Telekom Slovenije

Business and Financial Review • May 14, 2021

Unaudited Business Report of the Telekom Slovenije Group and Telekom Slovenije, d. d.

for the period January to March 2021

Contents

1.	INTRODUCTORY NOTE 1
1.1.	Statement of responsibility of the Management Board 1
2.	VISION, MISSION AND VALUES OF THE TELEKOM SLOVENIJE GROUP 2
2.1.	Vision, mission and values 2
2.2.	Key strategic objectives 3
3.	TELEKOM SLOVENIJEGROUP 5
3.1.	Markets and companies of the Telekom Slovenije Group 5
3.2.	Operating highlights 6
3.3.	Key financial indicators for the Telekom Slovenije Group 7
3.4.	Overview by company and key market 7
3.5.	Ownership structure and share trading 10
3.6.	Market and market shares in key service segments 13
3.7.	Risk management 14
4.	CORPORATE GOVERNANCE 18
5.	SIGNIFICANT EVENTS IN THE PERIOD JANUARY – MARCH 2021 20
6.	EVENTS AFTER THE REPORTING DATE 22
7.	CONDENSED INTERIM ACCOUNTING REPORT OF THE TELEKOM SLOVENIJE GROUP AND TELEKOM SLOVENIJE, D. D. FOR THE PERIOD JANUARY TO MARCH 2021 23
7.1.	Condensed interim financial statements of the Telekom Slovenije Group and Telekom Slovenije, d. d 24
7.2.	Notes to the interim financial statements of the Telekom Slovenije Group and Telekom Slovenije, d. d 32
7.3.	Financial risk management 41

Ljubljana, 13 May 2021

1. INTRODUCTORY NOTE

Pursuant to the law and the Rules of the Ljubljana Stock Exchange, Telekom Slovenije, d. d. (hereinafter: Telekom Slovenije), with its registered office at Cigaletova 15, Ljubljana, hereby publishes the Unaudited Business Report of the Telekom Slovenije Group and Telekom Slovenije for the period January to March 2021.

The condensed interim financial statements for the period ending 31 March 2021 were compiled in accordance with IAS 34 Interim Financial Reporting, and must be read in conjunction with the annual financial statements compiled for the financial year ending 31 December 2020. The financial statements for the period January to March 2021 have not been audited.

Telekom Slovenije's Supervisory Board discussed the Unaudited Business Report of the Telekom Slovenije Group and Telekom Slovenije for the period under consideration at its session on 12 May 2021.

Any significant changes to the data contained in the prospectus for listing on the stock exchange are regularly published by the Company on the Ljubljana Stock Exchange's SEOnet website and on the Company's website at www.telekom.si.

The Unaudited Business Report for the period January to March 2021 is also accessible on the Company's website at www.telekom.si.

1.1. Statement of responsibility of the Management Board

The members of Telekom Slovenije, d. d.'s Management Board responsible for compiling the unaudited report of the Telekom Slovenije Group and Telekom Slovenije for the period January to March 2021, hereby find that:

• to the best of our knowledge, the unaudited report of the Telekom Slovenije Group and Telekom Slovenije was compiled and published in accordance with valid legislation and the International Financial Reporting Standards as adopted by the EU;
• the condensed interim financial statements for the period ending 31 March 2021 were compiled in accordance with IAS 34 Interim Financial Reporting, and must be read in conjunction with the annual financial statements compiled for the financial year ending 31 December 2020;
• the selected accounting policies were applied consistently in the compilation of the condensed financial statements and any changes to those policies were disclosed, and that accounting estimates were made fairly and with careful consideration, according to the principle of prudence and the diligence of a good manager, and under the assumption that the Telekom Slovenije Group and Telekom Slovenije are going concerns; and
• the interim business report presents a fair picture of information regarding major transactions with related parties, in accordance with regulations.

Cvetko Sršen President of the management board

Tomaž Jontes Vice-President of the Management Board

Dr Mitja Štular Member of the Management Board

Barbara Galičič Drakslar Member of the Management Board

Špela Fortin Member of the Management Board – Workers Director

2. VISION, MISSION AND VALUES OF THE TELEKOM SLOVENIJE GROUP

2.1. Vision, mission and values

2.2. Key strategic objectives

The strategy for the period 2021 to 2025 is a core corporate document in which the future development and strategic policies of the Telekom Slovenije Group are defined through its mission, vision, values and strategic objectives. The Telekom Slovenije Group is implementing its established strategy in 2021 in accordance with adopted strategic policies. The strategic business plan is updated every year taking into account conditions in the sector and across the globe.

Strategic objectives of the Telekom Slovenije Group

Leader in user experience

The leading user experience is based on the best, most reliable and largest network, while we create that user experience in accordance with the latest trends and changing user habits. Through a superior user experience, we achieve short-term business objectives and strengthen our long-term strategic position to remain the first choice of users. Crucial in that regard are digital excellence, ensuring security, contactless operations and the dynamic adaptation to the needs and habits of the users of communication services.

Digitalisation of operations

Accelerated digitalisation via the optimisation and automation of processes improves the efficiency of operations, and will thus remain an integral part of future business activities to ensure the competitiveness of the Telekom Slovenije Group.

Growth in ICT services

Growth in ICT services and solutions will be based on the existing superior LTE/4G network, and the opportunities offered by fifth generation (5G) mobile networks. 5G technology will facilitate the development of the smart industry and smart cities, as well as the introduction of virtual campus networks, which in turn will enable the continued digitalisation of various verticals, such as energy, transportation, logistics, industry, smart cities, healthcare, and protection and rescue (public safety). The Telekom Slovenije Group will ensure the digitalisation of society as a whole on that basis. Growth will be

achieved through organic growth and the consolidation of the Slovenian ICT market.

Maintaining the level of revenues from the core activity in Slovenia

The basic telecommunications market is stagnating in Slovenia, while Telekom Slovenije is under additional pressure from regulatory bodies. We will preserve revenues through accelerated digitalisation and the development of digital services, the further development of the network, the development of services based on 5G technology, successful cooperation with regulators, and above all the best user experience.

Consolidation on individual markets

The European telecommunications market is experiencing the intensive consolidation of the sector, the merging of operators and a changing portfolio of services on the one hand, and the entry of new competitors on the ICT market on the other hand, which will further impact the operations of operators. The consolidation activities of Telekom Slovenije will focus on acquiring new competences, and on entering new markets and new areas.

Optimal employee structure

The Telekom Slovenije Group will continue to ensure the optimal number of employees, taking into account the needs of work processes at individual companies. We are optimising the employee structure through the strategic planning of needs for staff, and the appropriate organisational structure and job classification. We build the employer brand through an effective remuneration system, and the development of knowledge and competences.

Financial stability

We are implementing activities that facilitate the effective management of liquidity and ensure a high level of financial stability. We ensure the optimal level of debt over the long term, where the value of the Company is most important.

Responsibility to the environment and society

We actively identify opportunities where we can contribute to the development of the social and economic environment in which we operate through our expertise, and financial and other resources. The principles of sustainable development are built into our operations, products, services and content, while we also responsibly manage the economic, social and environmental impacts of our operations.

Key objectives of the Telekom Slovenije Group for 2021

Operating revenues	EUR 653.0 million
EBITDA	EUR 210.6 million
Net profit	EUR 30.8 million
Investments	EUR 203.7 million

3. TELEKOM SLOVENIJEGROUP

3.1. Markets and companies of the Telekom Slovenije Group

The Telekom Slovenije Group comprises the parent company Telekom Slovenije and its subsidiaries. The composition of the Telekom Slovenije Group and participating interests as at 31 March 2021 are presented in the picture below.

The detailed composition of the Telekom Slovenije Group is presented on the website https://www.telekom.si/opodjetju/skupina-telekom-slovenije/odvisne-druzbe.

Situation as at 31 March 2021

Changes in the Telekom Slovenije Group in 2021

There were no changes in the period January to March 2021.

Telekom Slovenije is the founder of the Heart Foundation, the aim of which is to help the children of employees of Slovenian Telekom Slovenije Group companies who have lost a parent or who are seriously ill. The majority of the foundation's funds are contributed by the employees of Slovenian Telekom Slovenije Group companies.

3.2. Operating highlights

The Telekom Slovenije Group achieved the following in the period January to March 2021:

• The Telekom Slovenije Group generated EUR 157.5 million in operating revenues in the period January to March 2021, a decrease of 6% relative to the revenues generated during the same period in 2020.
• Net sales revenue amounted to EUR 156.8 million. The COVID-19 pandemic is affecting sales revenue in 2021 due to lower revenues from the roaming of users in the networks of foreign operators and roaming by foreign users in our mobile networks, and due to lower revenues from international voice services. Having the most significant impact on lower revenues are IT licences, which result in lower costs on the other hand. Revenues are also declining due to the optimisation of subscribers who have an increasing number of services included in their monthly subscription fee, while revenues from traditional telephony have been declining for several years. Sales revenue was up relative to the same period last year at the subsidiary IPKO.
• The Telekom Slovenije Group's operating expenses totalled EUR 143.5 million, a decrease of 5% or EUR 8.2 million relative to the same period in 2020.
• Earnings before interest and taxes (EBIT) amounted to EUR 14.0 million in the period January to March 2021, a decrease of 10% or EUR 1.5 million relative to the same period last year. Taking into account one-off effects in 2020, EBIT was 16% higher in 2021 relative to the same period last year.
• Earnings before interest, taxes, amortisation and depreciation (EBITDA) totalled EUR 55.7 million at the Telekom Slovenije Group level, a decrease of 3% relative to the first quarter of 2020. Taking into account one-off effects in 2020, EBITDA was 3% higher in 2021 relative to the same period last year. The EBITDA margin (i.e. EBITDA as a proportion of sales revenue) was 35.5% at the Group level.
• Following the calculation of income tax (including deferred taxes), the Telekom Slovenije Group generated a net profit of EUR 9.7 million during the first quarter of 2021, a decrease of EUR 1.6 million relative to the same period in 2020. Taking into account one-off effects in 2020, net profit was 8% higher in 2021 relative to the same period last year.
• Despite the challenges in connection with the COVID-19 pandemic, the Telekom Slovenije Group is financially stable. In that context and given conditions on the market, it is adapting its business activities to the changing circumstances and closely monitoring and assessing risks in connection with supply chains, credit risk, the functioning of systems and the profitability of individual services, while adopting the appropriate measures.

3.3. Key financial indicators for the Telekom Slovenije Group

		Telekom Slovenije Group			Telekom Slovenije
EUR thousand / %	I - III 2021/ 31.3.2021	I - III 2020 / 31.12.2020	Index 21/20	I - III 2021/ 31.3.2021	I - III 2020 / 31.12.2020	Index 21/20
Revenue	156,768	166,760	94	142,243	152,861	93
Other operating income	725	469	155	286	251	114
Operating revenue	157,493	167,229	94	142,529	153,112	93
EBITDA	55,707	57,391	97	46,465	49,043	95
EBITDA margin	35.5%	34.4%	103	32.7%	32.1%	102
EBIT	13,993	15,539	90	11,870	14,905	80
Return on sales: ROS (EBIT/ sales revenue)	8.9%	9.3%	96	8.3%	9.8%	86
Net profit from continuing operations	9,717	12,388	78	8,470	12,554	67
Loss from discontinued operations	0	-1,054	-	0	0	-
Net profit	9,717	11,334	86	8,470	12,554	67
Assets	1,251,921	1,227,839	102	1,233,602	1,226,566	101
Equity	600,407	590,484	102	614,444	605,784	101
Equity ratio	48.0%	48.1%	100	49.8%	49.4%	101
Net financial debt	379,431	378,377	100	389,432	390,067	100

Key financial indicators for the Telekom Slovenije Group, in accordance with the accounting report:

The Telekom Slovenije Group also uses the Alternative Performance Measures (APMs) defined by the ESMA to present its operating results.

Net profit for the comparable period is broken down into profit or loss from continuing and discontinued operations. More information can be found in the accounting report.

3.4. Overview by company and key market

Operating revenue

EUR thousand	I - III 2021	I - III 2020	Index 21/20
Telekom Slovenije	142,529	153,112	93
Other companies in Slovenia	18,668	19,777	94
IPKO - Kosovo	15,160	13,851	109
Other companies abroad	978	993	98
Total - unconsolidated	177,335	187,733	94
Eliminations and adjustments	-19,842	-20,504	97
Telekom Slovenije Group	157,493	167,229	94

EBITDA – earnings before interest, taxes, depreciation and amortisation

EUR thousand	I - III 2021	I - III 2020	Index 21/20
Telekom Slovenije	46,465	49,043	95
Other companies in Slovenia	1,876	1,211	155
IPKO - Kosovo	8,363	6,745	124
Other companies abroad	643	698	92
Total - unconsolidated	57,347	57,697	99
Eliminations and adjustments	-1,640	-306	-
Telekom Slovenije Group	55,707	57,391	97

EBIT – earnings before interest and taxes

EUR thousand	I - III 2021	I - III 2020	Index 21/20
Telekom Slovenije	11,870	14,905	80
Other companies in Slovenia	613	-109	-
IPKO - Kosovo	1,943	-204	-
Other companies abroad	135	186	72
Total - unconsolidated	14,561	14,778	99
Eliminations and adjustments	-568	761	-
Telekom Slovenije Group	13,993	15,539	90

Net profit or loss

EUR thousand	I - III 2021	I - III 2020	Index 21/20
Telekom Slovenije	8,470	12,554	67
Other companies in Slovenia	404	-235	-
IPKO - Kosovo	1,240	-886	-
Other companies abroad	36	66	54
Eliminations and adjustments	-432	889	-
Net profit from continuing operations	9,717	12,388
Loss from discontinued operations	0	-1,054	-
Telekom Slovenije Group	9,717	11,334	86

Investments

EUR thousand	I - III 2021	I - III 2020	Index 21/20
Telekom Slovenije	39,962	43,349	92
Other companies in Slovenia	361	780	46
IPKO - Kosovo	2,119	1,221	174
Other companies abroad	698	84	831
Eliminations and adjustments	18	-949	-
Telekom Slovenije Group	43,158	44,485	97

Employees

Number of employees at	31.3.2021	31.12.2020	Index 21/20
Telekom Slovenije	2,162	2,165	100
Other companies in Slovenia	702	699	100
IPKO - Kosovo	528	528	100
Other companies abroad	0	0	-
Telekom Slovenije Group	3,392	3,392	100

TELEKOM SLOVENIJE GROUP CONNECTIONS AND SERVICES BY TYPE AND MARKET

Broadband connections

Number as at	31.3.2021	31.12.2020	Index 21/20
Slovenia - retail	200,273	201,420	99
Slovenia - wholesale	162,464	160,323	101
Slovenia total	362,737	361,743	100
Kosovo - retail	102,063	102,515	100
Telekom Slovenia Group	464,800	464,258	100

Mobile telephony

Number as at	31.3.2021	31.12.2020	Index 21/20
Slovenia - retail	959,481	965,867	99
Slovenia - wholesale	138,604	132,861	104
Slovenia total	1,098,085	1,098,728	100
Kosovo - retail	804,880	775,148	104
Telekom Slovenia Group	1,902,965	1,873,876	102

Fixed telephony and VoIP services

Number as at	31.3.2021	31.12.2020	Index 21/20
Slovenia - classical fixed telephony	300,292	302,867	99
Slovenia - VoIP	182,149	183,174	99
Slovenia total	482,441	486,041	99
Kosovo - VoIP	35,055	35,027	100
Telekom Slovenia Group	517,496	521,068	99

3.5. Ownership structure and share trading

General information regarding Telekom Slovenije shares as at 31 March 2021

General information regarding shares
Ticker symbol	TLSG
ISIN	SI0031104290
Listing	Ljubljana Stock Exchange, prime market
Share capital (EUR)	272,720,664.33
Number of ordinary registered no-par value shares	6,535,478
Number of shares held in treasury	30,000
Number of shareholders as at 31 March 2021	8,782

Ownership structure and largest shareholders as at 31 March 2021

Telekom Slovenije had 8,782 shareholders as at 31 March 2021, a decrease of 83 relative to the end of 2020.

With a total stake of 93.2%, domestic investors are predominant in the Company's ownership structure. The Company's largest shareholder is the Republic of Slovenia, together with Kapitalska družba, Slovenski državni holding, the First Pension Fund of Modra zavarovalnica and the latter's guarantee fund. Collectively, 73.36% of the Company's shares were directly or indirectly held by the government.

Individual shareholders represent the second largest category of owners. Their stake was up during the first quarter of 2021. Foreign legal entities also increased their stake, while domestic legal entities, financial corporations and funds decreased their stake. Government-held stakes were unchanged.

Ownership structure as at 31 March 2021

Ten largest shareholders as at 31 March 2021

The concentration of ownership, as measured by the ownership stake held by the ten largest shareholders, stood at 79.93% as at 31 March 2021, an increase of 0.08 percentage points relative to the end of 2020. There was no change in the order of the top ten shareholders.

70%60%50%40%30%20%10% 0%	31.3.2021	31.12.2020	0% 10% 20% 30% 40% 50% 60% 70%
62.54%	Republic of Slovenia	Republic of Slovenia	62.54%
5.59%	Kapitalska družba d.d. (KAD)	Kapitalska družba d.d. (KAD)	5.59%
4.25%	Slovenian Sovereign Holding, d.d (SDH)	Slovenian Sovereign Holding, d.d (SDH)	4.25%
2.63%	Citibank N.A. - fiduciary account	Citibank N.A. - fiduciary account	2.55%
1.77%	Raiffeisen Bank International AG (RBI)	Raiffeisen Bank International AG (RBI)	1.77%
1.22%	Perspektiva FT, d.o.o.	Perspektiva FT, d.o.o.	1.22%
0.73%	Guarantee Fund of the First Pension Fund	Guarantee Fund of the First Pension Fund	0.73%
0.46%	Telekom Slovenije, d.d.	Telekom Slovenije, d.d.	0.46%
0.38%	Lisca d.o.o.	Lisca d.o.o.	0.38%
0.36%	Guaranteed fund of Pokojninska družba A, Inc	Guaranteed fund of Pokojninska družba…	0.36%

Shares held by members of the Management Board and Supervisory Board of Telekom Slovenije

Members of the Management Board and Supervisory Board held 724 TLSG shares as at 31 March 2021.

Name	Office	Number of shares	% in equity
Management Board
dr. Mitja Štular	Member of the Management Board	470	0.,00719
Supervisory board
Marko Kerin	Member of the Supervisory Board	2	0.00003
Drago Kijevčanin	Vice-President of the Supervisory Board	212	0.00324
Dušan Pišek	Member of the Supervisory Board	36	0.00055
Jana Žižek Kuhar	Member of the Supervisory Board	4	0.00006
Total		724	0.01108

Trading in corporate shares by representatives of the Company and reporting on such transactions are governed at Telekom Slovenije by the applicable legislation and the Rules Restricting Trading in the Shares of Telekom Slovenije.

Movement in the TLSG share price

The shares of Telekom Slovenije are listed on the prime securities market of the Ljubljana Stock Exchange under the ticker symbol TLSG. The shares are included in the SBITOP share index, and accounted for 5.18% of that index according to the half-yearly review of the composition and parameters of the SBITOP conducted on 22 March 2021. Since 19 June 2019, TLSG shares are also included in the ADRIAprime share index, which is a composite index of selected companies listed on the prime markets of the Ljubljana Stock Exchange and Zagreb Stock Exchange. It is a total return index that takes into account both changes in share prices and dividend yield.

The price of TLSG shares closed at EUR 50.00 on the last trading day of March 2021. The share price rose by 14.68% during the first quarter of the year, while the SBITOP index, which provides information regarding the movement of the most liquid and largest shares on the stock exchange, was up by 9.98% during the same period. The market capitalisation of Telekom Slovenije stood at EUR 326.77 million on the last trading day of March. Turnover in Telekom Slovenije shares totalled EUR 3.01 million during the period January to March 2021, representing 2.4% of total turnover on the stock exchange.

Trading statistics for TLSG shares on the Ljubljana Stock Exchange

Standard price in EUR	I – III 2021	I – III 2020
Highest daily price	50.00	59.60
Lowest daily price	44.00	41.00
Average daily price	46.36	54.50
Volume in EUR thousand	I – III 2021	I – III 2020
Total volume for the year	3,008.68	5.820.26
Highest daily volume	249.10	379.22
Lowest daily volume	0.89	0.18
Average daily volume	48.53	92.39

Movement in the TLSG share price compared to the SBITOP index and volume of trading in TLSG shares

Source: Ljubljana Stock Exchange, archive of data.

Key financial data relating to shares

	31. 3. 2021 /	31. 3. 2020/
	I – III 2021	I – III 2020
Closing price of one share on the last trading day of the period in EUR	50.00	44.20
Book value of one share in EUR1	91.87	90.35
Net earnings per share in EUR2	1.49	1.74
P/BV	0.54	-
Capital return per share during the period in %3	14.68	-18.75

Notes:

¹ The book value of one share is calculated as the ratio of the book value of the Telekom Slovenije Group's equity on the last day of the period to the number of issued ordinary shares. Comparable data from the statement of financial position are from 31 December 2020.

²Net earnings per share is calculated as the ratio of the Telekom Slovenije Group's net operating profit for the accounting period to the average number of issued ordinary shares, excluding treasury shares.

³The capital return per share is calculated as the ratio of the share price on the final trading day of the period minus the share price on the first trading day of the period to the share price on the first trading day of the period.

3.6. Market and market shares in key service segments

Changes in the number of connections on the electronic communications market in Slovenia

Source: Statistical Office of the Republic of Slovenia, Electronic Communications, fourth quarter of 2020, March 2021.

Telekom Slovenije's market shares in the fourth quarter of 2020 in key market segments

Source: AKOS: eAnalitik portal, March 2021; internal Telekom Slovenije figures.

3.7. Risk management

Key risks are presented below by Telekom Slovenije Group company.

TELEKOM SLOVENIJE

Strategic risks

• In terms of strategic risks, Telekom Slovenije faces competition, regulatory effects and pricesensitive users, and the migration of voice traffic to OTT platforms. Users demand an increasing number of high-quality services at a low price. The Slovenian market is saturated, which means less manoeuvring room for attracting new users. The management of such risks requires the regular implementation of activities to ensure competitiveness, control over regulatory measures, a targeted and active market approach, the provision of high-quality and readily available services, the continuous adaptation of business solutions and the portfolio, and the introduction of the latest developments for specific groups and segments of users.
• In the area of strategic risks, activities are also being carried out on the retail market due to the impact of the COVID-19 pandemic, including an adapted portfolio of services and a separate approach for the user segment. A programme is being implemented to maintain subscribers. Sales of telemedicine and eCare services have risen during the pandemic, which is opening new opportunities to support users in changing operating conditions. The Company is adapting activities to the reduced scope of operations in certain sectors, which is affecting the implementation of some planned projects for business users. Sales of services and products through digital channels are being promoted. The restricted movement of the population and travel limitations have reduced the number of foreign users who roam in Telekom Slovenije's mobile network, while the number of Telekom Slovenije users in the networks of foreign operators is also down. Measures include the monitoring of the sales margin of international wholesale services, and the proactive search for new destinations and new revenues. The closure of points of sale had a significant impact on merchandise sales, resulting in the adaptation of some points of sale that operated as pick-up points. Purchases during this period shifted to a great extent to the digital environment. Telekom Slovenije is focusing on the user, for whom it facilitates the integration and accessibility of content and applications.

Financial risks

• Telekom Slovenije regularly monitors the dynamics of the financial environment that reflect the various types of risks to which the Company is exposed in its operations. The Company actively monitors liquidity, credit and interest-rate risk, while various financial risk management models and derivatives are used to reduce exposure to specific types of risks.
• Liquidity risk is managed through the regular management and planning of cash flows by ensuring the appropriate maturities and the diversification of financial debt, and through financing within the Group and the optimisation of working capital and cash. The Company manages cash flows using liquidity reserves in the form of short-term credit lines. Also in progress is the raising of a long-term loan, a larger portion of which will be earmarked for the refinancing of issued bonds, while the remainder will be used for other investments. A comprehensive approach to managing liquidity risk and measures implemented in other areas of operations mean that the COVID-19 pandemic is not having a significant impact on the Company's liquidity. To that end, additional measures were adopted to optimise costs and mitigate the effects of the pandemic on the Company's cash flow. In managing liquidity, we follow a conservative approach and ensure the best possible composition of sources of financing. We carefully monitor the economic situation and business factors, including the dynamics of received payments.
• Credit risk is managed by the Company through the active monitoring of the operations of customers and their credit ratings, and by limiting maximum allowable exposures. The Company further hedges against the risk of the deteriorating financial position of customers through credit insurance and by regularly monitoring the appropriateness thereof. Monitoring of the settlement of contractual obligations and the active recovery of past-due debt are also elements of the system tool used for credit risk management, while Telekom Slovenije regularly monitors credit exposure to customers. There has been no significant deterioration in the structure of receivables during the COVID-19 pandemic.
• The Company also hedges against interest-rate risk by concluding interest-rate swaps. Fixed or

hedged interest rates account for 65.0% of interest-bearing financial liabilities at the Company level.

• Telekom Slovenije manages credit risk in connection with receivables from loans to subsidiaries by including various collateral instruments in loan agreements, while it regularly monitors the operations and liquidity of subsidiaries. If the effects of the COVID-19 pandemic will have a negative impact on subsidiaries' ability to service their loans, activities will be implemented with the aim of refinancing loans or amending loan repayment schedules.

Regulatory and compliance-related risks

• Regulatory risks derive from changes to the regulatory framework and policies, and potential decisions of the regulator regarding the imposition of additional obligations or changes in prices in individual market segments.
• Currently being drafted is the new Electronic Communications Act (ZEKom-2), which will transpose the European Electronic Communications Code (EECC). Telekom Slovenije is participating in the drafting of that act through constructive expert proposals in the scope of a working group. At the European level, the Digital Services Act (DSA) package is currently the subject of public consultations. That package includes proposed new and amended rules for the strengthening of the Single Market for digital services.
• On 18 December 2020, the Agency for Communication Networks and Services (AKOS) published a decision regarding the organisation of a public tender with a public auction for the allocation of radio frequencies for the provision of public communication services to end-users in the 700 MHz, 1500 MHz, 2100 MHz, 2300 MHz, 3600 MHz and 26 GHz radio frequency bands. During the public opening of bids, the tender committee determined that four complete tenders were received in a timely manner. The public auction began on 7 April 2021 and was completed on 16 April 2021. Telekom Slovenije secured the radio frequency spectrum in the 700 MHz FDD band, 700 MHz SDL band, 1500 MHz band, 2100 MHz band, 3600 MHz band and 26 GHz band.
• The risk associated with personal data protection derives from the large scope and categories of personal data that Telekom Slovenije processes as the leading operator in Slovenia. Of significance with regard to that risk is the application of Regulation (EU) 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data

Protection Regulation or GDPR) and sectoral legislation, in particular the Electronic Communications Act (ZEKom-1), where the GDPR brought stricter regulation and increased the awareness of both users and the general public regarding the protection of the data, while sectoral legislation sets out the specific obligations of Telekom Slovenije in individual areas of operations. Telekom Slovenije ensures compliance through the continuous monitoring, updating and improvement of personal data processing and internal control processes for personal data protection. It also monitors the drafting of new regulations in the area of personal data protection at the national level (e.g. the ZEKom-2, ZVOP-2 and ZEISZ) and EU level (where the e-privacy directive is being coordinated by EU bodies) that will impact the processing of data during the provision of the Company's services.

• The new ZGD-1K was published on 9 February 2021 and entered into force on 24 February 2021. Activities are being carried out to implement changes.
• In its operations, Telekom Slovenije complies with valid legislation, as well as decisions and aspects of sectoral regulations and other competent bodies. Regulatory risks are managed through organisational and procedural measures in the Company's operations, through constructive dialogue, by putting forth opinions, comments and suggestions in public consultations regarding drafts of general and specific laws issued by the regulator, and by taking legal action against issued regulatory decisions, whenever that is justified.
• Remote operations and measures necessary to control the pandemic bring new challenges in personal data protection. At the same time, increased access to data regarding users via digital communication channels offers numerous opportunities for adapted solutions or new business models, in which all legal requirements are complied with in full.

Operational risks

• Telekom Slovenije gives a great deal of attention to managing ICT-related operational risks. These risks are controlled through the management and development of all subsystems, and by improving operational efficiency, processes and staff, while supporting new business opportunities. Risks in the area of security are managed through the continuous development and implementation of the security policy, by identifying security threats and vulnerabilities, and by spreading the security culture to employees and users.
• The Company adopted a plan of measures and activities in response to the impact of the

COVID-19 pandemic. That plan also takes into account national measures and adapts all activities accordingly with the aim of ensuring business continuity, while protecting the health of users and employees to the greatest extent possible. The Company also ensures compliance with all security and preventive measures with the aim of protecting the health of employees and ensuring remote work where the latter is possible.

• Telekom Slovenije also faces risks associated with recruiting and retaining key employees, as it is increasingly difficult to recruit qualified candidates with specific knowledge and retain employees with crucial expertise due to market conditions and increased demand for professionally qualified personnel. The Company focuses on the systematic development of employees and career planning, the internal transfer of knowledge, the introduction and implementation of advanced development-training programmes and ensuring employee motivation and remuneration systems. By providing scholarships to young people, the Company offers them the opportunity to make contact with the latest technologies and top experts, and facilitates their further development.
• As an operator and employer, we responsibly adopt measures to protect employees, users and other stakeholders, and to ensure the continuous functioning of services, which for many represent the only form of communication in a period of limited social contacts.
• Telekom Slovenije manages risks in connection with procurement processes through a centralised procurement function, a standard process for the implementation of procurement procedures and a methodology for assessing the risk of cooperation with suppliers. The Company monitors compliance with contractual provisions. The Supplier Code falls into this category of activities. The Rules on the procurement of goods and services are being updated, while activities are being implemented to provide new information support for the procurement process.
• The Company ensures the timely supply of equipment and services in the context of increased communication with suppliers due to the COVID-19 pandemic, and ensures an appropriate buffer stocks of strategic materials. A system is in place with at least two sources of supply due to possible supply disruptions and delays.

AVTENTA

• Risks in connection with achieving planned revenues are managed through a competitive portfolio and the development of digital solutions.

• Risks in connection with the COVID-19 pandemic have resulted in delays in the implementation of projects and the reduced scope of new projects.

GVO

• Risks associated with rising prices of construction services are managed by adapting the organisation of work and processes.
• Risks in connection with the COVID-19 pandemic are affecting operations in terms of the implementation of investment and maintenance works, and due to the limited resources of subcontractors.

SOLINE

• Weather-related risks are tied to the risk of a loss of salt production due to adverse weather conditions, as salt production is a seasonal activity. The operations of Soline are being adapted to climate change via new sales programmes, while the infrastructure is also being adapted with the help of the Climate Plan of the Republic of Slovenia.
• Changes to the concession agreement on the management of the Sečovlje Salina Nature Park can have a significant effect on the company's business model. The company is in the process of obtaining the necessary authorisations to extend the existing salt-mining concession, which expires at the end of 2021.
• Risks in connection with the COVID-19 pandemic are having a negative effect on the company's operations, as part of the retail sales network is closed, while part of that network is operating according to an adjusted schedule. Salt production is being carried out in two shifts due to safety measures.

TSinpo

• Risks in connection with achieving planned sales of other market services relate to falling demand and pressure from the competition. Currently in progress at the company are active sales via online communication and the adaptation of scanning and packing services to market requirements.
• Risks in connection with the COVID-19 pandemic are having a negative effect on the company's operations due to declining demand and the postponed market launch of products. The company is communicating actively with customers, while activities for finishing transactions are also being implemented.

TSmedia

• Risks in connection with achieving planned revenues are managed by entering into annual contracts and by monitoring revenues. Promotional prices are being developed to address existing customers and new potential advertisers with an increased scope of work and services. A selection was made of sales lines adapted to specific advertisers.
• Risks associated with the sale of the company are managed through a conservative approach to the disclosure of documentation regarding operations, and through the appropriate organisation of processes and the motivation of employees.
• Risks in connection with the COVID-19 pandemic have resulted in the reduced number of advertising campaigns. The company is attracting new customers through direct marketing, new forms of advertising and campaigns to promote advertising, and by creating joint projects with end-advertisers.

IPKO

• The company responds to the risk of the loss of users and revenues in the segment of fixed and mobile services due to unfair competition through the active adaptation of its portfolio and the appropriate market approaches.
• There are risks in connection with the introduction of RLAH for the countries of the Western Balkans on 1 July 2021 and the loss of revenues from roaming. The company will file a request for a surcharge in accordance with the fair use regulation.
• Risks in connection with programme broadcasting rights are managed through the constant monitoring of software content and regular communication with partners.
• The risk of additional investments relating to the shift from an aerial to an underground infrastructure is managed through cooperation with Kosovo Energy Distribution Services (KEDS) and other operators for an optimal solution.
• The company filed a lawsuit before the Constitutional Court at the end of 2020 in connection with the management of risks associated with the payment of additional fees for the use of the infrastructure in municipalities.
• There are risks associated with a change in legislation and the interpretation thereof. The company expects that the new public procurement act will be in line with EU directives.
• The company has hired a tax consultant and is working with tax authorities in connection with risks associated with compliance with tax legislation governing licence fees for the broadcasting of channels and tax on other rightof-use licences.
• Risks in connection with the COVID-19 pandemic are having an additional impact on operations, as travel is limited, while measures have been adopted at the national level. The company is adapting its operations with the aim of ensuring business continuity and the availability of services. The company is intensively marketing services via online media.

4. CORPORATE GOVERNANCE

Management Board

Telekom Slovenije is managed by a five-member Management Board, comprising the following members as at 31 March 2021:

• Cvetko Sršen, President,
• Tomaž Jontes, Vice-President,
• Dr Mitja Štular, member
• Barbara Galičič Drakslar, member, and
• Špela Fortin, member and Workers' Director.

At its session held on 10 March 2021, Telekom Slovenije's Supervisory Board concluded an agreement with the President and three members of the Company's Management Board on the termination of their employment contracts and their recall. Accordingly, the terms of office of the President of the Management Board Tomaž Seljak, MSc and members Dr Vida Žurga, Matjaž Beričič, MSc and Tomaž Jontes were terminated, effective 10 March 2021. The Supervisory Board appointed Cvetko Sršen to serve as new President and Dr Mitja Štular and Tomaž Jontes to serve as members of the Company's Management Board. Their terms of office began on 10 March 2021.

At its session held on 22 March 2021, Telekom Slovenije's Supervisory Board appointed Barbara Galičič Drakslar to serve as member of the Management Board. Her four-year term of office began on 31 March 2021.

Supervisory board

Telekom Slovenije's Supervisory Board comprises nine members, six of whom are shareholder representatives and three of whom are employee representatives. The members of the Supervisory Board submitted a statement of compliance with the criteria of independence in accordance with the Corporate Governance Code.

Telekom Slovenije's Supervisory Board comprised the following members as at 31 March 2021:

Shareholder representatives:

• Iztok Černoša, President,
• Barbara Kürner Čad, Vice-President,
• Aleksander Igličar, MSc, member,
• Marko Kerin, member,
• Radovan Cerjak, member,
• Barbara Gorjup, MSc, member.

Employee representatives:

• Drago Kijevčanin, Vice-President,
• Dušan Pišek, member, and
• Jana Žižek Kuhar, member.

Members of the Supervisory Board are elected for a four-year term of office that begins on the day an individual member is appointed.

On 21 January 2021, the General Meeting of Shareholders recalled member of the Supervisory Board Igor Rozman. On 22 January 2021, Iztok Černoša, Aleksander Igličar, MSc, Marko Kerin and Radovan Cerjak were appointed to four-year terms of office as new members of the Supervisory Board. With the election of the new members of the Supervisory Board, the terms of office of the persons who were appointed under the decision of Ljubljana District Court of 3 November 2020 were terminated: Boštjan Koler, Dimitrij Marjanović and Štefan Belingar.

On 11 February 2021, the newly constituted Supervisory Board elected Iztok Černoša to serve as President of the Supervisory Board, and Barbara Kürner Čad and Drago Kijevčanin to serve as Vice-Presidents. The Supervisory Board's committees were also reconstituted.

The composition of the Supervisory Board is diverse, as its members complement each other in terms of their expertise, competences, experience, age, gender, work method and other aspects. This facilitates the effective exchange of opinions and views at sessions.

For more information, visit https://www.telekom.si/o-podjetju/predstavitev/organiziranost-in-upravljanje.

Composition of management and governance bodies at subsidiaries of the Telekom Slovenije Group

SLOVENIA

GVO, d. o. o. Managing Director: Borut Radi Infratel, d. o. o. Managing Director: Borut Radi Optic-Tel, d. o. o. Managing Director: Borut Radi

Avtenta, d. o. o. Managing Director: Primož Kučič

TSmedia, d. o. o. Managing Director: Simon Furlan, MSc

Soline, d. o. o. Managing Director: Klavdij Godnič

TSinpo, d. o. o. Managing Director: Danilo Tomšič, MSc Procurator: Vesna Lednik

OTHER COUNTRIES

IPKO Telecommunications LLC, Kosovo CEO: Robert Erzin, MSc

SIOL, d. o. o. Zagreb, Croatia Managing Director: Matjaž Pogačnik, MBA

SIOL, d. o. o. Podgorica, Montenegro Managing Director: Matjaž Pogačnik, MBA

SIOL, d. o. o. Sarajevo, Bosnia and Herzegovina Managing Director: Matjaž Pogačnik, MBA

SIOL DOOEL Skopje, Macedonia

Managing Director: Matjaž Pogačnik, MBA

SIOL DOO BELGRADE, Serbia Managing Director: Matjaž Pogačnik, MBA

SIOL Prishtina L.L.C., Kosovo

Managing Director: Matjaž Pogačnik, MBA

GVO Telekommunikation GmbH

Managing Directors: Borut Radi, Darko Gradišnik and Roman Mazi

5. SIGNIFICANT EVENTS IN THE PERIOD JANUARY – MARCH 2021

FIRST QUARTER OF 2021

JANUARY

• At the 32nd General Meeting of Shareholders of Telekom Slovenije, d. d., which was held on Thursday, 21 January 2021, shareholders adopted proposed changes to the Articles of Association of Telekom Slovenije, d. d. and adopted the consolidated text thereof. The General Meeting of Shareholders recalled member of the Supervisory Board and shareholder representative Igor Rozman, and elected Iztok Černoša, Aleksander Igličar, MSc, Marko Kerin and Radovan Cerjak to serve fouryear terms of office as members and shareholder representatives, effective 22 January 2021. With the election of new members to the Supervisory Board, the terms of office of the following persons, who were appointed under the decision of Ljubljana District Court of 3 November 2020, were terminated: Boštjan Koler, Dimitrij Marjanović and Štefan Belingar.
• After setting up the first national fifth-generation (5G) mobile network last year, Telekom Slovenije facilitated the first 5G mobile roaming this January. Subscribers to Telekom Slovenije's mobile services can thus roam in the 5G network of the Austrian operator Hutchison Drei Austria. The name of the network is written as '3 AT' or 'Drei'.

FEBRUARY

• Telekom Slovenije received a lawsuit on 1 February 2021 due to alleged breaches of contractual obligations. The value of the claim is less than 5% of capital, which represents a contingent liability with no impact on the financial statements of the Company and Group. Telekom Slovenije responded to the lawsuit in a timely manner and assesses that the plaintiff will be unsuccessful in the dispute in question.
• After being closed from 24 October 2020 to 9 February 2021, Telekom Slovenije's points of sale reopened on 10 February 2021. We ensure the weekly testing of employees at Telekom centres, where we implement all necessary protective measures.
• On 11 February 2021, Telekom Slovenije's Supervisory Board elected Iztok Černoša to serve as its President. Barbara Kürner Čad, as shareholder representative, and Drago Kijevčanin, as employee representative, were

appointed Vice-Presidents. Given the changes to the composition of the Supervisory Board, the latter's committees were also reconstituted.

• On 10 December 2020, the Company announced the initiation of the merger of Avtenta with Telekom Slovenije, a process that was expected to be completed on 1 April 2021. The merger was not carried out by the planned deadline. The Company will notify shareholders about further activities.
• Telekom Slovenije facilitated cloud gaming via the NEO platform, which has brought an entirely new experience to Slovenian homes in terms of managing TV content through voice control functionality.
• For the Biathlon World Championships in Pokljuka, Telekom Slovenije provided rapid and reliable communications via the fixed and mobile networks, including the latest generation 5G mobile communications. Pokljuka was thus the first biathlon world championship site where organisers, competitors and media outlets had internet access via the 5G network at their disposal.
• The Slovenian Consumers' Association named the Naj 5G mobile package, which provides subscribers the fastest mobile internet with speeds of up to 450/100 Mbit/s, the best package in the category of subscriber and prepaid packages with unlimited calls and messaging.

MARCH

• On 2 March 2021, Telekom Slovenije was notified by the Ljubljana District Court of a lawsuit filed by T-2 for the payment of ordinary damages in the amount of EUR 12,195,656, payment for lost profit in the amount of EUR EUR 35,760,909 and the non-existence of claims in the amount of EUR 1,778,033 with appertaining amounts. The aforementioned claim represents damages that the plaintiff allegedly incurred in the period 1 September 2018 to 31 July 2020. Telekom Slovenije believes that the plaintiff's lawsuit will be rejected in full.
• At its session held on 10 March 2021, Telekom Slovenije's Supervisory Board concluded an agreement with the President and three members of the Company's Management Board on the termination of their employment contracts and their recall from those positions.

Accordingly, the terms of office of the President of the Management Board Tomaž Seljak, MSc and members Dr Vida Žurga, Matjaž Beričič, MSc and Tomaž Jontes were terminated, effective 10 March 2021. The Supervisory Board appointed Cvetko Sršen to serve as new President and Dr Mitja Štular and Tomaž Jontes to serve as members of the Management Board. Their terms of office began on 10 March 2021.

• At its session held on 22 March 2021, Telekom Slovenije's Supervisory Board appointed Barbara Galičič Drakslar to the function of member of the Management Board. Her fouryear term of office began on 31 March 2021.
• Key to the future success of companies will be digitalisation, which allows employees to work from anywhere. The establishment of a secure and reliable ICT environment that facilitates remote work remains a challenge for many companies. For this reason, Telekom Slovenije

has developed a solution that represents something entirely new on the Slovenian market and that responds to such needs. That solution entails comprehensive IT services, including the leasing of devices and equipment for specific workplaces, tools to improve efficiency, the IT management of implemented solutions and IT assistance and support.

• Telekom Slovenije has published changes to its financial calendar for 2021. Those changes include the dates of the publication of the annual report of the Telekom Slovenije Group and Telekom Slovenije for 2020, the corporate governance statement, the convening of the Company's 33rd General Meeting of Shareholders, the Company's 33rd General Meeting of Shareholders, the resolutions of the Company's 33rd General Meeting of Shareholders and the payment of dividends.

6. EVENTS AFTER THE REPORTING DATE

SECOND QUARTER OF 2021

APRIL

• Telekom Slovenije received a decision from the Supreme Court of the Republic of Slovenia on 24 March 2021 in the administrative dispute with the Competition Protection Agency (CPA) due to the alleged abuse of the Company's dominant position on the inter-operator market. In its decision, the Supreme Court partially ruled in favour of Telekom Slovenije's request for review and overruled the contested judgement of the Administrative Court of 9 January 2018 in the part rejecting Telekom Slovenije's claim. In that part, the Supreme Court overturned the contested judgement and returned the matter to the court of first instance for retrial. That matter involves the reversal of the CPA's decision no. 306-23/2013-151 of 2 February 2015. In accordance with the Supreme Court's ruling, the aforementioned decision is no longer partially final.
• In the period 1 April to 11 April, when stricter measures were in place at the national level in order to prevent the spread of the coronavirus, our points of sale remained open due to the regular weekly testing of employees. During that period, certain Telekom centres operated according to adjusted or reduced working hours. As of 12 April, Telekom centres once again operate according to the usual schedule.
• Two and a half years after Telekom Slovenije achieved a new milestone and became one of the first in the world to present a solution that allows TV viewers to manage content via voice commands in Slovene instead of using a traditional remote control, the NEO platform is now used by 100,000 users, with the voice control of content becoming increasingly popular. Users gave 8.6 million voice commands in March of this year (of which 185,000 were different commands), which translates to an average of 126 voice commands a month per user.
• At a public auction for the allocation of radio frequencies for the provision of public communication services to end-users, Telekom Slovenije secured the radio frequency spectrum in the 700 MHz FDD band, 700 MHz SDL band, 1500 MHz band, 2100 MHz band, 3600 MHz band and 26 GHz band, for which it will pay a total of EUR 52,078,177.00. During the auction, Telekom Slovenije secured the planned frequency spectrum required to provide private users, companies and operators that roam in its

network the most advanced services and solutions in the future, with the best user experience.

• Telekom Slovenije has developed a comprehensive range of smart city solutions for sustainable living and the improved quality of life of the inhabitants of cities and communities. Using those solutions, cities and communities can monitor emissions and water loss, improve energy efficiency, ensure the smart management of parking lots and traffic flows, provide smart lighting, etc. To that end, Telekom Slovenije also set up a free public WiFi network in all major Slovenian cities in the scope of the WiFi4EU project.
• On 3 May 2021, Telekom Slovenije received the decision of the Slovenian Competition Protection Agency (AVK) with which AVK informs it that the procedure of establishing a violation of Article 9 of the Prevention of Restriction of Competition Act (ZPOmK-1) and Article 102 of the Treaty on the Functioning of the European Union (TFEU; formerly Article 82 of the Treaty establishing the European Community) has been stopped. AVK launched the procedure on 19 March 2009 against Mobitel and continued the procedure against Telekom Slovenije as its legal successor. AVK launched the procedure following because of alleged abuse of dominant position on the retail market for mobile telephone services by leading a pricing policy of indirectly or directly setting unfair retail prices of its Itak Džabest price plan. On 13 February 2012, AVK issued a decision, determining that Telekom Slovenije did violate ZPOmK-1 and TFEU by offering the retail price plan Itak Džabest at unfair prices between November 2008 and July 2010, as the incremental revenue was lower than the incremental costs. Telekom Slovenije, d.d., lodged a lawsuit at the Supreme Court of the Republic of Slovenia against the decision, and on 26 November 2013 it ruled in favour of Telekom Slovenije returning AVK's decision back to AVK for a new procedure. AVK issued a decision on 22 April 2021 on stopping the procedure with the explanation that it did not manage to obtain evidence on the existence of a predatory exclusionary strategy of Telekom Slovenije the repeated procedure.

7. CONDENSED INTERIM ACCOUNTING REPORT OF THE TELEKOM SLOVENIJE GROUP AND TELEKOM SLOVENIJE, D. D. FOR THE PERIOD JANUARY TO MARCH 2021

The condensed financial statements of the Telekom Slovenije Group and the condensed financial statements of the parent company Telekom Slovenije for the reported period and the comparable period last year were compiled in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with the requirements of the Companies Act (ZGD).

The condensed financial statements for the period ending 31 March 2021 were compiled in accordance with IAS 34 Interim Financial Reporting, and must be read together with the financial statements and disclosures compiled for the 2020 financial year. The financial statements for the period January–March 2021 and the comparable period January–March 2020 are unaudited, while the financial statements for the comparable period ending 31 December 2020 are audited.

The financial statements of the Group and Company were compiled under the assumption that both are going concerns. Operations are not seasonal.

Changes in accounting policies

The accounting policies used in the compilation of the interim condensed financial statements are the same as those applied in the compilation of the financial statements for the financial year ending 31 December 2020.

Use of significant estimates and judgements

The compilation of the financial statements requires of management certain estimates, assessments and assumptions that affect the carrying amount of assets and liabilities, the disclosure of contingent liabilities as at the statement of financial position date and the amount of revenues and expenses in the period ending on the statement of financial position date.

Future events and their impact cannot be determined with certainty. Accounting assessments therefore apply a judgement subject to change taking into account new events, experiences and additional information, and as the result of changes in the business environment. Actual values may vary from estimates.

Estimates and assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which estimates are revised, and in all future years affected by such revisions.

Changes in the Telekom Slovenije Group

There were no changes in the composition of the Telekom Slovenije Group in the period January to March 2021.

Coronavirus pandemic

The COVID-19 pandemic hit Europe and the rest of the world in 2020, affecting the population and companies alike.

The Telekom Slovenije Group and Telekom Slovenije verified the need for the impairment of assets and liabilities in 2020 during the pandemic and determined that additional impairments were unnecessary. There was also no reduction in or waiving of lease payments in connection with IFRS 16 Leases.

In accordance with the Act Determining Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy, certain Telekom Slovenije Group companies took advantage of individual state aid measures during the first quarter of 2021, as follows:

• the following companies took advantage of the reimbursement of compensation during temporary absence from work due to sickness covered by the employer for up to three days: Telekom Slovenije, GVO and Soline, in the total amount of EUR 8 thousand;
• the following companies took advantage of the reimbursement of wage compensation for furloughed workers and for the period a worker did not perform their work due to force majeure: Telekom Slovenije, GVO, Avtenta, TSmedia, TSinpo and Soline, in the total amount of EUR 111 thousand;
• the following companies took advantage of the reimbursement of compensation for the period of quarantine: Telekom Slovenije and GVO, in the total amount of EUR 10 thousand;
• Soline took advantage of the reimbursement of fixed costs, in the amount of EUR 89 thousand; and
• the following companies took advantage of the payment of an additional crisis bonus: Telekom Slovenije, GVO, Avtenta, TSmedia and TSinpo, in the total amount of EUR 111 thousand.

The reporting currency of the Telekom Slovenije Group is the euro, which is also the functional and reporting currency of the parent company Telekom Slovenije. All financial information is presented in thousands of euros, unless otherwise stated.

7.1. Condensed interim financial statements of the Telekom Slovenije Group and Telekom Slovenije, d. d.

Unaudited consolidated and separate income statement for the period ending 31 March 2021

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	I - III 2021	I - III 2020	I - III 2021	I - III 2020
Revenue	156,768	166,760	142,243	152,861
Other operating income	725	469	286	251
Cost of goods sold	-22,574	-19,018	-24,627	-20,771
Cost of materials and energy	-4,088	-3,666	-2,540	-2,817
Cost of services	-48,829	-63,412	-46,430	-61,033
Labour costs	-24,904	-25,424	-20,862	-21,303
Depreciation/Amortisation	-41,714	-41,852	-34,595	-34,138
Other operating expenses	-1,391	1,682	-1,605	1,855
Total operating expenses	-143,500	-151,690	-130,659	-138,207
Operating profit	13,993	15,539	11,870	14,905
Finance income*	284	341	867	1,045
Finance expenses*	-2,546	-2,581	-2,438	-2,568
Profit before tax	11,731	13,299	10,299	13,382
Current tax	-1,216	-1,158	-1,017	-1,037
Deferred tax expense	-798	247	-812	209
Net profit from continuing operations	9,717	12,388	8,470	12,554
Loss from discontinued operations	0	-1,054	0	0
Net profit for the period	9,717	11,334	8,470	12,554
Total earnings per share - from continuing operations in EUR	1.49	1.90	1.30	1.93
Total earnings per share in EUR	1.49	1.74	1.30	1.93

* The finance income and costs of Telekom Slovenije include interest on loans to and from subsidiaries.

Unaudited consolidated and separate statement of other comprehensive income for the period ending 31 March 2021

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	I - III 2021	I - III 2020	I - III 2021	I - III 2020
Net profit for the period	9,717	11,334	8,470	12,554
Items that may be reclassified subsequently to the statement of profit or loss
Translation reserves	14	21	0	0
Change in fair value of hedging financial instruments	105	-83	105	-83
Deferred tax	-20	16	-20	16
Change in fair value of hedging financial instruments (net)	85	-67	85	-67
Items that may not be reclassified subsequently to the statement of profit or loss
Actuarial remeasurements of defined benefit obligation	0	0	0	0
Change in fair value of investments in equity instruments measured at fair value through other comprehensive income	130	-437	130	-437
Deferred tax	-25	83	-25	83
Change in fair value of investments in equity instruments measured at fair value through other comprehensive income, net of tax	105	-354	105	-354
	0	0	0	0
Other comprehensive income for the period after tax	204	-400	190	-421
Total comprehensive income for the period	9,921	10,934	8,660	12,133
Comprehensive income attributable to owners of the controlling company	9,921	10,934
Continuing operations	9,921	11,988	0	0
Discontinued operations	0	-1,054	0	0

Unaudited consolidated and separate statement of financial position as at 31 March 2021
	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	31.03.2021	31.12.2020	31.03.2021	31.12.2020
ASSETS
Intangible assets	194,972	190,033	147,217	141,451
Property, plant and equipment	664,512	664,644	602,480	600,532
Right-of-use assets	76,676	77,420	84,111	86,506
Investments in subsidiaries	0	0	37,001	37,001
Other investments	3,191	3,068	64,858	63,951
Contract assets	2,596	2,668	2,167	2,337
Other receivables	17,661	17,081	17,657	17,081
Deferred costs	1,561	1,438	1,831	1,636
Investment property	1,243	1,258	4,215	4,230
Deferred tax assets	43,630	44,448	43,097	43,929
Total non-current assets	1,006,042	1,002,058	1,004,634	998,654
Assets held for sale	214	214	214	214
Inventories	27,223	26,175	23,512	21,811
Trade and other receivables	150,593	162,936	141,209	158,367
Contract assets	27,149	23,527	27,001	23,309
Deferred costs	8,388	4,250	6,900	4,740
Investments	509	512	16,575	17,385
Cash and cash equivalents	31,803	8,167	13,557	2,086
Total current assets	245,879	225,781	228,968	227,912
Total assets	1,251,921	1,227,839	1,233,602	1,226,566
EQUITY AND LIABILITIES
Share capital	272,721	272,721	272,721	272,721
Capital reserves	181,489	181,489	180,956	180,956
Profit reserves	106,479	106,479	104,978	104,978
Legal reserves	51,612	51,612	50,434	50,434
Reserves for treasury shares and interests	3,671	3,671	3,671	3,671
Treasury shares and interests	-3,671	-3,671	-3,671	-3,671
Statutory reserves	54,854	54,854	54,544	54,544
Other profit reserves	13	13	0	0
Retained earnings	42,993	33,305	58,828	50,359
Retain earnings from previous periods	33,276	8,440	50,358	26,185
Profit or loss for the period	9,717	24,865	8,470	24,174
Fair value reserve	-307	-497	-306	-497
Reserves for actuarial gains/losses	-2,958	-2,988	-2,733	-2,733
Translation reserve	-10	-25	0	0
Total equity	600,407	590,484	614,444	605,784
Contract liabilities	14,463	14,955	13,828	14,302
Provisions	20,588	20,407	16,298	16,184
Other payables	41,902	38,896	24,842	20,856
Deferred liabilities	836	817	669	672
Loans and borrowings	184,265	184,221	184,265	184,221
Lease liabilities	58,032	59,092	64,597	67,093
Other financial liabilities	237	244	237	244
Deferred tax liabilities	1,588	1,563	260	235
Total non-current liabilities	321,911	320,195	304,996	303,807
Trade payables	94,569	119,058	87,751	109,755
Income tax payable	1,149	90	1,018	0
Loans and borrowings	57,470	32,080	57,475	45,083
Lease liabilities	10,107	10,180	11,357	11,660
Other financial liabilities	101,632	101,239	101,630	101,237
Contract liabilities	12,324	12,721	8,932	8,869
Deferred liabilities	52,352	41,792	45,999	40,371
Total current liabilities	329,603	317,160	314,162	316,975
Total liabilities	651,514	637,355	619,158	620,782
Total equity and liabilities	1,251,921	1,227,839	1,233,602	1,226,566

Unaudited consolidated statement of changes in equity of the Telekom Slovenije Group for the period ending 31 March 2021

					Revenue reserves			Retained earnings
EUR thousand	Called up capital	Capital surplus	Legal reserves	Treasury share reserve	Treasury shares	Statutory reserves	Other revenue reserves	Retained earnings from previous years	Profit or loss for the period	Fair value reserve on available for-sale financial assets	Fair value reserve for hedging instruments	Fair value reserve for actuarial deficit and surplus	Translation reserve	Total
Balance at 1 Jan 2021	272,721	181,489	51,612	3,671	-3,671	54,854	13	8,440	24,865	-219	-278	-2,988	-25	590,484
Net profit or loss for the period									9,717					9,717
Other comprehensive income for the period										105	85	0	14	204
Total comprehensive income for the period	0	0	0	0	0	0	0	0	9,717	105	85	0	14	9,921
Dividends paid								0						0
Transactions with owners	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Transfer of profit or loss from previous period to retained earnings or losses								24,865	-24,865					0
Other	0	0						-29	0	0		30	1	2
Balance at 31 March 2021	272,721	181,489	51,612	3,671	-3,671	54,854	13	33,276	9,717	-114	-193	-2,958	-10	600,407

Unaudited consolidated statement of changes in equity of the Telekom Slovenije Group for the period ending 31 March 2020

					Revenue reserves
EUR thousand	Called up capital	Capital surplus	Legal reserves	Treasury share reserve	Treasury shares	Statutory reserves	Other revenue reserves	Retained earnings from previous years	Profit or loss for the period	Fair value reserve on available for-sale financial assets	Fair value reserve for hedging instruments	Fair value reserve for actuarial deficit and surplus	Translation reserve	Total
Balance at 1 Jan 2020	272,721	181,488	51,612	3,671	-3,671	54,854	13	30,648	941	1,171	-507	-2,347	-6	590,588
Profit or loss for the period									11,334					11,334
Other comprehensive income for the period										-354	-67	0	21	-400
Total comprehensive income for the period	0	0	0	0	0	0	0	0	11,334	-354	-67	0	21	10,934
Dividends paid								0						0
Transactions with owners	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Transfer of retained earnings from previous years to retained earnings								941	-941					0
Other								-1	0					-1
Balance at 31 March 2020	272,721	181,488	51,612	3,671	-3,671	54,854	13	31,588	11,334	817	-574	-2,347	15	601,521

Unaudited separate statement of changes in equity of Telekom Slovenije, d. d. for the period ending 31 March 2021

	Called-up capital	Capital surplus	Revenue reserves						Retained earnings	Fair value
EUR thousand			Legal reserves	Treasury share reserve	Treasury shares	Statutory reserves	Other revenue reserves	Retained earnings from previous years	Profit or loss for the period	reserve on available-for sale financial assets	Fair value reserve for hedging instruments	Fair value reserve for actuarial deficit and surplus	Total
Balance at 1 Jan 2021	272,721	180,956	50,434	3,671	-3,671	54,544	0	26,185	24,174	-219	-278	-2,733	605,784
Profit or loss for the period									8,470				8,470
Other comprehensive income for the period										105	85	0	190
Total comprehensive income for the period	0	0	0	0	0	0	0	0	8,470	105	85	0	8,660
Dividends paid								0					0
Transactions with owners	0	0	0	0	0	0	0	0	0	0	0	0	0
Transfer of profit or loss from previous period to retained earnings or losses								24,174	-24,174				0
Balance at 31 March 2021	272,721	180,956	50,434	3,671	-3,671	54,544	0	50,358	8,470	-114	-193	-2,733	614,444

Unaudited separate statement of changes in equity of Telekom Slovenije, d. d. for the period ending 31 March 2020

	Called-up capital		Revenue reserves						Retained earnings	Fair value
EUR thousand		Capital surplus	Legal reserves	Treasury share reserve	Treasury shares	Statutory reserves	Other revenue reserves	Retained earnings from previous years	Profit or loss for the period	reserve on available-for sale financial assets	Fair value reserve for hedging instruments	Fair value reserve for actuarial deficit and surplus	Total
Balance at 1 Jan 2020	272,721	180,956	50,434	3,671	-3,671	54,544	0	48,301	585	1,171	-507	-2,069	606,136
Profit or loss for the period									12,554				12,554
Other comprehensive income for the period										-354	-67	0	-421
Total comprehensive income for the period	0	0	0	0	0	0	0	0	12,554	-354	-67	0	12,133
Dividends paid								0					0
Transactions with owners	0	0	0	0	0	0	0	0	0	0	0	0	0
Transfer of retained earnings from previous years to retained earnings								585	-585				0
Balance at 31 March 2020	272,721	180,956	50,434	3,671	-3,671	54,544	0	48,887	12,554	817	-574	-2,069	618,270

	Unaudited consolidated cash flow statement for the period ending 31 March 2021
	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	I - III 2021	I - III 2020	I - III 2021	I - III 2020
Cash flows from operating activities
Net profit for the period	9,717	11,334	8,470	12,554
Adjustments for:
Depreciation/Amortisation	41,714	41,907	34,595	34,138
Impairment and write-offs of property, plant and equipment, and intangible assets	0	163	0	0
Gain or loss on disposal of property, plant and equipment	127	119	127	113
Impairment and write-off of inventories	251	220	252	220
Net impairment of receivables	728	841	679	572
Change in provisions and other changes	2	-4,499	0	-4,500
Finance income	-284	-341	-867	-1,045
Finance expenses	2,546	2,584	2,438	2,568
Income tax expense	2,015	911	1,830	828
Cash flows from operating activities prior to changes in working capital and provisions	56,816	53,239	47,524	45,448
Change in inventories	-896	-3,338	-1,548	-2,998
Change in trade and other receivables	11,035	3,610	17,469	21,237
Change in accrued and deferred asset items and contract assets	-7,811	1,007	-7,471	-16,975
Change in provisions	179	214	114	157
Change in trade and other payables	-24,122	-14,698	-17,624	-8,381
Change in accrued and deferred liability items and contract liabilities	9,690	10,545	5,225	9,461
Income tax paid	-164	-94	0	0
Net cash from operating activities	44,727	50,485	43,689	47,949
Cash flows from investing activities
Receipts from investing activities	43	33	1,592	1,044
Proceeds from the sale of property, plant and equipment	28	14	28	14
Interest received	0	0	556	61
Receipts from repayment of loans and deposits	15	19	1,008	969
Disbursements from investing activities	-41,424	-41,892	-41,275	-41,167
Purchases of property, plant and equipment	-21,181	-19,154	-20,240	-18,168
Purchases of intangible non-current assets	-20,243	-22,732	-20,085	-22,649
Loans granted and acquisition of deposits	0	-6	-950	-350
Net cash from investing activities	-41,381	-41,859	-39,683	-40,123
Cash flows from financing activities
Proceeds from financing activities	24,500	0	11,500	0
Current borrowings	24,500	0	11,500	0
Disbursements from financing activities	-4,259	-4,023	-4,084	-5,751
Loan originating costs and bond issued	-232	0	-232	0
Repayment of lease liabilities – principal	-3,378	-2,865	-3,205	-2,618
Repayment of current borrowings	0	-500	0	-2,500
Repayment of non-current borrowings	0	-16	0	0
Interest paid	-649	-642	-647	-633
Net cash from financing activities	20,241	-4,023	7,416	-5,751
Net increase/decrease in cash and cash equivalents	23,587	4,603	11,422	2,075
Opening balance of cash	8,167	13,219	2,086	1,153
Effects of exchange rate changes on cash and cash equivalents	49	64	49	64
Closing balance of cash	31,803	17,886	13,557	3,292

7.2. Notes to the interim financial statements of the Telekom Slovenije Group and Telekom Slovenije, d. d.

Telekom Slovenije Group

The Telekom Slovenije Group comprised the parent company Telekom Slovenije and the following subsidiaries as at the reporting date:

Company	Country	31.3.2021
GVO, d.o.o.	Slovenia	100 %
OPTIC-TEL, d.o.o.	Slovenia	100 %
INFRATEL, d.o.o.	Slovenia	100 %
GVO Telekommunikation GmbH	Germany	100 %
TSmedia, d.o.o.	Slovenia	100 %
AVTENTA, d.o.o.	Slovenia	100 %
SOLINE, d.o.o.	Slovenia	100 %
TSinpo, d.o.o	Slovenia	100 %
IPKO Telecommunications LLC	Kosovo	100 %
SIOL, d.o.o. Zagreb	Croatia	100 %
SIOL, d.o.o. Sarajevo	Bosnia and Herzegovina	100 %
SIOL, d.o.o. Podgorica	Montenegro	100 %
SIOL, DOOEL Skopje	North Macedonia	100 %
SIOL, d.o.o. Beograd	Serbia	100 %
SIOL, d.o.o. Prishtina	Kosovo	100 %
USTANOVA SRČNI SKLAD	Kosovo	100 %

Segment reporting

Segment reporting is based on the internal reporting system used by management in the decision-making process. The criterion for segment reporting is the registered office where an activity is performed. The Telekom Slovenije Group thus presents its operations in the following two segments:

Slovenia: this segment includes all Group companies registered in Slovenia, and primarily activities in the areas of fixed and mobile telephony services, the construction and maintenance of the telecommunications network, multimedia and internet services, and content and digital TV. The segment comprises the following companies: Telekom Slovenije, GVO, Avtenta, TSmedia, Soline, TSinpo, OPTIC-TEL and INFRATEL, as well as the Heart Foundation, which organises and collects donations, grants and other monetary and non-monetary contributions to achieve the foundation's charitable mission.

Other countries: this segment comprises other Group companies, including IPKO, SiOL Zagreb, SiOL Sarajevo, SiOL Podgorica, SiOL Skopje, SiOL Belgrade, SiOL Prishtina and GVO Telekommunikation GmbH. This segment's main activity is the provision of telecommunication services.

Inter-segment sales were executed according to market terms. Intra-group transactions are eliminated in the consolidation process, and included in eliminations and adjustments.

The Group does not disclose finance income and costs by segment, as the Group's financing is centralised at the level of the parent company. Disclosures regarding revenues generated with external customers are described by type in the note 'Sales revenue'.

The accounting policies that apply to segments are the same as those that apply to the Group.

Operating segments: I – III 2021

EUR thousand	Slovenia		Other countries Eliminations and adjustments*	Total
External sales	142,218	14,550		156,768
Intersegment sales	18,363	1,473	-19,836	0
Total segment revenue	160,581	16,023	-19,836	156,768
Other revenue	615	110		725
Total operating expenses	-130,248	-13,252		-143,500
Operating profit per segment	30,948	2,881	-19,836	13,993
Finance income				284
Finance expenses				-2,546
Profit before tax				11,731
Income tax				-1,216
Deferred taxes				-798
Net profit for the period				9,717

Other data by segment 31. 3. 2021	Slovenia	Other countries	Eliminations and adjustments*	Total
Segment assets	1,308,793	133,033	-189,905	1,251,921
Segment liabilities	649,795	121,457	-119,738	651,514

* Inter-company amounts are excluded from the consolidated financial statements.

Revenues by segment: I – III 2021

EUR thousand	Slovenia	Other countries	Total
Mobile services in end-customer market	52,877	8,853	61,730
Fixed-line telephone services on end-customer market	46,542	5,419	51,961
Additional services	1,880	0	1,880
Wholesale market	35,504	278	35,782
Other revenues and merchandise	5,415	0	5,415
Total revenue	142,218	14,550	156,768

EUR thousand	Slovenia	Other countries	Total
Revenue from services rendered	118,785	14,139	132,924
Sales revenue - goods	23,433	411	23,844
Total revenue	142,218	14,550	156,768

Operating segments: I – III 2020

EUR thousand	Slovenia	Other countries	Eliminations and adjustments*	Total
External sales	153,425	13,335		166,760
Intersegment sales	19,863	1,480	-21,343	0
Total segment revenue	173,288	14,815	-21,343	166,760
Other revenue	442	27		469
Total operating expenses	-137,405	-14,285		-151,690
Operating profit per segment	36,325	557	-21,343	15,539
Finance income				341
Finance costs				-2,581
Profit before tax				13,299
Income tax expense				-1,158
Deferred tax				247
Net profit for the period				12,388

Slovenia	Other countries	Eliminations and adjustments*	Total
1,315,843	132,105	-220,109	1,227,839
655,272	121,819	-139,736	637,355

* Inter-company amounts are excluded from the consolidated financial statements.

Revenues by segment: I – III 2020

EUR thousand	Slovenia	Other countries	Total
Mobile services in end-customer market	50,108	7,534	57,642
Fixed-line telephone services on end-customer market	55,936	5,569	61,505
Additional services	1,887	0	1,887
Wholesale market	38,702	232	38,934
Other revenues and merchandise	6,792	0	6,792
Total revenue	153,425	13,335	166,760

EUR thousand	Slovenia	Other countries	Total
Revenue from services rendered	134,102	13,090	147,192
Sales revenue - goods	19,323	245	19,568
Total revenue	153,425	13,335	166,760

The sales revenue of the Telekom Slovenije Group amounted to EUR 156.8 million in the period January–March 2021, a decrease of 6% relative to 2020.

National measures in connection with the COVID-19 pandemic contributed to lower revenues.

Revenues were higher in the mobile segment of the end-user market, primarily on account of higher revenues from mobile merchandise at Telekom Slovenije. Revenues were also up relative to the same period last year at the subsidiary IPKO. The decline in revenues at Telekom Slovenije related to people not crossing national borders due to the COVID-19 pandemic, which in turn resulted in lower revenues from the roaming of users in the networks of foreign operators. Revenues are also declining due to the optimisation of subscribers who have an increasing number of services included in their monthly subscription fee.

Revenues were lower in the fixed segment of the end-user market, primarily due to lower sales of IT licences, which simultaneously reduces costs, and due to a decline in revenues from traditional voice telephony, as the result of the falling number of traditional connections and their replacement with mobile and IP telephony.

Revenues from financial services, energy, eHealth services and insurance are recorded in additional services. Revenues from eHealth services were up in 2021, while revenues from other services were down.

Revenues on the wholesale market were lower than in 2020, primarily due to lower revenues from international voice services and the roaming of foreign users in our mobile networks.

Other revenues and merchandise were down relative to 2020 due to lower revenues on account of the COVID-19 pandemic.

Rental income

The Telekom Slovenije Group generated rental income in the amount of EUR 2,156 thousand during the first quarter of 2021, compared with EUR 2,731 thousand during the same period last year.

Telekom Slovenije generated rental income in the amount of EUR 2,352 thousand in that period, compared with EUR 2,971 thousand during the same period last year.

Costs of services

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	I - III 2021	I - III 2020	I - III 2021	I - III 2020
Telecommunications services	26,590	30,350	26,372	30,218
Costs of leased lines, networks and platforms	1,420	1,447	2,082	2,058
Multimedia content	2,220	4,225	2,204	4,871
Costs of subcontractors	4,771	13,134	3,571	11,326
Maintenance of property, plant and equipment	5,268	5,257	5,278	5,161
Costs of other services	8,560	8,999	6,923	7,399
Total cost of services	48,829	63,412	46,430	61,033

The costs of services incurred by the Group in the period January–March 2021 were down by EUR 14,583 thousand relative to the same period in 2020. Revenues from the roaming of users in the networks of foreign operators and roaming by foreign users in our mobile networks were lower during 2021 due to the pandemic, as were revenues from international voice services, which also resulted in lower costs of telecommunication services. The costs of leased lines, networks and platforms were also slightly lower.

The costs of services of sub-contractors were lower, primarily due to lower sales of IT licences.

The costs of other services primarily comprise the costs of advertising and sponsorships in the amount of EUR 1,721 thousand (January–March 2020: EUR 1,770 thousand), the costs of intellectual and personal services in the amount of EUR 1,543 thousand (January–March 2020: EUR 1,518 thousand), the costs of insurance premiums in the amount of EUR 704 thousand (January–March 2020: EUR 759 thousand) and the costs of other services in the amount of EUR 2,213 thousand (January–March 2020: EUR 2,367 thousand).

Operating profit and net profit

Telekom Slovenije Group

Earnings before interest and taxes (EBIT) in the amount of EUR 13,993 thousand were down by EUR 1,546 thousand relative to the same period last year. A net profit of EUR 9,717 thousand was achieved for the accounting period in the context of a net financial loss of EUR 2,262 thousand.

Telekom Slovenije

Earnings before interest and taxes (EBIT) in the amount of EUR 11,870 thousand were down by EUR 3,035 thousand relative to the same period last year. A net profit of EUR 8,470 thousand was achieved for the accounting period in the context of a net financial loss of EUR 1,571 thousand.

Intangible assets

Intangible assets were up by EUR 4,939 thousand at the Telekom Slovenije Group level, and were up by EUR 5,766 thousand at Telekom Slovenije relative to the end of 2020. Commitments for intangible assets amounted to EUR 7,948 thousand at the Telekom Slovenije Group level and to EUR 9,087 thousand at Telekom Slovenije as at 31 March 2021.

Property, plant and equipment

The Telekom Slovenije Group's property, plant and equipment amounted to EUR 664,512 thousand as at 31 March 2021, representing 53.1% of total assets. The balance of property, plant and equipment was down by EUR 132 thousand relative to the end of 2020. Commitments for property, plant and equipment totalled EUR 6,569 thousand at the Group level as at 31 March 2021.

Telekom Slovenije's property, plant and equipment amounted to EUR 602,480 thousand, representing 48.8% of total assets. Assets were up by EUR 1,948 thousand relative to the end of 2020, while commitments for property, plant and equipment totalled EUR 25,748 thousand as at 31 March 2021.

Assets under lease

Assets under lease amounted to EUR 76,676 thousand at the Telekom Slovenije Group level and to EUR 84,111 thousand at Telekom Slovenije as at 31 March 2021.

Depreciation in the amount of EUR 3,048 thousand and interest expense on lease liabilities in the amount of EUR 544 thousand were disclosed in the Telekom Slovenije Group's income statement in the period January–March 2021. The Group disclosed depreciation in the amount of EUR 3,114 thousand and interest expense in the amount of EUR 572 thousand during the same period last year.

Depreciation in the amount of EUR 2,742 thousand and interest expense on lease liabilities in the amount of EUR 528 thousand were disclosed in Telekom Slovenije's income statement in the period January–March 2021. The Company disclosed depreciation in the amount of EUR 2,788 thousand and interest expense in the amount of EUR 565 thousand during the same period last year.

Trade and other receivables

The Group and Company disclose receivables from the sale of merchandise with a maturity exceeding one year in non-current receivables. Corrections to the value of receivables relate to expected credit losses. The ageing structure of receivables is presented in Section 7.3.

Current trade and other receivables were down by EUR 12,343 thousand at the Telekom Slovenije Group level and by EUR 17,158 thousand at Telekom Slovenije relative to the balance at the end of 2020.

Financial liabilities

Financial liabilities amounted to EUR 343,604 thousand at the Telekom Slovenije Group level and to EUR 343,607 thousand at Telekom Slovenije as at 31 March 2021. They mainly relate to:

• borrowings received in the amount of EUR 241,735 thousand at the Telekom Slovenije Group level and EUR 241,740 thousand at Telekom Slovenije; and
• other non-current financial liabilities relate to liabilities in connection with an interest-rate swap in the amount of EUR 237 thousand at both the Group and Company levels. Current financial liabilities comprise liabilities from issued bonds in the amount of EUR 101,569 thousand at the Group and Company levels, and other liabilities in the amount of EUR 63 thousand at the Telekom Slovenije Group level and EUR 61 thousand at Telekom Slovenije.

Lease liabilities

The lease liabilities of the Telekom Slovenije Group amounted to EUR 68,139 thousand as at 31 March 2021 and were down by EUR 1,133 thousand relative to the end of 2020.

The lease liabilities of Telekom Slovenije amounted to EUR 75,954 thousand as at 31 March 2021 and were down by EUR 2,799 thousand relative to the end of 2020.

Fair value hierarchy

Given accounting policies and the classification of individual items, the determination of fair value was required in certain cases for financial and non-financial assets and liabilities. The Group and Company take into account the following hierarchy when determining fair value:

Level 1: fair value is determined by directly quoting an officially published price on an active market;

Level 2: other techniques for determining fair value based on assumptions with a significant impact on fair value that are in line with current observable market transactions with the same instruments, either directly or indirectly; and

Level 3: other techniques for determining fair value based on assumptions with a significant impact on fair value that are not in line with current observable market transactions with the same instruments.

The table below only includes information regarding classification to the fair value hierarchy for assets and financial liabilities measured at fair value and for which fair value is disclosed.

Carrying amount and fair value of the Telekom Slovenije Group's financial instruments as at 31 March 2021

EUR thousand	Carrying amount	Fair values	Level 1	Level 2	Level 3
Non-current financial assets
Investments in shares and interests listed on the stock exchange, measured at fair value through other comprehensive income	1,984	1,984	1,984
Investments in shares and interests not listed on the stock exchange, measured at fair value through other comprehensive income	1,109	1,109			1,109
Loans granted	91	91		91
Other financial assets	7	7		7
Other receivables	17,661	17,661		17,661
Current financial assets
Loans granted	58	58		58
Other current financial assets	451	451		451
Trade and other receivables	150,593	150,593		150,593
Cash and cash equivalents	31,803	31,803		31,803
Non-current financial liabilities
Borrowings	184,265	184,265		184,265
Liabilities for interest rate swap	237	237		237
Other payables	41,902	41,902		41,902
Current financial liabilities
Bonds	101,569	100,500	100,500
Borrowings	57,470	57,470		57,470
Other financial liabilities	63	63		63
Trade payables	94,569	94,569		94,569

Carrying amount and fair value of the Telekom Slovenije Group's financial instruments as at 31 December 2020
EUR thousand	Carrying amount	Fair values	Level 1	Level 2	Level 3
Non-current financial assets
Investments in shares and interests listed on the stock exchange, measured at fair value through other comprehensive income	1,854	1,854	1,854
Investments in shares and interests not listed on the stock exchange, measured at fair value through other comprehensive income	1,111	1,111			1,111
Loans granted	103	103		103
Other receivables	17,081	17,081		17,081
Current financial assets
Other current financial assets	451	451		451
Trade and other receivables	162,936	162,936		162,936
Cash and cash equivalents	8,167	8,167		8,167
Non-current financial liabilities
Borrowings	184,221	184,221		184,221
Liabilities for interest rate swap	244	244		244
Other payables	38,896	38,896		38,896
Current financial liabilities
Bonds	101,078	100,500	100,500
Borrowings	32,080	32,080		32,080
Liabilities for interest rate swap	98	98		98
Other financial liabilities	98	98		98
Trade payables	119,058	119,058		119,058

Carrying amount and fair value of Telekom Slovenije's financial instruments as at 31 March 2021

EUR thousand	Carrying amount	Fair values	Level 1	Level 2	Level 3
Non-current financial assets
Investments in shares and interests listed on the stock exchange, measured at fair value through other comprehensive income	1,984	1,984	1,984
Investments in shares and interests not listed on the stock exchange, measured at fair value through other comprehensive income	1,109	1,109			1,109
Loans granted	61,765	61,765		61,765
Other receivables	17,657	17,657		17,657
Current financial assets
Loans granted	16,575	16,575		16,575
Trade and other receivables	141,209	141,209		141,209
Cash and cash equivalents	13,557	13,557		13,557
Non-current financial liabilities
Borrowings	184,265	184,265		184,265
Liabilities for interest rate swap	237	237		237
Other payables	24,842	24,842		24,842
Current financial liabilities
Bonds	101,569	100,500	100,500
Borrowings	57,475	57,475		57,475
Other financial liabilities	61	61		61
Trade payables	87,751	87,751		87,751

Carrying amount and fair value of Telekom Slovenije's financial instruments as at 31 December 2020

EUR thousand	Carrying amount	Fair values	Level 1	Level 2	Level 3
Non-current financial assets
Investments in shares and interests listed
on the stock exchange, measured at fair	1,854	1,854	1,854
value through other comprehensive income
Investments in shares and interests not
listed on the stock exchange,
measured at fair value through other	1,109	1,109			1,109
comprehensive income
Loans granted	60,988	60,988		60,988
Other financial assets
Other receivables	17,081	17,081		17,081
Current financial assets
Loans granted	17,385	17,385		17,385
Other current financial assets
Trade and other receivables	158,367	158,367		158,367
Cash and cash equivalents	2,086	2,086		2,086
Non-current financial liabilities
Bonds
Borrowings	184,221	184,221		184,221
Liabilities for interest rate swap	244	244		244
Other payables	20,856	20,856		20,856
Current financial liabilities
Bonds	101,078	100,500	100,500
Borrowings	45,083	45,083		45,083
Liabilities for interest rate swap	98	98		98
Other financial liabilities	61	61		61
Trade payables	109,755	109,755		109,755

The fair values in levels 2 and 3 of the hierarchy were assessed using the discounted cash flow valuation technique.

Neither the Group nor the Company recorded any transitions between fair value levels during the reporting period.

Contingent liabilities from lawsuits

The Telekom Slovenije Group received two lawsuits in the period January–March 2021:

• a lawsuit was received on 1 February 2021 due to alleged breaches of contractual obligations. Telekom Slovenije responded in a timely manner and assesses that the plaintiff will be unsuccessful in the dispute in question; and
• a lawsuit was received on 2 March 2021 claiming ordinary damages, lost income and the non-existence of claims. Telekom Slovenije believes that the plaintiff's lawsuit will be rejected in full.

Contingent liabilities from guarantees issued

The Group had provided the following guarantees as at 31 March 2021:

• performance guarantees and warranty bonds in the amount of EUR 8,854 thousand, and
• other guarantees in the amount of EUR 212 thousand.

The Company had provided the following guarantees as at 31 March 2021:

• performance guarantees and warranty bonds in the amount of EUR 7,208 thousand, and
• collateral and other guarantees in the amount of EUR 483 thousand.

None of the above stated liabilities meet the conditions for recognition in the statement of financial position, and the Group does not expect any material consequences as the result thereof.

Transactions with related parties

Related parties of the Company include the Republic of Slovenia as the majority shareholder of Telekom Slovenije, other shareholders, members of the Management Board, members of the Supervisory Board and their family members.

Transactions with individuals

Natural persons (members of the Management Board and Supervisory Board) held 724 shares in Telekom Slovenije as at 31 March 2021, representing a holding of 0.01108%.

Transactions with owners and parties related thereto

The majority owner of Telekom Slovenije is the Republic of Slovenia, which together with Slovenski državni holding (SDH), holds a 66.79% participating interest in Telekom Slovenije.

Parties related to owners include those companies in which the Republic of Slovenia and SDH together hold a direct participating interest of at least 20%. A list of the aforementioned companies is published on SDH's website (http://www.sdh.si/sl-si/upravljanje-nalozb/seznam-nalozb).

The total value of transactions is presented in the table below.

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	31.3.2021	31.12.2020	31.3.2021	31.12.2020
Outstanding trade receivables	3,069	3,480	2,890	3,336
Outstanding trade payables	2,051	2,156	1,981	2,060
VAT liabilities	4,575	5,845	4,524	6,026
Income tax payable	1,283	75	1,018	0
EUR thousand	I – III 2021	I – III 2020	I – III 2021	I – III 2020
Revenue	3,430	5,213	3,152	4,060
Purchase costs of material and services	2,369	2,499	2,148	2,244
EUR thousand	I – III 2021	I – III 2020	I – III 2021	I – III 2020
VAT payment	14,615	13,297	14,743	13,313
Corporate income tax payment	160	163	0	0

Transactions with Group companies

Telekom Slovenije recorded the following transactions with Group companies:

EUR thousand	31.3.2021	31.12.2020
Receivables due from companies in the Group
Subsidiaries – gross amount	3,432	3,872
Subsidiaries – impairment	-15	-22
Subsidiaries – net amount	3,417	3,850
Borrowings to companies in the Group
Subsidiaries – gross amount	78,192	78,209
Subsidiaries – impairment	0	0
Subsidiaries – net amount	78,192	78,209
Liabilities to companies in the Group
Subsidiaries	26,455	41,810
EUR thousand	I - III 2021	I - III 2020
Net Group revenue	2,915	3,594
Subsidiaries	2,915	3,594
Purchase of material and services in the Group	3,962	4,818
Subsidiaries	3,962	4,818

Loans granted to subsidiaries

EUR thousand	31.3.2021	31.12.2020
TSmedia, d.o.o.	1,831	1,556
IPKO d.o.o.	65,149	65,650
SOLINE d.o.o.	1,968	1,998
SIOL d.o.o., Zagreb	614	150

SiOL d.o.o. Sarajevo	5,166	5,290
SIOL BEOGRAD	178	240
SIOL Priština	3,286	3,325
Total to subsidiaries	78,192	78,209

All transactions between related parties are executed at market prices.

Events after the reporting date

Events after the reporting date are described in the business section of this report, in Section 6 Events after the reporting date

7.3. Financial risk management

The financial risks to which the Telekom Slovenije Group is most exposed in its operations are credit risk, shortterm and long-term solvency risk and interest-rate risk. The Telekom Slovenije Group assesses exposure to specific types of financial risks and implements measures to control those risks based on their effects on cash flows and the income statement.

Presented below are the most significant financial risks that the Group regularly assesses in accordance with the relevant policy. It also verifies the appropriateness of measures to manage those risks.

Credit risk

Credit risk is the risk of financial loss if a subscriber or contracting party fails to settle their obligations in full or fails to settle them at all.

Maximum exposure to credit risk is equal to the carrying amount of financial assets.

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	31.3.2021	31.12.2020	31.3.2021	31.12.2020
Loans granted	149	164	78,340	78,373
Investments	451	451	0	0
Trade and other receivables	150,593	162,936	141,209	158,367
- of which trade receivables	146,062	156,771	137,692	153,688
Cash and cash equivalents	31,803	8,167	13,557	2,086
TOTAL	182,996	171,718	233,106	238,826

The Group ensures an appropriate level of diversification in the placement of financial assets. Concentration risk is therefore low.

Credit risk or the risk of counterparty default derives from default by subscribers (retail) and by operators (wholesale). The highest exposure to credit risk is seen in trade receivables. The latter amounted to EUR 150,593 thousand as at 31 March 2021, a decrease of EUR 12,343 thousand relative to the end of 2020. Telekom Slovenije's receivables make up the majority of the Group's trade and other receivables. The majority of receivables are unsecured. The Group's receivables are accounted for by a large number of individuals and legal entities. Its largest customers are operators, where turnover generally flows in both directions, which reduces net credit exposure. We assess that there is no significant concentration of credit risk vis-à-vis a particular customer or economic sector.

Procedures aimed at the management of receivables are implemented at Group companies and include the monitoring of business partners' credit ratings, the monitoring of high-traffic subscribers and debt collection activities. Debt collection activities are carried out by companies according to a predefined timetable (reminders and disconnections) and via specialised external service providers. Prior authorisation is required at Telekom Slovenije for the entry into and amendments to subscriber agreements and for the deferred payment of merchandise purchases. Larger Group companies have implemented a Fraud Management System (FMS) as an additional credit risk management measure, while Telekom Slovenije, which has a large number of post-paid subscribers, has also introduced a Credit Management System (CMS).

Credit risk is assessed as manageable on account of procedures introduced to manage receivables.

The Telekom Slovenije Group and Telekom Slovenije also monitor credit risk in other areas of operations. Cash on accounts is allocated according to the principles of minimising risks and achieving the appropriate diversification by banks. The associated risk is low, as there is no major risk associated with maintaining cash on accounts due to the stability of the banking system and the high liquidity of banks.

The Group is also exposed to risks associated with receivables arising from loans to employees and investments in short-term deposits. The risk associated with loans granted is low, as those loans are repaid for the most part when employees' wages are paid, while the risks associated with other investments are mitigated through the appropriate diversification of investments and by monitoring the credit ratings of individual banks.

Telekom Slovenije is also exposed to credit risk in connection with receivables from loans to subsidiaries.

The Company manages risks associated with borrowers' failure to fulfil their obligations through the use of various collateral instruments in loan agreements, such as the establishment of liens on real estate and moveable property, the assignment of existing and future receivables, liens, declarations of surety and other appropriate forms of collateral. The Company also regularly monitors and supervises the operations of subsidiaries to further mitigate the associated risks.

Ageing analysis of receivables of the Telekom Slovenije Group as at the reporting date

	31.03.2021				31.12.2020
EUR thousand	Gross value	Expected loss rate	Value adjustment	Net value	Net value
Total trade receivables	162,297		-16,235	146,062	156,770
Trade receivables not past due	122,503	0.7%	-830	121,673	138,728
Past due
-up to and including 30 days	17,434	2.2%	-386	17,047	11,385
- from and including 31 days to and including 60 days	2,753	7.4%	-204	2,550	3,198
- from and including 61 days to and including 90 days	2,016	8.5%	-171	1,845	551
- from and including 91 days to and including 180 days	1,313	51.6%	-677	636	698
- from and including 181 days to and including 365 days	2,450	49.9%	-1,222	1,228	1,168
- from and including 366 days up to 2 years	4,812	80.0%	-3,851	961	926
- over 2 years	5,049	97.8%	-4,937	112	108
- trade receivables in insolvency proceedings	3,967	99.7%	-3,957	10	8
Total trade receivables past due	39,794		-15,405	24,389	18,042
Other trade receivables	4,539		-8	4,531	6,166
Total receivables	166,836		-16,243	150,593	162,936

Ageing analysis of receivables of Telekom Slovenije as at the reporting date

31.03.2021				31.12.2020
Gross value	Expected loss rate	Value adjustment	Net value	Net valued
150,452		-12,761	137,692	153,688
122,716	0.7%	-845	121,872	139,217
9,648	4.0%	-386	9,262	8,172
2,262	9.0%	-203	2,059	2,981
1,899	9.0%	-171	1,728	589
1,161	49.0%	-569	592	655
2,219	49.0%	-1,087	1,132	1,162
2,375	60.0%	-1,425	950	819
4,857	98.0%	-4,760	97	93
3,315	100.0%	-3,315	0	0

Total trade receivables past due	27,736	-11,916	15,820	14,471
Other trade receivables	3,517	0	3,517	4,679
Total receivables	153,969	-12,761	141,209	158,367

Trade receivables within the Group are classified to the appropriate maturity buckets. Expected credit losses for receivables within the Group are taken into account at the same rate applied to other receivables.

Non-current trade receivables are outstanding in full.

Maturity dates of loans granted

	Telekom Slovenije Group		Telekom Slovenije
In EUR thousand	31.3.2021	31.12.2020	31.3.2021	31.12.2020
Past due	6	6	6	6
Not past due:	143	158	78,334	78,367
- in less than 3 months	14	15	1,277	323
- between 3 and 12 months	38	40	15,292	17,056
- between 1 and 2 years	35	40	19,677	9,582
- between 2 and 5 years	49	53	34,917	44,358
- over 5 years	7	10	7,171	7,049
Total	149	164	78,340	78,373

Ageing analysis of loans granted as at 31 March 2021

Telekom Slovenije Group	Past due
EUR thousand	Not past due:	Less than 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
Loans granted	143	6	0	0	0	0	149

Telekom Slovenije	Past due
EUR thousand	Not past due:	Less than 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
Loans granted	78,334	6	0	0	0	0	78,340

Ageing analysis of loans granted as at 31 December 2020

Telekom Slovenije Group
EUR thousand	Not past due	Less than 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
Loans granted	158	6	0	0	0	0	164

Telekom Slovenije			Past due
EUR thousand	Not past due:	Less than 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
Loans granted	78,367	6	0	0	0	0	78,373

Liquidity risk

The Group's solvency is the result of the active planning and management of cash flows, ensuring the appropriate maturities and the diversification of financial debt, financing within the Group, and the optimisation of working capital and cash. Liquidity risk at the Group level is managed by the parent company, which plans and monitors subsidiaries' financing needs, and provides them the sources they require.

Debt is relatively low at the level of the Group and Company. The majority of the financial liabilities of the Group relate to a long-term syndicated loan in the amount of EUR 215.4 million, five-year bonds in the amount of EUR 100 million, and finance lease liabilities in the amount of EUR 68.1 million at the Group level and EUR 76.0 million at the Company level. The Group and Company regularly repay their liabilities from financing.

For the purpose of ensuring a high level of liquidity, the Group has open short-term credit lines at banks that are rolled over as required. Total liquidity reserves in the form of approved but undrawn short-term revolving credit lines amounted to EUR 100 million at the end of the first quarter of 2021, while a long-term loan in the amount of EUR 100 million under an agreement with the European Investment Bank is likewise undrawn. The Company began activities during the first quarter of 2021 to secure new long-term sources to repay bonds that mature in June 2021.

Maturity of liabilities of the Telekom Slovenije Group as at 31 March 2021 and 3 December 2020

	Not past due:
In EUR thousand	Past due	Callable	Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
31 March 2021
Loans and borrowings	0	0	16,260	41,385	30,769	153,846	0	242,260
Anticipated interest on loans	0	0	1,649	1,562	2,725	2,756	0	8,692
Other financial liabilities	61	0	101,569	2	237	0	0	101,869
Anticipated interest on bonds	0	0	1,950	0	0	0	0	1,950
Trade and other payables	816	2,686	72,587	18,480	16,157	8,467	17,278	136,471
Financial liabilities from lease	81	6	3,897	6,123	7,961	17,604	32,467	68,139
Total	958	2,692	197,912	67,552	57,849	182,673	49,745	559,381
31 Dec. 2020
Loans and borrowings	0	0	1	32,269	30,769	153,846	0	216,885
Anticipated interest on loans	0	0	16	3,202	2,725	2,756	0	8,699
Other financial liabilities	61	0	98	101,097	244	0	0	101,500
Anticipated interest on bonds	0	0	0	1,950	0	0	0	1,950
Trade and other payables	2,593	2,727	103,519	10,220	9,313	18,988	10,594	157,954
Financial liabilities from lease	120	14	5,023	5,023	7,044	18,059	33,989	69,272
Total	2,774	2,741	108,657	153,761	50,095	193,649	44,583	556,260

Maturity of liabilities of Telekom Slovenije as at 31 March 2021 and 31 December 2020

			Not past due:
v tisoč EUR	Past due	Callable	Up to 3 months	Between 3 and 12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total
31 March 2021
Loans and borrowings	0	0	16,265	41,385	30,769	153,846	0	242,265
Anticipated interest on loans	0	0	1,649	1,562	2,725	2,756	0	8,692
Other financial liabilities	61	0	101,569	0	237	0	0	101,867
Anticipated interest on bonds	0	0	1,950	0	0	0	0	1,950
Trade and other payables	15	1,305	69,303	17,128	16,160	8,467	215	112,593
Financial liabilities from lease	14	6	4,402	6,934	8,849	22,254	33,495	75,954
Total	90	1,311	195,138	67,009	58,740	187,323	33,710	543,321
31 Dec 2020
Loans and borrowings	0	0	0	45,272	30,769	153,846	0	229,887
Anticipated interest on loans	0	0	28	3,250	2,725	2,756	0	8,759
Other financial liabilities	61	0	98	101,095	244	0	0	101,498
Anticipated interest on bonds	0	0	0	1,950	0	0	0	1,950
Trade and other payables	1,845	1,376	96,548	9,986	10,551	10,045	260	130,611
Financial liabilities from lease	27	14	5,463	6,155	8,837	22,726	35,531	78,753
Total	1,933	1,390	102,137	167,708	53,126	189,373	35,791	551,458

Interest rate risk

Interest-rate risk is the risk of the negative effect of a change in market interest rates on the Group's operations. The Group's exposure to interest-rate risk as at 31 March 2021 derives from a potential change in the EURIBOR reference interest rate linked to interest-sensitive liabilities. The target ratio of financial liabilities with a variable interest rate to financial liabilities with a fixed or hedged interest rate that the Group and Company pursue is 50% of liabilities with a fixed or hedged interest rate.

Liabilities from loans raised with variable interest rates tied to the 6-month EURIBOR accounted for 52.6% of the Group's interest-bearing financial liabilities and 51.6% of the Company's interest-bearing financial liabilities as at 31 March 2021. The remaining liabilities are accounted for by short-term loans, issued bonds and a finance lease with a fixed interest rate.

The Group and Company entered into an interest-rate swap in the amount of 50% of two of three loan tranches with the aim of hedging exposure to interest-rate risk as the result of a long-term syndicated loan with a final repayment deadline of 31 December 2025. The amount of the secured principal stood at EUR 69.2 million as at 31 March 2021. By hedging interest-rate exposure through the use of an interest-rate swap (IRS), the Group and Company hedge future cash flows against the risk of rising interest rates. The principal is hedged against a rise in the reference interest rate if the latter is higher than or equal to zero. Fixed or hedged interest rates account for 64.3% of interest-bearing financial liabilities at the Group level and 65.0% at the Company level.

Exposure to interest rate risk

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	31.3.2021	31.12.2020	31.3.2021	31.12.2020
Financial instruments with variable interest rate
Financial receivables	0	0	0	0
Financial liabilities	146,154	147,654	146,154	147,654
Net financial liabilities	146,154	147,654	146,154	147,654

The table does not include financial instruments that do not bear interest or instruments bearing a fixed interest rate, as the latter are not exposed to interest-rate risk. Financial liabilities whose interest rate is hedged against a rise in the EURIBOR are also not included.

Sensitivity analysis

The table below presents a sensitivity analysis for a change in an interest rate on the reporting date with respect to the profit of the Group and Company. All other variables are constant in the analysis.

Interest rate risk table

31.3.2021	Interest rate increase/decrease	Effect on profit before tax in EUR thousand
		Telekom Slovenije Group	Telekom Slovenije
EURO	+100 bp	-209	-209
EURO	-100 bp	-692	-692

2020	Interest rate increase/decrease	Effect on profit before tax in EUR thousand
		Telekom Slovenije Group	Telekom Slovenije
EURO	+100 bp	-202	-202
EURO	-100 bp	-692	-692

Euribor interest rate values

Euribor	Value as at 31 March 2021	Value as at 31 Dec. 2020	Change in %
6-month	-0.513	-0.523	1.91

Capital management

The key objectives of managing the capital of the Group and Company are ensuring capital adequacy and thus long-term solvency and financial stability in an attempt to secure the best possible credit rating for the financing of operations, and ensuring the continued development of the Group and Company, and thus the achievement of the highest possible value for shareholders.

The Group and Company use the net financial debt to equity and equity to total assets ratios to monitor changes in capital. The Group's net financial debt includes loans received, finance leases and other financial liabilities, less current financial assets and cash and cash equivalents. The Group also complies with the financial commitments set out in loan agreements when making decisions regarding the management of capital.

	Telekom Slovenije Group		Telekom Slovenije
EUR thousand	31.3.2021	31.12.2020	31.3.2021	31.12.2020
Borrowings and other financial liabilities	411,743	387,056	419,561	409,538
Less current investments and cash with short-term deposits	-32,312	-8,679	-30,132	-19,471
Net liabilities	379,431	378,377	389,429	390,067
Equity	600,407	590,484	614,444	605,784
Total assets	1,251,921	1,227,839	1,233,602	1,226,566
Debt/equity ratio	63.2%	64.1%	63.4%	64.4%
Equity/total assets ratio	48.0%	48.1%	49.8%	49.4%