Annual Report 2020 - CVR API

Annual Report 2020

Name of the Entity: Doosan Škoda Power s.r.o.

Registered Office: Plzeň, Jižní Předměstí, Tylova 1/57, 301 00,

Czech Republic

Legal Status: Limited Liability Company

Corporate ID: 491 93 864

Doosan Škoda Power s.r.o. Annual Report

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TABLE OF CONTENTS

I. Information on the Development of the Entity 2

II. Information on Post Balance Sheet Events that are Significantfor the Purpose of the Annual Report 4

III. Research and Development Activities 4

IV. Activities in the Field of Work Safety and Health Protection,Fire Prevention and Environmental Protection 4

V. Labour Relations 5

VI. Corporate Social Responsibility (CSR) 5

FINANCIAL PART

VII. Financial Statements for the Year Ended 31 December 2020 Appendix 1

VIII. Report on Related Parties Appendix 2

IX. Auditor’s Report Appendix 3


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I. Information on the Development of the Entity Report on Business Activities and the Balance of its Assets Information on Past Development

Doosan Škoda Power s.r.o. is a traditional top engineering company. Besides various types of steam turbines, it successfully supplies and complements equipment for the energy sector and industry throughout the world. Recently, the Company has strengthened its activities in the area of modernisation, comprehensive maintenance and after-warranty service. The Company has a sufficient number of quality professionals and excellent technical equipment. On a long-term basis, it cooperates and expands its supplier portfolio. The Company offers solutions for regular and new customers thanks to its own technical and strategy development in the area of innovations. The Company supports investments in new technologies and education of core employees. The Company’s ability to generate profit enables to ensure optimal conditions for its growth in the future.

The main factors for the Company’s growth in 2020:

o As a member of the DOOSAN Group, the Company uses this fact for its active operationon the global market.

o The Company successfully met tasks within strategic initiatives in the area of:o Increase in the technical level and quality of products and the services provided;o Optimisation of the direct and overhead costs;o Expansion of supplies for biomass and waste incineration plants, paper industry

and water treatment plants;o Development of solutions for combined heat and power supplies, use of residual

heat in the industry and energy sector as well as the development of alternativeapplications to renewable energy sources;

o Increase in the contract volume in the area of restoration and modernisation(both OEM and non-OEM).

- The Company actively participates in fulfilling the EU emission targets.

In 2020, the dynamics of the Company’s growth were adversely affected by the following factors:

- The global epidemic situation: o Limited possibilities to travel and ensure cooperation with suppliers and

customers;o Changed the conditions for communication and work of a number of the

Company’s employees;o Caused necessity to reduce and postpone some of the planned items of the

budget (CAPEX, OPEX, etc.).- The ongoing changes in the energy sector include:

o Postponement of some Government decisions (completion of nuclear units inthe Czech Republic);

o General decrease in the investors‘ interest in the construction of new largefacilities.

- Political situation in the world (relations of the EU and Russia, the USA and China, etc.); - Strengthening of the global leaders’ role (Siemens, GE) and current growing influence of low- cost companies from South-Eastern Asia and South America.

The Company’s objective is to strengthen the orientation on the customer and end-consumer (provider) and to ensure sustainable development under the existing political and economic conditions.


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The Company had no organisational branches abroad. In relation to implementing its own projects, it registered permanent establishments to this end.

Information on Anticipated Future Development

Values and Philosophy of Business Activities

The Company adheres to the philosophy of the DOOSAN Group’s business activities entitled the “DOOSAN WAY”. It combines the ethics of business activities with responsibility to the applicable legislation, the owner and employees.

Business Strategy

The Czech and Slovak Republics are facing a shortage of investment opportunities to meet the needs and production possibilities of Doosan Škoda Power. For the Company’s total performance growth, cross-border supplies continue to be of vital importance going forward. It means to be successful in areas with various priorities and energy development needs and in industry applications. A significant part of the Company’s business success will be its contribution to the supplies for renewable energy sources and the existing equipment modernisation. Trading will be supported by new innovative solutions related to the automation and digitisation development and a wider range of services.

Investment Strategy and Development of New Products

Investments are primarily made in increasing productivity and the quality of work results. The role of developing new products and their applications is growing. Information technologies have to adapt quickly to the development and business needs in the area of communication and data administration. Employees’ occupational health and safety shall remain a priority.

Risk Management Objectives and Methods

Doosan Škoda Power s.r.o. keeps perfecting its risk management system, the objective being to minimise adverse impacts on the course of contracts and the Company’s financial performance. Risks arise from managing cross-border activities, exchange rate developments in foreign currencies, the scope of the supplied solution and particular specific conditions of the country.

We use well-established control and project management systems for the risk management. Data collecting and information sharing allow primarily for an effective supplier and customer communication. Data and information evaluation is a precondition for correct and effective decision-making.

The Company’s Integrated Management System addresses risk prevention. The underlying principles include risk description, determining preventative measures, and an ongoing review of the course of risky activities.

We methodically divide risks as follows.

Business Risk

This group of risks contains currency, interest rate and price risks.

Currency risk is the most significant risk given that the bulk of the payments are made in foreign currencies. The Company eliminates this risk by inherent hedging and by hedging foreign exchange rates for an open position of each currency for the duration of each project.

Interest rate risk is minimal as we usually do not use funding from external sources.

The price risk requires a thorough review of the scope of the supply, specific customer requirement assessment, review of the budget costs of materials and own production, update of prices of principal purchased items and activities both during the offer pre-negotiation and during the work performance.


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Liquidity Risk

The Company maintains the determined level of liquidity through the systematic assessment and work with receivables, inventory and payables.

Operational Risk

In reviewing a new contract, the Company determines a risk mark-up. The amount of the risk mark-up reflects the level and scope of the supply, knowledge of the customer and conditions on the construction site but also the demandingness of technical solution and contractual conditions.

Legal Risk

Given the complexity of contractual relations and possible legal disputes, we use the services of external legal advisors with experience in our industrial segment and detailed knowledge of local legal regulations. The Company has its own legal department, which, in many cases, coordinates the cooperation with external professionals from the Czech Republic and other countries.

II. Information on the Post Balance Sheet Events that areSignificant for the Purpose of the Annual ReportFrom 31 December 2020 to the preparation of this document, there were no facts that should belisted in order to comply with the purpose of the annual report.

III. Research and Development ActivitiesResearch and development in Doosan Škoda Power s.r.o. focuses in the long termon improvements in the parameters of various types of steam turbine working under non-standardoperational conditions.

IV. Activities in the Fields of Work Safety and Health Protection,Fire Prevention and Environmental ProtectionIn 2020, activities relating to work safety improvement and health protection, fire safety andenvironmental protection focused on the following:

˗ Meeting the requirements of the internationally recognised standard ISO 45001:2018 – in September 2020 checked by the audit by TŰV Nord;

˗ Ensuring compliance with legal and other requirements – checked by the Czech Environmental Inspectorate and Regional Labour Inspectorate inspections;

˗ Increase of staff awareness; ˗ Improvement of labour conditions and the safety of individual machine devices; ˗ Improvement of the management system on projects and detached offices; ˗ Involvement of suppliers in the improvement; ˗ Motivating the employees; ˗ Involvement of the middle and senior management; ˗ Streamlining of the planning and coordination of our activities in terms

of reviewing/checking work techniques and control documentation; ˗ Sharing best practices through seminars with professional public in the area of

occupational health and safety and environmental management system; ˗ Staff development with regard to occupational health and safety; ˗ Management of energy consumption with the objective of reducing greenhouse emission

production; ˗ Savings of natural resources and environmental protection through increasing the

effectiveness of our products and environmental protection in construction supplies; and


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˗ Reducing the Company’s energy intensity.

The improvement of work safety, fire prevention and environmental protection has always been one of the Company’s basic priorities.

V. Labour Relations

In 2020, just as in the previous year, the priorities of HR work were predominantly the stabilisation of key employees and the review of organisational structures to maximise work efficiency. Development activities were reduced as a result of the Government measures related to COVID-19. Flexible forms of working were used such as working from home. HR continues to develop systematic cooperation with universities and high schools and support educational activities aimed at students.

VI. Corporate Social Responsibility (CSR)This section follows up on the activities of sections III, IV and V and concerns all activities that relate to community projects. The Company’s social responsibility consists of activities that go beyond not only legal requirements but also ethical, commercial and social expectations. In general, CSR can be characterised as a commitment to make decisions and perform procedures that are desirable in terms of the values and goals of the Company. Social responsibility is a supported concept that is audited every year. Within it, the Company takes over part of the responsibility for the welfare and sustainable development of modern society while at the same time expecting to remain competitive and profitable; those two goals are not contradictory. It is also a voluntary commitment to make its operations responsible to the environment and the society where the Company’s business takes place.

These activities can be divided as follows:

1. Education, charity− Support of technical education through donations to the Department of Power System

Engineering of the University of West Bohemia; − Support of sport and sport activities; and − Small-scale charity and participation in help to local organisations during volunteer

days. 2. Social and environmental

a) HR:o Respect of human rights of all parties involved;o Equal work opportunities and labour relations;o Improving the employees’ quality of life;o Communication between employees and the management;o Talent support;o Involvement and development within the community; ando Employee code of conduct.

b) Ensuring fair operational practice:o Human rights;o Corruption prevention, including a whistleblowing line; ando Fair competition.

c) Public contracts:o Respect of human rights of the parties involved;o Corruption prevention;o Fair completion;o Promotion of CSR in the supply chain; ando Code of conduct for suppliers.


FINANCIAL PART

VII. Financial Statements for the Year Ended 31 December 2020

BALANCE SHEET Doosan Škoda Power s.r.o.full version Corporate ID 491 93 864

As of Tylova 1/5731.12.2020 301 00 Plzeň(in CZK thousand)

31.12.2019Gross Adjustment Net Net

TOTAL ASSETS 12 289 543 4 621 843 7 667 700 9 322 252B. Fixed assets 5 725 854 4 153 715 1 572 139 1 763 365B.I. Intangible fixed assets 1 519 914 1 491 559 28 355 67 062B.I.2. Valuable rights 1 497 048 1 469 559 27 489 64 387B.I.2.1. Software 536 281 508 792 27 489 64 387B.I.2.2. Other valuable rights 960 767 960 767B.I.4. Other intangible fixed assets 22 000 22 000

B.I.5.Prepayments for intangible fixed assets and intangible fixed assets under construction 866 866 2 675

B.I.5.2. Intangible fixed assets under construction 866 866 2 675B.II. Tangible fixed assets 4 203 101 2 662 056 1 541 045 1 693 412B.II.1. Land and structures 1 461 800 438 668 1 023 132 1 062 301B.II.1.1. Land 227 705 227 705 227 705B.II.1.2. Structures 1 234 095 438 668 795 427 834 596B.II.2. Tangible movable assets and sets of tangible movable assets 2 721 962 2 217 690 504 272 599 337B.II.4. Other tangible fixed assets 29 29 29B.II.4.3. Other tangible fixed assets 29 29 29

B.II.5.Prepayments for tangible fixed assets and tangible fixed assets under construction 19 310 5 698 13 612 31 745

B.II.5.1. Prepayments for tangible fixed assets 928 928B.II.5.2. Tangible fixed assets under construction 18 382 5 698 12 684 31 745B.III. Non-current financial assets 2 839 100 2 739 2 891B.III.1. Equity investments - controlled or controlling entity 2 739 2 739 2 891B.III.5. Other non-current securities and investments 100 100C. Current assets 6 559 179 468 128 6 091 051 7 553 480C.I. Inventories 1 860 735 208 846 1 651 889 2 002 781C.I.1. Material 402 808 165 611 237 197 251 266C.I.2. Work in progress and semifinished goods 1 336 143 43 235 1 292 908 1 646 626C.I.5. Prepayments for inventories 121 784 121 784 104 889C.II. Receivables 1 829 152 259 282 1 569 870 3 026 108C.II.1. Long-term receivables 119 038 22 111 96 927 97 521C.II.1.1. Trade receivables 16 786 16 786C.II.1.5. Receivables - other 102 252 22 111 80 141 97 521C.II.1.5.4. Sundry receivables 102 252 22 111 80 141 97 521C.II.2. Short-term receivables 1 710 114 237 171 1 472 943 2 928 587C.II.2.1. Trade receivables 1 111 814 228 974 882 840 640 306C.II.2.2. Receivables - controlled or controlling entity 260 000 260 000 1 617 260C.II.2.4. Receivables - other 338 300 8 197 330 103 671 021C.II.2.4.3. State - tax receivables 77 403 77 403 80 272C.II.2.4.4. Short-term prepayments made 1 825 1 825 3 026C.II.2.4.5. Estimated receivables 110 112 110 112 524 172C.II.2.4.6. Sundry receivables 148 960 8 197 140 763 63 551C.III. Current financial assets 1 541 950 1 541 950 586 893C.III.2. Other current financial assets 1 541 950 1 541 950 586 893C.IV. Cash 1 327 342 1 327 342 1 937 698C.IV.1. Cash on hand 52 52 57C.IV.2. Cash at bank 1 327 290 1 327 290 1 937 641D. Other assets 4 510 4 510 5 407D.1. Deferred expenses 4 510 4 510 5 407

31.12.2020

31.12.2020 31.12.2019

TOTAL LIABILITIES & EQUITY 7 667 700 9 322 252A. Equity 5 708 558 5 606 966A.I. Share capital 3 298 345 3 298 345A.I.1. Share capital 3 298 345 3 298 345A.II. Share premium and capital funds 19 437 27 964A.II.2. Capital funds 19 437 27 964A.II.2.2. Gains or losses from the revaluation of assets and liabilities (+/-) 19 437 27 964A.III. Funds from profit 329 834 329 834A.III.1. Other reserve funds 329 834 329 834A.IV. Retained earnings (+/-) 1 650 823 1 280 566A.IV.1. Accumulated profits or losses brought forward (+/-) 1 579 770 1 280 566A.IV.2. Other profit or loss from prior years (+/-) 71 053A.V. Profit or loss for the current period (+/-) 410 119 670 257B.+C. Liabilities 1 959 142 3 715 286B. Reserves 431 556 472 699B.II. Income tax reserve 5 677B.IV. Other reserves 425 879 472 699C. Payables 1 527 586 3 242 587C.I. Long-term payables 136 694 122 600C.I.4. Trade payables 10 489 10 234C.I.8. Deferred tax liability 104 321 107 418C.I.9. Payables - other 21 884 4 948C.I.9.3. Sundry payables 21 884 4 948C.II. Short-term payables 1 390 892 3 119 987C.II.3. Short-term prepayments received 818 332 1 765 339C.II.4. Trade payables 197 107 99 329C.II.8. Other payables 375 453 1 255 319C.II.8.1. Payables to partners 890 000C.II.8.3. Payables to employees 39 209 45 223C.II.8.4. Social security and health insurance payables 21 653 24 164C.II.8.5. State - tax payables and subsidies 40 322 34 520C.II.8.6. Estimated payables 234 726 234 350C.II.8.7. Sundry payables 39 543 27 062

PROFIT AND LOSS ACCOUNT Doosan Škoda Power s.r.o.structured by the nature of expense method Corporate ID 491 93 864

Year ended Tylova 1/5731.12.2020 301 00 Plzeň(in CZK thousand)

Year ended Year ended31.12.2020 31.12.2019

I. Sales of products and services 4 093 429 5 979 508A. Purchased consumables and services 2 333 126 3 278 173A.2. Consumed material and energy 1 453 186 1 931 257A.3. Services 879 940 1 346 916B. Change in internally produced inventory (+/-) 461 652 1 392 643C. Own work capitalised (-) -14 565 -232 074D. Staff costs 908 673 1 031 577D.1. Payroll costs 663 965 751 508D.2. Social security and health insurance costs and other charges 244 708 280 069D.2.1. Social security and health insurance costs 216 841 248 032D.2.2. Other charges 27 867 32 037E. Adjustments to values in operating activities 136 830 439 415E.1. Adjustments to values of intangible and tangible fixed assets 202 619 220 354E.1.1. Adjustments to values of intangible and tangible fixed assets - permanent 202 619 220 071E.1.2. Adjustments to values of intangible and tangible fixed assets - temporary 283E.2. Adjustments to values of inventories -89 390 212 104E.3. Adjustments to values of receivables 23 601 6 957III. Other operating income 52 408 380 702III.1. Sales of fixed assets 22 431III.2. Sales of material 358 1 308III.3. Sundry operating income 52 028 378 963F. Other operating expenses 15 942 -95 026F.1. Net book value of sold fixed assets 21 475F.2. Material sold 6 044 10 805F.3. Taxes and charges 12 191 1 223F.4. Reserves relating to operating activities and complex deferred expenses -46 820 -230 385F.5. Sundry operating expenses 44 506 122 856* Operating profit or loss (+/-) 304 179 545 502VI. Interest income and similar income 136 888 194 521VI.1. Interest income and similar income - controlled or controlling entity 42 014 81 321VI.2. Other interest income and similar income 94 874 113 200VII. Other financial income 935 645 434 835K. Other financial expenses 861 975 366 023* Financial profit or loss (+/-) 210 558 263 333** Profit or loss before tax (+/-) 514 737 808 835L. Income tax 104 618 138 578L.1. Due income tax 105 714 122 240L.2. Deferred income tax (+/-) -1 096 16 338** Profit or loss net of tax (+/-) 410 119 670 257*** Profit or loss for the current period (+/-) 410 119 670 257* Net turnover for the current period 5 218 370 6 989 566

STATEMENT OF Doosan Škoda Power s.r.o.

CHANGES IN EQUITY Corporate ID 491 93 864


Share capital Capital fundsFunds from profit,

reserve fund

Accumulated profits or losses brought

forward

Other profit or loss from prior years

Profit share prepayments

declared

Correction of errors from prior years

Profit or loss for the current period

Balance at 31 December 2018 3 298 345 38 914 329 834 4 472 700 251 011 8 390 804Distribution of profit or loss 251 011 -251 011Profit shares paid -3 443 145 -3 443 145Change in gains or losses from revaluation -10 950 -10 950Profit or loss for the current period 599 204 71 053 670 257Balance at 31 December 2019 3 298 345 27 964 329 834 1 280 566 599 204 71 053 5 606 966Distribution of profit or loss 599 204 -599 204Profit shares paid -300 000 -300 000Change in gains or losses from revaluation -8 527 -8 527Profit or loss for the current period 410 119 410 119Balance at 31 December 2020 3 298 345 19 437 329 834 1 579 770 410 119 71 053 5 708 558

CASH FLOW Doosan Škoda Power s.r.o.

STATEMENT Corporate ID 491 93 864


Year ended Year ended31.12.2020 31.12.2019

P. Opening balance of cash and cash equivalents 1 937 698 3 930 305Opening balance of cash and cash equivalents after transformationCash flows from ordinary activities (operating activities)

Z. Profit or loss before tax 514 737 808 835A.1. Adjustments for non-cash transactions -83 819 -37 938A.1.1. Depreciation of fixed assets 202 619 220 071A.1.2. Change in provisions and reserves -112 609 -11 041A.1.3. Profit/(loss) on the sale of fixed assets -1 44A.1.5. Interest expense and interest income -136 888 -194 521A.1.6. Adjustments for other non-cash transactions -36 940 -52 491A.* Net operating cash flow before changes in working capital 430 918 770 897A.2. Change in working capital -1 272 423 -643 453A.2.1. Change in operating receivables and other assets 132 846 -291 824A.2.2. Change in operating payables and other liabilities -890 494 -1 124 388A.2.3. Change in inventories 440 282 1 284 542A.2.4. Change in current financial assets -955 057 -511 783A.** Net cash flow from operations before tax -841 505 127 444A.4. Interest received 148 274 248 974A.5. Income tax paid from ordinary operations -78 834 -121 219A.*** Net operating cash flows -772 065 255 199

Cash flows from investing activitiesB.1. Fixed assets expenditures -5 573 -54 832B.2. Proceeds from fixed assets sold 22 431B.3. Loans and borrowings to related parties 1 357 260 359 740B.*** Net investment cash flows 1 351 709 305 339

Cash flow from financial activitiesC.2. Impact of changes in equity -1 190 000 -2 553 145C.2.6. Profit shares/ dividends paid -1 190 000 -2 553 145C.*** Net financial cash flows -1 190 000 -2 553 145F. Net increase or decrease in cash and cash equivalents -610 356 -1 992 607R. Closing balance of cash and cash equivalents 1 327 342 1 937 698

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Name of the Company: Doosan Škoda Power s.r.o.

Registered Office: Tylova 1/57, Jižní Předměstí, 301 00 Plzeň

Legal Form: Limited Liability Company

Corporate ID: 491 93 864

Doosan Škoda Power s.r.o. Notes to the Financial Statements (unconsolidated)

Year Ended 31 December 2020 (CZK thousand)

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TABLE OF CONTENTS

1. General Information and Principal Activities .................................................................................. 32. Principal Accounting Policies Used by the Company ...................................................................... 43. Change in Accounting Principles and Policies ................................................................................. 94. Fixed Assets ................................................................................................................................... 105. Leased Assets ................................................................................................................................ 126. Tangible and Intangible Fixed Assets not Reported in the Balance Sheet .................................... 127. Non-current Financial Assets......................................................................................................... 128. Inventory ....................................................................................................................................... 139. Long-Term and Short-Term Receivables and Payables ................................................................. 1410. Short-Term Prepayments Received ............................................................................................... 1511. Derivative Financial Instruments ................................................................................................... 1512. Provisions ...................................................................................................................................... 1613. Statement of Changes in Equity .................................................................................................... 1714. Reserves ........................................................................................................................................ 1815. Bank Loans ..................................................................................................................................... 1816. Information on Sales ..................................................................................................................... 1817. Related Party Information ............................................................................................................. 1918. Employees and Managers ............................................................................................................. 2019. Social Security and Health Insurance Payables ............................................................................. 2020. Information on Fees to Statutory Auditors ................................................................................... 2021. State – Tax Receivables, Payables and Subsidies .......................................................................... 2022. Income Taxation ............................................................................................................................ 2123. Research and Development .......................................................................................................... 2124. Off Balance Sheet Payables and Contingent Assets ...................................................................... 2225. Post Balance Sheet Events............................................................................................................. 23



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1. General Information and Principal Activities

Formation and Description of the Company

Doosan Škoda Power s.r.o. (hereinafter the “Company”) was formed by the Deed of Associationas a limited liability company on 27 April 1993 and was incorporated following its registration inthe Register of Companies of the Court in Plzeň on 1 July 1993.

On 7 December 2009, Doosan Heavy Industries Czech a.s. became the Company’s owner. It wassubsequently renamed to Doosan Power Systems Czech Investment a.s. On 5 December 2012,Doosan Power Systems S.A. (Grand Duchy of Luxembourg) became a new owner.

The Company’s principal activities during the year ended 31 December 2020 included theproduction of turbines, supplies of power generation plants and provision of services in the energy sector.

Owners of the Company

As of 31 December 2020, the owner of the Company is: Ownership percentage Doosan Power Systems S.A. (Grand Duchy of Luxembourg) 100%

Registered office

Doosan Škoda Power s.r.o.Tylova 1/57301 00 PlzeňCzech Republic

Corporate ID

49193864

Statutory executives as of 31 December 2020

Sukjoo Kang Hongook Park Seungwoo Sohn Youngki Lim

Doosan Škoda Power s.r.o. Notes to the Financial Statements (unconsolidated) Year Ended 31 December 2020 (CZK thousand)

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Changes in the Register of Companies

The following changes in the Register of Companies were made during the year ended 31 December 2020:

− On 1 January, the office of Mr Chulwoong Park as statutory executive expired. On 1 January, Mr Youngki Lim became new statutory executive.

− On 1 March, the office of Mr Jinwon Mok as statutory executive expired. On 1 March, Mr Hongook Park became new statutory executive.

− On 20 March, the office of Mr Jiří Šmondrk as statutory executive expired.

− On 18 September, the office of Mr Byougman Kim as statutory executive expired. On 18 September, Mr Sungwoo Sohn became new statutory executive. Subsequently, the reduction in the number of statutory executives to four was recorded and the manner of acting was recorded in such a way that at least two statutory executives act on behalf of the Company.

Organisational Structure

The statutory body of the Company includes four statutory executives. One statutory executive acts as the Company’s CEO, the other acts as the Company’s CFO. The COO and the heads of Finance, Corporate Strategy, Human Resources and the office of the CEO report directly to the CEO. The heads of Sales, Realisation, Technical Department, Servicing, Procurement and Application Research and Development report to the COO.

2. Principal Accounting Policies Used by the Company

The Company’s accounting books and records are maintained and the financial statements were prepared in accordance with the Accounting Act 563/1991 Coll., as amended; the Regulation 500/2002 Coll. which provides implementation guidance on certain provisions of the Accounting Act for reporting entities that are businesses maintaining double-entry accounting records, as amended; and Czech Accounting Standards for Businesses, as amended.

The accounting records are maintained in compliance with general accounting principles, specifically the historical cost valuation basis (unless stated otherwise), the accruals principle, the prudence concept and the going concern assumption.

The financial statements were prepared as of the balance sheet date of 31 December 2020 for the 2020 calendar year.

These financial statements are presented in thousands of Czech crowns (‘CZK thousand’) unless stated otherwise.



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(a) Tangible and Intangible Fixed Assets

Tangible and intangible fixed assets are valued at cost. Intangible and tangible assets with useful lives exceeding one year and the cost not exceeding CZK 5 thousand are not reported in the balance sheet and are charged through expenses at the date of acquisition.

In addition, the acquisition of cutting equipment with the acquisition cost of less than CZK 10 thousand, preparations with the acquisition cost of less than CZK 20 thousand and cutting instruments with the acquisition cost of less than CZK 40 thousand are not reported on the face of the balance sheet. The acquisition of these assets is charged through expenses in the year of acquisition.

The valuation of internally produced fixed assets includes direct material, direct wages and overhead costs directly attributable to the production until their capitalisation.

The following table shows the depreciation methods and periods by group of assets:

Assets Method Depreciation period Buildings Straight-line 20 – 50 years Machinery and equipment Straight-line 3 – 16 years Vehicles Straight-line 4 years Moulds and models Straight-line 3 years Preparations and cutting instruments Straight-line 4 – 6 years Valuable rights Straight-line 10 years Patents and other intangible assets Straight-line 4 - 10 years Software Straight-line 3 - 4 years Hardware Straight-line 4 years

Technical improvements on leasehold tangible fixed assets are depreciated on a straight line basis over the shorter of the lease term or the estimated useful life.

(b) Non-Current Financial Assets

Upon acquisition securities and equity investments are carried at cost. The cost of securities or equity investments includes the direct costs of acquisition, such as fees and commissions paid to brokers, advisors and stock exchanges.

At the date of acquisition of the securities and equity investments, the Company categorises these non-current financial assets based on their underlying characteristics as equity investments in subsidiaries and associates or debt securities held to maturity, or securities and equity investments available for sale.

At the balance sheet date, the Company records:

a. Equity investments at cost less provisions against equity investments; provisions arerecognised in respect of temporary impairment of these equity investments;

b. Debt securities held to maturity at cost; and


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c. Securities and equity investments available for sale at fair value if determinable.

Securities and equity investments denominated in a foreign currency are translated using the Czech National Bank’s exchange rate ruling as of the balance sheet date and the resulting foreign exchange difference is treated as part of the fair value measurement or the measurement determined using equity accounting. If the security or equity investment is not measured at fair value, the foreign exchange difference is recognised as part of the gains or losses from revaluation of assets and liabilities except for debt securities.

The proceeds from these assets are included in income from non-current financial assets.

(c) Current Financial Assets

Current financial assets include balances on bank accounts, current securities and cash equivalents. Balances denominated in foreign currencies are translated using the Czech National Bank’s exchange rate prevailing as of 31 December of the relevant year.

(d) Inventory

Purchased inventory is valued at acquisition costs. The acquisition cost includes the purchase cost and indirect acquisition costs such as customs fees, freight costs and storage fees during transportation, commissions and insurance charges.

Internally developed inventory is valued at the cost of producing the inventory, which primarily consists of the direct costs of production, and/or the portion of indirect costs relating to production.

Inventory is issued out of stock using the weighted arithmetic average method.

Work in progress is valued at own costs which include the price of material, work and the proportionate part of production overhead costs per the stage of completion.

(e) Recognition of Provisions and Reserves

Receivables

The Company determines provisions against doubtful and bad amounts pursuant to its own analysis of the payment discipline of its customers and aging of receivables.

Inventory

Provisions are recognised when the carrying amount stated in the books is temporarily higher than the realisable value of the relevant inventory.



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Reserves

Reserves for warranty repairs, reserves for risks and other reserves are recognised based on the individual assessment of the possibility of future costs being incurred which is performed by managers of projects and administrators of individual assets of the Company.

The Company recognises an income tax reserve since the moment of the financial statements preparation precedes the moment of the tax liability assessment. The Company releases the reserve in the following reporting period and recognises the identified tax liability. The reserve for income tax is reported in the financial statements only in the amount exceeding the income tax prepayments made. The reserve for asset repairs is recognised on the basis of the management’s decision reflecting the budget costs of selected planned repairs of assets.

(f) Foreign Currency Translation

Transactions denominated in foreign currencies during the year are translated using the Czech National Bank’s exchange rate prevailing on the date of the transaction. During the year, only realised foreign exchange rate gains and losses are accounted for.

Assets and liabilities denominated in foreign currencies as of the balance sheet date are translated using the official exchange rate of the Czech National Bank. Unrealised foreign exchange rate gains and losses are reflected in the profit and loss account.

In accordance with Accounting Standards for Business Entities/Financial Institutions, the Company reports foreign exchange rate gains or losses that relate to prepayments for projects and fulfil the hedging derivate definition as gains or losses from revaluation on the face of the balance sheet. Refer to Note 2(g).

(g) Derivative Financial Instruments

The Company designates derivative financial instruments as either trading or hedging. The Company’s criteria for a derivative instrument to be accounted for as a hedge include the application of hedge accounting and fulfilment of the following criteria:

a. At the inception of the hedge, a decision was made by the CEO regarding the hedged items and hedging instruments, hedged risks and the method used to calculate and documentthe hedge effectiveness;

b. The hedge is highly effective (that is, within a range of 80 percent to 125 percent); and

c. The hedge effectiveness can be measured reliably and is assessed on an ongoing basis.



8

If the derivative is used to hedge the risk of the change in fair value of reported assets or liabilities, the hedged item is also measured at fair value. Gains or losses arising from revaluation of the hedged item and the hedging derivative are included in income or expenses, respectively.

If the derivative is used to hedge the risk of changes in cash flows arising from assets, liabilities or legally enforceable contracts or forecasted transactions, the change in the fair value of the hedging derivative corresponding to the effective portion of the hedging is reported as part of equity in “Gains or losses from revaluation of assets and liabilities” adequately to the proportion of unbilled future cash flows. The ineffective part of hedging and the change in the fair value of the hedging derivative corresponding to the proportion of unbilled future cash flows is included in income or expenses. The proportion of the billed and unbilled parts is determined for each project individually.

If derivative instruments do not meet the criteria for hedge accounting referred to above, they are treated as trading derivatives.

The Company also applies hedge accounting in respect of prepayments received and provided for projects.

Valuation

Upon acquisition, financial derivatives are recognised at cost and subsequently remeasured to fair value as of the balance sheet date. The Company uses financial derivatives only for the hedging of future cash flows. Changes in the fair value of financial derivatives for the hedging of cash flows are recognised proportionately in equity in the balance sheet (not yet billed part) and in the profit and loss account (billed part). The fair value of financial derivatives is determined based on the valuation of the derivative by a financial institution as of the financial statements date.

(h) Research and Development

Research and development costs are recognised in the profit and loss account in the period in which they are incurred. In respect of prototypes, the research and development costs are recognised directly in work in progress of the relevant project.

(i) Revenue Recognition

Revenues which mostly include the deliveries of turbines and power facilities and services relating to their servicing and repairs are recognised when the invoice is issued pursuant to the supplies provided to the customer, in accordance with the conditions set out in the relevant contract for work/purchase contract as appropriate.

(j) Leased Assets

The Company uses only operating leases. The costs of operating leases are included in expenses on a straight line basis over the lease period, typically based on delivered tax documents.


9

(k) Income Taxation

The tax payable includes estimated tax calculated from the tax base using the tax rate applicable in the reporting period and all additional assessments and refunds for prior periods.

Deferred tax arises from all temporary differences between the accounting and tax value of assets and liabilities using the anticipated tax rate applicable for the period in which the deferred tax liability will be settled or the asset recovered.

The deferred tax asset is recognised only to the extent to which it is probable that it will be recovered in the following reporting periods.

(l) Payables, Loans and Financial Borrowings

The Company classifies the long-term portion of payables, bank loans and financial borrowings, the maturity of which is shorter than one year with respect to the financial statements date, as short-term.

Payables are stated at nominal value as of the acquisition date.

(m) Consolidation

The financial statements of the Company and all consolidated entities will be included in the consolidated financial statements of Doosan Power Systems S.A based in Luxembourg, 6, rue Eugène Ruppert, Grand Duchy of Luxembourg. Its consolidated financial statements will be published in accordance with the relevant regulations.

(n) Use of Estimates

The presentation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Management of the Company has made these estimates and assumptions on the basis of all the relevant information available to it. Nevertheless, pursuant to the nature of estimates, the actual results and outcomes in the future may differ from these estimates.

3. Change in Accounting Principles and Policies

During the year ended 31 December 2020, the Company changed no accounting principles or policies.



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4. Fixed Assets

(a) Intangible Fixed Assets

Start-up costs

Valuable rights

Software Intangible fixed assets

under construction

Other intangible

fixed assets

Prepayments Total

Cost Balance at 1 Jan 2020

0 960 767 534 352 2 675 22 000 0 1 519

794 Additions 0 0 1 273 866 0 0 2 139 Disposals 0 0 0 -720 0 0 -720 Transfers 0 0 656 -1 955 0 0 -1 299 Balance at 31 Dec 2020

0 960 767 536 281 866 22 000 0 1 519

914 Accumulated amortisation Balance at 1 Jan 2020

0 960 767 469 965 0 22 000 0 1 452

732 Accumulated amortisation 0 0 38 827 0 0 0 38 827 Provisions 0 0 0 0 0 0 0 Balance at 31 Dec 2020

0 960 767 508 792 0 22 000 0 1 491

559 Net book value at 1 Jan 2020 0 0 64 387 2 675 0 0 67 062 Net book value at 31 Dec 2020 0 0 27 489 866 0 0 28 355

(b) Tangible Fixed Assets

Buildings Machinery and equipment

Other fixed

assets

Tangible fixed assets under construction

Land Prepayments Total

Cost Balance at 1 Jan 2020 1 233 800 2 730 966 29 37 443 227 705 0 4 229 943 Additions 110 14 049 0 5 552 0 928 20 639 Disposals -37 -38 477 0 -8 861 0 0 -47 375 Transfers 221 15 424 0 -15 752 0 0 -107 Balance at 31 Dec 2020 1 234 095 2 721 962 29 18 382 227 705 928 4 203 101 Accumulated depreciation and provisions Balance at 1 Jan 2020 399 204 2 131 629 0 5 698 0 0 2 536 531 Accumulated depreciation 39 464 86 061 0 0 0 0 125 525 Provisions 0 0 0 0 0 0 0 Balance at 31 Dec 2020 438 668 2 217 690 0 5 698 0 0 2 662 056 Net book value at 1 Jan 2020 834 596 599 337 29 31 745 227 705 0 1 693 412 Net book value at 31 Dec 2020 795 427 504 272 29 12 684 227 705 928 1 541 045

Intangible Fixed Assets

Intangible fixed assets primarily include valuable rights. These are rights relating to the ownership of the Škoda trademark. These rights were invested in the Company by the original owner in 2008.



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Principal technical improvements in 2020 were made on the CATIA software with the aggregate acquisition cost of CZK 506 thousand, the COMOS Engineering software with the aggregate acquisition cost of CZK 415 thousand and the BI ORACLE software with the aggregate acquisition cost of CZK 290 thousand.

Tangible Fixed Assets

Principal additions to tangible fixed assets in 2020 were as follows:

A probe for the measurement of the size of water droplets with the aggregate value of CZK 2,656 thousand, Omniscan ultrasonic phased array flaw detectors with the aggregate value of CZK 3,756 thousand, turning machine for T10W with the aggregate amount of CZK 859 thousand, IPLEX NX industrial videoscope with the aggregate value of CZK 782 thousand, models and moulds with the aggregate value of CZK 4,729 thousand, computer technology with the aggregate value of CZK 2,416 thousand, tools with the aggregate value of CZK 2,101 thousand.

Major technical improvements in 2020 were made on the BB8100 boring machine with the aggregate value of CZK 5,640 thousand, EFCO VSA-2 high-speed grinding machine with the aggregate value of CZK 896 thousand, Telemetric system (for Campbell, TG10) with the aggregate value of CZK 535 thousand, and portal cranes with the aggregate value of CZK 718 thousand.

The Company uses machinery and equipment recorded at the zero net book value that were acquired in prior years under finance leases. As of 31 December 2020, their total acquisition cost is CZK 222,839 thousand (2019: CZK 222,839 thousand). The principal item is the portal machining centre with the acquisition cost of CZK 192,192 thousand.

Major disposals of fixed assets in 2020 include the liquidation of tools and preparations with the acquisition cost of CZK 20,108 thousand (net book value: CZK 151 thousand), liquidation of models with the acquisition cost of CZK 7,666 thousand (net book value: CZK 0 thousand) liquidation of individual tangible assets with the acquisition cost of CZK 577 thousand (net book value: CZK 456 thousand), liquidation of computer technology with the acquisition cost of CZK 1,730 thousand (net book value: CZK 28 thousand) and liquidation of furniture and fixtures with the acquisition cost of CZK 396 thousand (net book value: CZK 68 thousand).

The total amount of the provision against fixed assets for 2020 was recognised in the amount of CZK 5,698 thousand (2019: CZK 5,698 thousand).



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5. Leased Assets

(a) Finance Lease

As of 31 December 2020 and 2019, the Company recorded no assets under finance leases.

(b) Operating Lease

In the year ended 31 December 2020, the Company leased primarily office premises. The totalamount of the lease of buildings and land was CZK 6,219 thousand (2019: CZK 4,538 thousand).

Pursuant to the contract for the lease of vehicles, the Company leased cars from severalcompanies and paid CZK 10,956 thousand for these services in the year ended 31 December 2020(2019: CZK 11,397 thousand).

6. Tangible and Intangible Fixed Assets not Reported in the Balance Sheet

In line with the accounting policies disclosed in Note 2(a), the Company reported tangible andintangible fixed assets with the acquisition cost of less than CZK 5 thousand (cutting tools underCZK 10 thousand, preparations under CZK 20 thousand and cutting instruments underCZK 40 thousand) through expenses in the year of its acquisition. The total accumulatedacquisition cost of these tangible and intangible fixed assets which are still in use is as follows:

Balance at 31 Dec 2020 31 Dec 2019

Tangible fixed assets 291 788 286 030 Intangible fixed assets (software) 1 285 1 287 Total 293 073 287 317

7. Non-current Financial Assets

Equity investments as of 31 December 2020

Ownership percentage

Number of shares

Nominal value of a

share in CZK

Total profit (+)

loss (-)

Equity Cost Net book value

Share in equity

(equity accounting)

Guangzhou Škoda Jinma Ltd. (China) 5 % 0 0 * * 100 0 * ŠKODA POWER Private Limited (Indie) ** 100 % 0 0 5 057 40 569 2 739 2 739 40 569 * The data were not available as of the balance sheet date.** The figures are based on unaudited results under IFRS.



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Equity investments as of 31 December 2019

Ownership percentage

Number of

shares

Nominal value of a share in

CZK

Total profit (+)

loss (-)

Equity Cost Net book value

Share in equity

(equity accounting)

Guangzhou Škoda Jinma Ltd. (Čína) 5 % 0 0 * * 100 0 * ŠKODA POWER Private Limited (Indie) ** 100 % 0 0 16 961 38 443 2 891 2 891 38 443 * The data were not available as of on 31 December 2019.** The figures are based on unaudited results under IFRS.

In the years ended 31 December 2020 and 2019, the Company recorded no dividend income from non-current financial assets.

As of 31 December 2020, the Company holds the majority of voting rights in ŠKODA POWER Private Limited, India.

The registered office of the subsidiary:

ŠKODA POWER Private Limited

Siddhartha Chamber, Hauz Khas

New Delhi 110016

India

8. Inventory

(a) A provision was recognised against slow-moving inventory in the amount of 50% of its value,if the inventory has been idle for a period of one year. The provision against selected items was recognised even in a higher amount, based on the decision of the inventory manager. As of 31 December 2020, the total provision amounts to CZK 165,611 thousand (2019: CZK 144,621 thousand).

(b) The provision against work in progress of CZK 41,879 thousand was recognised for loss-making projects in progress as of 31 December 2020 (2019: CZK 152,637 thousand).

(c) The provision against internally produced semi-finished products as of 31 December 2020 is recognised for idle inventory in the amount of CZK 1,356 thousand (2019: CZK 1,722 thousand).

(d) No provision against finished products was recognised as of 31 December 2020 (2019: CZK 0 thousand).

(e) No provision against prepayments made was recognised as of 31 December 2020 (2019: CZK 0 thousand).


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(f) As of 31 December 2020, the principal balances of the work in progress were on the following projects: Mochovce block 1 (CZK 242 million), Wolfsburg (CZK 160 million), Hofor BIO4 (CZK 137 million), Kwinana (CZK 97 million), Zeran (CZK 76 million), Ness (CZK 57 million), Newhurst (CZK 56 million), Zagreb (CZK 54 million), Talara (CZK 44 million), TeesRep (CZK 43 million), Maxau (CZK 36 million), Rookery (CZK 32 million), Mochovce (CZK 32 million) and MAV (CZK 28 million).

(g) As of 31 December 2019, the principal balances of the work in progress were on the following projects: Hofor BIO4 (CZK 617 million), Talara (CZK 198 million), Lansing (CZK 163 million), Sodegaura (CZK 110 million), Mishor Rotem (CZK 90 million), Zeran (CZK 79 million), Maxau (CZK 74 million), ASV6 BIO (CZK 71 million), Grati 2 (CZK 70 million), Muara Tawar (CZK 70 million), Rookery (CZK 52 million), Mochovce (CZK 45 million), TeesRep (CZK 41 million), Kwinana (CZK 36 million), Opatovice (CZK 34 million), Zagreb (CZK 34 million) and Počerady (CZK 33 million).

9. Long-Term and Short-Term Receivables and Payables

(a) Short-term and long-term receivables

Short-term trade receivables amount to CZK 1,710,114 thousand (2019: CZK 2,928,587): CZK 1,111,814 thousand (2019: CZK 845,679 thousand) are trade receivables, of which CZK 764,339 thousand (2019: CZK 445,101 thousand) are past their due dates. The provision against doubtful trade receivables as of 31 December 2020 amounted to CZK 228,974 thousand (2019: CZK 205,373 thousand).

Short-term receivables – controlled or controlling entity primarily include loans of CZK 260,000 thousand granted to related parties (2019: CZK 1,617,260 thousand). A loan of CZK 260,000 thousand to Doosan Power Systems S.A. will mature in one year and bears interest at 12M PRIBOR + 4.2% p.a.

Estimated receivables of CZK 110,112 thousand (2019: CZK 524,172 thousand) primarily related to revenues from cross-border projects in 2020 that were not billed as of the balance sheet date.

As of 31 December 2020, the Company records long-term receivables of CZK 119,038 thousand (2019: CZK 121,656 thousand). The provision against the long-term receivables amounts to CZK 22,111 thousand as of 31 December 2020.

Other short-term and long-term receivables primarily include the receivable from Abener Energía, S.A. for the billed penalty (divided into the short-term and long-term portion under the agreed payment schedule) and a real value of derivative financial instruments – see Note 11.

(b) Short-term and long-term payables

Short-term payables amount to CZK 1,390,892 thousand (2019: CZK 3,119,987 thousand): CZK 197,107 thousand (2019: CZK 99,329 thousand) are trade payables, of which CZK 88,927 thousand (2019: CZK 59,717 thousand) are past their due dates.



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Long-term payables include retention fees from trade transactions of CZK 10,489 thousand (2019: CZK 10,234 thousand) and a deferred tax liability. The Company recorded no long-term payables with maturity exceeding 5 years in the years ended 31 December 2020 and 2019.

Estimated payables of CZK 234,726 thousand (2019: CZK 234,350 thousand) primarily include purchases of material and services relating to implemented projects in the scope of received supplies for which the Company had no relevant tax documents as of the accounting close date.

Other short-term and long-term payables predominantly include the fair value of financial derivative instruments – see Note 11.

10. Short-Term Prepayments Received

Short-term prepayments received amount to CZK 818,332 thousand (2019:CZK 1,765,339 thousand) and include prepayments relating to projects.

11. Derivative Financial Instruments

As of 31 December 2020, the Company had open long-term and short-term hedging derivatives.Derivatives were revalued in accordance with the accounting policies disclosed in Note 2 (g).

Gains or losses from revaluation of assets and liabilities as of 31 December 2020 include the lossfrom the revaluation of hedging derivatives adequately to the proportion of the unbilled part offuture cash flows (including the revaluation of prepayments complying with the definition ofhedging derivatives and settlement of hedging derivatives that were extended – swaps, as thehedged cash flow was delayed) of CZK 23,996 thousand (2019: a loss of CZK34,524 thousand).

Fair value of open trading derivatives

(a) Impact on equity

Fair value of derivatives Future hedging of cash flows 31 Dec 2020 31 Dec 2019

Receivables 26 521 13 530

Payables 9 556

17 753

Receivables Payables within one year 18 784 4 103 within 2 – 5 years 603 4 948

40 051 27 309 19 387 9 051 Impact on equity 12 742 10 336

Impact on revenue/expenses (adjustment based on the project invoicing percentage)

Fair value of derivatives Future hedging of cash flows 31 Dec 2020 31 Dec 2019

Income 19 509

282

Expense 3 535 7 954

Income Expense within one year 13 879 1 095 within 2 – 5 years 361 33

19 791 11 489 14 240 1 128 Impact on revenue/expenses 8 302 13 112


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(b) Fair value of open derivatives held for trading

Fair value of open derivatives Future hedging of cash flows 31 Dec 2020 31 Dec 2019 within one year Income

54 797 3 822

Expense 3 018

22

Income Expense within 2 – 5 years 27 647

0 20 400

0 58 619 3 040 27 647 20 400 Impact on revenue/expenses 55 579 0 7 247

12. Provisions

2020 Provision against fixed assets

Provision against inventory

Provision against receivables

Total

Balance at 1 January 2020 5 798 298 980 234 937 539 715

Recognition 0 27 253 59 003 86 256 Use 0 116 061 15 512 131 573 Release 0 1 326 19 146 20 472 Balance at 31 Dec 2020 5 798 208 846 259 282 473 926

2019 Provision against

fixed assets Provision against

inventory Provision against

receivables Total

Balance at 1 January 2019 5 515 86 894 227 962 320 371

Recognition 283 242 101 96 834 339 218 Use 0 13 822 54 680 68 502 Release 0 16 193 35 179 51 372 Balance at 31 Dec 2019 5 798 298 980 234 937 539 715



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13. Statement of Changes in Equity

(a) Changes in Equity

2020 Share capital Retained earnings

Profit for the period

Reserve fund

Gains or losses from revaluation of

assets and liabilities

Total

Balance at 1 Jan 2020 3 298 345 1 280 566 599 204 329 834 27 964 5 535

913 Profit for 2020 0 0 410 119 0 0 410 119 Retained earnings 0 599 204 -599 204 0 0 0 Correction of errors from prior years 71 053 71 053 Dividends 0 -300 000 0 0 0 -300 000 Change in gains or losses from revaluation 0 0 0 0 -8 527 -8 527 Balance at 31 Dec 2020

3 298 345 1 650 823 410 119 329 834 19 437 5 708

558

2019 Share capital

Retained earnings

Profit for the period

Reserve fund

Gains or losses from revaluation

of assets and liabilities

Total

Balance at 1 Jan 2019 3 298 345 4 472 700 251 011 329 834 38 914 8 390

804 Profit for 2019 0 0 599 204 0 0 599 204 Retained earnings 0 0 -251 011 0 0 -251 011 Dividends 0 -3 192 134 0 0 0 -3 192 134 Change in gains or losses from revaluation 0 0 0 0 -10 950 -10 950 Balance at 31 Dec 2019

3 298 345 1 280 566 599 204 329 834 27 964 5 535

913

The share capital of the Company amounts to CZK 3,298,345 thousand (2019: CZK 3,298,345 thousand) and is paid in full.

Correction of errors from prior years arises from the late invoicing of a delivery abroad which took place in 2019. This delivery was covered by prepayments received. The error was identified after closing the books for 2019. This impact has been duly reflected in the tax base in the form of an item increasing the tax base.

(b) Planned Allocation of the 2020 Profit

As of the balance sheet date, no decision has yet been made with regard to the allocation of the profit for 2020.



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14. Reserves2020 Reserve for

warranty repairs Reserve for risks

Other reserves (for legal disputes, outstanding

vacation days, etc.)

Reserve for projects in

progress and loss projects

Total

Balance at 1 Jan 2020 317 368

9 703 75 170

70 458 472 699

Recognition 46 267 246 59 393 56 400 162 306 Use 20 402 680 59 232 7 672 87 986 Release 121 125 15 0 0 121 140 Balance at 31 Dec 2020 222 108 9 254 75 331 119 186 425 879

2019 Reserve for warranty repairs

Reserve for risks

Other reserves (for legal disputes, outstanding

vacation days, etc.)

Reserve for projects in

progress and loss projects

Total

Balance at 1 Jan 2019 432 942 42 051 90 982 137 109 703 084 Recognition 53 202 7 463 56 194 0 116 859 Use 27 701 761 66 648 66 651 161 761 Release 141 075 39 050 5 358 0 185 483 Balance at 31 Dec 2019 317 368 9 703 75 170 70 458 472 699

The reserves for warranty repairs are recognised pursuant to long-term historical information regarding the costs of warranty repairs. The reserves for risks are recognised based on an individual assessment of the risk relating to a specific project by the project manager or another responsible person. The reserves for risks should primarily cover the sanctions that may be imposed on the Company due to non-compliance with the time, factual or quality parameters of the project, set by the business contract with a customer. The reserves for projects in progress are recognised when the Company determines during the project implementation that the expense-to-revenue ratio of the subsequent, not yet billed project phases will increase.

15. Bank Loans

As of 31 December 2020 and 2019, the Company used no bank loans.

16. Information on Sales

In the past, the Company reduced its range of products and it currently produces turbines andturbine components including their supply to power generation plants. The sales in 2020 and 2019were as follows:

In-country Cross-border Total 2020 2019 2020 2019 2020 2019

Turbines 694 780 457 583 3 753 742 5 166 831 4 448 522 5 624 414 Total 694 780 457 583 3 753 742 5 166 831 4 448 522 5 624 414



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17. Related Party Information

(a) Receivables and Payables

Trade receivables and payables, disclosed in Note 9, include the following intercompany accountbalances (including estimated receivables and payables and prepayments).

Relation to Receivables as of Payables as of the Company 31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019

ŠKODA POWER Private Limited (India) Subsidiary 281 10 368 1 298 1 138 Doosan Digital Innovation, branch Group company 445 617 30 134 39 616 Doosan Power Systems S.A. (Luxembourg) Parent company 1 178 7 863 10 000 6 000 Doosan Turbomachinery (USA) Group company 8 191 0 12 416 34 075 Doosan Babcock Energy (Poland) Group company 0 56 0 947 Doosan Heavy Industries (Korea) Group company 227 953 77 584 58 452 6 402 Total 238 048 96 488 112 300 88 178

Long-term Payables

The Company records no long-term intercompany payables.

(b) Receivables from the Controlled or Controlling Entity

As of 31 December 2020, the Company reports a receivable from a related party arising from the provided loan of CZK 260 thousand (2019: CZK 1,617,260 thousand). The loan falls due within one year.

(c) Sales and Purchases

Doosan group Relation to the Company

Sales for Purchases for 2020 2019 2020 2019

ŠKODA POWER Private Limited (India) Subsidiary 30 267 25 207 16 504 22 107 Doosan Heavy Industries (Korea) Group company 646 340 938 584 29 665 59 642 Doosan Digital Innovation, branch Group company 482 543 137 252 140 723 Doosan Power Systems SA (Luxembourg) Parent company 15 034 16 290 15 833 13 258 Doosan Babcock Energy (Poland) Group company 6 419 660 1 533 6 127 Doosan IMGB S.A. (Romania) Group company 0 0 0 7 648 Doosan Americas (USA) Group company 0 0 0 5 Total 698 542 981 284 200 787 249 510

Note: The “Sales” column includes sales of own products, sales of services, sales of assets and other operating income. The “Purchases” column includes the purchase of material, energy consumption, purchase of services, other operating expenses and purchase of inventory.

(d) Bonuses and Loans to Members of Statutory and Supervisory Bodies

Statutory executives 2020 2019

Number of members 5 5 Bonuses 3 735 8 252 Other supplies (pension insurance, etc.) 344 1 396



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The statutory executives receive monthly bonuses for their functions. If it results from their work position, they use Company cars for both business and private purposes, receive contributions for the pension fund and contribution for accommodation in certain cases.

18. Employees and Managers

The average number of employees and managers and staff costs for the years ended31 December 2020 and 2019.

2020 Number of employees

Payroll costs

Social security and health insurance costs

Social costs

Employees 967 634 541 209 285 27 661 Managers 8 29 424 7 556 206 Total 975 663 965 216 841 27 867

2019 Number of employees

Payroll costs

Social security and health insurance costs

Social costs

Employees 1 101 725 209 238 110 31 803 Managers 10 26 299 9 922 234 Total 1 111 751 508 248 032 32 037

19. Social Security and Health Insurance Payables

Social security and health insurance payables amount to CZK 21,653 thousand (2019:CZK 24,164 thousand), of which CZK 14,853 thousand (2019: CZK 16,547 thousand) are socialsecurity payables and CZK 6,800 thousand (2019: CZK 7,617 thousand) are health insurancepayables. No social security and health insurance payables are past their due dates.

20. Information on Fees to Statutory Auditors

The fee to statutory auditors was agreed to be EUR 69 thousand and does not include ancillarycosts. The fee includes both statutory audit and the audit of the IFRS financial statements.

21. State – Tax Receivables, Payables and Subsidies

As of 31 December 2020, the Company reports tax receivables of CZK 77,403 thousand (2019: CZK80,272 thousand). These are receivables from corporate income tax prepayments made in theCzech Republic and abroad, and receivables arising from value added tax.

Payables to the state of CZK 40,322 thousand (2019: CZK 34,520 thousand) primarily includepayables arising from the value added tax paid abroad.

The Company received a subsidy for research and development projects and training programmesfor employees of CZK 8,088 thousand (2019: CZK 11,605 thousand).



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22. Income Taxation

(a) Tax Payable

The tax payable for 2020 of CZK 105,714 thousand includes the tax liability for 2020 in the CzechRepublic and abroad.

The tax payable for 2019 of CZK 122,240 thousand includes the tax liability for 2019.

(b) Deferred Tax

Deferred tax by individual assets and liabilities

Difference 2020 2019

Fixed assets -214 202 -228 805 Receivables 17 406 13 079 Inventory 39 681 56 806 Reserves 80 917 89 813 Revaluation of assets and liabilities recognised in equity -4 559 -6 559 Other temporary differences (unpaid penalty) -23 564 -31 752 Deferred tax asset/ (liability) -104 321 -107 418

In accordance with the accounting policies disclosed in Note 2(k), the deferred tax was calculated using the tax rates applicable for the period in which the deferred tax liability is settled or the assets recovered.

The change in the deferred tax liability of CZK 3,097 thousand was recognised as of 31 December 2020 partially as a decrease in expenses amounting to CZK 1,096 thousand. The remaining change in the deferred tax of CZK 2,001 thousand arising from temporary differences from the revaluation of assets and liabilities charged against equity was not reported through profit or loss but as part of gains or losses from the revaluation of assets on the face of the balance sheet.

(c) Tax Relief arising from Investments Incentives

In 2020, the Company used no tax relief arising from investment incentives.

23. Research and Development

The Company incurred CZK 109,651 thousand (2019: CZK 145,245 thousand) in respect of thegeneral research and turbine development. The costs of the unspecified part of research anddevelopment were recognised in the profit and loss account. Research and development workrelating to the implementation of certain projects was capitalised as part of work in progress.



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24. Off Balance Sheet Payables and Contingent Assets

Legal Disputes

The Company is involved in a legal dispute against its two former employees arising from the damages resulting from their criminal activity for which they were convicted.

Bank Guarantees:

In line with tender terms and contractual conditions, the Company is obliged to provide the client with a bank guarantee for the due performance of the proposal, quality completion of the work, warranty period and payment refund in advance.

− BNP Paribas S.A., the Czech Republic branch provided a bank guarantee of EUR 116 thousand with validity until 31 January 2022.

− Československá obchodní banka, a. s. provided bank guarantees of CZK 197,177 thousand, EUR 40,557 thousand, and MXN 0 thousand with validity until 2 July 2024.

− Expobank CZ a.s. provided bank guarantees of EUR 500 thousand with validity until 23 December 2021.

− HSBC France – Prague branch provided the guarantee of EUR 1,134 thousand with validity until 15 March 2022.

− Komerční banka, a.s. provided bank guarantees of EUR 6,677 thousand, USD 3,857 thousand with validity until 16 September 2021.

− Raiffeisenbank a.s. provided bank guarantees of CZK 967 thousand, EUR 16,181 thousand and USD 11,323 thousand with validity until 24 January 2024.

− Všeobecná úvěrová banka, a.s., Prague branch provided bank guarantees of EUR 16,847 thousand with validity until 4 March 2024.

(a) Non-bank Guarantees

In accordance with the contractual terms and conditions the Company provided non-bank guarantees for the refund of the down payment, good work performance and the guarantee period in the amount of CZK 190,192 thousand to Doosan Heavy Industries and Construction, Co., Ltd.

Collateralised Payables

The Company records no collateralised payables.



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Issued Bills of Exchange

The Company records no issued bills of exchange.

(b) Guarantee

The Company provided a collateral for loans to related parties for the provision of bank guarantees and letters of credit as follows:

Guarantor Creditor Debtor Value of guarantee

Doosan Škoda Power s.r.o., Doosan Power Systems S.A., Doosan Babckock Limited, Doosan Babckok Energy Germany GmbH

Commerzbank Aktiengesellschaft, Groβkundencenter Region West Breite Str. 25, 40213 Düsseldorf Germany

Doosan Škoda Power s.r.o., Doosan Power Systems S.A., Doosan Babckock Limited, Doosan Babckok Energy Germany GmbH

GBP 6,750,000

Doosan Škoda Power s.r.o.

HSBC Limited, 1, Queen´s Road Central, Hong Kong, India corporate office, 52/60 Mahatma Gandhi Road, Fort, Mumbai 400 001

ŠKODA POWER PRIVATE LIMITED, with its registered office at 206/208, Siddharth Chambers, Hauz Khas, New Delhi, India, 110016 USD 2,000,000

25. Post Balance Sheet Events

Subsequent to the balance sheet date, no events took place that would have a significant impacton the financial statements.


VIII. Report on Relations Between Related Parties

26 February 2021

Doosan Škoda Power s.r.o.

Report on Relations between Related Parties for the Year Ended 31 December 2020


2

Opening Provisions

In accordance with the provisions of Section 82 (a) and the following sections of Act No. 90/2012 Coll., on Business Corporations and Cooperatives, (hereinafter the “Act on Business Corporations”), the Company prepared the Report on Relations between Related Parties for this Reporting Period.

Companies related to Doosan Škoda Power s.r.o.

Controlled Entity

Entity Doosan Škoda Power s.r.o.. Registered office Tylova 1/57, Jižní Předměstí,

301 00 Plzeň, Czech Republic Corporate ID 49193864

Recorded in the Register of Companies held by the Regional Court in Plzeň, File C, Insert 24 733

Controlling Entity – the Sole Owner (100% share)

Entity DOOSAN POWER SYSTEMS S.A. Registered office L-2453 Luxembourg, 6, Rue Eugène Ruppert, Grand Duchy

of Luxembourg (hereinafter “Controlling Entity 1”)

Controlling Entity pursuant to Section 75 (1) of the Business Corporations Act

Entity Doosan Heavy Industries & Construction Co., Ltd Registered office 1303-22 Seocho-dong, Seocho-gu, Seoul 137-920, Republic

of Korea

(hereinafter “Controlling Entity 2”)

Controlling Entity 1 and Controlling Entity 2 also jointly referred to as the “Controlling Entities”.

Entity directly controlling DOOSAN POWER SYSTEMS S.A. Entity Doosan Heavy Industries & Construction Co., Ltd Registered office 1303-22 Seocho-dong, Seocho-gu, Seoul 137-920, Republic

of Korea

Entity directly controlling Doosan Heavy Industries & Construction Co., Ltd and through it DOOSAN POWER SYSTEMS S.A.

Entity Doosan Co., Ltd. Registered office 18-12 Euljiro 6-ga Jung-gu Seoul, 100-730, Republic of Korea


3

Selection from a list of entities directly or indirectly controlled by Doosan Co., Ltd. and by Doosan Heavy Industries & Construction Co., Ltd.

Entity Doosan Babcock Energy, SP.Z O.O. Registered office Ul. Podmiejska 7, 44-207 Rybnik, Poland

Entity Doosan Babcock Limited Registered office Doosan House, Crawley Business Quarter, Manor Royal,

Crawley, West Sussex RH10 9 AD, United Kingdom

Entity Doosan Heavy Industries & Construction Co., Ltd. Registered office 1303-22 Seocho-dong, Seocho-gu, Seoul 137-920, Republic

of Korea

Entity DOOSAN DIGITAL INNOVATION EUROPE, branch Registered office Plzeň, Tylova 1/57, Jižní Předměstí 301 00, Czech Republic

Entity Doosan Power Systems Americas Registered office 1050 Crown Pointa Parkway, Suite 1200, Atlanta, GA 30338,

USA

Entity Doosan Turbomachinery Services Inc. Registered office 1200 N. P Street, La Porte, Texas, Houston, TX TX77571, USA

Entities controlled by Doosan Škoda Power s.r.o.

Entity Registered office Corporate ID Share

ŠKODA POWER Private Ltd. (SPPL) New Delhi, India U40101DL2004PTC130312 100%

The above list of related parties is not exhaustive. The DOOSAN group includes several tens of entities worldwide. This Report on Relations between Related Parties includes only entities with which the Controlled Entity has had or has economic relations.


4

Description:

Number Company Abbreviation Country

1 Doosan Power Systems S.A. DPS SA Luxembourg

2 Doosan Babcock Limited Babcock United Kingdom

3 Doosan Skoda Power s.r.o. Skoda Czech Republic

4 Skoda Power Private Limited Skoda P India

5 Doosan Power Systems Overseas Investments Limited DPSOIL United Kingdom

6 Doosan Power Systems Europe GbmH DPSE Germany

7 Doosan Babcock Energy Polska Sp.z.o.o DBEP Poland

8 Doosan Lentjes GmbH Lentjes Germany

9 Doosan Babcock Energy Germany GbmH DBEGG Germany

10 Doosan Lentjes Czech s.r.o Lentjes Czech Czech Republic

11 Doosan Power Systems Americas LLC DPSA United States of America

12 Doosan Babcock Energy Services (Overseas) Limited DBESL United Kingdom

13 Doosan Babcock W.L.L DBW Qatar

14 Doosan Babcock General Maintenance Service LLC DBGMS United Arab Emirates

15 Doosan Power Systems Pension Trustee Company Ltd. DPSPT United Kingdom

16 Doosan Power Systems (Scotland) Limited Partnership DPSLP United Kingdom

1 100%

2 100% 3 100%

4 100%

5 100% 11 100% 12 100% 13 49% 14 49% 15 100%

6 100% 7 98,9% 16 68,7% 31,3%

8 99% 9 100%

10 100%

Lentjes DBEGG

Lentjes Czech

DPS SA

DPSE DBEP

DBGCMS DPSPTDBESLDPSA (in Liq.)DPSOIL

DPSLP

DHI

Babcock Skoda

Skoda P

DBW


5

General Information on Relations between Related Parties in the Reporting Period

1 Information on relations between the Controlled Entity and Doosan Co., Ltd. (Republic of Korea) and entities directly and indirectly controlled by Doosan Co., Ltd.

1.1 In 2020, the Controlled Entity and DOOSAN Co., Ltd. (Republic of Korea) and companies directly and indirectly controlled by Doosan Co., Ltd. concluded contracts under the arm’s length principle, and performances and counter-performances under the arm’s length principle. As a result, the Controlled Entity cannot incur any damage or detriment as a result of these contracts. The list of individual types of transaction is provided in the following table. All performances are provided for consideration.

1.2 Except for the transactions listed below, there were no legal acts in the interest of other related parties between the Controlled Entity and other related parties. In addition, no measures relating to the Controlled Entity were adopted or made in the interest of other related parties.

1.3 Controlling Entity 1 has a 100% share in the Controlled Entity and as such is the sole owner of Doosan Škoda Power s.r.o. Controlling Entity 1 has limited all of its controlling powers to exercise the rights of the owner. Apart from exercising its rights as the sole owner, Controlling Entity 1 does not interfere in any other matters, ie matters related to business management, decision making and daily operation of the Controlled Entity. Controlling Entity 2 indirectly controls the Controlled Entity via Controlling Entity 1, through which it has the ability to influence the appointment and recalling of most of the persons that are members of the statutory body pursuant to provisions set out in Section 75 (1) of the Business Corporations Act.

1.4 The role of the Controlled Entity within related party relations remains the development of business activities in the area of design, production and modernisation of steam turbines and related facilities.

1.5 The relation between the Controlled Entity and the Controlling Entities, where Doosan Škoda Power s.r.o. is the Controlled Entity, may be assessed as advantageous with respect to the fact that the field for offering the subject of the company’s business activities has significantly expanded as a result of the relation of the Controlled Entity with the above mentioned controlled entities. The Controlled Entity’s relation with the DOOSAN group enables the Controlled Entity to use the synergies resulting from being a member of the DOOSAN Group. These synergies are of a great significance to the Controlled Entity as it can thus benefit from utilising namely the following: mutual marketing and sales networks based on a strong representation of the DOOSAN Group on Czech and Central and Eastern European markets and a significant representation of the DOOSAN Group in the Middle East, North Africa, North and South Americas, India and West Europe, completing the comprehensive range of main facilities for power plants and sharing the net of customer relations, maximisation of production capacity and sources for stable supplies of basic material, as well as sharing know-how and patents and participating in their further development. From this perspective, the relationship for Doosan Škoda Power s.r.o. is clearly profitable.


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An overview of actions that were initiated by or taken in the interest of the Controlling Entities or entities controlled by them in relation to assets the value of which exceeded 10% of shareholders’ equity

Subject of the Performance Entity initiating the performance Value

- - -

Performance Provided between Controlling Entity 1 and the Controlled Entity in the Reporting Period

Subject of the performance Provider Recipient Effectiveness

Customer Management Network Doosan Power Systems SA Doosan Škoda Power Throughout the whole

Reporting Period

Management services Doosan Power Systems SA Doosan Škoda Power Throughout the whole Reporting Period

Guarantee for bank loans Doosan Škoda Power Doosan Power Systems SA Throughout the whole Reporting Period

Paid dividends Doosan Škoda Power Doosan Power Systems SA One-off, based on the

decision of the General Meeting

Provision of loans Doosan Škoda Power Doosan Power Systems SA Throughout the whole Reporting Period

Performance provided between Controlling Entity 2 and the Controlled Entity in the Reporting Period (based on contracts concluded or effective in the 2020 Reporting Period)

Subject of the performance Provider Recipient Effectiveness

Sub-licence contract for the Doosan brand and other IP Doosan Heavy Industries Doosan Škoda Power Throughout the whole

Reporting Period

Research and development services Doosan Heavy Industries Doosan Škoda Power

Throughout the whole Reporting Period on an ad hoc basis

Supplies of generators, technical services, personal SW Doosan Heavy Industries Doosan Škoda Power Throughout the whole

Reporting Period

Supply of turbines, material and technical services Doosan Škoda Power Doosan Heavy Industries

Throughout the Reporting Period – ad hoc

Research and development services Doosan Škoda Power Doosan Heavy Industries Throughout the whole

Reporting Period

Licence provision Doosan Škoda Power Doosan Heavy Industries Throughout the whole Reporting Period

Provision of a loan Doosan Škoda Power Doosan Heavy Industries Throughout a part of the Reporting Period


IX. Auditor’s Report

Annual Report 2020 - CVR API

Documents

Transcript of Annual Report 2020 - CVR API