evaluaon of the eciency of the process of managing requests and complaints is carried out through
operaonal indicators and quality indicators, in accordance with the requirements of the Performance
Standard (ANRE Ordinance no. 83/2021) and internal procedures, but also through dedicated CSS
(Customer Sasfacon Survey) tools.
The main indicators used are:
• the rate of compliance with the legal deadlines for response;
• the average me for solving requests on each issue;
264
• the percentage of complaints solved within the deadline.
• volume of requests/complaints according to each input channel;
The ANRE standard establishes quality indicators and the obligaon of suppliers to pay compensaons if
the guaranteed level of indicators is not respected.
The results of these indicators are used to improve operaonal processes and opmize the customer
experience.
The main stages in which customer interacon takes place are:
The pre-contract stage where the main interacons concern:
• informaon on oers and contracng condions;
• contracng requests (change of supplier, administrave change, etc.);
• claricaons regarding the billing method, payment methods, other contractual condions.
Channels used: Call Center, wrien channels (e-mail, single contact form), customer service centers, Self-
Service (contracng portal).
Stages of service delivery where the main interacons are related to:
• contractual changes;
• index transmission;
• invoicing and payments;
• operaonal requests or complaints regarding the services oered.
These requests are managed through the request management plaorm, QDesk, and are monitored
according to performance indicators.
Post-incident / post-resoluon stage where the main interacons are aimed at:
• claricaons subsequent to the resoluon of a request/complaint;
• granng any compensaon according to performance standards;
• feedback from the customer on how to solve it.
The informaon collected at this stage is analysed to idenfy recurrent causes and to implement
improvement measures.
Also, the collaboraon takes place indirectly through legimate representaves and competent
authories, in parcular the Naonal Energy Regulatory Authority (ANRE), the Naonal Authority for
Consumer Protecon (ANPC), as well as other relevant instuons, which have a role in protecng
consumers' rights and supervising the compliance of electricity suppliers. These authories may submit
requests, referrals or recommendaons relevant to consumer protecon, which are analysed and
managed in accordance with the applicable internal procedures.
Interacons with competent authories and other bodies relevant to consumer protecon take place
mainly in the context of regulatory processes, the management of complaints submied by consumers to
the authories, regular reporng and one-o requests for claricaon or vericaon. The frequency of
265
these interacons depends on the nature of the requests and the reporng obligaons set out in the
regulatory framework applicable to the electricity supply acvity.
These interacons with the regulatory and consumer protecon authories (ANRE, ANPC) are managed
through a process that includes the following steps:
• Receipt of the request – nocaons are received through ocial channels (ANRE –
through the hps://spv.anre.ro plaorm, ANPC – through the e-mail sent to
clien@hidroelectrica.ro).
• Registraon and classicaon – the documents are registered in the request management
plaorm, QDesk, and classied according to the type of request (bidding, contracng,
intermediaon of the relaonship with the Distribuon Operator, invoicing, receivables,
etc.)
• Internal analysis – the situaon is analyzed by the assigned person in charge of the
Customer Service and Complaints Service who, in collaboraon with other services
(Domesc Contracng, Business Contracng, Invoicing, Debt Collecon, etc.) and takes
care of the management of the case.
• Formulaon and submission of the response – the response is prepared in accordance
with the legal framework and internal procedures and is sent to both the client and the
authority within the deadline requested by the laer.
Interacons with the authories are carried out:
• connuously, depending on the nocaons or requests received from the authories;
• occasionally, as part of control acons.
The eciency of the process of managing requests from authories is assessed by operaonal indicators
such as:
• compliance with the response deadlines requested by the authories;
• the number of cases solved within the set deadline;
• compliance conrmaon rate of responses (lack of addional requests received from the
authority);
• analysis of the typologies of nocaons in order to idenfy the recurring causes.
The results of the analyses are used to adjust internal processes, if the situaon requires it, and to improve
the relaonship with customers/authories.
Concrete examples of implemented measures that resulted from interacons with the authories:
• Collecon through a single communicaon channel (clien@hidroelectrica.ro) of all
requests received from the authories.
• Update and development of the exisng WIKI mode in Qdesk, which is available to
specialists within the Customer Service and Complaints Service. WIKI is a funconality
266
adapted to the Customer Relaons and Complaints Service where you can nd the
working methods and instrucons, as well as the applicable internal procedures.
• Connuous monitoring of complaints and transmission of needs for implementaon in IT
systems of developments that reduce the reasons for complaints led by customers.
• Implementaon of the single contact form and opmizaon of the contracng portal
made available to customers, as well as the portal for updang contract data.
The eecveness of these collaboraon mechanisms is assessed by monitoring the way in which the
requests and nocaons sent through the authories are resolved, the observance of the legal deadlines
for response and the analysis of any recommendaons or measures ordered by the competent authories.
Main communicaon channels:
• Company Website
• Customer Service Centers: Working hours with the public
• Email: clien@hidroelectrica.ro contractare.business@hidroelectrica.ro
• Call Center: 021 9834, 021 9861 – dedicated to general requests received from Hidroelectrica
customers
• Call Center: 0800 800 359 – dedicated to the transmission of the self-read index in the dedicated
interval
• Contracng portal (dedicated to domesc and non-domesc customers)
• Personal data update portal (dedicated to household customers)
• iHidro mobile applicaon (allows Payment of bills (only for household customers), using a bank
card/Google Pay/Apple Pay, Consumpon monitoring, Management of consumpon places, View
of bills, Transmission of the index during the allocated period
• Social Media Channels
• Online feedback system (forms or surveys)
The operaonal responsibility for ensuring collaboraon with end consumers lies with the Supply
Department, through the Customer Service and Complaints Service, which manages current interacons
with customers, including their requests, complaints and feedback.
At the management level, the responsibility for supervising this acvity and integrang its results into the
operaonal and commercial processes lies with the execuve management responsible for the supply
segment, respecvely the member of the Management Board responsible for the electricity supply
acvity. It ensures the implementaon of the necessary measures for the connuous improvement of the
relaonship with customers and the adaptaon of operaonal processes, in accordance with the strategy
and applicable legal obligaons.
Hidroelectrica SA has established a clear monitoring framework, by producing quarterly reports on the
sasfacon of end customers. This systemac approach allows for a connuous process of analysis,
adjustment and strengthening of the relaonship with customers. In addion to these, for a more coherent
267
and relevant overview, half-yearly reports are also drawn up, as well as a nal annual report, which
summarises the developments and trends recorded throughout the year. As a result of this process, a
number of decisions/improvements have been made, such as:
• Increasing the number of email markeng informaon campaigns
• Reorganizaon and simplicaon of the informaon presented on the website,
www.hidroelectrica.ro, and in the commercial oers
• Creang guides for the various tools made available to customers.
• Opmizaon of the iHidro app: a friendlier interface, clearer navigaon.
At the end of 2025, the customer sasfacon survey, sent to a sample of household customers, resulted
in a Net Promoter Score (NPS) worth 64.2 points out of the maximum of 100, which demonstrates that
the services and products oered generate a posive percepon.
NPS (Net Promoter Score) is a numerical value, expressed as a whole score, and can be interpreted in
context, as a measure of customer sasfacon and loyalty. A score above 50, it is rated Excellent and shows
very good customer loyalty and sasfacon.
Also, with a percentage of 75.3% dominant promoters (the percentage of customers who completed the
customer sasfacon assessment quesonnaire and gave a maximum grade of 5 to the queson: "How
likely is it to recommend Hidroelectrica to other people?"), it can be concluded that there is a solid
customer base.
Customer complaints are handled within the Supply Department, Customer Service and Complaints
Service according to ANRE Order 83/2021. This order approves the framework procedure regarding the
obligaon of electricity and natural gas suppliers to sele the complaints of end customers. The procedure
details the registraon, invesgaon, resoluon and reporng of complaints made by suppliers and
consumers. All these acvies are integrated into the "Analysis and resoluon of end-customer
complaints" process.
The sta involved in the collaboraon with end consumers, especially within the Supply Department and
the Customer Service and Complaints Service, benet from periodic training and capacity building
acvies, which include aspects regarding the applicable legal and regulatory framework (including ANRE
requirements), the use of IT systems dedicated to customer relaonship management, as well as good
pracces regarding customer communicaon and resoluon complaints. These acvies contribute to
ensuring an appropriate level of competence for the ecient and compliant management of interacons
with end consumers.
Consumer perspecves are integrated into the operaonal and commercial processes of the Hidroelectrica
Group through the analysis of nocaons, requests and feedback received through the dedicated
channels. For example, during the reporng period, consumer feedback helped to improve the
funconalies of the online portal and mobile applicaon, facilitang access to informaon on contracts,
bills and energy consumpon. Also, the analysis of complaints led to the opmizaon of internal billing
and customer communicaon processes, helping to reduce the risk of errors and improve transparency in
the relaonship with consumers.
268
Within the electricity supply acvity, the Hidroelectrica Group also takes into account the perspecves of
nal consumers who may be considered vulnerable, including nancially or medically vulnerable
consumers, in accordance with the applicable naonal legislaon on the protecon of vulnerable
consumers.
Vulnerable consumers on income grounds are idened on the basis of lists submied by local public
administraon authories, in accordance with the applicable legislaon on home heang aid and energy
supplement. These consumers are duly marked in the internal billing systems and the facilies provided
for by the legislaon (e.g. the energy surcharge or the heang aid in the cold season) are applied in
accordance with the informaon received from the competent authories. Consumers can also be
classied as vulnerable for medical reasons, based on the medical documentaon submied. In these
situaons, the status is recorded in the internal systems and communicated to the distribuon operator,
which applies the specic obligaons laid down in the regulatory framework (e.g. restricons on
disconnecon or measures to ensure connuity of supply).
To ensure the accessibility of informaon and interacons with consumers, the company uses several
communicaon channels, including customer service centers, call centers, communicaon by email or
postal mail, as well as dedicated informaon published on the company's website regarding the rights and
facilies applicable to vulnerable consumers.
Processes to remediate negave impacts and channels for consumers and end-users to raise concerns
S4-3
Hidroelectrica S.A. provides consumers and end users with dedicated channels through which they can
submit nocaons, complaints or concerns related to the services provided, including those related to
the protecon of personal data. These channels allow for the early idencaon of potenal negave
impacts, such as lack of transparency, processing errors or delays in the resoluon of claims, as well as the
idencaon of incidents or operaonal risks that may aect consumers, represenng a starng point for
correcve and prevenve measures.
The nocaons and complaints received are analyzed and managed within the applicable internal
processes, in order to clarify the reported situaons and, where appropriate, to remedy the idened
impacts. In situaons where recurring incidents or risks are idened, they are documented and
integrated into connuous improvement processes, so that the measures adopted prevent the recurrence
of similar problems. All remedial acons are carried out in compliance with the applicable legal framework
and the internal regulaons in force. Where internal complaints or invesgaons indicate systemic risks or
personal data security incidents, they are analysed to determine the causes and to substanate remedial
measures and further training.
269
In order to support the prevenon of incidents and the consolidaon of an organizaonal culture oriented
towards data protecon, Hidroelectrica S.A. implements training and awareness measures for employees.
In 2025, 9 training sessions were organized on the specic theme of personal data protecon, addressed
both to all sta and to employees directly involved in operaonal processes involving the processing of
customer data. New employees also receive training on personal data protecon at the me of
employment. These sessions had the role of increasing the level of awareness and accountability of sta
in terms of data protecon and were also developed in response to risks or incidents previously idened
in the operaonal acvity.
The eecveness of training measures is assessed by indicators such as the frequency of data security
incidents, the level of compliance observed in internal controls and feedback from training parcipants.
Hidroelectrica S.A. maintains mechanisms to protect against retaliaon, so that employees can report
incidents, risks or irregularies without fear of negave consequences, facilitang the early idencaon
of problems and the connuous improvement of processes.
Regarding the management of requests and complaints received from end customers, Hidroelectrica SA
has a system for recording, analyzing and solving them, which can be registered through the above-
menoned communicaon channels and which are addressed directly by Hidroelectrica SA. At the same
me, at the level of the Customer Service and Complaints Service, mechanisms for evaluang the quality
of the answers provided to customers are implemented, as well as tools made available to consultants
(library of working modes, operaonal ows, response models).
The complaint management process is a connuous one, being carried out through customer service
channels (Call Center, e-mail, online portal, contact form, customer service centers). Requests are
recorded and processed daily in the request and complaint management plaorm, QDesk.
The remediaon process includes the following steps:
• registraon and classicaon of the request according to the problem;
• case analysis by verifying contractual data and informaon from operaonal systems;
• idenfying the soluon and implemenng correcve measures, if necessary;
• communicaon of the response to the client and closure of the case;
• subsequent analysis of the types of complaints, in order to idenfy the recurring causes.
The analysis of aggregated data on complaints is carried out periodically (monthly, half-yearly and
annually), including through the reporng provided by ANRE regulaons.
The eecveness of the mechanism is assessed by indicators such as:
• compliance with response deadlines;
• the rate of resoluon of complaints within the deadline;
• the evoluon of the volume of complaints on management issues/services;
270
The data collected from the analysis of the cases encountered and the performance indicators are used to
adjust operaonal processes, update internal procedures, develop training plans for the sta in charge of
managing customer requests and complaints.
Following the analysis of the types of complaints and the idened operaonal situaons, training
sessions and individual feedbacks are organized at the level of the Customer Service and Complaints
Service, in order to prevent similar situaons from occurring.
These training modalies represent an indirect remedial measure, being oriented towards:
• claricaon of the applicable legislave framework;
• claricaon of working methods and internal procedures;
• improving communicaon with customers;
• standardising the applicaon of internal procedures across all communicaon channels.
The company evaluates consumers' trust in communicaon channels on a monthly basis through surveys
and analysis of the NPS (Net Promoter Score). Quesonnaires for assessing customer sasfacon are sent
monthly, as part of nocaon campaigns for contract extensions.
The company has encountered dicules in invoicing in previous years, but has made considerable eorts
to implement invoicing and CRM (Customer Relaonship Management) systems, as well as to interconnect
informaon systems. These eorts have led to a decrease in the number of complaints and nes from
ANRE.
At the level of the Supply Department, the Process Development Department periodically implements
technical improvements to the informaon systems used in operaonal processes (for example:
contracng portal, customer data update portal, SAP, interconnecon of internal systems), in order to
opmize customer relaonship management and reduce the risk of incidents.
These measures are iniated as follows:
• internal analyses of operaonal processes;
• the idencaon of malfuncons or limitaons of exisng systems;
• analysis of the types of customer complaints and requests.
The impact of the measures is assessed by:
• monitoring the evoluon of the volume of requests and associated complaints;
• analysis of request processing mes;
• assessment of the stability and funconality of IT systems.
Hidroelectrica SA ensures a structured process for managing end-customer complaints, including by
publishing periodic reports on the company's ocial website (Reports secon), in accordance with the
provisions of the Framework Procedure of March 18, 2015 regarding the obligaon of electricity and
natural gas suppliers to resolve end-customer complaints, approved by ANRE Order no. 16/2015, as
subsequently amended and supplemented. The semi-annual reports include:
• Total number of complaints
• Types of complaints (e.g. quality of service, interrupons, billing errors, etc.)
271
• Results of the analysis: what measures have been taken to resolve each type of complaint
• Performance stascs: including the percentage of complaints resolved within the legal deadline.
The publicaon of this informaon contributes to:
• increasing transparency on how to handle customer requests;
• informing consumers about the types of requests and how to solve them;
• building trust in complaint ling and handling mechanisms.
The eecveness of this mechanism is indirectly assessed by monitoring the evoluon of the volume of
complaints, the number of compensaons paid to customers and through customer sasfacon indicators.
The company takes measures to ensure that each complaint is treated seriously and resolved within the
legal deadline, according to the Performance Standard on the energy supply acvity, depending on the
category to which the customers fall. The performance indicator for solving end customer requests is
dened as follows: Number of requests in compliance with the performance indicator (according to the
legislaon in force) / Total number of requests > 80%. In 2025, Hidroelectrica SA was evaluated based on
the performance indicators applied to the electricity supply acvity, in accordance with ANRE Order no.
83/2021 on the approval of the Performance Standard for the electricity/natural gas supply acvity. During
the four reporng quarters, the company obtained an average score of 4.725 points out of a maximum of
5 points, which conrms the eecveness of the mechanisms implemented to manage the relaonship
with consumers and solve their requests.
Although NPS mainly reects the general percepon of the customer experience, its results can also
provide clues to the level of trust in the processes of relaonship with the supplier, including in the
mechanisms for handling requests and complaints.
The analysis of NPS results is used in conjuncon with other operaonal indicators (e.g. volume of
complaints, response mes) to idenfy opportunies to improve processes and customer experience.
Taking acon on material impacts on consumers and end-users, and approaches to managing material
risks and pursuing material opportunies related to consumers and end- users, and eecveness of
those acons
S4-4
No specic acons aligned with the ESRS reporng standard (ESRS 2 MDR-A) have been established in
terms of managing impacts on consumers and end-users. The measures presented below represent
272
operaonal mechanisms and internal procedures implemented within the company's current acvies for
managing the relaonship with customers and for solving their complaints.
Hidroelectrica SA has idened the risks and opportunies relevant to the current acvity in terms of
customer relaons, has allocated resources to address them and is adopng measures to manage the
impact on customers, including the implementaon of accessible communicaon channels, such as the
call center and the Single Contact Form. They allow customers to access informaon and express their
concerns. Also, through the procedure M01.021 Analysis. In the public interest, the right of any client to
report and report any violaon of the law or ethical norms (including related to discriminaon) is
guaranteed, and the company has dened the necessary framework for reporng and the company's
responsibilies for solving them.
If a customer wishes to report a violaon of the law or ethical rules of conduct, as a whistleblower in the
public interest, including anonymously, he must submit a wrien report to
comportament.ec@hidroelectrica.ro. In order to achieve an immediate and complete soluon, each
report must contain concrete idencaon elements regarding the act that represents/may represent a
violaon of the law or the norms of ethical behavior, the date/period, the person(s) involved, supporng
documents, other details regarding the nocaon.
Each report is analyzed according to the internal procedure, respecvely the receipt of the nocaon will
be conrmed to the whistleblower in the public interest within a period of no more than 7 days from its
receipt. The whistleblower in the public interest will be informed about the status of the follow-up acons
within 3 months from the date of acknowledgment of receipt and, subsequently, whenever there are
developments in the development of the follow-up acons, unl the resoluon of the report, unless the
informaon could jeopardize their development.
The Supervisory Board / Hidroelectrica's Management Board will be informed about the result of the
reporng analysis upon its compleon.
The company improves informaon transparency and remedies deciencies in order to provide beer
services and develops technological soluons and infrastructure necessary for market requirements.
Resources are concentrated in the Supply and IT departments for the eecve implementaon of acons.
Among the subsequent acons and methods to improve the relaonship with customers and the degree
of customer sasfacon, it is menoned:
1) Improving communicaon with customers, ensuring that each customer receives clear and accurate
informaon about the services and benets of Hidroelectrica SA,
2) Strengthening the relaonship with the promoter customers who are already sased, making sure that
their experience remains posive and that they acvely recommend our services,
3) Quickly manage the negave feedback received, carefully analyzing the responses of the detractors and
solving the problems idened as soon as possible.
4) Review internal processes to remove bolenecks and deliver a faster and more enjoyable experience.
Simplifying customer interacons can improve their percepon of our company.
273
The improvement acons presented above do not derive exclusively from the use of the single contact
form. It is mainly used for the transmission and management of customer complaints and requests. The
idencaon of acons to improve the customer relaonship is based on the integrated analysis of
informaon from several sources, including complaints and requests received through the single contact
form, interacons through call centers and customer service centers, requests sent by email or online
portals, as well as the analysis of operaonal indicators on customer relaonship management.
This informaon is used to idenfy recurring problems and to improve internal processes, customer
communicaon and the funconalies of the digital plaorms used in the relaonship with consumers.
The protecon of personal data is also a relevant element in the management of impacts on consumers
and end users, given that the acvies of contracng, supplying and billing electricity involve the
processing of their personal data.
The Company implements appropriate technical and organizaonal measures for the protecon of
customers' personal data, in accordance with the requirements of the applicable legal framework, in order
to prevent and limit the risks associated with data processing and reduce potenal negave impacts on
consumers.
The measures adopted shall be reviewed and strengthened regularly, in accordance with technological
developments, the nature of the acvies carried out and the operaonal experience, including on the
basis of incidents or risks idened, with the aim of connuously improving data protecon mechanisms.
During 2025, Hidroelectrica SA noed the Naonal Supervisory Authority for Personal Data Processing of
a number of 5 personal data security breaches. Most of these incidents were associated with human error
in current operaonal acvies, and one incident had technical causes. The company subsequently
implemented addional technical and organisaonal measures to reduce the risk of similar situaons
occurring, such as addional training of sta on personal data protecon and strengthening internal
controls on data transmission and access. The above-menoned personal data security incidents are dealt
with within the framework of data protecon compliance mechanisms and are not considered serious
human rights incidents in relaon to consumers or end-users.
During the reporng period, no serious human rights incidents were idened or reported in relaon to
consumers or end users of Hidroelectrica S.A.
The management of Hidroelectrica S.A. is periodically informed about the acvies and measures
implemented in the eld of personal data protecon, through internal reports, in order to ensure an
adequate approach at the governance level.
The acons taken by the company derive from its current operaonal acvies and exisng business
strategy. Their explicit correlaon with the impacts, risks and opportunies idened in the materiality
analysis is to be strengthened in the process of developing and implemenng the new Sustainability
Strategy.
274
Targets related to managing material negave impacts, advancing posive impacts, and managing
material risks and opportunies
S4-5
No targets aligned with the ESRS reporng standard for the impacts, risks and opportunies (IROs)
idened in relaon to consumers and end-users have not been set. The targets, targets and specic
indicators aligned with the idened material IROs will be established with the adopon of the new
Sustainability Strategy, aer the compleon of the revision process of the ESRS standards.
The performance indicators currently monitored are the result of the company's business strategy.
For the current acvity, for the ecient management of the relaonship with customers, Hidroelectrica
SA has implemented a series of indicators calculated and published every quarter. This report can be found
on the Company's website, in the Performance Indicators secon and includes:
• Response me to requests: Includes response me to requests to submit a bid, conclude a
contract, amend a contract, and others.
• Compensaons and penales: The document details the number and amount of compensaon
paid for non-compliance with guaranteed levels of quality indicators, as well as penalty interest.
• Phone calls: The number of phone calls made through the call center and the pickup me by a
human operator are analyzed.
In 2025, the single contact form was implemented, available to household customers, homeowners'
associaons and business customers, which can be accessed at: hps://formularunic.hidroelectrica.ro/.
Through this form, customers can register requests or complaints, using the idencaon data and
descripon of the situaon they are facing. The requests are managed by Hidroelectrica SA specialists
through the dedicated plaorm, depending on the skills of each one.
275
BUSINESS CONDUCT
ESRS G1
The role of the administrave, supervisory and management bodies
GOV 1
The acvity of the Hidroelectrica Group is based on naonal legislaon, including: Law no. 31/1990 on
companies, republished, with subsequent amendments and compleons, Energy Law no. 123/2012,
Emergency Ordinance no. 109/2011 on the corporate governance of public enterprises and with the
Romanian legislaon in force, Law 24/2017 on issuers of nancial instruments and market operaons and
the BVB Corporate Governance Code, as well as the Group Code of Ethics, which provides for the policies
and principles of integrity, responsible and transparent business.
The experse of the administrave, management and supervisory bodies in maers related to professional
conduct derives from the professional experience and relevant skills of the members of the Supervisory
Board and the Board of Directors, in areas such as corporate governance, management, compliance,
internal control, audit and risk management. By exercising the dues provided for by the corporate
governance framework of the company and through the acvity carried out within the management
structures and advisory commiees, the members of these bodies contribute to the supervision of
compliance with the principles of integrity, ethics and responsible conduct within the Hidroelectrica
Group.
The role and powers of the Board of Directors and the Supervisory Board are provided for in the Arcles
of Associaon as well as in the Regulaons on the Organizaon and Funconing of the Board of Directors,
respecvely the Regulaons on the Organizaon and Funconing of the Supervisory Board.
The main dues of the Supervisory Board, dened in the Arcles of Incorporaon, with regard to aspects
of business conduct include:
• exercises permanent control over the management of the Company carried out by the Management
Board;
• veries the compliance with the law, the Arcles of Associaon and the decisions of the General
Meeng of Shareholders of the Company's management operaons;
• reports to the General Meeng of Shareholders on the supervisory acvity carried out;
• prepares the proposal for the management component of the Management Plan;
276
• approves the Management Plan in its enrety, including the management component developed by
the Management Board;
• approves the Company's strategies and policies developed by the Management Board.
The following advisory commiees have been set up at the level of the Supervisory Board:
• Nominaon and Remuneraon Commiee;
• The Audit Commiee - is in charge of monitoring compliance with the Code of Conduct;
• Risk Management Commiee; and
• Governance and Sustainability Commiee.
The main responsibilies of the Board of Directors, dened in the Arcles of Associaon, include the
development and implementaon of the Company's strategies and policies, including those relang to
professional conduct.
The members of the Supervisory Board and the members of the Management Board are aware of and
apply the legal norms and internaonal standards on ethics and business conduct, as well as the
governance principles of transparency, accountability and fairness. Also, ethics, integrity and governance
issues were taken into account in the selecon process of the members of the Supervisory Board and the
members of the Management Board as a selecon criterion, as evidenced by the Leer of Expectaons at
the level of Hidroelectrica SA point VII – Elements regarding ethics, integrity and corporate governance.
Descripon of the processes to idenfy and assess material impacts, risks and opportunies
ESRS 2, IRO 1
The Hidroelectrica Group has implemented a risk management system in order to idenfy, manage,
prevent or maintain them within acceptable limits and improve.
At Hidroelectrica SA, procedures are implemented for the analysis, idencaon and management of
impacts and risks related to business conduct, according to specic legal regulaons. These procedures
include the applicaon of the Naonal An-Corrupon Strategy, the SR ISO 37001 standard for An-
Bribery Management Systems and the Good Pracce Guide on Internal Controls, Ethics and Compliance
issued by the OECD. Starng with September 2021, Hidroelectrica SA has obtained the cercaon of
compliance with the SR ISO 37001 requirements. These an-bribery management system policies and
procedures are to be formally aligned with the United Naons Convenon on Group Corrupon. To
alleviate them, it was decided to wait for the new revised ESRS standards to ensure the inclusion of all
aspects relevant to the Group's acvity. Even if at the me of this report there are no procedures
developed as a direct result of the business conduct IROs idened for the group enes, Hidroelectrica
SA already has a series of procedures implemented. Specically, the risk assessment within Hidroelectrica
SA is carried out based on the internal procedures M05.001 - Updang the risk classicaon at the level
of Hidroelectrica, M05.010 - Dening the risk assessment tools, M05.801 - Assessing the risks of a process,
277
M05.890 - Monitoring and reviewing the risks of a process, M05.901 - Managing the Risk Register and
M05.910 - Determining the risk prole according to OSGG 600/2018 on the approval of the Control Code
managerial internal of public enes.
The analysis and detailing of the risks aached to the objecves of Hidroelectrica SA is carried out through
the M05-Corporate Risk process group, based on the methodologies recommended by the Order of the
General Secretariat of the Government no. 600/2018 on the approval of the Code of Internal Managerial
Control of Public Enes and by the ISO 31000 standard on risk management.
The Process Porolio and Internal Management Control System Monitoring Commiee also has
responsibilies regarding the risk management system adopted by the Company, namely it idenes,
analyzes, evaluates, monitors and reports the idened risks, the plan of measures to migate or
ancipate them, other measures taken by the execuve management, performs an annual evaluaon of
the internal control system and presents relevant reports for the aenon of the Management Board. This
commiee will have the task of incorporang the IROs associated with Business Conduct resulng from
the analysis of the double materiality carried out in the Risk Register.
Hidroserv - within the integrated quality-environment-HSE management system cered according to the
requirements of SR EN ISO 9001:2015, SR EN ISO 14001:2015 and SR EN ISO 45001:2023 standards, the
company has established a methodology for determining and dealing with risks and opportunies. Risks
with the risk level above the accepted limit are included in a risk management plan and treatment
measures are established to be implemented by each Head of Service responsible for risk management.
Annually, the Risk Register and the Risk Treatment Plan are analysed and revised, and new risks can be
idened and the classicaon of exisng risks can be redone, according to their probability and impact.
The IROs associated with Business Conduct resulng from the double materiality analysis carried out are
to be incorporated into the register and the Hidroserv plan.
Within UCMH there are procedures for idenfying and managing operaonal risks integrated into the
quality, environment and occupaonal health and safety management system, cered according to ISO
9001:2015, ISO 14001:2015 and ISO 45001:2018 standards.
Within the "Risk management and objecve seng" process, code 5.06, specic procedures are applied
for idenfying, assessing and dealing with risks and opportunies in the areas of quality, environment and
OSH.
Currently, UCMH does not yet have an integrated risk management system at the organizaonal level,
which will be developed in the next period. At the level of Hidroelectrica SA, there is an Audit Commiee,
a commiee set up at the level of the Supervisory Board, as well as an Internal Audit Department, which
conducts periodic audits to ensure that all acvies comply with integrity and ethics standards.
In the process of analyzing the double materiality, the following criteria relevant to the idencaon of
the IROs related to business conduct were considered:
278
Location: The double materiality analyses took into account the Hidroelectrica branches (Porțile de Fier,
Hațeg, Bistrița, Curtea de Argeș, Râmnicu Vâlcea, Cluj, Sebeș, Wind and Executive) and the two
subsidiaries (Hidroserv and UCMH) taking into account local regulations and specificities.
Activity: All operational segments of the Hidroelectrica Group (electricity production, electricity supply,
maintenance and construction/modernization of hydropower equipment) were evaluated. Supply
chain and internal operations are also included in the assessment process.
Sector: The Hidroelectrica Group positions its risk analysis to the requirements of national and
international authorities regarding integrity and ethical behavior.
Business relations: In business relationships and partnerships with other companies and entities, the risks
of contractual non-compliance, as well as opportunities for expansion and innovation, are assessed.
The table below presents the IROs for the year 2025 related to business conduct resulng from the analysis
as material IROs.
Business conduct
Impact
Locaon on the
value chain
Risk/Opportunity (R/O)
Organizaonal
culture
Posive impact through the
development of a fair and healthy
organizaonal culture and the
elaboraon of codes of ethics for the
Hidroelectrica Group companies
Own operaons,
Upstream
Opportunity: Improvement of internal
processes and procedures to ensure ecient
management of company operaons, fair
remuneraon and adequate working
condions, contribung to the execuon of
the company’s development plan and
implicitly to nancial stability.
Whistleblower
protecon
Posive impact: the company can
develop whistleblower protecon
mechanisms that have a posive
eect on early prevenon of
potenal integrity-related incidents
Own operaons,
Upstream
No material risks or opportunies idened.
Supplier
relaonship
management,
including
payment pracces
Potenal moderate negave impact
if internal procedures regarding
suppliers are not respected,
including in cases of late payments.
Potenal negave impact on
supplier relaonships and supply
chain stability. Potenal negave
impact on negoaon power and
project compleon melines.
Own operaons,
Upstream
No material risks or opportunies idened.
Corrupon and
bribery
Moderate negave impact if internal
codes and procedures related to
corrupon and bribery are not
Own operaons,
Upstream
No material risks or opportunies idened.
279
followed, with eects on the
environment / society such as
reduced trust in instuons,
distoron of compeon and
perpetuaon of social inequalies
Addional topic –
Digital security
Impact
Locaon on the
value chain
Risk/Opportunity (R/O)
IT data protecon
Potenal moderate negave impact
in the event of incidents or accidents
related to IT data security. Exposure
of personal data implies signicant
security and nancial risks, including
identy the, nancial fraud and
criminal misuse of informaon.
Own operaons
Risk: Financial risks related to the security of
technical data essenal for electricity
producon services. Cyberaacks leading to
customer data breaches may generate
nancial and reputaonal impacts, including
potenal ligaon costs or reduced revenues
due to reputaonal damage.
Governance and business practices
Corporate culture and Business conduct policies and corporate culture
ESRS G1-1
Group employees are informed about the requirements of the ethics and conduct/integrity codes at the
me of hiring. Likewise, the Group’s suppliers, as business partners, commit through contract to comply
with the professional conduct rules of each enty within the Group. To support the implementaon of
professional conduct policies, the Company organizes dedicated training sessions for employees. These
sessions aim to increase awareness of ethical and integrity standards and to prevent risks associated with
non-compliant behaviour.
The training sessions are addressed to all Company personnel, including management sta, as well as
employees involved in processes that are sensive from a compliance perspecve (for example:
procurement, contractual relaons, commercial or administrave acvies). Training is conducted
periodically, including at the me of hiring and through refresher sessions organized at the Company level.
The content of these sessions mainly covers the principles of the Ethical Code and professional conduct
rules, the prevenon of conicts of interest, mechanisms for reporng irregularies and whistleblower
protecon, as well as compliance with applicable legislaon and internal integrity policies. Regarding
nocaons on breaches of the ethics codes, in 2025 there were three nocaons submied to the email
addresses menoned above. No nocaons were registered that would indicate potenal integrity
incidents according to Law no. 361/2022.
280
Hidroelectrica SA
Hidroelectrica SA has been listed on the Bucharest Stock Exchange (BVB) since 2023. In this regard, it
commied to comply with the capital market legislaon, Law 24/2017 on issuers of nancial instruments
and market operaons and Regulaon 5/2018 issued by the Financial Supervisory Authority, and to adhere
to the Corporate Governance Code of BVB. Currently, Hidroelectrica SA has implemented a series of
policies covering the conduct aspects menoned below, in order to align with the requirements of the
BVB. Annually reports on the manner of compliance with the BVB Governance Code through the "Apply
or explain" statement, which can be found in the Corporate Governance Secon of the Annual Report.
The management system of Hidroelectrica SA includes a set of internal policies, regulaons and
procedures that support the implementaon of principles related to professional conduct, integrity and
compliance within the organizaon. These documents establish the governance framework, internal
control mechanisms and operaonal processes through which risks associated with professional conduct
are managed and potenal non-compliances are monitored.
The management system of Hidroelectrica SA denes the following System Procedures and Regulaons
that are relevant to professional conduct aspects and to the management of impacts, risks and
opportunies idened in the double materiality assessment
• Procedure "Strategic Planning (M01.001)" – for establishing the Company's strategic objecves
and translang them into objecves of the Companies' departments;
• Hydroelectric Policy; (M01.001 F2) - which establishes the Company's main areas of interest,
namely communicaon with shareholders, improvement of customer sasfacon, respect for
human rights, social aspects (relaonship with its own employees and working condions of its
employees), the impacts of the Company's operaons on the environment, and corrupon and
bribery;
• Hidroelectrica Sustainability Management System Regulaon (M01.001 F3) – on Hidroelectrica
SA's commitments to sustainability issues (human resources, occupaonal safety and health,
environment/biodiversity/climate change, customers/local communies and the protecon of
personal data, as well as on how to set department-level objecves for the menoned aspects;
• Organizaon and Funconing Regulaon of Hidroelectrica SA;
• Internal Regulaon – Code of Conduct Hidroelectrica SA;
• HE Corporate Governance Regulaon (M01.002 F1);
• Hidroelectrica SA Code of Ethics;
• Procedure "Evaluaon and Modeling of the Process Map and the Internal Managerial Control
System of Hidroelectrica (M02.001)";
• Procedure "Implementaon Evaluaon of a Process (M02.010)" – regarding the evaluaon,
documentaon and implementaon of each process dened in the Hidroelectrica Process Map;
• Procedure 'Registraon of a non-conformity (M02.080)'.
281
Each enty within the Group has its own internal regulaons (ROI) which include specic provisions related
to corporate ethics and business conduct. These ROIs cover the following sub-themes idened as
materials following the double materiality analysis:
• Organizaonal culture
• Corrupon and bribery
• Computer data protecon
In addion, a number of aspects regarding business conduct and corporate culture are included in the
codes of ethics of the enes in the group.
The Code of Ethics of Hidroelectrica SA was revised in July 2023 and includes the group's values and
principles, both obligaons and responsibilies. The Code of Ethics of Hidroelectrica SA can be found on
the Hidroelectrica website: Hidroelectrica SA’s Code of Ethics
The principles by which it is guided are:
• Performance - The performance of each employee contributes to increasing the value of the
company.
• Integrity - Through integrity, honesty, fairness and incorrupbility, each Hidroelectrica employee
creates the premises of a strong and resilient organizaon.
• Creavity - The creavity of each employee ensures the future of the company.
• Team spirit - Together, employees have the necessary strength to achieve Hidroelectrica's
objecves.
• Social responsibility - By understanding and respecng the environment and the social
environment in which they live and develop, each employee contributes directly to their future
and that of the Hidroelectrica Group.
The Code of Ethics of Hidroelectrica SA is binding and applies at any me and regardless of the posion
held within the Company, both in relaons within the organizaon and in relaons with customers,
suppliers, civil society, the local community or other stakeholders.
Regarding the Protecon of whistleblowers, Hidroelectrica SA has adopted a procedure for reporng
violaons of the law within the Code of Ethics. All complaints regarding non-compliance with the Code of
Ethics are strictly condenal. No employee or partner will be subjected to pressure and will not suer if
they have made a good faith complaint regarding non-compliance with the law or the Code of Ethics. If a
member of the management (Supervisory Board or Management Board), an employee of the Company or
a partner wishes to report a violaon of the law or the rules of ethical conduct, as a whistleblower,
including anonymously, they must send a wrien report to comportament.ec@hidroelectrica.ro. This
address is managed by the Manager of the Internal Public Audit Department, which is under the authority
of the Supervisory Board of Hidroelectrica SA.
Hidroelectrica SA has idened the following posions within the Company as the most exposed to risks
in terms of corrupon and bribery: members of the Supervisory Board, Management Board, managers of
282
Hidroelectrica SA branches, managers of departments directly subordinate to the Management Board,
sta within the Procurement, Trading, Supply, Human Resources and internal control departments.
Hidroserv
Hidroserv has implemented the Code of Ethics and Integrity, which aims to prevent, detect and combat
ethics and integrity risks, posted on the Hidroserv website: Hidroserv Code of Ethics and Integrity.
Hidroserv's Code of Ethics and Integrity presents the set of values, principles and ethical norms necessary
for the respect of dignity, integrity, as well as for ensuring fair relaons between the employees of the
Hidroserv organizaon but also in relaons with society as a whole.
The objecves of Hidroserv's code of ethics are the prevenon, detecon and/or combang of ethical and
integrity risks, from the earliest possible phases, and zero tolerance for situaons likely to put the company
in a posion to violate the an-corrupon laws and other applicable regulaons in force.
In order to report ethics and integrity incidents, Hidroserv proceeds as follows:
• The company's management encourages employees and other stakeholders to report any ethics
and integrity incidents by establishing and communicang the code of ethics and integrity.
• Any person who reports violaons of the code of ethics is obliged to support the nocaon, as
far as possible, with data or clues regarding the act commied.
• Persons who complain or report violaons of the code of ethics, regulaons, procedures cannot
be sanconed, directly or indirectly, by applying an unfair sancon.
Also, in the case of Hidroserv, any employee of the enty or any partner of the enty can report violaons
of the Code of Ethics to sesizari.eca@hidroserv.ro. These complaints are managed by the Ethics Advisor
within Hidroserv.
However, there is no channel for reporng integrity concerns, nor are there protecon measures against
retaliaon in accordance with the European Direcve on the protecon of whistleblowers, nor an
an-bribery and an-corrupon policy in line with the UN Convenon, nor invesgaon procedures.
Furthermore, no implementaon plan has been dened for these policies either at the level of Hidroserv
or at group level to include Hidroserv.
UCMH
UCMH has implemented a Code of Ethics and business Conduct, posted on the UCMH website: UCMH
Code of Ethics and Business Conduct.
283
Complaints related to UCMH's acvity can be sent through the contact form available online or to the e-
mail address contact@ucmh.ro. However, there is no channel for reporng integrity concerns, nor are
there protecon measures against retaliaon in accordance with the European Direcve on the protecon
of whistleblowers, nor an an-bribery and an-corrupon policy aligned with the UN Convenon, nor
invesgaon procedures. Furthermore, no implementaon plan has been dened for these policies either
at the level of UCMH or at group level to include UCMH.
Acons and targets
Plans, acons and targets related to the material IROs idened in the dual materiality analysis related to
professional conduct are to be established as part of the ESG Strategy review and approval process, in
order to align with the ESRS requirements. At the me of reporng, no deadline for their compleon has
been dened.
Management of relaonships with suppliers
ESRS G1-2
The Hidroelectrica Group chooses its suppliers in accordance with public procurement legislaon and
upholds the principles of compeon in the market, assessing their ability to deliver high-quality products
and services, following regulaons and best pracces in environmental management and occupaonal
health and safety. There is no specic policy for the prevenon of late payment for SMEs.
Hidroelectrica SA carries out the purchases of products, services and works in accordance with the
provisions of Law no. 99/2016 on sectoral procurement, most of them being carried out through the SEAP
plaorm. For strategic projects, the Company iniated market consultaons through SEAP to clarify
aspects related to technical soluons, contractual clauses and the establishment of the esmated value.
The management of procurement is carried out in compliance with the applicable legal provisions and
aiming at compliance with the principles of sectoral procurement, namely:
● Non-discriminaon
● Equal treatment
● Mutual recognion
● Transparency
● Proporonality
● Taking responsibility
The acquisions are carried out in accordance with Hidroelectrica's Annual Sectoral Procurement Strategy,
based on the Annual Sectoral Procurement Plan ("ASPP"). Within the Company, operaonal procedures
are implemented to comply with SGG Order no. 600/2018 on the approval of the Code of Internal
Managerial Control of Public Enes.
284
Hidroelectrica SA's suppliers are evaluated in the procurement procedure according to the Sectoral
Procurement Law to ensure compliance with ethical and integrity standards. This assessment allows the
Company to work only with partners who share a commitment to integrity and transparency. Through
these measures, the Company is commied to maintaining a fair, transparent and ethical business
environment, thus protecng the interests of all pares involved and ensuring the long-term sustainability
of its acvies.
At Hidroserv SA, operaonal procedures are implemented regarding the management of relaons with
suppliers. Hidroserv SA has implemented an operaonal procedure "Evaluaon of suppliers/providers of
products/services/works", ed. 2/rev.0 of 01.10.2022. The procedure establishes criteria for evaluang
suppliers, such as: issuance of declaraons of performance, warranty cercates, product safety data
sheets, whether they have environmental protecon authorizaons, whether there have been delays
regarding delivery deadlines, complaints, payment deadlines, etc.
Also, Hidroserv SA has implemented the operaonal procedure "Award of procurement contracts", ed.
3/rev. 1 of 24.07.2023, which presents the way in which procurement contracts are awarded so as to
eliminate ethical and integrity risks. The organizaon veries that the business partner has the necessary
qualicaons, experience, and resources to perform the acvies for which it has been contracted, and
that the business partner is known for bribery, fraud, dishonesty, or similar incorrect behavior.
Subsequently, the economic and nancial situaon of the bidder is veried: the balance sheet submied
to ANAF; Statements regarding the global/average turnover.
UCMH has implemented a working procedure for establishing suppliers and a process procedure for the
periodic evaluaon of suppliers and their classicaon into capability classes. Purchases are made both
from suppliers established in the List of Annually Accepted Suppliers who meet qualicaon criteria that
include sustainability aspects such as compliance with legal environmental and occupaonal health and
safety requirements, and from suppliers who respond to requests for quotaons posted on the company's
website. They are selected according to the legal public procurement procedures that impose condions
for compliance with the environmental and occupaonal health and safety legislaon through the related
specicaons.
Anti-corruption and fair competition
Prevenon and detecon of corrupon and bribery
ESRS G1-3
The Hidroelectrica Group considers that any form of corrupon has a negave impact on its acvies and
threatens the achievement of its strategic objecves. Corrupon undermines the integrity and eciency
of operaons, negavely aecng relaonships with partners and customers. The main signicant
corrupon-related impacts occur when internal codes and procedures are not followed.
285
The Code of Ethics of Hidroelectrica SA includes explicit provisions on prevenng and combang
corrupon and bribery, including the prohibion of oering, promising, solicing or accepng bribes or
undue advantages; rules on gis, hospitality and similar benets; prohibion of facilitaon payments; the
obligaon to declare conicts of interest; rules regarding the relaonship with public authories and
business partners; the obligaon to report suspected breaches through dedicated internal channels.
The provisions included in the Code of Ethics are aligned with the general principles set out in the United
Naons Convenon against Corrupon and the applicable naonal legislaon in the eld of prevenng
and combang corrupon. In the case of UCMH, there is no zero-tolerance policy on corrupon, which
will be drawn up aer the entry into force of the revised ESRS standards.
The Hidroelectrica Group aims to zero cases of corrupon. At the level of Hidroelectrica SA, an-corrupon
policies and annual training sessions dedicated to the prevenon of corrupon incidents or situaons that
could create the appearance of non-compliant pracces are implemented. At subsidiary level, measures
and policies are being strengthened and harmonized, in line with the Group's overall governance
framework.
Hidroelectrica SA has implemented an internal procedure for idenfying and assessing corrupon risks, as
well as for implemenng prevenon measures. This procedure includes the annual evaluaon of internal
processes and the implementaon of controls to prevent any form of corrupon.
Also, the personnel occupying a posion with a risk of corrupon, detailed in Secon G1-1, annually
complete a declaraon of compliance with the Code of Ethics of Hidroelectrica SA, conrming their
commitment to the Company's ethical principles, including the rm commitment not to oer, promise,
request or accept sums of money, valuables or other benets to inuence decisions. The Code of Ethics of
Hidroelectrica SA menons specic requirements regarding this commitment.
Also, in order to ensure the reducon of the risks associated with the funcons, all managers of funconal
compartments conduct an annual (online) course to update the knowledge on the content of the Code of
Ethics and take a vericaon test on the assimilaon of this knowledge. The organizaon of this course
and the vericaon test is provided by the Human Resources Department. Aer taking the vericaon
test, the managers of funconal departments ensure the training of subordinate employees (formalized
by a training report sent to the Human Resources Department).
Regarding the independence of invesgators, the designated Ethics Advisor of Hidroelectrica SA, manager
of the Internal Control and Process Monitoring Department, supervises the design and implementaon by
Hidroelectrica SA of the way to comply with the requirements established by the Hidroelectrica Code of
Ethics. The Hidroelectrica Ethics Advisor responds to each request, within a reasonable me, but not more
than 10 working days, in accordance with the applicable internal procedures. The results of the analyses
and invesgaons are documented and, where appropriate, communicated to the execuve management
for the adopon of the necessary measures. The ethics advisor annually conducts an evaluaon of the
implementaon of the requirements established by the Code of Ethics, respecvely of the
286
eecveness/eciency of these requirements and reports the result of this evaluaon to the
Hidroelectrica Management Board, respecvely to the Internal Public Audit Department.
At the level of the Group enes (Hidroserv and UCMH), the nocaons regarding the compliance with
the codes of ethics are analyzed according to the internal mechanisms applicable to each company, and
the results of the invesgaons are reported to the management of the respecve enes.
The Company's posion on corrupon was also rearmed by the adopon in 2022 of the Naonal
Ancorrupon Strategy 2021 – 2025, through the SPEEH Hidroelectrica SA Integrity Plan, which has as its
general objecve the prevenon of corrupon and integrity incidents. The plan includes 4 specic
objecves, for the fulllment of which 18 measures have been established and the associated risks, those
responsible, deadlines and performance indicators have been idened.
Trainings related to corrupon prevenon
The table below presents the trainings related to the prevenon of corrupon carried out in 2025 within
Hidroelectrica SA. As for UCMH and Hidroserv, no an-corrupon trainings were carried out in 2025.
The percentage of posions at risk covered by the training programs is 100% for those who do not have
the CIM suspended. 100% of the members of the administrave, management and supervisory bodies are
trained and give a statement in this regard.
Risky posions
Managers
AMSB
10
Other own employees
Training Coverage
Total
282 (including those with suspended
CIM)
54
12
3,274
Total receiving training
274 (all acve)
Supervisory Board, Management
Board, execuve managers, heads of
departments. report directly to the
Management Board, personnel,
procurement, trading, supply, human
resources, internal control.
54
12**
(self-
instrucon)
3,266
Delivery method and duraon
Classroom Training
2 hours
xx
3,245*
10
Administrative, management and supervisory bodies.
287
Computer-based training
2 hours
262 parcipants)
2 hours
(54 parcipants)
-
-
Frequency
How oen training is needed
Annual
Annual
Annual
Annual
Topics Covered
Protecng Hidroelectrica's
image and reputaon
x
x
x
x
An-corrupon
x
x
x
x
Mutual respect
x
x
x
x
Compeon
x
x
x
x
Insider trading
x
x
x
x
Privacy
x
x
x
x
*3544 no. average employees /2025 of which 299 no. persons in a management posion
** The members of the Management Board and of the Supervisory Board sign an annual declaraon, in
accordance with the provisions of the Code of Ethics of Hidroelectrica SA in force, Chapter III Rules of
ethical behavior in Hidroelectrica, item 2.6 Idencaon/Assessment of corrupon risks and
Implementaon of measures to prevent them, leer c) regarding compliance with the Requirements of
the Hidroelectrica Code of Ethics, by which they declare the following: knowledge of the provisions of the
Code of Ethics of Hidroelectrica S.A. - July 2023 version and compliance with its requirements.
Conrmed incidents of corrupon or bribery
ESRS G1-4
No cases of corrupon or bribery were conrmed at Group level in the reporng year.
• No specific actions were needed to address breaches of anti-corruption and anti-bribery
procedures and standards during this period.
• During the reporting period, no cases of bribery or corruption were registered.
• There have been no confirmed incidents where its workers have been dismissed or subject to
disciplinary proceedings for incidents of corruption or bribery.
288
• There were no confirmed incidents related to contracts with business partners that were
terminated or not renewed due to corruption-related or bribery-related violations.
• No public cases of corruption or bribery or bribery against the company and its own workers or
management were reported during the reporting period.
• There have been no reported incidents of corruption or bribery involving actors in our value chain
in which the organization or its employees are directly involved.
The Hidroelectrica Group targets zero cases of corrupon, as set out in the 2023 Sustainability Strategy.
Payment pracces
G1-6
According to the contractual provisions established regarding the payment terms, payments to the
suppliers of the Hidroelectrica Group enes are made according to the contracts, of 5 and 60 days,
depending on the specicaons of each contract, being respected by the group enes. In the case of
refurbishment projects, there is also a provision for the payment of a percentage of the works aer their
recepon. The average payment term achieved in 2025 is esmated at 26,6 days (calculated as the average
supplier balance divided by the value of purchases * 365).
At the level of Hidroelectrica SA, a performance indicator is established for monitoring compliance with
payment deadlines, which can be found in procedure S04.140 Operaon of payments by bank transfer and
refers to the compliance with the payment terms indicated by the contract developers of Hidroelectrica
SA. For the Payment of invoices and other payment obligaons as due dates, the indicator is "Zero
penales resulng from late payment of payment obligaons".
Thus, in the 2025 reporng period, the indicator was 100% fullled. The calculaon of the indicator was
carried out as follows: Total late payment penales issued and paid for ANAR (Naonal Administraon of
Romanian Waters) suppliers / Total invoices issued and paid for ANAR suppliers).
During the reporng period, there were no ongoing or iniated legal proceedings related to late payments.
Computer data protecon
G1-7 (enty-specic)
Cybersecurity policies
At the moment, the Hidroelectrica Group does not have a formalized cybersecurity policy at Group level.
However, at the level of Hidroelectrica S.A., internal documents on informaon security are implemented,
namely "Hidroelectrica's Policy on Informaon Security and Informaon Networks and Systems" and
"Regulaon of the Informaon Security and Informaon Networks and Systems Management System
289
within S.P.E.E.H. Hidroelectrica S.A.", approved on 19.03.2025, in accordance with the applicable legal
requirements.
Also, UCMH SRL has adopted the "UCMH SRL Policy on Informaon Security", publicly available at:
hps://www.ucmh.ro/wp-content/uploads/2025/07/Polica-de-Securitate-a-Informaei-UCMH-Resita-
SRL.pdf.
Currently, there are also operaonal procedures and technical mechanisms in place for incident
management and protecon of IT and OT infrastructure. The group is considering the development and
implementaon of a cyber risk migaon plan, which involves the development and applicaon of
prevenve measures for each type of cyber risk.
These iniaves are planned to be developed in stages, depending on the evoluon of IT investment
projects and procurement procedures, esmated for the period 2026 and beyond. At the me of reporng,
there is sll no detailed approved meline for the implementaon of all these policies at Group level.
Applicaon of cybersecurity in Hidroelectrica SA
Encrypng customer data is an important component of our security strategy, and IT implements a wide
range of advanced measures that help protect crical infrastructure and sensive data.
The measures outlined below represent operaonal pracces implemented by the Digital Transformaon
and Innovaon Department (TID) to manage cybersecurity risks. They do not constute acons specically
set out in the process of idenfying impacts, risks and opportunies (IROs) in the double materiality
analysis, but reect the exisng operaonal framework for the protecon of IT and OT infrastructure.
Security measures implemented by the Digital Transformaon and Innovaon (DTI) department:
1. Managing cybersecurity issues
At the level of the Hidroelectrica Group, relevant internal policies and regulaons are implemented for the
management of informaon security and IT systems, which contribute to the prevenon and management
of cybersecurity risks.
• The “Hidroelectrica Policy on Informaon Security and IT Networks and Systems” establishes the
general framework for the protecon of informaon and IT infrastructure, dening the basic
principles regarding condenality, integrity and availability of data, as well as the responsibilies
of personnel in the applicaon of security measures. The policy applies to all employees and IT
systems within Hidroelectrica S.A.
• The “Regulaons on the Management System for Informaon Security and IT Networks and
Systems within S.P.E.E.H. Hidroelectrica S.A.” details the implementaon of the informaon
security management system, including the processes for idenfying and managing risks, access
control, incident monitoring and security incident response measures. The regulaon establishes
organizaonal level responsibilies and internal control mechanisms.
290
• The “UCMH SRL Informaon Security Policy” denes the principles and measures applicable at the
subsidiary level for the protecon of informaon and IT systems, being aligned with the group’s
requirements and adapted to its operaonal specics.
These policies are applicable at the level of the relevant enes in the Group and are reviewed periodically,
in order to ensure alignment with the legislave requirements and applicable standards in the eld of
informaon security.
There are addionally dened procedures for risk management, incident response, data protecon and
network security. Resources are also allocated and responsibilies are established.
2. Aack detecon and prevenon
The company uses rewall soluons to monitor and control network trac, constantly updated to protect
the infrastructure against malware and external aacks. The implementaon of an advanced intrusion
monitoring and detecon system (IDS/IPS) is a priority to quickly idenfy aacks and prevent system
compromise.
3. Advanced Packet Inspecon
It enables the idencaon and blocking of malicious trac, helping to protect IT and OT infrastructure,
protect sensive data, and maintain network performance. By ltering trac, access control, network
performance improvement and implicitly protecon against cyberaacks are ensured.
4. Malware Protecon
An-malware and anvirus soluons are implemented at workstaons, servers and network devices, with
automac updates. Regular scans and real-me monitoring help prevent and eliminate cyber threats and
reduce risks such as nancial losses, data leaks or business interrupons.
5. Increasing resilience through redundancy and backups
Periodic backups of crical data are made and redundancy mechanisms are used for the IT infrastructure.
Data restoraon procedures are reviewed regularly to ensure that operaons are resumed quickly in the
event of incidents or malfuncons.
6. Compliance with applicable regulaons
The requirements of naonal and European cybersecurity legislaon, including GDPR and the NIS1
Direcve, as well as relevant internaonal standards such as ISO/IEC 27001, are complied with.
7. Connuous monitoring and assessment of risks
Cyber risks are regularly assessed to idenfy vulnerabilies and establish protecve measures. Impact
291
analyses are also carried out on crical acvies in the event of cyber incidents.
8. Incident Response
A security monitoring center (SOC) works to idenfy abnormal acvies and respond quickly to incidents.
It is also planned to implement a SIEM (Security Informaon and Event Management) soluon to correlate
events and detect complex threats.
9. Network Segmentaon
Network segmentaon through disnct VLANs and security zones is being implemented, to isolate crical
systems and reduce the aack surface.
10. Applicaon of the "Zero Trust" principle
The "Zero Trust" principle involves rigorous vericaon of users and devices before access to sensive
systems. Mul-factor authencaon is implemented for crical applicaons with planned expansion and
other sensive systems.
11. Connuous training and educaon of employees
Regular informaon and training sessions are organized on the main cyber threats (phishing, social
engineering) and good security pracces. Sta are trained to recognise and report suspicious acvies in
accordance with the internal cybersecurity regulaons.
12. Physical and digital access control
Access to data and systems is granted on a "least privilege" basis, with strict policies on password
complexity and rotaon.
13. Eecve third-party management
Measures to verify the cybersecurity of suppliers and partners are applied. Their access to the IT&C
infrastructure is granted only aer risk assessment and security measures have been established, and
suppliers sign condenality agreements (NDAs).
14. Protecon against DDoS aacks
Trac ltering soluons and DDoS migaon services are implemented to prevent crical services from
being blocked.
15. Other measures
For the implementaon of cybersecurity measures, the company collaborates with strategic partners and
292
state instuons (DNSC, CNC, etc.). These acons help protect the IT and OT infrastructure and ensure
operaonal security, connuity and resilience.
Conrmed cybersecurity incidents and targets
In 2025, no signicant cybersecurity incidents were idened at the level of the Hidroelectrica Group. An
isolated incident was previously reported in connecon with the iHidro plaorm, being determined by a
conguraon error that occurred during the data migraon process in 2023. The incident aected a limited
number of users (69 out of more than 500,000 customers) and was promptly remedied, without
represenng a cyberaack.
ANNEXES
Annex 1 – Disclosure Requirements in ESRS covered by the Group’s sustainability statement
Standard
Presentation Requirements (CP)
Page number
ESRS 2
BP-1 – General basis for the preparation of
the sustainability report
150
BP-2 – Disclosures in relation to specific
circumstances
150
GOV-1 – Role of administrative,
management and supervisory bodies
151, 275
GOV-2 – Information provided to the
administrative, management and
supervisory bodies of the enterprise and the
sustainability issues addressed by them
155
GOV-3 – Integration of sustainability-
related performance into incentive
schemes
155, 189
GOV-4 – Due Diligence Process Statement
156
GOV-5 – Risk management and internal
157
293
Standard
Presentation Requirements (CP)
Page number
controls related to sustainability reporting
SBM-1 – Strategy, Business Model and
Value Chain
158
SBM-2 – Interests and Views of
Stakeholders
159, 221, 249, 256
SBM-3 - Significant Impact, Risks and
Opportunities and Their Interaction with
Strategy and Business Model
160, 175, 196, 222, 249, 258
IRO-1 – Description of processes for
identifying and assessing significant
impacts, risks and opportunities
161, 175, 202, 276
IRO-2 – ESRS reporting requirements
covered by the enterprise sustainability
report
174
MDR-P policies – Policies adopted to
manage significant sustainability issues
174
MDR-A Actions – Actions and Resources on
Significant Sustainability Issues
174
MDR-M – Significant sustainability
indicators
174
MDR-T targets – tracking the effectiveness
of policies and actions through targets
174
ESRS E1
E1-1 – Climate Change Mitigation Transition
Plan
175
ESRS 2 SBM-3
175
ESRS 2 IRO-1
175
E1-2 – Mitigation Policies
179
294
Standard
Presentation Requirements (CP)
Page number
Climate
climate change and adaptation
E1-3 – Actions and resources related to
climate change policies
179
E1-4 – Targets related to climate change
mitigation and adaptation
180
E1-5 – Energy consumption and energy mix
180
E1-6 – Gross GHG emissions of categories 1,
2, 3 and total GHG emissions
182
E1-7 – GHG removals and GHG mitigation
projects financed by carbon credits
188
E1-8 – Domestic carbon pricing
189
E1-9 – Anticipated financial effects of
significant physical and transition risks and
potential climate-related opportunities
189
ESRS E4
Biodiversity and
ecosystems
ESRS 2 SBM-3
196
ESRS 2 IRO-1
202
E4-1 – Transition plan and consideration of
biodiversity and ecosystems in the
framework of
strategy and business model
209
E4-2 – Biodiversity and ecosystem policies
211
E4-3 – Actions and resources related to
biodiversity and ecosystems
212
E4-4 – Biodiversity and ecosystem targets
215
E4-5 – Impact indicators related to
biodiversity and ecosystem change
216
295
Standard
Presentation Requirements (CP)
Page number
E4-6 – Financial Effects
-
ESRS S1
Own workforce
ESRS 2 SBM-2
221
ESRS 2 SBM-3
222
S1-1 – Own workforce policies
224
S1-2 – Processes for working with own
workers and workers' representatives on
Impacts
228
S1-3 – Processes for remediation of
negative impacts and channels through
which their own workers can
express the concerns
230
S1-4 – Taking action on significant impacts
on their own workforce, and
approaches to mitigate significant risks and
to pursue significant opportunities related
to one's own workforce, as well as the
effectiveness of these actions
232
S1-5 – Targets related to managing
significant adverse impacts, promoting
positive impacts, and managing significant
risks and opportunities
235
S1-6 – Characteristics of the company's
employees
238
S1-7 — Characteristics of non-employees in
the workforce of the
Undertaking
-
S1-8 – Collective bargaining coverage and
233
296
Standard
Presentation Requirements (CP)
Page number
social dialogue
S1-9 – Diversity indicators
240
S1-10 – Adequate salaries
241
S1-11 – Social protection
-
S1-12 – Persons with disabilities
242
S1-13 – Training and skills development
indicators
-
S1-14 – Health and safety indicators
246
S1-15 – Work-Life Balance Indicators
-
S1-16 – Remuneration indicators (pay gap
and total remuneration)
243
S1-17 – Incidents, Complaints, and Serious
Human Rights Issues and Incidents
245
ESRS S3
Affected
communities
ESRS 2 SBM-2
249
ESRS 2 SBM-3
249
S3-1 – Policies related to affected
communities
251
S3-2 – Processes for working with affected
communities on impacts
252
S3-3 – Processes for remediation of
negative impacts and channels through
which affected communities can express
their concerns
252
S3-4 – Taking action on significant impacts
on affected communities and
approaches for managing significant risks
253
297
Standard
Presentation Requirements (CP)
Page number
and pursuing significant opportunities
related to affected communities, as well as
the effectiveness of these actions
S3-5 – Targets related to managing
significant adverse impacts, promoting
positive impacts, and managing significant
risks and opportunities
255
ESRS S4
Consumers and
end-users
ESRS 2 SBM-2
256
ESRS 2 SBM-3
258
S4-1 – Consumer and end-user policies
259
S4-2 – Collaborative processes with
consumers and end-users on impacts
262
S4-3 – Processes for remediation of
negative impacts and channels through
which consumers and end-users can
express their concerns
268
S4-4 – Taking action on significant impacts
on consumers and end-users and
approaches for managing significant risks
and pursuing significant opportunities
related to consumers and end-users, as well
as the effectiveness of these measures
271
S4-5 – Targets related to managing
significant adverse impacts, promoting
positive impacts, and managing significant
risks and opportunities
274
ESRS G1
Professional
ESRS 2 GOV-1
275
ESRS 2 IRO-1
276
298
Standard
Presentation Requirements (CP)
Page number
conduct
G1-1 – Corporate Culture and Policies on
Professional Conduct and Corporate Culture
279
G1-2 – Supplier Relationship Management
283
G1-3 – Prevention and detection of
corruption and bribery
284
G1-4 – Confirmed cases of corruption or
bribery
287
G1-6 – Payment Practices
288
Annex 2 - Data points that derive from other EU legislation
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
ESRS 2 GOV-1
Board's gender diversity paragraph 21 (d)
Commission Delegated
Regulation (EU)
2020/1816
13
, Annex II
ESRS 2 - General information
ESRS 2 GOV-1
Percentage of board members who are
independent paragraph 21 (e)
Delegated Regulation
(EU) 2020/1816, Annex
II
ESRS 2 - General information
ESRS 2 GOV-4
Statement on due diligence
paragraph 30
ESRS 2 - General information
ESRS 2 SBM-1
Involvement in activities related to
fossil fuel activities paragraph 40 (d) i
Delegated Regulation
(EU) 2020/1816, Annex
II
This is not the case
11
Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial
instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and
2014/17/EU and Regulation (EU) no. 596/2014 (OJ L 171, 29.6.2016, p. 1).
12
Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate
neutrality and amending Regulations (EC) no. 401/2009 and (EU) 2018/1999 ('European Climate Law') (OJ L 243, 9.7.2021, p. 1).
13
Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament
and of the Council as regards the explanation in the benchmark statement of how environmental, social and governance factors are reflected in
each benchmark provided and published (OJ L 406, 3.12.2020, p. 1).
299
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
ESRS 2 SBM-1
Involvement in activities related to
chemical production paragraph 40 (d) ii
Delegated Regulation
(EU) 2020/1816,
Annex II
This is not the case
ESRS 2 SBM-1
Involvement in activities related to
controversial weapons paragraph 40
(d) iii
Delegated Regulation
(EU) 2020/1818 ( 7 ),
Article 12(1)
Delegated Regulation
(EU) 2020/1816,
Annex II
This is not the case
ESRS 2 SBM-1
Involvement in activities related to
cultivation and production of tobacco
paragraph 40 (d) iv
Delegated Regulation
(EU) 2020/1818,
Article 12(1)
Delegated Regulation
(EU) 2020/1816,
Annex II
This is not the case
ESRS E1-1
Transition plan to reach climate
neutrality by 2050 paragraph 14
Regulation
(EU) 2021/1119,
Article 2(1)
ESRS E1 Transition Plan
ESRS E1-1
Undertakings excluded from Paris-
aligned Benchmarks paragraph 16 (g)
Delegated Regulation
(EU) 2020/1818,
Article12.1 (d) to (g),
and Article 12.2
This is not the case
ESRS E1-4
GHG emission reduction targets
paragraph 34
Delegated Regulation
(EU) 2020/1818, Article
6
E1-4 Targets related to climate change
mitigation and adaptation
ESRS E1-5
Energy consumption from fossil sources
disaggregated by sources (only high
climate impact sectors) paragraph 38
E1-5 Energy Consumption and mix
ESRS E1-5 Energy consumption and mix
paragraph 37
E1-5 Energy Consumption and mix
ESRS E1-5
Energy intensity associated with activities
in high climate impact sectors paragraphs
40 to 43
E1-5 Energy Consumption and mix
ESRS E1-6
Gross Scope 1, 2, 3 and Total GHG
emissions paragraph 44
Delegated Regulation
(EU) 2020/1818, Article
5(1), 6 and 8(1)
E1-6 Gross Scopes 1, 2, 3 and Total GHG
emissions
ESRS E1-6
Gross GHG emissions intensity
paragraphs 53 to 55
Delegated Regulation
(EU) 2020/1818, Article
8(1)
E1-6 Gross Scopes 1, 2, 3 and Total GHG
emissions
ESRS E1-7
GHG removals and carbon credits
paragraph 56
Regulation (EU)
2021/1119, Article
2(1)
E1-7 GHG removals
300
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
ESRS E1-9
Exposure of the benchmark portfolio to
climate-related physical risks paragraph
66
Delegated Regulation
(EU) 2020/1818, Annex
II Delegated Regulation
(EU) 2020/1816, Annex
II
This is not the case
ESRS E1-9
Disaggregation of monetary amounts by
acute and chronic physical risk paragraph
66 (a)
ESRS E1-9
Location of significant assets at material
physical risk
paragraph 66 (c)
This is not the case
ESRS E1-9 Breakdown of the carrying
value of its real estate assets by energy-
efficiency classes paragraph 67 (c).
This is not the case
ESRS E1-9
Degree of exposure of the portfolio to
climate- related opportunities paragraph
69
Delegated Regulation
(EU) 2020/1818, Annex
II
This is not the case. Phased-in
ESRS E2-4
Amount of each pollutant
listed in Annex II of the
E-PRTR Regulation
(European Pollutant Release
and Transfer Register)
emitted to air, water and soil,
paragraph 28
It's not material
ESRS E3-1
Water and marine resources paragraph 9
It's not material
ESRS E3-1
Dedicated policy paragraph
13
It's not material
ESRS E3-4
Total water recycled and
reused paragraph 28 c
It's not material
ESRS E3-4
Total water consumption in
m3 per net revenue on own
operations paragraph 29
It's not material
ESRS 2- IRO 1 - E4 paragraph 16 (a) i
This is not the case
ESRS 2- IRO 1 - E4 paragraph 16 (b)
This is not the case
ESRS 2- IRO 1 - E4 paragraph 16 (c)
This is not the case
ESRS E4-2
Sustainable land / agriculture practices or
policies paragraph 24 (b)
This is not the case
301
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
ESRS E4-2
Sustainable oceans /seas practices or
policies paragraph 24 (c)
This is not the case
ESRS E4-2
Policies to address deforestation
paragraph 24 (d)
This is not the case
ESRS E5-5
Non-recycled waste paragraph 37 (d)
It's not material
ESRS E5-5
Hazardous waste and radioactive waste
paragraph 39
It's not material
ESRS 2- SBM3 - S1
Risk of incidents of forced labour
paragraph 14 (f)
It's not material
ESRS 2- SBM3 - S1 Risk of incidents of
child labour paragraph 14 (g)
It's not material
ESRS S1-1
Human rights policy commitments
paragraph 20
This is not the case
ESRS S1-1
Due diligence policies on issues addressed
by the fundamental International Labor
Organisation Conventions 1 to 8,
paragraph 21
Delegated Regulation
(EU) 2020/1816, Annex
II
S1-1 Policies related to own workforce
ESRS S1-1
processes and measures for preventing
trafficking in
human beings paragraph 22
This is not the case
ESRS S1-1
workplace accident prevention policy or
management system paragraph 23
This is not the case
ESRS S1-3
grievance/complaints handling
mechanisms paragraph 32 (c)
This is not the case
ESRS S1-14
Number of fatalities and number and rate
of work- related accidents paragraph 88
(b) and (c)
Delegated Regulation
(EU) 2020/1816, Annex
II
S1-14 Health and safety metrics
ESRS S1-14
Number of days lost to injuries, accidents,
fatalities or illness paragraph 88 (e)
This is not the case
ESRS S1-16
Unadjusted gender pay gap paragraph 97
(a)
Delegated Regulation
(EU) 2020/1816, Annex
II
S1-16 Compensation metrics (pay gap and
total compensation)
ESRS S1-16
Excessive CEO pay ratio
This is not the case
302
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
paragraph 97 (b)
ESRS S1-17
Incidents of discrimination
paragraph 103 (a)
This is not the case
ESRS S1-17 Non-respect of UNGPs on
Business and Human Rights and OECD
paragraph 104 (a)
Delegated Regulation
(EU) 2020/1816, Annex
II Delegated Regulation
(EU) 2020/1818 Art 12
(1)
S1-17 Incidents, Complaints, and Severe
Human Rights Impacts
ESRS 2- SBM3 – S2
Significant risk of child
labour or forced labour in the value chain
paragraph 11 (b)
It's not material
ESRS S2-1
Human rights policy
commitments paragraph 17
It's not material
ESRS S2-1 Policies related to value chain
workers
paragraph 18
It's not material
ESRS S2-1Non-respect of UNGPs on
Business and Human Rights principles and
OECD guidelines paragraph 19
Delegated Regulation
(EU) 2020/1816, Annex
II Delegated Regulation
(EU) 2020/1818, Art 12
(1)
It's not material
ESRS S2-1
Due diligence policies on issues addressed
by the fundamental International Labor
Organisation Conventions 1 to 8,
paragraph 19
Delegated Regulation
(EU) 2020/1816, Annex
II
It's not material
ESRS S2-4
Human rights issues and
incidents connected to its
upstream and downstream
value chain paragraph 36
It's not material
ESRS S3-1
Human rights policy
commitments paragraph 16
It's not material
ESRS S3-1
non-respect of UNGPs on Business and
Human Rights, ILO principles or and OECD
guidelines paragraph 17
Delegated Regulation
(EU) 2020/1816, Annex
II Delegated Regulation
(EU) 2020/1818, Art 12
(1)
It's not material
ESRS S3-4
Human rights issues and incidents
paragraph 36
It's not material
ESRS S4-1
ESRS S4-1
303
Disclosure Requirement and related
datapoint
Benchmark Regulation
reference
11
EU
Climate Law
reference
12
Where it can be found in the Sustainability
Report
Policies related to consumers
and end-users paragraph 16
Policies related to consumers
and end-users
ESRS S4-1
Non-respect of UNGPs on Business and
Human Rights and OECD guidelines
paragraph 17
Delegated
Regulation
(EU) 2020/1816,
Annex II Delegated
Regulation
(EU) 2020/1818,
Art
12 (1)
This is not the case
ESRS S4-4
Human rights issues and incidents
paragraph 35
This is not the case
ESRS G1-1
United Nations Convention
against Corruption
paragraph 10 (b)
This is not the case
ESRS G1-1
Protection of whistle-blowers paragraph
10 (d)
This is not the case
ESRS G1-4
Fines for violation of anti- corruption and
anti-bribery laws paragraph 24 (a)
Delegated Regulation
(EU) 2020/1816, Annex
II)
G1-4 Confirmed incidents of corruption and
bribery
ESRS G1-4
Standards of anti-corruption and anti-
bribery paragraph 24 (b)
This is not the case
Management Board of Hidroelectrica
Bogdan-Nicolae BADEA – President of the Management Board (CEO)
Radu-Ioan CONSTANTIN Ianăș RĂDOI
Member of the Management Board Member of the Management Board
304
III. Management Statement
Based on the information available, we confirm that the consolidated financial statements as at and for
the financial year ended 31 December 2025, prepared in accordance with the accounting standards
adopted by the European Union (“IFRS-EU”), as well as the separate and consolidated financial statements
as at and for the financial year ended 31 December 2025, prepared in accordance with Order of the
Minister of Public Finance no. 2844/2016 approving the Accounting Regulations compliant with
International Financial Reporting Standards, as subsequently amended (“OMFP no. 2844/2016”), present
a true and fair view of the assets, liabilities, financial position, profit or loss and cash flows of the
Hidroelectrica Group and of Hidroelectrica.
Based on the information available, we confirm that the Management Board Report for the year 2025,
prepared in accordance with the provisions of ASF Regulation no. 5/2018, the provisions of Law no.
24/2017 on issuers of financial instruments and market operations, as well as in accordance with the
sustainability reporting standards referred to in Article 29b of Directive 2013/34/EU and the specifications
adopted pursuant to Article 8(4) of Regulation (EU) 2020/852, provides a fair review of the development
and performance of the issuer and of the companies included in the consolidation, as well as a description
of the principal risks and uncertainties specific to the activities carried out, available as at the date of this
report.
Management Board of Hidroelectrica
Bogdan-Nicolae BADEA – President of the Management Board (CEO)
Radu-Ioan CONSTANTIN Ianăș RĂDOI
Member of the Management Board Member of the Management Board
305
Glossary of terms and definitions
GMS
The General Meeting of Shareholders, which can be either the Ordinary General
Meeting of Shareholders (OGMS) or the Extraordinary General Meeting of
Shareholders (EGMS)
BSE
Bucharest Stock Exchange
FSA (FSA)
Financial Supervisory Authority
AMEPIP
The Agency for Monitoring and Evaluation of Performance of Public Enterprises
CHE
Hydroelectric Power Plant
AHE
Hydropower development
MHC
Microhydropower plant
NBR
National Bank of Romania
ANRE
Romanian Energy Regulatory Authority (Romanian: Autoritatea Nationala de
Reglementare in Domeniul Energiei)
ANAR
Romanian Waters National Administration
(Romanian: Administrația Națională Apele Române)
CHE
Hydroelectric plant (Romanian: Centrala hidroelectrica)
AHE
Hydropower station (Romanian: Amenajare hidroenergetica)
SB
Supervisory Board
GEO
Government Emergency Ordinance
Hidroserv
Company branch, S,S,H, Hidroserv S,A
GO
Government Ordinance
GEO
Government Emergency Ordinance
IFRS
International Financial Reporting Standards
ESG
Environmental, Social, Governance
GD
Government Decision
IAS
International Accounting Standards
LEI
The identification code of the legal entity
M&A
Mergers and acquisitions
PAM (EAP)
Energy Asset Performance
SISC
Structures, installations (systems), assemblies, subassemblies, equipment and
components of capacities in the electricity and heat sector, managed by license
holders, classified as fixed assets, for which EAP applies
CEPM (MACEE)
Centralized Electricity Purchasing Mechanism (Romanian: MACEE)
NRRP (PNRR)
The National Recovery and Resilience Plan (Romanian: PNRR)
GDPR
General Data Protection Regulation
OPCOM
The operator of the electricity and natural gas market in Romania - OPCOM S.A.
NPS
National Power System (Romanian: SEN)
Hidroelectrica
SOCIETATEA DE PRODUCERE A ENERGIEI ELECTRICE IN HIDROCENTRALE
“HIDROELECTRICA” S.A.
306
Transelectrica
The national operator of transport and electricity system
• EBITDA is defined as profit/(loss) before tax before (i) depreciation and amortization of property,
plant and equipment and intangible assets and (ii) interest income and interest expense.
• EBITDA Margin is defined as EBITDA divided by revenue.
• Adjusted EBITDA is defined as EBITDA adjusted for (a) impairment/reversal of impairment of
property, plant and equipment and (b) gain on bargain purchase of subsidiaries.
• Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue.
• Adjusted Net Debt/(Cash) is defined as bank loans and liabilities related to leasing contracts minus
cash and cash equivalents and short-term investments (investments in deposits and government
bonds).
• Adjusted Net Debt/(Cash) to Adjusted EBITDA Ratio is defined as Adjusted Net Debt/(Cash) divided
by Adjusted EBITDA
307
IV. Financial Statements
Consolidated financial statements - IFRS-EU
Consolidated financial statements - OMFP 2844/2016
Separate financial statements - OMFP 2844/2016

S.P.E.E.H. HIDROELECTRICA S.A.

Two-tier system Company

CONSOLIDATED FINANCIAL STATEMENTS

for the year ended

31 December 2025

Prepared in accordance with IFRS Accounting Standards

as adopted by the European Union

CONTENTS: | PAGE:
INDEPENDENT AUDITORS' REPORT |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
as at 31 December 2025 | 1-2
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME |
for the year 2025 | 3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year 2025 | 4-5
CONSOLIDATED STATEMENT OF CASH FLOWS for the year 2025 | 6-7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as at and for the year ended | 8-80
31 December 2025 |
BASIS OF PREPARATION |
1. REPORTING ENTITY AND GENERAL INFORMATION | 8
2. BASIS OF ACCOUNTING | 11
3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY | 11
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS | 11
5. USE OF JUDGEMENTS AND ESTIMATES | 13
6. BASIS OF MEASUREMENT | 20
7. MATERIAL ACCOUNTING POLICIES | 21
8. CHANGES IN ACCOUNTING POLICIES | 36
9. COMPARATIVES | 36
PERFORMANCE FOR THE YEAR |
10. OPERATING SEGMENTS | 37
11. REVENUE | 39
12. OTHER INCOME | 40
13. OPERATING EXPENSES | 40
14. FINANCE RESULT | 42
15. EARNING PER SHARE | 43
EMPLOYEE BENEFITS |
16. EMPLOYEE BENEFITS | 48
INCOME TAXES |
17. INCOME TAX |
ASSETS |
18. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | 49
19. INVESTMENTS IN DEPOSITS AND CORPORATE BONDS | 50
20. TRADE RECEIVABLES | 50
21. OTHER ASSETS | 51
22. PROPERTY, PLANT AND EQUIPMENT | 52
EQUITY AND LIABILITY |
23. CAPITAL AND RESERVES | 60
24. BORROWINGS | 62
25. TRADE PAYABLES | 64
26. OTHER PAYABLES | 64

27. DEFERRED INCOME | 65
28. PROVISIONS | 65
FINANCIAL INSTRUMENTS |
29. FINANCIAL INSTRUMENTS – Fair values and risk management | 67
GROUP COMPOSITION |
30. ACQUISITION OF SUBSIDIARIES | 72
OTHER INFORMATION |
31. COMMITMENTS | 73
32. CONTINGENCIES | 73
33. RELATED PARTIES | 76
34. SUBSEQUENT EVENTS | 80

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

Consolidated statement of financial position

as at 31 December 2025

(All amounts are in thousand RON, unless otherwise stated)

|  | 31 December | 31 December
| Note | 2025 | 2024
Assets |  |  |
Non-current assets |  |  |
Property, plant and equipment | 22 | 19,429,425 | 19,848,494
Intangible assets |  | 36,249 | 21,753
Restricted cash | 18 | 23,057 | -
Other non-current assets | 21 | 374,334 | 276,760
Total non-current assets |  | 19,863,066 | 20,147,007
Current assets |  |  |
Inventories |  | 123,808 | 93,998
Trade receivables | 20 | 1,698,378 | 1,633,688
Investments in deposits and bonds | 19 | 3,732,016 | 3,475,933
Cash and cash equivalents | 18 | 1,187,734 | 1,581,617
Restricted cash | 18 | 32,066 | 21,057
Other current assets | 21 | 64,960 | 23,926
Total current assets |  | 6,838,962 | 6,830,219
Total assets |  | 26,702,028 | 26,977,226
Equity and liabilities |  |  |
Equity |  |  |
Share capital | 23 | 5,526,898 | 5,526,898
Revaluation reserve |  | 11,083,763 | 11,548,962
Other reserves | 23 | 1,029,674 | 1,025,970
Retained earnings |  | 4,539,471 | 4,749,312
Total equity |  | 22,179,806 | 22,851,142
Liabilities |  |  |
Non-current liabilities |  |  |
Bank borrowings | 24 | 118,358 | 207,846
Lease liabilities |  | 61,511 | 70,110
Deferred income | 27 | 192,389 | 201,997
Current tax liabilities | 17 | 7,822 | 8,196
Deferred tax liabilities | 17 | 1,396,869 | 1,460,112
Employee benefits | 16 | 139,904 | 128,596
Provisions | 28 | 1,009,132 | 943,505
Trade payables | 25 | 14,901 | 999
Other payables | 26 | 57,867 | 52,512
Total non-current liabilities |  | 2,998,753 | 3,073,873

(continued on page 2)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

Consolidated statement of financial position

as at 31 December 2025

(All amounts are in thousand RON, unless otherwise stated)

|  | 31 December | 31 December
| Note | 2025 | 2024
Current liabilities |  |  |
Bank borrowings | 24 | 94,957 | 92,887
Lease liabilities |  | 10,136 | 9,244
Trade payables | 25 | 777,323 | 429,683
Contract liabilities | 11 | 48,392 | 97,786
Current tax liabilities | 17 | 180,641 | 60,329
Deferred income | 27 | 5,606 | 6,146
Employee benefits | 16 | 155,541 | 147,281
Provisions | 28 | 104,498 | 82,470
Tax for electricity producers | 13 E | - | 2,136
Other payables | 26 | 146,374 | 124,249
Total current liabilities |  | 1,523,468 | 1,052,211
Total liabilities |  | 4,522,221 | 4,126,084
Total equity and liabilities |  | 26,702,028 | 26,977,226

Bogdan-Nicolae BADEA | Radu Ioan CONSTANTIN | Ianăș RĂDOI
Chairman of the Management Board | Member of the Management Board | Member of the Management Board

Petronel CHIRIAC |  | Marian FETIŢA
Financial Director |  | Accounting Manager

The accompanying notes are an integral part of these consolidated financial statements.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise stated)

| Note | 2025 | 2024
Revenue | 11 | 9,619,010 | 9,122,709
Other income | 12 | 40,478 | 187,615
Turbinated water | 13 A | (444,764) | (517,805)
Employee benefits expenses | 16 | (1,019,598) | (885,397)
Transport and distribution of electricity | 13 C | (1,634,838) | (1,228,392)
Electricity purchased | 13 B | (911,358) | (208,848)
Green certificates expenses | 13D | (354,338) | (273,534)
Depreciation and amortization | 22 | (882,879) | (904,968)
Impairment loss on property, plant and equipment, net | 22 | (99,463) | (39,494)
Impairment loss on trade receivables, net | 20 | (37,087) | (78,829)
Repair, maintenance, materials and consumables |  | (111,529) | (92,356)
Tax for electricity producers | 13 E | (122,721) | (234,654)
Other operating expenses | 13 F | (407,790) | (307,240)
Own work capitalized |  | 85,915 | 49,221
Operating profit |  | 3,719,039 | 4,588,029
Finance income | 14 | 325,829 | 342,025
Finance costs | 14 | (86,423) | (85,459)
Net finance result |  | 239,406 | 256,566
Profit before tax |  | 3,958,445 | 4,844,595
Income tax expense | 17 | (588,751) | (716,679)
Profit for the year |  | 3,369,694 | 4,127,916
Earnings per share |  |  |
Basic and diluted earnings per share (RON) | 15 | 7.49 | 9.18
Other comprehensive income |  |  |
Impairment of property, plant and equipment recognized in revaluation reserve, net of tax |  | (528) | (770)
Revaluation of property, plant and equipment, net of tax | 22 | - | -
Remeasurement of defined benefit liabilities, net of tax | 16 | 2,727 | (4,500)
Other comprehensive income |  | 2,199 | (5,270)
Total comprehensive income |  | 3,371,893 | 4,122,646

The accompanying notes are an integral part of these consolidated financial statements.

Bogdan-Nicolae BADEA | Radu Ioan CONSTANTIN | Ianăș RĂDOI
Chairman of the Management Board | Member of the Management Board | Member of the Management Board

Petronel CHIRIAC |  | Marian FETIŢA
Financial Director |  | Accounting Manager

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise specified)

| Note | Share capital | Revaluation reserve | Other reserves | Retained earnings | Total equity
Balance at 1 January 2024 |  | 5,526,898 | 12,038,616 | 1,024,034 | 6,431,686 | 25,021,234
Total comprehensive income for the year |  |  |  |  |  |
Profit of the year |  | - | - | - | 4,127,916 | 4,127,916
Other comprehensive income for the year |  |  |  |  |  |
Impairment of property, plant and equipment recognized in revaluation reserve, net of tax | 23 | - | (770) | - | - | (770)
Remeasurement of defined benefit liabilities, net of tax | 16 | - | - | - | (4,500) | (4,500)
Total other comprehensive income for the year |  | - | (770) | - | (4,500) | (5,270)
Total comprehensive income for the year |  | - | (770) | - | 4,123,416 | 4,122,646
Transactions with owners of the Group |  |  |  |  |  |
Contributions and distributions |  |  |  |  |  |
Dividends | 23 | - | - | - | (6,292,738) | (6,292,738)
Total transactions with owners of the Group |  | - | - | - | (6,292,738) | (6,292,738)
Other changes in shareholders' equity |  |  |  |  |  |
Set up of legal reserves |  | - | - | 1,936 | (1,936) | -
Transfer of revaluation reserve to retained earnings due to depreciation and disposals of property, plant and equipment | 23 | - | (488,884) | - | 488,884 | -
Balance at 31 December 2024 |  | 5,526,898 | 11,548,962 | 1,025,970 | 4,749,312 | 22,851,142

(continued on page 5)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise specified)

| Note | Share capital | Revaluation reserve | Other reserves | Retained earnings | Total equity
Balance at 1 January 2025 |  | 5,526,898 | 11,548,962 | 1,025,970 | 4,749,312 | 22,851,142
Total comprehensive income for the year |  |  |  |  |  |
Profit of the year |  | - | - | - | 3,369,694 | 3,369,694
Other comprehensive income for the year |  |  |  |  |  |
Impairment of property, plant and equipment recognized in revaluation reserve, net of tax | 23 | - | (528) | - | - | (528)
Remeasurement of defined benefit liabilities, net of tax | 16 | - | - | - | 2,727 | 2,727
Total other comprehensive income for the year |  | - | (528) | - | 2,727 | 2,199
Total comprehensive income for the year |  | - | (528) | - | 3,372,422 | 3,371,893
Transactions with owners of the Group |  |  |  |  |  |
Contributions and distributions |  |  |  |  |  |
Dividends | 23 | - | - | - | (4,043,229) | (4,043,229)
Total transactions with owners of the Group |  | - | - | - | (4,043,229) | (4,043,229)
Other changes in shareholders' equity |  |  |  |  |  |
Set up of legal reserves |  | - | - | 3,704 | (3,704) | -
Transfer of revaluation reserve to retained earnings due to depreciation and disposals of property, plant and equipment | 23 | - | (464,672) | - | 464,672 | -
Balance at 31 December 2025 |  | 5,526,898 | 11,083,763 | 1,029,674 | 4,539,471 | 22,179,806

The accompanying notes are an integral part of these consolidated financial statements.

Bogdan-Nicolae BADEA | Radu Ioan CONSTANTIN | Ianăș RĂDOI
Member of the Management Board | Member of the Management Board | Member of the Management Board

Petronel CHIRIAC | Marian FETITA
Financial Director | Accounting manager

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise specified)

| Note | 2025 | 2024
Cash flow from operating activities: |  |  |
Profit for the year |  | 3,369,694 | 4,127,916
Adjustments for: |  |  |
Depreciation | 22 | 879,817 | 903,129
Amortisation |  | 3,017 | 1,839
Impairment loss on property, plant and equipment and intangible assets, net | 22 | 99,463 | 39,494
Impairment loss on trade receivables, net | 20 | 37,087 | 78,829
Write-down of inventories |  | 495 | (879)
Gain from bargain purchase of subsidiaries | 12, 30 | - | (25,728)
Provisions for risk and charges |  | 21,792 | (34,346)
Loss on disposal of property, plant and equipment | 13 F | 1,293 | 6,253
Net foreign exchange loss | 14 | 1,040 | (211)
Interest income | 14 | (283,174) | (332,134)
Interest expense | 14 | 22,397 | 26,925
Unwinding of discount effect | 14 | 65,863 | 58,476
Income tax expense | 17 | 588,751 | 716,679
|  | 4,807,534 | 5,566,242
Changes in: |  |  |
Trade receivables |  | (84,372) | 1,335,451
Inventories |  | (30,305) | (12,612)
Restricted cash |  | (34,066) | 80,000
Other assets |  | (32,117) | 45,644
Trade payables |  | 185,842 | 21,348
Deferred income |  | (10,147) | 25,589
Employee benefits |  | 10,136 | 33,672
Other payables |  | 31,579 | 112,694
Cash generated from operating activities |  | 4,844,084 | 7,208,028
Interest paid |  | (12,239) | (18,841)
Income tax paid |  | (531,683) | (836,254)
Net cash from operating activities |  | 4,300,161 | 6,352,933
Cash flow from investing activities: |  |  |
Payments for acquisition of property, plant and equipment |  | (541,450) | (284,086)
Payments for acquisition of intangible assets |  | (17,445) | (325)
Proceeds from redemption of corporate bonds |  | - | 353,332
Payments for deposits held for investment purposes |  | (9,080,000) | (6,950,000)
Proceeds from deposits held for investment purposes |  | 8,815,000 | 7,850,000
Interest received |  | 265,770 | 305,880
Proceeds from disposals of fixed assets |  | 8,827 | -
Payments for acquisition of subsidiaries, net of cash acquired |  | - | (67,879)
Net cash flow from/(used in) investing activity |  | (549,298) | 1,206,922

(continued on page 7)

S.P.E.E.H. HIDROELECTRICA S.A. managed in a two-tier system

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise stated)

| Note | 2025 | 2024
Cash flow from financing activities: |  |  |
Repayment of borrowings | 24 | (94,194) | (92,350)
Lease payments | 24 | (8,594) | (6,436)
Dividends paid | 23 | (4,041,960) | (6,287,086)
Net cash used in financing activities |  | (4,144,748) | (6,385,872)
Net increase/(decrease) in cash and cash equivalents |  | (393,883) | 1,173,983
Cash and cash equivalents at 1 January | 18 | 1,581,617 | 407,634
Cash and cash equivalents at 31 December | 18 | 1,187,734 | 1,581,617

The accompanying notes are an integral part of these consolidated financial statements.

Bogdan-Nicolae BADEA | Radu Ioan CONSTANTIN | Ianăș RĂDOI
Chairman of the Management Board | Member of the Management Board | Member of the Management Board

Petronel CHIRIAC | Marian FETITA
Financial Director | Accounting manager

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise stated)

1. REPORTING ENTITY AND GENERAL INFORMATION

(a) General information about the Group

Societatea de Producere a Energiei Electrice in Hidrocentrale Hidroelectrica S.A. (“the Company” or “Hidrolectrica”) is a joint stock company, domiciled in Romania. The Company’s registered office is 15-17 Ion Mihalache Blvd., Tower Center Building, 10-15 floors, Sector 1, Bucharest. The Company is registered at National Trade Register Officer with no. J40/7426/2000 and has unique registration code 13267213.

These consolidated financial statements comprise the Company and its subsidiaries (together referred as the “Group”).

The Group’s main lines of business are power generation (hydro and wind) and electricity supply to end consumers.

As of 31 December 2025, the Romanian State through the Ministry of Energy owns 360,094,390 shares, representing 80.0561% of the share capital and of the total voting rights. The rest of the shares are traded on the Bucharest Stock Exchange as follows: 75,600,136 shares, representing 16.8074% of the share capital are owned by legal persons and 14,108,041 shares representing 3.1365% of the share capital by individuals.

The Company is governed by a two-tier system comprising the Supervisory Board and the Management Board.

Between 23 June and 4 July 2023, the Company went through an initial public offer on Bucharest Stock Exchange. The allocation of the shares was carried out on 5 July 2023, the total offer included the entire holding of Fondul Proprietatea, namely 89,708,177 shares, representing 19.9439% of the Company's share capital.

The first trading day of Hidroelectrica shares at the Bucharest Stock Exchange was 12 July 2023.

List of subsidiaries

As of 31 December 2025, and 31 December 2024 Hidroelectrica has the following subsidiaries:

Subsidiary | Activity | Registered Office | % participation at 31 December 2025 | % participation at 31 December 2024
Hidroserv S.A. (company in reorganization) | Services for energy sector(maintenance, repairs, construction) | Bucharest, Romania | 100% | 100%
Uzina de Construcții Mașini Hidroenergetice S.R.L. | Manufacturing of engines and turbines | Resita, Romania | 100% | 100%

Hidroserv S.A. entered the insolvency proceedings in October 2016. In 2020, a reorganization plan of the subsidiary was approved by the Assembly of Creditors and confirmed by the insolvency judge. On June 25, 2025 the insolvency procedure was closed.

On 22 February 2023, the Company was declared the winner of the sales procedure of the business lines ABC and Calnicel platform, owned by UCM Resita SA. In January 2024, the Company set-up a new subsidiary, Uzina de Construcții Mașini Hidroenergetice S.R.L., through which it took-over the business from U.C.M. Reșița S.A.. The transaction was finalized on 11 March 2024.

All revenues are generated in Romania.

(b) Regulatory environment

The activity in the energy sector is regulated by the National Energy Regulatory Authority ("ANRE").

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

The main responsibilities of ANRE include: licensing the entities operating in the energy sector, issuance of regulations applicable to the electricity market, approval of regulated prices and tariffs and issuance of methodologies used to set regulated prices and tariffs.

(c) Main operations of the Group

Electricity generation and system services

The Group generates electricity by operating 188 hydropower plants and micro-hydropower plants, including 5 pumping stations, (the main generation capacities being Portile de Fier I and Portile de Fier II, which represent approximately 40% of the total electricity generated) and 36 wind turbines of 3 MW each.

The electricity generated is sold both wholesale and retail (supply to end consumers).

On 1 January 2023 a centralized electricity acquisition mechanism („MACEE”) was implemented by the Government through which the electricity producers shall sell the available (not contracted as of November 2022) quantity of electricity to the market operator, OPCOM, at a fixed price of RON 450 per MWh.

In March 2024, the Government issued a new Emergency Ordinance (OUG no. 32/28.03.2024) which states that starting 1 April 2024, the MACEE mechanism becomes voluntary, leaving producers the posibility to sell energy at the price of 400 lei/MWh until 31 December 2024. Thus, for 2024, the price paid by the sole purchaser (OPCOM) to electricity producers who sell electricity through MACEE in monthly auctions was as follows:

- RON 450 /MWh for the electricity contracted until 31 March 2024;

- RON 400 /MWh for the electricity contracted starting 1 April 2024.

Starting January 2025 the MACEE mechanism was not applicable anymore.

Hidroelectrica S.A. also provides system services to the national electricity system operator, Transelectrica. The system services involve making an agreed power generation capacity available to Transelectrica within a certain period of time, so that to allow the system operator to achieve permanent balancing of the electricity system.

Electricity supply to end consumers

The electricity market to end users in Romania is liberalized and all consumers are free to choose their electricity supplier from which they can purchase electricity at negotiated prices.

The Group supplies electricity at negotiated tariffs to both industrial consumers and household consumers. The supply tariff include, in addition to the electricity price, the electricity transmission and distribution costs (see accounting policy 6 c)), the contribution to high efficiency co-generation power support scheme, and the cost of green certificates (see Green certificates section).

Starting 1 November 2021, due to the significant increase in energy prices on the international and national markets and the impact thereof on Romanian consumers, the Government implemented consumer support schemes, as follows:

- capping the electricity supply tariffs for household and non-household consumers until 30 June 2025. The difference between the cap price and the regulated cost was partially covered through a subsidy from the State reducing the impact of the capping mechanism. Once the Group submitted the requests for the subsidy to be received from the State authorities as per applicable law, the subsidy and the related income is recorded (Note 11). The impact of this mechanism on the Group’s financial performance in 2025 was a reduction of revenue due to capped prices by RON 46 million.

  Green certificates (“GC”)

  As a producer of electricity from renewable sources (hydroelectric power in refurbished micro-hydropower plants with an installed capacity of no more than 10 MW and with a service life of at least 15 years from the date of commissioning, and wind power), the Group receives green certificates through the green certificates support scheme.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

In 2025 the Group received 3 green certificates for each MWh generated by the eligible micro-hydropower plant and 0.75 green certificates for each MWh generated by the wind farm. In 2024 received between 2.92 and 3 green certificates for each MWh generated by eligible micro-hydropower plants. During 2025, the Group generated from its own production portfolio a number of 24,635 GC from hydropower plants and 197,813 GC from wind power plant (CEE Crucea Nord) (2024: 28,089 GC from hydropower plants and 217,200 GC from wind power plant).

The selling price must fall between the minimum and maximum values set by law:

(a) a minimum trading value of EUR 29.4/GC and

(b) a maximum trading value of EUR 35/GC.

As an electricity supplier, the Group is required to purchase a number of green certificates computed by multiplying the annual mandatory purchase quota of green certificates by the quantity (in MWh) of electricity supplied to end users. ANRE establishes the annual mandatory level of purchase obligations (quotas) for green certificates. The Group is eligible to receive green certificates for the production of Crucea Wind farm which are used to partially settle the obligation to comply with the mandatory annual quota. The difference is acquired by the Group to reach the quota and the Group recognizes the amount needed to acquire the green certificates for fulfilling the quota in “Trade payables”.

Applicable annual quota for 2025 is 0.49983 green certificate per MWh (2024: 0.496 green certificate per MWh).

Tax on electricity producers

The tax for electricity producers is computed as 100% of net monthly average selling price in excess of RON 400 per MWh. The tax on electricity producers was applicable until 31 March 2025.

In February 2025, the Government issued a new Emergency Ordinance (GEO no. 6/27.02.2025) extending the applicability of the tax for an additional 3 months, until June 30, 2025. Starting April 1, 2025, the tax for energy producers is calculated by applying a rate of 80% (reduced from 100%) to the difference between the average net monthly selling price and the price of 400 RON per MWh

The net monthly average selling price is computed based on the monthly revenue of the generation segment, which includes the wholesale of electricity produced and the value of electricity transferred within the same entity from producer portfolio (generation segment) to supplier portfolio (supply segment), less monthly cost for imbalances.

Tax on Constructions

Starting with 1 January 2025, the tax on constructions was introduced through Government Emergency Ordinance (GEO) 156/2024, with subsequent amendments, calculated as 0.5%, of the net book value of eligible constructions held as of 31 December of the preceding year and constructions subject to concession contract.

The tax had an impact of 51,133 thousand RON for the period ended 31 December 2025.

2. BASIS OF ACCOUNTING

These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as adopted by the European Union (“IFRS-EU”).

These financial statements are prepared in order to comply with reporting obligations under Law no.24/2017 regarding issuers of financial instruments and market operations and related amendments.

The consolidated financial statements were authorized for issue by the Company’s Management Board on 25.03.2026 and by the Supervisory Board on 26.03.2026.

The Group also issues a primary version of these consolidated financial statements prepared in accordance with IFRS-EU in Romanian language approved at the same date with these financial statements.

These consolidated financial statements have been prepared on a going concern basis. Details of the Group’s accounting policies are included in Note 7.

The Group also prepares consolidated financial statements in accordance with Order of Minister of Public Finance no. 2844/2016 and subsequent amendments (“OMFP no. 2844/2016").

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY

These consolidated financial statements are presented in Romanian Lei (RON), which is the functional currency of the parent company and its subsidiaries based on separate assessment assessments conducted in accordance with IAS 21. All amounts have been rounded to the nearest thousand, unless otherwise indicated.

4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

Following below are the new standards, amendments and interpretations to existing standards adopted starting 1 January 2025 and their effect in the preparation of the Group and the Company financial statements for the year ended 31 December 2025.

The standards/amendments that are effective and have been endorsed by the European Union

The accounting policies adopted are consistent with those of the previous financial year, except for the following IFRS Accounting Standard which however, is not relevant for the Group:

- IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments). The amendments are effective for annual reporting periods beginning on or after January 1, 2025. The newly adopted IFRS Accounting Standard did not have a material impact on the Group’s/Company’s accounting policies.

The standards/amendments that are not yet effective, but have been endorsed by the European Union

- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and Measurement of Financial Instruments (Amendments). In May 2024, the IASB issued amendments to the Classification and Measurement of Financial Instruments which amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures and they become effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. Management has assessed that these amendments will not have a material impact.

- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Contracts Referencing Nature-dependent Electricity (Amendments). In December 2024, the IASB issued targeted amendments for a better reflection of Contracts Referencing Nature-dependent Electricity, which amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures and they become effective for annual reporting periods beginning on or after January 1, 2026, with earlier application permitted. Management has assessed that these amendments will not have a material impact.

- Annual Improvements to IFRS Accounting Standards – Volume 11. In July 2024, the IASB issued Annual Improvements to IFRS Accounting Standards – Volume 11. An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2026. Earlier application is permitted. Management has assessed that these amendments will not have a material impact

The standards/amendments that are not yet effective and have not yet been endorsed by the European Union

- IFRS 18 introduces new requirements on presentation within the statement of profit or loss. It requires an entity to classify all income and expenses within its statement of profit or loss into one of the five categories: operating; investing; financing; income taxes; and discontinued operations. These categories are complemented by the requirements to present subtotals and totals for ‘operating profit or loss’, ‘profit or loss before financing and income taxes’ and ‘profit or loss’. It also requires disclosure of management-defined performance measures and includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary financial statements and the notes. In addition, there are consequential amendments to other accounting standards. IFRS 18 is effective for reporting periods beginning on or after January 1, 2027, with earlier application permitted. Retrospective application is required in both annual and interim financial statements. The standard has not yet been endorsed by the EU. The Group is currently working to identify all impacts the amendments will have on the primary financial statements and notes to the financial statements. The initial expected material impacts on Group’s financial statements are as follows:

- Foreign exchange differences will be classified in the category where the related income and expense form the item giving rising to the foreign exchange difference.

- New disclosure will be added: (a) management-defined performance measures; (b) specified expense by nature if expenses are presented by nature in the operating category of the statement of profit or loss; and (c) a reconciliation for each line item in the statement of profit or loss between the restated amounts presented applying IFRS 18 and the amounts previously presented applying IAS 1.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

- Interest received and interest paid will be classified in the investing activities and financing activities.

- IFRS 19 Subsidiaries without Public Accountability: Disclosures (including amendments). In May 2024, the IASB issued the IFRS 19 - Subsidiaries without Public Accountability: Disclosures, and in August 2025 the IASB issued amendments to IFRS 19. IFRS 19 (including the amendments) becomes effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. Management has assessed that these amendments will not have a material impact

- IAS 21 The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary Presentation Currency (Amendments). In November 2025, the IASB issued amendments to Translation to a Hyperinflationary Presentation Currency which amend IAS 21 The Effects of Changes in Foreign Exchange Rates, and they become effective for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. Management has assessed that these amendments will not have a material impact

- Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an In vestor and its Associate or Joint Venture. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting.

5.USE OF JUDGEMENTS AND ESTIMATES

In preparing these consolidated financial statements, management has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.

a) Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is presented below:

a1) Concession agreement

In November 1998 Law no. 213/1998 was issued regulating the statute of the public domain. This law provides that the ownership right over the public domain assets belongs to the State or local authorities, which can lease the assets that are in public property. In accordance with the provisions of Law no. 213/1998 and Law no. 219/1998, the Ministry of Economy and Commerce (currently the Ministry of Energy) has leased to the Company the hydropower facilities (dams, piers, locks, water storage reservoirs) and the land on which they are located. Thus, in December 2004, the concession contract no. 171/27.12.2004 was concluded between the Ministry of Economy and Commerce (currently the Ministry of Energy) (grantor) and Company (operator) for the hydropower assets in the public patrimony existing as at 31 December 2003.

The main terms of the concession contract and its subsequent amendments are the following:

- The State, through the Ministry of Economy and Commerce (currently the Ministry of Energy), holds the ownership right over the public assets that are the subject matter of the contract;

- The Company has the right to use these assets for a period of 49 years from the signoff date (the period may be extended in accordance with the provisions of the concessions law, by half of the original period, by mutual agreement of the parties), for the purpose of operation, refurbishment, modernization, rehabilitation, as well as construction of new hydro-power facilities according to the investment programs;

- The Company pays an annual royalty of 1/1000 of the annual revenues from power generation and system services generated in hydro-power facilities;

- Upon termination of the contract, certain assets that were used by the operator in carrying out the concession will be returned to the grantor, as explained below;

- The Company has the obligation to use the assets in accordance with the provisions of the concession contract and the operating license.

The concession contract provides for the following types of assets:

- Assets to be returned – assets of public domain that belong to the grantor and that are returned to the grantor in full right, free of charge and free of any encumbrances, upon termination of the concession contract. Assets to be returned are assets of public domain such as dams, piers, locks, that are subject to the concession/lease, as well as those resulting from investments/improvements to these assets made by the Company during the concession contract period. The Company depreciates these investments/improvements over the lower of the concession contract remaining period and the useful life of those assets.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

- Takeover assets – assets that belong to the operator and are used by the operator during the concession period and which are similar in nature to assets of public domain above (land improvements and constructions, technical installations and machinery), over which, upon termination of the concession contract, the grantor has an option to take over those assets in exchange for a payment equal to the “present book value” on the takeover date. In Company’s interpretation, the “present book value” is the net book value at the date of the takeover, and given that the Company uses the revaluation model, this value will be the revalued amount at that date. These assets are depreciated over their estimated useful life.

- Own assets – assets that, upon termination of the concession contract, remain the property of the operator. Own assets are assets (constructions, technological installations, machinery and equipment, measuring and control devices; vehicles; furniture, office equipment, protective equipment and other tangible assets) that belong to the operator and are used by the operator during the concession period, except for the takeover assets. These assets are depreciated over their estimated useful life.

In assessing the application of IFRIC 12 “Service concession arrangements”, the Group considered the following criteria of the public-private service concession arrangements in the analysis of the concession contract:

a) The grantor controls or regulates what services the operator must provide within the infrastructure, to whom it must provide them and at what price; and

b) The grantor controls – by ownership, beneficial entitlement or otherwise – any significant residual interest in the infrastructure at the end of the term of the arrangement.

The Group concluded that it is not within the scope of IFRIC 12 because it does not meet criterium a) above, the grantor does not regulate to whom the operator must provide the service and at what price. The Group considered that the price fixing mechanism introduced by the Government starting 1 January 2023 does not affect this conclusion as this mechanism is temporary and applied only to part of the production.

The Group recognizes the royalty of the concession contract in Other operating expenses.

a2) Leasing and refurbishing of assets to be returned

In assessing the application of IFRS 16 “Leases” to the concession contract presented above, the Group considered the following criteria to determine whether this contract contains a lease:

a) the lessee has the right to obtain in essence all the economic benefits using the identified asset;

b) the lessee has the right to direct the use of the identified asset.

The Group concluded that both criteria are met and, consequently, the concession contract contains a lease as the Ministry of Energy transferred the right to control the use of the assets of the public domain (assets to be returned) to the Group in exchange for a royalty. According to IFRS 16, the Group measured the carrying amount of the right-of-use asset and the amount of lease liability related to this contract as nil, because the future lease payments are variable and depending on Company’s revenue, the royalty being calculated as a percentage of revenues.

In respect of refurbishments made to the assets to be returned, the Group concluded that they are improvements of a leased asset for which the Group is the “accounting owner”, in the sense that these improvements serve the Group’s interest, as lessee, to use and control the leased assets. Consequently, the Group recognized improvements of assets to be returned as property, plant and equipment. The Group depreciates these assets over the lower of the concession contract remaining period and the useful life of those assets.

The Group believes that the following facts indicate that the Group is the “accounting owner” of improvements made:

The Ministry of Energy, as a lessor, does not reimburse the Company, as lessee, for the cost of the improvements made. Consequently, the improvements are fully funded from the Group’s sources, and the Group is responsible to incur the costs;

a) The Ministry of Energy, as a lessor, does not reimburse the Company, as lessee, for the cost of the improvements made. Consequently, the improvements are fully funded from the Group’s sources, and the Group is responsible to incur the costs;

b) The Group has no obligation to make improvements of the assets to be returned. The decisions regarding refurbishment of the assets to be returned are made by the Group depending on its needs to use these assets and are unique to the Group’s intended use of the leased assets;

c) The Group is permitted to alter the leasehold improvements without the consent of the lessor or without compensating the lessor;

d) Improvements are made on the risk and responsibility of the Group (the Group bears the risk of overruns) and are not available to the grantor until the termination of the concession contract.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

a3) Cash-generating units (“CGU”)

A cash-generating unit is the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of cash inflows of other assets or groups of assets.

The Group concluded that the assets relating to hydro-power plants represent a single cash-generating unit, mainly based on the following considerations:

- the Company has a single hydro-power generation license which covers all power plants as a whole;

- the license stipulates the Company’s obligation to maintain the availability of its production capacities as a whole;

- the decision to produce electricity in a hydro-power plant is made based on the technical operating conditions of the other hydro-power plants;

- the balancing of the electricity contracted and produced is made at the Company’s level and not at individual plants;

- the contracts are concluded based on the total estimated electricity to be produced in a specific period in all of the Company’s hydro-power plants, and the price is set for the entire production.

Also, the Group concluded that the wind park is a separate single CGU.The Group has different investment objective projects under construction related to hydro-power assets with complex/multiple functions for which reliable estimates related to future cash-flows can be made, therefore tested individually for specific impairment.

a4) Decommissioning obligations

Order of the Ministry of Water and Environment no. 119 of 11 February 2002 on approval of the Procedure of transfer into conservation, post-utilisation or abandonment of dams provides the procedures for post-utilisation and abandonment of dams (including levees, hydro-power plants and locks) that must be carried out by the holders of dams under certain conditions provided by law. The Company has no legal or contractual obligations to disassemble and restore the site, other than those arising from Order no. 119, which are presented in the paragraphs below.

Dam holders are defined by GEO no. 244 of 28 November 2000 (republished) on the safety of the dams as legal persons of any title, who have in their possession, ownership and/or administration a dam.

Post-utilisation refers to the dams that have reached their normal operating life span and can be used for purposes other than those for which they were originally constructed for. Post-utilisation requires the implementation of a set of measures and works that will ensure the new functionality of the dam to protect the population and the environment in safe conditions. The necessary measures and works are carried out through the care of both the holder or administrator of the dam, and the post-user.

The post-utilisation of the dams is proposed by the holders of the dams and is approved by order of the minister that exercises control, coordination or authority over the entity that holds the dam, based on the endorsement of the Ministry of Water and Environment.

After the performance of the works required by the post-utilisation project, the hand over reception protocol between the former holder and the post-user is performed.

Abandonment refers to completed or unfinished dams, with or without the normal life span exceeded, which can no longer be kept in operation or post-utilisation due to technical impossibility or very high costs and which, at the same time, represent a potential danger for the population and the environment. Abandonment requires the implementation of a set of measures and works for the decommissioning of the dam, the ecological reconstruction of the area and enabling adequate liquid and solid flows, including the maximum water flow in the dammed section. The necessary measures and works are carried out with the care of the holder or the administrator of the dam and must ensure the flow conditions existing prior to the construction of the dam.

The triggering events of dam abandonment operations include:

- the request of the holders of the dams, when they find that the necessary performance requirements according to the law cannot be met, the dams presenting an unacceptable associated risk;

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

- the disposition of the control bodies, following expertises that show that the dams present an unacceptable associated risk, constituting a real danger for the population and the environment;

- accidents, when the conclusions of the expert report specifically indicate the abandonment due to the very high cost of the necessary repairs, as well as not meeting the performance requirements and the safety criteria, etc.

The reception of the decommissioning and ecological reconstruction works is carried out by representatives of the holder of the dam and of the central or local public administration, who take over the respective area, by concluding a handover protocol.

The Romanian State, represented by the Ministry of Economy and Commerce, currently the Ministry of Energy, holds the ownership right over the hydropower developments (dams, levees, locks, storage lakes) and the land on which they are located that belong to the public domain and which are the subject of the concession contract mentioned above. The Group has the right to use these assets for a period of 49 years (remaining 28 years as of 31 December 2025).

According to the concession contract, the Group has the right during the contract to abandon or deactivate assets that are part of the public domain with the consent of the grantor.

The Group considers that, in accordance with the applicable legal provisions and practices, abandonment occurs in extreme situations, when the dams become an unacceptable risk impacting the environment and the population. Given that these constructions have complex functions in addition to power generation, including flood protection, water supply, irrigation etc., post-utilisation is the usual way in which these constructions will be transferred to central or local public administration, after they can no longer be used for power generation purposes.

The necessary works for post-utilisation are established by technical documentation prepared based on an assessment of the safety status of the dam at that time, carried out by experts certified by the ministries and certified/endorsed by the Ministry of Water and Environment.

Moreover, the abandonment works are carried out based on a special documentation prepared with the water authority approval, the environmental protection agreement, and the endorsement of the local and central public administration. These documentations and endorsements will establish the activities necessary for abandonment.

The works and costs of transition into post-utilisation or abandonment are subject to significant uncertainties caused by the fact that the rate of degradation and the life span of a dam vary significantly from one case to another (some could reach more than 100 years), as well as by the complexity and variety of works that may be necessary for transition into post-use or abandonment, depending on the specific factual status of each dam at the time of entering post-utilisation or abandonment, on the cost sharing between the holder and the post-user, as well as by the very remote time period from present to the moment when the abandonment works would be performed, if any. Also, there are significant uncertainties related to the evolution of the degree of degradation and to the determination of the actual life span of a dam, which are dependent on natural disasters (floods, landslides, earthquakes, etc.) and on the reliability of the construction.

In addition, the Group estimates that, by the end of the concession contract (the remaining period of 28 years as of 31 December 2025), the occurrence of situations requiring post-utilisation or abandonment of public domain assets or its own assets – levees, hydro-power plants and locks (other than those in progress assets described in Note 22) is unlikely, considering the long life of the dams, which can be significantly extended over 100 years by maintenance and improvements.

Consequently, the Group recognizes decommissioning provisions only when management has taken the decision to abandon an asset or switch to post-utilisation or has no realistic alternative but to do so during the concession period. The provisions are recognized based on the costs resulting from the technical documentation prepared by specialists employed by the Group.

a5) Electricity sale-purchase contracts

Under IFRS 9 “Financial Instruments”, a contract to buy or sell a non-financial item (including electricity) may be classified and recognized as a financial instrument. According to paragraphs 2.4 and 2.6 of IFRS 9, if the contracts to buy or sell non-

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

financial items can be settled net in cash or in another financial instrument, or by exchanging financial instruments, including if the underlying commodity is readily convertible into cash, they are in the scope of IFRS 9. The standard provides an exemption from applying IFRS 9 for the contracts that are entered into and continue to be held for the purpose of the receipt or delivery a non-financial item in accordance with the entity’s expected purchase, sale or usage requirements (“own-use exemption”).

The electricity is a commodity readily convertible into cash and therefore management has conducted an analysis in order to determine if own use exemption applies to its contracts.

The main considerations are:

- the Group is an electricity producer and its only intention and purpose is to sell all the electricity produced;

- the forward sell contracts are concluded with the sole intention of delivering the electricity produced; the Group does not act as an electricity broker/dealer;

- the buy-sell transactions on the spot markets (day-ahead, intra-day and balancing markets) are entered into only for meeting the Group’s own balancing necessity and responsibility;

- in 2020 the Group started to be active in the electricity supply sector (selling electricity to end users), acting also as a service provider (including customer service); and

- the Group has used limited forward purchase electricity contracts and their purpose was to cover the needs for the contractual commitments for deliveries to final end consumers.

The Group concluded that own use exemption applies in all its electricity sale and purchase contracts in 2025 si 2024 and therefore are not in scope of IFRS 9.

b) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is included in the following notes:

- Note 22 – assumptions related to the revaluation of property, plant and equipment;

- Note 22 – assumptions related to determination of recoverable amount of assets under construction;

- Note 7 h) and i) – estimates of useful lives of property, plant and equipment and intangible assets;

- Note 13 E – estimates in relation to electricity transfer price between production and supply activity used in calculation of tax for electricity producers;

- Notes 28 and 31 – recognition and measurement of provisions and contingent liabilities;

- Notes 7 l), 20 and 29 b) – determination of expected credit losses for trade receivables;

- Note 16 – assessment of obligations resulting from defined benefit plans and other long-term employee benefits: the main actuarial assumptions;

- Note 28 – estimates related to decommissioning provisions.

Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for financial assets and liabilities, and non-financial assets (property, plant and equipment).

When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included in the following notes:

- Note 22: property, plant and equipment;

- Note 29: financial instruments.

Climate-related risks

Hidroelectrica is exposed to climate-related risks, which can impact water resource availability, a key factor in hydropower generation. These include variability in precipitation, with the potential for altered river flows impacting water availability for energy production. The increased incidence of extreme weather events—such as the drought experienced in 2024 that led to a significant decrease in hydro production. Nevertheless, the company has historically observed that during droughts, electricity prices have increased, which may benefit the company through increased profit margins rather than through volumes sold.

To address climate-related risks, Hidroelectrica is emphasizing the diversification of its energy portfolio, particularly focusing on expanding into renewable energy sources. The company plans to acquire solar parks and additional wind farms, aiming for an additional of minimum 500 MW of installed capacity in the next years. This shift towards solar and wind energy is strategically significant, especially given the inverse correlation between solar power generation and water levels for hydropower. The adoption of solar power, therefore, offers an offset during periods of low water availability, underlining the importance of a versatile and resilient energy mix in response to the challenges posed by climate variability.

The financial implications of climate-related risks include the fair value of Hidroelectrica's property, plant and equipment, related to water resources and hydropower facilities that can be affected by a lower volume of power generation estimated during projected useful life associated with climate change compared with the initial technical and financial performance indicators of such projects. These potential implications are considered in the economic obsolescence test conducted as part of the revaluation exercise.

Also, with respect to investment objective that are currently in progress, the specific impairment assessments performed consider a lower forecasted electricity production given the expected variability in precipitation.

Work safety and safe operations

Protecting people is a priority of the Group and the Group is committed to safe and responsible operations to protect the health and safety of its employees, contractors and surrounding communities. This commitment demonstrated through established health and safety policies, ongoing learning and development via training on human rights and workplace safety, and the annual update of the HSE Prevention and Protection Plan.

While the Group aims for zero serious workplace accidents, incidents may still occur. However, the Group’s top priorities remain the enhancement of safe working conditions.

Cyber risk

Digitalization brings many benefits, but it also increases risks related to cybersecurity and system reliance. As the Group’s operations grow and depend heavily on IT systems and network infrastructure, these risks can cause operational disruptions, fraud, or data theft.

Any IT system failure, including from cyberattacks, could negatively impact the business, finances, and operations. Systems face threats like power outages and cyberattacks, and despite our cybersecurity measures, disaster recovery plans, and employee training, we may not be fully protected against all unauthorized access attempts. The Group is continuously enhancing its IT systems and cybersecurity to protect data confidentiality and integrity, while also educating its employees to responsibly manage cyber risks and IT systems failures.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Risk management and internal control

The Group’s internal control framework includes compliance to the company’s values and guidelines on ethics and corporate responsibility. A strong commitment to integrity, responsibility, and ethical behaviour is especially crucial in preventing and detecting fraud, bribery and corruption. The Group is committed to conducting its operations fairly, honestly, and in full compliance with all applicable laws. It adopts a zero-tolerance policy toward bribery and corruption in all its operations and relationships worldwide. Internal procedures addressing conflicts of interest, gifts and hospitality, and whistleblowing are designed to reduce potential fraud and corruption risks.

Group-wide fraud preventing, anti-bribery and corruption policies, along with whistleblower procedures, provide guidance on risk assessment, legal compliance, and reporting concerns.

The Group and its Supervisory Board take whistleblowing reports and negative media coverage seriously. Established policies ensure analysis of any breaches of the internal code of conduct or legal requirements, supported by an open channel for reporting. Internal reviews conducted throughout 2025, up to the financial statements’ approval date, found no instances of ethical violations or non-compliance with laws and regulations.

6. BASIS OF MEASUREMENT

The consolidated financial statements have been prepared on the historical cost basis except for land, buildings, equipment and other items of property, plant and equipment, which are measured using revaluation model.

7. MATERIAL ACCOUNTING POLICIES

The Group has consistently applied the following accounting policies to all periods presented in these consolidated financial statements.

(a) Basis of consolidation

(i) Business combinations

The Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group (see 6 (a) (ii)). In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

(ii) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(iii) Non-controlling interests (“NCI”)

NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(iv) Loss of control

When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized gains or losses (except for foreign currency transactions gains or losses), are eliminated.

(b) Foreign currency transactions

Transactions in foreign currencies are translated into the functional currency of Group companies at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognized in profit or loss and presented within finance costs.

(c) Revenue from contracts with customers

Revenue in measured based on the consideration specified in a contract with a customer, while the revenue from electricity supply is measured based on lower of the agreed contractual prices with customers and, where applicable, the capped electricity prices as per legislation. The Group recognises revenue when it transfers control over a good or service to a customer.

The following table provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and the related revenue recognition policies.

| Nature and satisfaction of contractual obligations |  | Revenue recognition
Wholesale of electricity | The Group sells the majority of electricity produced on forward contracts with electricity suppliers and traders, on the spot market (day-ahead market) to the market operator (OPCOM) and on the balancing market to the system operator (Transelectrica). Invoices are issued at the end of the month or at the beginning of the following month for the electricity delivered in the current month. The payment term is 30 days from invoice date. |  | Revenue is recognized over time, because the customer simultaneously receives the benefits provided by the performance of the Group as the Group delivers electricity; generation and use of electricity are simultaneous because electricity is not stored. The contract liabilities primarily relate to the advance consideration received from customers under contract in relation to energy to be supplied in the following period.
Electricity supply to end users (retail sales of electricity) | The performance obligation is represented by delivery of electricity to the customer’s location, which includes transmission and distribution, performed via third party assets. |  | Revenue is recognized over time, because the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group delivers electricity. At the end of the month an accrual is recorded for the quantity of electricity supplied during month but not yet invoiced, this being unbilled revenue.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

| Customers obtain control of electricity as electricity is consumed. Revenue is recognized based on the volumes communicated to the Group by the distribution operators, which are based on automated or manual meter readings performed by the distribution operators, self-readings reported by the consumers, or based on estimates of electricity delivered for which readings were not yet performed for the interval between the date of last reading and the end of period. Invoices are usually issued on a monthly basis, in the month following consumption. The payment term is 45 days from invoice date for households final consumers and 30 days from invoice date for non-households final consumers. |  | The recognition of unbilled revenue gives the unconditional right to receive the value for the electricity supplied and usually there are not difference between the estimated revenue and the amount invoiced. Electricity supply revenue include transmission and distribution tariffs, which are invoiced by the Group to end users. The transmission and distribution services are provided by the transmission operator and the distribution operators, and the related costs are billed by the transmission operator and the distribution operators to the Group. The Group assessed whether it is a principal or an agent in relation to transmission and distribution services (and related green certificates obligations as described under paragraph 7.j) passed through to the customer and it concluded that it acts as a principal. The considerations supporting this conclusion include: the Group has a single performance obligation, i.e. delivery of electricity to end user location, which includes transmission and distribution; electricity consumption happens instantaneously as the electricity is generated at the Group’s plants and delivered through the transmission and distribution grids to the end user’s location.
System services | System services consist of Group making available an agreed generation capacity to the system operator, Transelectrica, for a certain period of time. This capacity is used by Transelectrica in the process of balancing the electricity system. Invoices for system services are issued on a monthly basis, at the beginning of each month for the services provided in the previous month. The payment term is 30 days from invoice date. |  | As the Group makes available generation capacity measured in MWh and not specific assets, the Group concluded that the contract does not contain a lease and therefore is in scope of IFRS 15. Revenue is recognized over time, because the customer simultaneously receives and consumes the benefits provided by the Groups's performance as the services are performed. The fee received for system services depends on the hourly capacities made available (ie number of hours for which the capacity multiplied by the capacity) and the hourly tariffs. Both the hourly capacities and the hourly tariffs are established based on the results of daily auctions organized by the system operator. If, during the interval the capacity is made available, the system operator orders the Group to produce electricity using the capacity made available, the electricity produced is sold on the balancing market at the price established on the respective market (see Wholesale of electricity section above).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(d) Employee benefits

(i) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in the current and prior periods, discounting that amount. There are no plan assets.

The defined benefit plans include cash benefits on retirement and benefits in kind consisting of free electricity granted to employees after retirement.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method.

Remeasurements of the defined benefit liability, which comprise actuarial gains and losses, are recognised immediately in other comprehensive income (“OCI”). The Group determines the net interest expense (income) on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iv) Other long-term employee benefits

The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that the employees have earned in return for their service in the current period and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

Other long term employee benefits include cash benefits paid to employees at the moment when they achieve certain seniority milestones.

(v) Termination benefits

Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises cos ts for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(e) Operating profit

Operating profit is the result generated from the continuing principal revenue-producing activities of the Group as well as other income and expenses related to operating activities. Operating profit excludes finance result and income taxes.

(f) Finance income and finance costs

The Group's finance income and finance costs include:

- interest income;

- interest expense;

- the foreign currency gain or loss on financial assets and financial liabilities;

- unwinding of non-current provisions.

Interest income or expense is recognised using the effective interest method.

The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

– the gross carrying amount of the financial asset; or

– the amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

(g) Income tax

Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.

The Group has determined that interest and penalties related to income taxes, do not meet the definition of income taxes, and therefore accounted for them under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Current tax assets and liabilities are offset only if certain criteria are met.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

- temporary differences that occur on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

- taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if certain criteria are met.

(iii) Global minimum -top up tax

Law 431/2023 on ensuring a global minimum level of taxation for multinational groups and large national entities transposed into the national legislation the provisions of Directive 2523/2022. Also, according to Article 5 of the Law 431/2023, the explanations and examples from the Administrative Guidelines issued by the Organization for Economic Co-operation and Development ("OECD") are used for the application of this law.

Law 431/2023 is applicable to large groups of entities, both national and multinational, with a consolidated turnover (at the level of the entire group) of at least 750 million Euros in at least two years of the four years prior to the reference year. Thus, according to the legislation, starting with the financial year 2024, a supplemental tax ("Global minimum top-up tax ") should be collected each time the effective rate of 15%.

The effective tax rate ("ETR") is computed annually at the jurisdiction level. The ETR is calculated as the ratio of the adjusted covered taxes of the Constituent Entities (“CE”) – the numerator and the qualifying net profit of the CE – the denominator, respectively. Both the numerator and the denominator represent the cumulative amounts of all CEs located in a jurisdiction. The OECD has introduced a number of safe harbours, aimed at simplifying the calculation for taxpayers, especially in the first years of application. As long as at least one of the tests mentioned under the protection regimes (de minimis test, the simplified ETR test and the routine profitability test) is met for a year, the additional tax in that jurisdiction for the Group can be considered to be zero. Thus, the Group analyzes if at least one of the aforementioned tests is met and, in the event that none of the tests is met, performs the calculation of the ETR at the level of the jurisdiction. If the ETR determined is less than 15%, the additional tax required to reach the minimum of 15% is recognized as corporate income tax.

(h) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are initially recognised at cost, which includes capitalized borrowing costs.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.

After initial recognition:

- land, buildings, equipment and other items of property, plant and equipment are measured at revalued amount; and

- assets in progress are measured at cost less any accumulated impairment losses.

Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using the fair value at the end of the reporting period.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

When an item of property, plant and equipment is revalued, the accumulated depreciation is eliminated from the gross book value, and the net amount is adjusted to the revalued amount of the asset.

If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised and accumulated in equity under revaluation reserve. However, the increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same amount of the same asset previously recognised in profit or loss.

If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or loss. However, the decrease is recognized in equity in revaluation reserve if there is any credit balance existing in the revaluation reserve in respect of that asset.

The difference between revalued amount and the net book value of assets is recognized as revaluation reserve in equity.

The revaluation reserve is transferred to retained earnings in an amount corresponding to the use of the asset (as the asset is depreciated) and upon disposal of the asset.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iii) Depreciation

Depreciation is calculated using the straight-line method over the assets estimated useful lives, and is recognized in profit or loss. Land and assets under construction are not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

Category |  | Useful life (years)
Buildings and special installations |  | 65-97
Buildings and special installations representing assets to be returned, according to the concession contract (see Note 5 a1)) |  | The lesser of useful economic life and remaining period of the concession contract
Technological equipment |  | 25-47
Measurement and control devices |  | 15-23
Vehicles |  | 16-24
Fixture and fittings |  | 12

Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.

(i) Intangible assets

(i) Recognition and measurement

Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets include mainly software and licenses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortisation

Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss.

The estimated useful lives of software and licenses for current and comparative periods are 3-5 years.

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(j) Green certificates

The Group recognizes the green certificates granted under the support mechanism for renewable energy producers at cost (which is 0) when electricity is produced and delivered.

The Group recognizes green certificates purchased at cost.

The Group, as an electricity supplier, is required by law to purchase a number of green certificates (see Note 1 c)), whose cost is subsequently charged to the end users based on the quantities of electricity consumed. In order to meet the legal annual purchase obligation (annual target or quota), the Group uses both green certificates granted under the support scheme and green certificates purchased.

Green certificates needed to to meet the purchase obligation (quota) are estimated by the Group and accrued expenses is reflected in the statement of financial position considering the acquisition cost. Further, green certificates are acquired and expensed to the extent required to meet the quota obligation. Green certificates purchased in excess of the mandatory quota at the end of the reporting period are recognized in the consolidated statement of financial position. If the mandatory quota is not met at the end of the reporting period, then the Group recognized a liability in the consolidated statement of financial position.

The cost of green certificates recharged to end users of RON 354,338 thousand is recognized in profit or loss as part of Revenue from contracts with customers.

(k) Financial instruments

(i) Recognition and initial measurement

Trade receivables are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents include cash balances, demand deposits and deposits with maturity of up to three months from the date of origination that have an insignificant exposure to the risk of change in fair value, and are used by the Group to manage short-term commitments.

A financial asset (unless it is a trade receivable without a significant financing component) or a financial liability is initially measured at fair value plus or minus transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(ii) Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified into one of the business models: held to collect, held to collect and sell or other.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is classified as held to collect and measured at amortized cost if it meets both of the following conditions:

- it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

- its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All financial assets of the Group are classified as held to collect and give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets – Subsequent measurement and gains and losses.

Financial assets at amortized cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Financial liabilities – Classification, subsequent measurement and gains or losses

Financial liabilities are classified as measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains or losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

(iii) Derecognition

Financial assets

The Group derecognizes a financial asset when:

- the contractual rights to the cash flows from the financial asset expire; or

- it transfers the rights to receive the contractual cash flows in a transaction in which either:

- substantially all of the risks and rewards of ownership of the financial asset are transferred; or

- the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

Financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(iv) Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(I) Impairment

(i) Financial assets

The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are measured at amortized cost or at fair value through other comprehensive income. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognizes lifetime expected credit losses for trade receivables.

The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

The Group measures loss allowances at an amount equal to lifetime ECLs (Note 29).

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessments, that includes forward-looking information.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days past due.

The Group considers a financial asset to be in default when:

- the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as realising security (if any is held); or

- the financial asset is more than 180 days past due.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 180 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period con sidered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

Measurement of ECLs

ECLs are probability-weighted estimate of credit losses. Credit losses are measured as the present value of cash deficit (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive).

Credit-impaired financial assets

At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Evidence that a financial asset measured at amortized cost is credit-impaired includes the following observable data:

- significant financial difficulty of the debtor;

- a breach of contract such as a default or being more than 180 days past due;

- the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise; or

- it is probable that the debtor will enter bankruptcy or other financial reorganisation.

Presentation of allowance for ECL in the statement of financial position

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof.

(ii) Non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs, according to the judgement described in Note 5 a3).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss, except for the property, plant and equipment measured at revalued amount, in which case the impairment loss is recognized in other comprehensive income and decreases the revaluation reserve within equity to the extent that it reverses a previous revaluation surplus related to the same asset.

The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(m) Share capital

The Group recognized changes in share capital in accordance with the applicable legislation and after approval of the General Meeting of Shareholders and registration in the Trade Register.

Until 31 December 2003, the statutory share capital in nominal terms was restated according to IAS 29 “Financial Reporting in Hyperinflationary Economies” with a corresponding adjustment to retained earnings.

Ordinary shares

Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS 12 (see 7 (g)).

(n) Dividends

Dividends are recognized as a deduction from equity in the period in which their distribution is approved and recognized as a liability to the extent it is unpaid at the reporting date. Dividends are disclosed in the notes to financial statements when their distribution is proposed after the reporting date and before the date of the issuance of the financial statements.

(o) Provisions

A provision is recognized if, as a result of a past event, the Group has a current, legal or constructive obligation, which can be reliably estimated and it is likely that an outflow of resources incorporating economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

Decommissioning

A decommissioning provision in respect of abandoned or switched to post-utilization hydro-power assets, and the related expenses are recognized when management has taken the decision to abandon an asset or switch an asset to post-utilisation or the Group has not a realistic alternative except to abandon or move to post-utilization an asset before the end of the concession period (see Note 5 (a4)).

Subsequent to initial measurement, the obligation is measured at the end of each reporting period to reflect the time value of money and any changes in the estimated future cash flows underlying the obligation. The increase in the provision due to time value of money is recognized as finance costs, while the changes in estimated future cash flow is recognized as operating expense.

The Group recognizes a decommissioning provision against property, plant and equipment in respect of decommissioning of the wind turbines. The obligation is measured at the end of each reporting period to reflect the time value of money and any changes in the estimated future cash flows underlying the obligation. The change in the provision due to time value of money is recognized as finance costs, while the changes in estimated future cash flow is recognized against property, plant and equipment.

(p) Contingent assets and liabilities

A contingent liability is:

a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or

b) a present obligation that arose from past events but is not recognized because:

i. it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

ii. the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognized in the financial statements, but disclosed unless the possibility of an outflow of resources embodying economic benefits is remote.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.

A contingent asset is not recognized in the financial statements, unless it is virtually certain. Contingent assets are only disclosed when an inflow of economic benefits is considered probable.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(q) Tax uncertainties

The Group applies IFRIC 23 Uncertainties over income tax treatment to account for uncertainties related to income tax.

An 'uncertain tax treatment' is an income tax treatment for which there is uncertainty over whether the relevant tax authority will accept it under tax law. Whether an uncertain tax treatment is present depends both on the specific position taken by the Group and on the applicable tax law. Therefore, uncertain tax treatments often occur when the applicable tax law is unclear or is not consistently understood.

If there is uncertainty about an income tax treatment, then the Group considers whether it is probable (more likely than not) that a tax authority will accept the Group's tax treatment included or planned to be included in its tax filing.

The Group reflects uncertainty about a tax treatment in measuring its current and deferred taxes as follows.

Tax authority is likely to accept the Group's tax treatment: If the Group concludes that it is probable that the tax authority will accept its tax treatment, then it measures current and deferred taxes consistently with the tax treatment used or planned to be used in its income tax filing.

Tax authority is unlikely to accept the Group's tax treatment: If the Group concludes that it is not probable that the tax authority will accept its tax treatment, then it reflects the effect of that tax uncertainty in determining the related taxable profit (or tax loss), tax bases, unused tax losses, unused tax credits and tax rates. To do so, the Group uses either the most likely amount or the expected value method - whichever better predicts the resolution of the uncertainty.

Uncertainties related to taxes that are not income taxes (e.g. value added tax or taxes in scope of IFRSC 21 Levies) are recognized and measured in accordance with IAS 37 Provisions, contingent liabilities and contingent assets, unless they are dealt with specifically in another standard (e.g. IAS 19 Employee Benefits for social security taxes).

Uncertainties surrounding the amount to be recognized as a provision are dealt with by various means according to the circumstances. Where the provision being measured involves a large population of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities. The name for this statistical method of estimation is ‘expected value’. The provision will therefore be different depending on whether the probability of a loss of a given amount is. Where there is a continuous range of possible outcomes, and each point in that range is as likely as any other, the mid-point of the range is used.

Where a single obligation is being measured, the individual most likely outcome may be the best estimate of the liability. However, even in such a case, the Group considers other possible outcomes. Where other possible outcomes are either mostly higher or mostly lower than the most likely outcome, the best estimate will be a higher or lower amount.

(r) Leases

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if this rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

- fixed lease payments, including in-substance fixed payments;

- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

- amounts expected to be payable under a residual value guarantee; and

- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets in Property, plant and equipment in the consolidated statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term of 12 months or less) and leases of low-value assets (less than USD 5,000 equivalent). The Group recognises the lease payments associated with these leases as an expenses on a straight-line basis over the lease term.

(s) Government grants

Government grants related to assets are initially recognised as deferred income at fair value if there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Grants related to the acquisition of assets are recognised in profit or loss as other income on a systematic basis over the useful life of the asset.

Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the periods in which the expenses are recognised, unless the conditions for receiving the grant are met after the related expenses have been recognised. In this case, the grant is recognised when it becomes receivable.

For green certificates grants refer to Note 7 (j).

(t) Segment reporting

Segment results that are reported to the Company’s Management Board and Supervisory Board include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

(u) Subsequent events

Events occurring after the reporting dates until the date these financial statements were authorized for issue, which provide additional information about conditions prevailing at the reporting date (adjusting events) are reflected in these financial statements. Events occurring after the reporting dates until the date these financial statements were authorized for issue, which provide information on events that occurred after the reporting dates (non-adjusting events), when material, are disclosed in the notes to the financial statements.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(v) Fair value measurement

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for financial assets and liabilities, and non-financial assets (see Note 5 (b)).

When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

8. CHANGE IN ACCOUNTING POLICIES

The accounting policies applied in these consolidated financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 31 December 2024.

9. COMPARATIVES

These consolidated financial statements prepared at 31 December 2025 show comparability with the previous financial year consolidated financial statements.

10. OPERATING SEGMENTS

A. Basis for segmentation

The Group has identified two reporting segments based on the operating licenses owned – production of electricity and supply of electricity.

The following summary describes the operations of each reportable segment:

Reportable segment | Operations
Electricity generation | Production of electricity through the operation of hydropower plants, micro-hydropower plants and wind turbines, rendering of system services to the system operator (meaning making available an agreed generation capacity for the balancing needs of the energy system). Electricity produced is sold mainly to electricity suppliers and entities that trade electricity on the wholesale electricity market, as well as supplied to final consumers through the electricity sypply segment.
Electricity supply | Supply of electricity to non-households and households final consumers. Electricity supplied to end consumers is mainly generated by the electricity generation segment, and where there is a gap, this is covered through spot or forward electricity purchases.

The Management Board of the Company reviews management reports of each segment. Segment profit before tax is used to measure performance because management believes that such information is one of the most relevant in evaluating the results of the segments.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

B. Information about operating segments

Year ended 31 December 2025 | Electricity generation | Electricity supply | Total for reportable segments | Others | Inter-segment eliminations | Consolidated total
External revenues | 4,115,263 | 5,503,747 | 9,619,010 | 40,478 | - | 9,659,488
Inter-segment revenue | 1,673,946 | - | 1,673,946 | - | (1,673,946) | -
Segment revenue | 5,789,209 | 5,503,747 | 11,292,956 | 40,478 | (1,673,946) | 9,659,488
Segment profit before tax | 2,973,780 | 944,186 | 3,917,966 | 40,478 | - | 3,958,446
Net finance income/(cost) | 198,240 | 41,166 | 239,406 | - | - | 239,406
Amortization and depreciation | (881,387) | (1,492) | (882,879) | - | - | (882,879)
Impairment loss on property, plant and equipment, net | (99,462) | (1) | (99,463) | - | - | (99,463)
Electricity purchased | (23,881) | (2,528,081) | (2,551,962) | - | 1,640,603 | (911,358)
Green certificates expenses | - | (387,680) | (387,680) | - | 33,343 | (354,338)
Employee benefits expenses | (991,831) | (27,767) | (1,019,598) | - | - | (1,019,598)
Turbinated water | (444,764) | - | (444,764) | - | - | (444,764)
Tax for electricity producers | (122,721) | - | (122,721) | - | - | (122,721)
Transport and distribution of electricity | (54,192) | (1,580,646) | (1,634,838) | - | - | (1,634,838)
Other expenses | (474,181) | (82,225) | (556,406) | - | - | (556,406)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Year ended 31 December 2024 | Electricity generation | Electricity supply | Total for reportable segments | Others | Inter-segment eliminations | Consolidated total
External revenues | 5,521,040 | 3,601,669 | 9,122,709 | 187,615 | - | 9,310,324
Inter-segment revenue | 1,342,630 | - | 1,342,630 | - | (1,342,630) | -
Segment revenue | 6,863,670 | 3,601,669 | 10,465,339 | 187,615 | (1,342,630) | 9,310,324
Segment profit before tax | 4,128,743 | 528,237 | 4,656,980 | 187,615 | - | 4,844,595
Net finance income/(cost) | 248,648 | 7,918 | 256,566 | - | - | 256,566
Amortization and depreciation | (904,885) | (83) | (904,968) | - | - | (904,968)
Impairment loss on property, plant and equipment, net | (39,494) | - | (39,494) | - | - | (39,494)
Electricity purchased | (25,549) | (1,490,355) | (1,515,904) | - | 1,307,056 | (208,848)
Green certificates expenses | - | (309,108) | (309,108) | - | 35,574 | (273,534)
Employee benefits expenses | (859,564) | (25,833) | (885,397) | - | - | (885,397)
Turbinated water | (517,805) | - | (517,805) | - | - | (517,805)
Tax for electricity producers | (234,654) | - | (234,654) | - | - | (234,654)
Transport and distribution of electricity | (64,395) | (1,163,997) | (1,228,392) | - | - | (1,228,392)
Other expenses | (384,073) | (94,352) | (478,425) | - | - | (478,425)

Other expenses include the following captions from consolidated statement of profit or loss: Repair, maintenance, materials and consumables, Impairment loss on trade receivables and Other operating expenses.

The electricity generation segment includes also system services and production of electricity for system balancing which are billed to the system operator, Transelectrica SA (see details in Note 11).

Inter-segment revenue includes the value of electricity produced and transferred within the same entity from producer portfolio (generation segment) to supplier portfolio (supplier segment) of RON 1,616,722 thousand in 2025 (2024: RON 1,271,355 thousand). Inter-segment revenue is calculated based on a methodology approved by the Management Board in 2021. The methodology used for computing transfer price between segments is based on the average electricity production cost in the last 12 months ending 2 months prior the calculation month, plus an internal margin.

The increase in profitability of the supply segment in 2025 compared to 2024 is due to the increase in selling price per MWh and the increase of number of clients, compared to the same period as in prior year.

All revenues are generated in Romania.

Total segment assets and total segment liabilities are not included in the management reports reviewed by the Management Board.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

11. REVENUE

A. Revenue from contracts with customers

The Group generates revenue from:

| 2025 | 2024
Wholesale of electricity | 3,864,223 | 5,217,335
Electricity supplied to final consumers (retail sales) | 5,503,747 | 3,601,669
System services | 248,151 | 302,828
Maintenance services | 2,889 | 877
Total | 9,619,010 | 9,122,709

Revenue from electricity supplied to final consumers reflects the value of volume supplied, including positive imbalances, which are based on automated or manual meter readings performed by the distribution operators, self-readings reported by the consumers, or based on volume estimated by distribution operators if readings are not available.

The majority of the Group’s supply revenue in the year ended 31 December 2025 represents sales to non-household consumers (approx. 64% of volume, 63% in 2024), for which readings are performed at the end of each month and data sent by the distribution operators. Also, approximately 71% (67% in 2024) of the volume supplied to household consumers in the year ended 31 December 2025 is determined based on meter readings at the end of the period, and the rest is based on estimates of the consumption, data sent by the distribution operators. Consequently, the Group assesses that the risk of revenue adjustment subsequent to period end that could result from the difference between the meter readings and the estimated volumes would have a limited impact on the financial statements.

In 2025, the Group produced 11,847 GWh (2024: 13,864 GWh) and sold 14,056 GWh (2024: 14,666 GWh). From total quantity sold, 7,244 GWh were supplied to end users in 2025 (5,572 GWh in 2024).

The Group has contracts with customers for periods up to 12 months.

Individual clients who represented more than 10% of the Group’s revenues are as follows:

• Transelectrica SA, the electricity system operator - system services and production of electricity for system balancing – RON 739,636 thousand in 2025 (8%) and RON RON 1,946,834 thousand in 2024 (36%);

• OPCOM SA, the market operator – sale of electricity produced on the spot market of RON 686,612 thousand in 2025 (7%) and RON RON 2,704,049 thousand in 2024 (51%).

Timing of revenue recognition:

| 2025 | 2024
Revenue recognised over time | 9,616,121 | 9,121,832
Revenue recognized at a point in time | 2,889 | 877
Total | 9,619,010 | 9,122,709

B. Contract liabilities

As at 31 December 2025, the Group has contract liabilities of RON 48,392 thousand (31 December 2024: RON 97,786 thousand). These represent advance payments from customers for future contractual obligations for electricity delivery and supply.

Contract liabilities as at 31 December 2024 of RON 97,786 thousand were recognized as revenues during 2025 (2024: RON 41,720 thousand).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

12. OTHER INCOME

| 2025 | 2024
Grant income | 5,725 | 5,812
Compensations, fines and penalties from suppliers | 1,454 | 126,556
Gain from bargain purchase of subsidiaries (Note 30) | - | 25,728
Other income | 33,299 | 29,519
Total | 40.478 | 187.615

On 2 April 2024, the High Court of Cassation and Justice, through Decision no. 1852, has definitively ruled in favor of Hidroelectrica in relation to the litigation with the tax authorities whose subject was the annulment of the Decision on settling the preliminary tax appeal no. 406/18.12.2014, annulment of Tax Decision no. F-MC 851/21.01.2014, in amount of RON 214,385 thousand, as well as the reimbursement of the imposed amount. In July 2024, the imposed amount was compensated with the tax obligations for the year 2024. Additionally, the Group received tax interest of RON 122,843 thousand in September 2024, corresponding to the period between the enforcement of the imposed amount by the authorities and its compensation.

13. OPERATING EXPENSES

A. Turbined water

Turbined water represents the water used by the hydropower plants in order to generate electricity. The fee for turbined water established by the National Agency for Water Administration is RON 37 per MWh produced (2024: 37 RON/MWh).

B. Electricity purchased

The Group purchases electricity in order to fulfill the deficit between the electricity contracted for sales and the actual electricity produced or in order to cover the electricity needs of the supply segment.

In 2025, the Group purchased 2,209 GWh (2024: 802 GWh) for RON 911,358 thousand (2024: RON 208,848 thousand). The increase of electricity purchases in 2025 is mainly due to decrease of own production due to poor hidrology and increase in energy delivered under supply segment.

C. Transport and distribution of electricity

| 2025 | 2024
Injection of electricity produced in the national system | 39,174 | 62,360
Distribution of electricity supplied | 1,301,106 | 949,131
Transport of electricity supplied | 294,558 | 216,901
Total | 1,634,838 | 1,228,392

Tariffs for transport and distribution of electricity are regulated. Increase in transport and distribution costs in 2025 is determined by the increase in the regulated tariffs starting 1 January 2025 and the increase of energy delivered to final consumers.

D. Green certificates expenses

As of 31 December 2025, the Group incurred costs of RON 354,338 thousands (2024: RON 273,534 thousands)

cost of green certificates purchased for the supply segment under the legal obligation to purchase green certificates from renewable energy producers, based on annual targets or quotas established by law, which apply to the quantity of electricity purchased and supplied to final consumers.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

E. Tax for electricity producers

The tax for electricity producers is computed as 100% of net monthly average selling price in excess of RON 400 per MWh. (450/MWh till 31 March 2024) The tax on electricity producers was applicable until 31 March 2025..

In February 2025, the Government issued a new Emergency Ordinance (GEO no. 6/27.02.2025) extending the applicability of the tax for an additional 3 months, until June 30, 2025. Starting April 1, 2025, the tax for energy producers is calculated by applying a rate of 80% (reduced from 100%) to the difference between the average net monthly selling price and the price of 400 RON per MWh

The tax recorded by the Group in 2025 is RON 122,721 thousand (2024: RON 234,654 thousand).

F. Other operating expenses

| 2025 | 2024
Movement in provisions, net | 23,992 | 5,770
Local taxes | 145,283 | 82,879
Security | 32,888 | 29,737
Sponsorship | 8,780 | 13,561
Professional services | 16,820 | 12,696
Services related to abandoned constructions | 10,113 | 10,642
ANRE contribution | 9,720 | 12,244
AMEPIP contribution | 8,649 | 11,267
Penalties | 2,833 | 13,040
Loss on disposal of property, plant and equipment | 1,293 | 6,253
Other expenses | 147,419 | 109,151
Total | 407,790 | 307,240

The overall increase of local taxes by RON 64,404 as compared with prior year is due to the recording of tax on special constructions in amount of RON 51,133 thousand which came into force starting 2025.

Other expenses in amount of RON 147,419 thousand include among others expenses with licenses used for less than 1 year in amount of RON 22,572 thousand, royalties paid to the Ministry of Energy as part of the service concession agreement amounting RON 6,360 thousand, third party services amounting RON 23,367 thousand and management fees amounting RON 8,667 thousand.

G. Auditors remuneration

Remuneration of the statutory auditor, Ernst &Young Assurance Services SRL, for the audit services for the year 2025 (2024: KPMG Audit SRL), as well as the fees charged for non-audit services, are as follows:

| 2025 (EUR) | 2024 (EUR)
Contractual fee for the audits of the separate and consolidated financial statements prepared in accordance with OMFP no. 2844/2016 and of the consolidated financial statements prepared in accordance with IFRS-EU | 269,000 | 217,235
Contractual fee for the audit of the separate financial statements prepared in accordance with OMFP 1802/2014 for Hidroserv SA | 22,000 | -
Total audit fees | 291,000 | 217,235
Fees for non-audit services fees | 167,000 | 129,859
Total fees | 458,000 | 347,094

Non-audit services include reviews of interim condensed consolidated financial statements, limited assurance and agreed upon procedures.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

14. FINANCE RESULT

| 2025 | 2024
Interest income | 283,182 | 332,134
Other finance income | 42,647 | 9,891
Finance income | 325,829 | 342,025
Interest expense | (22,401) | (26,925)
Unwinding of non-current provisions | (65,864) | (58,476)
Gain or (loss) from foreign exchange differences | 1,842 | (58)
Finance expenses | (86,423) | (85,459)
Net finance result | 239,406 | 256,566

The decrease in interest income is generally due to the decrease in interest rates and decrease in deposits over the period.

The increase in other finance income are related to late payment penalties invoiced for outstanding balances as a result of a increase in the number of clients and their payment behavior.

15. EARNINGS PER SHARE

The calculation of earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

| 2025 | 2024
Profit attributable to the owners of the Group |  |
Profit for the year attributable to the owners of the Group | 3,369,694 | 4,127,916
Profit attributable to ordinary shareholders | 3,369,694 | 4,127,916
Weighted average number of ordinary shares (basic and diluted) |  |
Issued ordinary shares at 1 January | 449,802,567 | 449,802,567
Weighted average number of ordinary shares at 31 December | 449,802,567 | 449,802,567
Earnings per share (basic and diluted) RON/share | 7.49 | 9.18

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

16. EMPLOYEE BENEFITS

| 31 December 2025 | 31 December 2024
Defined benefit plans | 109,351 | 105,166
Other long-term employee benefits | 47,717 | 45,310
Salaries payable | 83,066 | 77,612
Social security contributions | 31,788 | 30,357
Tax on salaries | 5,649 | 5,398
Other | 17,874 | 12,034
Total | 295,445 | 275,877
- Current | 155,541 | 147,281
- Non-current | 139,904 | 128,596

Current portion of employee benefits is as follows:

| 31 December 2025 | 31 December 2024
Defined benefit plans | 12,847 | 14,513
Other long-term employee benefits | 6,650 | 8,312
Salaries payable | 83,066 | 77,612
Social security contributions | 31,788 | 30,357
Tax on salaries | 5,649 | 5,398
Other | 15,541 | 11,089
Total | 155,541 | 147,281

Post-employment benefits (defined benefit plans)

In accordance with the Collective Labour Agreements, the Group provides cash benefits to employees at retirement depending on the years of service in the Company, Hidroserv and UCMH, as follows:

| 31 December 2025 | 31 December 2024
Up to 10 years | 1 | 1
Between 10 and 25 years | 3 | 3
More than 25 years | 6 | 6

Benefits in kind

Also, in accordance with Collective Labour Agreements, the Group provides benefits in kind consisting of free electricity (within the limit of 1,200 kWh annually) to employees retired from the Company and from Hidroserv subsidiary subject to meeting certain conditions (at least 15 cumulative years of seniority in the Company, Hidroserv or other companies operating in the electricity sector or at least 10 consecutive years of service in such companies before retirement). In the event of the retired person's death, the surviving spouse has the right to receive the same benefit until the time of their remarriage or death.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Other long-term employee benefits

In accordance with the Collective Labour Agreements, the Group provides cash benefits to the Company’s and Hidroserv’s employees depending on seniority in the companies, as follows:

Seniority | Number of monthly gross base salary
31 December 2025 | 31 December 2024
20 years | 1 | 1
25 years | 2 | 2
30 years | 3 | 3
35 years | 4 | 4
40 years | 5 | 5
45 years | 6 | 6

(i) Movement in the defined benefit liability and other long-term employee benefits

The following tables show the reconciliation between the opening and closing balance for the defined benefit liability and other long-term employee benefits and their components. There are no benefit plan assets.

Defined benefit liabilities | 2025 | 2024
Balance at 1 January | 105,166 | 98,154
Included in profit or loss |  |
Current service cost | 4,944 | 4,606
Past service cost | 1,077 | -
Interest cost | 7,061 | 5,756
Benefits paid | (5,652) | (8,705)
Included in other comprehensive income |  | -
Actuarial losses/(gains) | (3,246) | 5,355
Balance at 31 December | 109,350 | 105,166

Other long-term employee benefits | 2025 | 2024
Balance at 1 January | 45,310 | 44,163
Included in profit or loss |  |
Current service cost | 2,503 | 2,292
Past service cost | 1,068 | -
Interest cost | 3,346 | 2,722
Actuarial losses/(gains) | 7,409 | 6,395
Benefits paid | (11,919) | (10,262)
Balance at 31 December | 47,717 | 45,310

(ii) Actuarial assumptions

The following are the main actuarial assumptions at each reporting date:

(a) Macroeconomic assumptions:

- the inflation rate used as at 31 December 2025 and 2024 is based on the forecast of the National Bank of Romania (“NBR”) for the inflation for RON, as follows:

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Year | Valuation date 31 December 2025 | Valuation date 31 December 2024 |
2025 | n/a | 3.88% |
2026 | 6.5% | 3.33% |
2027 | 3.07% | 2.5% |
2028+ | 2.5% | 2.5% |

- discount rate used was obtained from the interest rates for RON published by the European Insurance and Occupational Pensions Authority (EIOPA) as follows:

Year | Valuation date 31 December 2025 | Valuation date 31 December 2024 |
2025 | n/a | 6.671% |
2026 | 6.111% | 6.902% |
2027 | 6.240% | 7.074% |
2028 | 6.365% | 7.198% |
2029+ | 6.481%-4.059% (avg. 5.046%) | 7.198%-4.151% (avg. 5.295%) |

- increase in electricity price per kWh in line with the inflation rate. The electricity price used in the actuarial calculation is RON 1.0045/kWh as at 31 December 2025 (31 December 2024: RON 0.833/kWh);

- mortality rate used on is the rate published by the National Institute of Statistics for the last 10 years as of the valuation date.

- taxes and social contributions are those in force at the reporting dates.

  (b) Group specific assumptions:

- growth rate of gross salaries used as at 31 December 2025 and 31 December 2024 is a rate equal to the inflation rate in the following years;

- employee’ turnover rate used as at 31 December 2025 is based on annual averages of employee’ turnover for the last 8 years differentiated by age and gender (31 December 2024: last 8 years average). The weighted average employee’ turnover rate used as at 31 December 2025 is 1.24% (31 December 2024: 0.99%).

(iii) Sensitivity analysis

The significant actuarial assumptions used for the determination of the defined benefits and other long-term employee benefits obligations are discount rate, expected salary increase and employee turnover. The sensitivity analysis below shows the effect on employee benefit liabilities – increase/(decrease), and was determined based on the reasonable changes in the respective assumptions at the end of the reporting periods, while other assumptions remain constant.

| 31 December 2025 | 31 December 2024
| Increase | Decrease | Increase | Decrease
Discount rate (100 bp) | (11,603) | 13,492 | (10,914) | 12,699
Employee turnover ratio (100 bp) | (8,569) | 6,271 | (7,523) | 4,672
Annual salary increase rate (100 bp) | 8,373 | (7,495) | 7,450 | (6,698)

The sensitivity analysis presented above may not be representative for the actual change in the benefit obligation, as it is unlikely that changes in the assumptions would occur independent from each other, while certain assumptions may be correlated. In the sensitivity analysis above, the present value of the benefit obligation was calculated using the projected unit credit method at the end of the reporting period, which is the same as the one applied to calculate the obligations recognized in the statement of financial position.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Employee benefits expense

|  | 2025 | 2024
Average number of employees |  | 5,200 | 5,083
Number of employees at 31 December |  | 5,277 | 5,236
|  | 2025 | 2024
Salaries and other remuneration |  | 933,261 | 812,669
Social security contributions |  | 40,367 | 33,683
Meal tickets |  | 45,970 | 39,045
Total |  | 1,019,598 | 885,397

17. INCOME TAX

In the determination of the current and deferred tax the Group takes into account the impact of uncertain tax positions (see Note 32). This assessment relies on estimates and assumptions and may involve a series of judgments about future events.

The Group considers that the accounting records for income tax due are appropriate for all open tax years, based on assessment made by management taking into account various factors, including the interpretation of tax legislation and previous experience. New information may become available that causes the Group to change its judgement regarding the adequacy of the existing tax liabilities; such changes to tax liabilities will have impact in tax expense in the period that such determination is made (Note 32).

The increase of current tax liability by RON 120,312 thousand as compared with prior period is due to higher income tax payable related to 4th quarter of 2025 as compared with the similar period from 2024.

(a) Amounts recognized to profit or loss

| 2025 | 2024
Current tax expense | 652,514 | 759,365
Deferred tax benefit | (63,763) | (42,686)
Total | 588,751 | 716,679

(b) Amounts recognized in OCI

| 2025 | 2024
| Before tax | Tax (expense)/ benefit | Net | Before tax | Tax (expense)/ benefit | Net
Items that will not be reclassified to profit or loss |  |  |
Impairment of PPE recognized in revaluation reserve, net of tax | (528) | - | (528) | (770) | - | (770)
Remeasurement of defined benefit liability | (3,243) | 519 | (2,724) | (5,357) | 857 | (4,500)
TOTAL | (3,771) | 519 | (3,252) | (6,127) | 857 | (5,270)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

(c) Reconciliation of effective tax rate

| 2025 | 2024
Profit before tax |  | 3,958,445 |  | 4,844,595
Tax using the Group’s domestic tax rate | 16.0% | 633,351 | 16.0% | 775,135
Global minimum tax | 0.2% | 7,822 | 0.2% | 8,196
Tax effect of: |  |  |  |
- Non-deductible expenses | 0.3% | 13,085 | 0.4% | 17,775
- Tax-exempt income | (0.00%) | (2,306) | (0.00%) | (1,920)
- Tax incentives | (0.02%) | (69,204) | (0.02%) | (82,010)
- Deduction of legal reserves | (0.01%) | - | (0.01%) | (497)
- Temporary differences previously not recognized | 0.00% | 6,003 | - | -
Income tax | 14.8% | 588,751 | 14.8% | 716,679

In 2025 and 2024, tax incentives refer to reinvested profit tax facility, positive tax incentive, increase in equity tax incentive and sponsorships granted. The main increase is due to the increase in tax incentive for equity preservation.

According to the Fiscal Code, certain revaluation reserves are subject to income tax at their distribution as dividends, if the revaluation reserves were previously tax deducted.

(d) Global minimum top-up tax

The Group qualifies as a large group at the national level and is subject to the global minimum top-up tax according to Law no. 431/2023. The Law transposes into national legislation the provisions of Directive 2523/2022 regarding the establishment of a minimum tax level ("Directive 2523"), which includes the guidelines from the Pillar Two of the "Global anti-base erosion model rules" (called "GloBE rules ”) issued by the OECD/G20 Inclusive Framework on BEPS as well as the Administrative Guidelines for the GloBE rules. For the year 2025, the Group has recorded an expense and a long-term liability regarding the additional top-up tax amounting to RON 7,822 thousand.

(e) Movement in deferred tax balances

| Net balance at 1 January 2025 | Recognized in profit or loss | Reconized in OCI | Net balance at 31 December 2025 | Deferred tax assets | Deferred tax liabilities
Property, plant and equipment and intangible assets | 1,709,600 | (44,908) |  | 1,664,692 | - | 1,664,692
Provisions | (156,846) | (14,156) |  | (171,002) | (171,002) | -
Employee benefits | (24,273) | (655) | 519 | (24,408) | (24,408) | -
Leasing liabilities | (12,697) | (637) |  | (13,334) | (13,334) | -
Trade receivables | (49,322) | (3,127) |  | (52,449) | (52,449) | -
Inventories | (6,350) | (280) |  | (6,630) | (6,630) | -
Tax loss carried forward | - | 0 |  | - | - | -
Total deferred tax liabilities (assets) before offset | 1,460,112 | (63,763) | 519 | 1,396,869 | (267,823) | 1,664,692
Offset |  |  |  |  | 267,283 | (267,283)
Net deferred tax liabilities (assets) |  |  |  |  |  | 1,396,869

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

| Net balance at 1 January 2024 | Recognized in profit or loss | Reconized in OCI | Net balance at 31 December 2024 | Deferred tax assets | Deferred tax liabilities
Property, plant and equipment and intangible assets | 1,741,524 | (31,924) | - | 1,709,600 | - | 1,709,600
Provisions | (150,583) | (6,263) | - | (156,846) | (156,846) | -
Employee benefits | (22,771) | (645) | (857) | (24,273) | (24,273) | -
Leasing liabilities | (14,095) | 1,398 | - | (12,697) | (12,697) | -
Trade receivables | (43,514) | (5,808) | - | (49,322) | (49,322) | -
Inventories | (6,491) | 141 | - | (6,350) | (6,350) | -
Tax loss carried forward | (415) | 415 | - | - | - | -

Total deferred tax liabilities (assets) before set-off | 1,503,655 | (42,686) | (857) | 1,460,112 | (249,488) | 1,709,600
Set-off tax |  |  |  |  | 249,488 | (249,488)
Net deferred tax liabilities (assets) |  |  |  |  | - | 1,460,112

(f) Potential consequences on income tax

The Group may have potential consequences on corporate income tax that may result from the payment to shareholders of dividends from revaluation reserves transferred to retained earnings which, according to tax law, are taxed at the time of change of destination, to the extent they were previously tax deducted. Thus, the distribution of dividends from such reserves will generate additional income tax. The Group has such reserves transferred in retained earnings at 31 December 2025, which following the distribution would generate additional income tax for the Group of RON 27,229 thousand (31 December 2024: RON 18,837 thousand).

The potential tax effect of revaluation reserves taxable at change in distribution (at 16% tax rate) that were not yet transferred to retained earnings, amount to RON 346,537 thousand at 31 December 2025 (RON 354,931 thousand at 31 December 2024).

18 .CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents

| 31 December 2025 | 31 December 2024
Bank accounts | 1,005,233 | 982,016
Bank deposits with a maturity below 3 months | 179,928 | 598,595
Petty cash | 158 | 157
Cash equivalents | 2,415 | 849
Total | 1,187,734 | 1,581,617

Restricted cash

As at 31 December 2025, restricted cash includes a collateral deposit of RON 23,057 thousand (31 December 2024: RON 21,057 thousand) at Banca Comerciala Romana for issuance of bank guarantee in favor of OPCOM in relation to the transactions on day-ahead market. During the period until maturity the Group does not have access to this deposit. In addition, the restricted cash includes consigned deposits for dividend payments and consigned cash for compensations to be paid for expropriations.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

19. INVESTMENTS IN DEPOSITS

| 31 December 2025 | 31 December 2024
| Current | Non-current | Current | Non-current
Bank deposits with maturity less than 1 year held for investment purposes | 3,732,016 | - | 3,475,933 | -
Total | 3,732,016 | - | 3,475,933 | -

Bank deposits are short-term deposits with maturity between 3 to 12 months held for investment

purposes rather than for short term cash commitments. The average interest rate on term deposits was 6.74 % per year in 2025 (2024: 5.89% per year).

20. TRADE RECEIVABLES

| 31 December 2025 | 31 December 2024
Trade receivables – generation segment (wholesale) | 212,558 | 349,668
Trade receivables – supply segment (retail) | 1,749,816 | 1,520,397
Impairment allowance | (263,996) | (236,377)
Total | 1,698,378 | 1,633,688

The unbilled revenues included in trade receivables amounts to RON 685,844 thousand gross at 31 December 2025, representing 35% of total gross trade receivables (RON 669,127 thousand at 31 December 2024, representing 36% of total gross trade receivables), out of which RON 595,652 thousand gross relate to supply segment (RON 420,642 thousand as at 31 December 2024).

Of the invoiced receivables at 31 December 2025, RON 182,739 thousand represent payment rescheduled receivables (31 December 2024: RON 333,510 thousand).

The movement of impairment loss for trade receivables is as follows:

| 2025 | 2024
Balance at 1 January | 236,377 | 157,253
Impairment loss recognized | 59,279 | 81,665
Impairment loss reversed | (31,660) | (2,541)
Balance at 31 December | 263,996 | 236,377

Trade receivables ageing analysis is disclosed in Note 29. Trade receivables due from related parties are disclosed in Note 33.

21. OTHER ASSETS

| 31 December 2025 | 31 December 2024
| Current | Non-current | Current | Non-current
Payments made in connection with uncertain tax treatments | - | 63,612 | - | 63,612
Payments in advance and prepayments | 55,150 | 305,961 | 14,104 | 208,558
Value added tax receivable | 1,950 | - | 892 | -
Other assets | 23,693 | 4,761 | 15,833 | 4,590
Impairment loss on other assets | (15,833) | - | (6,903) | -
Total | 64,960 | 374,334 | 23,926 | 276,760

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

The movement of impairment losses for other receivables is as follows:

| 2025 | 2024
Balance at 1 January | 6,903 | 9,691
Impairment loss recognized | 10,486 | -
Impairment loss used | - | (2,126)
Impairment loss reversed | (1,556) | (662)
Balance at 31 December | 15,833 | 6,903

Payments made in connection with uncertain tax treatments

Details regarding the payments made in connection with uncertain tax position are presented in Note 32.1 a).

The Group recognized these payments as an asset based on IFRIC 23 Uncertainty over Income Tax Treatments because they will either be refunded if the Group is successful in the litigations related to the contingent liability or they will be used to pay the potential liability in case of loss of the dispute.

Non-current payments in advance mainly represent advance payment for the AHE Vidraru overhaul contract signed in June 2024 and the comparative figures were reclassified accordingly, from current prepayments in line with their nature. In addition, the balance as of 31 December 2025 include advance payment for CHE Stejaru and Lotru pumping stations for which related contracts were signed in 2025.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

22. PROPERTY, PLANT AND EQUIPMENT

| Land and land improvements | Buildings and special constructions and installations | Machinery, equipment and other items | Assets under construction | TOTAL
GROSS CARRYING AMOUNT |  |  |  |  |
Balance at 1 January 2024 | 524,950 | 16,344,378 | 2,925,993 | 4,245,198 | 24,040,519
Acquisitions through business combinations (Note 30) | 13,174 | 28,350 | 24,921 | - | 66,445
Additions | 4,434 | 726 | 26,290 | 275,867 | 307,317
Transfers from assets under construction | - | 72,911 | 151,514 | (224,425) | -
Disposals | - | (1,049) | (7,214) | (7,225) | (15,488)
Balance at 31 December 2024 | 542,558 | 16,445,316 | 3,121,504 | 4,289,415 | 24,398,793
Balance at 1 January 2025 | 542,558 | 16,445,316 | 3,121,504 | 4,289,415 | 24,398,793
Change in decommissioning | - | (344) | - | - | (344)
Additions | 4,543 | 1,574 | 7,605 | 575,220 | 588,942
Transfers from assets under construction | - | 69,868 | 90,753 | (160,621) | -
Transfers to intangible assets | - | - | - | (17,574) | (17,574)
Disposals | (7,423) | (3,609) | (1,181) | (1,017) | (13,230)
Balance at 31 December 2025 | 539,678 | 16,512,805 | 3,218,681 | 4,685,423 | 24,956,587
ACCUMULATED DEPRECIATION |  |  |  |  |
Balance at 1 January 2024 | 1,428 | 22,135 | 10,528 | - | 34,091
Depreciation charge | 801 | 412,914 | 489,414 | - | 903,129
Accumulated depreciation of disposals | - | (6) | (6,286) | - | (6,292)
Balance at 31 December 2024 | 2,229 | 435,043 | 493,656 | - | 930,928
Balance at 1 January 2025 | 2,229 | 435,043 | 493,656 | - | 930,928
Depreciation charge | 1,059 | 413,787 | 463,729 | - | 878,575
Accumulated depreciation of disposals | - | (1,094) | (489) | - | (1,583)
Balance at 31 December 2025 | 3,288 | 847,736 | 956,896 | - | 1,807,920
ACCUMULATED IMPAIRMENT LOSSES |  |  |  |  |
Balance at 1 January 2024 | - | - | - | 3,579,774 | 3,579,774
Impairment loss | - | - | 3 | 109,636 | 109,639
Reversal of impairment loss | - | - | - | (70,042) | (70,042)
Balance at 31 December 2024 | - | - | 3 | 3,619,368 | 3,619,371
Balance at 1 January 2025 | - | - | 3 | 3,619,368 | 3,619,371
Impairment loss | - | - | 683 | 101,240 | 101,923
Reversal of impairment loss | - | - | - | (2,049) | (2,049)
Balance at 31 December 2025 | - | - | 686 | 3,718,559 | 3,719,245
NET CARRYING AMOUNT |  |  |  |  |
Balance at 1 January 2024 | 523,522 | 16,322,243 | 2,915,465 | 665,424 | 20,426,654
Balance at 31 December 2024 | 540,329 | 16,010,273 | 2,627,845 | 670,047 | 19,848,494
Balance at 31 December 2025 | 536,389 | 15,665,071 | 2,261,099 | 966,864 | 19,429,425

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Property, plant and equipment in use

The Group's property, plant and equipment include mainly special constructions, namely hydro-power plants, energy pumping stations, micro hydro-power plants, floodgates, as well as hydro-aggregates, equipment and installations and wind turbines. The Group operates 188 hydro-power plants with an installed capacity of 6,372.403 MW, out of which 5 pumping stations with an installed capacity of 91.5 MW, and 36 wind turbines with an installed capacity of 108 MW.

According to the applicable legislation, the Group must obtain environmental permits to carry out its activities. Starting in 2021, the Group has obtained environmental permits that remain valid as long as annual endorsements are secured for them. The Group has the obligation to request annual endorsements from the Competent Authority for Environmental Protection (ACPM). In 2025 and 2024, annual endorsements were obtained for all permits subject to these regulations, except for facilities that are not in use.

The conditions set forth in the environmental permits include compliance with environmental legislation applicable to wind and hydro-power facilities, monitoring of environmental factors, and the frequency of reporting monitoring results to ACPM. In order to monitor the environmental factors, the Group performs measurements of the physical and chemical quality indicators of reservoir water, industrial and wastewater, as well as noise level measurements at site boundaries. In 2024, all required measurements were performed in accordance with regulatory documents, and no legal limits were exceeded. The Group expects that the legal limits of the indicators as provided by the current legislation and regulatory acts will not be exceeded in 2025 as well.

Right-of-use assets

Property, plant and equipment include right-of-use assets mainly in relation to the Group's headquarters, land of the wind park and the car fleet of RON 63,689 thousand as at 31 December 2025 (31 December 2024: RON 75,375 thousand) classified in Land, Buildings and installations and Machinery, equipment and other items.

| 2025 | 2025 | 2025 | 2024 | 2024 | 2024
| Land and buildings | Vehicles | Total | Land and buildings | Vehicles | Total
Balance at 1 January | 91,277 | 18,323 | 109,600 | 89,999 | 6.360 | 96,359
Additions | 1,780 | 349 | 2,129 | 1,278 | 18,210 | 19,488
Disposals | (965) | (429) | (1,394) | - | (6,247) | (6,248)
Balance at 31 December | 92,092 | 18,243 | 110,335 | 91,277 | 18,323 | 109,601
Balance at 1 January | (32,441) | (1,784) | 34,226 | 23,564 | 6,324 | 29,888
Depreciation | (9,153) | (4,403) | 13,557 | 8,876 | 1,708 | 10,586
Disposals | - | - | (1,135) | - | (6,247) | (6,247)
Balance at 31 December | 40,629 | 6,019 | 46,648 | 32,441 | 1,784 | 34,226
Net book value | 51,464 | 12,224 | 63,688 | 58,836 | 16,359 | 75,375

Revaluation of property, plant and equipment

Property, plant and equipment, except for assets under construction and right-of-use assets, were revalued by an independent valuation expert at 31 December 2023.

The fair value measurement of property, plant and equipment is classified as Level 3 as inputs used for valuation techniques, which have had a significant effect on the recorded fair value, are not based on observable market data. The fair value of the Group’s land was estimated using the market comparison approach, the method of direct comparison. The valuation technique used to determine the fair value of the special constructions, the net reconstruction cost was used given that no comparable information were available on the market (include hydro-power facilities and other highly specialized items, with no such works being undertaken in the last decades in Romania). Physical depreciation was determined as the ratio of remaining useful life to the economic useful life of each asset applied to the gross replacement cost.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

For the general purpose construction items, the valuation expert determined the net replacement cost (i.e. the cost to replace an asset with another comparable asset available in the market), computed as gross replacement cost, less physical and external depreciation (functional depreciation is accounted for when computing the gross replacement cost – i.e. the replacement cost does not include the cost of specific functionalities that are not specific to the asset subject to valuation).

Based on the assessment conducted as of 31 December 2025 with the involvement of an independent specialist which corroborates the evolution of the construction cost index and other macroeconomic indicators with the forecasted electricity production from hydro-power plants and the forecasted curve of selling price, the Group’s management estimate is that the net carrying amount of property, plant, and equipment accounted for using the revaluation model approximates the fair value as of the balance sheet date.

Assets under construction

As at 31 December 2025, the Group has assets under construction with a gross carrying amount of RON 4,685,422 thousand (31 December 2024: RON 4,289,415 thousand) for which it recognized accumulated impairment losses of RON 3,718,559 thousand (31 December 2024: RON 3,619,368 thousand).

The main assets under construction relate to the construction or rehabilitation of the following hydro-power projects or plants: construction of hydro- power plants – Bumbesti – Livezeni, Siriu – Surduc, Rastolita, Cornetu-Avrig, Pascani, Cerna Belareca, Cerna-Motru-Tismana, Bistra, Cosmesti-Movileni, Valea Sadului, Fagaras Hoghiz, Runcu Firiza; and rehabilitation of hydro-power plants – CHE Stejaru, CHE Slatina.

These assets under construction include mainly investments with complex functions, represented by historical investment objectives regarding hydropower development schemes with social functions (described below) which have been designed to have a secondary energy function. The primary objectives of these investment objectives are rational and safe water supply management, including:

Limitation of flooding effects;

- Protection of population, communities and agricultural land;

- Water supply to riverain communities;

- Insuring water reserves to supply population and industry;

- Insuring flow for irrigation during periods of drought;

- Retaining solid flow in the water accumulations.

The social functions described above are specific to public authorities, which are not-for-profit entities. In fact, many of these investments belonged to the “Romanian Waters” National Agency, the governmental body concerned with regional planning and water management, in the past. Hidroelectrica SA is incorporated under Companies Law no. 31/1990 and is not a not-for-profit organization. In addition, Hidroelectrica does not benefit from public funds to complete such social investments, which, if continued to be funded, would impair shareholder value.

These “historical” hydro-power projects were mainly initiated between 1982 and 1989, following a number of Decrees of the State Council, and were financed by public funds, through the ministries involved as owners. After 1989, some of these projects were continued by the Romanian Waters National Agency, financed with public funds, before they were transferred to Hidroelectrica. The economic and energy conditions have significantly changed compared to 1980s and 1990s, mainly due to the shut down of the state centralized investment fund, and the beneficiaries of these complex works ceased funding the specific works included in the hydro-power projects, while the costs of these works remained to be incurred by Hidroelectrica.

After Hidroelectrica entered insolvency in June 2012 and in the view of the planned future listing of the Company’s shares, the legal administrators strongly prioritized the Company focus on profit and rational cash management.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

In 2017 the Company contracted a specialized engineer, ISPH SA, to estimate the costs of abandonment, conservation and securing the works performed on the investments with complex functions. In 2018, based on the analysis of costs and benefits, the management decided to abandon certain investment objectives, as presented below and in Note 28.

For the investment objectives for which the decision to abandon was taken, impairment losses were recognized at the amount of their total gross carrying amount. The gross carrying amount of abandoned investments is RON 590,890 thousand as at 31 December 2025 and 31 December 2024. For these investment objectives the Group recognized provisions for decommissioning and site restoration (see Note 28).

Project | Purpose | Gross carrying amount | Accumulated impairment | Net carrying amount
Borca – Poiana Teiului | Galu Step | 9,023 | (9,023) | -
Cosmesti – Movileni | Cosmesti Step | 93,207 | (93,207) | -
Surduc – Siriu | Ciresu-Surduc Step | 17,345 | (17,345) | -
Fagaras-Hoghiz | Fagaras – Hoghiz | 174,950 | (174,950) | -
Runcu – Firiza | Runcu Firiza | 87,807 | (87,807) | -
Dambovita – Clabucet | Dambovita – Clabucet | 34,762 | (34,762) | -
Valea Sadului-Vadeni | Valea Sadului-Vadeni | 165,209 | (165,209) | -
Others |  | 8,587 | (8,587) | -
Total |  | 590,890 | (590,890) | -

In 2025 and 2024 impairment losses were recognized for assets under construction, other than the abandoned assets mentioned above, as follows:

Project | Gross carrying amount 31 Dec 2025 | Accumulated impairment loss 31 Dec 2025 | Net book value 31 Dec 2025 | Impairment loss/(reversal) 2025
AHE Bumbesti-Livezeni | 806,577 | 446,184 | 360,393 | 23,409
CHE Racovita | 62,796 | 62,796 | - | -
AHE Rastolita | 736,807 | 736,807 | - | 13,958
AHE Siriu-Surduc | 769,692 | 677,544 | 92,148 | 28,402
AHE Pascani | 470,422 | 470,422 | - | 34,806
AHE Cerna-Belareca | 319,451 | 319,451 | - | 501
AHE Cornetu-Avrig | 108,391 | 107,100 | 1,291 | -
Cerna Motru Tismana – stage II | 73,618 | 72,943 | 676 | -
Lac redresor Sebes | 59,958 | 59,958 | - | -
Bistra | 44,293 | 37,304 | 6,989 | -
Rehabilitation of Portile de Fier II | 45,265 | 45,265 | - | -
Others | 67,131 | 66,615 | 516 | -
Total | 3,564,401 | 3,102,389 | 462,012 | 101,077

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Project | Gross carrying amount 31 Dec 2024 | Accumulated impairment loss 31 Dec 2024 | Net book value 31 Dec 2024 | Impairment loss/(reversal) 2024
AHE Bumbesti-Livezeni | 789.333 | (422.775) | 366,558 | (28,314)
CHE Racovita | 62,781 | (62,781) | - | -
AHE Rastolita | 722,849 | (722,849) | - | 68,778
AHE Siriu-Surduc | 750,191 | (666,488) | 83,703 | (33,447)
AHE Pascani | 435,616 | (435,616) | - | 39,133
AHE Cerna-Belareca | 318,950 | (318,950) | - | 685
AHE Cornetu-Avrig | 108,262 | (106,985) | 1,277 | 1,036
Cerna Motru Tismana – stage II | 72,943 | (72,943) | - | -
Lac redresor Sebes | 56,363 | (56,363) | - | -
Bistra | 45,013 | (45,013) | - | 4
Rehabilitation of Portile de Fier II | 45,265 | (45,265) | - | -
Others | 78,572 | (72,450) | 6,122 | (8,281)
Total | 3,486,138 | (3,028,478) | 457,660 | 39,594

Determination of recoverable amounts

The determination of the recoverable amounts of the assets under construction above was based on a series of assumptions related to the feasibility of completion of the investments and the projected cash flows.

The significant assumptions used in estimating the recoverable amount are presented below. The estimates were based both on historical data, as well as on management’s assessment of future trends related to electricity prices, margins, costs to complete and climate related risk:

Assumptions | Method for building the estimates
31 December 2025 | 31 December 2024
Cost to complete the projects, annual cash flows to completion and the date of commissioning | based on the contracts concluded with the suppliers for each project or estimation made by management (see below)
Installed capacities | based on technical data for each project (see below)
Capacity utilization rate | 80% of the production capacity on average (based on Group average historical electricity production and also adjusted downwards for addressing climate risks.) | 80% of the production capacity on average (based on Group average historical electricity production and also adjusted downwards for addressing climate risks.)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Electricity prices | Based on reports prepared by external consultants for the period 2025-2060, adjusted for certain assumptions; 2% annual price increase (long-term inflation rate) for the period 2061 – 2080 | Based on reports prepared by external consultants for the period 2025-2060, adjusted for certain assumptions; 2% annual price increase (long-term inflation rate) for the period 2061 – 2080
Operating expenses | For Bumbești Livezeni, Răstolița, Siriu Surduc, and Pașcani projects, the Group has determined future cash flows by estimating the operating expenses specific to each project (expenses for turbinated water, employee benefits, maintenance expenses, material expenses), as well as indirect expenses. | For Bumbești Livezeni, Răstolița, Siriu Surduc, and Pașcani projects, the Group has determined future cash flows by estimating the operating expenses specific to each project (expenses for turbinated water, employee benefits, maintenance expenses, material expenses), as well as indirect expenses.
Useful life | 50 years | 50 years
Discount rate before tax | 10.6% | 10.4%

The Group’s estimates of the costs necessary to complete the projects under construction, as well as the annual production capacities to be installed per year, are as follows:

Year | Estimated costs to complete | Installed capacity per year (MW) |
| 31 December 2025 | 31 December 2024 | 31 December 2025 | 31 December 2024
2025 | - | 160,975 | - | 30
2026 | 194,890 | 520,670 | - | 10
2027 | 495,949 | 667,949 | - | 207
2028 | 810,022 | 335,701 | 404 | 222
2029 | 187,584 | 118,145 | 152 | 65
2030 | 198,112 | 10,000 | 65 | -
Total | 1,886,556 | 1,813,440 | 621 | 534

The Group estimated that approximately 88% of the additional generation capacity will be installed by the end of 2028.

The impairment losses recognized were mainly driven by the change in the assumptions used on future prices of electricity, change in discount rate, as well as by the update of the work schedule until completion.

The main variations in the recoverable amount/ impairment loss in 2025 and 2024 refer mainly to the following investment projects:

- Bumbesti-Livezeni project, with a net carrying amount of RON 360,393 thousand as at 31 December 2025 (31 December 2024: RON 366,558 thousand), for which the works were suspended in 2017 due to the fact that the construction and environmental authorisations were cancelled as a result of litigation lost by the Company with non-profit organizations. The project started in 2003, while in 2005 the National Park “Defileul Jiului” was ruled as protected area; therefore the Company needs to reassess the impact on the environment and obtain new authorisations.

  The additional impairment of RON 23,408 thousand in 2025 for Bumbesti-Livezeni project was driven by the change in main assumptions (discount rate, prices of energy and inflation).

  The Group is currently in process of obtaining new construction and environmental authortisations in order to continue the works. In 2022, the authorities informed the Group that the documentation submitted does not comply with the legal requirements and needs to be revised.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

In 2024, the revised environmental documentation was re-submitted to the authorities and public consultations were held. Management believes that there are no issues that would prevent the Company to obtain the authorizations and complete the project. Consequently, the recoverable value of the project was determined considering that the project will be completed in 2028.

- Siriu-Surduc project with a net carrying amount of RON 92,147 thousand as at 31 December 2025 (31 December 2024: RON 83,703 thousand), for which works were suspended due to the fact that the construction and environmental authorizations for the construction of the dam were cancelled as a result of litigation lost by the Company with non-profit organizations. The project started in 1983 and comprises 3 hydropower plants, out of which one was put in function in 1988, for another one the management decided to abandon the project and the third one is under construction, with the works suspended until revision of the impact on the environment and obtain new authorisations.

The additional impairment of RON 28,401 thousand in 2025 for Siriu-Surduc project was driven by the change in main assumptions (discount rate, prices of energy and inflation).

Management believes that there are no issues that would prevent the Company to obtain the authorisations and complete the project. Consequently, the recoverable value of the project was determined considering that the project will be completed in 2028.

Sensitivity analysis

The sensitivity analysis below shows the effect on profit before tax, and was determined based on the reasonable changes in key assumptions at the end of the reporting periods, while other assumptions remain constant.

Discount rate before tax | Increase/ (decrease) of Profit before tax
100 bp increase | 100 bp decrease
2025 | (108,651) | 135,358
2024 | (121,363) | 154,595

Operating expenses | Increase/ (decrease) of Profit before tax
5% increase | 5% decrease
2025 | (10,124) | 10,124
2024 | (13,403) | 13,403

Electricity prices | Increase/ (decrease) of Profit before tax
5% increase | 5% decrease
2025 | 62,844 | (62,844)
2024 | 89,417 | (89,417)

Capacity utilization rate | Increase/ (decrease) of Profit before tax
500 bp increase | 500 bp decrease
2025 | 62,844 | (62,844)
2024 | 71,593 | (71,442)

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

23. CAPITAL AND RESERVES

(a) Share capital

| 31 December 2025 | 31 December 2024
Nominal share capital | 4,498,026 | 4,498,026
Inflation adjustments in accordance with IAS 29 | 1,028,872 | 1,028,872
Total | 5,526,898 | 5,526,898

Until 31 December 2003, the share capital in nominal terms was restated in accordance with IAS 29 "Financial Reporting in Hyperinflationary Economies", the related adjustments being recognized against retained earnings.

As at 31 December 2025 and 31 December 2024, the authorized, subscribed share capital of the Company is divided into 449,802,567 ordinary shares with a nominal value of RON 10 per share. The shareholders are entitled to dividends and each share grants a voting right.

| 31 December 2025 | 31 December 2024
Shareholders | Number of shares | % | Number of shares | %
Ministry of Energy | 360,094,390 | 80.0561% | 360,094,390 | 80.0561%
Legal persons | 75,600,136 | 16.8074% | 73,287,787 | 16.2933%
Individuals | 14,108,041 | 3.1365% | 16,420,390 | 3.6506%
Total | 449,802,567 | 100% | 449,802,567 | 100%

(b) Revaluation reserve

The reconciliation between opening balance and closing balance of the revaluation reserve is as follows:

| 2025 | 2024
Balance at 1 January | 11,548,962 | 12,038,616
Transfer of revaluation reserve to retained earnings following depreciation and disposal of property, plant and equipment, net of tax | (464,690) | (488,884)
Revaluation reserve adjustments on impairment of property, plant and equipment | (528) | (770)
Revaluation of property, plant and equipment | - | -
Deferred tax related to revaluation reserve | - | -
Balance at 31 December | 11,083,763 | 11,548,962

(c) Other reserves

Other reserves include:

- legal reserve of RON 928,970 thousand (31 December 2024: RON 928,970 thousand), set-up annually at each Group company level as 5% of the profit before tax until the total legal reserve reach 20% of the paid-up nominal share capital. Legal reserves are mandatory, are deductible for income tax purposes and are not distributable.

- Other non-distributable reserves of RON 97,000 thousand at 31 December 2025 and 2024, set-up in 2006 based on Government Emergency Ordinance no. 89/2004.

(d) Dividends

On 29 April 2025, the Shareholders General Meeting approved the distribution of dividends from the 2024 profit of RON 4.043.229 thousand, representing 100% of the 2024 net profit eligible for distribution as per statutory separate financial statements of the Company.

The value of the distributed dividends per share is 8.99 RON/share (2024: 13.99 RON/share).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Liabilities in relation to dividends include:

| 31 December 2025 | 31 December 2024
Dividends payable | 6,452 | 5,183
Tax on dividends | 285 | 470
Total | 6,737 | 5,653

Romanian companies may distribute dividends from statutory earnings only, as per separate financial statements prepared in accordance with Romanian accounting regulations.

(e) Capital management

The capital management of the Group is significantly influenced by the regulations. The distribution of dividends is governed by special regulation, including the Government Ordinace no. 64/2001, according to which, in the case of companies wholly or majority-owned by the State, minimum 50% of the accounting profit shall be distributed as dividends, unless otherwise provided by special laws.

The Groups’ policy is to maintain a strong capital base as to maintain investor, creditor and market confidence and to sustain future developments of the business. Management monitors the return on capital, as well as the level of dividends to shareholders. The net debt / (net cash and short-term investments) to ADJUSTED EBITDA should not exceed 3.

|  | 2025 | 2024
Bank borrowings |  | 213,315 | 300,733
Lease liabilities |  | 71,648 | 79,354
Less: Cash and cash equivalents |  | (1,187,734) | (1,581,617)
Less : Short-term investments |  | (3,732,016) | (3,475,933)
Net debt /(net cash and short-term investments) | A | (4,634,787) | (4,677,463)
ADJUSTED EBITDA(1) | B | 4,833,528 | 5,516,597
Net debt /(net cash and short-term investments) to ADJUSTED EBITDA ratio | A/B | (0.96) | (0.85)

(1) ADJUSTED EBITDA (Earnings before interest, tax, depreciation and amortisation) is calculated as EBITDA, defined and calculated as profit/(loss) before tax before (i) depreciation and amortization of property, plant and equipment and (ii) interest income and expense, and ADJUSTED FOR impairment/reversal of impairment of property, plant and equipment. EBITDA and ADJUSTED EBITDA are not IFRS measures and should not be treated as an alternative to IFRS measures. Moreover, ADJUSTED EBITDA is not uniformly defined. The method used to calculate ADJUSTED EBITDA by other companies may differ significantly from that used by the Group. As a consequence, the ADJUSTED EBITDA presented in this note cannot, as such, be relied upon for the purpose of comparison to EBITDA or ADJUSTED EBITDA of other companies.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

24. BORROWINGS

Description | 31 December 2025 | 31 December 2024
BRD Groupe Societe Generale dated 4 March 2021 of RON 1,250,000 thousand - loan contracted for financing the acquisition of Crucea Wind Farm SA and Hidroelectrica Wind Services SRL. Proceeds from loan: EUR 130,000 thousand (representing RON 635,219 thousand) | 215,315 | 300,733
Repayment: quarterly installments between 11 June 2021 and 11 March 2028. Interest is linked to EURIBOR 3 months plus a margin. Year of maturity: 2028.
Total loans | 215,315 | 300,733
Current portion | 94,957 | 92,887
Non-current portion | 118,358 | 207,846

In 2025 the Group repaid loans of RON 93,674 thousand (2024: RON 92,350 thousand).

The loan agreement with BRD Groupe Société Générale includes the following financial ratios:

- Debt service coverage ratio, calculated as the ratio between EBITDA (from which dividend payments, capital expenditures, and taxes are deducted) and debt service – minimum value: 1.1;

- Leverage ratio – maximum value: 3.0.

According to the loan agreement, if either of the above indicators is not met, the Company benefits from a 60-day grace period for remediation starting from the date the lender notifies the Company.

As of December 31, 2025, the debt service coverage ratio, as defined under contract, is below 1.1, therefore long-term portion of the loan amounting RON 118,358 thousand shall be classified as current liability. As the net debt service defined under contract is positive given the Group’s debt level compared with EBITDA, as the interest are higher than the debt service. A waiver letter was received from the bank, subsequent to 31 December 2025.

A similar breach was recorded as of 31 December 2024, the long-term portion of the loan being of RON 207,846 thousand. A waiver letter was obtained from the bank subsequent to 31 December 2024.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Reconciliation of movements of liabilities to cash flows arising from financing activity

| Bank borrowings | Lease liabilities | Total
Balance at 1 January 2025 | 300,733 | 79,354 | 380,087
Changes from financing cash flows |  |  |
Repayment of bank loans | (93,674) | - | (93,674)
Lease payments | - | (9,486) | (9,486)
Total changes from financing cash flows | (93,674) | (9,486) | (103,160)
The effect of changes in foreign exchange rates | 6,505 | - | 6,505
Other changes |  |  |
Liability-related |  |  |
Lease modifications | - | 1,780 | 1,780
Interest expense | 6,765 | 5,224 | 11,989
Interest paid | (7,014) | (5,224) | (12,238)
Total liability-related other changes | 249 | 1,780 | 1,530
Balance at 31 December 2025 | 213,315 | 71,648 | 284,963

| Bank borrowings | Lease liabilities | Total
Balance at 1 January 2024 | 393,535 | 66,301 | 459,836
Changes from financing cash flows |  |  |
Repayment of bank loans | (92,350) | - | (92,350)
Lease payments | - | (6,436) | (6,436)
Total changes from financing cash flows | (92,350) | (6,436) | (98,786)
The effect of changes in foreign exchange rates | (58) | - | (58)
Other changes |  |  |
Liability-related |  |  |
Lease modifications | - | 19,489 | 19,489
Interest expense | 14,136 | 4,311 | 18,447
Interest paid | (14,530) | (4,311) | (18,841)
Total liability-related other changes | (394) | 19,489 | 19,095
Balance at 31 December 2024 | 300,733 | 79,354 | 380,087

25. TRADE PAYABLES

| 31 December 2025 | 31 December 2024
Electricity suppliers | 194,151 | 107,729
Electricity distribution services suppliers | 184,014 | 146,328
Property, plant and equipment suppliers | 159,951 | 38,888
Turbinated water supplier | 101,298 | 70,287
Maintenance and repairs suppliers | 25,928 | 14,511
Other suppliers | 126,882 | 52,939
Total trade payables | 792,224 | 430,682
Current | 777,323 | 429,683
Non-current | 14,901 | 999

The suppliers of electricity, electricity distribution and water are mainly those presented in Note 33 Related Parties.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Other suppliers include service providers, materials and consumables providers.

The Group has guarantees received from suppliers of RON 667,069 thousand at 31 December 2025 (RON 470,255 thousand at 31 December 2024) that are off-balance. These guarantees represent performance guarantees in the form of bank letters of guarantee, insurance policies and escrow accounts. The increase is mainly due to the guarantees received for works contracted by the Group for maintenance and development.

26. OTHER PAYABLES

| 31 December 2025 | 31 December 2024
| Current | Non-current | Current | Non-current
Payables to the State | 53,989 | - | 39,339 | -
Performance deposits from suppliers | 10,357 | 57,758 | 7,056 | 52,403
Performance deposits from clients | 45,505 | - | 57,587 | -
Liabilities in relation to dividends | 6,736 | - | 5,653 | -
Other | 29,787 | 109 | 14,614 | 109
Total | 146,374 | 57,867 | 124,249 | 52,512

Payables to the State represent mainly VAT payable of RON 49,448 thousand as at 31 December 2025 (31 December 2024: RON 37,573 thousand).

Starting from the second quarter of 2024, the Group requires potential end customers with counterparty risk to provide multiple payment guarantee options, including the establishment of monetary guarantees. In this regard, guarantee deposits are opened by customers, with the deposit amount based on the estimated contractual value of the electricity supplied for a period up to three months, and these deposits remain valid for the entire contractual period.

27. DEFERRED INCOME

| 31 December 2025 | 31 December 2024
| Current | Non-current | Current | Non-current
Government grants | 5,555 | 191,455 | 6,091 | 201,002
Other | 53 | 933 | 55 | 995
Total | 5,608 | 192,388 | 6,146 | 201,997

Government grants represent amounts received from the State for the construction of certain investment projects.

Reconciliation between opening and closing balance of government grants:

| 2025 | 2024
Balance at 1 January | 207,093 | 182,486
Increase in the year | 5,869 | 30,514
Released to income | (6,612) | (5,907)
Grants used for expropriation | (9,340) | -
Balance at 31 December | 197,010 | 207,093

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

28. PROVISIONS

| 31 December 2025 | 31 December 2024
| Current | Non-current | Current | Non-current
Litigation and claims | 93,481 | - | 71,420 | -
Decommissioning | - | 911,465 | - | 848,189
Tax provisions | - | 97,667 | - | 95,316
Other provisions | 11,017 | - | 11,050 | -
Total | 104,498 | 1,009,132 | 82,470 | 943,505

| Litigation and claims | Decommissioning | Tax provisions | Other provisions | Total
Balance at 1 January 2025 | 71,420 | 848,189 | 95,316 | 11,050 | 1,025,975
Provisions recognized against property, plant and equipment | - | 127 | - | - | 127
Provisions recognized in profit or loss | 22,214 | 21,327 | - | - | 43,541
Provisions used | - | - | - | - | -
Provisions reversed | (149) | (17,288) | (4,407) | (32) | (21,876)
Unwinding of provisions (Note 14) | (4) | 59,111 | 6,758 | - | 65,864
Balance at 31 December 2025 | 93,481 | 911,466 | 97,667 | 11,018 | 1,113,630

| Litigation and claims | Decommissioning | Tax provisions | Other provisions | Total
Balance at 1 January 2024 | 163,588 | 746,286 | 90,544 | 1,771 | 1,002,189
Provisions recognized against property, plant and equipment | - | (344) | - | - | (344)
Provisions recognized in profit or loss | 1,881 | 50,152 | - | 10,410 | 31,960
Provisions used | (65,279) | - | - | (1,026) | (66,305)
Provisions reversed | (28,770) | - | (1,608) | (105) | -
Unwinding of provisions (Note 14) | - | 52,096 | 6,380 | - | 58,476
Balance at 31 December 2024 | 71,420 | 848,189 | 95,316 | 11,050 | 1,025,975

(i) Provisions for litigation and claims

As at 31 December 2025 and 31 December 2024, provisions for litigations include RON 67,618 thousand relating to the litigation with the Consortium formed of Romelectro SA, Hidroconstructia SA and ISPH Project Development SA (the Consortium) started in 2013. The subject of the litigation is disputes over the contract signed in 2004 for Bumbesti-Livezeni investment project. The Consortium requested RON 88,400 thousand representing additional works performed by the Consortium starting 2010 until the date of commencement of the litigation. Following several rulings and appeals in 2019 the file was sent to retrial. In 2020 the Court requested a technical expert report. Based on the past rulings, the expert report issued on 17 February 2022 and considering the probability of an unfavorable outcome, the Group recognized a provision of RON 67,618 thousand.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

The company recognized in 2025 an additional provision for litigation raised against the Company for interest and penalties related to late payments of works not initially recognized.

(ii) Decommissioning provision

In 2018 and 2019, the management of the Company decided to abandon certain investment projects in progress (Note 22). As a result, the Company recognized decommissioning provisions against profit or loss for the present value of the works estimated to be necessary to abandon those assets. The decommissioning costs were estimated based on studies performed by an external technical expert in 2017, updated during 2024, taking into account the current cost of the main decommissioning activities.

Main abandonment costs included in the provision are:

• cost to demolish existing constructions;

• cost to transport the waste materials to the nearest ecological deposit;

• environmental tax, in accordance with the legal requirements;

• cost to deposit the waste at an ecological deposit.

The costs were discounted using discount rates between 4.73% and 5.73% (31 December 2024: between 5.27% and 7.09%), depending on the expected period of decommissioning.

A decommissioning provision of RON 15,299 thousand is related to the wind farm. The effects of changes in assumptions underlying the decommissioning costs for the wind farm are recognized against property, plant and equipment.

(iii) Tax provisions

Tax provisions of RON 97,667 thousand at 31 December 2025 (31 December 2024: RON 95,316 thousand) represent the present value of the VAT expected to be paid at the write off of the abandoned investment projects (Note 22).

29. FINANCIAL INSTRUMENTS – Fair Values and Risk Management

(a) Accounting classifications and fair values

In accordance with IFRS 9, the Group's financial assets and liabilities are measured at amortized cost. According to the business model of the Group, financial assets and liabilities are held to collect contractual cash flows and these cash flows are solely payments of principal and interest. The Group did not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

(b) Financial risk management

Credit risk

Credit risk is the risk that the Group will incur a financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and this risk derives mainly from trade receivables, cash and cash equivalents, and investments in deposits and corporate bonds.

Cash and bank deposits are placed in financial institutions that are considered to have high creditworthiness, part of these being held by Romanian State such as CEC Bank and Exim Bank.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Exposure to credit risk

The carrying amount of financial assets represents the maximum exposure to credit risk.

| 31 December 2025 | 31 December 2024
Trade receivables | 1,698,378 | 1,633,688
Cash and cash equivalents | 1,187,734 | 1,581,617
Restricted cash | 55,124 | 21,057
Investments in corporate bonds and deposits | 3,732,016 | 3,475,933
Total | 6,673,252 | 6,712,295

Trade receivables

The Group's exposure to credit risk is mainly influenced by the individual characteristics of each client. The Group has established a credit policy according to which each new business client is analyzed individually from the point of view of creditworthiness before the conclusion of a contract, so that the sale is made to the clients with adequate creditworthiness. For household clients, such credit risk analysis is not performed due to the nature and volume of the customers and due to the legislation in force. Impairment adjustments of trade receivables reflect the expected credit losses, calculated based on the loss rates.

The following table provides information about the exposure to credit risk and expected credit loss (ECL) for trade receivables as at 31 December 2025:

|  | Weighted average loss rate |  | Gross carrying amount |  | Impairment loss allowance |  | Net trade receivables
Not past due |  | 2.04% |  | 964,353 |  | (19,498) |  | 944,856
Past due - from 0 to 3 months |  | 15.61% |  | 118,051 |  | (18,454) |  | 99,597
Past due - from 3 to 6 months |  | 55.76% |  | 54,937 |  | (30,633) |  | 24,304
Past due - from 6 months to 1 year |  | 89.37% |  | 64,054 |  | (58,124) |  | 5,930
Past due - more than 1 year |  | 100.00% |  | 137,287 |  | (137,287) |  | -
Total |  |  |  | 1,338,682 |  | (263,996) |  | 1,074,686
Customers analyzed individually |  |  |  | 623,692 |  | - |  | 623,692
Total trade receivables |  |  |  | 1,962,374 |  | (263,996) |  | 1,698,378

The following table provides information about the exposure to credit risk and expected credit loss (ECL) for trade receivables as at 31 December 2024:

|  | Weighted average loss rate |  | Gross carrying amount |  | Impairment loss allowance |  | Net trade receivables
Not past due |  | 2.21% |  | 803,320 |  | (17,745) |  | 785,476
Past due - from 0 to 3 months |  | 17.80% |  | 140,963 |  | (25,096) |  | 115,867
Past due - from 3 to 6 months |  | 73.31% |  | 69,496 |  | (50,945) |  | 18,550
Past due - from 6 months to 1 year |  | 100.00% |  | 69,294 |  | (69,294) |  | -
Past due - more than 1 year |  | 100.00% |  | 73,297 |  | (73,297) |  | -
Total |  |  |  | 1,156,270 |  | (236,377) |  | 919,893
Customers analyzed individually |  |  |  | 713,795 |  | - |  | 713,795
Total trade receivables |  |  |  | 1,870,065 |  | (236,377) |  | 1,633,688

Customers analyzed individually represent outstanding amounts from customers for which the Group believes that there is a negligible risk to collect.

Loss rates estimated for 2025 are based on the actual credit loss experienced over the past six quarters considering the evolution of the supply segment and the delays in invoicing the electricity supplied (31 December 2024: past six quarters).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

The Group has guarantees received from customers of RON 591,806 thousand at 31 December 2025 (RON 527,949 thousand at 31 December 2024) in the form of bank letters of guarantee. Under client guarantees are included cash deposits of RON 45,505 thousands (2024: 57,587 thousands) (see Note 26).

Liquidity risk

Liquidity risk represents the risk that the Group may have difficulties in meeting the obligations associated with financial liabilities settled by transfer of cash or another financial asset. The Group has significant cash and cash equivalents and short-term investments, therefore it does not face significant liquidity risk.

The Group monitors the level of cash inflows forecasted from collection of trade receivables, as well as the level of cash outflows forecasted for the payment of loans, trade and other payables. The Group aims to maintain a level of current bank accounts and bank deposits that exceeds the cash outflows forecasted for the payment of financial liabilities.

Exposure to liquidity risk

The following table shows the remaining contractual maturities of financial liabilities at the reporting date. The contractual cash flows are presented gross and undiscounted and include estimated contractual interest payments.

|  | Contractual cash flows
31 December 2025 | Carrying amount | Total | < 12 months | 1 - 5 years | > 5 years
Financial liabilities |  |  |  |  |
Trade payables | 792,224 | 792,224 | 777,323 | 14,901 | -
Bank borrowings | 213,315 | 219,217 | 98,802 | 120,415 | -
Lease liabilities | 71,648 | 89,782 | 14,597 | 46,701 | 28,484
Total | 1,077,187 | 1,101,223 | 890,722 | 182,017 | 28,484

|  | Contractual cash flows
31 December 2024 | Carrying amount | Total | < 12 months | 1 - 5 years | > 5 years
Financial liabilities |  |  |  |  |
Trade payables | 430,682 | 430,682 | 429,683 | 999 | -
Bank borrowings | 300,733 | 316,524 | 100,618 | 215,906 | -
Lease liabilities | 79,354 | 101,968 | 14,329 | 50,922 | 36,717
Total | 810,769 | 849,174 | 544,630 | 267,827 | 36,717

Market risk

Market risk is the risk that changes in market prices – foreign exchange rate and interest rate – will affect the Group's profit or the value of the financial instruments held. The objective of market risk management is to control market risk exposures within acceptable parameters, while optimizing the return.

(i) Interest rate risk

The Group has long-term bank borrowings with variable interest rates, which may expose the Group to interest rate risk.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

| 31 December 2025 | 31 December 2024
Fixed-rate instruments |  |
Financial assets |  |
Restricted cash | 55,124 | 21,057
Investments in deposits and bonds | 3,732,016 | 3,475,933
Total | 3,787,140 | 3,496,990
Financial liabilities |  |
Lease liabilities | (71,648) | (79,354)
Total | (71,648) | (79,354)
Variable–rate instruments |  |
Financial liabilities |  |
Bank borrowings | (213,315) | (300,733)
Total | (213,315) | (300,733)

Fair value sensitivity analysis of fixed-rate instruments

The Group has no financial assets and financial liabilities with a fixed interest rate recognized at fair value through profit or loss. Therefore, a change in interest rates on the reporting date would not result in a gain or loss in profit or loss.

Cash flow sensitivity analysis of variable-rate instruments

A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased (decreased) the profit before tax by the amounts shown below. This analysis assumes that all other variables, in particular currency exchange rates, remain constant.

| Increase/ (decrease) of Profit before tax
50 bp increase | 50 bp decrease
2025 |  |
Variable-rate instruments | (1,066) | 1,066
2024 |  |
Variable-rate instruments | (1,504) | 1,504

(ii) Currency risk

The Group is exposed to transactional foreign currency risk to the extent that there is mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of of the parent company and its subsidiaries. The functional currency of the Group is the Romanian Leu (RON).

The currency in which these transactions are primarily denominated are RON. Certain liabilities are denominated in foreign currencies as EUR and USD. The Group's risk management policy is to primarily use the local currency. The Group does not use derivative instruments or hedging instruments.

| 31 December 2025 - RON thousand equivalent of the currency -
| EUR | USD | CHF
Trade receivables | 228 | - | -
Investments in deposits and corporate bonds | 277,256 | - | -
Cash and cash equivalents | 3,468 | 89 | 3
Trade payables | 60,176 | 160 | -
Bank borrowings | 213,315 | - | -
Lease liabilities | 58,719 | - | -
Net statement of financial position exposure | (51,258) | (71) | 3

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

| 31 December 2024 - RON thousand equivalent of the currency -
| EUR | USD | CHF
Trade receivables | 221 | - | -
Other current assets | 78,840 |  |
Cash and cash equivalents | 382,420 | 112 | 3
Trade payables | (3,898) | (160) | -
Bank borrowings | (300,733) | - | -
Lease liabilities | (62,432) | - | -
Net statement of financial position exposure | 94,418 | (48) | 3

The following exchange rates have been applied:

| 31 December 2025 | 31 December 2024
RON / EUR | 5.0985 | 4.9741
RON / USD | 4.3417 | 4.7768
RON / CHF | 5.4743 | 5.2806

Sensitivity analysis

A 5% appreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31 December would have affected the profit before tax by the amounts shown below. This analysis assumes that all other variables remain constant.

| Increase/(decrease) of Profit before tax |  | Increase/(decrease) of Profit before tax |
| 2025 (RON thousand) |  | 2024 (RON thousand) |
EUR | 2,563 |  | 4,721 |
USD | 4 |  | 2 |
Total | 2,567 |  | 4,719 |

A 5% depreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31 December would have affected the profit before tax by the amounts shown below. This analysis assumes that all other variables remain constant.

| Increase/ (decrease) of Profit before tax |  | Increase/ (decrease) of Profit before tax
| 2025 (RON thousand) |  | 2024 (RON thousand)
EUR | (2,563) |  | (4,721)
USD | (4) |  | 2
Total | (2,567) |  | (4,719)

30. ACQUISITION OF SUBSIDIARIES

On 22 February 2023, the Company was declared winner of the sales procedure of business lines ABC and Calnicel platform (the acquiree), which were owned by UCM Resita SA.

In January 2024, the Company set-up a new subsidiary, Uzina de Construcții Mașini Hidroenergetice S.R.L., through which it took-over the business from U.C.M. Reșița S.A.. The object of activity of the new subsidiary is manufacturing of engines and turbines (code CAEN 2811).

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

On 22 January 2024, the Extraordinary General Meeting of Shareholders (“EMGS”) approved the transaction and related documents for business acquisition from U.C.M. Reșița S.A..The transaction was completed upon the fulfillment of the suspensive conditions on 11 March 2024. The total price for the transfer of ownership rights over the business was RON 67,879 thousand.

The following table summarizes the value of assets acquired. The Group did not acquire liabilities.

| RON thousand
Intangible assets | 17,576
Property, plant and equipment | 66,446
Inventories | 9,585
Fair value of identifiable net assets acquired | 93,607

The result of the transaction was as follows:

| RON thousand
Fair value of identifiable net assets acquired | 93,607
Consideration transferred | 67,879
Gain on bargain purchase | 25,728

The transaction was accounted for as business combination using the acquisition method in accordance with IFRS 3.

The consideration transferred was measured at fair value, calculated as acquisition date fair values of the assets transferred by the Company and the liabilities incurred by the Company to the former owner of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree . The fair value of the assets and liabilities were determined with the involvement of a valuation expert, resulting in a gain on bargain purchase of RON 25,728 thousand. Identified assets acquired were represented by intangible assets, property, plant and equipment and inventories. Also, processes and employees of the acquiree were transferred.

Acquisition related costs of RON 1,128 thousand for due diligence services and legal fees were accounted for as other operating expenses in 2024.

31. COMMITMENTS

31.1 Contractual commitments

The Group has the following contractual commitments:

| 31 December 2025 | 31 December 2024
Acquisition of property, plant and equipment and intangible assets | 2,516,721 | 1,372,035

In 2025, the Company signed the contracts for overhaul of CHE Stejaru and high power pumps stations Lotru.

In June 2024, Hidroelectrica signed the contract for refurbishment works of AHE Vidraru with the Consortium formed of ELECTROMONTAJ (Consortium Leader) and Koncar – Engineering Co. Ltd. for production and services (Croatia), with BUTAN GRUP as subcontractor, following the completion of the award procedure through a public tender. The contractual price is RON 937,709 thousand and the works are to be completed within 84 months, according to the execution schedule.

31.2 Guarantees

The Group issued performance guarantees of RON 184,269 thousand as at 31 December 2025 (31 December 2024: RON 45,350 thousand) mainly in relation to its obligations to deliver electricity, and in relation to its payment obligations related to electricity purchase transactions on the day-ahead and intra-day markets.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

32. CONTINGENCIES

32.1 Litigation, claims and tax uncertainties

The main litigations involving the Group, with a potential exposure of RON 195,206 thousand as at 31 December 2025 (31 December 2024: RON 195,206 thousand), are disclosed as contingent liabilities:

a) Litigation with Tax authorities

Potential exposure: RON 63,612,328 as at 31 December 2025 and 31 December 2024

Plaintiff: Hidroelectrica

File no. 638/2/2024 and 1962/2/2024

Subject matter: Annulment of Tax Decision No. A-DAF 6890/11.05.2023

Tax for electricity producers was subject to multiple changes with respect to the method of computation during 2022. The latest change was instated through Law no. 357/2022, which was published on 16 December 2022. The Company applied the provisions of the law starting with 16 December 2022.

As previously mentioned in Note 13 E, the Company was subject to a tax control by the General Antifraud Division of ANAF on the tax for electricity producers. As per the control report on 11 April 2023, the tax authorities applied the changes introduced by the law retroactively starting 1 September 2022, and therefore computed additional tax of RON 62,052 thousand.

On 28 April 2023 the Company received the imposing decision for the amount of RON 62,052,115. The Company challenged the imposing decision within the procedural term, the challenge being rejected by the General Division for Solving Disputes within the Finance Ministry.

The Company argued in its Court application that successive changes of legislation regarding the calculation methodology of the tax for electricity producers can only be applicable for the future, starting with the date of publication of legislative amendments and not retroactively, as tax authorities considered.

On 17 December 2024, the Court ruled in favor of Hidroelectrica and ordered the reimbursement to the claimant of the amount of RON 62,052,115. The Finance Ministry filed an appeal against the court’s decision to the High Court of Cassation and Justice, with the next hearing date set on 13 May 2026.

On 7 August 2023, the Company received a decision regarding interest and penalties in the amount of RON 1,560,213 related to the previously mentioned imposing decision. The Company challenged the decision, initiating proceedings before the Court of Appeal of Bucharest under file no. 1962/2/2024. The file is suspended until the final resolution of case no. 638/2/2024. In relation to the ruling in file no. 638/3/2024, the management believes that the dispute in file no. 1962/2/2024 will also be ruled in the Company’s favor.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

b) Litigation with Hidroconstructia SA

Potential exposure: RON 98,762,431 as at 31 December 2025 and 31 December 2024

Plaintiff: Hidroconstructia SA

File no. 12257/3/2022

Subject-matter: Termination of Contract no. 672/1989 regarding the Fagaras-Hoghiz investment project; claims

Hidroconstructia SA filed claims to recover RON 98,762,431 consisting of unrealized profits as a result of the suspension by Hidroelectrica of the construction works related to the Fagaras Hoghiz investment project. Also, Hidroconstructia requested the court to enforce the termination of the underlying contract.

In January 2023, the Court ruled in favor of the Company, rejecting Hidroconstructia’s claims. The decision was appealed by Hidroconstructia SA.

On 12 October 2023, the Court of Appeal set aside the first Court ruling and granted a new hearing on the merits. On 3 July 2025, the court partially admitted the statement of claim, ordering the termination of the contract, while dismissing the remaining claims as unsubstantiated.

Hidroconstrucția filed an appeal against the above mentioned decision, the file being forwarded to the High Court of Cassation and Justice, the first hearing date, to be set.

Based on the court’s ruling, Management estimates that the dispute will be settled in the Group’s favor and, consequently, an outflow of resources is not probable.

c) Litigation with Hidroconstructia SA

Potential exposure: RON 32,831,841 as at 31 December 2025 and 31 December 2024

Plaintiff: Hidroconstructia SA

File no. 44443/3/2016, currently File no. 11314/3/2021

Subject-matter: Claims - the equivalent value of the costs generated by the cessation of construction works related to investment projects in progress.

Hidroconstructia SA claims the costs generated by the suspension of construction works rendered before the Company’s insolvency. The Company argues that such claims have no grounds considering the insolvency process of Hidrolectrica and the fact that the claimant lost its right to claims as it failed to register the claim in the table of creditors.

In March 2018 the first Court rejected the claims of Hidroconstructia SA. This ruling was contested by Hidroconstructia SA. The Company also contested the ruling, as it provided for legal fees for Hidroelectrica.

In April 2019 the Court of appeal sent the case back to the first court for reexamination. The dispute was reopened by the first Court (file no. 11314/3/2021).

In April 2022, the Court requested an expertise report in hydrotechnical constructions and an accounting expertise report to be performed by independent experts. The expert’s report has been finalized and both parties have filed objections against the findings of the expert, with the next hearing date being set on 17 June 2026.

Based on the initial first Court ruling, management estimates that the litigation will be ruled in favor of the Company and consequently an outflow of resources is not probable.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

32.2 Fiscal environment

Tax audits are frequent in Romania, consisting of thorough verifications of taxpayers’ accounting records. Such audits sometimes take place months or even years after the establishment of the tax liabilities. Consequently, companies may be found liable for significant taxes and fines. In addition, the tax legislation is subject to frequent changes, and the authorities often show inconsistency in the interpretation of law.

Tax returns may be subject to revision and corrections by the tax authorities, generally for a five years period after they are filed with the tax authorities.

Romanian tax authorities carried out tax audits on Hidroelectrica’s income tax and value added tax until 20 June 2012, while on Hidroserv’s income tax until 31 December 2014.

Management believes that adequate provisions have been recognised in the consolidated financial statements for all significant tax liabilities; however, a risk persists that tax authorities might have different views, representing a normal risk in the accounting/tax environment in Romania.

In 2025 the Company was notified by the fiscal authorities that a general fiscal inspection was initiated covering the period 2019-2024 having in scope all the taxes payable to the central state budget. The inspection is currently in preliminary stage – scoping and information requests.

32.3 Decommissioning obligations

As described in Note 5 a4), the Group identified decommissioning obligations in relation to its hydro-power facilities. Management estimates that, except for the assets abandoned or switched to post-utilisation upon management decisions, and except for its wind farm, for which decommissioning provisions are recognised (see Notes 22 and 28), the occurrence of events that would require abandonment or switching to post-utilisation of other assets in the public domain or hydro-power plants owned by the Group by the end of the concession contract (29 years from 31 December 2024) is unlikely, considering the long useful life of dams, which can be significantly extended over 100 years by maintenance and improvements.

33. RELATED PARTIES

a) Ultimate controlling party

The Company’s ultimate controlling party is the Romanian State, represented by the Ministry of Energy, with a shareholding of 80.0561%.

b) Transaction with key management personnel

Key management personnel include the members of the Management Board and Supervisory Board.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Management Board remuneration | 2025 |  | 2024
Expenses recognized during the year |  |  |
Fixed component | 14,500 |  | 3,945
Variable component accrual | 4,734 |  | 7,890
Reversal of over accrual of the previous year | (7,890) |  | -
Total | 11,344 |  | 11,835
Payments made in the year | 2025 |  | 2024
Fixed component | 14,500 |  | 3,945
Variable component (for the previous year) | 7,855 |  | -
Total | 22,355 |  | 3,945

The Management Board include 5 directors appointed for 4 years.

Remuneration of executive directors consists of a fixed monthly salary limited to five times the average monthly gross salary for the last 12 (starting with December 2025) months prior to appointment published by National Institute of Statistics (INS) for the Company’s activity code (CAEN) according to the classification of activities in the national economy, and a variable component calculated on the basis of the financial and non-financial performance indicators, negotiated and approved by the general meeting of shareholders.

In 2024, the General Meeting of Shareholders approved the annual variable component of the remuneration for the Management Board, which is limited to 24 gross monthly fixed components. The annual maximum amount of the variable component for all the Management Board is RON 7,889,760. variable component to be paid in 2023.

According to the decision of the Supervisory Board, adopted in the interest of the company and all shareholders, taking into account the obligations arising from Milestone 121 (PNRR), the context established by the European Commission Decision C(2025) 3490/28.05.2025, as well as Hidroelectrica’s status as an issuer listed on a regulated market, two of the mandate contracts were terminated by mutual agreement in September 2025. Consequently, the maximum amount of the variable component for 2025 was reduced to RON 4,734 thousand. Following the termination, by mutual agreement of the parties, compensations totaling RON 3,156 thousand were established for the two mandate contracts.

According to the decision of the Supervisory Board, adopted in the interest of the company and all shareholders, taking into account the obligations arising from Milestone 121 (PNRR), the context established by the European Commission Decision C(2025) 3490/28.05.2025, as well as Hidroelectrica’s status as an issuer listed on a regulated market, two of the mandate contracts were terminated by mutual agreement in September 2025. Consequently, the maximum amount of the variable component for 2025 was reduced to RON 4,734 thousand. Following the termination, by mutual agreement of the parties, compensations totaling RON 3,156 thousand were established for the two mandate contracts.

On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-financial key performance indicators resulting from the Company’s Management Plan.

On 14 December 2025, the Ordinary General Meeting of Shareholders approved the fixed monthly salary to five times the average monthly gross salary computed as described above, in accordance with the provisions of Law 109/2011. In addition, the Ordinary General Meeting of Shareholders approved the revised financial and non-financial performance indicators.

The Company has no contractual obligations related to pensions to its former directors.

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Supervisory Board remuneration

| 2025 |  | 2024
Expenses recognized during the year |  |  |
Fixed component | 3,805 |  | 1,779
Variable component accrual | 991 |  | 1,777
Reversal of over accrual of the previous year | (1,777) |  | -
Total | 3,019 |  | 3,556
Payments made in the year | 2025 |  | 2024
Fixed component | 3,805 |  | 1,779
Variable component (for the previous year) | 1,726 |  | -
Total | 5,531 |  | 1,779

The Supervisory Board consists of 7 members appointed for 4 years.

Remuneration of the members of the Supervisory Board was approved by shareholders decisions in 2024 and 2025. According to these decisions, the remuneration of the Supervisory Board members consists of a monthly fixed gross salary, limited to two times the average monthly gross salary for the last 12 months prior to appointment published by National Institute of Statistics for the Company’s activity code (CAEN) according to the classification of activities in the national economy and a variable component, calculated on the basis of the financial and non-financial performance indicators, negotiated and approved by the general meeting of shareholders.

In 2024, the General Meeting of Shareholders approved the annual variable component of the Supervisory Board remuneration, which is limited to 12 times the gross monthly fixed component. The annual maximum amount of the variable component for all the Supervisory Board members is RON 1,776,816.

On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-financial key performance indicators resulting from the Company’s Management Plan.

There were no loans granted to the members of Supervisory Board or Management Board in 2025 and 2024.

c) Transactions with other companies in which the State has control or significant influence

In the normal course of business, the Group has transactions with other entities in which the State has control or significant influence, mainly related to the tax on industrial water, the purchase of electricity, transport and system services and sales of electricity, as follows:

Supplier | Purchases (without VAT) 2025 | Payables (including VAT) 31 December 2025
Administratia Nationala Apele Romane | 430,067 | 98,226
Transelectrica (Romanian Electricity System Operator) | 680,444 | 152,173
OPCOM (Romanian Electricity Market Operator) | 267,197 | 683
Distributie Energie Electrica Romania | 450,832 | 45,448
Others | 390,778 | 64,514
Total | 2,219,318 | 361,044

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Supplier | Purchases (without VAT) 2024 | Payables (including VAT) 31 December 2024
Administratia Nationala Apele Romane | 502,739 | 69,381
Transelectrica (Romanian Electricity System Operator) | 1,038,931 | 107,498
OPCOM (Romanian Electricity Market Operator) | 22,478 | 150
Distributie Energie Electrica Romania | 293,620 | 59,657
Others | 50,688 | 1,062
Total | 1,908,456 | 237,748

| Sales (without VAT) | Receivables Gross Carrying amount (including VAT) | Impairment loss | Receivables Net Carrying amount (including VAT)
Client | 2025 | 31 December 2025
CNTEE Transelectrica S.A. | 739,636 | 90,230 | - | 90,230
Operatorul Pietei De Energie | 686,612 | 428 | - | 428
Electrica Furnizare | 302,854 | 25,785 | - | 25,785
Rompetrol Rafinare | 238,367 | 32,178 | - | 32,178
Compania Municipala Termoenergetica | 44,983 | 17,816 | - | 17,816
Others | 502,158 | 168,584 | (27,692) | 140,892
Total | 2,514,610 | 335,021 | (27,692) | 307,329

| Sales (without VAT) | Receivables Gross Carrying amount (including VAT) | Impairment loss | Receivables Net Carrying amount (including VAT)
Client | 2024 | 31 December 2024
Transelectrica (Romanian Electricity System Operator) | 1,946,834 | 192,449 | - | 192,449
OPCOM (Romanian Electricity Market Operator) | 2,704,049 | 73,489 | - | 73,489
Electrica Furnizare | 163,692 | 5,923 | - | 5,923
Rompetrol Rafinare | 206,462 | 64,461 | - | 64,461
S.N.G.N Romgaz SA | 52,005 | 5,610 | - | 5,610
Raja SA | 14,861 | 5,132 | - | 5,132
SN Radiocomunicatii SA | 19,108 | 116 | - | 116
Municipal Thermoenergetic Company | 36,713 | 6,213 | - | 6,213
Engie Romania | 8,164 | - | - | -
Others | 192,015 | 152,796 | (34,085) | 118,711
Total | 5,343,903 | 506,189 | (34,085) | 472,104

S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2025

(All amounts are in thousand RON, unless otherwise indicated)

Other customers include mainly public institutions, local authorities and public educational institutions to which the Group supplied electricity in 2025 and 2024.

Balance

Bank | Bank account | Bank deposits |  | Bank account | Bank deposits
| 31 December 2025 |  | 31 December 2024
Exim Bank | 120,779 | 1,167,145 |  | 605 | 1,573,286
CEC Bank | 19,260 | 100,373 |  | 38,973 | 882,191
Total | 140,039 | 1,267,518 |  | 39,578 | 2,455,477

Transactions |  |  |  |  |
Bank | Bank deposits placed | Interest income |  | Bank deposits placed | Interest income
| 2025 |  | 2024
Exim Bank | 6,008,500 | 89,879 |  | 6,435,000 | 91,193
CEC Bank | 250,000 | 7,210 |  | 3,079,832 | 54,005
Total | 6,258,500 | 97,089 |  | 9,514,832 | 145,198

34. SUBSEQUENT EVENTS

At the end of February 2026, a significant geopolitical event occurred in the Middle East, resulting in heightened regional tensions and uncertainty. Due to the growing geopolitical tensions, since February 2026, there has been a significant increase in the overall market volatility, as well as fluctuations in energy, oil and gas prices. Elevated inflationary pressures, disruptions across global supply chains, and a deceleration in economic growth are expected.

The Group does not have direct exposures to related parties and/or key customers or suppliers or banks from affected region.

Bogdan-Nicolae BADEA | Radu Ioan CONSTANTIN | Ianăș RĂDOI
Chairman of the Management Board | Member of the Management Board | Member of the Management Board

Petronel CHIRIAC | Marian FETITA
Financial Director | Accounting manager

S.P.E.E.H. HIDROELECTRICA S.A.
Two-tier system Company
SEPARATE FINANCIAL STATEMENTS
for the year ended
31 December 2025
Prepared in accordance with Order of Minister of Public Finance no. 2844/2016
and subsequent amendments
S.P.E.E.H. HIDROELECTRICA S.A.
Separate financial statements – OMFP no. 2844/2016
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
CONTENTS:
PAGINA:
15
INDEPENDENT AUDITORS' REPORT
SEPARATE STATEMENT OF FINANCIAL POSITION as at 31 December 2025
1 - 2
SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year 2025
3
SEPARATE STATEMENT OF CHANGES IN EQUITY for the year 2025
4 - 5
SEPARATE STATEMENT OF CASH FLOWS for the year 2025
6 - 7
NOTES TO THE SEPARATE FINANCIAL STATEMENTS as at and for the year ended 31 December 2025
8 - 97
BASIS OF PREPARATION
1. REPORTING ENTITY AND GENERAL INFORMATION
8
2. BASIS OF ACCOUNTING
11
3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY
12
4. STANDARDS ISSUED BUT NOT EFFECTIVE
13
5. USE OF JUDGEMENTS AND ESTIMATES
15
6. BASIS OF MEASUREMENT
24
7. MATERIAL ACCOUNTING POLICIES
24
8. CHANGES IN ACCOUNTING POLICIES
42
9. COMPARATIVES
43
PERFORMANCE FOR THE YEAR
10. OPERATING SEGMENTS
43
11. REVENUE
45
12. OTHER INCOME
47
13. OPERATING EXPENSES
47
14. FINANCE RESULT
50
15. EARNING PER SHARE
50
EMPLOYEE BENEFITS
16. EMPLOYEE BENEFITS
51
INCOME TAXES
17. INCOME TAX
55
ASSETS
18. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
58
19. INVESTMENTS IN DEPOSITS
58
20. TRADE RECEIVABLES
59
21. OTHER ASSETS
60
22. PROPERTY, PLANT AND EQUIPMENT
61
23. INVESTMENTS IN SUBSIDIARIES
70
S.P.E.E.H. HIDROELECTRICA S.A.
Separate financial statements – OMFP no. 2844/2016
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
EQUITY AND LIABILITY
24. CAPITAL AND RESERVES
70
25. BORROWINGS
73
26. TRADE PAYABLES
75
27. OTHER PAYABLES
75
28. DEFERRED INCOME
76
29. PROVISIONS
76
FINANCIAL INSTRUMENTS
30. FINANCIAL INSTRUMENTS – Fair values and risk management
79
OTHER INFORMATION
31. COMMITMENTS
84
32. CONTINGENCIES
85
33. RELATED PARTIES
88
34. SUBSEQUENT EVENTS
93
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
1
31 December
31 December
Note
2025
2024
Assets
Non-current assets
Property, plant and equipment
22
19,292,990,942
19,686,065,023
Intangible assets
48,307,096
36,206,966
Investments in subsidiaries
23
315,226,810
315,226,810
Restricted cash
18
23,057,471
-
Other non-current assets
21
472,139,579
275,702,809
Total non-current assets
20,151,721,898
20,313,201,608
Current assets
Inventories
69,851,954
68,696,720
Trade receivables
20
1,697,693,169
1,632,834,052
Investments in deposits
19
3,732,016,142
3,475,932,995
Cash and cash equivalents
18
816,143,749
1,356,523,240
Restricted cash
18
32,666,071
21,057,471
Other current assets
21
57,873,032
21,662,777
Total current assets
6,406,244,117
6,576,707,255
Total assets
26,557,966,015
26,889,908,863
Equity and liabilities
Equity
Share capital
24
4,498,025,670
4,498,025,670
Inflation adjustments to share capital
24
1,028,872,000
1,028,872,000
Public patrimony
45,324,243
45,324,243
Revaluation reserve
24
11,088,735,173
11,555,225,745
Other reserves
24
1,017,729,953
1,017,729,953
Retained earnings
4,431,870,117
4,671,250,019
Total equity
22,110,557,156
22,816,427,630
Liabilities
Non-current liabilities
Bank borrowings
25
118,358,036
207,846,322
Lease liabilities
61,511,401
70,110,288
Deferred income
28
146,636,351
156,271,412
Current tax liabilities
17
7,743,356
8,116,947
Deferred tax liabilities
17
1,393,785,861
1,456,172,881
Employee benefits
16
126,030,247
116,454,138
Provisions
29
1,009,131,883
943,504,704
Trade payables
26
14,900,534
998,585
Other payables
27
54,695,970
54,659,563
Total non-current liabilities
2,932,793,639
3,014,134,840
(continued on page 2)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
SEPARATE STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
2
31 December
31 December
Note
2025
2024
Current liabilities
Bank borrowings
25
94,957,232
92,886,954
Lease liabilities
10,136,499
9,244,000
Trade payables
26
819,409,878
475,115,635
Contract liabilities
11
48,391,638
97,786,127
Current tax liabilities
17
175,454,931
56,869,918
Deferred income
28
5,594,476
6,133,103
Employee benefits
16
87,070,447
79,929,776
Provisions
29
146,263,699
124,382,716
Tax for electricity producers
13 E
-
2,135,558
Other payables
27
127,336,420
114,862,606
Total current liabilities
1,514,615,220
1,059,346,393
Total liabilities
4,447,408,859
4,073,481,233
Total equity and liabilities
26,557,966,015
26,889,908,863
The accompanying notes are an integral part of these separate financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
SEPARATE STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
3
Note
2025
2024
Revenue
11
9,622,795,031
9,123,148,860
Other income
12
35,053,501
148,936,882
Turbinated water
13A
(444,764,067)
(517,805,427)
Employee benefits expenses
16
(778,485,394)
(676,554,906)
Transport and distribution of electricity
13C
(1,634,837,904)
(1,228,392,210)
Electricity purchased
13B
(911,358,305)
(208,848,067)
Green certificates expenses
13D
(354,337,865)
(273,534,123)
Depreciation and amortization
22
(871,938,024)
(896,091,345)
Impairment loss on property, plant and equipment and
intangible assets, net
22
(99,463,122)
(39,493,787)
Impairment loss on trade receivables, net
20
(32,317,469)
(67,936,740)
Repair, maintenance, materials and consumables
(340,793,731)
(303,342,358)
Tax for electricity producers
13E
(122,721,182)
(234,654,212)
Other operating expenses
13F
(381,234,519)
(298,236,230)
Operating profit
3,685,596,950
4,527,196,337
Finance income
14
315,256,803
337,849,633
Finance costs
14
(85,411,116)
(84,617,159)
Net finance result
229,845,687
253,232,474
Profit before tax
3,915,442,637
4,780,428,811
Income tax expense
17
(577,925,516)
(708,877,229)
Profit for the year
3,337,517,121
4,071,551,582
Earnings per share
Basic and diluted earnings per share (RON)
15
7.42
9.05
Other comprehensive income
Impairment of property, plant and equipment recognized in
revaluation reserve, net of tax
(510,200)
(770,110)
Remeasurement of defined benefit liabilities, net of tax
351,628
1,383,073
Other comprehensive income
(158,572)
612,963
Total comprehensive income
3,337,358,549
4,072,164,545
The accompanying notes are an integral part of these separate financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise specified)
4
Share capital
Inflation
adjustments to
share capital
Public
patrimony
Revaluation
reserve
Other reserves
Retained
earnings
Total equity
Balance at 1 January 2024
4,498,025,670
1,028,872,000
45,324,243
12,047,813,106
1,017,729,953
6,399,236,025
25,037,000,997
Total comprehensive income for the year
Profit of the year
-
-
-
-
-
4,071,551,582
4,071,551,582
Total comprehensive income for the year
Impairment of property, plant and equipment recognized in revaluation
reserve, net of tax
-
-
-
(770,110)
-
-
(770,110)
Remeasurement of defined benefit liabilities, net of tax
-
-
-
-
-
1,383,073
1,383,073
Total other comprehensive income for the year
-
-
-
(770,110)
-
1,383,073
612,963
Total comprehensive income for the year
-
-
-
(770,110)
-
4,072,934,655
4,072,164,545
Transactions with owners of the Company
Contributions and distributions
Dividends (Note 24)
-
-
-
-
-
(6,292,737,912)
(6,292,737,912)
Total transactions with owners of the Company
-
-
-
-
-
(6,292,737,912)
(6,292,737,912)
Other changes in shareholders' equity
Transfer of revaluation reserve to retained earnings due to depreciation
and disposals of property, plant and equipment
-
-
-
(491,817,251)
-
491,817,251
-
Balance at 31 December 2024
4,498,025,670
1,028,872,000
45,324,243
11,555,225,745
1,017,729,953
4,671,250,019
22,816,427,630
(continued on page 5)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
SEPARATE STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise specified)
5
Share capital
Inflation
adjustments to
share capital
Public
patrimony
Revaluation
reserve
Other
reserves
Retained
earnings
Total equity
Balance at 1 January 2025
4,498,025,670
1,028,872,000
45,324,243
11,555,225,745
1,017,729,953
4,671,250,019
22,816,427,630
Total comprehensive income for the year
Profit of the year
-
-
-
-
-
3,337,517,121
3,337,517,121
Total comprehensive income for the year
Impairment of property, plant and equipment recognized in revaluation
reserve, net of tax
-
-
-
(510,200)
-
-
(510,200)
Remeasurement of defined benefit liabilities, net of tax
-
-
-
-
-
351,628
351,628
Total other comprehensive income for the year
-
-
-
(510,200)
-
351,628
(158,572)
Total comprehensive income for the year
-
-
-
(510,200)
-
3,337,868,749
3,337,358,549
Transactions with owners of the Company
Contributions and distributions
Dividends (Note 24)
-
-
-
-
-
(4,043,229,023)
(4,043,229,023)
Total transactions with owners of the Company
-
-
-
-
-
(4,043,229,023)
(4,043,229,023)
Other changes in shareholders' equity
Transfer of revaluation reserve to retained earnings due to depreciation
and disposals of property, plant and equipment
-
-
-
(465,980,372)
-
465,980,372
-
Balance at 31 December 2025
4,498,025,670
1,028,872,000
45,324,243
11,088,735,173
1,017,729,953
4,431,870,117
22,110,557,156
The accompanying notes are an integral part of these separate financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. managed in a two-tier system
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
6
Note
2025
2024
Cash flow from operating activities:
Profit for the year
3,337,517,121
4,071,551,582
Adjustments for:
Depreciation
22
866,441,920
893,257,152
Amortisation
5,496,104
2,834,193
Impairment loss on property, plant and equipment and
intangible assets, net
22
99,463,122
39,493,787
Impairment loss on trade receivables, net
20
32,317,469
67,936,740
Write-down of inventories
(415,518)
(580,592)
Provisions for risk and charges
21,511,010
(14,252,468)
Loss on disposal of property, plant and equipment
13F
2,448,872
5,489,339
Net foreign exchange loss
6,505,363
(211,220)
Interest income
14
(271,083,441)
(327,958,055)
Interest expense
14
21,379,170
26,117,608
Unwinding of discounts
65,869,790
58,476,191
Income tax expense
17
577,925,516
708,877,229
4,765,376,498
5,531,031,486
Changes in:
Trade receivables
(97,176,586)
1,346,618,362
Inventories
(239,968,113)
(7,318,385)
Restricted cash
(739,717)
80,000,000
Other assets
(34,666,071)
43,876,820
Trade payables
247,729,683
48,011,627
Deferred income
(10,173,688)
25,456,959
Employee benefits
7,745,756
7,418,002
Other payables
(45,755,984)
110,140,309
Cash generated from operating activities
4,592,371,778
7,185,235,180
Interest paid
(12,239,091)
(18,840,756)
Income tax paid
(522,168,092)
(831,670,339)
Net cash from operating activities
4,057,964,595
6,334,724,085
Cash flow from investing activities:
Payments for acquisition of property, plant and equipment
(463,450,774)
(280,713,219)
Payments for acquisition of intangible assets
(17,561,973)
(287,734)
Payments for deposits held for investment purposes
(9,080,000,000)
(6,950,000,000)
Proceeds from deposits held for investment purposes
8,815,000,000
7,850,000,000
Proceeds from the redemption of corporate bonds
-
353,331,500
Interest received
287,321,382
301,699,785
Payments for share capital increase of subsidiaries
23
-
(244,650,000)
Net cash flow from/ (used in) investing activity
(458,691,365)
1,029,380,332
(continued on page 7)
S.P.E.E.H. HIDROELECTRICA S.A. managed in a two-tier system
SEPARATE STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
7
Note
2025
2024
Cash flow from financing activities:
Repayment of borrowings
25
(93,673821)
(92,349,679)
Lease payments
25
(9,486,038)
(6,436,017)
Dividends paid
24
(4,036,492,863)
(6,287,085,221)
Net cash used in financing activities
(4,139,652,722
(6,385,870,917)
Net increase/(decrease) in cash and cash equivalents
1,356,523,240
978,233,500
Cash and cash equivalents at 1 January
18
(540,379,492)
378,289,740
Cash and cash equivalents at 31 December
18
816,143,748
1,356,523,240
The accompanying notes are an integral part of these separate financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
8
1. REPORTING ENTITY AND GENERAL INFORMATION
(a) General information about the Company
Societatea de Producere a Energiei Electrice in Hidrocentrale Hidroelectrica S.A. (“the Company” or
“Hidrolectrica”) is a joint stock company, domiciled in Romania. The Company’s registered office is 15-17
Ion Mihalache Blvd., Tower Center Building, 10-15 floors, Sector 1, Bucharest. The Company is registered
at National Trade Register Officer with no. J40/7426/2000 and has unique registration code 13267213.
These financial statements are separate financial state ments (not consolidated) of Societății de Producere
a Energiei Electrice în Hidrocentrale Hidroelectrica S.A.
The Company’s main lines of business are power generation (hydro and wind) and electricity supply to
end consumers.
As of 31 December 2025, the Romanian State through the Ministry of Energy owns 360,094,390 shares,
representing 80.0561% of the share capital and of the total voting rights. The rest of the shares are traded
on the Bucharest Stock Exchange as follows: 75,600,136 shares, representing 16.8074% of the share
capital are owned by legal persons and 14,108,041 shares, representing 3.1365% of the share capital by
individuals.
The Company is governed by a two-tier system comprising the Supervisory Board and the Management
Board.
Between 23 June and 4 July 2023, the Company went through an initial public offer on Bucharest Stock
Exchange. The allocation of the shares was carried out on 5 July 2023, the total offer included the entire
holding of Fondul Proprietatea, namely 89,708,177 shares representing 19.9439% of the Company's share
capital.
The first trading day of Hidroelectrica shares at the Bucharest Stock Exchange was 12 July 2023.
List of subsidiaries
As of 31 December 2025 and 31 December 2024 Hidroelectrica has the following subsidiaries:
Subsidiary
Activity
Registered
Office
% participation at
31 December
2025
% participation at
31 December
2024
Hidroserv S.A. (company
in reorganization)
Services for energy
sector(maintenance,
repairs, construction)
Bucharest,
Romania
100%
100%
Uzina de Construcții
Mașini Hidroenergetice
S.R.L.
Manufacturing of
engines and turbines
Resita,
Romania
100%
100%
Hidroserv S.A. entered the insolvency proceedings in October 2016. In 2020, a reorganization plan of the
subsidiary was approved by the Assembly of Creditors and confirmed by the insolvency judge. On 25 June
2025 the court has officially closed the insolvency proceedings against S.S.H. Hidroserv S.A, by ordering
its reintegration into the economic circuit. On June 25, 2025 the insolvency procedure was closed.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
9
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
On 22 February 2023, the Company was declared the winner of the sales procedure of the business lines
ABC and Calnicel platform, owned by UCM Resita SA. In January 2024, the Company set-up a new
subsidiary, Uzina de Construcții Mașini Hidroenergetice S.R.L., through which it took-over the business
from U.C.M. Reșița S.A. The transaction was finalized on 11 March 2024.
All revenues are generated in Romania.
(b) Regulatory environment
The activity in the energy sector is regulated by the National Energy Regulatory Authority ("ANRE").
The main responsibilities of ANRE include: licensing the entities operating in the energy sector, issuance
of regulations applicable to the electricity market, approval of regulated prices and tariffs and issuance of
methodologies used to set regulated prices and tariffs.
(c) Main operations of the Company
Electricity generation and system services
The Company generates electricity by operating 188 hydropower plants and micro-hydropower plants,
including 5 pumping stations, (the main generation capacities being Portile de Fier I and Portile de Fier II,
which represent approximately 40% of the total electricity generated) and 36 wind turbines of 3 MW each.
The electricity generated is sold both wholesale and retail (supply to end consumers).
On 1 January 2023 a centralized electricity acquisition mechanism (“MACEE”) was implemented by the
Government through which the electricity producers shall sell the available (not contracted as of
November 2022) quantity of electricity to the market operator, OPCOM, at a fixed price of RON 450 per
MWh.
In March 2024, the Government issued a new Emergency Ordinance (OUG no. 32/28.03.2024) which
states that starting 1 April 2024, the MACEE mechanism becomes voluntary, leaving producers the
posibility to sell energy at the price of 400 RON/MWh until 31 December 2024. Thus, for 2024, the price
paid by the sole purchaser (OPCOM) to electricity producers who sell electricity through MACEE in
monthly auctions is as follows:
• RON 450 /MWh for the electricity contracted until 31 March 2024;
• RON 400 /MWh for the electricity contracted starting 1 April 2024.
Starting January 2025 the MACEE mechanism was not applicable anymore.
Hidroelectrica S.A. also provides system services to the national electricity system operator,
Transelectrica. The system services involve making an agreed power generation capacity available to
Transelectrica within a certain period of time, so that to allow the system operator to achieve permanent
balancing of the electricity system.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
10
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
Electricity supply to end users
The electricity market to end users in Romania is liberalized and all consumers are free to choose their
electricity supplier from which they can purchase electricity at negotiated prices.
The Company supplies electricity at negotiated tariffs to both industrial consumers and household
consumers. The supply tariff include, in addition to the electricity price, the electricity transmission and
distribution costs (see accounting policy 7 b)), the contribution to high efficiency co-generation power
support scheme, and the cost of green certificates (see Green certificates section).
Starting 1 November 2021, due to the significant increase in energy prices on the international and
national markets and the impact thereof on Romanian consumers, the Government implemented
consumer support schemes, as follows:
• capping the electricity supply tariffs for household and non-household consumers until 30 June 2025.
The difference between the cap price and the regulated cost was partially covered through a subsidy
from the State reducing the impact of capping mechanism. Once the Group submitted the requests
for the subsidy to be received from the State authorities as per applicable law, the subsidy and the
related income is recorded (Note 11). The impact of this mechanism on the Group’s f inancial
performance in 2025 was a reduction of revenue due to capped prices by RON 46 million.
Green certificates (“GC”)
As a producer of electricity from renewable sources (hydroelectric power in refurbished micro-
hydropower plants with an installed capacity of no more than 10 MW and with a service life of at least 15
years from the date of commissioning, and wind power), the Company receives green certificates through
the green certificates support scheme.
In 2025 the Group received 3 green certificates for each MWh generated by the eligible micro-hydropower
plant and 0.75 green certificates for each MWh generated by the wind farm. In 2024 received between
2,92 and 3 green certificates for each MWh generated by eligible micro-hydropower plants. During 2025,
the Group generated from its own production portfolio a number of 24,635 GC from hydropower plants
and 197,813 GC from wind power plant (CEE Crucea Nord) (2024: 28,089 GC from hydropower plants and
217,200 GC from wind power plant).
The selling price must fall between the minimum and maximum values set by law:
(a) a minimum trading value of EUR 29.4/GC and
(b) a maximum trading value of EUR 35/GC.
As an electricity supplier, the Company is required to purchase a number of green certificates computed
by multiplying the annual mandatory purchase quota of green certificates by the quantity (in MWh) of
electricity supplied to end users. ANRE establishes the annual mandatory level of purchase obligations
(quotas) of green certificates. The Company is eligible to receive green certificates for the production of
Crucea Wind farm which are used to partially settle the obligation to comply with the mandatory annual
quota. The difference is acquired by the Group to reach the quota and the Group recognizes the amount
needed to acquire the green certificates for fulfilling the quota in “Trade payables”
Applicable annual quota for 2025 is 0.49983 green certificate per MWh (2024: 0.496 green certificate per
MWh).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
11
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
Tax on electricity producers
The tax for electricity producers is computed as 100% of net monthly average selling price in excess of
RON 400 per MWh. (450/MWh till 31 March 2024) The tax on electricity producers was applicable until
31 March 2025.
In February 2025, the Government issued a new Emergency Ordinance (GEO no. 6/27.02.2025) extending
the applicability of the tax for an additional 3 months, until June 30, 2025. Starting April 1, 2025, the tax
for energy producers is calculated by applying a rate of 80% (reduced from 100%) to the difference
between the average net monthly selling price and the price of 400 RON per MWh.
The net monthly average selling price is computed based on the monthly revenue of the generation
segment, which includes the wholesale of electricity produced and the value of electricity transferred
within the same entity from producer portfolio (generation segment) to supplier portfolio (supply
segment), less monthly cost for imbalances.
Tax on Constructions
Starting with 1 January 2025, the tax on constructions was introduced through Government Emergency
Ordinance (GEO) 156/2024, with subsequent amendments, calculated as 0.5%, of the net book value of
eligible constructions held as of 31 December of the preceding year and constructions subject to
concession contract.
The tax had an impact of 51,133,367 RON for the period ended 31 December 2025.
2. BASIS OF ACCOUNTING
These separate financial statements were prepared in accordance with the Order of Minister of Public
Finance no.2844/2016 and subsequent amendments („OMFP 2844/2016”). According to OMFP
2884/2016 the International Financial Reporting Standards ("IFRS") represent standards adopted based
on the procedure as per European Commission Regulation no. 1606/2002 of the European Parliament and
of the Council of 19 July 2002 on the application of international accounting standards (IFRS as adopted
by European Union). OMFP no. 2844/2016 includes also additional provisions versus IFRS-EU, the
Company identified as provisions applicable to its financial statements the matters described below.
The separate financial statements were authorized for issue by the Company’s Management Board on
25.03.2026 and by the Supervisory Board on 26.03.2026.
The Company also issues a primary version of these separate financial statements prepared in accordance
with OMFP 2844/2016 in Romanian language approved at the same date with these financial statements.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
12
2. BASIS OF ACCOUNTING (continued)
OMF 2844/2016 is prepared in accordance with the IFRS Accounting Standards as adopted by the
European Union, with the following exceptions:
- IAS 21 The Effects of Changes in Foreign Exchange Rates regarding the functional currency, and
except for IAS 12 Income Taxes concerning the treatment of the minimum tax on turnover as an
income tax expense.
- These exceptions do not affect the compliance of the Company's financial statements with the
IFRS Accounting Standards as adopted by the EU.
The Company also prepared consolidated financial statements in accordance with OMFP no. 2844/2016
and consolidated financial statements in accordance with IFRS-EU, approved at the same date as these
separate financial statements.
Main differences between IFRS-EU and OMFP no. 2844/2016, that affects this set of financial statements
refer to:
- Fee paid for the connection of the power generation capacities to the electricity grid is presented
as “Property, plant and equipment” in the IFRS-EU financial statements while in the OMFP no.
2844/2016 financial statements is presented as “Intangible assets”; (Net book value is of RON
30,470,918 RON as of 31 December 2025 (31 December 2024: RON 32,096,035)
- Impact of restatement of statutory share capital in nominal terms according to IAS 29 “Financial
Reporting in Hyperinflationary Economies” in amount of RON 1.028,872,000 is presented as part
of “Share Capital” in the IFRS-EU financial statements while in the OMFP no. 2844/2016 financial
statements is presented as an equity item separate from share capital, namely “Inflation
adjustments in accordance with IAS 29”;
- Cash contribution received from State for construction of public domain assets in amount of RON
45,324,243 as of 31 December 2025 and 2024 (ie certain type of assets such as dams which will
be transferred to the State at the end of its economic life) is presented as deferred income in the
IFRS-EU financial statements, while in the OMFP no. 2844/2016 financial statements is presented
as public patrimony;
- Accruals for employee bonuses in amount of RON 42,529,000 as of 31 December 2025 (31
December 2024: RON 42,681,942) are presented as employee benefits liabilities in the IFRS-EU
financial statements, while in the OMFP no. 2844/2016 financial statements are presented as
provisions. In addition, the related expense in current year in amount of RON 42,529,000 is
included u nder “Other operating expenses”, while in the IFRS-EU financial statements is included
under “Employee benefits expenses”
These separate financial statements have been prepared on a going concern basis. Details of the
Company’s accounting policies are included in Note 7.
3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY
These separate financial statements are presented in Romanian Lei (RON), which is the Company’s
functional currency. All amounts are presented in RON, unless otherwise indicated.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
13
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
Following below are the new standards, amendments and interpretations to existing standards adopted
starting 1 January 2025 and their effect in the preparation of the Group and the Company financial
statements for the year ended 31 December 2025.
The standards/amendments that are effective and have been endorsed by the European Union
The accounting policies adopted are consistent with those of the previous financial year, except for the
following IFRS Accounting Standard which however, is not relevant for the Group:
- IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments). The
amendments are effective for annual reporting periods beginning on or after January 1, 2025. The
newly adopted IFRS Accounting Standard did not have a material impact on the Group’s/Company’s
accounting policies.
The standards/amendments that are not yet effective, but have been endorsed by the European Union
- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and
Measurement of Financial Instruments (Amendments). In May 2024, the IASB issued amendments to
the Classification and Measurement of Financial Instruments which amended IFRS 9 Financial
Instruments and IFRS 7 Financial Instruments: Disclosures and they become effective for annual
reporting periods beginning on or after January 1, 2026, with earlier application permitted.
Management has assessed that these amendments will not have a material impact.
- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Contracts Referencing
Nature-dependent Electricity (Amendments). In December 2024, the IASB issued targeted
amendments for a better reflection of Contracts Referencing Nature-dependent Electricity, which
amended IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures and they become
effective for annual reporting periods beginning on or after January 1, 2026, with earlier application
permitted. Management has assessed that these amendments will not have a material impact.
- Annual Improvements to IFRS Accounting Standards – Volume 11. In July 2024, the IASB issued Annual
Improvements to IFRS Accounting Standards – Volume 11. An entity shall apply those amendments for
annual reporting periods beginning on or after January 1, 2026. Earlier application is permitted.
Management has assessed that these amendments will not have a material impact.
The standards/amendments that are not yet effective and have not yet been endorsed by the European
Union
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
14
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(continued)
- IFRS 18 introduces new requirements on presentation within the statement of profit or loss. It requires
an entity to classify all income and expenses within its statement of profit or loss into one of the five
categories: operating; investing; financing; income taxes; and discontinued operations. These
categories are complemented by the requirements to present subtotals and totals for ‘operating profit
or loss’, ‘profit or loss before financing and income taxes’ and ‘profit or loss’. It also requires disclosure
of management-defined performance measures and includes new requirements for aggregation and
disaggregation of financial information based on the identified ‘roles’ of the primary financial
statements and the notes. In addition, there are consequential amendments to other accounting
standards. IFRS 18 is effective for reporting periods beginning on or after January 1, 2027, with earlier
application permitted. Retrospective application is required in both annual and interim financial
statements. The standard has not yet been endorsed by the EU. The Company is currently working to
identify all impacts the amendments will have on the primary financial statements and notes to the
financial statements. The initial expected material impacts on Company’s financial statements are, as
follows:
- Foreign exchange difference will be classified in the category where the related income and expense
form the item giving rising to the foreign exchange difference.
- New disclosure will be added: (a) management-defined performance measures; (b) specified
expense by nature if expenses are presented by nature in the operating category of the statement
of profit or loss; and (c) a reconciliation for each line item in the statement of profit or loss between
the restated amounts presented applying IFRS 18 and the amounts previously presented applying
IAS 1.
- Interest received and interest paid will be classified in the financing activities.
- IFRS 19 Subsidiaries without Public Accountability: Disclosures (including amendments). In May 2024,
the IASB issued the IFRS 19 - Subsidiaries without Public Accountability: Disclosures, and in August 2025
the IASB issued amendments to IFRS 19. IFRS 19 (including the amendments) becomes effective for
annual reporting periods beginning on or after January 1, 2027, with earlier application
permitted. Management has assessed that these amendments will not have a material impact;
- IAS 21 The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary
Presentation Currency (Amendments). In November 2025, the IASB issued amendments to Translation
to a Hyperinflationary Presentation Currency which amend IAS 21 The Effects of Changes in Foreign
Exchange Rates, and they become effective for annual reporting periods beginning on or after January
1, 2027, with earlier application permitted. Management has assessed that these amendments will not
have a material impact;
- Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint
Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. In December
2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research
project on the equity method of accounting.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
15
5. USE OF JUDGEMENTS AND ESTIMATES
In preparing these separate financial statements, management has made judgements and estimates that
affect the application of the Company’s accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are
recognized prospectively.
a) Judgements
Information about judgements made in applying accounting policies that have the most significant effects
on the amounts recognized in the financial statements is presented below:
a1) Concession agreement
In November 1998 Law no. 213/1998 was issued regulating the statute of the public domain. This law
provides that the ownership right over the public domain assets belongs to the State or local authorities,
which can lease the assets that are in public property. In accordance with the provisions of Law no.
213/1998 and Law no. 219/1998, the Ministry of Economy and Commerce (currently the Ministry of
Energy) has leased to the Company the hydropower facilities (dams, piers, locks, water storage reservoirs)
and the land on which they are located. Thus, in December 2004, the concession contract no.
171/27.12.2004 was concluded between the Ministry of Economy and Commerce (currently the Ministry
of Energy) (grantor) and Company (operator) for the hydropower assets in the public patrimony existing
as at 31 December 2003.
The main terms of the concession contract and its subsequent amendments are the following:
• The State, through the Ministry of Economy and Commerce (currently the Ministry of Energy), holds
the ownership right over the public assets that are the subject matter of the contract;
• The Company has the right to use these assets for a period of 49 years from the signoff date (the
period may be extended in accordance with the provisions of the concessions law, by half of the
original period, by mutual agreement of the parties), for the purpose of operation, refurbishment,
modernization, rehabilitation, as well as construction of new hydro-power facilities according to the
investment programs;
• The Company pays an annual royalty of 1/1000 of the annual revenues from power generation and
system services generated in hydro-power facilities;
• Upon termination of the contract, certain assets that were used by the operator in carrying out the
concession will be returned to the grantor, as explained below;
• The Company has the obligation to use the assets in accordance with the provisions of the concession
contract and the operating license.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
16
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The concession contract provides for the following types of assets:
• Assets to be returned – assets of public domain that belong to the grantor and that are returned to
the grantor in full right, free of charge and free of any encumbrances, upon termination of the
concession contract. Assets to be returned are assets of public domain such as dams, piers, locks, that
are subject to the concession/lease, as well as those resulting from investments/improvements to
these assets made by the Company during the concession contract period. The Company depreciates
these investments/improvements over the lower of the concession contract remaining period and the
useful life of those assets.
• Takeover assets – assets that belong to the operator and are used by the operator during the
concession period and which are similar in nature to assets of public domain above (land
improvements and constructions, technical installations and machinery), over which, upon
termination of the concession contract, the grantor has an option to take over those assets in
exchange for a payment equal to the “present book value” on the takeover date. In Company’s
interpretation, the “present book value” is the net book value at the date of the takeover, and given
that the Company uses the revaluation model, this value will be the revalued amount at that date.
These assets are depreciated over their estimated useful life.
• Own assets – assets that, upon termination of the concession contract, remain the property of the
operator. Own assets are assets (constructions, technological installations, machinery and equipment,
measuring and control devices; vehicles; furniture, office equipment, protective equipment and other
tangible assets) that belong to the operator and are used by the operator during the concession
period, except for the takeover assets. These assets are depreciated over their estimated useful life.
In assessing the application of IFRIC 12 “Service concession arrangements”, the Company considered the
following criteria of the public-private service concession arrangements in the analysis of the concession
contract:
a) The grantor controls or regulates what services the operator must provide within the
infrastructure, to whom it must provide them and at what price; and
b) The grantor controls – by ownership, beneficial entitlement or otherwise – any significant residual
interest in the infrastructure at the end of the term of the arrangement.
The Company concluded that it is not within the scope of IFRIC 12 because it does not meet criterium a)
above, the grantor does not regulate to whom the operator must provide the service and at what price.
The Company considered that the price fixing mechanism introduced by the Government starting 1
January 2023 does not affect this conclusion as this mechanism is temporary and applied only to part of
the production.
The Company recognises the royalty of the concession contract in Other operating expenses.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
17
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
a2) Leasing and refurbishing of assets to be returned
In assessing the application of IFRS 16 “Leases” to the concession contract presented above, the Company
considered the following criteria to determine whether this contract contains a lease:
a) the lessee has the right to obtain in essence all the economic benefits using the identified asset;
b) the lessee has the right to direct the use of the identified asset.
The Company concluded that both criteria are met and, consequently, the concession contract contains a
lease as the Ministry of Energy transferred the right to control the use of the assets of the public domain
(assets to be returned) to the Company in exchange for a royalty. According to IFRS 16, the Company
measured the carrying amount of the right-of-use asset and the amount of lease liability related to this
contract as nil, because the future lease payments are variable and depending on Company’s revenue,
the royalty being calculated as a percentage of revenues.
In respect of refurbishments made to the assets to be returned, the Company concluded that they are
improvements of a leased asset for which the Company is the “accounting owner”, in the sense that these
improvements serve the Company’s interest, as lessee, to use and control the leased assets.
Consequently, the Company recognized improvements of assets to be returned as property, plant and
equipment. The Company depreciates these assets over the lower of the concession contract remaining
period and the useful life of those assets.
The Company believes that the following facts indicate that the Company is the “accounting owner” of
improvements made:
a) The Ministry of Energy, as a lessor, does not reimburse the Company, as lessee, for the cost of the
improvements made. Consequently, the improvements are fully funded from the Company’s
sources, and the Company is responsible to incur the costs;
b) The Company has no obligation to make improvements of the assets to be returned. The decisions
regarding refurbishment of the assets to be returned are made by the Company depending on its
needs to use these assets and are unique to the Company’s intended use of the leased assets;
c) The Company is permitted to alter the leasehold improvements without the consent of the lessor
or without compensating the lessor;
d) Improvements are made on the risk and responsibility of the Company (the Company bears the
risk of overruns) and are not available to the grantor until the termination of the concession
contract.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
18
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
a3) Cash-generating units (“CGU”)
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows from
continuing use that are largely independent of cash inflows of other assets or groups of assets.
The Company concluded that the assets relating to hydro-power plants representing a single cash-
generating unit, mainly based on the following considerations:
- the Company has a single hydro-power generation license which covers all power plants as a whole;
- the license stipulates the Company’s obligation to maintain the availability of its production
capacities as a whole;
- the decision to produce electricity in a hydro-power plant is made based on the technical operating
conditions of the other hydro-power plants;
- the balancing of the electricity contracted and produced is made at the Company’s level and not at
individual plants;
- the contracts are concluded based on the total estimated electricity to be produced in a specific
period in all of the Company’s hydro-power plants, and the price is set for the entire production.
Also, the Company concluded that the wind park is a separate single CGU. The Company has different investment
objective projects under construction related to hydro-power assets with complex/multiple functions for which
reliable estimates related to future cash-flows can be made, therefore tested individually for specific impairment.
a4) Decommissioning obligations
Order of the Ministry of Water and Environment no. 119 of 11 February 2002 on approval of the Procedure
of passage into conservation, post-utilisation or abandonment of dams provides the procedures for post-
utilisation and abandonment of dams (including levees, hydro-power plants and locks) that must be
carried out by the holders of dams under certain conditions provided by law. The Company has no legal
or contractual obligations to disassemble and restore the site, other than those arising from Order no.
119, which are presented in the paragraphs below.
Dam holders are defined by GEO no. 244 of 28 November 2000 (republished) on the safety of the dams
as legal persons of any title, who have in their possession, ownership and/or administration a dam.
Post-utilisation refers to the dams that have reached their normal operating life span and can be used for
purposes other than those for which they were originally constructed for. Post-utilisation requires the
implementation of a set of measures and works that will ensure the new functionality of the dam to
protect the population and the environment in safe conditions. The necessary measures and works are
carried out through the care of both the holder or administrator of the dam, and the post-user.
The post-utilisation of the dams is proposed by the holders of the dams and is approved by order of the
minister that exercises control, coordination or authority over the entity that holds the dam, based on the
endorsement of the Ministry of Water and Environment.
After the performance of the works required by the post-utilisation project, the hand over reception
protocol between the former holder and the post-user is performed.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
19
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
Abandonment refers to completed or unfinished dams, with or without the normal life span exceeded,
which can no longer be kept in operation or post-utilisation due to technical impossibility or very high
costs and which, at the same time, represent a potential danger for the population and the environment.
Abandonment requires the implementation of a set of measures and works for the decommissioning of
the dam, the ecological reconstruction of the area and enabling adequate liquid and solid flows, including
the maximum water flow in the dammed section. The necessary measures and works are carried out with
the care of the holder or the administrator of the dam and must ensure the flow conditions existing prior
to the construction of the dam.
The triggering events of dam abandonment operations include:
• the request of the holders of the dams, when they find that the necessary performance requirements
according to the law cannot be met, the dams presenting an unacceptable associated risk;
• the disposition of the control bodies, following expertises that show that the dams present an
unacceptable associated risk, constituting a real danger for the population and the environment;
• accidents, when the conclusions of the expert report specifically indicate the abandonment due to
the very high cost of the necessary repairs, as well as not meeting the performance requirements and
the safety criteria, etc.
The reception of the decommissioning and ecological reconstruction works is carried out by
representatives of the holder of the dam and of the central or local public administration, who take over
the respective area, by concluding a handover protocol.
The Romanian State, represented by the Ministry of Economy and Commerce, currently the Ministry of
Energy, holds the ownership right over the hydropower developments (dams, levees, locks, storage lakes)
and the land on which they are located that belong to the public domain and which are the subject of the
concession contract mentioned above. The Company has the right to use these assets for a period of 49
years (remaining 28 years as of 31 December 2025).
According to the concession contract, the Company has the right during the contract to abandon or
deactivate assets that are part of the public domain with the consent of the grantor.
The Company considers that, in accordance with the applicable legal provisions and practices,
abandonment occurs in extreme situations, when the dams become an unacceptable risk impacting the
environment and the population. Given that these constructions have complex functions in addition to
power generation, including flood protection, water supply, irrigation etc., post-utilisation is the usual
way in which these constructions will be transferred to central or local public administration, after they
can no longer be used for power generation purposes.
The necessary works for post-utilisation are established by technical documentation prepared on the basis
of an assessment of the safety status of the dam at that time, carried out by experts certified by the
ministries and certified/endorsed by the Ministry of Water and Environment.
Moreover, the abandonment works are carried out on the basis of a special documentation prepared with
the water authority approval, the environmental protection agreement, and the endorsement of the local
and central public administration. These documentations and endorsements will establish the activities
necessary for abandonment.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
20
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The works and costs of transition into post-utilisation or abandonment are subject to significant
uncertainties caused by the fact that the rate of degradation and the life span of a dam vary significantly
from one case to another (some could reach more than 100 years), as well as by the complexity and variety
of works that may be necessary for transition into post-use or abandonment, depending on the specific
factual status of each dam at the time of entering post-utilisation or abandonment, on the cost sharing
between the holder and the post-user, as well as by the very remote time period from present to the
moment when the abandonment works would be performed, if any. Also, there are significant
uncertainties related to the evolution of the degree of degradation and to the determination of the actual
life span of a dam, which are dependent on natural disasters (floods, landslides, earthquakes, etc.) and on
the reliability of the construction.
In addition, the Company estimates that, by the end of the concession contract (the remaining period of
28 years as of 31 December 2025), the occurrence of situations requiring post-utilisation or abandonment
of public domain assets or its own assets – levees, hydro-power plants and locks (other than those in
progress assets described in Note 22) is unlikely, considering the long life of the dams, which can be
significantly extended over 100 years by maintenance and improvements.
Consequently, the Company recognizes decommissioning provisions only when management has taken
the decision to abandon an asset or switch to post-utilisation or has no realistic alternative but to do so
during the concession period. The provisions are recognized based on the costs resulting from the
technical documentation prepared by specialists employed by the Company.
a5) Electricity sale-purchase contracts
Under IFRS 9 “Financial Instruments”, a contract to buy or sell a non-financial item (including electricity)
may be classified and recognized as a financial instrument. According to paragraphs 2.4 and 2.6 of IFRS 9,
if the contracts to buy or sell non-financial items can be settled net in cash or in another financial
instrument, or by exchanging financial instruments, including if the underlying commodity is readily
convertible into cash, they are in the scope of IFRS 9. The standard provides an exemption from applying
IFRS 9 for the contracts that are entered into and continue to be held for the purpose of the receipt or
delivery a non-financial item in accordance with the entity’s expected purchase, sale or usage
requirements (“own-use exemption”).
The electricity is a commodity readily convertible into cash and therefore management has conducted an
analysis in order to determine if own use exemption applies to its contracts.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
21
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The main considerations are:
- the Company is an electricity producer and its only intention and purpose is to sell all the
electricity produced;
- the forward sell contracts are concluded with the sole intention of delivering the electricity
produced; the Company does not act as an electricity broker/dealer;
- the buy-sell transactions on the spot markets (day-ahead, intra-day and balancing markets) are
entered into only for meeting the Company’s selling and own balancing necessity and
responsibility;
- in 2020 the Company started to be active in the electricity supply sector (selling electricity to end
users), acting also as a service provider (including customer service); and
- the Company has used limited forward purchase electricity contracts and their purpose was to
cover the needs for the contractual commitments for deliveries to final end consumers.
The Company concluded that own use exemption applies in all its electricity sale and purchase contracts
in 2025 si 2024 and therefore are not in scope of IFRS 9.
b) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at the reporting date that have a significant
risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next
financial year is included in the following notes:
• Note 22 – assumptions related to the revaluation of property, plant and equipment;
• Note 22 – assumptions related to determination of recoverable amount of assets under construction;
• Note 7 g) and h) – estimates of useful lives of property, plant and equipment and intangible assets;
• Note 13 E – estimates in relation to electricity transfer price between production and supply activity
used in calculation of tax for electricity producers;
• Notes 29 and 32 – recognition and measurement of provisions and contingent liabilities;
• Notes 7 k), 20 and 30 b) – determination of expected credit losses for trade receivables;
• Note 16 – assessment of obligations resulting from defined benefit plans and other long-term
employee benefits: the main actuarial assumptions;
• Note 29 – estimates related to decommissioning provisions.
Measurement of fair values
A number of the Company’s accounting policies and disclosures require the measurement of fair values,
for financial assets and liabilities, and non-financial assets (property, plant and equipment).
When measuring the fair value of an asset or liability, the Company uses observable market data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used
in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
22
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting
period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following
notes:
• Note 22: property, plant and equipment;
• Note 30: financial instruments.
Climate-related risks
Hidroelectrica is exposed to climate-related risks, which can impact water resource availability, a key
factor in hydropower generation. These include variability in precipitation, with the potential for altered
river flows impacting water availability for energy production. The increased incidence of extreme
weather events—such as the drought experienced in 2024 that led to a significant decrease in hydro
production. Nevertheless, the company has historically observed that during droughts, electricity prices
have increased, which may benefit the company through increased profit margins rather than through
volumes sold.
To address climate-related risks, Hidroelectrica is emphasizing the diversification of its energy portfolio,
particularly focusing on expanding into renewable energy sources. The company plans to develop and
acquire solar parks and additional wind farms, aiming for an additional of minimum 500 MW of installed
capacity in the next years. This shift towards solar and wind energy is strategically significant, especially
given the inverse correlation between solar power generation and water levels for hydropower. The
adoption of solar power, therefore, offers an offset during periods of low water availability, underlining
the importance of a versatile and resilient energy mix in response to the challenges posed by climate
variability.
The financial implications of climate-related risks include the fair value of Hidroelectrica's property, plant
and equipment, related to water resources and hydropower facilities that can be affected by a lower
volume of power generation estimated during projected useful life associated with climate change
compared with the initial technical and financial performance indicators of such projects. These potential
implications are considered in the economic obsolescence test conducted as part of the revaluation
exercise performed as of 31 December 2023.
Also, with respect to investment objectives that are currently in progress, the specific impairment
assessments performed consider a lower forecasted electricity production given the expected variability
in precipitation.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
23
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
Work safety and safe operations
Protecting people is a priority of the Company and the Company is committed to safe and responsible
operations to protect the health and safety of its employees, contractors and surrounding communities.
This commitment demonstrated through established health and safety policies, ongoing learning and
development via training on human rights and workplace safety, and the annual update of the HSE
Prevention and Protection Plan.
While the Company aims for zero serious workplace accidents, incidents may still occur. However, the
Company’s top priorities remain the enhancement of safe working conditions.
Cyber risk
Digitalization brings many benefits, but it also increases risks related to cybersecurity and system reliance.
As the Company’s operations grow and depend heavily on IT systems and network infrastructure, these
risks can cause operational disruptions, fraud, or data theft.
Any IT system failure, including from cyberattacks, could negatively impact the business, finances, and
operations. Systems face threats like power outages and cyberattacks, and despite our cybersecurity
measures, disaster recovery plans, and employee training, we may not be fully protected against all
unauthorized access attempts. The Company is continuously enhancing its IT systems and cybersecurity
to protect data confidentiality and integrity, while also educating its employees to responsibly manage
cyber risks and IT systems failures.
Risk management and internal control
The Company’s internal control framework includes compliance to the company’s values and guidelines
on ethics and corporate responsibility. A strong commitment to integrity, responsibility, and ethical
behaviour is especially crucial in preventing and detecting fraud, bribery and corruption. The Company is
committed to conducting its operations fairly, honestly, and in full compliance with all applicable laws. It
adopts a zero-tolerance policy toward bribery and corruption in all its operations and relationships
worldwide. Internal procedures addressing conflicts of interest, gifts and hospitality, and whistleblowing
are designed to reduce potential fraud and corruption risks.
Company-wide fraud preventing, anti-bribery and corruption policies, along with whistleblower
procedures, provide guidance on risk assessment, legal compliance, and reporting concerns.
The Company and its Supervisory Board take whistleblowing reports and negative media coverage
seriously. Established policies ensure analysis of any breaches of the internal code of conduct or legal
requirements, supported by an open channel for reporting. Internal reviews conducted throughout 2025,
up to the financial statements’ approval date, found no instances of ethical violations or non-compliance
with laws and regulations.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
24
6. BA SIS OF MEASUREMENT
The separate financial statements have been prepared on the historical cost basis except for land,
buildings, equipment and other items of property, plant and equipment, which are measured using
revaluation model.
7. MATERIAL ACCOUNTING POLICIES
The Company has consistently applied the following accounting policies to all periods presented in these
separate financial statements.
(a) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency at the exchange rates at the
dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured
at fair value in a foreign currency are translated into the functional currency at the exchange rate when
the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction. Foreign currency differences
are generally recognized in profit or loss and presented within finance costs.
(b) Revenue from contracts with customers
Revenue in measured based on the consideration specified in a contract with a customer, while the
revenue from electricity supply is measured based on lower of the agreed contractual prices with
customers and, where applicable, the capped electricity prices as per legislation. The Company recognises
revenue when it transfers control over a good or service to a customer.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
25
7. MATERIAL ACCOUNTING POLICIES (continued)
The following table provides information about the nature and timing of the satisfaction of performance
obligations in contracts with customers, including significant payment terms, and the related revenue
recognition policies.
Nature and satisfaction of contractual
obligations
Revenue recognition
Wholesale of
electricity
The Company sells the majority of electricity
produced on forward contracts with electricity
suppliers and traders, on the spot market (day-
ahead market) to the market operator (OPCOM)
and on the balancing market to the system
operator (Transelectrica).
Invoices are issued at the end of the month or at
the beginning of the following month for the
electricity delivered in the current month.
The payment term is 30 days from invoice date.
Revenue is recognized over time, because the
customer simultaneously receives the benefits
provided by the performance of the Company as the
Company delivers electricity; generation and use of
electricity are simultaneous because electricity is
not stored.
The contract liabilities primarily relate to the
advance consideration received from customers
under contract in relation to energy to be supplied
in the following period.
Electricity supply to
end users (retail
sales of electricity)
The performance obligation is represented by
delivery of electricity to the customer’s location,
which includes transmission and distribution,
performed via third party assets.
Customers obtain control of electricity as
electricity is consumed. Revenue is recognized
based on the volumes communicated to the
Company by the distribution operators, which are
based on automated or manual meter readings
performed by the distribution operators, self-
readings reported by the consumers, or based on
estimates of electricity delivered for which
readings were not yet performed for the interval
between the date of last reading and the end of
period.
Invoices are usually issued on a monthly basis, in
the month following consumption.
The payment term is 45 days from invoice date for
households final consumers and 30 days from
invoice date for non-households final consumers.
Revenue is recognized over time, because the
customer simultaneously receives and consumes
the benefits provided by the Company's
performance as the Company delivers electricity. At
the end of the month an accrual is recorded for the
quantity of electricity supplied during month but not
yet invoiced, this being unbilled revenue. The
recognition of unbilled revenue gives the
unconditional right to receive the value for the
electricity supplied and usually there are not
difference between the estimated revenue and the
amount invoiced.
Electricity supply revenue include transmission and
distribution tariffs, which are invoiced by the
Company to end users. The transmission and
distribution services are provided by the
transmission operator and the distribution
operators, and the related costs are billed by the
transmission operator and the distribution
operators to the Company.
The Company assessed whether it is a principal or an
agent in relation to transmission and distribution
services (and related green certificates obligations
as described under paragraph 7.j) passed through to
the customer and it concluded that it acts as a
principal. The considerations supporting this
conclusion include: the Company has a single
performance obligation, i.e. delivery of electricity to
end user location, which includes transmission and
distribution; electricity consumption happens
instantaneously as the electricity is generated at the
Company’s plants and delivered through the
transmission and distribution grids to the end user’s
location.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
26
Nature and satisfaction of contractual
obligations
Revenue recognition
System services
System services consist of Company making
available an agreed generation capacity to the
system operator, Transelectrica, for a certain
period of time. This capacity is used by
Transelectrica in the process of balancing the
electricity system.
Invoices for system services are issued on a
monthly basis, at the beginning of each month for
the services provided in the previous month.
The payment term is 30 days from invoice date.
As the Company makes available generation
capacity measured in MWh and not specific assets,
the Company concluded that the contract does not
contain a lease and therefore is in scope of IFRS 15.
Revenue is recognized over time, because the
customer simultaneously receives and consumes
the benefits provided by the Company's
performance as the services are performed.
The fee received for system services depends on the
hourly capacities made available (ie number of
hours for which the capacity multiplied by the
capacity) and the hourly tariffs.
Both the hourly capacities and the hourly tariffs are
established based on the results of daily auctions
organized by the system operator.
If, during the interval the capacity is made available,
the system operator orders the Company to produce
electricity using the capacity made available, the
electricity produced is sold on the balancing market
at the price established on the respective market
(see Wholesale of electricity section above).
(c) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for
the amount expected to be paid if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(ii) Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future
payments is available.
(iii) Defined benefit plans
The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by
estimating the amount of future benefits that employees have earned in the current and prior periods,
discounting that amount. There are no plan assets.
The defined benefit plans include cash benefits on retirement and benefits in kind consisting of free
electricity granted to employees after retirement.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
27
7. MATERIAL ACCOUNTING POLICIES (continued)
The calculation of defined benefit obligations is performed annually by a qualified actuary using the
projected unit credit method.
Remeasurements of the defined benefit liability, which comprise actuarial gains and losses, are recognised
immediately in other comprehensive income (“OCI”). The Company determines the net interest expense
(income) on the net defined benefit liability for the period by applying the discount rate used to measure
the defined benefit obligation at the beginning of the annual period to the then-net defined benefit
liability, taking into account any changes in the net defined benefit liability during the period as a result
of contributions and benefit payments. Net interest expense and other expenses related to defined
benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that
relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The
Company recognises gains and losses on the settlement of a defined benefit plan when the settlement
occurs.
(iv) Other long-term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit
that the employees have earned in return for their service in the current period and prior periods. That
benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in
the period in which they arise.
Other long term employee benefits include cash benefits paid to employees at the moment when they
achieve certain seniority milestones.
(v) Termination benefits
Termination benefits are expensed at the earlier of when the Company can no longer withdraw the offer
of those benefits and when the Company recognises costs for a restructuring. If benefits are not expected
to be settled wholly within 12 months of the reporting date, then they are discounted.
(d) Operating profit
Operating profit is the result generated from the continuing principal revenue-producing activities of the
Company as well as other income and expenses related to operating activities. Operating profit excludes
finance result and income taxes.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
28
7. MATERIAL ACCOUNTING POLICIES (continued)
(e) Finance income and finance costs
The Company's finance income and finance costs include:
• interest income;
• interest expense;
• the foreign currency gain or loss on financial assets and financial liabilities;
• unwinding of non-current provisions.
Interest income or expense is recognised using the effective interest method.
The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument to:
• the gross carrying amount of the financial asset; or
• the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying
amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability.
However, for financial assets that have become credit-impaired subsequent to initial recognition, interest
income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If
the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
(f) Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the
extent that it relates to a business combination, or items recognised directly in equity or in OCI.
The Company has determined that interest and penalties related to income taxes, do not meet the
definition of income taxes, and therefore accounted for them under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets.
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to tax payable or receivable in respect of previous years. The amount of current tax
payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted
at the reporting date.
Current tax assets and liabilities are offset only if certain criteria are met.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
29
7. MATERIAL ACCOUNTING POLICIES (continued)
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognized for:
• temporary differences that occur on the initial recognition of assets and liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Company is able to control the timing of the reversal of the temporary differences and
it is probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they
can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset
in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered,
based on the business plans of the Company. Deferred tax assets are reviewed at each reporting date and
are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such
reductions are reversed when the probability of future taxable profits improves.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in
which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
(iii) Global minimum-top up tax
Law 431/2023 on ensuring a global minimum level of taxation for multinational groups and large national
entities transposed into the national legislation the provisions of Directive 2523/2022. Also, according to
Article 5 of the Law 431/2023, the explanations and examples from the Administrative Guidelines issued
by the Organization for Economic Co-operation and Development ("OECD") are used for the application
of this law.
Law 431/2023 is applicable to large groups of entities, both national and multinational, with a
consolidated turnover (at the level of the entire group) of at least 750 million Euros in at least two years
of the four years prior to the reference year. Thus, according to the legislation, starting with the financial
year 2024, a supplemental tax ("Global minimum top-up tax ") should be collected each time the effective
rate of 15%.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
30
7. MATERIAL ACCOUNTING POLICIES (continued)
The effective tax rate ("ETR") is computed annually at the jurisdiction level. The ETR is calculated as the
ratio of the adjusted covered taxes of the Constituent Entities (“CE”) – the numerator and the qualifying
net profit of the CE – the denominator, respectively. Both the numerator and the denominator represent
the cumulative amounts of all CEs located in a jurisdiction. The OECD has introduced a number of safe
harbours, aimed at simplifying the calculation for taxpayers, especially in the first years of application. As
long as at least one of the tests mentioned under the protection regimes (de minimis test, the simplified
ETR test and the routine profitability test) is met for a year, the additional tax in that jurisdiction for the
Group can be considered to be zero. Thus, the Group analyzes if at least one of the aforementioned tests
is met and, in the event that none of the tests is met, performs the calculation of the ETR at the level of
the jurisdiction. If the ETR determined is less than 15%, the additional tax required to reach the minimum
of 15% is recognized as corporate income tax.
(g) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are initially recognised at cost, which includes capitalized
borrowing costs.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
After initial recognition:
- land, buildings, equipment and other items of property, plant and equipment are measured at
revalued amount; and
- assets in progress are measured at cost less any accumulated impairment losses.
Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ
materially from that which would be determined using the fair value at the end of the reporting period.
When an item of property, plant and equipment is revalued, the accumulated depreciation is eliminated
from the gross book value, and the net amount is adjusted to the revalued amount of the asset.
If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised and
accumulated in equity under revaluation reserve. However, the increase is recognised in profit or loss to
the extent that it reverses a revaluation decrease of the same amount of the same asset previously
recognised in profit or loss.
If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit
or loss. However, the decrease is recognized in equity in revaluation reserve if there is any credit balance
existing in the revaluation reserve in respect of that asset.
The difference between revalued amount and the net book value of assets is recognized as revaluation
reserve in equity.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
31
7. MATERIAL ACCOUNTING POLICIES (continued)
The revaluation reserve is transferred to retained earnings in an amount corresponding to the use of the
asset (as the asset is depreciated) and upon disposal of the asset.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company.
(iii) Depreciation
Depreciation is calculated using the straight-line method over the assets estimated useful lives, and is
recognized in profit or loss. Land and assets under construction are not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
Category
Useful life (years)
Buildings and special installations
65 - 97
Buildings and special installations representing assets to be returned,
according to the concession contract (see Note 5 a1))
The lesser of useful economic
life and remaining period of
the concession contract
Technological equipment
25 - 47
Measurement and control devices
15 - 23
Vehicles
16 - 24
Fixture and fittings
12
Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.
(h) Intangible assets
(i) Recognition and measurement
Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses. Intangible assets include mainly
software and licenses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in
the specific asset to which it relates. All other expenditure, including expenditure on internally generated
goodwill and brands, is recognized in profit or loss as incurred.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
32
7. MATERIAL ACCOUNTING POLICIES (continued)
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values
using the straight-line method over their estimated useful lives, and is generally recognized in profit or
loss.
The estimated useful lives of software and licenses for current and comparative periods are 3 - 5 years.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted
if appropriate.
(i) Green certificates
The Company recognizes the green certificates granted under the support scheme for renewable energy
generators at cost (which is 0) at the time of obtaining the right to receive the grant (when electricity is
generated).
The Company recognizes green certificates purchased at cost.
The Company, as an electricity supplier, is required by law to purchase a number of green certificates (see
Note 1 c)), whose cost is subsequently charged to the end users based on the quantities of electricity
consumed. In order to meet the legal annual purchase obligation (annual target or quota), the Company
uses both green certificates granted under the support scheme and green certificates purchased.
Green certificates needed to meet the obligation (quota) are estimated by the Group and an accrued
expense is reflected in the Statement of financial position considering the acquisition cost. Further green
certificates are acquired and expensed to the extent required to meet the quota obligation. Green
certificates purchased in excess of the mandatory quota at the end of the reporting period are recognized
in the separate statement of financial position. If the mandatory quota is not met at the end of the
reporting period, then the Company recognized a liability in the separate statement of financial position.
The cost of green certificates recharged to end users of RON 354,337 thousand is recognized in profit or
loss as part of Revenue from contracts with customers.
(j) Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognized when they are originated. All other financial assets and financial
liabilities are initially recognized when the Company becomes a party to the contractual provisions of the
instrument.
Cash and cash equivalents include cash balances, demand deposits and deposits with maturity of up to
three months from the date of origination that have an insignificant exposure to the risk of change in fair
value, and are used by the Company to manage short-term commitments.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
33
7. MATERIAL ACCOUNTING POLICIES (continued)
A financial asset (unless it is a trade receivable without a significant financing component) or a financial
liability is initially measured at fair value plus or minus transaction costs that are directly attributable to
its acquisition or issue. A trade receivable without a significant financing component is initially measured
at the transaction price.
Investments in subsidiary companies - represent long-term strategic investments and are stated at
historical cost, less any adjustments impairment caused by a diminished value, which is recognised as an
expense in the period in which the impairment is identified. The main indicators considered for the
identification of impairment are current and anticipated results of the subsidiary, in the context of the
industry in which it operates.
The cost of investment is measured at initial recognition as fair value of consideration transferred. The
consideration transferred for the acquisition of an investment, includes the fair value of the deferred
consideration.
Investments held as of 31 December 2025 and as of 31 December 2024 represent fully controlled
subsidiaries.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified into one of the business models: held to collect, held
to collect and sell or other.
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes
its business model for managing financial assets, in which case all affected financial assets are reclassified
on the first day of the first reporting period following the change in the business model.
A financial asset is classified as held to collect and measured at amortized cost if it meets both of the
following conditions:
• it is held within a business model whose objective is to hold assets in order to collect contractual
cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
All financial assets of the Company are classified as held to collect and give rise to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
Financial assets – Subsequent measurement and gains and losses.
Financial assets at amortized cost are subsequently measured at amortised cost using the effective
interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange
gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is
recognized in profit or loss.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
34
7. MATERIAL ACCOUNTING POLICIES (continued)
Financial liabilities – Classification, subsequent measurement and gains or losses
Financial liabilities are classified as measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains or losses are recognized in profit or loss. Any gain or loss on
derecognition is also recognized in profit or loss.
(iii) Derecognition
Financial assets
The Company derecognizes a financial asset when:
• the contractual rights to the cash flows from the financial asset expire; or
• it transfers the rights to receive the contractual cash flows in a transaction in which either:
o substantially all of the risks and rewards of ownership of the financial asset are
transferred; or
o the Company neither transfers nor retains substantially all of the risks and rewards of
ownership and it does not retain control of the financial asset.
Financial liabilities
The Company derecognizes a financial liability when its contractual obligations are discharged or
cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and
the cash flows of the modified liability are substantially different, in which case a new financial liability
based on the modified terms is recognized at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit
or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company currently has a legally enforceable right to set off
the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability
simultaneously.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
35
7. MATERIAL ACCOUNTING POLICIES (continued)
(k) Impairment
(i) Financial assets
The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that
are measured at amortized cost or at fair value through other comprehensive income. The amount of
expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument. The Group always recognizes lifetime expected credit
losses for trade receivables.
The expected credit losses on these financial assets are estimated using a provision matrix based on the
Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general
economic conditions and an assessment of both the current as well as the forecast direction of conditions
at the reporting date, including time value of money where appropriate.
The Group measures loss allowances at an amount equal to lifetime ECLs (Note 30).
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information that
is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group’s historical experience and informed credit assessments,
that includes forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90
days past due.
The Group considers a financial asset to be in default when:
• the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the
Group to actions such as realising security (if any is held); or
• the financial asset is more than 180 days past due.
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is
more than 180 days past due unless the Group has reasonable and supportable information to
demonstrate that a more lagging default criterion is more appropriate.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument.
The maximum period considered when estimating ECLs is the maximum contractual period over which
the Group is exposed to credit risk.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
36
7. MATERIAL ACCOUNTING POLICIES (continued)
Measurement of ECLs
ECLs are probability-weighted estimate of credit losses. Credit losses are measured as the present value
of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with
the contract and the cash flows that the Company expects to receive).
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial assets carried at amortised cost are
credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset measured at amortised cost is credit-impaired includes the following
observable data:
• significant financial difficulty of the debtor;
• a breach of contract such as a default or being more than 180 days past due;
• the restructuring of a loan or advance by the Company on terms that the Company would not
consider otherwise; or
• it is probable that the debtor will enter bankruptcy or other financial reorganisation.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying
amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Company has no reasonable
expectations of recovering a financial asset in its entirety or a portion thereof.
(ii) Non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than
inventories, contract assets and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs,
according to the judgement described in Note 5 a3).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of
disposal. Value in use is based on the estimated future cash flows, discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable
amount.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
37
7. MATERIAL ACCOUNTING POLICIES (continued)
Impairment losses are recognized in profit or loss, except for the property, plant and equipment measured
at revalued amount, in which case the impairment loss is recognized in other comprehensive income and
decreases the revaluation reserve within equity to the extent that it reverses a previous revaluation
surplus related to the same asset.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount,
nor exceed the carrying amount that would have been determined, net of depreciation, had no
impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement
of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as
a revaluation increase.
(l) Share capital
The Company recognized changes in share capital in accordance with the applicable legislation and after
approval of the General Meeting of Shareholders and registration in the Trade Register.
Until 31 December 2003, the statutory share capital in nominal terms was restated according to IAS 29
“Financial Reporting in Hyperinflationary Economies” with a corresponding adjustment to retained
earnings.
Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from
equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance
with IAS 12 (see 7 (f)).
(m) Public patrimony
Public patrimony represents the value of assets belonging to the public domain, that have been financed
from state budgetary sources (public funds). The part of the value of these assets funded from budgetary
sources is initially recognized as deferred income, and then, at the time of work acceptance and
commissioning of the assets, the value is transferred to Public Patrimony assimilated to equity accounts.
According to Government Decision 1705/2006, these assets will be transferred to the balance sheet of
the institutions from whose sources they were financed, after the end of their economic life, based on an
official act adopted for this purpose. According to OMFP no. 2844/2016, entities that have not completed
the legal procedures for the transfer of such public patrimony assets, meanwhile report them separately
in equity, in accounts assimilated to capital.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
38
7. MATERIAL ACCOUNTING POLICIES (continued)
(n) Dividends
Dividends are recognized as a deduction from equity in the period in which their distribution is approved
and recognized as a liability to the extent it is unpaid at the reporting date. Dividends are disclosed in the
notes to financial statements when their distribution is proposed after the reporting date and before the
date of the issuance of the financial statements.
(o) Provisions
A provision is recognized if, as a result of a past event, the Company has a current, legal or constructive
obligation, which can be reliably estimated and it is likely that an outflow of resources incorporating
economic benefits will be required to settle the obligation. Provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
Decommissioning
A decommissioning provision in respect of abandoned or switched to post-utilization hydro-power assets,
and the related expenses are recognized when management has taken the decision to abandon an asset
or switch an asset to post-utilisation or the Company has not a realistic alternative except to abandon or
move to post-utilization an asset before the end of the concession period (see Note 5 (a4)).
Subsequent to initial measurement, the obligation is measured at the end of each reporting period to
reflect the time value of money and any changes in the estimated future cash flows underlying the
obligation. The increase in the provision due to time value of money is recognized as finance costs, while
the changes in estimated future cash flow is recognized as operating expense.
The Company recognizes a decommissioning provision against property, plant and equipment in respect
of decommissioning of the wind turbines. The obligation is measured at the end of each reporting period
to reflect the time value of money and any changes in the estimated future cash flows underlying the
obligation. The change in the provision due to time value of money is recognized as finance costs, while
the changes in estimated future cash flow is recognized against property, plant and equipment.
(p) Contingent assets and liabilities
A contingent liability is:
a) a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control
of the Company; or
b) a present obligation that arose from past events but is not recognized because:
i. it is not probable that an outflow of resources embodying economic benefits will be required to
settle the obligation; or
ii. the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the financial statements, but disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
39
7. MATERIAL ACCOUNTING POLICIES (continued)
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Company.
A contingent asset is not recognized in the financial statements, unless it is virtually certain. Contingent
assets are only disclosed when an inflow of economic benefits is considered probable.
(q) Tax uncertainties
The Company applies IFRIC 23 Uncertainties over income tax treatment to account for uncertainties
related to income tax.
An 'uncertain tax treatment' is an income tax treatment for which there is uncertainty over whether the
relevant tax authority will accept it under tax law. Whether an uncertain tax treatment is present depends
both on the specific position taken by the Company and on the applicable tax law. Therefore, uncertain tax
treatments often occur when the applicable tax law is unclear or is not consistently understood.
If there is uncertainty about an income tax treatment, then the Company considers whether it is probable
(more likely than not) that a tax authority will accept the Company's tax treatment included or planned
to be included in its tax filing.
The Company reflects uncertainty about a tax treatment in measuring its current and deferred taxes as
follows:
• Tax authority is likely to accept the Company's tax treatment: If the Company concludes that it is
probable that the tax authority will accept its tax treatment, then it measures current and
deferred taxes consistently with the tax treatment used or planned to be used in its income tax
filing.
• Tax authority is unlikely to accept the Company's tax treatment: If the Company concludes that it
is not probable that the tax authority will accept its tax treatment, then it reflects the effect of
that tax uncertainty in determining the related taxable profit (or tax loss), tax bases, unused tax
losses, unused tax credits and tax rates. To do so, the Company uses either the most likely amount
or the expected value method - whichever better predicts the resolution of the uncertainty.
Uncertainties related to taxes that are not income taxes (e.g. value added tax or taxes in scope of IFRSC
21 Levies) are recognized and measured in accordance with IAS 37 Provisions, contingent liabilities and
contingent assets, unless they are dealt with specifically in another standard (e.g. IAS 19 Employee Benefits
for social security taxes).
Uncertainties surrounding the amount to be recognized as a provision are dealt with by various means
according to the circumstances. Where the provision being measured involves a large population of items,
the obligation is estimated by weighting all possible outcomes by their associated probabilities. The name
for this statistical method of estimation is ‘expected value’. The provision will therefore be different
depending on whether the probability of a loss of a given amount is. Where there is a continuous range
of possible outcomes, and each point in that range is as likely as any other, the mid-point of the range is
used.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
40
7. MATERIAL ACCOUNTING POLICIES (continued)
Where a single obligation is being measured, the individual most likely outcome may be the best estimate
of the liability. However, even in such a case, the Company considers other possible outcomes. Where
other possible outcomes are either mostly higher or mostly lower than the most likely outcome, the best
estimate will be a higher or lower amount.
(r) Leases
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration.
As a lessee
At commencement or on modification of a contract that contains a lease component, the Company
allocates the consideration in the contract to each lease component on the basis of its relative stand-
alone prices.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct costs
incurred, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the end of the lease term, unless the lease transfers ownership of the underlying
asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the
Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the
useful life of the undelying asset, which is determined on the same basis as those of property and
equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if this rate cannot be
readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its
incremental borrowing rate as the discount rate.
The Company determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset
leased.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
41
7. MATERIAL ACCOUNTING POLICIES (continued)
Lease payments included in the measurement of the lease liability comprise the following:
• fixed lease payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate
as at the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Company is reasonably certain to exercise, lease
payments in an optional renewal period if the Company is reasonably certain to exercise an extension
option, and penalties for early termination of a lease unless the Company is reasonably certain not to
terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising from a change in an index or rate, if there is a
change in the Company’s estimate of the amount expected to be payable under a residual value
guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or
termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use
asset has been reduced to zero.
The Company presents right-of-use assets in Property, plant and equipment in the separate statement of
financial position.
Short-term leases and leases of low-value assets
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases
(lease term of 12 months or less) and leases of low-value assets (less than USD 5,000 equivalent). The
Company recognises the lease payments associated with these leases as an expenses on a straight-line
basis over the lease term.
(s) Government grants
Government grants related to assets are initially recognised as deferred income at fair value if there is
reasonable assurance that they will be received and the Company will comply with the conditions
associated with the grant. Grants related to the acquisition of assets are recognised in profit or loss as
other income on a systematic basis over the useful life of the asset.
Grants that compensate the Company for expenses incurred are recognised in profit or loss as other
income on a systematic basis in the periods in which the expenses are recognised, unless the conditions
for receiving the grant are met after the related expenses have been recognised. In this case, the grant is
recognised when it becomes receivable.
For green certificates grants refer to Note 7 (i).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
42
7. MATERIAL ACCOUNTING POLICIES (continued)
(t) Segment reporting
Segment results that are reported to the Company’s Management Board and Supervisory Board include
items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
(u) Subsequent events
Events occurring after the reporting dates until the date these financial statements were authorized for
issue, which provide additional information about conditions prevailing at the reporting date (adjusting
events) are reflected in these financial statements. Events occurring after the reporting dates until the
date these financial statements were authorized for issue, which provide information on events that
occurred after the reporting dates (non-adjusting events), when material, are disclosed in the notes to
the financial statements.
(v) Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the
most advantageous market to which the Company has access at that date. The fair value of a liability
reflects its non-performance risk.
A number of the Company’s accounting policies and disclosures require the measurement of fair values,
for financial assets and liabilities, and non-financial assets (see Note 5 (b)).
When one is available, the Company measures the fair value of an instrument using the quoted price in
an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or
liability take place with sufficient frequency and volume to provide pricing information on an ongoing
basis.
If there is no quoted price in an active market, then the Company uses valuation techniques that maximise
the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation
technique incorporates all of the factors that market participants would take into account in pricing a
transaction.
8. CHANGE IN ACCOUNTING POLICY
The accounting policies applied in these separate financial statements are the same as those applied in
the Company’s separate financial statements as at and for the year ended 31 December 2024.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
43
9. COMPARATIVES
These separate financial statements prepared at 31 December 2025 show comparability with the previous
financial year separate financial statements.
10. OPERATING SEGMENTS
A. Basis for segmentation
The Company has identified two reporting segments based on the operating licenses owned – production
of electricity and supply of electricity.
The following summary describes the operations of each reportable segment:
Reportable segment
Operations
Electricity generation
Production of electricity through the operation of hydropower plants, micro-
hydropower plants and wind turbines, rendering of system services to the
system operator (meaning making available an agreed generation capacity for
the balancing needs of the energy system).
Electricity produced is sold mainly to electricity suppliers and entities that trade
electricity on the wholesale electricity market, as well as supplied to final
consumers through the electricity sypply segment.
Electricity supply
Supply of electricity to non-households and households final consumers.
Electricity supplied to end consumers is mainly generated by the electricity
generation segment, and where there is a gap, this is covered through spot or
forward electricity purchases.
The Management Board of the Company reviews management reports of each segment. Segment profit
before tax is used to measure performance because management believes that such information is one
of the most relevant in evaluating the results of the segments.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
44
10. OPERATING SEGMENTS (continued)
B. Information about operating segments
Year ended
31 December 2025
Electricity
generation
Electricity
supply
Total for
reportable
segments
Others
Inter-segment
eliminations
Total
External revenues
4,112,373,887
5,510,421,144
9,622,795,031
35,053,501
-
9,647,848,532
Inter-segment revenue
1,673,945,907
-
1,673,945,907
(1,673,945,907)
-
Segment revenue
5,786,319,794
5,510,421,144
11,296,740,938
35,053,501
(1,673,945,907)
9,647,848,532
Segment profit before tax
2,936,202,840
944,186,296
3,880,389,136
35,053,501
-
3,915,442,637
Net finance income/(cost)
188,679,627
41,166,060
229,845,687
-
-
229,845,687
Amortization and
depreciation
(870,446,020)
(1,492,004)
(871,938,024)
-
-
(871,938,024)
Impairment loss on property,
plant and equipment
(99,462,374)
(748)
(99,463,122)
-
-
(99,463,122)
Electricity purchased
(23,880,422)
(2,528,081,278)
(2,551,961,700)
-
1,640,603,395
(911,358,305)
Green certificates expenses
-
(387,680,377)
(387,680,377)
-
33,342,512
(354,337,865)
Employee benefits expenses
(750,718,731)
(27,766,663)
(778,485,394)
-
-
(778,485,394)
Turbinated water
(444,764,067)
-
(444,764,067)
-
-
(444,764,067)
Tax for electricity producers
(122,721,182)
-
(122,721,182)
-
-
(122,721,182)
Transport and distribution of
electricity
(54,192,034)
(1,580,645,870)
(1,634,837,904)
-
-
(1,634,837,904)
Other expenses
(672,120,761)
(82,224,958)
(754,345,719)
-
-
(754,345,719)
Year ended
31 December 2024
Electricity
generation
Electricity
supply
Total for
reportable
segments
Others
Inter-segment
eliminations
Total
External revenues
5,520,163,184
3,602,985,676
9,123,148,860
148,936,882
-
9,272,085,742
Inter-segment revenue
1,342,797,031
-
1,342,797,031
(1,342,797,031)
-
Segment revenue
6,862,960,215
3,602,985,676
10,465,945,891
148,936,882
(1,342,797,031)
9,272,085,742
Segment profit before tax
4,103,255,268
528,236,661
4,631,491,929
148,936,862
-
4,780,428,811
Net finance income/(cost)
245,314,959
7,917,515
253,232,474
-
-
253,232,474
Amortization and
depreciation
(896,008,456)
(82,889)
(896,091,345)
-
-
(896,091,345)
Impairment loss on property,
plant and equipment
(39,493,787)
-
(39,493,787)
-
-
(39,493,787)
Electricity purchased
(25,715,723)
(1,490,355,288)
(1,516,071,011)
-
1,307,222,944
(208,848,067)
Green certificates expenses
-
(309,108,210)
(309,108,210)
-
35,574,087
(273,534,123)
Employee benefits expenses
(650,722,043)
(25,832,863)
(676,554,906)
-
-
(676,554,906)
Turbinated water
(517,805,427)
-
(517,805,427)
-
-
(517,805,427)
Tax for electricity producers
(234,654,212)
-
(234,654,212)
-
-
(234,654,212)
Transport and distribution of
electricity
(64,394,869)
(1,163,997,341)
(1,228,392,210)
-
-
(1,228,392,210)
Other expenses
(575,163,352)
(94,351,976)
(669,515,328)
-
-
(669,515,328)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
45
10. OPERATING SEGMENTS (continued)
Other expenses include the following captions from separate statement of profit or loss: Repair,
maintenance, materials and consumables, Impairment loss on trade receivables and Other operating
expenses.
The electricity generation segment includes also system services and production of electricity for system
balancing which are billed to the system operator, Transelectrica SA (see details in Note 11).
Inter-segment revenue includes the value of electricity produced and transferred within the same entity
from producer portfolio (generation segment) to supplier portfolio (supplier segment) of RON
1,616,722,973 in 2025 (2024: RON 1,271,354,516). Inter-segment revenue is calculated based on a
methodology approved by the Management Board in 2021. The methodology used for computing transfer
price between segments is based on the average electricity production cost in the last 12 months ending
2 months prior the calculation month, plus an internal margin.
The increase in profitability of the supply segment in 2025 compared to 2024 is due to the increase in
selling price per MWh and the increase of number of clients, compared to the same period as in prior
year.
All revenues are generated in Romania.
Total segment assets and total segment liabilities are not included in the management reports reviewed
by the Management Board.
11. REVENUE
A. Revenue from contracts with customers
The Company generates revenue from:
2025
2024
Wholesale of electricity
3,864,222,971
5,217,335,087
Electricity supplied to final consumers (retail sales)
5,510,421,144
3,602,985,676
System services
248,150,916
302,828,097
Total
9,622,795,031
9,123,148,860
Revenue from electricity supplied to final consumers reflect the value of volume supplied, including
positive imbalances, which are based on automated or manual meter readings performed by the
distribution operators, self-readings reported by the consumers, or based on volume estimated by
distribution operators if readings are not available.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
46
11. REVENUE (continued)
The majority of the Company’s supply revenue in the year ended 31 December 202 5 represent sales to
non-household consumers (approx. 64 % of volume, 63% in 2024), for which readings are performed at
the end of each month, data sent by the distribution operators. Also, approximately 71% (67% in 2024) of
the volume supplied to household consumers in the year ended 31 December 2025 is determined based
on meter readings at the end of the period, and the rest is based on estimates of the consumption, data
sent by the distribution operators. Consequently, the Company assesses that the risk of revenue
adjustment subsequent to period end that could result from the difference between the meter readings
and the estimated volumes would have a limited impact on the financial statements.
In 2025, the Company produced 11,847 GWh (2024: 13,864 GWh) and sold 1 4,056 GWh (2024: 14,666
GWh). From total quantity sold, 7,244 GWh were supplied to end users in 2025 (5,572 GWh in 2024).
The Company has contracts with customers for periods up to 12 months.
Individual clients who represent more than 10% of the Company’s revenues are as follows:
• Transelectrica SA, the electricity system operator - system services and production of electricity for
system balancing (latter included in Sale of electricity produced) – RON 739,636,134 in 2025 (8%)
and RON 1,946,833,917 in 2024 (21%);
• OPCOM SA, the market operator – sale of electricity produced on the spot market of RON
686,612,232 in 2025 (7%) and RON 2,704,049.345 in 2024 (30%).
Timing of revenue recognition:
2025
2024
Revenue recognised over time
9,622,795,031
9,123,148,860
Total
9,622,795,031
9,123,148,860
B. Contract liabilities
As at 31 December 2025, the Company has contract liabilities of RON 48,391,638 (31 December 2024:
RON 97,786,127). These represent advance payments from customers for future contractual obligations
for electricity delivery and supply.
Contract liabilities as at 31 December 2024 of RON 97,786,127 were recognized as revenues during 2025
(2024: RON 41,719,807).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
47
12. OTHER INCOME
2025
2024
Grant income
5,642,425
5,794,211
Compensations, fines and penalties from suppliers
884,077
126,282,247
Other income
28,526,999
16,860,424
Total
35,053,501
148,936,882
On 2 April 2024, the High Court of Cassation and Justice, through Decision no. 1852, has definitively ruled
in favor of Hidroelectrica in relation to the litigation with the tax authorities whose subject was the
annulment of the Decision on settling the preliminary tax appeal no. 406/18.12.2014, annulment of Tax
Decision no. F-MC 851/21.01.2014, in amount of RON 214,385,212, as well as the reimbursement of the
imposed amount. In July 2024, the imposed amount was compensated with the tax obligations for the
year 2024. Additionally, the Company received tax interest of RON 122,842,704 in September 2024,
corresponding to the period between the enforcement of the imposed amount by the authorities and its
compensation.
13. OPERATING EXPENSES
A. Turbined water
Turbined water represents the water used by the hydropower plants in order to generate electricity. The
fee for turbined water established by the National Agency for Water Administration is RON 37 per MWh
produced (2024: RON 37 MWh).
B. Electricity purchased
The Company purchases electricity in order to fulfill the deficit between the electricity contracted for sales
and the actual electricity produced or in order to cover the electricity needs of the supply segment.
In 2025, the Company purchased 2,209 GWh (2024: 802 GWh) for RON 911,358,305 (2024: RON
208,848,067). The increase in electricity purchases in 2025 is mainly due to decrease of own production
due a poor hydrology and increase in energy delivered under supply segment.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
48
13. OPERATING EXPENSES (continued)
C. Transport and distribution of electricity
2025
2024
Injection of electricity produced in the national system
39,173,613
62,359,501
Distribution of electricity supplied
1,301,105,512
949,130,524
Transport of electricity supplied
294,558,779
216,902,185
Total
1,634,837,904
1,228,392,210
Tariffs for transport and distribution of electricity are regulated.
Increase in transport and distribution costs in 2025 is determined by the increase in the regulated tariffs
starting 1 January 2025 and the increase of energy delivered to final consumers.
D. Green certificates
As of 31 December 2025, the Group incurred costs of RON 354,338,865 (2024: RON 273,534,123) cost of
green certificates purchased for the supply segment under the legal obligation to purchase green
certificates from renewable energy producers, based on annual targets or quotas established by law,
which apply to the quantity of electricity purchased and supplied to final consumers.
E. Tax for electricity producers
The tax for electricity producers is computed as 100% of net monthly average selling price in excess of
RON 400 RON per MWh (RON (450 /MWh up to 31 March 20214)
In February 2025, the Government issued a new Emergency Ordinance (OUG no. 6/27.02.2024) extending
the applicability period of the tax for an additional 3 months until 30 June 2025. Starting with 1 April 2025,
the tax for electricity producers is computed as 80% (decreased from 100%) on the difference between
the net monthly average selling price and 400 RON per MWh.
The tax recorded by the Company for 2025 is RON 122,721,182 (2024: RON 234,654,212).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
49
13. OPERATING EXPENSES (continued)
F. Other operating expenses
2025
2024
Movement in provisions, net
21,511,010
25,863,081
Local taxes
143,480,551
81,616,684
Security
26,751,073
23,958,430
Sponsorship
8,780,048
13,560,664
Professional services
16,216,399
11,575,992
Services related to abandoned constructions
10,112,609
10,641,918
ANRE contribution
9,719,571
12,243,581
AMEPIP contribution
8,648,942
11,266,739
Penalties
2,815,633
12,694,544
Loss on disposal of property, plant and equipment
2,448,872
5,489,339
Other expenses
130,749,812
89,325,258
Total
381,234,519
298,236,230
The overall increase of local taxes as compared with prior year is due to the recording of tax on special
constructions in amount of RON 51,133,367 which came into force starting 2025.
Other expenses in amount of RON 130,749,812 includes expenses with licenses used for less than 1 year
in amount of RON 22,572,612, royalties paid to the Ministry of Energy as part of the service concession
agreement amounting RON 6,360,539, third party services amounting RON 19,679,400 and management
fees amounting RON 8,866,834.
G. Auditor remuneration
Remuneration of the statutory auditor, Ernst &Young Assurance Services SRL, for the audit services for
the year 2025 (2024: KPMG Audit SRL), as well as the fees charged for non-audit services, are as
follows:
2025 (EUR)
2024 (EUR)
Contractual fee for the audits of the separate and consolidated financial
statements prepared in accordance with OMFP no. 2844/2016 and of the
consolidated financial statements prepared in accordance with IFRS-EU
269,000
217,235
Contractual fee for the audit of the separate financial statements prepared
in accordance with OMFP 1802/2014 for Hidroserv SA
22,000
-
Total audit fees
291,000
217,235
Fees for non-audit services fees
167,000
129,859
Total fees
458,000
347,094
Non-audit services include reviews of interim condensed consolidated financial statements, limited
assurance.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
50
14. FINANCE RESULT
2025
2024
Interest income
271,083,441
327,958,055
Dividends
1,516,400
-
Other finance income
42,656,962
9,891,578
Finance income
315,256,803
337,849,633
Interest expense
(21,379,170)
(26,117,608)
Unwinding of non-current provisions
(65,869,790)
(58,476,191)
Gain or (loss) from foreign exchange differences
1,837,844
(23,360)
Finance expenses
(85,411,116)
(84,617,159)
Net finance result
229,845,687
253,232,474
The decrease in interest income is generally due to the decrease in interest rates and decrease in deposits
over the period.
The increase in other finance income are related to late payment penalties invoiced for outstanding
balances as a result of a increase in the number of clients and their payment behavior.
15. EARNINGS PER SHARE
The calculation of earnings per share has been based on the following profit attributable to ordinary
shareholders and weighted-average number of ordinary shares outstanding.
2025
2024
Profit attributable to the owners of the Company
Profit for the year attributable to the owners of the Company
3,337,517,121
4,071,551,582
Profit attributable to ordinary shareholders
3,337,517,121
4,071,551,582
Weighted average number of ordinary shares (basic and diluted)
Issued ordinary shares at 1 January
449,802,567
449,802,567
Weighted average number of ordinary shares at 31 December
449,802,567
449,802,567
Earnings per share (basic and diluted) RON/share
7.42
9.05
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
51
16. EMPLOYEE BENEFITS
31 December 2025
31 December 2024
Defined benefit plans
98,597,734
92,743,253
Other long-term employee benefits
43,179,024
42,301,294
Salaries payable
35,010,541
29,816,913
Social security contributions
24,958,836
24,166,439
Tax on salaries
4,402,379
4,265,390
Other
6,952,180
3,090,625
Total
213,100,694
196,383,914
- Current
87,070,447
79,929,776
- Non-current
126,030,247
116,454,138
Current portion of employee benefits is as follows:
31 December 2025
31 December 2024
Defined benefit plans
11,787,842
11,398,343
Other long-term employee benefits
6,119,476
7,994,265
Salaries payable
35,010,541
29,816,913
Social security contributions
24,958,836
24,166,439
Tax on salaries
4,402,379
4,265,390
Other
4,791,373
2,288,426
Total
87,070,447
79,929,776
Post-employment benefits (defined benefit plans)
In accordance with the Collective Labour Agreements, the Company provides cash benefits to employees
at retirement depending on the years of service in the Company, as follows:
Retirement benefits
Years of service
Number of monthly gross base salary
31 December 2025
31 December 2024
Up to 10 years
1
1
Between 10 and 25 years
3
3
More than 25 years
6
6
Benefits in kind
Also, in accordance with Collective Labour Agreements, the Company provides benefits in kind consisting
of free electricity (within the limit of 1,200 kWh annually) to employees retired from the Company, subject
to meeting certain conditions (at least 15 cumulative years of seniority in the Company or other
companies operating in the electricity sector or at least 10 consecutive years of service in such companies
before retirement). In the event of the retired person's death, the surviving spouse has the right to receive
the same benefit until the time of their remarriage or death.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
52
16. EMPLOYEE BENEFITS (continued)
Other long-term employee benefits
In accordance with the Collective Labour Agreements, the Company provides cash benefits to the
Company’s employees depending on seniority in the companies, as follows:
Seniority
Number of monthly gross base salary
31 December 2025
31 December 2024
20 years
1
1
25 years
2
2
30 years
3
3
35 years
4
4
40 years
5
5
45 years
6
6
(i) Movement in the defined benefit liability and other long-term employee benefits
The following tables show the reconciliation between the opening and closing balance for the defined
benefit liability and other long-term employee benefits and their components. There are no benefit plan
assets.
Defined benefit liabilities
2025
2024
Balance at 1 January
92,743,253
93,243,143
Included in profit or loss
Current service cost
4,305,703
3,913,823
Interest cost
6,361,644
5,129,144
Benefits paid
(4,394,260)
(7,896,343)
Included in other comprehensive income
Actuarial losses/(gains)
(418,606)
(1,646,514)
Balance at 31 December
98,597,734
92,743,253
Other long-term employee benefits
2025
2024
Balance at 1 January
42,301,294
41,085,875
Included in profit or loss
Current service cost
2,273,103
2,153,738
Interest cost
3,027,985
2,541,283
Actuarial losses/(gains)
6,690,903
6,417,101
Benefits paid
(11,114,261)
(9,896,703)
Balance at 31 December
43,179,024
42,301,294
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
53
16. EMPLOYEE BENEFITS (continued)
(ii) Actuarial assumptions
The following are the main actuarial assumptions at each reporting date:
(a) Macroeconomic assumptions:
• the inflation rate used as at 31 December 2025 and 2024 is based on the forecast of the National Bank
of Romania (“NBR”) for the inflation for RON, as follows:
Year
Valuation date
31 December 2025
Valuation date
31 December 2024
2025
n/a
3.88%
2026
6.5%
3.33%
2027
3.07%
2.5%
2028+
2.5%
2.5%
• discount rate used was obtained from the interest rates for RON published by the European Insurance
and Occupational Pensions Authority (EIOPA) as follows:
Year
Valuation date
31 December 2025
Valuation date
31 December 2024
2025
n/a
6.671%
2026
6.111%
6.902%
2027
6.240%
7.074%
2028
6.365%
7.198%
2029+
6.481%-4.059% (avg 5.046%)
7.198%-4.151% (avg5.295%)
• increase in electricity price per kWh in line with the inflation rate. The electricity price used in the
actuarial calculation is RON 1.0045/kWh as at 31 December 2025 (31 December 2024: RON
0.833/kWh);
• mortality rate used on is the rate published by the National Institute of Statistics for the last 10 years
as of the valuation date.
• taxes and social contributions are those in force at the reporting dates.
(b) Company specific assumptions:
• growth rate of gross salaries used as at 31 December 2025 and 31 December 2024 is a rate equal to
the inflation rate in the following years;
• employee’ turnover rate used as at 31 December 202 5 is based on annual averages of employee’
turnover for the last 8 years differentiated by age and gender (31 December 2024: last 8 years
average). The weighted average employee’ turnover rate used as at 31 December 2025 is 1.24% (31
December 2024: 0.99%).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
54
16. EMPLOYEE BENEFITS (continued)
(iii) Sensitivity analysis
The significant actuarial assumptions used for the determination of the defined benefits and other long-
term employee benefits obligations are discount rate, expected salary increase and employee turnover.
The sensitivity analysis below shows the effect on employee benefit liabilities – increase/(decrease), and
was determined based on the reasonable changes in the respective assumptions at the end of the
reporting periods, while other assumptions remain constant.
31 December 2025
31 December 2024
Increase
Decrease
Increase
Decrease
Discount rate (100 bp)
(10,905,411)
12,735,759
(10,359,640)
12,102,339
Employee turnover ratio (100 bp)
(7,846,522)
5,836,523
(7,316,676)
4,459,459
Annual salary increase rate (100 bp)
7,029,050
(6,297,477)
6,414,534
(5,758,253)
The sensitivity analysis presented above may not be representative for the actual change in the benefit
obligation, as it is unlikely that changes in the assumptions would occur independent from each other,
while certain assumptions may be correlated. In the sensitivity analysis above, the present value of the
benefit obligation was calculated using the projected unit credit method at the end of the reporting
period, which is the same as the one applied to calculate the obligations recognized in the statement of
financial position.
Employee benefits expense
2025
2024
Average number of employees
3,544
3,537
Number of employees at 31 December
3,601
3,582
2025
2024
Salaries and other remuneration
713,531,260
620,079,320
Social security contributions
33,853,544
28,612,458
Meal tickets
31,100,590
27,863,128
Total
778,485,394
676,554,906
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
55
17. INCOME TAX
In the determination of the current and deferred tax the Company takes into account the impact of
uncertain tax positions (see Note 32). This assessment relies on estimates and assumptions and may
involve a series of judgments about future events.
The Company considers that the accounting records for income tax due are appropriate for all open tax
years, based on assessment made by management taking into account various factors, including the
interpretation of tax legislation and previous experience. New information may become available that
causes the Company to change its judgement regarding the adequacy of the existing tax liabilities; such
changes to tax liabilities will have impact in tax expense in the period that such determination is made.
(Note 32).
The increase of current tax liability by RON 118,585,013 as compared with prior period is due to higher
income tax payable related to 4th quarter of 2025 as compared with the similar period from 2024.
(a) Amounts recognized to profit or loss
2025
2024
Current tax expense
640,379,514
751,244,170
Deferred tax benefit
(62,453,998)
(42,366,941)
Total
577,925,516
708,877,229
(b) Amounts recognized in OCI
2025
2024
Before
tax
Tax
(expense)/
benefit
Net
Before
tax
Tax
(expense)/
benefit
Net
Items that will not be reclassified to profit or loss
Impairment of PPE recognized in
revaluation reserve, net of tax
(510,200)
-
(510,200)
(770,110)
-
(770,110)
Remeasurement of defined
benefit liability
418,606
(66,978)
351,628
1,646,514
(263,441)
1,383,073
TOTAL
(91,594)
(66,978)
158,572
876,404
(263,441)
612,963
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
56
17. INCOME TAX (continued)
(c) Reconciliation of effective tax rate
2025
2024
Profit before tax
3,915,442,637
4,780,428,811
Tax using the Company’s domestic tax rate
16%
626,470,822
16%
764,868,610
Global minimum tax
0.0%
7,743,356
0.2%
8,116,947
Tax effect of:
- Non-deductible expenses
0.2%
6,300,394
0.4%
17,170,709
- Tax-exempt income
(0.0%)
(245,127)
(0.0%)
(2,371)
- Tax incentives
(1.3%)
(68,346,785)
(1.7%)
(81,276,666)
- Effect of previously unrecognized temporary
differences
0.2%
(6,002,856)
-
-
Income tax
15.0%
577,925,516
14.8%
708,877,229
In 2025 and 2024, tax incentives refer to reinvested profit tax facility, positive tax incentive, increase in
equity tax incentive and sponsorships granted. The main increase is due to the increase in equity tax
incentives for equity preservation.
According to the Fiscal Code, certain revaluation reserves are subject to income tax at their distribution
as dividends, if the revaluation reserves were previously tax deducted.
(d) Global minimum top-up tax
The Company qualifies as a large group at the national level and is subject to the global minimum top-up
tax according to Law no. 431/2023. The Law transposes into national legislation the provisions of Directive
2523/2022 regarding the establishment of a minimum tax level ("Directive 2523"), which includes the
guidelines from the Pillar Two of the "Global anti-base erosion model rules" (called "GloBE rules ”) issued
by the OECD/G20 Inclusive Framework on BEPS as well as the Administrative Guidelines for the GloBE
rules. For the year 2025, the Company has recorded an expense and a long-term liability regarding the
additional top-up tax amounting to RON 7,743,356 (2024: RON 8,116,947).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
57
17. INCOME TAX (continued)
(e) Movement in deferred tax balances
Net balance at
1 January
2025
Recognized in
profit or loss
Reconized
in OCI
Net balance at
31 December
2025
Deferred tax
assets
Deferred tax
liabilities
Property, plant and
equipment and
intangible assets
1,701,633,004
(43,262,374)
-
1,658,370,630
-
1,658,370,630
Provisions
(155,688,162)
(13,980,565)
(169,668,727)
(169,668,727)
-
Employee benefits
(21,607,129)
(1,144,132)
66,978
(22,684,283)
(22,684,283)
-
Leasing liabilities
(12,696,686)
(636,836)
-
(13,333,522)
(13,333,522)
-
Trade receivables
(49,161,353)
(3,149,912)
(52,311,265)
(52,311,265)
-
Inventories
(6,306,793)
(280,179)
(6,586,972)
(6,586,972)
-
Total deferred tax
liabilities (assets)
before set-off
1,456,172,881
(62,453,998)
66,978
1,393,785,861
(264,584,769)
1,658,370,630
Set-off tax
264,584,769
(264,584,769)
Net deferred tax
liabilities (assets)
-
1,393,785,861
Net balance at
1 January
2024
Recognized in
profit or loss
Reconized
in OCI
Net balance at
31 December
2024
Deferred tax
assets
Deferred tax
liabilities
Property, plant and
equipment and
intangible assets
1,732,736,184
(31,103,181)
-
1,701,633,004
-
1,701,633,004
Provisions
(149,493,392)
(6,194,770)
(155,688,162)
(155,688,162)
-
Employee benefits
(21,492,642)
(377,928)
263,441
(21,607,129)
(21,607,129)
-
Leasing liabilities
(14,094,736)
1,398,050
-
(12,696,686)
(12,696,686)
-
Trade receivables
(42,978,974)
(6,182,379)
(49,161,353)
(49,161,353)
-
Inventories
(6,400,060)
93,267
(6,306,793)
(6,306,793)
-
Total deferred tax
liabilities (assets)
before set-off
1,498,276,380
(42,366,941)
263,441
1,456,172,881
(245,460,123)
1,701,633,004
Set-off tax
245,460,123
(245,460,123)
Net deferred tax
liabilities (assets)
-
1,456,172,881
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
58
17. INCOME TAX (continued)
(f) Potential consequences on income tax
The Company may have potential consequences on corporate income tax that may result from the
payment to shareholders of dividends from revaluation reserves transferred to retained earnings which,
according to tax law, are taxed at the time of change of destination, to the extent they were previously
tax deducted. Thus, the distribution of dividends from such reserves will generate additional income tax.
The Company has such reserves transferred in retained earnings at 31 December 2025, which following
the distribution would generate additional income tax for the Company of RON 27,229,601 (31 December
2024: RON 18,836,539).
The potential tax effect of revaluation reserves taxable at change in destination/distribution (at 16% tax
rate) that were not yet transferred to retained earnings, amount to RON 346,537,747 at 31 December
2024 (RON 354,930,809 at 31 December 2024).
18. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents
31 December 2025
31 December 2024
Bank accounts
813,656,635
975,938,522
Bank deposits with a maturity below 3 months
-
379,648,372
Petty cash
71,906
87,645
Cash equivalents
2,415,208
848,701
Total
816,143,749
1,356,523,240
Restricted cash
As at 31 December 2025, restricted cash includes a collateral deposit of RON 23,057,741(31 December
2024: RON 21,057,741) at Banca Comerciala Romana for issuance of bank guarantee in favor of OPCOM
in relation to the transactions on Day-Ahead market. During the period until maturity the Company does
not have access to this deposit. In addition, the restricted cash includes consigned deposits for dividend
payments and consigned cash for compensations to be paid for expropriations.
19. INVESTMENTS IN DEPOSITS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Bank deposits with maturity less
than 1 year held for investment
purposes
3,732,016,142
-
3,475,932,995
-
TOTAL
3,732,016,142
-
3,475,932,995
-
Bank deposits are short-term deposits with maturity between 3 to 12 months held for investment
purposes rather than for short term cash commitments. The average interest rate on term deposits was
6.74% per year in 2025 (2024: 5.89% per year).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
59
20. TRADE RECEIVABLES
31 December 2025
31 December 2024
Trade receivables – generation segment (wholesale)
284,312,314
415,677,082
Trade receivables – supply segment (retail)
1,749,809,713
1,521,268,359
Impairment allowance
(336,428,858)
(304,111,389)
Total
1,697,693,169
1,632,834,052
The unbilled revenues included in trade receivables amount to RON 685,870,552 gross at 31 December
2025, representing 34% of total gross trade receivables (RON 668,926,120 at 31 December 2024,
representing 35% of total gross trade receivables), out of which RON 595,652,046 gross relate to supply
segment (RON 420,887,122 as at 31 December 2024).
Of the invoiced receivables at 31 December 2025, RON 182,739,882 represents payment rescheduled
receivables (31 December 2024: RON 333,509,906).
The movement of impairment loss for trade receivables is as follows:
2025
2024
Balance at 1 January
304,111,389
235,879,050
Impairment loss recognized
58,739,723
80,401,850
Impaiment loss used
(2,623,286)
(964,504)
Impairment loss reversed
(23,798,968)
(11,205,007)
Balance at 31 December
336,428,858
304,111,389
Trade receivables ageing analysis is disclosed in Note 30. Trade receivables due from related parties are
disclosed in Note 33.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
60
21. OTHER ASSETS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Payments made in connection with uncertain
tax treatments
-
63,612,328
-
63,612,328
Advances for fixed assets
-
402,750,734
-
208,557,734
Prepayments
54,620,972
13,844,591
Value added tax receivable
901,646
-
551,335
-
Other assets
17,549,922
5,776,517
13,367,601
3,532,747
Impairment loss on other assets
(15,199,508)
-
(6,100,750)
-
Total
57,873,032
472,139,579
21,662,777
275,702,809
The movement of impairment losses for other receivables is as follows:
2025
2024
Balance at 1 January
6,100,750
27,753,513
Impairment loss recognized
9,098,758
-
Impairment loss used
-
(21,339,041)
Impairment loss reversed
-
(313,722)
Balance at 31 December
15,199,508
6,100,750
Payments made in connection with uncertain tax treatments
Details regarding the payments made in connection with uncertain tax position are presented in Note
32.1 a).
The Company recognized these payments as an asset based on IFRIC 23 Uncertainty over Income Tax
Treatments because they will either be refunded if the Company is successful in the litigations related to
the liability or they will be used to pay the liability in case of loss of the dispute.
Non-current payments in advance mainly represent advance payment for the AHE Vidraru overhaul
contract signed in June 2024 and the comparative figures were reclassified accordingly, from current
prepayments in line with their nature. In addition, the balance as of 31 December 2025 include advance
payment for CHE Stejaru and Lotru pumping stations for which related contracts were signed in 2025.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
61
22. PROPERTY, PLANT AND EQUIPMENT
Land and land
improvement
s
Buildings and
special
constructions
and installations
Machinery,
equipment
and other
items
Assets under
construction
TOTAL
GROSS CARRYING AMOUNT
Balance at 1 January 2024
500,750,815
16,317,530,457
2,869,904,350
4,244,098,888
23,932,284,510
Additions
4,432,913
541,477
18,246,350
280,446,101
303,666,841
Transfers from assets under
construction
-
72,863,441
151,185,998
(224,049,439)
-
Disposals
-
(413,376)
(7,060,183)
(7,225,333)
(14,698,892)
Balance at 31 December 2024
505,183,728
16,390,521,999
3,032,276,515
4,293,270,217
24,221,252,459
Balance at 1 January 2025
505,183,728
16,390,521,999
3,032,276,515
4,293,270,217
24,221,252,459
Additions
4,543,373
1,475,050
445,513
595,004,261
601,468,197
Transfers from assets under
construction
-
69,868,200
90,703,619
(160,571,819)
-
Transfers to intangible assets
(17,576,272)
(17,576,272)
Change in decommissioning
127,362
127,362
Disposals
(7,422,523)
(3,606,795)
(830,730)
(854,412)
(12,714,460)
Balance at 31 December 2025
502,304,578
16,458,385,816
3,122,594,917
4,709,271,975
24,792,557,286
ACCUMULATED DEPRECIATION
Balance at 1 January 2024
1,427,990
22,136,235
6,324,001
-
29,888,226
Depreciation charge
771,796
411,398,231
481,087,125
-
893,257,152
Accumulated depreciation of
disposals
-
(5,448)
(6,261,991)
-
(6,267,439)
Balance at 31 December 2024
2,199,786
433,529,018
481,149,135
-
916,877,939
Balance at 1 January 2025
2,199,786
433,529,018
481,149,135
-
916,877,939
Depreciation charge
1,019,306
412,059,838
453,417,217
-
866,496,361
Accumulated depreciation of
disposals
-
(1,093,925)
(344,883)
-
(1,438,808)
Balance at 31 December 2025
3,219,092
844,494,931
934,221,469
-
1,781,935,492
ACCUMULATED IMPAIRMENT
LOSSES
Balance at 1 January 2024
-
-
-
3,578,781,450
3,578,781,450
Impairment loss
-
-
3,175
109,636,096
109,639,271
Reversal of impairment loss
-
-
-
(70,111,224)
(70,111,224)
Balance at 31 December 2024
-
-
3,175
3,618,306,322
3,618,309,497
Balance at 1 January 2025
-
-
3,175
3,618,306,322
3,618,309,497
Impairment loss
-
-
-
101,240,022
101,240,022
Reversal of impairment loss
-
-
-
(1,918,667)
(1,918,667)
Balance at 31 December 2025
-
-
3,175
3,717,627,677
3,717,630,852
NET CARRYING AMOUNT
Balance at 1 January 2024
499,322,825
16,295,394,222
2,863,580,349
665,317,438
20,323,614,834
Balance at 31 December 2024
502,983,942
15,956,992,981
2,551,124,205
674,963,895
19,686,065,023
Balance at 31 December 2025
499,085,486
15,613,890,885
2,188,370,273
991,644,298
19,292,990,942
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
62
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Property, plant and equipment in use
The Company's property, plant and equipment include mainly special constructions, namely hydro-power
plants, energy pumping stations, micro hydro-power plants, floodgates, as well as hydro-aggregates,
equipment and installations and wind turbines. The Company operates 188 hydro-power plants with an
installed capacity of 6,372.403 MW, out of which 5 pumping stations with an installed capacity of 91.5
MW, and 36 wind turbines with an installed capacity of 108 MW.
According to the applicable legislation, the Company must obtain environmental permits to carry out its
activities. Starting in 2021, the Company has obtained environmental permits that remain valid as long as
annual endorsements are secured for them. The Company has the obligation to request annual
endorsements from the Competent Authority for Environmental Protection (ACPM). In 2024 and 2025,
annual endorsements were obtained for all permits subject to these regulations, except for facilities that
are not in use.
The conditions set forth in the environmental permits include compliance with environmental legislation
applicable to wind and hydro-power facilities, monitoring of environmental factors, and the frequency of
reporting monitoring results to ACPM. In order to monitor the environmental factors, the Company
performs measurements of the physical and chemical quality indicators of reservoir water, industrial and
wastewater, as well as noise level measurements at site boundaries. In 2025, all required measurements
were performed in accordance with regulatory documents, and no legal limits were exceeded. The
Company expects that the legal limits of the indicators as provided by the current legislation and
regulatory acts will not be exceeded in 2026 as well.
Right-of-use assets
Property, plant and equipment include right-of-use assets mainly in relation to the Company's
headquarters, land of the wind park and the car fleet.
2025
2025
Total
2024
2024
Total
Land and
buildings
Vehicles
Land and
buildings
Vehicles
Balance at 1January
91,277,846
18,323,418
109,601,264
89,999,223
6,360,480
96,359,703
Additions
1,780,923
349,200
2,130,123
1,278,623
18,210,711
19,489,334
Disposals
(965,338)
(429,009)
(1,394,347)
-
(6,247,773)
(6,247,773)
Balance at 31December
92,093,430
18,243,609
110,337,040
91,277,846
18,323,418
109,601,264
Balance at 1January
(32,441,144)
(1,784,916)
34,226,060
(23,564,225
6,324,001
29,888,226
Depreciation
9,153,124
4,403,906
13,557,030
8,876,919
1,708,688
10,585,607
Disposals
-
-
(1,134,638)
-
(6,247,773)
(6,247,773)
Balance at 31December
40,628,930
6,019,322
46,648,452
32,441,144
1,784,916
34,226,060
Net book value
51,464,500
12,224,087
63,688,587
58,836,702
16,358,502
75,375,204
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
63
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Revaluation of property, plant and equipment
Property, plant and equipment, except for assets under construction and right-of-use assets, were
revalued by an independent valuation expert at 31 December 2023.
The fair value measurement of property, plant and equipment is classified as Level 3 as inputs used for
valuation techniques, which have had a significant effect on the recorded fair value, are not based on
observable market data. The fair value of the Group’s land was estimated using the market comparison
approach, the method of direct comparison. The valuation technique used to determine the fair value of
the special constructions, the net reconstruction cost was used given that no comparable information
were available on the market (include hydro-power facilities and other highly specialized items, with no
such works being undertaken in the last decades in Romania). Physical depreciation was determined as
the ratio of remaining useful life to the economic useful life of each asset applied to the gross replacement
cost.
For the general purpose construction items, the valuation expert determined the net replacement cost
(i.e. the cost to replace an asset with another comparable asset available in the market), computed as
gross replacement cost, less physical and external depreciation (functional depreciation is accounted for
when computing the gross replacement cost – i.e. the replacement cost does not include the cost of
specific functionalities that are not specific to the asset subject to valuation)
Based on the assessment conducted as of 31 December 2025 with the involvement of an independent
specialist which corroborates the evolution of the construction cost index and other macroeconomic
indicators with the forecasted electricity production from hydro-power plants and the forecasted curve
of selling price, the Group’s management estimate is that the net carrying amount of property, plant, and
equipment accounted for using the revaluation model approximates the fair value as of the balance sheet
date.
Assets under construction
As at 31 December 2025, the Company has assets under construction with a gross carrying amount of
RON 4,709,533,797 (31 December 2024: RON 4,293,270,217) for which it recognized accumulated
impairment losses of RON 3,717,627,679 (31 December 2024: RON 3,618,306,322).
The main assets under construction relate to the construction or rehabilitation of the following hydro-
power projects or plants: construction of hydro- power plants – Bumbesti – Livezeni, Siriu – Surduc,
Rastolita, Cornetu-Avrig, Pascani, Cerna Belareca, Cerna-Motru-Tismana, Bistra, Cosmesti-Movileni, Valea
Sadului, Fagaras Hoghiz, Runcu Firiza; and rehabilitation of hydro-power plants – CHE Stejaru, CHE Slatina.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
64
22. PROPERTY, PLANT AND EQUIPMENT (continued)
These assets under construction include mainly investments with complex functions, represented by
historical investment objectives regarding hydropower development schemes with social functions
(described below) which have been designed to have a secondary energy function. The primary objectives
of these investment objectives are rational and safe water supply management, including:
- Limitation of flooding effects;
- Protection of population, communities and agricultural land;
- Water supply to riverain communities;
- Insuring water reserves to supply population and industry;
- Insuring flow for irrigation during periods of drought;
- Retaining solid flow in the water accumulations.
The social functions described above are specific to public authorities, which are not-for-profit entities. In
fact, many of these investments belonged to the “Romanian Waters” National Agency, the governmental
body concerned with regional planning and water management, in the past. Hidroelectrica SA is
incorporated under Companies Law no. 31/1990 and is not a not-for-profit organization. In addition,
Hidroelectrica does not benefit from public funds to complete such social investments, which, if continued
to be funded, would impair shareholder value.
These “historical” hydro-power projects were mainly initiated between 1982 and 1989, following a
number of Decrees of the State Council, and were financed by public funds, through the ministries
involved as owners. After 1989, some of these projects were continued by the Romanian Waters National
Agency, financed with public funds, before they were transferred to Hidroelectrica. The economic and
energy conditions have significantly changed compared to 1980s and 1990s, mainly due to the shut down
of the state centralized investment fund, and the beneficiaries of these complex works ceased funding
the specific works included in the hydro-power projects, while the costs of these works remained to be
incurred by Hidroelectrica.
After Hidroelectrica entered insolvency in June 2012 and in the view of the planned future listing of the
Company’s shares, the legal administrators strongly prioritized the Company focus on profit and rational
cash management.
In 2017 the Company contracted a specialized engineer, ISPH SA, to estimate the costs of abandonment,
conservation and securing the works performed on the investments with complex functions. In 2018,
based on the analysis of costs and benefits, the management decided to abandon certain investment
objectives, as presented below and in Note 29.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
65
22. PROPERTY, PLANT AND EQUIPMENT (continued)
For the investment objectives for which the decision to abandon was taken, impairment losses were
recognized at the amount of their total gross carrying amount. The gross carrying amount of abandoned
investments is RON 590,889,477 as at 31 December 2025 and 31 December 2024. For these investment
objectives the Company recognized provisions for decommissioning and site restoration (see Note 29).
Project
Purpose
Gross carrying
amount
Accumulated
impairment
Net carrying
amount
Borca – Poiana Teiului
Galu Step
9,022,718
(9,022,718)
-
Cosmesti – Movileni
Cosmesti Step
93,206,729
(93,206,729)
-
Surduc – Siriu
Ciresu-Surduc Step
17,345,275
(17,345,275)
-
Fagaras-Hoghiz
Fagaras – Hoghiz
174,949,578
(174,949,578)
-
Runcu – Firiza
Runcu Firiza
87,807,430
(87,807,430)
-
Dambovita – Clabucet
Dambovita – Clabucet
34,761,669
(34,761,669)
-
Valea Sadului-Vadeni
Valea Sadului-Vadeni
165,209,205
(165,209,205)
-
Others
8,586,873
(8,586,873)
-
Total
590,889,477
(590,889,477)
-
In 2025 and 2024 impairment losses were recognized for assets under construction, other than the
abandoned assets mentioned above, as follows:
Project
Gross carrying
amount
31 December
2025
Accumulated
impairment loss
31 December
2025
Net book value
31 December
2025
Impairment
loss/(reversal)
2025
AHE Bumbesti-Livezeni
806,576,940
(446,183,742)
360,393,198
(23,408,845)
CHE Racovita
62,796,188
(62,796,188)
-
-
AHE Rastolita
736,807,263
(736,807,263)
-
(13,958,289)
AHE Siriu-Surduc
769,691,907
(677,544,385)
92,147,521
(28,401,758)
AHE Pascani
470,421,909
(470,421,909)
-
(34,806,305)
AHE Cerna-Belareca
319,451,464
(319,451,464)
-
(501,355)
AHE Cornetu-Avrig
108,390,789
(107,100,183)
1,290,606
-
Cerna Motru Tismana - Stage II
73,618,102
(72,942,551)
675,551
-
Lac redresor Sebes
59,957,775
(59,957,775)
-
-
Bistra
44,292,876
(37,303,605)
6,989,271
-
Rehabilitation of Portile de Fier II
45,265,051
(45,265,051)
-
-
Others
67,130,946
(66,614,739)
516,206
-
Total
3,564,401,206
(3,102,388,854)
462,012,352
101,076,552
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
66
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Project
Gross carrying
amount
31 December
2024
Accumulated
impairment loss
31 December
2024
Net book value
31 December
2024
Impairment
loss/(reversal)
2024
AHE Bumbesti-Livezeni
789,332,611
(422,774,897)
366,557,714
(28,314,053)
CHE Racovita
62,781,188
(62,781,188)
-
-
AHE Rastolita
722,848,974
(722,848,974)
-
68,778,292
AHE Siriu-Surduc
750,190,905
(666,488,060)
83,702,845
(33,447,119)
AHE Pascani
435,615,604
(435,615,604)
-
39,132,979
AHE Cerna-Belareca
318,950,109
(318,950,109)
-
684,944
AHE Cornetu-Avrig
108,261,601
(106,985,994)
1,275,606
1,036,370
Cerna Motru Tismana - Stage II
72,942,551
(72,942,551)
-
-
Lac redresor Sebes
56,363,185
(56,363,185)
-
-
Bistra
45,013,279
(45,013,279)
-
3,513
Rehabilitation of Portile de Fier II
45,265,051
(45,265,051)
-
-
Others
77,511,317
(71,387,954)
6,123,363
(8,350,052)
Total
3,485,076,373
(3,027,416,845)
457,659,528
39,524,874
Determination of recoverable amounts
The determination of the recoverable amounts of the investments under construction above was based
on a series of assumptions related to the feasibility of completion of the investments and the projected
cash flows.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
67
22. PROPERTY, PLANT AND EQUIPMENT (continued)
The significant assumptions used in estimating the recoverable amount are presented below. The
estimates were based both on historical data, as well as on management’s assessment of future trends
related to electricity prices, margins, costs to complete and climate related risk:
Assumptions
Method for building the estimates
31 December 2025
31 December 2024
Cost to complete the projects, annual cash
flows to completion and the date of
commissioning
based on the contracts concluded with the suppliers for each project or
estimation made by management (see below)
Installed capacities
based on technical data for each project (see below)
Capacity utilization rate
80% of the production capacity on
average (based on Company average
historical electricity production and
also adjusted downwards for
addressing climate risks.)
80% of the production capacity on
average (based on Company
average historical electricity
production and also adjusted
downwards for addressing
climate risks.)
Electricity prices
Based on reports prepared by
external consultants for the period
2025-2060, adjusted for certain
assumptions; 2% annual price
increase (long-term inflation rate)
for the period 2061 – 2080
Based on reports prepared by
external consultants for the
period 2025 – 2060; 2% annual
price increase (long-term inflation
rate) for the period 2061 – 2080
Operating expenses
For Bumbești Livezeni, Răstolița,
Siriu Surduc, and Pașcani projects,
the Company has determined future
cash flows by estimating the
operating expenses specific to each
project (expenses for turbinated
water, employee benefits,
maintenance expenses, material
expenses), as well as indirect
expenses.
For Bumbești Livezeni, Răstolița,
Siriu Surduc, and Pașcani projects,
the Company has determined
future cash flows by estimating
the operating expenses specific to
each project (expenses for
turbinated water, employee
benefits, maintenance expenses,
material expenses), as well as
indirect expenses.
Useful life
50 years
50 years
Discount rate before tax
10.6%
10.4%
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
68
22. PROPERTY, PLANT AND EQUIPMENT (continued)
The Company’s estimates of the costs necessary to complete the projects under construction, as well as
the annual production capacities to be installed per year, are as follows:
Year
Estimated costs to complete
Installed capacity per year (GW)
31 December 2025
31 December 2024
31 December 2025
31 December 2024
2025
-
160,974,719
-
30
2026
194,890,000
520,669,795
-
10
2027
495,949,000
667,949,194
-
207
2028
810,021,668
335,701,069
404
222
2029
187,583,555
118,144,882
152
65
2030
198,112,190
10,000,000
65
-
Total
1,886,556,413
1,813,439,659
621
534
The Company estimated that approximately 88% of the additional generation capacity will be installed by
the end of 2028.
The impairment losses recognized were mainly driven by the change in the assumptions used on future
prices of electricity, change in discount rate, as well as by the update of the work schedule until
completion.
The main variations in the recoverable amount/ impairment loss in 2025 and 2024 refer mainly to the
following investment projects:
- Bumbesti-Livezeni project, with a net carrying amount of RON 360,393,198 as at 31 December 2025
(31 December 2024: RON 366,557,714), for which the works were suspended in 2017 due to the fact
that the construction and environmental authorisations were cancelled as a result of litigation lost by
the Company with non-profit organizations. The project started in 2003, while in 2005 the National
Park “Defileul Jiului” was ruled as protected area; therefore the Company needs to reassess the
impact on the environment and obtain new authorisations.
The additional impairment of RON 23,408,845 in 2025 for Bumbesti-Livezeni project was driven by
the change in main assumptions (discount rate, prices of energy and inflation).
The Company is currently in process of obtaining new construction and environmental authortisations
in order to continue the works. In 2022, the authorities informed the Company that the
documentation submitted does not comply with the legal requirements and needs to be revised.
In 2024, the revised environmental documentation was re-submitted to the authorities and public
consultations were held. Management believes that there are no issues that would prevent the
Company to obtain the authorizations and complete the project. Consequently, the recoverable value
of the project was determined considering that the project will be completed in 2028.
- Siriu-Surduc project with a net carrying amount of RON 74,802,246 as at 31 December 2025 (31
December 2024: RON 83,702,844), for which works were suspended due to the fact that the
construction and environmental authorizations for the construction of the dam were cancelled as a
result of litigation lost by the Company with non-profit organizations. The project started in 1983 and
comprises 3 hydropower plants, out of which one was put in function in 1988, for another one the
management decided to abandon the project and the third one is under construction, with the works
suspended until revision of the impact on the environment and obtain new authorisations.
The additional impairment of RON 28,401,759 in 2025 for Siriu-Surduc project was driven driven by
the change in main assumptions (discount rate, prices of energy and inflation).
Management believes that there are no issues that would prevent the Company to obtain the
authorisations and complete the project. Consequently, the recoverable value of the project was
determined considering that the project will be completed in 2028.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
69
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Sensitivity analysis
The sensitivity analysis below shows the effect on profit before tax, and was determined based on the
reasonable changes in key assumptions at the end of the reporting periods, while other assumptions
remain constant.
Discount rate before tax
Increase/ (decrease) of
Profit before tax
100 bp increase
100 bp decrease
2025
(108,651,041)
135,367,789
2024
(121,362,849)
154,595,489
Operating expenses
Increase/ (decrease) of
Profit before tax
5% increase
5% decrease
2025
(10,124,282)
(10,124,282)
2024
(13,402,966)
13,402,966
Electricity prices
Increase/ (decrease) of
Profit before tax
5% increase
5% decrease
2025
62,844,024
(62,844,024)
2024
71,593,345
(71,441,872)
Capacity utilization rate
Increase/ (decrease) of
Profit before tax
500 bp increase
500 bp decrease
2025
62,844,024
(62,844,024)
2024
89,416,997
(88,187,104)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
70
23. INVESTMENTS IN SUBSIDIARIES
31 December 2025
31 December 2024
Hidroserv S.A.
Uzina de Construcţii Mașini Hidroenergetice S.R.L.
70,576,810
244,650,000
70,576,810
244,650,000
Total
315,226,810
315,226,810
In January 2024, the Company set-up a new subsidiary, Uzina de Construcții Mașini Hidroenergetice S.R.L.,
initial share capital contribution to the newly subsidiary was RON 119,650,000. Subsequently, in
November 2024, the Company made a second contribution to the subsidiary’s share capital of RON
125,000,000. Uzina de Construcții Mașini Hidroenergetice S.R.L. took over in March 2024 the business
lines ABC and Calnicel platform, of UCM Resita SA, the amount paid was RON 67,879,000.
The subsidiaries’ net assets as per their statutory financial statements at 31 December 2025 and 2024 are:
31 December 2025
31 December 2024
Net assets of Hidroserv S.A.
Net assets of UCMH S.R.L.
154,881,561
284,759,021
131,576,158
247,906,485
24. CAPITAL AND RESERVES
(a) Share capital
31 December 2025
31 December 2024
Nominal share capital
4,498,025,670
4,498,025,670
Inflation adjustments in accordance with IAS 29
1,028,872,000
1,028,872,000
Total
5,526,897,670
5,526,897,670
Until 31 December 2003, the share capital in nominal terms was restated in accordance with IAS 29
"Financial Reporting in Hyperinflationary Economies", the related adjustments being recognized against
retained earnings.
As at 31 December 2025 and 31 December 2024, the authorized, subscribed share capital of the Company
is divided into 449,802,567 ordinary shares with a nominal value of RON 10 per share. The shareholders
are entitled to dividends and each share grants a voting right.
31 December 2025
31 December 2024
Shareholders
Number of
shares
%
Number of
shares
%
Ministry of Energy
360,094,390
80.0561%
360,094,390
80.0561%
Legal persons
75,600,136
16.8074%
73,287,787
16.2933%
Individuals
14,108,041
3.1365%
16,420,390
3.6506%
Total
449,802,567
100%
449,802,567
100%
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
71
24. CAPITAL AND RESERVES (continued)
(b) Revaluation reserve
The reconciliation between opening balance and closing balance of the revaluation reserve is as follows:
2025
2024
Balance at 1 January
11,555,225,745
12,047,813,106
Transfer of revaluation reserve to retained earnings following
depreciation and disposal of property, plant and equipment, net of
tax
(465,980,372)
(491,817,251)
Revaluation reserve adjustments on impairment of property, plant
and equipment
(510,200)
(770,110)
Balance at 31 December
11,088,735,173
11,555,225,745
(c) Other reserves
Other reserves include:
• legal reserve of RON 920,729,953 (31 December 2024: RON 920,729,953), set-up annually as 5% of
the profit before tax until the total legal reserve reach 20% of the paid-up nominal share capital. Legal
reserves are mandatory, are deductible for income tax purposes and are not distributable;
• Other non-distributable reserves of RON 97,000,000 at 31 December 2025 and 2024, set-up in 2006
based on Government Emergency Ordinance no. 89/2004.
(d) Dividends
On 29 April 2025, the Shareholder General Meeting approved the distribution of dividends from the 2024
profit of RON 4,043,229,023, representing 100% of the 2024 eligible for distribution net profit in the
statutory separate financial statements of the Company.
The value of the distributed dividends per share is 8.988897 RON/share (2024: 13.99 RON/share).
Liabilities in relation to dividends include:
2025
2024
Dividends payable
6,451,583
5,182,867
Tax on dividends
284,577
469,825
Total
6,736,160
5,652,692
Romanian companies may distribute dividends from statutory earnings only, as per separate financial
statements prepared in accordance with Romanian accounting regulations.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
72
24. CAPITAL AND RESERVES (continued)
(e) Capital management
The capital management of the Company is significantly influenced by the regulations. The distribution of
dividends is governed by special regulation, including the Government Ordinace no. 64/2001, according
to which, in the case of companies wholly or majority-owned by the State, minimum 50% of the
accounting profit shall be distributed as dividends, unless otherwise provided by special laws.
The Company’ policy is to maintain a strong capital base as to maintain investor, creditor and market
confidence and to sustain future developments of the business. Management monitors the return on
capital, as well as the level of dividends to shareholders. The net debt / (net cash and short-term
investments) to ADJUSTED EBITDA should not exceed 3.
2025
2024
Bank borrowings
213,315,268
300,733,276
Lease liabilities
71,647,900
79,354,288
Less: Cash and cash equivalents
(816,143,749)
(1,356,523,240)
Less : Short-term investments
(3,732,016,142)
(3,475,932,995)
Net debt /(net cash and short-term investments)
A
(4,263,196,723)
(4,452,368,671)
ADJUSTED EBITDA
(1)
B
4,703,009,302
5,472,649,687
Net debt /(net cash and short-term investments)
to ADJUSTED EBITDA ratio
A/B
(0.91)
(0.81)
(1) ADJUSTED EBITDA (Earnings before interest, tax, depreciation and amortisation) is calculated as
EBITDA, defined and calculated as profit/(loss) before tax before (i) depreciation and amortization
of property, plant and equipment and (ii) interest income and expense, and ADJUSTED FOR (a)
impairment/reversal of impairment of property, plant and equipment and (b) impairment/reversal
of impairment of financial investments. EBITDA and ADJUSTED EBITDA are not IFRS measures and
should not be treated as an alternative to IFRS measures. Moreover, ADJUSTED EBITDA is not
uniformly defined. The method used to calculate ADJUSTED EBITDA by other companies may differ
significantly from that used by the Company. As a consequence, the ADJUSTED EBITDA presented
in this note cannot, as such, be relied upon for the purpose of comparison to EBITDA or ADJUSTED
EBITDA of other companies.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
73
25. BORROWINGS
Description
31 December
2025
31 December
2024
BRD Groupe Societe Generale dated 4 March 2021 of RON 1,250,000,000 - loan
contracted for financing the acquisition of Crucea Wind Farm SA and
Hidroelectrica Wind Services SRL.
Proceeds from loan: EUR 130,000,000 (representing RON 635,219,000)
Repayment: quarterly installments between 11 June 2021 and 11 March 2028.
Interest is linked to EURIBOR 3 months plus a margin.
Year of maturity: 2028.
213,315,268
300,733,276
Total loans
213,315,268
300,733,276
Current portion
94,957,232
92,886,954
Non-current portion
118,358,036
207,846,322
In 2025 the Company repaid loans of RON 93,673,821 (2024: RON 92,349,679).
The loan agreement with BRD Groupe Société Générale includes the following financial ratios:
- Debt service coverage ratio, calculated as the ratio between EBITDA (from which dividend
payments, capital expenditures, and taxes are deducted) and debt service – minimum value: 1.1;
- Leverage ratio – maximum value: 3.0.
According to the loan agreement, if either of the above indicators is not met, the Company benefits from
a 60-day grace period for remediation starting from the date the lender notifies the Company.
As of December 31, 2025, the debt service coverage ratio, as defined under contract, is below 1.1,
therefore long-term portion of the loan amounting RON 118,358 thousand shall be classified as current
liability. As the net debt service defined under contract is positive given the Group’s debt level compared
with EBITDA, as the interest are higher than the debt service. A waiver letter was received from the bank,
subsequent to 31 December 2025.
A similar breach was recorded as of 31 December 2024, the long-term portion of the loan being of RON
207,846 thousand. A waiver letter was obtained from the bank subsequent to 31 December 2024.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
74
25. BORROWINGS (continued)
Reconciliation of movements of liabilities to cash flows arising from financing activity
Bank borrowings
Lease liabilities
Total
Balance at 1 January 2025
300,733,276
79,354,288
380,087,563
Changes from financing cash flows
Repayment of bank loans
(93,673,821)
-
(93,673,821)
Lease payments
-
(9,486,038)
(9,486,038)
Total changes from financing cash flows
(93,673,821)
(9,486,038)
(103,159,859)
The effect of changes in foreign exchange rates
6,505,363
-
6,505,363
Other changes
Liability-related
Lease modifications
-
1,779,650
1,779,650
Interest expense
6,765,118
5,224,422
11,989,540
Interest paid
(7,014,669)
(5,224,422)
(12,239,091)
Total liability-related other changes
(249,550)
1,779,650
1,530,099
Balance at 31 December 2025
213,315,268
71,647,900
284,963,167
Bank borrowings
Lease
liabilities
Total
Balance at 1 January 2024
393,534,741
66,300,971
459,835,711
Changes from financing cash flows
Repayment of bank loans
(92,349,679)
-
(92,349,679)
Lease payments
-
(6,436,017)
(6,436,017)
Total changes from financing cash flows
(92,349,679)
(6,436,017)
(98,785,696)
The effect of changes in foreign exchange rates
(58,212)
-
(58,212)
Other changes
Liability-related
Lease modifications
-
19,489,334
19,489,334
Interest expense
14,136,228
4,310,953
18,447,181
Interest paid
(14,529,803)
(4,310,953)
(18,840,756)
Total liability-related other changes
(393,574)
19,489,334
19,095,759
Balance at 31 December 2024
300,733,276
79,354,288
380,087,563
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
75
26. TRADE PAYABLES
31 December
2025
31 December
2024
Electricity suppliers
194,104,731
107,728,825
Electricity distribution services suppliers
183,987,973
146,305,563
Property, plant and equipment suppliers
205,091,782
74,328,377
Turbinated water supplier
101,173,106
70,250,442
Maintenance and repairs suppliers
53,200,462
41,528,690
Other suppliers
96,752,358
35,972,324
Total trade payables
834,310,412
476,114,220
Current
819,409,878
475,115,635
Non-current
14,900,534
998,585
The suppliers of electricity, electricity distribution, water and maintenance and repairs are mainly those
presented in Note 33 Related Parties.
Other suppliers include service providers, materials and consumables providers.
The Company has guarantees received from suppliers of RON 798,191,652 at 31 December 2025 (RON
474,497,200 at 31 December 2024) that are off-balance. These guarantees represent performance
guarantees in the form of bank letters of guarantee, insurance policies and escrow accounts. The increase
is mainly due to the guarantees received for works contracted by the Group for maintenance and
development.
27. OTHER PAYABLES
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Payables to the State
25,762,266
-
29,705,046
-
Performance deposits from suppliers
20,063,420
54,586,301
7,955,007
54,550,218
Performance deposits from clients
45,512,292
-
57,587,395
-
Dividens payable
6,736,160
-
5,652,692
-
Other
29,262,282
109,669
13,962,466
109,345
Total
127,336,420
54,695,970
114,862,606
54,659,563
Payables to the State represent mainly VAT payable of RON 21,392,597 as at 31 December 2025 (31
December 2024: RON 28,078,111).
Starting from the second quarter of 2024, the Company requires potential end customers with
counterparty risk to provide multiple payment guarantee options, including the establishment of
monetary guarantees. In this regard, guarantee deposits are opened by customers, with the deposit
amount based on the estimated contractual value of the electricity supplied for a period up to three
months, and these deposits remain valid for the entire contractual period.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
76
28. DEFERRED INCOME
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Government grants
5,554,937
145,702,825
6,091,097
155,275,571
Other
39,539
933,526
42,006
995,841
Total
5,594,476
146,636,351
6,133,103
156,271,412
Government grants represent amounts received from the State for the construction of certain investment
projects.
Reconciliation between opening and closing balance of government grants:
2025
2024
Balance at 1 January
161,366,668
136,878,918
Increase in the year
5,941,752
30,377,190
Released to income
(16,050,658)
(5,889,439)
Balance at 31 December
151,257,762
161,366,668
29. PROVISIONS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Litigation and claims
92,717,470
-
70,651,160
-
Decommissioning
-
911,465,144
-
848,188,672
Tax provisions
-
97,666,739
-
95,316,032
Other provisions
53,546,229
-
53,731,556
-
Total
146,263,699
1,009,131,883
124,382,716
943,504,704
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
77
29. PROVISIONS (continued)
Litigation and
claims
Decommissioning
Tax
provisions
Other
provisions
Total
Balance at 1 January 2025
70,651,160
848,188,672
95,316,032
53,731,556
1,067,887,420
Provisions recognized against
PPE
-
127,362
-
-
127,362
Provisions in P&Lloss
22,214,369
21,326,721
-
42,543,456
86,084,546
Provisions used
-
-
-
(42,681,941)
(42,681,941)
Provisions reversed
(148,058)
(17,289,494)
(4,407,200)
(46,842)
(21,891,594)
Unwinding (Note 14)
-
59,111,883
6,757,907
-
65,869,790
Balance at 31 December 2025
92,717,470
911,465,144
97,666,739
53,546,229
1,155,395,582
Litigation and
claims
Decommissioning
Tax
provisions
Other
provisions
Total
Balance at 1 January 2024
162,818,480
746,285,396
90,544,424
24,359,462
1,024,007,762
Provisions recognized against
PPE
-
(344,065)
-
-
(344,065)
Provisions in P&Lloss
1,881,095
50,150,967
-
53,091,457
74,641,213
Provisions used
(65,279,278)
-
-
(23,614,403)
(88,893,681)
Provisions reversed
(28,769,137)
-
(1,608,209)
(104,960)
-
Unwinding (Note 14)
-
52,096,374
6,379,817
-
58,476,191
Balance at 31 December 2024
70,651,160
848,188,672
95,316,032
53,731,556
1,067,887,420
I. Provisions for litigation and claims
As at 31 December 2025 and 31 December 2024, provisions for litigations include RON 67,618,460 relating
to the litigation with the Consortium formed of Romelectro SA, Hidroconstructia SA and ISPH Project
Development SA (the Consortium) started in 2013. The subject of the litigation is disputes over the
contract signed in 2004 for Bumbesti-Livezeni investment project. The Consortium requested RON
88,400,000 representing additional works performed by the Consortium starting 2010 until the date of
commencement of the litigation. Following several rulings and appeals in 2019 the file was sent to retrial.
In 2020 the Court requested a technical expert report. Based on the past rulings, the expert report issued
on 17 February 2022 and considering the probability of an unfavourable outcome the Company
recognized a provision of RON 67,618,460.
The company recognized in 2025 an additional provision for litigation raised against the Company for
interest and penalties related to late payments of works not initially recognized.
II. Decommissioning provision
In 2018 and 2019, the management of the Company decided to abandon certain investment projects in
progress (Note 22). As a result, the Company recognized decommissioning provisions against profit or loss
for the present value of the works estimated to be necessary to abandon those assets. The
decommissioning costs were estimated based on studies performed by an external technical expert in
2017, updated during 2024 taking into account the current cost of the main decommissioning activities.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
78
29. PROVISIONS (continued)
Main abandonment costs included in the provision are:
• cost to demolish existing constructions;
• cost to transport the waste materials to the nearest ecological deposit;
• environmental tax, in accordance with the legal requirements;
• cost to deposit the waste at an ecological deposit.
The costs were discounted using discount rates between 4.73% and 5.73% (31 December 2024: between
5.27% and 7.09%), depending on the expected period of decommissioning.
A decommissioning provision of RON 15,299,726 is related to the wind farm. The effects of changes in
assumptions underlying the decommissioning costs for the wind farm are recognized against property,
plant and equipment.
III. Tax provisions
Tax provisions of RON 97,666,739 at 31 December 2025 (31 December 2024: RON 95,316,032) represent
the present value of the VAT expected to be paid at the write off of the abandoned investment projects
(Note 22).
IV. Other provisions
Employee
profit sharing
Variable component
remuneration for
Management and
Supervisory Board
Others
Total
Balance at 1 January 2025
25,917,365
16,764,576
11,049,615
53,731,556
Provisions recognized in profit or loss
29,504,000
13,025,000
14,456
42,543,456
Provisions used
(25,917,365)
(16,764,576)
-
(42,681,941)
Provisions reversed
-
-
(46,842)
(46,842)
Balance at 31 December 2025
29,504,000
13,025,000
11,017,229
53,546,229
Employee
profit sharing
Variable component
remuneration for
Management and
Supervisory Board
Others
Total
Balance at 1 January 2024
23,614,403
-
745,059
24,359,462
Provisions recognized in profit or loss
25,917,365
16,764,576
10,409,516
53,091,457
Provisions used
(23,614,403)
-
-
(23,614,403)
Provisions reversed
-
-
(104,960)
(104,960)
Balance at 31 December 2024
25,917,365
16,764,576
11,049,615
53,731,556
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
79
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT
(a) Accounting classifications and fair values
In accordance with IFRS 9, the Company's financial assets and liabilities are measured at amortized cost.
According to the business model of the Company, financial assets and liabilities are held to collect
contractual cash flows and these cash flows are solely payments of principal and interest. The Company
did not include fair value information for financial assets and financial liabilities not measured at fair value
if the carrying amount is a reasonable approximation of fair value.
(b) Financial risk management
Credit risk
Credit risk is the risk that the Company will incur a financial loss if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and this risk derives mainly from trade receivables,
cash and cash equivalents, and investments in deposits and bonds.
Cash and bank deposits are placed in financial institutions that are considered to have high
creditworthiness, part of these being held by Romanian State, such as CEC Bank and Exim Bank.
Exposure to credit risk
The carrying amount of financial assets represents the maximum exposure to credit risk.
31 December 2025
31 December 2024
Trade receivables
1,697,693,169
1,632,834,052
Cash and cash equivalents
816,143,749
1,356,523,240
Restricted cash
55,723,542
21,057,471
Investments in deposits and bonds
3,732,016,142
3,475,932,995
Total
6,301,576,602
6,486,347,758
Trade receivables
The Company's exposure to credit risk is mainly influenced by the individual characteristics of each client.
The Company has established a credit policy according to which each new business client is analyzed
individually from the point of view of creditworthiness before the conclusion of a contract, so that the
sale is made to the clients with adequate creditworthiness. For household clients, such credit risk analysis
is not performed due to the nature and volume of the customers and due to the legislation in force.
Impairment adjustments of trade receivables reflect the expected credit losses, calculated based on the
loss rates.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
80
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
The following table provides information about the exposure to credit risk and expected credit loss (ECL)
for trade receivables as at 31 December 2025:
Weighted average
loss rate
Gross carrying
amount
Impairment loss
allowance
Net trade
receivables
Not past due
2.02%
963,609,054
(19,486,649)
944,122,405
Past due - from 0 to 3 months
15.61%
118,043,539
(18,422,462)
99,621,077
Past due - from 3 to 6 months
55.76%
54,935,923
(30,632,607)
24,303,316
Past due - from 6 months to 1 year
90.72%
64,069,017
(58,124,448)
5,954,687
Past due - more than 1 year
100.00%
209,750,473
(209,750,473)
-
Total
1,410,408,005
(336,406,520)
1,074,001,485
Customers analyzed individually
623,691,684
-
623,691,684
Total trade receivables
2,034,099,689
(336,416,639)
1,697,693,169
The following table provides information about the exposure to credit risk and expected credit loss (ECL)
for trade receivables as at 31 December 2024:
Weighted average
loss rate
Gross carrying
amount
Impairment loss
allowance
Net trade
receivables
Not past due
2,21%
802,366,376
(17,744,371)
784,622,005
Past due - from 0 to 3 months
17,80%
140,961,970
(25,095,806)
115,866,164
Past due - from 3 to 6 months
73,31%
69,495,832
(50,945,404)
18,550,428
Past due - from 6 months to 1 year
100,00%
69,230,782
(69,230,782))
-
Past due - more than 1 year
100,00%
141,095,026
(141,095,026)
-
Total
1,223,149,986
(304,111,389)
919,038,597
Customers analyzed individually
713,795,455
-
713,795,455
Total trade receivables
1,936,945,441
304,111,389)
1,632,834,052
Customers analyzed individually represent outstanding amounts from customers for which the Company
believes that there is a negligible risk to collect.
Loss rates estimated for 2025 are based on the actual credit loss experienced over the past six quarters
considering the evolution of the supply segment and the delays in invoicing the electricity supplied (31
December 2024: past six quarters).
The Company has guarantees received from customers of RON 591,805,583 at 31 December 2025 (RON
527,949,485 at 31 December 2024) in the form of bank letters of guarantee. Under client guarantees are
included cash deposits of RON 45,504,714 (see Note 27).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
81
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
Liquidity risk
Liquidity risk represents the risk that the Company may have difficulties in meeting the obligations
associated with financial liabilities settled by transfer of cash or another financial asset. The Company has
significant cash and cash equivalents and short-term investments, therefore it does not face significant
liquidity risk.
The Company monitors the level of cash inflows forecasted from collection of trade receivables, as well
as the level of cash outflows forecasted for the payment of loans, trade and other payables. The Company
aims to maintain a level of current bank accounts and bank deposits that exceeds the cash outflows
forecasted for the payment of financial liabilities.
Exposure to liquidity risk
The following table shows the remaining contractual maturities of financial liabilities at the reporting date.
The contractual cash flows are presented gross and undiscounted and include estimated contractual
interest payments.
Carrying
amount
Contractual cash flows
31 December 2025
Total
< 12 months
1 - 5 years
> 5 years
Financial liabilities
Trade payables
834,310,412
834,310,412
819,409,878
14,900,534
-
Bank borrowings
213,315,268
219,217,273
98,802,637
120,414,636
-
Lease liabilities
71,647,900
89,781,274
14,596,149
46,701,259
28,483,866
Total
1,119,273,580
1,143,308,959
932,808,664
182,016,428
28,483,866
Carrying
amount
Contractual cash flows
31 December 2024
Total
< 12 months
1 - 5 years
> 5 years
Financial liabilities
Trade payables
476,114,220
476,114,220
475,115,635
998,585
Bank borrowings
300,733,276
316,523,991
100,618,245
215,905,746
-
Lease liabilities
79,354,288
101,967,239
14,327,708
50,922,328
36,717,203
Total
856,201,784
894,605,450
590,061,588
267,826,659
36,717,203
Market risk
Market risk is the risk that changes in market prices – foreign exchange rate and interest rate – will affect
the Company's profit or the value of the financial instruments held. The objective of market risk
management is to control market risk exposures within acceptable parameters, while optimizing the
return.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
82
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
(i) Interest rate risk
The Company has long-term bank borrowings with variable interest rates, which may expose the Company
to interest rate risk.
31 December 2025
31 December 2024
Fixed-rate instruments
Financial assets
Restricted cash
55,723,542
21,057,471
Investments in deposits and bonds
3,732,016,142
3,475,932,995
Total
3,787,739,684
3,496,990,466
Financial liabilities
Lease liabilities
(71,647,900)
(79,354,288)
Total
(71,647,900)
(79,354,288)
Variable–rate instruments
Financial liabilities
Bank borrowings
(213,315,268)
(300,733,276)
Total
(213,315,268)
(300,733,276)
Fair value sensitivity analysis of fixed-rate instruments
The Company has no financial assets and financial liabilities with a fixed interest rate recognized at fair
value through profit or loss. Therefore, a change in interest rates on the reporting date would not result
in a gain or loss in profit or loss.
Cash flow sensitivity analysis of variable-rate instruments
A reasonably possible change of 50 basis points in interest rates at the reporting date would have
increased (decreased) the profit before tax by the amounts shown below. This analysis assumes that all
other variables, in particular currency exchange rates, remain constant.
Increase/ (decrease) of
Profit before tax
50 bp increase
50 bp decrease
2025
Variable-rate instruments
(1,066,576)
1,066,576
2024
Variable-rate instruments
(1,503,666)
1,503,666
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
83
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
(ii) Currency risk
The Company is exposed to transactional foreign currency risk to the extent that there is mismatch
between the currencies in which sales, purchases, receivables and borrowings are denominated and the
respective functional currency of the Company. The functional currency of the Company is the Romanian
Leu (RON).
The currency in which these transactions are primarily denominated are RON. Certain liabilities are
denominated in foreign currencies as EUR and USD. The Company's risk management policy is to primarily
use the local currency. The Company does not use derivative instruments or hedging instruments.
31 December 2025
- RON equivalent of the currency -
EUR
USD
CHF
Trade receivables
228,068
-
-
Investment deposits and corporate bonds
277,256,430
Cash and cash equivalents
2,557,892
89,298
2,604
Trade payables
(59,648,480)
-
-
Bank borrowings
(213,315,268)
-
-
Lease liabilities
(58,718,651)
-
-
Net statement of financial position exposure
(51,640,009)
89,298
2,604
31 December 2024
- RON equivalent of the currency -
EUR
USD
CHF
Trade receivables
221,340
-
-
Investment deposits and corporate bonds
78,137,224
Cash and cash equivalents
382,244,722
111,499
2,512
Trade payables
(3,870,977)
(160,093)
-
Bank borrowings
(300,733,276)
-
-
Lease liabilities
(62,432,290)
-
-
Net statement of financial position exposure
93,566,743
(48,594)
2,512
The following exchange rates have been applied:
31 December
2025
31 December
2024
RON / EUR
5.0985
4.9741
RON / USD
4.3417
4.7768
RON / CHF
5.4743
5.2806
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
84
30. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
Sensitivity analysis
A 5% appreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31
December would have affected the profit before tax by the amounts shown below. This analysis assumes
that all other variables remain constant.
Increase/(decrease) of
Profit before tax
Increase/(decrease) of
Profit before tax
2025 (RON)
2024 (RON)
EUR
2,582,000
(4,678,337)
USD
(4,465)
2,380
CHF
(130)
(126)
Total
2,577,405
(4,676,083)
A 5% depreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31
December would have affected the profit before tax by the amounts shown below. This analysis assumes
that all other variables remain constant.
Increase/(decrease) of
Profit before tax
Increase/(decrease) of
Profit before tax
2025 (RON)
2024 (RON)
EUR
(2,582,000)
4,678,337
USD
4,465
(2,380)
CHF
130
126
Total
(2,577,405)
4,676,083
31. COMMITMENTS
31.1. Contractual commitments
The Company has the following contractual commitments:
31 December 2025
31 December 2024
Acquisition of property, plant and equipment and intangible
assets
2,516,720,628
1,372,035,019
AHE Vidraru Refurbishment
In 2025, the Company signed the contracts for overhaul of CHE Stejaru and high power pumps stations.
In June 2024, Hidroelectrica signed the contract for refurbishment works of AHE Vidraru with the
Consortium formed of ELECTROMONTAJ (Consortium Leader) and Koncar – Engineering Co. Ltd. for
production and services (Croatia), with BUTAN GRUP as subcontractor, following the completion of the
award procedure through a public tender. The contractual price is RON 937,709,185 and the works are to
be completed within 84 months, according to the execution schedule.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
85
31. COMMITMENTS (continued)
31.2. Guarantees
The Company issued performance guarantees of RON 184,269,318 as at 31 December 2025 (31 December
2024: RON 45,350,256) mainly in relation to its obligations to deliver electricity, and in relation to its
payment obligations related to electricity purchase transactions on the day-ahead and intra-day markets.
32. CONTINGENCIES
32.1. Litigation, claims and uncertainties
The main litigations involving the Company, with a potential exposure of RON 195,206,600 as at 31
December 2025 (31 December 2024: RON 195,206,600), are disclosed as contingent liabilities:
a) Litigation with Tax authorities
Potential exposure: RON 63,612,328 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroelectrica
File no. 638/2/2024 and 1962/2/2024
Subject matter: Annulment of Tax Decision No. A-DAF 6890/11.05.2023
Tax for electricity producers was subject to multiple changes with respect to the method of computation
during 2022. The latest change was instated through Law no. 357/2022, which was published on 16
December 2022. The Company applied the provisions of the law starting with 16 December 2022.
As previously mentioned in Note 13 D, the Company was subject to a tax control by the General Antifraud
Division of ANAF on the tax for electricity producers. As per the control report on 11 April 2023, the tax
authorities applied the changes introduced by the law retroactively starting 1 September 2022, and
therefore computed additional tax of RON 62,052,115.
On 28 April 2023 the Company received the imposing decision for the amount of RON 62,052,115. The
Company challenged the imposing decision within the procedural term, the challenge being rejected by
the General Division for Solving Disputes within the Finance Ministry.
The Company argued in its Court application that successive changes of legislation regarding the
calculation methodology of the tax for electricity producers can only be applicable for the future, starting
with the date of publication of legislative amendments and not retroactively, as tax authorities
considered.
On 17 December 2024, the Court ruled in favor of Hidroelectrica and ordered the reimbursement to the
claimant of the amount of RON 62,052,115. The Finance Ministry filed an appeal against the court’s
decision to the High Court of Cassation and Justice, with the next hearing date set on 13 May 2026.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
86
32. CONTINGENCIES (continued)
On 7 August 2023, the Company received a decision regarding interest and penalties in the amount of
RON 1,560,213 related to the previously mentioned imposing decision. The Company challenged the
decision, initiating proceedings before the Court of Appeal of Bucharest under file no. 1962/2/2024. The
file is suspended until the final resolution of case no. 638/2/2024. In relation to the ruling in file no.
638/3/2024, the management believes that the dispute in file no. 1962/2/2024 will also be ruled in the
Company’s favor.
b) Litigation with Hidroconstructia SA
Potential exposure: RON 98,762,431 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroconstructia SA
File no. 12257/3/2022
Subject-matter: Termination of Contract no. 672/1989 regarding the Fagaras-Hoghiz investment project;
claims
Hidroconstructia SA filed claims to recover RON 98,762,431 consisting of unrealized profits as a result of
the suspension by Hidroelectrica of the construction works related to the Fagaras Hoghiz investment
project. Also, Hidroconstructia requested the court to enforce the termination of the underlying contract.
In January 2023, the Court ruled in favor of the Company, rejecting Hidroconstructia’s claims. The decision
was appealed by Hidroconstructia SA.
On 12 October 2023, the Court of Appeal set aside the first Court ruling and granted a new hearing on the
merits. On 3 July 2025, the court partially admitted the statement of claim, ordering the termination of
the contract, while dismissing the remaining claims as unsubstantiated.
Hidroconstrucția filed an appeal against the above mentioned decision, the file being forwarded to the
High Court of Cassation and Justice, the first hearing date, to be set.
Based on the court’s ruling, Management estimates that the dispute will be settled in the Group’s favor
and, consequently, an outflow of resources is not probable.
c) Litigation with Hidroconstructia SA
Potential exposure: RON 32,831,841 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroconstructia SA
File no. 44443/3/2016, currently file no. 11314/3/2021
Subject-matter: Claims - the equivalent value of the costs generated by the cessation of construction
works related to investment projects in progress.
Hidroconstructia SA claims the costs generated by the suspension of construction works rendered before
the Company’s insolvency. The Company argues that such claims have no grounds considering the
insolvency process of Hidrolectrica and the fact that the claimant lost its right to claims as it failed to
register the claim in the table of creditors.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
87
32. CONTINGENCIES (continued)
In March 2018 the first Court rejected the claims of Hidroconstructia SA. This ruling was contested by
Hidroconstructia SA. The Company also contested the ruling, as it provided for legal fees for
Hidroelectrica.
In April 2019 the Court of appeal sent the case back to the first court for reexamination. The dispute was
reopened by the first Court (file no. 11314/3/2021).
In April 2022, the Court requested an expertise report in hydrotechnical constructions and an accounting
expertise report to be performed by independent experts. The expert’s report has been finalized and both
parties have filed objections against the findings of the expert, with the next hearing date being set on 17
June 2026.
Based on the initial first Court ruling, management estimates that the litigation will be ruled in favor of
the Company and consequently an outflow of resources is not probable.
32.2. Fiscal environment
Tax audits are frequent in Romania, consisting of thorough verifications of taxpayers’ accounting records.
Such audits sometimes take place months or even years after the establishment of the tax liabilities.
Consequently, companies may be found liable for significant taxes and fines. In addition, the tax legislation
is subject to frequent changes, and the authorities often show inconsistency in the interpretation of law.
Tax returns may be subject to revision and corrections by the tax authorities, generally for a five years
period after they are filed with the tax authorities.
Romanian tax authorities carried out tax audits on Hidroelectrica’s income tax and value added tax until
20 June 2012.
Management believes that adequate provisions have been recognised in the separate financial
statements for all significant tax liabilities; however, a risk persists that tax authorities might have
different views, representing a normal risk of the accounting/tax environment in Romania.
In 2025 the Company was notified by the fiscal authorities that a general fiscal inspection was initiated
covering the period 2019-2024 having in scope all the taxes payable to the central state budget. The
inspection is currently in preliminary stage – scoping and information requests.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
88
32. CONTINGENCIES (continued)
32.3. Decommissioning obligations
As described in Note 5 a4), the Company identified decommissioning obligations in relation to its hydro-
power facilities. Management estimates that, except for the assets abandoned or switched to post-
utilisation upon management decisions, and except for its wind farm, for which decommissioning
provisions are recognised (see Notes 22 and 29), the occurrence of events that would require
abandonment or switching to post-utilisation of other assets in the public domain or hydro-power plants
owned by the Company by the end of the concession contract (28 years from 31 December 2025) is
unlikely, considering the long useful life of dams, which can be significantly extended over 100 years by
maintenance and improvements.
33. RELATED PARTIES
a) Ultimate controlling party
The Company’s ultimate controlling party is the Romanian State, represented by the Ministry of Energy,
with a shareholding of 80.0561%.
b) Transaction with key management personnel
Key management personnel include the members of the Management Board and Supervisory Board.
Management Board remuneration
2025
2024
Expenses recognized during the year
Fixed component
14,500,376
3,944,881
Variable component accrual
4,734,000
7,889,760
Reversal of over accrual of the previous year
(7,889,760)
-
Total
11,344,616
11,834,641
Payments made in the year
2025
2024
Fixed component
14,500,376
3,944,881
Variable component (for the previous year)
7,855,045
-
Total
22,355,421
3,944,881
The Management Board include 5 directors appointed for 4 years.
Remuneration of executive directors consists of a fixed monthly salary limited to five times the average
monthly gross salary for the last 12 months (starting with December 2025) prior to appointment published
by National Institute of Statistics (INS) for the Company’s activity code (CAEN) according to the
classification of activities in the national economy, and a variable component calculated on the basis of
the financial and non-financial performance indicators, negotiated and approved by the general meeting
of shareholders.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
89
33. RELATED PARTIES (continued)
In 2024, the General Meeting of Shareholders approved the annual variable component of the
remuneration for the Management Board, which is limited to 24 gross monthly fixed components. The
annual maximum amount of the variable component for all the Management Board is RON 7,889,760,
variable component to be paid in 2025.
According to the decision of the Supervisory Board, adopted in the interest of the company and all
shareholders, taking into account the obligations arising from Milestone 121 (PNRR), the context
established by the European Commission Decision C(2025) 3490/28.05.2025, as well as Hidroelectrica’s
status as an issuer listed on a regulated market, two of the mandate contracts were terminated by mutual
agreement in September 2025. Consequently, the maximum amount of the variable component for 2025
was reduced to RON 4,734 thousand. Following the termination, by mutual agreement of the parties,
compensations totaling RON 3,156 thousand were established for the two mandate contracts.
On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-
financial key performance indicators resulting from the Company’s Management Plan.
On 14 December 2025, the Ordinary General Meeting of Shareholders approved the fixed monthly salary
to five times the average monthly gross salary computed as described above, in accordance with the
provisions of Law 109/2011. In addition, the Ordinary General Meeting of Shareholders approved the
revised financial and non-financial performance indicators.
The Company has no contractual obligations related to pensions to its former directors.
Supervisory Board remuneration
2025
2024
Expenses recognized during the year
Fixed component
3,804,663
1,779,434
Variable component accrual
991.000
1,776,816
Reversal of over accrual of the previous year
(1,776,816)
-
Total
3,018,847
3,556,250
Payments made in the year
2025
2024
Fixed component
3,804,663
1,779,434
Variable component (for the previous year)
1,725,917
-
Total
5,530,580
1,779,434
The Supervisory Board consists of 7 members appointed for 4 years.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
90
33. RELATED PARTIES (continued)
Remuneration of the members of the Supervisory Board was approved by shareholders decisions in 2024
and 2025. According to these decisions, the remuneration of the Supervisory Board members consists of
a monthly fixed gross salary, limited to two times the average monthly gross salary for the last 12 months
prior to appointment published by National Institute of Statistics for the Company’s activity code (CAEN)
according to the classification of activities in the national economy and a variable component, calculated
on the basis of the financial and non-financial performance indicators, negotiated and approved by the
general meeting of shareholders.
In 2024, the General Meeting of Shareholders approved the annual variable component of the Supervisory
Board remuneration, which is limited to 12 times the gross monthly fixed component. The annual
maximum amount of the variable component for all the Supervisory Board members is RON 1,776,816.
On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-
financial key performance indicators resulting from the Company’s Management Plan.
There were no loans granted to the members of Supervisory Board or Management Board in 2025 and
2024.
No guarantees were granted / received to / from the members of Supervisory Board or Management
Board.
c) Transactions with subsidiaries
(i) Receivables and liabilities balances from/to subsidiaries
Receivables from
Liabilities to
31 December
2025
31 December
2024
31 December
2025
31 December
2024
Hidroserv S.A.
99,799,443
497,989
55,752,188
32,365,580
Uzina de Construcţii Mașini
Hidroenergetice S.R.L.
995,139
531,983
28,899,655
30,383,978
Total
100,794,583
1,029,972
84,651,842
62,749,558
Liabilities to Hidroserv S.A include debts from maintenance services provided. Liabilities to Uzina de
Constructii Masini Hidroenergetice S.R.L. include debts related to modernization contracts.
Receivables from Hidroserv S.A. include receivables from rent and electricity supply. Receivables from
Uzina de Constructii Masini Hidroenergetice S.R.L. include receivables from electricity supply.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
91
33. RELATED PARTIES (continued)
(ii) Transactions with subsidiaries
Sales in 2025
Sales in 2024
Purchases in 2025
Purchases in 2024
Hidroserv S.A.
3,362,479
1,246,517
362,095,282
310,807,540
Uzina de Construcţii Mașini
Hidroenergetice S.R.L.
4,102,297
902,283
79,744,696
10,315,049
Total
7,459,659
2,148,800
441,839,979
321,122,589
Acquisitions are mainly related to the maintenance services acquired from Hidroserv S.A. and purchases
of modernization services according to contracts with Uzina de Constructii Masini Hidroenergetice S.R.L.
Sales to subsidiaries are mainly related to the sale of electricity and rental services.
d) Transactions with other companies in which the State has control or significant influence
In the normal course of business, the Company have transactions with other entities in which the State
has control or significant influence, mainly related to the tax on industrial water, the purchase of
electricity, transport and system services and sales of electricity, as follows:
Supplier
Purchases
(without VAT) 2025
Payables (including VAT)
31 decembrie 2025
Administrația Națională Apele Romane
430,067,386
98,226,116
Transelectrica (Romanian Electricity System Operator)
680,444,435
152,172,688
OPCOM (Romanian Electricity Market Operator)
267,197,352
683,322
Distributie Energie Electrica Romania
450,831,752
45,447,696
Others
386,629,856
61,969,474
Total
2,215,170,782
358,499,295
Supplier
Purchases
(without VAT) 2024
Payables (including VAT)
31 decembrie 2024
Administrația Națională Apele Romane
502,738,592
69,380,977
Transelectrica (Romanian Electricity System Operator)
1,038,930,925
107,498,150
OPCOM (Romanian Electricity Market Operator)
22,477,937
149,975
Distributie Energie Electrica Romania
293,620,301
59,656,673
Others
48,881,780
996,389
Total
1,906,649,536
237,682,163
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
92
33. RELATED PARTIES (continued)
Sales
(without VAT)
Receivables
(including VAT)
Impairment
loss
Receivables Net
(including VAT)
Client
2025
31 December 2025
Transelectrica (Romanian Electricity
System Operator)
739,636,134
90,230,212
-
90,230,212
OPCOM (Romanian Electricity
Market Operator)
686,612,232
427,824
-
427,824
Electrica Furnizare
302,853,622
25,784,774
-
25,784,774
Rompetrol Rafinare
238,367,320
32,177,509
-
32,177,509
Municipal Thermoenergetic
Company
44,983,058
17,816,320
-
17,816,320
Others
501,596,818
168,583,170
(27,692,485)
140,890,685
Total
2,514,049,182
335,019,810
(27,692,485)
307,327,325
Sales
(without VAT)
Receivables
(including VAT)
Impairment
loss
Receivables Net
(including VAT)
Client
2024
31 December 2024
Transelectrica (Romanian Electricity
System Operator)
1,946,833,917
192,449,261
-
192,449,261
OPCOM (Romanian Electricity
Market Operator)
2,704,049,345
73,489,057
-
73,489,057
Electrica Furnizare
163,692,478
5,922,604
-
5,922,604
Rompetrol Rafinare
206,461,816
64,460,701
-
64,460,701
S.N.G.N Romgaz SA
52,005,110
5,610,318
-
5,610,318
Raja SA
14,860,611
5,131,515
-
5,131,515
SN Radiocomunicatii SA
19,107,560
116,121
-
116,121
Municipal Thermoenergetic
Company
36,712,580
6,213,128
-
6,213,128
Engie Romania
8,163,600
-
-
-
Others
191,941,736
152,796,357
(34,085,240)
118,711,117
Total
5,343,828,754
506,189,061
34,085,240)
472,103,821
Other customers include mainly public institutions, local authorities and public educational institutions
to which the Company supplied electricity in 2025 and 2024,
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
93
33. RELATED PARTIES (continued)
Balance
Bank
Bank account
Bank deposits
Bank account
Bank deposits
31 December 2025
31 December 2024
Exim Bank
37,082
1,089,681,083
17,484
1,507,836,111
CEC Bank
19,259,792
100,372,603
38,973,297
882,191,103
Total
19,296,874
1,190,053,686
38,990,780
2,390,027,214
Transactions
Bank
Bank deposits
placed
Interest
income
Bank deposits
placed
Interest
income
2025
2024
Exim Bank
5,130,000,000
87,143,356
5,900,000,000
89,845,583
CEC Bank
250,000,000
7,209,932
3,079,831,552
54,005,030
Total
5,380,000,000
94,353,287
8,979,831,552
143,850,614
34. SUBSEQUENT EVENTS
At the end of February 2026, a significant geopolitical event occurred in the Middle East, resulting in
heightened regional tensions and uncertainty. Due to the growing geopolitical tensions, since February
2026, there has been a significant increase in the overall market volatility, as well as fluctuations in
energy, oil and gas prices. Elevated inflationary pressures, disruptions across global supply chains, and a
deceleration in economic growth are expected.
The Company does not have direct exposures to related parties and/or key customers or suppliers or
banks from affected region.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management
Board
Member of the Management
Board
Member of the Management
Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A.
Two-tier system Company
CONSOLIDATED FINANCIAL STATEMENTS
for the year ended
31 December 2025
Prepared in accordance with Order of Minister of Public Finance no. 2844/2016
and subsequent amendments
CONTENTS:
Page
INDEPENDENT AUDITORS' REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2025
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year 2025
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year 2025
CONSOLIDATED STATEMENT OF CASH FLOWS for the year 2025
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS as at and for the year ended
31 December 2025
BASIS OF PREPARATION
1. REPORTING ENTITY AND GENERAL INFORMATION
8
2. BASIS OF ACCOUNTING
11
3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY
12
4. APPLICATION OF NEW AND REVISED IFRS
12
5. USE OF JUDGEMENTS AND ESTIMATES
14
6. BASIS OF MEASUREMENT
22
7. MATERIAL ACCOUNTING POLICIES
22
8. CHANGES IN ACCOUNTING POLICIES
38
9. COMPARATIVES
38
PERFORMANCE FOR THE YEAR
10. OPERATING SEGMENTS
39
11. REVENUE
41
12. OTHER INCOME
42
13. OPERATING EXPENSES
42
14. FINANCE RESULT
45
15. EARNINGS PER SHARE
45
EMPLOYEE BENEFITS
16. EMPLOYEE BENEFITS
46
INCOME TAXES
17. INCOME TAX
49
ASSETS
18. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
52
19. INVESTMENTS IN DEPOSITS
52
20. TRADE RECEIVABLES
53
21. OTHER ASSETS
54
22. PROPERTY, PLANT AND EQUIPMENT
55
EQUITY AND LIABILITIES
23. CAPITAL AND RESERVES
63
24. BORROWINGS
65
25. TRADE PAYABLES
67
26. OTHER PAYABLES
67
27. DEFERRED INCOME
68
28. PROVISIONS
68
FINANCIAL INSTRUMENTS
29. FINANCIAL INSTRUMENTS – Fair values and risk management
70
GROUP COMPOSITION
30. ACQUISITION OF SUBSIDIARIES
76
OTHER INFORMATION
31. COMMITMENTS
78
32. RELATED PARTIES
80
33. SUBSEQUENT EVENTS
85
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
1
31 December
31 December
Note
2025
2024
Assets
Non-current assets
Property, plant and equipment
22
19,398,954,109
19,816,398,176
Intangible assets
66,719,955
53,848,538
Restricted cash
18
23,057,471
-
Other non-current assets
21
374,334,423
276,759,591
Total non-current assets
19,863,065,958
20,147,006,305
Current assets
Inventories
123,808,015
93,998,138
Trade receivables
20
1,698,377,642
1,633,688,425
Investments in deposits
19
3,732,016,142
3,475,932,995
Cash and cash equivalents
18
1,187,733,975
1,581,617,072
Restricted cash
18
32,066,077
21,057,471
Other current assets
21
64,960,265
23,926,235
Total current assets
6,838,962,116
6,830,220,336
Total assets
26,702,028,074
26,977,226,641
Equity and liabilities
Equity
Share capital
23
4,498,025,670
4,498,025,670
Inflation adjustments to share capital
23
1,028,872,000
1,028,872,000
Public patrimony
45,324,243
45,324,243
Revaluation reserve
23
11,110,747,401
11,580,347,711
Other reserves
23
1,029,674,414
1,025,970,174
Retained earnings
4,512,486,772
4,717,927,188
Total equity
22,225,130,500
22,896,466,986
Liabilities
Non-current liabilities
Bank borrowings
24
118,358,036
207,846,322
Lease liabilities
61,511,401
70,110,288
Deferred income
27
147,064,351
156,673,133
Current tax liabilities
17
7,822,302
8,195,893
Deferred tax liabilities
17
1,396,868,878
1,460,112,440
Employee benefits
16
139,903,542
128,595,893
Provisions
28
1,009,131,883
943,504,704
Trade payables
25
14,900,534
998,585
Other payables
26
57,867,442
52,512,395
Total non-current liabilities
2,953,428,369
3,028,549,653
(continued on page 2)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
2
31 December
31 December
Note
2025
2024
Current liabilities
Bank borrowings
24
94,957,232
92,886,954
Lease liabilities
10,136,499
9,244,000
Trade payables
25
777,323,350
429,683,124
Contract liabilities
11
48,391,638
97,786,127
Current tax liabilities
17
180,640,051
60,327,927
Deferred income
27
5,607,539
6,145,943
Employee benefits
16
113,012,224
104,599,400
Provisions
28
147,026,811
125,151,784
Tax for electricity producers
13E
-
2,135,558
Other payables
26
146,373,861
124,249,185
Total current liabilities
1,523,469,205
1,052,210,002
Total liabilities
4,476,897,574
4,080,759,655
Total equity and liabilities
26,702,028,074
26,977,226,641
The accompanying notes are an integral part of these consolidated financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
3
Note
2025
2024
Revenue
11
9,619,009,529
9,122,709,143
Other income
12
35,737,470
174,732,075
Turbinated water
13 A
(444,764,067)
(517,805,427)
Employee benefits expenses
16
(1,019,751,138)
(866,329,938)
Transport and distribution of electricity
13 C
(1,634,837,904)
(1.228.392.210)
Electricity purchased
13 B
(911,358,305)
(208,848,067)
Green certificates expenses
13 D
(354,337,865)
(273,534,123)
Depreciation and amortization
22
(882,878,794)
(904,968,113)
Impairment loss on property, plant and equipment and
intangible assets, net
22
(99,463,122)
(39,493,787)
Impairment loss on trade receivables, net
20
(32,346,083)
(65,946,725)
Repair, maintenance, materials and consumables
(111,529,434)
(92,355,537)
Tax for electricity producers
13 E
(122,721,182)
(234,654,212)
Other operating expenses
13 F
(407,635,561)
(326,306,949)
Own work capitalized
85,916,136
49,222,254
Operating profit
3,719,039,680
4,588,028,384
Finance income
14
325,828,597
342,025,483
Finance costs
14
(86,423,495)
(85,458,834)
Net finance result
239,405,102
256,566,649
Profit before tax
3,958,444,782
4,844,595,033
Income tax expense
17
(588,751,147)
(716,679,241)
Profit for the year
3,369,693,635
4,127,915,792
Earnings per share
Basic and diluted earnings per share (RON)
15
7.49
9.18
Other comprehensive income
Impairment of property, plant and equipment
recognized in revaluation reserve, net of tax
(528,031)
(770,110)
Remeasurement of defined benefit liabilities, net of tax
16
2,726,933
(4,498,292)
Other comprehensive income
2,198,902
(5,268,402)
Total comprehensive income
3,371,892,537
4,122,647,390
The accompanying notes are an integral part of these consolidated financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management
Board
Member of the Management
Board
Member of the Management
Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise specified)
4
Share capital
Inflation adjustments
to share capital
Public
patrimony
Revaluation reserve
Other reserves
Retained
earnings
Total equity
Balance at 1 January 2024
4,498,025,670
1,028,872,000
45,324,243
12,076,640,610
1,024,033,814
6,393,661,171
25,066,557,508
Total comprehensive income for the year
Profit for the year
-
-
-
-
-
4,127,915,792
4,127,915,792
Other comprehensive income for the year
Impairment of property, plant and equipment
recognized in revaluation reserve, net of tax
-
-
-
(770,110)
-
-
(770,110)
Remeasurement of defined benefit liabilities, net
of tax
-
-
-
-
-
(4,498,292)
(4,498,292)
Total other comprehensive income for the year
-
-
-
(770,110)
-
(4,498,292)
(5,268,402)
Total comprehensive income for the year
-
-
-
(770,110)
-
4,123,417,500
4,122,647,390
Transactions with owners of the Group
Contributions and distributions
Dividends (Note 23)
-
-
-
-
-
(6,292,737,912)
(6,292,737,912)
Total transactions with owners of the Group
-
-
-
-
-
(6,292,737,912)
(6,292,737,912)
Other changes in shareholders' equity
Set up of legal reserves
-
-
-
-
1,936,360
(1,936,360)
-
Transfer of revaluation reserve to retained
earnings due to depreciation and disposals of
property, plant and equipment
-
-
-
(495,522,789)
-
495,522,789
-
Balance at 31 December 2024
4,498,025,670
1,028,872,000
45,324,243
11,580,347,711
1,025,970,174
4,717,927,188
22,896,466,986
(continued on page 5)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise specified)
5
Share capital
Inflation adjustments
to share capital
Public
patrimony
Revaluation reserve
Other reserves
Retained
earnings
Total equity
Balance at 1 January 2025
4,498,025,670
1,028,872,000
45,324,243
11,580,347,711
1,025,970,174
4,717,927,188
22,896,466,986
Total comprehensive income for the year
Profit of the year
-
-
-
-
-
3,369,693,635
3,369,693,635
Other comprehensive income for the year
Impairment of property, plant and equipment
recognized in revaluation reserve, net of tax
-
-
-
(528,031)
-
-
(528,031)
Remeasurement of defined benefit liabilities, net
of tax
-
-
-
-
-
2,726,933
2,726,933
Total other comprehensive income for the year
-
-
-
(528,031)
-
2,726,933
2,198,902
Total comprehensive income for the year
-
-
-
(528,031)
-
3,372,420,568
3,371,892,537
Transactions with owners of the Group
Contributions and distributions
Dividends (Note 23)
-
-
-
-
-
(4,043,229,023)
(4,043,229,023)
Total transactions with owners of the Group
-
-
-
-
-
(4,043,229,023)
(4,043,229,023)
Other changes in shareholders' equity
Set up of legal reserves
-
-
-
-
3,704,240
(3,704,240)
-
Transfer of revaluation reserve to retained
earnings due to depreciation and disposals of
property, plant and equipment
-
-
-
(469,072,279)
-
469,072,279
-
Balance at 31 December 2025
4,498,025,670
1,028,872,000
45,324,243
11,110,747,401
1,029,674,414
4,512,486,772
22,225,130,500
The accompanying notes are an integral part of these consolidated financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC Marian FETIŢA
Financial Director Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
6
Note
2025
2024
Cash flow from operating activities:
Profit for the year
3,369,693,635
4,127,915,792
Adjustments for:
Depreciation
22
879,816,786
901,573,161
Amortisation
3,017,046
3,394,952
Impairment loss on property, plant and equipment and intangible
assets, net
22
99,463,122
39,493,787
Impairment loss on trade receivables, net
20
37,087,014
65,946,725
Write-down of inventories
494,934
(879,030)
Provisions for risk and charges
(20,737,686)
43,197,769
Gain from bargain purchase of subsidiaries
-
(25,727,908)
Loss on disposal of property, plant and equipment
13 F
1,292,963
6,252,784
Net foreign exchange loss
1,040,155
(211,220)
Interest income
14
(283,174,321)
(332,133,890)
Interest expense
14
22,396,637
26,925,341
Unwinding of discount effect
65,863,834
-
Income tax expense
17
588,751,148
716,679,241
4,765,005,268
5,572,427,504
Changes in:
Trade receivables
(84,371,874)
1,348,333,059
Inventories
(30,304,810)
(12,611,579)
Restricted cash
(34,066,077)
80,000,000
Other assets
10,411,823
45,643,998
Trade payables
185,842,408
21,348,384
Deferred income
(10,147,187)
25,588,775
Employee benefits
10,135,573
14,604,683
Other payables
31,573,735
112,692,719
Cash generated from operating activities
4,844,083,858
7,208,027,543
Interest paid
(12,239,091)
(18,840,756)
Income tax paid
(531,682,586)
(836,254,275)
Net cash from operating activities
4,300,162,183
6,352,932,512
Cash flow from investing activities:
Payments for acquisition of property, plant and equipment
(541,380,425)
(284,085,602)
Payments for acquisition of intangible assets
(17,513,580)
(324,712)
Proceeds from disposals of fixed assets
8,826,780
-
Proceeds from redemption of corporate bonds
-
353,331,500
Payments for deposits held for investment purposes
(9,080,000,000)
(6,950,000,000)
Proceeds from deposits held for investment purposes
8,815,000,000
7,850,000,000
Interest received
265,769,963
305,879,768
Payments for acquisition of subsidiaries, net of cash acquired
-
(67,879,000)
Net cash flow from/ (used in) investing activity
(549,297,260)
1,206,921,954
(continued on page 7)
S.P.E.E.H. HIDROELECTRICA S.A. managed in a two-tier system
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
7
Note
2025
2024
Cash flow from financing activities:
Repayment of borrowings
24
(94,194,174)
(92,349,679)
Lease payments
24
(8,593,538)
(6,436,017)
Dividends paid
23
(4,041,960,306)
(6,287,086,070)
Net cash used in financing activities
(4,144,748,018)
(6,385,871,766)
Net increase/(decrease) in cash and cash equivalents
(393,883,097)
1,173,982,700
Cash and cash equivalents at 1 January
18
1,581,617,072
407,634,372
Cash and cash equivalents at 31 December
18
1,187,733,975
1,581,617,072
The accompanying notes are an integral part of these consolidated financial statements.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management Board
Member of the Management Board
Petronel CHIRIAC Marian FETIŢA
Financial Director Accounting Manager
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise stated)
8
1. REPORTING ENTITY AND GENERAL INFORMATION
(a) General information about the Group
Societatea de Producere a Energiei Electrice in Hidrocentrale Hidroelectrica S.A. (“the Company” or
“Hidroelectrica”) is a joint stock company, domiciled in Romania. The Company’s registered office is 15-17 Ion
Mihalache Blvd., Tower Center Building, 10-15 floors, Sector 1, Bucharest. The Company is registered at
National Trade Register Office with no. J40/7426/2000 and has unique registration code 13267213.
These consolidated financial statements comprise the Company and its subsidiaries (together referred as the
“Group”).
The Group’s main lines of business are power generation (hydro and wind) and electricity supply to end
consumers.
As of 31 December 2025, the Romanian State through the Ministry of Energy owns 360,094,390 shares,
representing 80.0561% of the share capital and of the total voting rights. The rest of the shares are traded on
the Bucharest Stock Exchange as follows: 75,600,136 shares, representing 16.8074% of the share capital are
owned by legal persons and 14,108,041 shares representing 3.1365% of the share capital by individuals.
The Company is governed by a two-tier system comprising the Supervisory Board and the Management Board.
Between 23 June and 4 July 2023, the Company went through an initial public offer on Bucharest Stock
Exchange. The allocation of the shares was carried out on 5 July 2023, the total offer included the entire holding
of Fondul Proprietatea, namely 89,708,177 shares, representing 19.9439% of the Company's share capital.
The first trading day of Hidroelectrica shares at the Bucharest Stock Exchange was 12 July 2023.
List of subsidiaries
As of 31 December 2025 and 31 December 2024 Hidroelectrica has the following subsidiaries:
Subsidiary
Activity
Registered
Office
% participation at 31
December 2025
% participation at 31
December 2024
Hidroserv S.A. (company in
reorganization)
Services for energy
sector(maintenance,
repairs, construction)
Bucharest,
Romania
100%
100%
Uzina de Construcții Mașini
Hidroenergetice S.R.L.
Manufacturing of engines
and turbines
Resita,
Romania
100%
100%
Hidroserv S.A. entered the insolvency proceedings in October 2016. In 2020, a reorganization plan of the
subsidiary was approved by the Assembly of Creditors and confirmed by the insolvency judge. On 25 June 2025
the court has officially closed.
On 22 February 2023, the Company was declared the winner of the sales procedure of the business lines ABC
and Calnicel platform, owned by UCM Resita SA. In January 2024, the Company set-up a new subsidiary, Uzina
de Construcții Mașini Hidroenergetice S.R.L., through which it took-over the business from U.C.M. Reșița S.A..
The transaction was finalized on 11 March 2024.
All revenues are generated in Romania.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
9
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
(b) Regulatory environment
The activity in the energy sector is regulated by the National Energy Regulatory Authority ("ANRE").
The main responsibilities of ANRE include: licensing the entities operating in the energy sector, issuance of
regulations applicable to the electricity market, approval of regulated prices and tariffs and issuance of
methodologies used to set regulated prices and tariffs.
(c) Main operations of the Group
Electricity generation and system services
The Group generates electricity by operating 188 hydropower plants and micro-hydropower plants, including
5 pumping stations, (the main generation capacities being Portile de Fier I and Portile de Fier II, which represent
approximately 40% of the total electricity generated) and 36 wind turbines of 3 MW each.
The electricity generated is sold both wholesale and retail (supply to end consumers).
On 1 January 2023 a centralized electricity acquisition mechanism (“MACEE”) was implemented by the
Government through which the electricity producers shall sell the available (not contracted as of November
2022) quantity of electricity to the market operator, OPCOM, at a fixed price of RON 450 per MWh.
In March 2024, the Government issued a new Emergency Ordinance (OUG no. 32/28.03.2024) which states that
starting 1 April 2024, the MACEE mechanism becomes voluntary, leaving producers the possibility to sell energy
at the price of 400 lei/MWh until 31 December 2024. Thus, for 2024, the price paid by the sole purchaser
(OPCOM) to electricity producers who sell electricity through MACEE in monthly auctions was as follows:
• RON 450 /MWh for the electricity contracted until 31 March 2024;
• RON 400 /MWh for the electricity contracted starting 1 April 2024.
Starting January 2025 the MACEE mechanism was not applicable anymore.
Hidroelectrica S.A. also provides system services to the national electricity system operator, Transelectrica. The
system services involve making an agreed power generation capacity available to Transelectrica within a certain
period of time, so that to allow the system operator to achieve permanent balancing of the electricity system.
Electricity supply to end consumers
The electricity market to end users in Romania is liberalized and all consumers are free to choose their electricity
supplier from which they can purchase electricity at negotiated prices.
The Group supplies electricity at negotiated tariffs to both industrial consumers and household consumers. The
supply tariff includes, in addition to the electricity price, the electricity transmission and distribution costs (see
accounting policy 7 c)), the contribution to high efficiency co-generation power support scheme, and the cost
of green certificates (see Green certificates section).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
10
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
Starting 1 November 2021, due to the significant increase in energy prices on the international and national
markets and the impact thereof on Romanian consumers, the Government implemented consumer support
schemes, as follows:
• capping the electricity supply tariffs for household and non-household consumers until 30 June 2025. The
difference between the cap price and the regulated cost was covered through a subsidy from the State to
compensate for the impact of capping mechanism. Once the Group submitted the requests for the subsidy
to be received from the State authorities as per applicable law, the subsidy and the related income is
recorded (Note 11). The impact of this mechanism on the Group’s financial performance in 2025 was a
reduction of revenue due to capped prices by RON 46 million.
Green certificates (“GC”)
As a producer of electricity from renewable sources (hydroelectric power in refurbished micro-hydropower
plants with an installed capacity of no more than 10 MW and with a service life of at least 15 years from the
date of commissioning, and wind power), the Group receives green certificates through the green certificates
support scheme.
In 2025 the Group received 3 green certificates for each MWh generated by the eligible micro-hydropower
plant and 0.75 green certificates for each MWh generated by the wind farm in 2025 and 2024. In 2024 received
between 2,92 and 3 green certificates for each MWh generated by eligible micro-hydropower plants, 5 micro-
hydropower plants in January 2024, 4 micro-hydropower plants in February and March 2024, 3 micro-
hydropower plants in April 2024, 2 micro-hydropower plants in May 2024 and 1 micro-hydropower plant
starting October 2024. During 2025, the Group generated from its own production portfolio a number of 24,635
GC from hydropower plants and 197,813 GC from wind power plant (CEE Crucea Nord) (2024: 28,089 GC from
hydropower plants and 217,200 GC from wind power plant).
The selling price must fall between the minimum and maximum values set by law:
(a) a minimum trading value of EUR 29.4/GC and
(b) a maximum trading value of EUR 35/GC.
As an electricity supplier, the Group is required to purchase a number of green certificates computed by
multiplying the annual mandatory purchase quota of green certificates by the quantity (in MWh) of electricity
supplied to end users. ANRE establishes the annual mandatory level of purchase obligations (quotas) for green
certificates. The Group is eligible to receive green certificates for the production of Crucea Wind farm which
are used to partially settle the obligation to comply with the mandatory annual quota. The difference is acquired
by the Group to reach the quota and the Group recognizes the amount needed to acquire the green certificates
for fulfilling the quota in “Trade payables”.
Applicable annual quota for 2025 is 0.49983 green certificate per MWh (2024: 0.496 green certificate per
MWh).
Tax on electricity producers
The tax for electricity producers is computed as 100% of net monthly average selling price in excess of RON
400 per MWh. (450/MWh till 31 March 2024) The tax on electricity producers was applicable until 31 March
2025..
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
11
1. REPORTING ENTITY AND GENERAL INFORMATION (continued)
In February 2025, the Government issued a new Emergency Ordinance (GEO no. 6/27.02.2025) extending the
applicability of the tax for an additional 3 months, until June 30, 2025. Starting April 1, 2025, the tax for energy
producers is calculated by applying a rate of 80% (reduced from 100%) to the difference between the average
net monthly selling price and the price of 400 RON per MWh.
The net monthly average selling price is computed based on the monthly revenue of the generation segment,
which includes the wholesale of electricity produced and the value of electricity transferred within the same
entity from producer portfolio (generation segment) to supplier portfolio (supply segment), less monthly cost
for imbalances.
The tax for electricity producers was eliminated starting 01 July 2025.
Tax on Special Constructions
Starting with 1 January 2025, the tax on constructions was introduced through Government Emergency
Ordinance (GEO) 156/2024, with subsequent amendments, calculated as 0.5 %, of the net book value of eligible
constructions held as of 31 December of the preceding year and constructions subject to concession contract.
The tax had an impact of 51,133 thousand RON for the period ended 31 December 2025.
2. BASIS OF ACCOUNTING
These consolidated financial statements were prepared in accordance with the Order of Minister of Public
Finance no.2844/2016 and subsequent amendments („OMFP 2844/2016”). According to OMFP 2884/2016 the
International Financial Reporting Standards ("IFRS") represent standards adopted based on the procedure as
per European Commission Regulation no. 1606/2002 of the European Parliament and of the Council of 19 July
2002 on the application of international accounting standards (IFRS as adopted by European Union). OMFP no.
2844/2016 includes also additional provisions versus IFRS-EU, the Group identified as provisions applicable to
its financial statements the matters described below.
The consolidated financial statements were authorized for issue by the Company’s Management Board on
25.03.2026 and by the Supervisory Board on 26.03.2026.
The Group also issues a primary version of these consolidated financial statements prepared in accordance with
OMFP 2844/2016 in Romanian language approved at the same date with these financial statements. OMF
2844/2016 is prepared in accordance with the IFRS Accounting Standards as adopted by the European Union,
with the following exceptions:
- IAS 21 The Effects of Changes in Foreign Exchange Rates regarding the functional currency, and except
for IAS 12 Income Taxes concerning the treatment of the minimum tax on turnover as an income tax
expense.
- These exceptions do not affect the compliance of the Company's financial statements with the IFRS
Accounting Standards as adopted by the EU.
The Group also prepared consolidated financial statements in accordance with International Financial
Reporting Standards, IFRS-EU, approved at the same date as these consolidated financial statements. Main
differences between IFRS-EU and OMFP no. 2844/2016, that affects this set of financial statements refer to:
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
12
2. BASIS OF ACCOUNTING (continued)
Main differences between IFRS-EU and OMFP no. 2844/2016, that affects this set of financial statements refer
to:
• Fee paid for the connection of the power generation capacities to the electricity grid is presented as
“Property, plant and equipment” in the IFRS-EU financial statements while in the OMFP no. 2844/2016
financial statements is presented as “Intangible assets”; (Net book value is of RON 30,470,918 RON as
of 31 December 2025 (31 December 2024: RON 32,096,035)
• Impact of restatement of statutory share capital in nominal terms according to IAS 29 “Financial
Reporting in Hyperinflationary Economies” in amount of RON 1.028,872,000 is presented as part of
“Share Capital” in the IFRS-EU financial statements while in the OMFP no. 2844/2016 financial
statements is presented as an equity item separate from share capital, namely “Inflation adjustments
in accordance with IAS 29”;
• Cash contribution received from State for construction of public domain assets in amount of RON
45,324,243 as of 31 December 2025 and 2024 (ie certain type of assets such as dams which will be
transferred to the State at the end of its economic life) is presented as deferred income in the IFRS-EU
financial statements, while in the OMFP no. 2844/2016 financial statements is presented as public
patrimony;
• Accruals for employee bonuses in amount of RON 42,529,000 as of 31 December 2025 (31 December
2024: RON 42,681,942) are presented as employee benefits liabilities in the IFRS-EU financial
statements, while in the OMFP no. 2844/2016 financial statements are presented as provisions. In
addition, the related expense in current year in amount of RON 42,529,000 is included under “Other
operating expenses”, while in the IFRS-EU financial statements is included under “Employee benefits
expenses”
These consolidated financial statements have been prepared on a going concern basis. Details of the Group’s
accounting policies are included in Note 7.
3. FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY
These consolidated financial statements are presented in Romanian Lei (RON), which is the functional currency
of the parent company and its subsidiaries based on separate assessment assessments conducted in
accordance with IAS 21. All amounts have been rounded to the nearest thousand, unless otherwise indicated.
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
Following below are the new standards, amendments and interpretations to existing standards adopted
starting 1 January 2025 and their effect in the preparation of the Group and the Company financial statements
for the year ended 31 December 2025.
The standards/amendments that are effective and have been endorsed by the European Union
The accounting policies adopted are consistent with those of the previous financial year, except for the
following IFRS Accounting Standard which however, is not relevant for the Group:
- IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (Amendments). The
amendments are effective for annual reporting periods beginning on or after January 1, 2025. The newly
adopted IFRS Accounting Standard did not have a material impact on the Group’s/Company’s accounting
policies.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
13
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(continued)
The standards/amendments that are not yet effective, but have been endorsed by the European Union
- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and Measurement
of Financial Instruments (Amendments). In May 2024, the IASB issued amendments to the Classification and
Measurement of Financial Instruments which amended IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures and they become effective for annual reporting periods beginning on or after
January 1, 2026, with earlier application permitted. Management has assessed that these amendments will
not have a material impact.
- IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Contracts Referencing Nature-
dependent Electricity (Amendments). In December 2024, the IASB issued targeted amendments for a better
reflection of Contracts Referencing Nature-dependent Electricity, which amended IFRS 9 Financial
Instruments and IFRS 7 Financial Instruments: Disclosures and they become effective for annual reporting
periods beginning on or after January 1, 2026, with earlier application permitted. Management has assessed
that these amendments will not have a material impact.
- Annual Improvements to IFRS Accounting Standards – Volume 11. In July 2024, the IASB issued Annual
Improvements to IFRS Accounting Standards – Volume 11. An entity shall apply those amendments for
annual reporting periods beginning on or after January 1, 2026. Earlier application is permitted.
Management has assessed that these amendments will not have a material impact
The standards/amendments that are not yet effective and have not yet been endorsed by the European
Union
- IFRS 18 introduces new requirements on presentation within the statement of profit or loss. It requires an
entity to classify all income and expenses within its statement of profit or loss into one of the five categories:
operating; investing; financing; income taxes; and discontinued operations. These categories are
complemented by the requirements to present subtotals and totals for ‘operating profit or loss’, ‘profit or
loss before financing and income taxes’ and ‘profit or loss’. It also requires disclosure of management-
defined performance measures and includes new requirements for aggregation and disaggregation of
financial information based on the identified ‘roles’ of the primary financial statements and the notes. In
addition, there are consequential amendments to other accounting standards. IFRS 18 is effective for
reporting periods beginning on or after January 1, 2027, with earlier application permitted. Retrospective
application is required in both annual and interim financial statements. The standard has not yet been
endorsed by the EU.
The Group is currently working to identify all impacts the amendments will have on the primary financial
statements and notes to the financial statements. The initial expected material impacts on Group’s financial
statements are, as follows:
- Foreign exchange difference will be classified in the category where the related income and expense form
the item giving rising to the foreign exchange difference.
- New disclosure will be added: (a) management-defined performance measures; (b) specified expense by
nature if expenses are presented by nature in the operating category of the statement of profit or loss; and
(c) a reconciliation for each line item in the statement of profit or loss between the restated amounts
presented applying IFRS 18 and the amounts previously presented applying IAS 1.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
14
4. APPLICATION OF THE NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(continued)
• Interest received and interest paid will be classified in the financing activities,
• IFRS 19 Subsidiaries without Public Accountability: Disclosures (including amendments). In May 2024,
the IASB issued the IFRS 19 - Subsidiaries without Public Accountability: Disclosures, and in August 2025
the IASB issued amendments to IFRS 19. IFRS 19 (including the amendments) becomes effective for
annual reporting periods beginning on or after January 1, 2027, with earlier application
permitted. Management has assessed that these amendments will not have a material impact
• IAS 21 The Effects of Changes in Foreign Exchange Rates: Translation to a Hyperinflationary
Presentation Currency (Amendments). In November 2025, the IASB issued amendments to Translation
to a Hyperinflationary Presentation Currency which amend IAS 21 The Effects of Changes in Foreign
Exchange Rates, and they become effective for annual reporting periods beginning on or after January
1, 2027, with earlier application permitted. Management has assessed that these amendments will not
have a material impact
• Amendment in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and
Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. In
December 2015, the IASB postponed the effective date of this amendment indefinitely pending the
outcome of its research project on the equity method of accounting.
5. USE OF JUDGEMENTS AND ESTIMATES
In preparing these consolidated financial statements, management has made judgements and estimates that
affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized
prospectively.
a) Judgements
Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognized in the financial statements is presented below:
a1) Concession agreement
In November 1998 Law no. 213/1998 was issued regulating the statute of the public domain. This law provides
that the ownership right over the public domain assets belongs to the State or local authorities, which can lease
the assets that are in public property. In accordance with the provisions of Law no. 213/1998 and Law no.
219/1998, the Ministry of Economy and Commerce (currently the Ministry of Energy) has leased to the
Company the hydropower facilities (dams, piers, locks, water storage reservoirs) and the land on which they
are located. Thus, in December 2004, the concession contract no. 171/27.12.2004 was concluded between the
Ministry of Economy and Commerce (currently the Ministry of Energy) (grantor) and Company (operator) for
the hydropower assets in the public patrimony existing as at 31 December 2003.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
15
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The main terms of the concession contract and its subsequent amendments are the following:
• The State, through the Ministry of Economy and Commerce (currently the Ministry of Energy), holds the
ownership right over the public assets that are the subject matter of the contract;
• The Company has the right to use these assets for a period of 49 years from the signoff date (the period
may be extended in accordance with the provisions of the concessions law, by half of the original period,
by mutual agreement of the parties), for the purpose of operation, refurbishment, modernization,
rehabilitation, as well as construction of new hydro-power facilities according to the investment programs;
• The Company pays an annual royalty of 1/1000 of the annual revenues from power generation and system
services generated in hydro-power facilities;
• Upon termination of the contract, certain assets that were used by the operator in carrying out the
concession will be returned to the grantor, as explained below;
• The Company has the obligation to use the assets in accordance with the provisions of the concession
contract and the operating license.
The concession contract provides for the following types of assets:
• Assets to be returned – assets of public domain that belong to the grantor and that are returned to the
grantor in full right, free of charge and free of any encumbrances, upon termination of the concession
contract. Assets to be returned are assets of public domain such as dams, piers, locks, that are subject to
the concession/lease, as well as those resulting from investments/improvements to these assets made by
the Company during the concession contract period. The Company depreciates these
investments/improvements over the lower of the concession contract remaining period and the useful life
of those assets.
• Takeover assets – assets that belong to the operator and are used by the operator during the concession
period and which are similar in nature to assets of public domain above (land improvements and
constructions, technical installations and machinery), over which, upon termination of the concession
contract, the grantor has an option to take over those assets in exchange for a payment equal to the
“present book value” on the takeover date. In Company’s interpretation, the “present book value” is the
net book value at the date of the takeover, and given that the Company uses the revaluation model, this
value will be the revalued amount at that date. These assets are depreciated over their estimated useful
life.
• Own assets – assets that, upon termination of the concession contract, remain the property of the operator.
Own assets are assets (constructions, technological installations, machinery and equipment, measuring and
control devices; vehicles; furniture, office equipment, protective equipment and other tangible assets) that
belong to the operator and are used by the operator during the concession period, except for the takeover
assets. These assets are depreciated over their estimated useful life.
In assessing the application of IFRIC 12 “Service concession arrangements”, the Group considered the following
criteria of the public-private service concession arrangements in the analysis of the concession contract:
a) The grantor controls or regulates what services the operator must provide within the infrastructure, to
whom it must provide them and at what price; and
b) The grantor controls – by ownership, beneficial entitlement or otherwise – any significant residual
interest in the infrastructure at the end of the term of the arrangement.
The Group concluded that it is not within the scope of IFRIC 12 because it does not meet criterium a) above,
the grantor does not regulate to whom the operator must provide the service and at what price.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
16
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The Group considered that the price fixing mechanism introduced by the Government starting 1 January 2023
does not affect this conclusion as this mechanism is temporary and applied only to part of the production.
The Group recognises the royalty of the concession contract in Other operating expenses.
a2) Leasing and refurbishing of assets to be returned
In assessing the application of IFRS 16 “Leases” to the concession contract presented above, the Group
considered the following criteria to determine whether this contract contains a lease:
a) the lessee has the right to obtain in essence all the economic benefits using the identified asset;
b) the lessee has the right to direct the use of the identified asset.
The Group concluded that both criteria are met and, consequently, the concession contract contains a lease as
the Ministry of Energy transferred the right to control the use of the assets of the public domain (assets to be
returned) to the Group in exchange for a royalty. According to IFRS 16, the Group measured the carrying
amount of the right-of-use asset and the amount of lease liability related to this contract as nil, because the
future lease payments are variable and depending on Company’s revenue, th e royalty being calculated as a
percentage of revenues.
In respect of refurbishments made to the assets to be returned, the Group concluded that they are
improvements of a leased asset for which the Group is the “accounting owner”, in the sense that these
improvements serve the Group’s interest, as lessee, to use the leased assets. Consequently, the Group
recognized improvements of assets to be returned as property, plant and equipment. The Group depreciates
these assets over the lower of the concession contract remaining period and the useful life of those assets.
The Group believes that the following facts indicate that the Group is the “accounting owner” of improvements
made:
a) The Ministry of Energy, as a lessor, does not reimburse the Company, as lessee, for the cost of the
improvements made. Consequently, the improvements are fully funded from the Group’s sources, and
the Group is responsible to incur the costs;
b) The Group has no obligation to make improvements of the assets to be returned. The decisions
regarding refurbishment of the assets to be returned are made by the Group depending on its needs
to use these assets and are unique to the Group’s intended use of the leased assets;
c) The Group is permitted to alter the leasehold improvements without the consent of the lessor or
without compensating the lessor;
d) Improvements are made on the risk and responsibility of the Group (the Group bears the risk of
overruns) and are not available to the grantor until the termination of the concession contract.
a3) Cash-generating units (“CGU”)
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows from continuing
use that are largely independent of cash inflows of other assets or groups of assets.
The Group concluded that the assets relating to hydro-power plants represent a single cash-generating unit,
mainly based on the following considerations:
- the Company has a single hydro-power generation license which covers all power plants as a whole;
- the license stipulates the Company’s obligation to maintain the availability of its production capacities as
a whole;
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
17
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
- the decision to produce electricity in a hydro-power plant is made based on the technical operating
conditions of the other hydro-power plants;
- the balancing of the electricity contracted and produced is made at the Company’s level and not at
individual plants;
- the contracts are concluded based on the total estimated electricity to be produced in a specific period in
all of the Company’s hydro-power plants, and the price is set for the entire production.
Also, the Group concluded that the wind park is a separate single CGU.. The Group has different investment
objective projects under construction related to hydro-power assets with complex/multiple functions for which
reliable estimates related to future cash-flows can be made, these being considered as separate single CGU.
a4) Decommissioning obligations
Order of the Ministry of Water and Environment no. 119 of 11 February 2002 on approval of the Procedure of
transfer into conservation, post-utilisation or abandonment of dams provides the procedures for post-
utilisation and abandonment of dams (including levees, hydro-power plants and locks) that must be carried out
by the holders of dams under certain conditions provided by law. The has no legal or contractual obligations
to disassemble and restore the site, other than those arising from Order no. 119, which are presented in the
paragraphs below.
Dam holders are defined by GEO no. 244 of 28 November 2000 (republished) on the safety of the dams as legal
persons of any title, who have in their possession, ownership and/or administration a dam.
Post-utilisation refers to the dams that have reached their normal operating life span and can be used for
purposes other than those for which they were originally constructed for. Post-utilisation requires the
implementation of a set of measures and works that will ensure the new functionality of the dam to protect
the population and the environment in safe conditions. The necessary measures and works are carried out
through the care of both the holder or administrator of the dam, and the post-user.
The post-utilisation of the dams is proposed by the holders of the dams and is approved by order of the minister
that exercises control, coordination or authority over the entity that holds the dam, based on the endorsement
of the Ministry of Water and Environment.
After the performance of the works required by the post-utilisation project, the hand over reception protocol
between the former holder and the post-user is performed.
Abandonment refers to completed or unfinished dams, with or without the normal life span exceeded, which
can no longer be kept in operation or post-utilisation due to technical impossibility or very high costs and which,
at the same time, represent a potential danger for the population and the environment. Abandonment requires
the implementation of a set of measures and works for the decommissioning of the dam, the ecological
reconstruction of the area and enabling adequate liquid and solid flows, including the maximum water flow in
the dammed section. The necessary measures and works are carried out with the care of the holder or the
administrator of the dam and must ensure the flow conditions existing prior to the construction of the dam.
The triggering events of dam abandonment operations include:
• the request of the holders of the dams, when they find that the necessary performance requirements
according to the law cannot be met, the dams presenting an unacceptable associated risk;
• the disposition of the control bodies, following expertises that show that the dams present an unacceptable
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
18
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
• associated risk, constituting a real danger for the population and the environment;
• accidents, when the conclusions of the expert report specifically indicate the abandonment due to the
very high cost of the necessary repairs, as well as not meeting the performance requirements and the
safety criteria, etc.
The reception of the decommissioning and ecological reconstruction works is carried out by representatives of
the holder of the dam and of the central or local public administration, who take over the respective area, by
concluding a handover protocol.
The Romanian State, represented by the Ministry of Economy and Commerce, currently the Ministry of Energy,
holds the ownership right over the hydropower developments (dams, levees, locks, storage lakes) and the land
on which they are located that belong to the public domain and which are the subject of the concession contract
mentioned above. The Group has the right to use these assets for a period of 49 years (remaining 28 years as
of 31 December 2025).
According to the concession contract, the Group has the right during the contract to abandon or deactivate
assets that are part of the public domain with the consent of the grantor.
The Group considers that, in accordance with the applicable legal provisions and practices, abandonment
occurs in extreme situations, when the dams become an unacceptable risk impacting the environment and the
population. Given that these constructions have complex functions in addition to power generation, including
flood protection, water supply, irrigation etc., post-utilisation is the usual way in which these constructions will
be transferred to central or local public administration, after they can no longer be used for power generation
purposes.
The necessary works for post-utilisation are established by technical documentation prepared on the basis of
an assessment of the safety status of the dam at that time, carried out by experts certified by the ministries
and certified/endorsed by the Ministry of Water and Environment.
Moreover, the abandonment works are carried out on the basis of a special documentation prepared with the
water authority approval, the environmental protection agreement, and the endorsement of the local and
central public administration. These documentations and endorsements will establish the activities necessary
for abandonment.
The works and costs of transition into post-utilisation or abandonment are subject to significant uncertainties
caused by the fact that the rate of degradation and the life span of a dam vary significantly from one case to
another (some could reach more than 100 years), as well as by the complexity and variety of works that may
be necessary for transition into post-use or abandonment, depending on the specific factual status of each dam
at the time of entering post-utilisation or abandonment, on the cost sharing between the holder and the post-
user, as well as by the very remote time period from present to the moment when the abandonment works
would be performed, if any. Also, there are significant uncertainties related to the evolution of the degree of
degradation and to the determination of the actual life span of a dam, which are dependent on natural disasters
(floods, landslides, earthquakes, etc.) and on the reliability of the construction.
In addition, the Group estimates that, by the end of the concession contract (the remaining period of 28 years
as of 31 December 2025), the occurrence of situations requiring post-utilisation or abandonment of public
domain assets or its own assets – levees, hydro-power plants and locks (other than those in progress assets
described in Note 21) is unlikely, considering the long life of the dams, which can be significantly extended over
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
19
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
100 years by maintenance and improvements.
Consequently, the Group recognizes decommissioning provisions only when management has taken the
decision to abandon an asset or switch to post-utilisation or has no realistic alternative but to do so during the
concession period. The provisions are recognized based on the costs resulting from the technical
documentation prepared by specialists employed by the Group.
a5) Electricity sale-purchase contracts
Under IFRS 9 “Financial Instruments”, a contract to buy or sell a non-financial item (including electricity) may
be classified and recognized as a financial instrument. According to paragraphs 2.4 and 2.6 of IFRS 9, if the
contracts to buy or sell non-financial items can be settled net in cash or in another financial instrument, or by
exchanging financial instruments, including if the underlying commodity is readily convertible into cash, they
are in the scope of IFRS 9. The standard provides an exemption from applying IFRS 9 for the contracts that are
entered into and continue to be held for the purpose of the receipt or delivery a non-financial item in
accordance with the entity’s expected purchase, sale or usage requirements (“own-use exemption”).
The electricity is a commodity readily convertible into cash and therefore management has conducted an
analysis in order to determine if own use exemption applies to its contracts.
The main considerations are:
- the Group is an electricity producer and its only intention and purpose is to sell all the electricity
produced;
- the forward sell contracts are concluded with the sole intention of delivering the electricity produced;
the Group does not act as an electricity broker/dealer;
- the buy-sell transactions on the spot markets (day-ahead, intra-day and balancing markets) are entered
into only for meeting the Group’s own selling and balancing necessity and responsibility;
- in 2020 the Group started to be active in the electricity supply sector (selling electricity to end users),
acting also as a service provider (including customer service); and
- the Group has used limited forward purchase electricity contracts and their purpose was to cover the
needs for the contractual commitments for deliveries to final end consumers.
The Group concluded that own use exemption applies in all its electricity sale and purchase contracts in 2025
si 2024 and therefore are not in scope of IFRS 9.
b) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at the reporting date that have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial
year is included in the following notes:
• Note 22 – assumptions related to the revaluation of property, plant and equipment;
• Note 22 – assumptions related to determination of recoverable amount of assets under construction;
• Note 7 h) and i) – estimates of useful lives of property, plant and equipment and intangible assets;
• Note 13 E – estimates in relation to electricity transfer price between production and supply activity used
in calculation of tax for electricity producers;
• Notes 28 and 32 – recognition and measurement of provisions and contingent liabilities;
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
20
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
• Notes 7 l), 20 and 29 b) – determination of expected credit losses for trade receivables;
• Note 16 – assessment of obligations resulting from defined benefit plans and other long-term employee
benefits: the main actuarial assumptions;
• Note 28 – estimates related to decommissioning provisions
Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for
financial assets and liabilities, and non-financial assets (property, plant and equipment).
When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices);
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
- Note 22: property, plant and equipment;
- Note 29: financial instruments.
Climate-related risks
Hidroelectrica is exposed to climate-related risks, which can impact water resource availability, a key factor in
hydropower generation. These include variability in precipitation, with the potential for altered river flows
impacting water availability for energy production. The increased incidence of extreme weather events—such
as the drought experienced in 2024 that led to a significant decrease in hydro production—demonstrates the
tangible effects of these risks. Nevertheless, the company has historically observed that during droughts,
electricity prices have increased, which may benefit the company through increased profit margins rather than
through volumes sold.
To address climate-related risks, Hidroelectrica is emphasizing the diversification of its energy portfolio,
particularly focusing on expanding into renewable energy sources. The company plans to acquire and develop
solar parks and additional wind farms, aiming for an additional of minimum 500 MW of installed capacity in the
next years. This shift towards solar and wind energy is strategically significant, especially given the inverse
correlation between solar power generation and water levels for hydropower. The adoption of solar power,
therefore, offers an offset during periods of low water availability, underlining the importance of a versatile
and resilient energy mix in response to the challenges posed by climate variability.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
21
5. USE OF JUDGEMENTS AND ESTIMATES (continued)
The financial implications of climate-related risks include the fair value of Hidroelectrica's property, plant and
equipment, related to water resources and hydropower facilities that can be affected by a lower volume of
power generation estimated during projected useful life associated with climate change compared with the
initial technical and financial performance indicators of such projects. These potential implications are
considered in the economic obsolescence test conducted as part of the revaluation exercise.
Also, with respect to investment objective that are currently in progress, the specific impairment assessments
performed consider a lower forecasted electricity production given the expected variability in precipitation.
Work safety and safe operations
Protecting people is a priority of the Group and the Group is committed to safe and responsible operations to
protect the health and safety of its employees, contractors and surrounding communities. This commitment
demonstrated through established health and safety policies, ongoing learning and development via training
on human rights and workplace safety, and the annual update of the HSE Prevention and Protection Plan.
While the Group aims for zero serious workplace accidents, incidents may still occur. However, the Group’s top
priorities remain the enhancement of safe working conditions.
Cyber risk
Digitalization brings many benefits, but it also increases risks related to cybersecurity and system reliance. As
the Group’s operations grow and depend heavily on IT systems and network infrastructure, these risks can
cause operational disruptions, fraud, or data theft.
Any IT system failure, including from cyberattacks, could negatively impact the business, finances, and
operations. Systems face threats like power outages and cyberattacks, and despite our cybersecurity measures,
disaster recovery plans, and employee training, we may not be fully protected against all unauthorized access
attempts. The Group is continuously enhancing its IT systems and cybersecurity to protect data confidentiality
and integrity, while also educating its employees to responsibly manage cyber risks and IT systems failures.
Risk management and internal control
The Group’s internal control framework includes compliance to the company’s values and guidelines on ethics
and corporate responsibility. A strong commitment to integrity, responsibility, and ethical behaviour is
especially crucial in preventing and detecting fraud, bribery and corruption. The Group is committed to
conducting its operations fairly, honestly, and in full compliance with all applicable laws. It adopts a zero-
tolerance policy toward bribery and corruption in all its operations and relationships worldwide. Internal
procedures addressing conflicts of interest, gifts and hospitality, and whistleblowing are designed to reduce
potential fraud and corruption risks.
Group-wide fraud preventing, anti-bribery and corruption policies, along with whistleblower procedures,
provide guidance on risk assessment, legal compliance, and reporting concerns.
The Group and its Supervisory Board take whistleblowing reports and negative media coverage seriously.
Established policies ensure analysis of any breaches of the internal code of conduct or legal requirements,
supported by an open channel for reporting. Internal reviews conducted throughout 2025, up to the financial
statements’ approval date, found no instances of ethical violations or non-compliance with laws and
regulations.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
22
6. BASIS OF MEASUREMENT
The consolidated financial statements have been prepared on the historical cost basis except for land, buildings,
equipment and other items of property, plant and equipment, which are measured using revaluation model.
7. MATERIAL ACCOUNTING POLICIES
The Group has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
(a) Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when the acquired set of activities
and assets meets the definition of a business and control is transferred to the Group (see 7 (a) (ii)). In
determining whether a particular set of activities and assets is a business, the Group assesses whether the set
of assets and activities acquired includes, at a minimum, an input and substantive process and whether the
acquired set has the ability to produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an
acquired set of activities and assets is not a business. The optional concentration test is met if substantially all
of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar
identifiable assets.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is
recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the
issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships.
Such amounts are generally recognized in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay
contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not
remeasured and settlement is accounted for within equity. Otherwise, other contingent consideration is
remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent
consideration are recognized in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group ‘controls’ an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date on which control commences until the date on which control ceases.
(iii) Non-controlling interests (“NCI”)
NCI are measured initially at their proportionate share of the acquiree’s identifiable net assets at the date of
acquisition.
Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
23
7. MATERIAL ACCOUNTING POLICIES (continued)
(iv) Loss of control
When the Group loses control over a subsidiary, it derecognizes the assets and liabilities of the subsidiary, and
any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any
interest retained in the former subsidiary is measured at fair value when control is lost.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized gains or losses (except for foreign currency
transactions gains or losses), are eliminated.
(b) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of Group companies at the
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in
a foreign currency are translated into the functional currency at the exchange rate when the fair value was
determined. Non-monetary items that are measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction. Foreign currency differences are generally
recognized in profit or loss and presented within finance costs.
(c) Revenue from contracts with customers
Revenue in measured based on the consideration specified in a contract with a customer, while the revenue
from electricity supply is measured based on lower of the agreed contractual prices with customers and, where
applicable, the capped electricity prices as per legislation. The Group recognises revenue when it transfers
control over a good or service to a customer.
The following table provides information about the nature and timing of the satisfaction of performance
obligations in contracts with customers, including significant payment terms, and the related revenue
recognition policies.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
24
Nature and satisfaction of contractual
obligations
Revenue recognition
Wholesale of
electricity
The Group sells the majority of electricity
produced on forward contracts with electricity
suppliers and traders, on the spot market (day-
ahead market) to the market operator (OPCOM)
and on the balancing market to the system
operator (Transelectrica).
Invoices are issued at the end of the month or at
the beginning of the following month for the
electricity delivered in the current month.
The payment term is 30 days from invoice date.
Revenue is recognized over time, because the
customer simultaneously receives the benefits
provided by the performance of the Group as the
Group delivers electricity; generation and use of
electricity are simultaneous because electricity is
not stored.
The contract liabilities primarily relate to the
advance consideration received from customers
under contract in relation to energy to be supplied
in the following period.
Electricity supply to
end users (retail
sales of electricity)
The performance obligation is represented by
delivery of electricity to the customer’s location,
which includes transmission and distribution,
performed via third party assets.
Customers obtain control of electricity as
electricity is consumed. Revenue is recognized
based on the volumes communicated to the
Group by the distribution operators, which are
based on automated or manual meter readings
performed by the distribution operators, self-
readings reported by the consumers, or based on
estimates of electricity delivered for which
readings were not yet performed for the interval
between the date of last reading and the end of
period.
Invoices are usually issued on a monthly basis, in
the month following consumption.
The payment term is 45 days from invoice date for
households final consumers and 30 days from
invoice date for non-households final consumers.
Revenue is recognized over time, because the
customer simultaneously receives and consumes
the benefits provided by the Group's performance
as the Group delivers electricity.
Electricity supply revenue include transmission and
distribution tariffs, which are invoiced by the
Group to end users. The transmission and
distribution services are provided by the
transmission operator and the distribution
operators, and the related costs are billed by the
transmission operator and the distribution
operators to the Group.
The Group assessed whether it is a principal or an
agent in relation to transmission and distribution
services (and related green certificates obligations
as described under paragraph 7.j) passed through
to the customer and it concluded that it acts as a
principal. The considerations supporting this
conclusion include: the Group has a single
performance obligation, i.e. delivery of electricity
to end user location, which includes transmission
and distribution; electricity consumption happens
instantaneously as the electricity is generated at
the Group’s plants and delivered through the
transmission and distribution grids to the end
user’s location.
System services
System services consist of Group making available
an agreed generation capacity to the system
operator, Transelectrica, for a certain period of
time. This capacity is used by Transelectrica in the
process of balancing the electricity system.
Invoices for system services are issued on a
monthly basis, at the beginning of each month for
the services provided in the previous month.
The payment term is 30 days from invoice date.
As the Group makes available generation capacity
measured in MWh and not specific assets, the
Group concluded that the contract does not
contain a lease and therefore is in scope of IFRS 15.
Revenue is recognized over time, because the
customer simultaneously receives and consumes
the benefits provided by the Groups's performance
as the services are performed.
The fee received for system services depends on
the hourly capacities made available (ie number of
hours for which the capacity multiplied by the
capacity) and the hourly tariffs.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
25
Both the hourly capacities and the hourly tariffs are
established based on the results of daily auctions
organized by the system operator.
If, during the interval the capacity is made
available, the system operator orders the Group to
produce electricity using the capacity made
available, the electricity produced is sold on the
balancing market at the price established on the
respective market (see Wholesale of electricity
section above).
(d) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
(ii) Defined contribution plans
Obligations for contributions to defined contribution plans are expensed as the related service is provided.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future
payments is available.
(iii) Defined benefit plans
The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by
estimating the amount of future benefits that employees have earned in the current and prior periods,
discounting that amount. There are no plan assets.
The defined benefit plans include cash benefits on retirement and benefits in kind consisting of free electricity
granted to employees after retirement.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected
unit credit method.
Remeasurements of the defined benefit liability, which comprise actuarial gains and losses, are recognised
immediately in other comprehensive income (“OCI”). The Group determines the net interest expense (income)
on the net defined benefit liability for the period by applying the discount rate used to measure the defined
benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking into
account any changes in the net defined benefit liability during the period as a result of contributions and benefit
payments. Net interest expense and other expenses related to defined benefit plans are recognized in profit or
loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates
to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Group
recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
26
7. MATERIAL ACCOUNTING POLICIES (continued)
(iv) Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that the
employees have earned in return for their service in the current period and prior periods. That benefit is
discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in
which they arise.
Other long term employee benefits include cash benefits paid to employees at the moment when they achieve
certain seniority milestones.
(v) Termination benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those
benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled
wholly within 12 months of the reporting date, then they are discounted.
(e) Operating profit
Operating profit is the result generated from the continuing principal revenue-producing activities of the Group
as well as other income and expenses related to operating activities. Operating profit excludes finance result
and income taxes.
(f) Finance income and finance costs
The Group's finance income and finance costs include:
• interest income;
• interest expense;
• the foreign currency gain or loss on financial assets and financial liabilities;
• unwinding of non-current provisions.
Interest income or expense is recognised using the effective interest method.
The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument to:
– the gross carrying amount of the financial asset; or
– the amortised cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount
of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for
financial assets that have become credit-impaired subsequent to initial recognition, interest income is
calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no
longer credit-impaired, then the calculation of interest income reverts to the gross basis.
(g) Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent
that it relates to a business combination, or items recognised directly in equity or in OCI.
The Group has determined that interest and penalties related to income taxes, do not meet the definition of
income taxes, and therefore accounted for them under IAS 37 Provisions, Contingent Liabilities and Contingent
Assets.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
27
7. MATERIAL ACCOUNTING POLICIES (continued)
(i) Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty
related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting
date.
Current tax assets and liabilities are offset only if certain criteria are met.
(ii) Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognized for:
• temporary differences that occur on the initial recognition of assets and liabilities in a transaction that is
not a business combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the
extent that the Group is able to control the timing of the reversal of the temporary differences and it is
probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary
differences to the extent that it is probable that future taxable profits will be available against which they can
be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences.
If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then
future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the
business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such
reductions are reversed when the probability of future taxable profits improves.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
(iii) Global minimum-top up tax
Law 431/2023 on ensuring a global minimum level of taxation for multinational groups and large national
entities transposed into the national legislation the provisions of Directive 2523/2022. Also, according to Article
5 of the Law 431/2023, the explanations and examples from the Administrative Guidelines issued by the
Organization for Economic Co-operation and Development ("OECD") are used for the application of this law.
Law 431/2023 is applicable to large groups of entities, both national and multinational, with a consolidated
turnover (at the level of the entire group) of at least 750 million Euros in at least two years of the four years
prior to the reference year. Thus, according to the legislation, starting with the financial year 2024, a
supplemental tax ("Global minimum top-up tax ") should be collected each time the effective rate of 15%.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
28
7. MATERIAL ACCOUNTING POLICIES (continued)
The effective tax rate ("ETR") is computed annually at the jurisdiction level. The ETR is calculated as the ratio of
the adjusted covered taxes of the Constituent Entities (“CE”) – the numerator and the qualifying net profit of
the CE – the denominator, respectively. Both the numerator and the denominator represent the cumulative
amounts of all CEs located in a jurisdiction. The OECD has introduced a number of safe harbours, aimed at
simplifying the calculation for taxpayers, especially in the first years of application. As long as at least one of
the tests mentioned under the protection regimes (de minimis test, the simplified ETR test and the routine
profitability test) is met for a year, the additional tax in that jurisdiction for the Group can be considered to be
zero. Thus, the Group analyzes if at least one of the aforementioned tests is met and, in the event that none
of the tests is met, performs the calculation of the ETR at the level of the jurisdiction. If the ETR determined is
less than 15%, the additional tax required to reach the minimum of 15% is recognized as corporate income tax.
(h) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are initially recognised at cost, which includes capitalized borrowing
costs.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss.
After initial recognition:
- land, buildings, equipment and other items of property, plant and equipment are measured at revalued
amount; and
- assets in progress are measured at cost less any accumulated impairment losses.
Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially
from that which would be determined using the fair value at the end of the reporting period.
When an item of property, plant and equipment is revalued, the accumulated depreciation is eliminated from
the gross book value, and the net amount is adjusted to the revalued amount of the asset.
If an asset’s carrying amount is increased as a result of a revaluation, the increase is recognised and
accumulated in equity under revaluation reserve. However, the increase is recognised in profit or loss to the
extent that it reverses a revaluation decrease of the same amount of the same asset previously recognised in
profit or loss.
If an asset’s carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or
loss. However, the decrease is recognized in equity in revaluation reserve if there is any credit balance existing
in the revaluation reserve in respect of that asset.
The difference between revalued amount and the net book value of assets is recognized as revaluation reserve
in equity.
The revaluation reserve is transferred to retained earnings in an amount corresponding to the use of the asset
(as the asset is depreciated) and upon disposal of the asset.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
29
7. MATERIAL ACCOUNTING POLICIES (continued)
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with
the expenditure will flow to the Group.
(iii) Depreciation
Depreciation is calculated using the straight-line method over the assets estimated useful lives, and is
recognized in profit or loss. Land and assets under construction are not depreciated.
The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:
Category
Useful life (years)
Buildings and special installations
65-97
Buildings and special installations representing assets to be
returned, according to the concession contract (see Note 5 a1))
The lesser of useful
economic life and remaining
period of the concession
contract
Technological equipment
25-47
Measurement and control devices
15-23
Vehicles
16-24
Fixture and fittings
12
Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate.
(i) Intangible assets
(i) Recognition and measurement
Intangible assets that are acquired by the Group and have finite useful lives are measured at cost less
accumulated amortisation and any accumulated impairment losses. Intangible assets include mainly software
and licenses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognized in profit or loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the
straight-line method over their estimated useful lives, and is generally recognized in profit or loss.
The estimated useful lives of software and licenses for current and comparative periods are 3-5 years.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
30
7. MATERIAL ACCOUNTING POLICIES (continued)
(j) Green certificates
The Group recognizes the green certificates granted under the support mechanism for renewable energy
producers at cost (which is 0) when electricity is produced and delivered.
The Group recognizes green certificates purchased at cost.
The Group, as an electricity supplier, is required by law to purchase a number of green certificates (see Note 1
c)), whose cost is subsequently charged to the end users based on the quantities of electricity consumed. In
order to meet the legal annual purchase obligation (annual target or quota), the Group uses both green
certificates granted under the support scheme and green certificates purchased.
Green certificates purchased to meet the purchase obligation (quota) are recognized as current assets, at
acquisition cost, and expensed to the extent required to meet the quota obligation. Green certificates
purchased in excess of the mandatory quota at the end of the reporting period are recognized in the
consolidated statement of financial position. If the mandatory quota is not met at the end of the reporting
period, then the Group recognized a liability in the consolidated statement of financial position.
The cost of green certificates recharged to end users of RON 354,337,865 is recognized in profit or loss as part
of Revenue from contracts with customers.
(k) Financial instruments
(i) Recognition and initial measurement
Trade receivables are initially recognized when they are originated. All other financial assets and financial
liabilities are initially recognized when the Group becomes a party to the contractual provisions of the
instrument.
Cash and cash equivalents include cash balances, demand deposits and deposits with maturity of up to three
months from the date of origination that have an insignificant exposure to the risk of change in fair value, and
are used by the Group to manage short-term commitments.
A financial asset (unless it is a trade receivable without a significant financing component) or a financial liability
is initially measured at fair value plus or minus transaction costs that are directly attributable to its acquisition
or issue. A trade receivable without a significant financing component is initially measured at the transaction
price.
(ii) Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified into one of the business models: held to collect, held to
collect and sell or other.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day
of the first reporting period following the change in the business model.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
31
7. MATERIAL ACCOUNTING POLICIES (continued)
A financial asset is classified as held to collect and measured at amortized cost if it meets both of the following
conditions:
• it is held within a business model whose objective is to hold assets in order to collect contractual cash
flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
All financial assets of the Group are classified as held to collect and give rise to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets – Subsequent measurement and gains and losses
Financial assets at amortized cost are subsequently measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and
losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit
or loss.
Financial liabilities – Classification, subsequent measurement and gains or losses
Financial liabilities are classified as measured at amortised cost using the effective interest method. Interest
expense and foreign exchange gains or losses are recognized in profit or loss. Any gain or loss on derecognition
is also recognized in profit or loss.
(iii) Derecognition
Financial assets
The Group derecognizes a financial asset when:
• the contractual rights to the cash flows from the financial asset expire; or
• it transfers the rights to receive the contractual cash flows in a transaction in which either:
o substantially all of the risks and rewards of ownership of the financial asset are transferred; or
o the Group neither transfers nor retains substantially all of the risks and rewards of ownership
and it does not retain control of the financial asset.
Financial liabilities
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or
expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different, in which case a new financial liability based on the modified terms
is recognized at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or
loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
32
7. MATERIAL ACCOUNTING POLICIES (continued)
(l) Impairment
(i) Financial assets
The Group recognizes a loss allowance for expected credit losses on investments in debt instruments that are
measured at amortized cost or at fair value through other comprehensive income. The amount of expected
credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument. The Group always recognizes lifetime expected credit losses for trade
receivables.
The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting
date, including time value of money where appropriate.
The Group measures loss allowances at an amount equal to lifetime ECLs (Note 29).
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessments, that includes forward-looking
information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days
past due.
The Group considers a financial asset to be in default when:
• the debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group
to actions such as realising security (if any is held); or
• the financial asset is more than 180 days past due.
Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more
than 180 days past due unless the Group has reasonable and supportable information to demonstrate that a
more lagging default criterion is more appropriate.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument.
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
Measurement of ECLs
ECLs are probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract
and the cash flows that the Group expects to receive).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
33
7. MATERIAL ACCOUNTING POLICIES (continued)
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-
impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
• significant financial difficulty of the debtor;
• a breach of contract such as a default or being more than 180 days past due;
• the restructuring of a loan or advance by the Group on terms that the Group would not consider
otherwise; or
• it is probable that the debtor will enter bankruptcy or other financial reorganisation.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets.
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.
(ii) Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than
inventories, contract assets and deferred tax assets) to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs, according
to the judgement described in Note 5 a3).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs of
disposal. Value in use is based on the estimated future cash flows, discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss, except for the property, plant and equipment measured at
revalued amount, in which case the impairment loss is recognized in other comprehensive income and
decreases the revaluation reserve within equity to the extent that it reverses a previous revaluation surplus
related to the same asset.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
34
7. MATERIAL ACCOUNTING POLICIES (continued)
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless
the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
(m) Share capital
The Group recognized changes in share capital in accordance with the applicable legislation and after approval
of the General Meeting of Shareholders and registration in the Trade Register.
Until 31 December 2003, the statutory share capital in nominal terms was restated according to IAS 29
“Financial Reporting in Hyperinflationary Economies” with a corresponding adjustment to retained earnings.
Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from
equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with IAS
12 (see 7 (g)).
(n) Public patrimony
Public patrimony represents the value of assets belonging to the public domain, that have been financed from
state budgetary sources (public funds). The part of the value of these assets funded from budgetary sources is
initially recognized as deferred income, and then, at the time of work acceptance and commissioning of the
assets, the value is transferred to Public Patrimony assimilated to equity accounts. According to Government
Decision 1705/2006, these assets will be transferred to the balance sheet of the institutions from whose sources
they were financed, after the end of their economic life, based on an official act adopted for this purpose.
According to OMFP no. 2844/2016, entities that have not completed the legal procedures for the transfer of
such public patrimony assets, meanwhile report them separately in equity, in accounts assimilated to capital.
(o) Dividends
Dividends are recognized as a deduction from equity in the period in which their distribution is approved and
recognized as a liability to the extent it is unpaid at the reporting date. Dividends are disclosed in the notes to
financial statements when their distribution is proposed after the reporting date and before the date of the
issuance of the financial statements.
(p) Provisions
A provision is recognized if, as a result of a past event, the Group has a current, legal or constructive obligation,
which can be reliably estimated and it is likely that an outflow of resources incorporating economic benefits
will be required to settle the obligation. Provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the liability. The unwinding of the discount is recognized as finance cost.
Decommissioning
A decommissioning provision in respect of abandoned or switched to post-utilization hydro-power assets, and
the related expenses are recognized when management has taken the decision to abandon an asset or switch
an asset to post-utilisation or the Group has not a realistic alternative except to abandon or move to post-
utilization an asset before the end of the concession period (see Note 5 (a4)).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
35
7. MATERIAL ACCOUNTING POLICIES (continued)
Subsequent to initial measurement, the obligation is measured at the end of each reporting period to reflect
the time value of money and any changes in the estimated future cash flows underlying the obligation. The
increase in the provision due to time value of money is recognized as finance costs, while the changes in
estimated future cash flow is recognized as operating expense.
The Group recognizes a decommissioning provision against property, plant and equipment in respect of
decommissioning of the wind turbines. The obligation is measured at the end of each reporting period to reflect
the time value of money and any changes in the estimated future cash flows underlying the obligation. The
change in the provision due to time value of money is recognized as finance costs, while the changes in
estimated future cash flow is recognized against property, plant and equipment.
(q) Contingent assets and liabilities
A contingent liability is:
a) a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Group; or
b) a present obligation that arose from past events but is not recognized because:
i. it is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; or
ii. the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the financial statements, but disclosed unless the possibility of an
outflow of resources embodying economic benefits is remote.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Group.
A contingent asset is not recognized in the financial statements, unless it is virtually certain. Contingent assets
are only disclosed when an inflow of economic benefits is considered probable.
(r) Tax uncertainties
The Group applies IFRIC 23 Uncertainties over income tax treatment to account for uncertainties related to
income tax.
An 'uncertain tax treatment' is an income tax treatment for which there is uncertainty over whether the
relevant tax authority will accept it under tax law. Whether an uncertain tax treatment is present depends both
on the specific position taken by the Group and on the applicable tax law. Therefore, uncertain tax treatments
often occur when the applicable tax law is unclear or is not consistently understood.
If there is uncertainty about an income tax treatment, then the Group considers whether it is probable (more
likely than not) that a tax authority will accept the Group's tax treatment included or planned to be included in
its tax filing.
The Group reflects uncertainty about a tax treatment in measuring its current and deferred taxes as follows.
Tax authority is likely to accept the Group's tax treatment: If the Group concludes that it is probable that the
tax authority will accept its tax treatment, then it measures current and deferred taxes consistently with the
tax treatment used or planned to be used in its income tax filing.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
36
7. MATERIAL ACCOUNTING POLICIES (continued)
Tax authority is unlikely to accept the Group's tax treatment: If the Group concludes that it is not probable that
the tax authority will accept its tax treatment, then it reflects the effect of that tax uncertainty in determining
the related taxable profit (or tax loss), tax bases, unused tax losses, unused tax credits and tax rates. To do so,
the Group uses either the most likely amount or the expected value method - whichever better predicts the
resolution of the uncertainty.
Uncertainties related to taxes that are not income taxes (e.g. value added tax or taxes in scope of IFRSC 21
Levies) are recognized and measured in accordance with IAS 37 Provisions, contingent liabilities and contingent
assets, unless they are dealt with specifically in another standard (e.g. IAS 19 Employee Benefits for social
security taxes).
Uncertainties surrounding the amount to be recognized as a provision are dealt with by various means
according to the circumstances. Where the provision being measured involves a large population of items, the
obligation is estimated by weighting all possible outcomes by their associated probabilities. The name for this
statistical method of estimation is ‘expected value’. The provision will therefore be different depending on
whether the probability of a loss of a given amount is. Where there is a continuous range of possible outcomes,
and each point in that range is as likely as any other, the mid-point of the range is used.
Where a single obligation is being measured, the individual most likely outcome may be the best estimate of
the liability. However, even in such a case, the Group considers other possible outcomes. Where other possible
outcomes are either mostly higher or mostly lower than the most likely outcome, the best estimate will be a
higher or lower amount.
(s) Leases
At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration.
As a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone prices.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-
use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any
lease payments made at or before the commencement date, plus any initial direct costs incurred, less any lease
incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by
the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which
is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if this rate cannot be readily
determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external
financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
37
7. MATERIAL ACCOUNTING POLICIES (continued)
Lease payments included in the measurement of the lease liability comprise the following:
• fixed lease payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at
the commencement date;
• amounts expected to be payable under a residual value guarantee; and
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments
in an optional renewal period if the Group is reasonably certain to exercise an extension option, and
penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes
its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-
substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets in Property, plant and equipment in the consolidated statement of
financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases (lease term
of 12 months or less) and leases of low-value assets (less than USD 5,000 equivalent). The Group recognises the
lease payments associated with these leases as an expenses on a straight-line basis over the lease term.
(t) Government grants
Government grants related to assets are initially recognised as deferred income at fair value if there is
reasonable assurance that they will be received and the Group will comply with the conditions associated with
the grant. Grants related to the acquisition of assets are recognised in profit or loss as other income on a
systematic basis over the useful life of the asset.
Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a
systematic basis in the periods in which the expenses are recognised, unless the conditions for receiving the
grant are met after the related expenses have been recognised. In this case, the grant is recognised when it
becomes receivable.
For green certificates grants refer to Note 7 (j).
(u) Segment reporting
Segment results that are reported to the Company’s Management Board and Supervisory Board include items
directly attributable to a segment as well as those that can be allocated on a reasonable basis.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
38
7. MATERIAL ACCOUNTING POLICIES (continued)
(v) Subsequent events
Events occurring after the reporting dates until the date these financial statements were authorized for issue,
which provide additional information about conditions prevailing at the reporting date (adjusting events) are
reflected in these financial statements. Events occurring after the reporting dates until the date these financial
statements were authorized for issue, which provide information on events that occurred after the reporting
dates (non-adjusting events), when material, are disclosed in the notes to the financial statements.
(w) Fair value measurement
‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date in the principal or, in its absence, the most
advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-
performance risk.
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for
financial assets and liabilities, and non-financial assets (see Note 5 (b)).
When one is available, the Group measures the fair value of an instrument using the quoted price in an active
market for that instrument. A market is regarded as ‘active’ if transactions for the asset or liability take place
with sufficient frequency and volume to provide pricing information on an ongoing basis.
If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use
of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into account in pricing a transaction.
8. CHANGE IN ACCOUNTING POLICY
Except as described below, the accounting policies applied in these consolidated financial statements are the
same as those applied in the Group’s consolidated financial statements as at and for the year ended 31
December 2024.
The Group has adopted Classification of Liabilities as Current or Non-current and Non-current Liabilities with
Covenants – Amendments to IAS 1, as issued in 2020 and 2022. The amendments apply retrospectively for
annual reporting periods beginning on or after 1 January 2024. They clarify certain requirements for
determining whether a liability should be classified as current or non-current and require new disclosures for
non-current liabilities that are subject to covenants within 12 months after the reporting period. This change in
the accounting policy has no impact on the consolidated statement of the financial position as at 31 December
2024 or the consolidated statement of the comparative financial position.
9. COMPARATIVES
These consolidated financial statements prepared at 31 December 2025 show comparability with the previous
financial year consolidated financial statements.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
39
10. OPERATING SEGMENTS
A. Basis for segmentation
The Group has identified two reporting segments based on the operating licenses owned – production of
electricity and supply of electricity.
The following summary describes the operations of each reportable segment:
Reportable segment
Operations
Electricity generation
Production of electricity through the operation of hydropower plants, micro-
hydropower plants and wind turbines, rendering of system services to the
system operator (meaning making available an agreed generation capacity for
the balancing needs of the energy system).
Electricity produced is sold mainly to electricity suppliers and entities that trade
electricity on the wholesale electricity market, as well as supplied to final
consumers through the electricity sypply segment.
Electricity supply
Supply of electricity to non-households and households final consumers.
Electricity supplied to end consumers is mainly generated by the electricity
generation segment, and where there is a gap, this is covered through spot or
forward electricity purchases.
The Management Board of the Company reviews management reports of each segment. Segment profit before
tax is used to measure performance because management believes that such information is one of the most
relevant in evaluating the results of the segments.
B. Information about operating segments
Year ended
31 December 2025
Electricity
generation
Electricity
supply
Total for
reportable
segments
Others
Inter-
segment
eliminations
Total
External revenues
4,114,995,303
5,504,014,226
9,619,009,529
35,737,470
-
9,654,746,999
Inter-segment revenue
1,673,945,907
-
1,673,945,907
-
(1,673,945,907)
-
Segment revenue
5,788,941,210
5,504,014,226
11,292,955,436
35,737,470
(1,673,945,907)
9,654,746,999
-
-
Segment profit before tax
2,978,521,016
944,186,296
3,922,707,312
35,737,470
-
3,958,444,782
Net finance income/(cost)
198,239,042
41,166,060
239,405,102
-
-
239,405,102
Amortization and
depreciation
(881,386,790)
(1,492,004)
(882,878,794)
-
-
(882,878,794)
Impairment loss on property,
plant and equipment
(99,462,374)
(748)
(99,463,122)
-
-
(99,463,122)
Electricity purchased
(23,880,422)
(2,528,081,278)
(2,551,961,700)
-
1,640,603,395
(911,358,305)
Green certificates expenses
-
(387,680,377)
(387,680,377)
-
33,342,512
(354,337,865)
Employee benefits expenses
(991,984,475)
(27,766,663)
(1,019,751,138)
-
-
(1,019,751,138)
Turbinated water
(444,764,067)
-
(444,764,067)
-
-
(444,764,067)
Tax for electricity producers
(122,721,182)
-
(122,721,182)
-
-
(122,721,182)
Transport and distribution of
electricity
(54,192,034)
(1,580,645,870)
(1,634,837,904)
-
-
(1,634,837,904)
Other expenses
(469,286,120)
(82,224,958)
(551,511,078)
-
-
(551,511,078)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
40
10. OPERATING SEGMENTS (continued)
Year ended
31 December 2024
Electricity
generation
Electricity
supply
Total for
reportable
segments
Others
Inter-segment
eliminations
Total
External revenues
5,521,040,247
3,601,668,896
9,122,709,143
174,732,075
-
9,297,441,218
Inter-segment revenue
1,342,629,674
-
1,342,629,674
(1,342,629,674)
-
Segment revenue
6,863,669,921
3,601,668,896
10,465,338,817
174,732,075
1,342,629,674)
9,297,441,218
Segment profit before tax
4,141,626,297
528,236,661
4,669,862,958
174,732,075
-
4,844,595,033
Net finance income/(cost)
248,649,134
7,917,515
256,566,649
-
-
256,566,649
Amortization and depreciation
(904,885,224)
(82,889)
(904,968,113)
-
-
(904,968,113)
Impairment loss on property,
plant and equipment
(39,493,787)
-
(39,493,787)
-
-
(39,493,787)
Electricity purchased
(25,548,366)
(1,490,355,288)
(1,515,903,654)
-
1,307,055,587
(208,848,067)
Green certificates expenses
-
(309,108,210)
(309,108,210)
-
35,574,087
(273,534,123)
Employee benefits expenses
(840,497,075)
(25,832,863)
(866,329,938)
-
-
(866,329,938)
Turbinated water
(517,805,427)
-
(517,805,427)
-
-
(517,805,427)
Tax for electricity producers
(234,654,212)
0
(234,654,212)
-
-
(234,654,212)
Transport and distribution of
electricity
(64,394,869)
(1,163,997,341)
(1,228,392,210)
-
-
(1,228,392,210)
Other expenses
(390,257,236)
(94,351,976)
(484,609,212)
-
-
(484,609,212)
Other expenses include the following captions from consolidated statement of profit or loss: Repair,
maintenance, materials and consumables, Impairment loss on trade receivables and Other operating expenses.
The electricity generation segment includes also system services and production of electricity for system
balancing which are billed to the system operator, Transelectrica SA (see details in Note 11).
Inter-segment revenue includes the value of electricity produced and transferred within the same entity from
producer portfolio (generation segment) to supplier portfolio (supplier segment) of RON 1,616,722,973 in 2025
(2024: RON 1,271,354,516 ). Inter-segment revenue is calculated based on a methodology approved by the
Management Board in 2021. The methodology used for computing transfer price between segments is based
on the average electricity production cost in the last 12 months ending 2 months prior the calculation month,
plus an internal margin.
The increase in profitability of the supply segment in 2025 compared to 2024 is due to the increase in selling
price per MWh and the increase of number of clients, compared to the same period as in prior year.
All revenues are generated in Romania.
Total segment assets and total segment liabilities are not included in the management reports reviewed by the
Management Board.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
41
11. REVENUE
A. Revenue from contracts with customers
The Group generates revenue from:
2025
2024
Wholesale of electricity
3,864,222,971
5,217,335,087
Electricity supplied to final consumers (retail sales)
5,504,014,226
3,601,668,896
System services
248,150,916
302,828,097
Maintenance services
2,621,416
877,063
Total
9,619,009,529
9,122,709,143
Revenue from electricity supplied to final consumers reflect the value of volume supplied, including positive
imbalances, which are based on automated or manual meter readings performed by the distribution operators,
self-readings reported by the consumers, or based on volume estimated by distribution operators if readings
are not available.
The majority of the Group’s supply revenue in the year ended 31 December 2025 represent sales to non-
household consumers (approx. 64 % of volume, 63% in 2024), for which readings are performed at the end of
each month, data sent by the distribution operators. Also, approximately 71% (67% in 2024) of the volume
supplied to household consumers in the year ended 31 December 2025 is determined based on meter readings
at the end of the period, and the rest is based on estimates of the consumption, data sent by the distribution
operators. Consequently, the Group assesses that the risk of revenue adjustment subsequent to period end
that could result from the difference between the meter readings and the estimated volumes would have a
limited impact on the financial statements.
In 2025, the Group produced 11,847 GWh (2024: 13,864 GWh) and sold 14,056 GWh (2024: 14,666 GWh). From
total quantity sold, 7,244 GWh were supplied to end users in 2025 (5,572 GWh in 2024).
The Group has contracts with customers for periods up to 12 months.
Individual clients who represented more than 10% of the Group’s revenues are as follows:
• Transelectrica SA, the electricity system operator - system services and production of electricity for
system balancing (latter included in Sale of electricity produced) – RON 739,636,134 in 2025 (8%) and
RON 1,946,833,917 in 2024 (21%);
• OPCOM SA, the market operator – sale of electricity produced on the spot market of RON 686,612,232 in
2025 (7%) and RON 2,704,049,345 in 2024 (30%).
Timing of revenue recognition:
2025
2024
Revenue recognised over time
9,616,388,113
9,121,832,080
Revenue recognized at a point in time
2,621,416
877,063
Total
9,619,009,529
9,122,709,143
11. REVENUES (continued)
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
42
B. Contract liabilities
As at 31 December 2025, the Group has contract liabilities of RON 48,391,638 (31 December 2024: RON
97,786,127). These represent advance payments from customers for future contractual obligations for
electricity delivery and supply.
Contract liabilities as at 31 December 2024 of RON 97,786,127 were recognized as revenues during 2025 (2024:
RON 41,719,807).
12. OTHER INCOME
2025
2024
Compensations, fines and penalties from
suppliers
5,725,032
5,811,870
Grant income
1,425,524
126,556,330
Gain from bargain purchase of subsidiaries
(Note 30)
-
25,727,908
Other income
28,586,914
16,635,967
Total
35,737,470
174,732,075
On 2 April 2024, the High Court of Cassation and Justice, through Decision no. 1852, has definitively ruled in
favor of Hidroelectrica in relation to the litigation with the tax authorities whose subject was the annulment of
the Decision on settling the preliminary tax appeal no. 406/18.12.2014, annulment of Tax Decision no. F-MC
851/21.01.2014, in amount of RON 214,385,212, as well as the reimbursement of the imposed amount. In July
2024, the imposed amount was compensated with the tax obligations for the year 2024. Additionally, the Group
received tax interest of RON 122,842,704 in September 2024, corresponding to the period between the
enforcement of the imposed amount by the authorities and its compensation.
13. OPERATING EXPENSES
A. Turbinated water
Turbinated water represents the water used by the hydropower plants in order to generate electricity. The fee
for turbin ated water established by the National Agency for Water Administration is RON 37 per MWh
produced (2024: 37 RON/MWh).
B. Electricity purchased
The Group purchases electricity in order to fulfill the deficit between the electricity contracted for sales and the
actual electricity produced or in order to cover the electricity needs of the supply segment.
In 2025, the Group purchased 2.209 GWh (2024: 802 GWh) for RON 911.358.305 (2024: RON 208,848,067). The
increase in electricity purchases in 2025 is mainly due to decrease of own production due to poor hidrology and
increase in energy delivered under supply segment.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
43
13. OPERATING EXPENSES (continued)
C. Transport and distribution of electricity
2025
2024
Injection of electricity produced in the national system
39,173,613
62,359,501
Distribution of electricity supplied
1,301,105,512
949,130,524
Transport of electricity supplied
294,558,781
216,902,187
Total
1,643,837,906
1,228,392,212
Tariffs for transport and distribution of electricity are regulated. Increase in transport and distribution costs in
2025 is determined by the increase in the regulated tariffs starting 1 January 2025 and the increase of energy
delivered to final consumers.
D. Green certificates expenses
As of 31 December 2025, the Group incurred costs of RON 354,337,865 (2024: RON 273,534,123) cost of green
certificates purchased for the supply segment under the legal obligation to purchase green certificates from
renewable energy producers, based on annual targets or quotas established by law, which apply to the quantity
of electricity purchased and supplied to final consumers.
E. Tax for electricity producers
The tax for electricity producers is computed as 100% of net monthly average selling price in excess of RON
400 per MWh. (450/MWh till 31 March 2024) The tax on electricity producers was applicable until 31 March
2025.
In February 2025, the Government issued a new Emergency Ordinance (GEO no. 6/27.02.2025) extending the
applicability of the tax for an additional 3 months, until June 30, 2025. Starting April 1, 2025, the tax for energy
producers is calculated by applying a rate of 80% (reduced from 100%) to the difference between the average
net monthly selling price and the price of 400 RON per MWh.
The tax recorded by the Group in 2025 is RON 122,721,182 (2024: RON 234,654,212).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
44
13. OPERATING EXPENSES (continued)
F. Other operating expenses
2025
2024
Movement in provisions, net
23,870,638
24,837,129
Local taxes
140,141,235
82,878,702
Security
32,888,083
29,736,901
Sponsorship
8,780,048
13,560,664
Professional services
16,819,821
12,696,408
Services related to abandoned constructions
10,112,609
10,641,918
ANRE contribution
9,719,571
12,243,581
AMEPIP contribution
8,648,942
11,266,739
Penalties
2,832,410
13,039,691
Loss on disposal of property, plant and equipment
1,292,963
6,252,784
Other expenses
147,387,434
109,152,433
Total
407,635,561
326,306,950
The overall increase of local taxes as compared with prior year is due to the recording of tax on special
constructions in amount of RON 51,133,367 which came into force starting 2025.
Other expenses in amount of RON 147,387,434 includes expenses with licenses used for less than 1 year in
amount of RON 22,572,612, royalties paid to the Ministry of Energy as part of the service concession agreement
amounting RON 6,360,539, third party services amounting RON 19,679,400 and management fees amounting
RON 8,866,834.
G. Auditors remuneration
Remuneration of the statutory auditor, Ernst &Young Assurance Services SRL, for the audit services for the year
2025 (2024: KPMG Audit SRL), as well as the fees charged for non-audit services, are as follows:
2025 (EUR)
2024 (EUR)
Contractual fee for the audits of the separate and consolidated financial
statements prepared in accordance with OMFP no. 2844/2016 and of the
consolidated financial statements prepared in accordance with IFRS-EU
269,000
217,235
Contractual fee for the audit of the separate financial statements
prepared in accordance with OMFP 1802/2014 for Hidroserv SA
22,000
-
Total audit fees
291,000
217,235
Fees for non-audit services fees
167,000
129,859
Total fees
458,000
347,094
Non-audit services include reviews of interim condensed consolidated financial statements, limited assurance
and agreed upon procedures.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
45
14. FINANCE RESULT
2025
2024
Interest income
283,174,321
332,133,890
Other finance income
42,654,276
9,891,593
Finance income
325,828,597
342,025,483
Interest expense
(22,396,637)
(26,925,341)
Unwinding of non-current provisions
(65,863,834)
(58,476,191)
Gain or (loss) from foreign exchange
differences
1,836,976
(57,302)
Other finance expenses
-
-
Finance expenses
(86,423,495)
(85,458,834)
Net finance result
239,405,102
256,566,649
The decrease in interest income is generally due to the decrease in interest rates and decrease in deposits over
the period.
The increase in other finance income are related to late payment penalties invoiced for outstanding balances
as a result of a increase in the number of clients and their payment behavior.
15. EARNINGS PER SHARE
The calculation of earnings per share has been based on the following profit attributable to ordinary
shareholders and weighted-average number of ordinary shares outstanding.
2025
2024
Profit attributable to the owners of the Group
Profit for the year attributable to the owners of the Group
3,369,693,635
4,127,915,792
Profit attributable to ordinary shareholders
3,369,693,635
4,127,915,792
Weighted average number of ordinary shares (basic and
diluted)
Issued ordinary shares at 1 January
449,802,567
449,802,567
Weighted average number of ordinary shares at
31 December
449,802,567
449,802,567
Earnings per share (basic and diluted) RON/share
7.49
9.18
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
46
16. EMPLOYEE BENEFITS
31 December 2025
31 December 2024
Defined benefit plans
109,351,350
105,166,172
Other long-term employee benefits
47,716,754
45,310,075
Salaries payable
40,536,977
34,930,077
Social security contributions
31,788,183
30,356,838
Tax on salaries
5,648,544
5,398,187
Other
17,873,958
12,033,944
Total
252,915,766
233,195,293
- Current
113,012,224
104,599,400
- Non-current
139,903,542
128,595,893
Current portion of employee benefits is as follows:
31 December 2025
31 December 2024
Defined benefit plans
12,846,389
14,512,538
Other long-term employee benefits
6,649,746
8,312,065
Salaries payable
40,536,977
34,930,077
Social security contributions
31,788,183
30,356,838
Tax on salaries
5,648,544
5,398,187
Other
15,542,385
11,089,695
Total
113,012,224
104,599,400
Post-employment benefits (defined benefit plans)
In accordance with the Collective Labour Agreements, the Group provides cash benefits to employees at
retirement depending on the years of service in the Company, Hidroserv and UCMH, as follows:
Retirement benefits
Years of service
Number of monthly gross base salary
31 December 2025
31 December 2024
Up to 10 years
1
1
Between 10 and 25 years
3
3
More than 25 years
6
6
Benefits in kind
Also, in accordance with Collective Labour Agreements, the Group provides benefits in kind consisting of free
electricity (within the limit of 1,200 kWh annually) to employees retired from the Company and from Hidroserv
subsidiary subject to meeting certain conditions (at least 15 cumulative years of seniority in the Company,
Hidroserv or other companies operating in the electricity sector or at least 10 consecutive years of service in
such companies before retirement). In the event of the retired person's death, the surviving spouse has the
right to receive the same benefit until the time of their remarriage or death.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
47
16. EMPLOYEES BENEFITS (continued)
Other long-term employee benefits
In accordance with the Collective Labour Agreements, the Group provides cash benefits to the Company’s and
Hidroserv’s employees depending on seniority in the companies, as follows:
Seniority
Number of monthly gross base salary
31 December 2025
31 December 2024
20 years
1
1
25 years
2
2
30 years
3
3
35 years
4
4
40 years
5
5
45 years
6
6
(i) Movement in the defined benefit liability and other long-term employee benefits
The following tables show the reconciliation between the opening and closing balance for the defined benefit
liability and other long-term employee benefits and their components. There are no benefit plan assets.
Defined benefit liabilities
2025
2024
Balance at 1 January
105,166,172
98,154,192
Included in profit or loss
Current service cost
4,944,004
4,606,353
Past service cost
1,078,670
-
Interest cost
7,061,196
5,755,985
Benefits paid
(5,652,347)
(8,705,468)
Included in other comprehensive income
Actuarial losses/(gains)
(3,246,345)
5,355,110
Balance at 31 December
109,351,350
105,166,172
Other long-term employee benefits
2025
2024
Balance at 1 January
45,310,075
44,162,937
Included in profit or loss
Current service cost
2,503,254
2,291,557
Past service cost
1,067,438
-
Interest cost
3,345,901
2,722,175
Actuarial losses/(gains)
7,409,147
6,395,109
Benefits paid
(11,919,062)
(10,261,703)
Balance at 31 December
47,716,753
45,310,075
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
48
16. EMPLOYEES BENEFITS (continued)
ii) Actuarial assumptions
The following are the main actuarial assumptions at each reporting date:
(a) Macroeconomic assumptions:
the inflation rate used as at 31 December 2025 and 2024 is based on the forecast of the National Bank of
Romania (“NBR”) for the inflation for RON, as follows:
Year
Valuation date
31 December 2025
Valuation date
31 December 2024
2025
n/a
3.88%
2026
6.50%
3.33%
2027
3.07%
2.5%
2028+
2.5%
2.5%
• discount rate used was obtained from the interest rates for RON published by the European Insurance and
Occupational Pensions Authority (EIOPA) as follows:
Year
Valuation date
31 December 2025
Valuation date
31 December 2024
2025
n/a
6.671%
2026
6.111%
6.902%
2027
6.240%
7.074%
2028
6.365%
7.198%
2029+
6.481%-4.059% (avg.
5.046%)
7.198%-4.151% (avg.
5.295%)
• increase in electricity price per kWh in line with the inflation rate. The electricity price used in the actuarial
calculation is RON 1.0045/kWh as at 31 December 2025 (31 December 2024: RON 0.833/kWh);
• mortality rate used on is the rate published by the National Institute of Statistics for the last 10 years as of
the valuation date.
• taxes and social contributions are those in force at the reporting dates.
(b) Group specific assumptions:
• growth rate of gross salaries used as at 31 December 2025 and 31 December 2024 is a rate equal to the
inflation rate in the following years;
• employee’ turnover rate used as at 31 December 2025 is based on annual averages of employee’ turnover
for the last 8 years differentiated by age and gender (31 December 2024: last 8 years average). The
weighted average employee’ turnover rate used as at 31 December 2025 is 1.24% (31 December 2024:
0.99%).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
49
16. EMPLOYEES BENEFITS (continued)
(iii) Sensitivity analysis
The significant actuarial assumptions used for the determination of the defined benefits and other long-term
employee benefits obligations are discount rate, expected salary increase and employee turnover. The
sensitivity analysis below shows the effect on employee benefit liabilities – increase/(decrease),and was
determined based on the reasonable changes in the respective assumptions at the end of the reporting periods,
while other assumptions remain constant.
31 December 2025
31 December 2024
Increase
Decrease
Increase
Decrease
Discount rate (100 bp)
(11,603,447)
13,492,446
(10,914,067)
12,699,058
Employee turnover ratio (100 bp)
(8,568,646)
6,270,640
(7,523,123)
4,671,790
Annual salary increase rate (100 bp)
8,373,309
(7,494,815)
7,449,995
(6,698,195)
The sensitivity analysis presented above may not be representative for the actual change in the benefit
obligation, as it is unlikely that changes in the assumptions would occur independent from each other, while
certain assumptions may be correlated. In the sensitivity analysis above, the present value of the benefit
obligation was calculated using the projected unit credit method at the end of the reporting period, which is
the same as the one applied to calculate the obligations recognized in the statement of financial position.
Employee benefits expense
2025
2024
Average number of employees
5,200
5,083
Number of employees at 31 December
5,277
5,236
2025
2024
Salaries and other remuneration
933,413,528
793,601,729
Social security contributions
40,367,006
33,682,655
Meal tickets
45,970,604
39,045,554
Total
1,019,751,138
866,329,938
17. INCOME TAX
In the determination of the current and deferred tax the Group takes into account the impact of uncertain tax
positions (see Note 32). This assessment relies on estimates and assumptions and may involve a series of
judgments about future events.
The Group considers that the accounting records for income tax due are appropriate for all open tax years,
based on assessment made by management taking into account various factors, including the interpretation of
tax legislation and previous experience. New information may become available that causes the Group to
change its judgement regarding the adequacy of the existing tax liabilities; such changes to tax liabilities will
have impact in tax expense in the period that such determination is made (Note 32).
The increase of current tax liability by RON 120,312,124 as compared with prior period is due to higher income
tax payable related to 4th quarter of 2025 as compared with the similar period from 2024.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
50
(a) Amounts recognized to profit or loss
2025
2024
Current tax expense
652,514,125
759,365,061
Deferred tax benefit
(63,762,978)
(42,685,820)
Total
588,751,147
716,679,241
(b) Amounts recognized in OCI
2025
2024
Before tax
Tax (expense)/
benefit
Net
Before tax
Tax (expense)/
benefit
Net
Items that will not be reclassified to profit or loss
Impairment of
PPE net of tax
(528,031)
-
528,031
770,110
-
(770,110)
Remeasurement
of defined benefit
liability
3,246,345
2,726,933
(5,355,110)
856,818
(4,498,292))
2,718,314
(519,412)
2,198,902
6,125,220
856,818
5,268,402
(c) Reconciliation of effective tax rate
2025
2024
Profit before tax
3,958,444,782
4,844,595,033
Tax using the Group’s domestic tax rate
16%
633,351,165
16%
775,135,205
Global minimum tax
0.2%
7,743,356
0.2%
8,195,893
Tax effect of:
- Non-deductible expenses
0.3%
13,163,583
0.4%
17,774,813
- Tax-exempt income
(0.1)%
(2,306,235)
0.0%
(1,919,760)
- Tax incentives
(1.7%)
(69,203,578)
(1.7%)
(82,009,506)
- Deduction of legal reserves
(0.0%)
-
(0.0%)
(497,404)
- Distribution of previously tax deducted
revaluation reserves
-
-
-
-
Income tax
14.9%
588,751,147
14.8%
716,679,241
In 2025 and 2024, tax incentives refer to reinvested profit tax facility, positive tax incentive, increase in equity
tax incentive and sponsorships granted. The main increase is due to the increase in equity tax incentive for
equity preservation.
According to the Fiscal Code, certain revaluation reserves are subject to income tax at their distribution as
dividends, if the revaluation reserves were previously tax deducted.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
51
17. INCOME TAX (continu ed)
(d) Global minimum top-up tax
The Group qualifies as a large group at the national level and is subject to the global minimum top-up tax
according to Law no. 431/2023. The Law transposes into national legislation the provisions of Directive
2523/2022 regarding the establishment of a minimum tax level ("Directive 2523"),which includes the guidelines
from the Pillar Two of the "Global anti-base erosion model rules" (called "GloBE rules ”) issued by the OECD/G20
Inclusive Framework on BEPS as well as the Administrative Guidelines for the GloBE rules. For the year 2025,
the Group has recorded an expense and a long-term liability regarding the additional top-up tax amounting to
RON 7,822,302 (2024: RON 8,195,893).
(e) Movement in deferred tax balances
Net balance at
1 January 2025
Recognized in
profit or loss
Reconized in
OCI
Net balance at
31 December
2025
Deferred tax
assets
Deferred tax
liabilities
Property, plant and
equipment and
intangible assets
1,709,598,768
(44,907,090)
1,664,691,682
-
1,664,691,682
Provisions
(156,846,035)
(14,155,733)
(171,001,768)
(171,001,768)
-
Employee benefits
(24,272,133)
(655,419)
519,412
(24,408,140)
(24,408,140)
-
Leasing liabilities
(12,696,686)
(636,836)
(13,333,522)
(13,333,522)
-
Trade receivables
(49,321,767)
(3,127,719)
(52,449,486)
(52,449,486)
-
Inventories
(6,349,707)
(280,181)
(6,629,888)
(6,629,888)
-
Total deferred tax
liabilities (assets)
before set-off
1,460,112,440
(63,762,978)
19,412
1,396,868,878
267,822,804)
1,664,691,682
Set-off tax
267,822,804
(267,822,804)
Net deferred tax
liabilities (assets)
-
1,396,868,878
Net balance at
1 January 2024
Recognized in profit
or loss
Reconized in
OCI
Net balance at
31 December
2024
Deferred tax
assets
Deferred tax
liabilities
Property, plant and
equipment and
intangible assets
1,741,522,977
(31,924,209)
-
1,709,598,768
-
1,709,598,768
Provisions
(150,583,405)
(6,262,630)
-
(156,846,035)
(156,846,035)
-
Employee benefits
(22,770,740)
(644,576)
(856,817)
(24,272,133)
(24,272,133)
-
Leasing liabilities
(14,094,736)
1,398,050
-
(12,696,686)
(12,696,686)
-
Trade receivables
(43,513,595)
(5,808,172)
-
(49,321,767)
(49,321,767)
-
Inventories
(6,490,724)
141,017
-
(6,349,707)
(6,349,707)
-
Tax loss carried
forward
(414,740)
414,700
-
-
-
Total deferred tax
liabilities (assets)
before set-off
1,503,655,077
(42,685,820)
(856,817)
1,460,112,440
(249,486,328)
1,709,598,768
Set-off tax
249,486,328
(249,486,328)
Net deferred tax
liabilities (assets)
-
1,460,112,440
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
52
17. INCOME TAX (continued)
(f) Potential consequences on income tax
The Group may have potential consequences on corporate income tax that may result from the payment to
shareholders of dividends from revaluation reserves transferred to retained earnings which, according to tax
law, are taxed at the time of change of destination, to the extent they were previously tax deducted. Thus, the
distribution of dividends from such reserves will generate additional income tax. The Group has such reserves
transferred in retained earnings at 31 December 2025, which following the distribution would generate
additional income tax for the Group of RON 27,229,601 (31 December 2024: RON 18,836,539).
The potential tax effect of revaluation reserves taxable at change in destination/distribution (at 16% tax rate)
that were not yet transferred to retained earnings, amount to RON 337,264,800 at 31 December 2025 (RON
354,930,809 at 31 December 2024).
18. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents
31 December 2025
31 December 2024
Bank accounts
949,833,184
982,016,851
Bank deposits with a maturity below 3 months
235,327,557
598,594,867
Petty cash
158,026
156,653
Cash equivalents
2,415,208
848,701
Total
1,187,733,975
1,581,617,072
Restricted cash
As at 31 December 2025, restricted cash comprises long-term collateral deposits of RON 23,057,471
(2024:21,057,741 RON) at Banca Comerciala Romana for issuance of bank guarantee in favor of OPCOM, related
to transactions on Day-Ahead Market. In addition, the restricted cash includes consigned deposits for dividend
payments and consigned cash for compensations to be paid for expropriations.
19. INVESTMENTS IN DEPOSITS AND CORPORATE BONDS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Bank deposits with maturity less
than 1 year held for investment
purposes
3,732,016,142
-
3,475,932,995
-
TOTAL
3,732,016,142
-
3,475,932,995
-
Bank deposits are short-term deposits with maturity between 3 to 12 months held for investment purposes
rather than for short term cash commitments. The average interest rate on term deposits was 6.74% per year
in 2025 (2024: 5.89% per year).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
53
20. TRADE RECEIVABLES
31 December 2025
31 December 2024
Trade receivables – generation segment
(wholesale)
285,311,503
417,602,605
Trade receivables – supply segment (retail)
1,749,744,657
1,520,397,165
Impairment allowance
(336,678,518)
(304,311,345)
Total
1,698,377,642
1,633,688,425
The unbilled revenues included in trade receivables amount to RON 685,870,552 gross at 31 December 2025,
representing 34% of total gross trade receivables (RON 668,681,476 at 31 December 2024, representing 35%
of total gross trade receivables), out of which RON 595,652,046 gross relate to supply segment (RON
420,642,478 as at 31 December 2024).
Of the invoiced receivables at 31 December 2025, RON 182,739,882 represents payment rescheduled
receivables (31 December 2024: RON 333,509,906).
The movement of impairment loss for trade receivables is as follows:
2025
2024
Balance at 1 January
304,311,345
238,069,021
Impairment loss recognized
58,768,337
81,665,404
Impairment loss used
2,618,639
(3,984,286)
Impairment loss reversed
(29,019,803)
(11,438,794)
Balance at 31 December
336,678,518
304,311,345
Trade receivables ageing analysis is disclosed in Note 29. Trade receivables due from related parties are
disclosed in Note 33.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
54
21. OTHER ASSETS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Payments made in connection
with uncertain tax treatments
-
63,612,328
-
63,612,328
Payments in advance and
prepayments
55,150,658
305,961,455
14,104,239
208,557,734
Value added tax receivable
1,949,546
892,139
-
Other assets
23,692,842
4,760,640
15,833,239
4,589,529
Impairment loss on other
assets
(15,832,781)
-
(6,903,382)
-
Total
64,960,265
374,334,423
23,926,235
276,759,591
The movement of impairment losses for other receivables is as follows:
2025
2024
Balance at 1 January
6,903,382
28,904,922
Impairment loss recognized
10,484,983
-
Impairment loss used
-
(21,339,041)
Impairment loss reversed
(1,555,584)
(662,499)
Balance at 31 December
15,832,781
6,903,382
Payments made in connection with uncertain tax treatments
Details regarding the payments made in connection with uncertain tax position are presented in Note 32.1 a).
The Company recognized these payments as an asset based on IFRIC 23 Uncertainty over Income Tax
Treatments because they will either be refunded if the Company is successful in the litigations related to the
liability or they will be used to pay the liability in case of loss of the dispute.
Non-current payments in advance mainly represent advance payment for the AHE Vidraru overhaul contract
signed in June 2024 and the comparative figures were reclassified accordingly, from current prepayments in
line with their nature. In addition, the balance as of 31 December 2025 include advance payment for CHE
Stejaru and Lotru pumping stations for which related contracts were signed in 2025.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
55
22. PROPERTY, PLANT AND EQUIPMENT
Land and land
improvements
Buildings and
special
constructions
and installations
Machinery,
equipment and
other items
Assets under
construction
TOTAL
GROSS CARRYING AMOUNT
Balance at 1 January 2024
524,950,394
16,344,376,471
2,888,136,002
4,245,200,783
24,002,663,650
Acquisitions through business
combinations (Note 30)
13,174,408
28,350,059
24,921,710
-
66,446,177
Additions
4,432,913
726,527
26,291,839
275,864,156
307,315,435
Transfers from assets under
construction
-
72,910,848
151,513,816
(224,424,664)
-
Disposals
-
(1,047,344)
(7,214,350)
(7,225,333)
(15,487,027)
Balance at 31 December 2024
542,557,715
16,445,316,561
3,083,649,017
4,289,414,942
24,360,938,235
Balance at 1 January 2025
542,557,715
16,445,316,561
3,083,649,017
4,289,414,942
24,360,938,235
Change in decommissioning
(344,065)
(344,065)
Additions
4,543,373
1,573,650
7,604,759
575,219,210
588,940,992
Transfers from assets under
construction
-
69,868,200
90,752,636
(160,620,836)
-
Transfers to intangible assets
(17,573,705)
(17,573,705)
Disposals
(7,422,523)
(3,606,795)
(1,181,012)
(886,589)
(13,096,919)
Balance at 31 December 2025
539,678,565
16,512,807,551
3,180,825,400
4,685,553,022
24,918,864,538
ACCUMULATED DEPRECIATION
Balance at 1 January 2024
1,427,990
22,136,234
6,324,002
-
29,888,226
Depreciation charge
801,541
412,913,063
487,858,557
-
901,573,161
Accumulated depreciation of
disposals
-
(6,344)
(6,285,785)
-
(6,292,129)
Balance at 31 December 2024
2,229,531
435,042,953
487,896,774
-
925,169,258
Balance at 1 January 2025
2,229,531
435,042,953
487,896,774
-
925,169,258
Depreciation charge
1,058,966
413,786,838
462,103,146
-
876,948,950
Accumulated depreciation of
disposals
-
(1,093,925)
(489,255)
-
(1,583,180)
Balance at 31 December 2025
3,288,497
847,735,866
949,510,665
-
1,800,535,028
ACCUMULATED IMPAIRMENT LOSSES
Balance at 1 January 2024
-
-
-
3,579,842,754
3,579,842,754
Impairment loss
-
-
3,175
109,636,096
109,639,271
Reversal of impairment loss
-
-
-
(70,111,224)
(70,111,224)
Balance at 31 December 2024
-
-
3,175
3,619,367,626
3,619,370,801
Balance at 1 January 2025
-
-
3,175
3,619,367,626
3,619,370,801
Impairment loss
-
-
683,245
101,240,022
101,923,267
Reversal of impairment loss
-
-
-
(1,918,667)
(1,918,667)
Balance at 31 December 2025
-
-
686,420
3,718,688,981
3,719,375,401
NET CARRYING AMOUNT
Balance at 1 January 2024
523,522,404
16,322,240,237
2,881,812,000
665,358,029
20,392,932,670
Balance at 31 December 2024
540,328,184
16,010,273,608
2,595,749,068
670,047,316
19,816,398,176
Balance at 31 December 2025
536,390,068
15,665,071,685
2,230,628,315
966,864,041
19,398,954,109
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
56
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Property, plant and equipment in use
The Group's property, plant and equipment include mainly special constructions, namely hydro-power plants,
energy pumping stations, micro hydro-power plants, floodgates, as well as hydro-aggregates, equipment and
installations and wind turbines. The Group operates 188 hydro-power plants with an installed capacity of
6,372.403 MW, out of which 5 pumping stations with an installed capacity of 91.5 MW, and 36 wind turbines
with an installed capacity of 108 MW.
According to the applicable legislation, the Group must obtain environmental permits to carry out its activities.
Starting in 2021, the Group has obtained environmental permits that remain valid as long as annual
endorsements are secured for them. The Group has the obligation to request annual endorsements from the
Competent Authority for Environmental Protection (ACPM). In 2024 and 2025, annual endorsements were
obtained for all permits subject to these regulations, except for facilities that are not in use.
The conditions set forth in the environmental permits include compliance with environmental legislation
applicable to wind and hydro-power facilities, monitoring of environmental factors, and the frequency of
reporting monitoring results to ACPM. In order to monitor the environmental factors, the Group performs
measurements of the physical and chemical quality indicators of reservoir water, industrial and wastewater, as
well as noise level measurements at site boundaries. In 2024, all required measurements were performed in
accordance with regulatory documents, and no legal limits were exceeded. The Group expects that the legal
limits of the indicators as provided by the current legislation and regulatory acts will not be exceeded in 2025
as well.
Right-of-use assets
Property, plant and equipment include right-of-use assets mainly in relation to the Group's headquarters, land
of the wind park and the car fleet.
2025
2025
Total
2024
2024
Total
Land and
buildings
Vehicles
Land and
buildings
Vehicles
Balance at 1January
91,277,846
18,323,418
109,601,264
89,999,223
6,360,480
96,359,703
Additions
1,780,923
349,200
2,130,123
1,278,623
18,210,711
19,489,334
Disposals
(965,338)
(429,009)
(1,394,347)
-
(6,247,773)
(6,247,773)
Balance at 31December
92,093,430
18,243,609
110,337,040
91,277,846
18,323,418
109,601,264
Balance at 1January
(32,441,144)
(1,784,916)
34,226,060
(23,564,225
6,324,001
29,888,226
Depreciation
9,153,124
4,403,906
13,557,030
8,876,919
1,708,688
10,585,607
Disposals
-
-
(1,134,638)
-
(6,247,773)
(6,247,773)
Balance at 31December
40,628,930
6,019,322
46,648,452
32,441,144
1,784,916
34,226,060
Net book value
51,464,500
12,224,087
63,688,587
58,836,702
16,358,502
75,375,204
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
57
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Revaluation of property, plant and equipment
Property, plant and equipment, except for assets under construction and right-of-use assets, were revalued by
an independent valuation expert at 31 December 2023.
The fair value measurement of property, plant and equipment is classified as Level 3 as inputs used for valuation
techniques, which have had a significant effect on the recorded fair value, are not based on observable market
data. The fair value of the Gro up’s land was estimated using the market comparison approach, the method of
direct comparison. The valuation technique used to determine the fair value of the special constructions, the
net reconstruction cost was used given that no comparable information were available on the market (include
hydro-power facilities and other highly specialized items, with no such works being undertaken in the last
decades in Romania). Physical depreciation was determined as the ratio of remaining useful life to the economic
useful life of each asset applied to the gross replacement cost.
For the general purpose construction items, the valuation expert determined the net replacement cost (i.e. the
cost to replace an asset with another comparable asset available in the market), computed as gross
replacement cost, less physical and external depreciation (functional depreciation is accounted for when
computing the gross replacement cost – i.e. the replacement cost does not include the cost of specific
functionalities that are not specific to the asset subject to valuation)
Based on the assessment conducted as of 31 December 2025 with the involvement of an independent specialist
which corroborates the evolution of the construction cost index and other macroeconomic indicators with the
forecasted electricity production from hydro-power plants and the forecasted curve of selling price, the Group’s
management estimate is that the net carrying amount of property, plant, and equipment accounted for using
the revaluation model approximates the fair value as of the balance sheet date.
Assets under construction
As at 31 December 2025, the Group has assets under construction with a gross carrying amount of RON
4.685.553.022 (31 December 2024: RON 4,289,414,942) for which it recognized accumulated impairment losses
of RON 3,718,688,981 (31 December 2024: 3,619,367,626 RON ).
The main assets under construction relate to the construction or rehabilitation of the following hydro-power
projects or plants: construction of hydro- power plants – Bumbesti – Livezeni, Siriu – Surduc, Rastolita, Cornetu-
Avrig, Pascani, Cerna Belareca, Cerna-Motru-Tismana, Bistra, Cosmesti-Movileni, Valea Sadului, Fagaras Hoghiz,
Runcu Firiza; and rehabilitation of hydro-power plants – CHE Stejaru, CHE Slatina.
These assets under construction include mainly investments with complex functions, represented by historical
investment objectives regarding hydropower development schemes with social functions (described below)
which have been designed to have a secondary energy function. The primary objectives of these investment
objectives are rational and safe water supply management, including:
- Limitation of flooding effects;
- Protection of population, communities and agricultural land;
- Water supply to riverain communities;
- Insuring water reserves to supply population and industry;
- Insuring flow for irrigation during periods of drought;
- Retaining solid flow in the water accumulations.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
58
22. PROPERTY, PLANT AND EQUIPMENT (continued)
The social functions described above are specific to public authorities, which are not-for-profit entities. In fact,
many of these investments belonged to the “Romanian Waters” National Agency, the governmental body
concerned with regional planning and water management, in the past. Hidroelectrica SA is incorporated under
Companies Law no. 31/1990 and is not a not-for-profit organization. In addition, Hidroelectrica does not benefit
from public funds to complete such social investments, which, if continued to be funded, would impair
shareholder value.
These “historical” hydro-power projects were mainly initiated between 1982 and 1989, following a number of
Decrees of the State Council, and were financed by public funds, through the ministries involved as owners.
After 1989, some of these projects were continued by the Romanian Waters National Agency, financed with
public funds, before they were transferred to Hidroelectrica. The economic and energy conditions have
significantly changed compared to 1980s and 1990s, mainly due to the shut down of the state centralized
investment fund, and the beneficiaries of these complex works ceased funding the specific works included in
the hydro-power projects, while the costs of these works remained to be incurred by Hidroelectrica.
After Hidroelectrica entered insolvency in June 2012 and in the view of the planned future listing of the
Company’s shares, the legal administrators strongly prioritized the Company focus on profit and rational cash
management.
In 2017 the Company contracted a specialized engineer, ISPH SA, to estimate the costs of abandonment,
conservation and securing the works performed on the investments with complex functions. In 2018, based on
the analysis of costs and benefits, the management decided to abandon certain investment objectives, as
presented below and in Note 28.
For the investment objectives for which the decision to abandon was taken, impairment losses were recognized
at the amount of their total gross carrying amount. The gross carrying amount of abandoned investments is
RON 590,889,477 as at 31 December 2025 and 31 December 2024. For these investment objectives the Group
recognized provisions for decommissioning and site restoration (see Note 28).
Project
Purpose
Gross carrying
amount
Accumulated
impairment
Net carrying
amount
Borca-Poiana Teiului
Galu Step
9,022,718
(9,022,718)
-
Cosmești-Movileni
Cosmesti Step
93,206,729
(93,206,729)
-
AHE Surduc - Siriu
Ciresu-Surduc Step
17,345,275
(17,345,275)
-
Fagaras-Hoghiz
Fagaras – Hoghiz
174,949,578
(174,949,578)
-
Runcu-Firiza
Runcu Firiza
87,807,430
(87,807,430)
-
Dambovita-Clabucet
Dambovita – Clabucet
34,761,669
(34,761,669)
-
Valea Sadului-
Vadeni
Valea Sadului-Vadeni
165,209,205
(165,209,205)
-
Others
8,586,873
(8,586,873)
-
Total
590,889,477
(590,889,477)
-
In 2025 and 2024 impairment losses were recognized for assets under construction, other than the abandoned
assets mentioned above, as follows:
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
59
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Project
Gross carrying
amount
31 Dec 2025
Accumulated
impairment loss
31 Dec 2025
Net book value
31 Dec 2025
Impairment
loss/(reversal)
2025
AHE Bumbesti-Livezeni
806,576,940
(446,183,742)
360,393,198
(23,408,845)
CHE Racovita
62,796,188
(62,796,188)
-
-
AHE Rastolita
736,807,263
(736,807,263)
-
(13,958,289)
AHE Siriu-Surduc
769,691,907
(677,544,385)
92,147,521
(28,401,758)
AHE Pascani
470,421,909
(470,421,909)
-
(34,806,305)
AHE Cerna-Belareca
319,451,464
(319,451,464)
-
(501,355)
AHE Cornetu-Avrig
108,390,789
(107,100,183)
1,290,606
-
Cerna Motru Tismana -
stage II
73,618,102
(72,942,551)
675,551
-
Lac redresor Sebes
59,957,775
(59,957,775)
-
-
Bistra
44,292,876
(37,303,605)
6,989,271
-
Rehabilitation of Portile de
Fier II
45,265,051
(45,265,051)
-
-
Others
67,130,946
(66,614,739)
516,206
-
Total
3,564,401,210
(3,102,388,854)
462,012,352
101,076,552
Project
Gross carrying
amount
31 Dec 2024
Accumulated
impairment loss
31 Dec 2024
Net book value
31 Dec 2024
Impairment
loss/(reversal)
2024
AHE Bumbesti-Livezeni
789,332,611
422,774,897
366,557,714
(28,314,053)
CHE Racovita
62,781,188
62,781,188
-
-
AHE Rastolita
722,848,974
722,848,974
-
68,778,292
AHE Siriu-Surduc
750,190,905
666,488,060
83,702,845
(33,447,119)
AHE Pascani
435,615,604
435,615,604
-
39,132,979
AHE Cerna-Belareca
318,950,109
318,950,109
-
684,944
AHE Cornetu-Avrig
108,261,601
106,985,994
1,275,606
1,036,370
Cerna Motru Tismana -
stage II
72,942,551
72,942,551
-
-
Lac redresor Sebes
56,363,185
56,363,185
-
-
Bistra
45,013,279
45,013,279
-
3,513
Rehabilitation of Portile de
Fier II
45,265,051
45,265,051
-
-
Others
78,572,621
72,449,258
6,123,363
(8,350,052)
Total
3,486,137,677
3,028,478,149
457,659,528
39,524,874
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
60
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Determination of recoverable amounts
The determination of the recoverable amounts of the investments under construction above was based on a
series of assumptions related to the feasibility of completion of the investments and the projected cash flows.
The significant assumptions used in estimating the recoverable amount are presented below. The estimates
were based both on historical data, as well as on management’s assessment of future trends related to
electricity prices, margins, costs to complete and climate related risk:
Estimates
Method for building the estimates
31 December 2025
31 December 2024
Cost to complete the projects,
annual cash flows to completion
and the date of commissioning
based on the contracts concluded with the suppliers for each project or
estimation made by management (see below)
Installed capacities
based on technical data for each project (see below)
Capacity utilization rate
80% of the production capacity on average
(based on Group average historical
electricity production for the previous 11
years and also adjusted downwards for
addressing climate risks.)
80% of the production capacity
on average (based on Group
average historical electricity
production for the previous 11
years and also adjusted
downwards for addressing
climate risks).
Electricity prices
Based on reports prepared by external
consultants for the period 2025-2060,
adjusted for certain assumptions; 2%
annual price increase (long-term inflation
rate) for the period 2061 – 2080.
Based on reports prepared by
external consultants for the
period 2025 – 2060; 2% annual
price increase (long-term
inflation rate) for the period
2061 – 2080.
Operating expenses
For Bumbești Livezeni, Răstolița, Siriu
Surduc, and Pașcani projects, the Group
has determined future cash flows by
estimating the operating expenses specific
to each project (expenses for turbinated
water, employee benefits, maintenance
expenses, material expenses), as well as
indirect expenses.
For Bumbești Livezeni, Răstolița,
Siriu Surduc, and Pașcani
projects, the Group has
determined future cash flows by
estimating the operating
expenses specific to each project
(expenses for turbinated water,
employee benefits, maintenance
expenses, material expenses), as
well as indirect expenses.
Useful life
50 years
50 years
Discount rate before tax
10.6%
10.4%
(*)PPE EBIDTA margin represents the margin used by the Group in impairment testing of assets under
construction and is computed as Adjusted EBITDA as defined in Note 23 plus tax on electricity producers as a
non-recurring item, changes in provisions and impairment loss on trade receivables, divided by Revenues. The
above value represents the average PPE EBITDA margin for the most recent 7 years.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
61
22. PROPERTY, PLANT AND EQUIPMENT (continued)
The Group’s estimates of the costs necessary to complete the projects under construction, as well as the annual
production capacities to be installed per year, are as follows:
Year
Estimated costs to complete
Installed capacity per year (GW)
31 December 2025
31 December 2024
31 December 2025
31 December 2024
2025
-
160,974,719
-
30
2026
194,890,000
520,669,795
-
10
2027
495,949,000
667,949,194
-
207
2028
810,021,668
335,701,069
404
222
2029
187,583,555
118,144,882
152
65
2030
198,112,190
10,000,000
65
-
Total
1,886,556,413
1,813,439,659
621
534
The Group estimated that approximately 88% of the additional generation capacity will be installed by the end
of 2028.
The impairment losses recognized were mainly driven by the change in the assumptions used on future prices
of electricity, change in discount rate, as well as by the update of the work schedule until completion.
The main variations in the recoverable amount/ impairment loss in 2025 and 2024 refer mainly to the following
investment projects:
- Bumbesti-Livezeni project, with a net carrying amount of RON 360,393,198 as at 31 December 2025 (31
December 2024: RON 366,557,714), for which the works were suspended in 2017 due to the fact that the
construction and environmental authorisations were cancelled as a result of litigation lost by the Company
with non-profit organizations. The project started in 2003, while in 2005 the National Park “Defileul Jiului”
was ruled as protected area; therefore the Company needs to reassess the impact on the environment and
obtain new authorisations.
The additional impairment of RON 23,408,845 in 2025 for Bumbesti-Livezeni project was driven by the
change in main assumptions (discount rate, prices of energy and inflation).
The Company is currently in process of obtaining new construction and environmental authortisations in
order to continue the works. In 2022, the authorities informed the Company that the documentation
submitted does not comply with the legal requirements and needs to be revised.
In 2024, the revised environmental documentation was re-submitted to the authorities and public
consultations were held. Management believes that there are no issues that would prevent the Company
to obtain the authorizations and complete the project. Consequently, the recoverable value of the project
was determined considering that the project will be completed in 2028.
- Siriu-Surduc project with a net carrying amount of RON 74,802,246 as at 31 December 2025 (31 December
2024: RON 83,702,844), for which works were suspended due to the fact that the construction and
environmental authorizations for the construction of the dam were cancelled as a result of litigation lost by
the Company with non-profit organizations. The project started in 1983 and comprises 3 hydropower
plants, out of which one was put in function in 1988, for another one the management decided to abandon
the project and the third one is under construction, with the works suspended until revision of the impact
on the environment and obtain new authorisations.
The additional impairment of RON 28,701,759 in 2025 for Siriu-Surduc project was driven driven by the
change in main assumptions (discount rate, prices of energy and inflation).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
62
22. PROPERTY, PLANT AND EQUIPMENT (continued)
Management believes that there are no issues that would prevent the Company to obtain the authorisations
and complete the project. Consequently, the recoverable value of the project was determined considering that
the project will be completed in 2028.
Sensitivity analysis
The sensitivity analysis below shows the effect on profit before tax, and was determined based on the
reasonable changes in key assumptions at the end of the reporting periods, while other assumptions remain
constant.
Discount rate before tax
Increase/ (decrease) of
Profit before tax
100 bp increase
100 bp decrease
2025
(108,651,041)
135,367,789
2024
(121,362,849)
154,595,489
Operating expenses
Increase/ (decrease) of
Profit before tax
5% increase
5% decrease
2025
10,124,282
(10,124,282)
2024
(13,402,966)
13,402,966
Electricity prices
Increase/ (decrease) of
Profit before tax
5% increase
5% decrease
2025
62,844,024
(62,844,024)
2024
71,593,345
(71,441,872)
Capacity utilization rate
Increase/ (decrease) of
Profit before tax
500 bp increase
500 bp decrease
2025
62,844,024
(62,844,024)
2024
89,416,997
(88,187,104)
23. CAPITAL AND RESERVES
(a) Share capital
31 December
2025
31 December
2024
Nominal share capital
4,498,025,670
4,498,025,670
Inflation adjustments in accordance with IAS 29
1,028,872,000
1,028,872,000
Total
5,526,897,670
5,526,897,670
Until 31 December 2003, the share capital in nominal terms was restated in accordance with IAS 29 "Financial
Reporting in Hyperinflationary Economies", the related adjustments being recognized against retained earnings.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
63
23. CAPITAL AND RESERVES (continued)
As at 31 December 2025 and 31 December 2024 the authorized, subscribed share capital of the Company is
divided into 449,802,567 ordinary shares with a nominal value of RON 10 per share. The shareholders are
entitled to dividends and each share grants a voting right.
31 December 2025
31 December 2024
Shareholders
Number of shares
%
Number of shares
%
Ministry of Energy
360,094,390
80.0561%
360,094,390
80.0561%
Legal persons
75,600,136
16.8074%
73,287,787
16.2933%
Individuals
14,108,041
3.1365%
16,420,390
3.6506%
Total
449,802,567
100%
449,802,567
100%
(b) Revaluation reserve
The reconciliation between opening balance and closing balance of the revaluation reserve is as follows:
2025
2024
Balance at 1 January
11,580,347,711
12,076,640,610
Transfer of revaluation reserve to retained earnings following
depreciation and disposal of property, plant and equipment,
net of tax
(469,072,279)
(495,522,789)
Revaluation reserve adjustments on impairment of property,
plant and equipment
(528,031)
(770,110)
Revaluation of property, plant and equipment
-
-
Deferred tax related to revaluation reserve
-
-
Balance at 31 December
11,110,747,401
11,580,347,711
(c) Other reserves
Other reserves include:
• legal reserve of RON 928,970,174 (31 December 2024: RON 928,970,174), set-up annually at each Group
company level as 5% of the profit before tax until the total legal reserve reach 20% of the paid-up nominal
share capital. Legal reserves are mandatory, are deductible for income tax purposes and are not
distributable.
• Other non-distributable reserves of RON 97,000,000 at 31 December 2025 and 2024, set-up in 2006 based
on Government Emergency Ordinance no. 89/2004.
(d) Dividends
On 29 April 2025, the Shareholder General Meeting approved the distribution of dividends from the 2024 profit
of RON 4,043,229,023, representing 100% of the 2024 eligible for distribution net profit in the statutory
separate financial statements of the Company.
The value of the distributed dividends per share is 8.988897 RON/share (2024: 13.99 RON/share).
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
64
23. CAPITAL AND RESERVES (continued)
Liabilities in relation to dividends include:
31 December 2025
31 December 2024
Dividends payable
6,451,583
5,182,867
Tax on dividends
284,577
469,825
Total
6,736,160
5,652,692
Romanian companies may distribute dividends from statutory earnings only, as per separate financial
statements prepared in accordance with Romanian accounting regulations.
(e) Capital management
The capital management of the Group is significantly influenced by the regulations. The distribution of
dividends is governed by special regulation, including the Government Ordinace no. 64/2001, according to
which, in the case of companies wholly or majority-owned by the State, minimum 50% of the accounting profit
shall be distributed as dividends, unless otherwise provided by special laws.
The Groups’ policy is to maintain a strong capital base as to maintain investor, creditor and market confidence
and to sustain future developments of the business. Management monitors the return on capital, as well as the
level of dividends to shareholders. The net debt / (net cash and short-term investments) to ADJUSTED EBITDA
should not exceed 3.
2025
2024
Bank borrowings
213,315,268
300,733,276
Lease liabilities
71,647,900
79,354,288
Less: Cash and cash equivalents
(1,187,733,975)
(1,581,617,072)
Less : Short-term investments
(3,732,016,142)
(3,475,932,995)
Net debt /(net cash and short-term investments)
A
(4,634,786,949)
(4,677,462,503)
ADJUSTED EBITDA
(1)
B
4,747,165,812
5,516,596,667
Net debt /(net cash and short-term investments)
to ADJUSTED EBITDA ratio
A/B
(0.98)
(0.85)
(1) ADJUSTED EBITDA (Earnings before interest, tax, depreciation and amortisation) is calculated as
EBITDA, defined and calculated as profit/(loss) before tax before (i) depreciation and amortization of
property, plant and equipment and (ii) interest income and expense, and ADJUSTED FOR
impairment/reversal of impairment of property, plant and equipment. EBITDA and ADJUSTED EBITDA
are not IFRS measures and should not be treated as an alternative to IFRS measures. Moreover,
ADJUSTED EBITDA is not uniformly defined. The method used to calculate ADJUSTED EBITDA by other
companies may differ significantly from that used by the Group. As a consequence, the ADJUSTED
EBITDA presented in this note cannot, as such, be relied upon for the purpose of comparison to EBITDA
or ADJUSTED EBITDA of other companies.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
65
24. BORROWINGS
Description
31 December
2025
31 December
2024
BRD Groupe Societe Generale dated 4 March 2021 of RON
1,250,000,000- loan contracted for financing the acquisition of
Crucea Wind Farm SA and Hidroelectrica Wind Services SRL.
Proceeds from loan: EUR 130,000,000 (representing RON
635,219,000)
213,315,268
300,733,276
Repayment: quarterly installments between 11 June 2021 and 11
March 2028.
Interest is linked to EURIBOR 3 months plus a margin.
Year of maturity: 2028.
Total loans
213,315,268
300,733,276
Current portion
94,957,232
92,886,954
Non-current portion
118,358,036
207,846,322
In 2025 the Group repaid loans of RON 93,673,821 (2024: RON 92,349,679).
The loan agreement with BRD Groupe Société Générale includes the following financial ratios:
- Debt service coverage ratio, calculated as the ratio between EBITDA (from which dividend payments,
capital expenditures, and taxes are deducted) and debt service – minimum value: 1.1
- Leverage ratio – maximum value: 3.0
According to the loan agreement, if either of the above indicators is not met, the Company benefits from a 60-
day grace period for remediation starting from the date the lender notifies the Company.
As of December 31, 2025, the debt service coverage ratio, as defined under contract, is below 1.1, therefore
long-term portion of the loan amounting RON 118,358 thousand shall be classified as current liability. As the
net debt service defined under contract is positive given the Group’s debt level compared with EBITDA, as the
interest are higher than the debt service. Management considers that the Company is technically compliant,
however a waiver letter was received from the bank, subsequent to 31 December 2025.
A similar breach was recorded as of 31 December 2024, the long-term portion of the loan being of RON 207,846
thousand. A waiver letter was obtained from the bank subsequent to 31 December 2024.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
66
24. BORROWINGS (continued)
Reconciliation of movements of liabilities to cash flows arising from financing activity
Bank borrowings
Lease liabilities
Total
Balance at 1 January 2025
300,733,276
79,354,288
380,087,564
Changes from financing cash flows
Repayment of bank loans
(93,673,821)
-
(93,673,821)
Lease payments
-
(9,486,038)
(9,486,038)
Total changes from financing cash flows
(93,673,821)
(9,486,038)
(103,159,859)
The effect of changes in foreign exchange rates
6,505,363
-
6,505,363
Other changes
Liability-related
Lease modifications
-
1,779,649
1,779,649
Interest expense
6,765,118
5,224,422
11,989,540
Interest paid
(7,014,669)
(5,224,422)
(12,239,091)
Total liability-related other changes
(249,550)
1,779,650
1,530,099
Balance at 31 December 2025
213,315,268
71,647,900
284,963,168
Bank borrowings
Lease liabilities
Total
Balance at 1 January 2024
393,534,741
66,300,971
459,835,712
Changes from financing cash flows
Repayment of bank loans
(92,349,679)
(92,349,679)
Lease payments
(6,436,017)
(6,436,017)
Total changes from financing cash flows
(92,349,679)
(6,436,017)
(98,785,696)
The effect of changes in foreign exchange rates
(58,212)
-
(58,212)
Other changes
Liability-related
Lease modifications
-
19,489,334
19,489,334
Interest expense
14,136,228
4,310,953
18,447,181
Interest paid
(14,529,803)
(4,310,953)
(18,840,756)
Total liability-related other changes
(393,574)
19,489,334
19,095,759
Balance at 31 December 2024
300,733,276
79,354,288
380,087,563
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
67
25. TRADE PAYABLES
31 December 2025
31 December 2024
Electricity suppliers
194,151,162
107,728,825
Electricity distribution services suppliers
184,013,818
146,328,047
Property, plant and equipment suppliers
159,950,862
38,887,993
Turbinated water supplier
101,298,282
70,287,437
Maintenance and repairs suppliers
25,928,377
14,511,016
Other suppliers
126,881,383
52,938,391
Total trade payables
792,223,884
430,681,709
Current
777,323,350
429,683,124
Non-current
14,900,534
998,585
The suppliers of electricity, electricity distribution and water are mainly those presented in Note 33 Related
Parties.
Other suppliers include service providers, materials and consumables providers.
The Group has guarantees received from suppliers of RON 667,069,588 at 31 December 2025 (RON 470,254,839
at 31 December 2024) that are off-balance. These guarantees represent performance guarantees in the form
of bank letters of guarantee, insurance policies and escrow accounts. The increase is mainly due to the
guarantees received for works contracted by the Group for maintenance and development.
26. OTHER PAYABLES
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Payables to the State
54,006,063
-
39,338,896
-
Performance deposits
from suppliers
10,356,738
57,757,775
7,055,899
52,403,051
Performance deposits
from clients
45,512,292
-
57,587,395
-
Liabilities in relation to
dividends
6,736,160
-
5,652,692
-
Other
29,762,608
109,667
14,614,303
109,344
Total
146,373,861
57,867,442
124,249,185
52,512,395
Payables to the State represent mainly VAT payable of RON 49,448,612 as at 31 December 2025 (31 December
2024: RON 37,573,122 ).
Starting from the second quarter of 2024, the Group requires potential end customers with counterparty risk
to provide multiple payment guarantee options, including the establishment of monetary guarantees. In this
regard, guarantee deposits are opened by customers, with the deposit amount based on the estimated
contractual value of the electricity supplied for a period up to three months, and these deposits remain valid
for the entire contractual period.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
68
27. DEFERRED INCOME
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Government grants
5,554,937
146,130,825
6,091,097
155,677,293
Other
52,602
933,526
54,846
995,840
Total
5,607,539
147,064,351
6,145,943
156,673,133
Government grants represent amounts received from the State for the construction of certain investment
projects.
Reconciliation between opening and closing balance of government grants:
2025
2024
Balance at 1 January
161,768,390
137,161,662
Increase in the year
5,868,670
30,513,825
Released to income
(6,611,792)
(5,907,097)
Grants used for expropriation
(9,339,506)
-
Balance at 31 December
151,685,762
161,768,390
28. PROVISIONS
31 December 2025
31 December 2024
Current
Non-current
Current
Non-current
Litigation and claims
93,480,582
-
71,420,228
-
Decommissioning
-
911,465,144
-
848,188,672
Tax provisions
-
97,666,739
-
95,316,032
Other provisions
53,546,229
-
53,731,556
-
Total
147,026,811
1,009,131,883
125,151,784
943,504,704
Litigation
and claims
Decommissioning
Tax
provisions
Other
provisions
Total
Balance at 1 January 2025
71,420,228
848,188,672
95,316,032
53,731,556
1,068,656,488
Provisions recognized against
property, plant and equipment
-
127,362
-
-
127,362
Provisions recognized in profit or
loss
22,214,369
21,326,721
-
42,543,456
86,084,546
Provisions used
-
-
-
(42,681,941)
(42,681,941)
Provisions reversed
(148,058)
(17,289,494)
(4,407,200)
(46,842)
(21,891,594)
Unwinding of provisions (Note 14)
(5,956)
59,111,883
6,757,907
-
65,863,834
Balance at 31 December 2025
93,480,582
911,465,144
97,666,739
53,546,229
1,156,158,695
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
69
28. PROVISIONS (continued)
Litigation and
claims
Decommissioning
Tax
provisions
Other
provisions
Total
Balance at 1 January 2024
163,587,549
746,285,396
90,544,424
25,385,415
1,025,802,784
Provisions recognized against
property, plant and equipment
-
(344,065)
-
-
(344,065)
Provisions recognized in profit or
loss
1,881,095
50,150,967
53,091,457
74,641,213
Provisions used
(65,279,279)
-
-
(24,640,356)
(89,919,635)
Provisions reversed
(28,769,137)
-
(1,608,209)
(104,960)
-
Unwinding of provisions (Note 14)
-
52,096,374
6,379,817
-
58,476,191
Balance at 31 December 2024
71,420,228
848,188,672
95,316,032
53,731,556
1,068,656,488
(i) Provisions for litigation and claims
As at 31 December 2025 and 31 December 2024, provisions for litigations include RON 67,618 thousand relating
to the litigation with the Consortium formed of Romelectro SA, Hidroconstructia SA and ISPH Project
Development SA (the Consortium) started in 2013. The subject of the litigation is disputes over the contract
signed in 2004 for Bumbesti-Livezeni investment project. The Consortium requested RON 88,400 thousand
representing additional works performed by the Consortium starting 2010 until the date of commencement of
the litigation. Following several rulings and appeals in 2019 the file was sent to retrial. In 2020 the Court
requested a technical expert report. Based on the past rulings, the expert report issued on 17 February 2022
and considering the probability of an unfavorable outcome, the Group recognized a provision of RON 67,618
thousand.
The company recognized in 2025 an additional provision for litigation raised against the Company for interest
and penalties related to late payments of works not initially recognized.
(ii) Decommissioning provision
In 2018 and 2019, the management of the Company decided to abandon certain investment projects in
progress (Note 22). As a result, the Company recognized decommissioning provisions against profit or loss for
the present value of the works estimated to be necessary to abandon those assets. The decommissioning costs
were estimated based on studies performed by an external technical expert in 2017, updated during 2024,
taking into account the current cost of the main decommissioning activities.
Main abandonment costs included in the provision are:
• cost to demolish existing constructions;
• cost to transport the waste materials to the nearest ecological deposit;
• environmental tax, in accordance with the legal requirements;
• cost to deposit the waste at an ecological deposit.
The costs were discounted using discount rates between 4.73% and 5.73% (31 December 2024: between 5.27%
and 7.09%), depending on the expected period of decommissioning.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
70
28. PROVISIONS (continued)
A decommissioning provision of RON 15,299,726 is related to the wind farm. The effects of changes in
assumptions underlying the decommissioning costs for the wind farm are recognized against property, plant
and equipment.
(iii) Tax provisions
Tax provisions of RON 97,666,739 at 31 December 2025 (31 December 2024: RON 95,316,032 ) represent the
present value of the VAT expected to be paid at the write off of the abandoned investment projects (Note 22).
(iv) Other provisions
Employee
profit sharing
Variable component
remuneration for
Management and
Supervisory Board
Others
Total
Balance at 1 January 2025
25,917,455
16,764,576
11,049,525
53,731,556
Provisions recognized in profit
or loss
29,504,000
13,025,000
14,456
42,543,456
Provisions used
(25,917,365)
(16,764,576)
-
(42,681,941)
Provisions reversed
-
-
(46,842)
(46,842)
Balance at 31 December 2025
29,504,090
13,025,000
11,017,139
53,546,229
Employee
profit sharing
Variable component
remuneration for
Management and
Supervisory Board
Others
Total
Balance at 1 January 2024
23,614,403
-
1,771,012
25,385,415
Provisions recognized in profit
or loss
25,917,455
16,764,576
10,409,426
53,091,457
Provisions used
(23,614,403)
-
(1,025,953)
(24,640,356)
Provisions reversed
-
(104,960)
(104,960)
Balance at 31 December 2024
25,917,455
16,764,576
11,049,525
53,731,556
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT
(a) Accounting classifications and fair values
In accordance with IFRS 9, the Group's financial assets and liabilities are measured at amortized cost. According
to the business model of the Group, financial assets and liabilities are held to collect contractual cash flows and
these cash flows are solely payments of principal and interest. The Group did not include fair value information
for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable
approximation of fair value.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
71
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
(b) Financial risk management
Credit risk
Credit risk is the risk that the Group will incur a financial loss if a customer or counterparty to a financial
instrument fails to meet its contractual obligations, and this risk derives mainly from trade receivables, cash
and cash equivalents, and investments in deposits and corporate bonds.
Cash and bank deposits are placed in financial institutions that are considered to have high creditworthiness,
part of these being held by Romanian State such as CEC Bank and Exim Bank.
Exposure to credit risk
The carrying amount of financial assets represents the maximum exposure to credit risk.
31 December 2025
31 December 2024
Trade receivables
1,698,377,642
1,633,688,425
Cash and cash equivalents
1,187,733,975
1,581,617,072
Restricted cash
55,123,548
21,057,471
Investments in deposits and bonds
3,732,016,142
3,475,932,995
Total
6,673,251,307
6,712,295,963
Trade receivables
The Group's exposure to credit risk is mainly influenced by the individual characteristics of each client. The
Group has established a credit policy according to which each new business client is analyzed individually from
the point of view of creditworthiness before the conclusion of a contract, so that the sale is made to the clients
with an adequate creditworthiness. For household clients, such credit risk analysis is not performed due to the
nature and volume of the customers and due to the legislation in force. Impairment adjustments of trade
receivables reflect the expected credit losses, calculated based on the loss rates.
The following table provides information about the exposure to credit risk and expected credit loss (ECL) for
trade receivables as at 31 December 2025:
Weighted
average
loss rate
Gross carrying
amount
Impairment loss
allowance
Net trade receivables
Not past due
2.03%
964,369,735
(19,529,305)
944,840,430
Past due - from 0 to 3 months
15.63%
118,050,773
(18,453,519)
99,597,254
Past due - from 3 to 6 months
55.76%
54,936,698
(30,632,993)
24,303,705
Past due - from 6 months to 1 year
90.72%
64,069,017
(58,124,448)
5,944,569
Past due - more than 1 year
100.00%
209,938,253
(209,938,253)
-
Total
1,411,364,476
(336,678,518)
1,074,685,958
Customers analyzed individually
623,691,684
-
623,691,684
Total trade receivables
2,035,056,160
(336,678,518)
1,698,377,642
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
72
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
The following table provides information about the exposure to credit risk and expected credit loss (ECL) for
trade receivables as at 31 December 2024:
Weighted
average loss
rate
Gross carrying
amount
Impairment
loss allowance
Net trade
receivables
Not past due
2.21%
803,221,198
(17,745,320)
785,475,878
Past due - from 0 to 3 months
17.80%
140,962,538
(25,095,874)
115,866,664
Past due - from 3 to 6 months
73.31%
69,495,832
(50,945,404)
18,550,428
Past due - from 6 months to 1 year
100.00%
69,293,528
(69,293,528)
-
Past due - more than 1 year
100.00%
141,231,219
(141,231,219)
-
Total
1,224,204,315
(304,311,345)
919,892,970
Customers analyzed individually
713,795,455
-
713,795,455
Total trade receivables
1,937,999,770
(304,311,345)
1,633,688,425
Customers analyzed individually represent outstanding amounts from customers for which the Group believes
that there is a negligible risk to collect.
Loss rates estimated for 2025 are based on the actual credit loss experienced over the past six quarters
considering the evolution of the supply segment and the delays in invoicing the electricity supplied (31
December 2024: past six quarters).
The Group has guarantees received from customers of RON 591,805,583 at 31 December 2025 (RON
527,949,485 at 31 December 2024) in the form of bank letters of guarantee. Under client guarantees are
included cash deposits of RON 45,504,714 (see Note 26).
Liquidity risk
Liquidity risk represents the risk that the Group may have difficulties in meeting the obligations associated with
financial liabilities settled by transfer of cash or another financial asset. The Group has significant cash and cash
equivalents and short-term investments, therefore it does not face significant liquidity risk.
The Group monitors the level of cash inflows forecasted from collection of trade receivables, as well as the level
of cash outflows forecasted for the payment of loans, trade and other payables. The Group aims to maintain a
level of current bank accounts and bank deposits that exceeds the cash outflows forecasted for the payment of
financial liabilities.
Exposure to liquidity risk
The following table shows the remaining contractual maturities of financial liabilities at the reporting date.
The contractual cash flows are presented gross and undiscounted, and include estimated contractual interest
payments.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
73
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
Contractual cash
flows
31 December 2025
Carrying amount
Total
< 12 months
1 - 5 years
> 5 years
Financial liabilities
Trade payables
792,223,884
792,223,884
777,323,350
14,900,534
-
Bank borrowings
213,315,268
219,217,273
98,802,637
120,414,636
-
Lease liabilities
71,647,900
89,781,274
14,596,149
46,701,259
28,483,866
Total
1,077,187,052
1,101,222,431
890,722,136
182,016,428
28,483,866
Contractual cash flows
31 December 2024
Carrying amount
Total
< 12 months
1 - 5 years
> 5 years
Financial liabilities
Trade payables
430,681,709
430,681,709
429,683,124
998,585
Bank borrowings
300,733,276
316,523,991
100,618,245
215,905,746
-
Lease liabilities
79,354,288
101,967,239
14,327,708
50,922,328
36,717,203
Total
810,769,273
849,172,939
544,629,077
267,826,659
36,717,203
Market risk
Market risk is the risk that changes in market prices – foreign exchange rate and interest rate – will affect the
Group's profit or the value of the financial instruments held. The objective of market risk management is to
control market risk exposures within acceptable parameters, while optimizing the return.
(i) Interest rate risk
The Group has long-term bank borrowings with variable interest rates, which may expose the Group to interest
rate risk.
31 December 2025
31 December 2024
Fixed-rate instruments
Financial assets
Restricted cash
55,123,548
21,057,471
Investments in corporate bonds and deposits
3,732,016,142
3,475,932,995
Total
3,787,139,690
3,496,990,466
Financial liabilities
Lease liabilities
(71,647,900)
(79,354,288)
Total
(71,647,900)
(79,354,288)
Variable–rate instruments
Financial liabilities
Bank borrowings
(213,315,268)
(300,733,276)
Total
(213,315,268)
(300,733,276)
Fair value sensitivity analysis of fixed-rate instruments
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
74
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
The Group has no financial assets and financial liabilities with a fixed interest rate recognized at fair value
through profit or loss. Therefore, a change in interest rates on the reporting date would not result in a gain or
loss in profit or loss.
Cash flow sensitivity analysis of variable-rate instruments
A reasonably possible change of 50 basis points in interest rates at the reporting date would have increased
(decreased) the profit before tax by the amounts shown below. This analysis assumes that all other variables,
in particular currency exchange rates, remain constant.
Increase/ (decrease) of
Profit before tax
50 bp increase
50 bp decrease
2025
Variable-rate instruments
(1,066,576)
1,066,576
2024
Variable-rate instruments
(1,503,666)
1,503,666
(ii) Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is mismatch between the
currencies in which sales, purchases, receivables and borrowings are denominated and the respective
functional currencies of of the parent company and its subsidiaries based on separate assessment assessments
conducted in accordance with IAS 21. The functional currency of the Group is the Romanian Leu (RON).
The currency in which these transactions are primarily denominated are RON. Certain liabilities are
denominated in foreign currencies as EUR and USD. The Group's risk management policy is to primarily use the
local currency. The Group does not use derivative instruments or hedging instruments.
31 December 2025
- RON equivalent of the currency-
EUR
USD
CHF
Trade receivables
228,068
-
-
Other current assets including investment deposits
277,256,430
-
-
Cash and cash equivalents
3,467,775
89,298
2,604
Trade payables
(60,175,622)
(160,093)
-
Bank borrowings
(213,315,268)
-
-
Lease liabilities
(58,718,651)
-
-
Net statement of financial position exposure
(51,257,269)
(70,795)
2,604
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
75
29. FINANCIAL INSTRUMENTS – FAIR VALUES AND RISK MANAGEMENT (continued)
31 December 2024
- RON equivalent of the currency-
EUR
USD
CHF
Trade receivables
221,340
-
-
Other current assets including investment deposit
78,839,581
-
-
Cash and cash equivalents
382,420,303
112,499
2,512
Trade payables
(3,898,497)
(160,093)
-
Bank borrowings
(300,733,276)
-
-
Lease liabilities
(62,432,290)
-
-
Net statement of financial position exposure
94,417,161
(47,594)
2,512
The following exchange rates have been applied:
31 December 2025
31 December 2024
RON / EUR
5.0985
4.9741
RON / USD
4.3417
4.7768
RON / CHF
5.4743
5.2806
Sensitivity analysis
A 5% appreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31 December
would have affected the profit before tax by the amounts shown below. This analysis assumes that all other
variables remain constant.
Increase/(decrease) of
Profit before tax
Increase/(decrease) of
Profit before tax
2025 (RON)
2024 (RON)
EUR
2,562,863
4,720,85
USD
3,540
(2,380 )
CHF
(130)
(126)
Total
2,566,273
4,718,604
A 5% depreciation of the Romanian leu (RON) against each of the other foreign currencies as at 31 December
would have affected the profit before tax by the amounts shown below. This analysis assumes that all other
variables remain constant.
Increase/(decrease) of
Profit before tax
Increase/(decrease) of
Profit before tax
2025 (RON)
2024 (RON)
EUR
(2,562,863)
(4,720,858)
USD
(3,540)
2,380
CHF
130
126
Total
2,566,273
4,718,604
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
76
30. ACQUISITION OF SUBSIDIARIES
On 22 February 2023, the Company was declared winner of the sales procedure of business lines ABC and
Calnicel platform (the acquiree), were owned by UCM Resita SA.
In January 2024, the Company set-up a new subsidiary, Uzina de Construcții Mașini Hidroenergetice S.R.L.,
through which it took-over the business from U.C.M. Reșița S.A.. The object of activity of the new subsidiary is
manufacturing of engines and turbines (code CAEN 2811).
On 22 January 2024, the Extraordinary General Meeting of Shareholders (“EMGS”) approved the transaction
and related documents for business acquisition from U.C.M. Reșița S.A..The transaction was completed upon
the fulfillment of the suspensive conditions on 11 March 2024. The total price for the transfer of ownership
rights over the business was RON 67,879,000.
The Group incurred acquisition related costs of RON 1,127,622 for due diligence services and legal fees. These
costs were included in other operating expenses.
The following table summarizes the value of assets acquired. The Grup did not acquire liabilities.
RON
Intangible assets
17,575,789
Property, pland and equipment
66,446,177
Inventories
9,584,942
Fair value of identifiable net assets acquired
93,606,908
The result of the transaction is as follows:
RON
Fair value of identifiable net assets acquired
93,606,908
Consideration transferred
67,879,000
Gain on bargain purchase
25,727,908
The transaction was accounted for as business combination using the acquisition method in accordance with
IFRS 3. The consideration transferred was measured at fair value, calculated as acquisition date fair values of
the assets transferred by the Company and the liabilities incurred by the Company to the former owner of the
acquiree and the equity interest issued by the Group in exchange for control of the acquiree . The fair value of
the assets and liabilities were determined with the involvement of a valuation expert, resulting in a gain on
bargain purchase of RON 25,728 thousand. Identified assets acquired were represented by intangible assets,
property, plant and equipment and inventories. Also, processes and employees of the acquiree were
transferred.
Acquisition related costs of RON 1,128 thousand for due diligence services and legal fees were accounted for
as other operating expenses in 2024.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
77
30. COMMITMENTS
a) Contractual commitments
The Group has the following contractual commitments:
31 December 2025
31 December 2024
Acquisition of property, plant and equipment
and intangible assets
2,516,720,628
1,372,035,019
AHE Vidraru Refurbishment
In 2025, the Company signed the contracts for overhaul of CHE Stejaru and high power pumps stations.
In June 2024, Hidroelectrica signed the contract for refurbishment works of AHE Vidraru with the Consortium
formed of ELECTROMONTAJ (Consortium Leader) and Koncar – Engineering Co. Ltd. for production and services
(Croatia), with BUTAN GRUP as subcontractor, following the completion of the award procedure through a
public tender. The contractual price is RON 937,709,185 and the works are to be completed within 84 months,
according to the execution schedule.
b) Guarantees
The Group issued performance guarantees of RON 184,269,318 as at 31 December 2025 (31 December 2024:
RON 45,350,256) mainly in relation to its obligations to deliver electricity, and in relation to its payment
obligations related to electricity purchase transactions on the day-ahead and intra-day markets.
31. CONTINGENCIES
Litigation, claims and tax uncertainties
The main litigations involving the Group, with a potential exposure of RON 195,206,600 as at 31 December
2025 (31 December 2024: RON 195,206,600 ), are disclosed as contingent liabilities:
a) Litigation with Tax authorities
Potential exposure: RON 63,612,328 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroelectrica
File no. 638/2/2024 and 1962/2/2024
Subject matter: Annulment of Tax Decision No. A-DAF 6890/11.05.2023
Tax for electricity producers was subject to multiple changes with respect to the method of computation during
2022. The latest change was instated through Law no. 357/2022, which was published on 16 December 2022.
The Company applied the provisions of the law starting with 16 December 2022.
As previously mentioned in Note 13 D, the Company was subject to a tax control by the General Antifraud
Division of ANAF on the tax for electricity producers. As per the control report on 11 April 2023, the tax
authorities applied the changes introduced by the law retroactively starting 1 September 2022, and therefore
computed additional tax of RON 62,052,115.
On 28 April 2023 the Company received the imposing decision for the amount of RON 62,052,115. The Company
challenged the imposing decision within the procedural term, the challenge being rejected by the General
Division for Solving Disputes within the Finance Ministry.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
78
31. CONTINGENCIES (CONTINUED)
The Company argued in its Court application that successive changes of legislation regarding the calculation
methodology of the tax for electricity producers can only be applicable for the future, starting with the date of
publication of legislative amendments and not retroactively, as tax authorities considered.
On 17 December 2024, the Court ruled in favor of Hidroelectrica and ordered the reimbursement to the
claimant of the amount of RON 62,052,115. The Finance Ministry filed an appeal against the court’s decision to
the High Court of Cassation and Justice, with the next hearing date set on 13 May 2026.
On 7 August 2023, the Company received a decision regarding interest and penalties in the amount of RON
1,560,213 related to the previously mentioned imposing decision. The Company challenged the decision,
initiating proceedings before the Court of Appeal of Bucharest under file no. 1962/2/2024. The file is suspended
until the final resolution of case no. 638/2/2024. In relation to the ruling in file no. 638/3/2024, the
management believes that the dispute in file no. 1962/2/2024 will also be ruled in the Company’s favor.
b) Litigation with Hidroconstructia SA
Potential exposure: RON 98,762,431 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroconstructia SA
File no. 12257/3/2022
Subject-matter: Termination of Contract no. 672/1989 regarding the Fagaras-Hoghiz investment project; claims
Hidroconstructia SA filed claims to recover RON 98,762,431 consisting of unrealized profits as a result of the
suspension by Hidroelectrica of the construction works related to the Fagaras Hoghiz investment project. Also,
Hidroconstructia requested the court to enforce the termination of the underlying contract.
In January 2023, the Court ruled in favor of the Company, rejecting Hidroconstructia’s claims. The decision was
appealed by Hidroconstructia SA.
On 12 October 2023, the Court of Appeal set aside the first Court ruling and granted a new hearing on the
merits. On 3 July 2025, the court partially admitted the statement of claim, ordering the termination of the
contract, while dismissing the remaining claims as unsubstantiated.
Hidroconstrucția filed an appeal against the above mentioned decision, the file being forwarded to the High
Court of Cassation and Justice, the first hearing date, to be set.
Based on the court’s ruling, Management estimates that the dispute will be settled in the Group’s favor and,
consequently, an outflow of resources is not probable.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
79
31. CONTINGENCIES (CONTINUED)
c) Litigation with Hidroconstructia SA
Potential exposure: RON 32,831,841 as at 31 December 2025 and 31 December 2024
Plaintiff: Hidroconstructia SA
File no. 44443/3/2016, currently file no. 11314/3/2021
Subject-matter: Claims - the equivalent value of the costs generated by the cessation of construction works
related to investment projects in progress.
Hidroconstructia SA claims the costs generated by the suspension of construction works rendered before the
Company’s insolvency. The Company argues that such claims have no grounds considering the insolvency
process of Hidrolectrica and the fact that the claimant lost its right to claims as it failed to register the claim in
the table of creditors.
In March 2018 the first Court rejected the claims of Hidroconstructia SA. This ruling was contested by
Hidroconstructia SA. The Company also contested the ruling, as it provided for legal fees for Hidroelectrica.
In April 2019 the Court of appeal sent the case back to the first court for reexamination. The dispute was
reopened by the first Court (file no. 11314/3/2021).
In April 2022, the Court requested an expertise report in hydrotechnical constructions and an accounting
expertise report to be performed by independent experts. The expert’s report has been finalized and both
parties have filed objections against the findings of the expert, with the next hearing date being set on 17 June
2026.
Based on the initial first Court ruling, management estimates that the litigation will be ruled in favor of the
Company and consequently an outflow of resources is not probable.
31.1 Fiscal environment
Tax audits are frequent in Romania, consisting of thorough verifications of taxpayers’ accounting records. Such
audits sometimes take place months or even years after the establishment of the tax liabilities. Consequently,
companies may be found liable for significant taxes and fines. In addition, the tax legislation is subject to
frequent changes, and the authorities often show inconsistency in the interpretation of law.
Tax returns may be subject to revision and corrections by the tax authorities, generally for a five years period
after they are filed with the tax authorities.
Romanian tax authorities carried out tax audits on Hidroelectrica’s income tax and value added tax until 20
June 2012, while on Hidroserv’s income tax until 31 December 2014.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
80
31. CONTINGENCIES (CONTINUED)
Management believes that adequate provisions have been recognised in the consolidated financial statements
for all significant tax liabilities; however, a risk persists that tax authorities might have different views,
representing a normal risk in the accounting/tax environment in Romania.
In 2025 the Company was notified by the fiscal authorities that a general fiscal inspection was initiated covering
the period 2019-2024 having in scope all the taxes payable to the central state budget. The inspection is
currently in preliminary stage – scoping and information requests.
31.2 Decommissioning obligations
As described in Note 5 a4), the Group identified decommissioning obligations in relation to its hydro-power
facilities. Management estimates that, except for the assets abandoned or switched to post-utilisation upon
management decisions, and except for its wind farm, for which decommissioning provisions are recognised (see
Notes 22 and 28), the occurrence of events that would require abandonment or switching to post-utilisation of
other assets in the public domain or hydro-power plants owned by the Group by the end of the concession
contract (28 years from 31 December 2025) is unlikely, considering the long useful life of dams, which can be
significantly extended over 100 years by maintenance and improvements.
32. RELATED PARTIES
a) Ultimate controlling party
The Company’s ultimate controlling party is the Romanian State, represented by the Ministry of Energy, with a
shareholding of 80.0561%.
b) Transaction with key management personnel
Key management personnel include the members of the Management Board and Supervisory Board.
Management Board remuneration
2025
2024
Expenses recognized during the year
Fixed component
14,500,376
3,944,881
Variable component accrual
4,734,000
7,889,760
Reversal of over accrual of the previous year
(7,889,760)
-
Total
11,344,616
11,834,641
Payments made in the year
2025
2024
Fixed component
14,500,376
3,944,881
Variable component (for the previous year)
7,855,045
-
Total
22,355,421
3,944,881
The Management Board include 5 directors appointed for 4 years.
Remuneration of executive directors consists of a fixed monthly salary limited to five times the average monthly
gross salary for the last 12 months (starting with December 2025) prior to appointment published by National
Institute of Statistics (INS) for the Company’s activity code (CAEN) according to the classification of activities in
the national economy, and a variable component calculated on the basis of the financial and non-financial
performance indicators, negotiated and approved by the general meeting of shareholders.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
81
32. RELATED PARTIES (continued)
In 2024, the General Meeting of Shareholders approved the annual variable component of the remuneration
for the Management Board, which is limited to 24 gross monthly fixed components. The annual maximum
amount of the variable component for all the Management Board is RON 7,889,760. variable component to be
paid in 2023.
According to the decision of the Supervisory Board, adopted in the interest of the company and all shareholders,
taking into account the obligations arising from Milestone 121 (PNRR), the context established by the European
Commission Decision C(2025) 3490/28.05.2025, as well as Hidroelectrica’s status as an issuer listed on a
regulated market, two of the mandate contracts were terminated by mutual agreement in September 2025.
Consequently, the maximum amount of the variable component for 2025 was reduced to RON 4,734 thousand.
Following the termination, by mutual agreement of the parties, compensations totaling RON 3,156 thousand
were established for the two mandate contracts.
According to the decision of the Supervisory Board, adopted in the interest of the company and all shareholders,
taking into account the obligations arising from Milestone 121 (PNRR), the context established by the European
Commission Decision C(2025) 3490/28.05.2025, as well as Hidroelectrica’s status as an issuer listed on a
regulated market, two of the mandate contracts were terminated by mutual agreement in September 2025.
Consequently, the maximum amount of the variable component for 2025 was reduced to RON 4,734 thousand.
Following the termination, by mutual agreement of the parties, compensations totaling RON 3,156 thousand
were established for the two mandate contracts.
On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-financial
key performance indicators resulting from the Company’s Management Plan.
On 14 December 2025, the Ordinary General Meeting of Shareholders approved the fixed monthly salary to
five times the average monthly gross salary computed as described above, in accordance with the provisions of
Law 109/2011. In addition, the Ordinary General Meeting of Shareholders approved the revised financial and
non-financial performance indicators.
The financial and non-financial performance indicators based on which the variable remuneration was
determined include:
- Financial indicators: capital expenditure rate, net profit margin, dividend payout rate, leverage, accounts
receivable turnover rate, net turnover growth rate.
- Operating indicators: Carrying out the execution schedule for rehabilitation/ modernization works (%) =
carrying out the schedule contracted annually/ planned contract schedule for the current year; Carrying out
the design according to the annual design plan (%); Carrying out the equipment maintenance program for
planned works (%), powerplants availability; average training hours per employee.
- Services indicators: customer retention rate for supply operations (%); market share of the supply business
in the competitive segment (%); customer satisfaction score for supply operations (%).
- Corporate governance indicators: number of investor events; number of Board meetings; defining risk
management policies
The Company has no contractual obligations related to pensions to its former directors.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
82
32. RELATED PARTIES (continued)
Supervisory Board remuneration
2025
2024
Expenses recognized during the year
Fixed component
3,804,663
1,779,434
Variable component accrual
991,000
1,776,816
Reversal of over accrual of the previous year
(1,776,816)
-
Total
3,018,847
3,556,250
Payments made in the year
2025
2024
Fixed component
3,804,663
1,779,434
Variable component (for the previous year)
1,725,917
-
Total
5,530,580
1,779,434
The Supervisory Board consists of 7 members appointed for 4 years.
Remuneration of the members of the Supervisory Board was approved by shareholders decisions in 2024 and
2025. According to these decisions, the remuneration of the Supervisory Board members consists of a monthly
fixed gross salary, limited to two times the average monthly gross salary for the last 12 months prior to
appointment published by National Institute of Statistics for the Company’s activity code (CAEN) according to
the classification of activities in the national economy and a variable component, calculated on the basis of the
financial and non-financial performance indicators, negotiated and approved by the general meeting of
shareholders.
In 2024, the General Meeting of Shareholders approved the annual variable component of the Supervisory
Board remuneration, which is limited to 12 times the gross monthly fixed component. The annual maximum
amount of the variable component for all the Supervisory Board members is RON 1,776,816.
On 28 July 2025, the Ordinary General Meeting of Shareholders approved the new financial and non-financial
key performance indicators resulting from the Company’s Management Plan.
The financial and non-financial performance indicators based of which the variable remuneration was
determined include:
- Financial indicators: debt-to-EBITDA rate; return on equity (ROE); inventory turnover rate; return on assets
(ROA).
- Operating indicators: establishment of an employee safety system; number of safety trainings conducted;
improvement of the internal managerial control system, including periodic analysis and review of
procedures to enhance company efficiency.
- Services indicators: electricity generation market share (%).
- Corporate governance indicators: percentage of independent board members(%)- Supervisory Board;
number of Supervisory Board meetings; meeting attendance rate (%)-Supervisory Board; total remuneration
package.
There were no loans granted to the members of Supervisory Board or Management Board in 2025 and 2024.
No guarantees were granted / received to / from the members of Supervisory Board or Management Board.
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
83
32. RELATED PARTIES (continued)
c) Transactions with other companies in which the State has control or significant influence
In the normal course of business, the Group has transactions with other entities in which the State has control
or significant influence, mainly related to the tax on industrial water, the purchase of electricity, transport and
system services and sales of electricity, as follows:
Supplier
Purchases (without
VAT) 2025
Payables (including VAT)
31 December 2025
Administratia Nationala Apele Romane
430,067,386
98,226,116
Transelectrica (Romanian Electricity System Operator)
680,444,435
152,172,688
OPCOM (Romanian Electricity Market Operator)
267,197,352
683,322
Distributie Energie Electrica Romania
450,831,752
45,447,696
Others
390,778,377
64,513,817
Total
2,219,319,304
361,043,639
Supplier
Purchases (without
VAT) 2024
Payables (including VAT)
31 December 2024
Administratia Nationala Apele Romane
502,738,592
69,380,977
Transelectrica (Romanian Electricity System Operator)
1,038,930,925
107,498,150
OPCOM (Romanian Electricity Market Operator)
22,477,937
149,975
Distributie Energie Electrica Romania
293,620,301
59,656,673
Others
50,688,376
1,062,056
Total
1,908,456,132
237,747,831
Client
Sales
(without VAT)
Receivables Gross
Carrying amount
(including VAT)
Impairment loss
Receivables Net
Carrying amount
(including VAT)
2025
31 December 2025
Transelectrica (Romanian
Electricity System Operator)
739,636,134
90,230,212
-
90,230,212
OPCOM (Romanian Electricity
Market Operator)
686,612,232
427,824
-
427,824
Electrica Furnizare
302,853,622
25,784,774
-
25,784,774
Rompetrol Rafinare
238,367,320
32,177,509
-
32,177,509
Municipal Thermoenergetic
Company
44,983,058
17,816,320
-
17,816,320
Others
502,157,615
168,584,039
(27,692,485)
140,891,555
Total
2,514,609,980
335,020,679
(27,692,485)
307,328,194
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
84
Client
Sales
(without VAT)
Receivables Gross
Carrying amount
(including VAT)
Impairment loss
Receivables Net
Carrying amount
(including VAT)
2024
31 December 2024
Transelectrica (Romanian
Electricity System Operator)
1,946,833,917
192,449,261
-
192,449,261
OPCOM (Romanian Electricity
Market Operator)
2,704,049,345
73,489,057
-
73,489,057
Electrica Furnizare
163,692,478
5,922,604
-
5,922,604
Rompetrol Rafinare
206,461,816
64,460,701
-
64,460,701
S.N.G.N Romgaz SA
52,005,110
5,610,318
-
5,610,318
Raja SA
14,860,611
5,131,515
-
5,131,515
Engie Romania
8,163,600
-
-
-
SN Radiocomunicatii SA
19,107,560
116,121
-
116,121
Municipal Thermoenergetic
Company
36,712,580
6,213,128
-
6,213,128
Others
192,014,921
152,796,357
(34,085,240)
118,711,117
Total
5,343,901,939
506,189,061
(34,085,240)
472,103,821
Other customers include mainly public institutions, local authorities and public educational institutions to which
the Group supplied electricity in 2025 and 2024.
Balance
Bank
Bank
account
Bank
deposits
Bank
account
Bank
deposits
31 December 2025
31 December 2024
Exim Bank
120,779,000
1,167,145,000
605,000
1,573,286,000
CEC Bank
19,260,000
100,373,000
38,973,000
882,191,000
Total
140,039,000
1,267,518,000
39,578,000
2,455,477,000
Transactions
Bank
Bank deposits
placed
Interest
income
Bank deposits placed
Interest income
2025
2024
Exim Bank
6,008,500,000
89,879,000
6,435,000,000
91,193,000
CEC Bank
250,000,000
7,210,000
3,079,832,000
54,005,000
Total
6,258,500,000
97,089,000
9,514,832,000
145,198,000
S.P.E.E.H. HIDROELECTRICA S.A. Two-tier system Company
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
(All amounts are in RON, unless otherwise indicated)
85
33. SUBSEQUENT EVENTS
At the end of February 2026, a significant geopolitical event occurred in the Middle East, resulting in heightened
regional tensions and uncertainty. Due to the growing geopolitical tensions, since February 2026, there has
been a significant increase in the overall market volatility, as well as fluctuations in energy, oil and gas
prices. Elevated inflationary pressures, disruptions across global supply chains, and a deceleration in economic
growth are expected.
The Group does not have direct exposures to related parties and/or key customers or suppliers or banks from
affected region.
Bogdan-Nicolae BADEA
Radu Ioan CONSTANTIN
Ianăș RĂDOI
Chairman of the Management Board
Member of the Management
Board
Member of the Management
Board
Petronel CHIRIAC
Marian FETIȚA
Financial Director
Accounting Manager