2008 ANNUAL REPORT - Elektroprivreda HZ HB

2008 ANNUAL REPORT

32008 ANNUAL REPORT

CONTENTS

GENERAL MANAGER’S REPORT 5

HUMAN RESOURCES 9

LEGAL STATUS AND ORGANIZATION OF COMPANY 11

COMPANY PERFORMANCE 15

POWER GENERATION DIVISION 19

HPP RAMA 20

HPP MOSTAR 21

HPP PEĆ MLINI 22

PSPP ČAPLJINA 23

HPP JAJCE I 24

HPP JAJCE II 25

HPP MOSTARSKO BLATO UNDER CONSTRUCTION 26

DEVELOPMENT PROJECTS 33

POWER DISTRIBUTION DIVISION 37

DISTRIBUTION FACILITIES IN 2008 38

POWER SUPPLY DIVISION 41

MANAGEMENT BOARD’S EVALUATION OF COMPANY PERFORMANCE 44

4 2008 ANNUAL REPORT 52008 ANNUAL REPORT

GENERAL MANAGER’S REPORT

Elektroprivreda Hrvatske zajednice Herceg Bosne, d.d. Mostar, a public company for power generation, distribution and supply was founded on August 28, 1992 and since it has operated in 6 cantons in the Federation of Bosnia and Herzegovina. It is one of three power companies in Bosnia and Herzegovina and since April, 2004 it has been a joint stock company. The stock capital of the Company consists of 10% private capital and 90% state capital.

The Company operates six hydro power plants ( Rama, Mostar, Jajce I, Jajce II, Peć Mlini and Čapljina) with the total capacity of 792 MW. The total power generation in 2008 was 1355,64 GWh.

The total length of the distribution network is 11,131 km. On Decem-ber 31, 2008, EP HZ HB supplied 183,706 customers, including Aluminij d.d. Mostar company as the biggest customer in Bosnia and Herzegovina, and had 1729 employees.

In 2008, in spite of many problems and the business environment burdened with evident consequences of the economic crisis, the Company operated at a gross profit of BAM 7,333,131. The following contributed to good operating results: proper power system control, orientation to loss minimization and collection rate increase, conclusion of flexible contracts with customers and suppliers of electricity with risk sharing, good business relations with customers, control of operating costs and good human reso-urces management. The application of new tariffs according to the FERC’s decision on tariffs for non-eligible (tariff) customers and the planned re-duction of delivery to the 100 kV and higher level customers also had a positive influence on the Company performance.

As the strategic objective of the Company is construction of new gene-ration facilities, the year 2008 was marked by continuation of the work on construction of the HPP Mostarsko Blato. Installation of the mechani-cal and electrical equipment (turbines-generators) and other equipment started in the already constructed facilities. Preparation of the design and

tender documents continued for the projects approved through the POWER 4 program for the HPP Rama and PSPP Čapljina. For better efficiency, minor repair work and other activities were carried out in these plants and in the HPPs Jajce I and Jajce II.

For the projects of use of hydro energy, preparation of the feasibility study started and the research work was carried out for the small hydro power plants Kravice, Stubica, Dubrava and Luke. The pre-feasibility study was prepared for the HPP Han Skela and the hydro power plants on the Ugar River. For the PSPP Vrilo, preparation of the feasibility study started and the tender documents for the research work were prepared. For the projects of use of wind energy, we started activities on preparation of a


For further adjustment to the requirements of the modern business operations, all necessary preparations for production of the Financial Ma-nagement Information System (FMIS) were made. The system will signifi-cantly modernize the financial management of the Company as a whole as well as of its organizational units. By implementation of this project, JP Elektroprivreda HZHB will be the first power company in the region to improve its business operations by integrating the processes of purchasing, selling, materials management, finance, controlling and fixed assets in a single, transparent and unified system.

For permanent improvement of the control of all business processes in the Company, we continued the activities on introducing the quality control system according to ISO 9001:2008 as well as on investment in human re-sources of the Company through awarding scholarships, employment and professional improvement.

Mato-Matan Žarić, B.Sc. (El. Eng.)General Manager

comprehensive environmental and social impact assessment and of the general design for the 20/110 kV substations for the wind farms Borova Glava, Mesihovina and Velika Vlajna. The activities on issuing the buil-ding permits and solving the problem of property-rights relations were intensified.

We carried out the internal review of the report on the detailed ge-ological research in the Kongora Lignite Deposit and started activities for preparation of the study for recognition of the reserves by the competent cantonal ministry.

Regular maintenance of the distribution network and facilities, and continuous investment of our own and credit funds in the distribution network improved the quality of electricity supply. The feasibility study for establishing the modern SCADA/DMS system of operation in the Power Distribution Division was prepared since we try to bring the distribution network and its operation as well as the supply quality to the level as requ-ired by the EU Directive. Supply to all customers was safe and reliable and establishment and implementation of the new information systems incre-ased the collection rate.

PSPP Čapljina - reservoir


Semi-skilled - 33Secondary school - 521 Associate degree - 89B.Sc. - 333D.Sc. - 1 M.Sc. - 2

Skilled - 385 Unskilled 70

On December 31, 2008 JP “Elektroprivreda HZ Herceg-Bosne” d.d. Mostar had 1729 employees. In comparison with the end of 2007, the number of employees increased by 7.1% or 114 employees.

At the end of 2008, out of the total number of employees in the Company’s Division and other organizational units, 86 were trainees em-ployed on a temporary basis.

Comparing the qualification structure of the employees at the end of 2007 and of 2008, the number of employees having university or associ-ate degrees increased. This will undoubtedly have a positive influence on carrying out of the given tasks.

The Company has been continuously working on professional impro-vement referring its employees to workshops, training courses and other types of education and training, and awarding scholarships and em-ploying trainees to have jobs in high demand.

HUMAN RESOURCES

EMPLOyEE QUALifiCATiON STRUCTURE

Educational lecel

Power Generation Division Power Distribution Division Power Supply Division Company’s Division and other organizational units Total

Index 11/10 Structure in %Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008

1 2 3 4 5 6 7 8 9 10 11 12 13

Unskilled 42 40 33 24 5 5 2 1 82 70 85,4 4

Semi-skilled 2 2 19 27 5 4 0 0 26 33 126,9 2

Skilled 73 74 182 178 134 114 1 19 390 385 98,7 23

Second. school 113 119 162 164 189 186 13 52 477 521 109,2 30

Highly-skilled 82 77 152 152 39 65 0 1 273 295 108,1 17

Assoc. degree 21 23 40 41 18 21 2 4 81 89 109,9 5

B.Sc. 80 86 88 93 59 62 55 92 282 333 118,1 19

M.Sc. 1 1 0 0 1 1 1 0 3 2 66,7 0

D.Sc. 1 1 0 0 0 0 0 0 1 1 100,0 0

Total 415 423 676 679 450 458 74 169 1615 1729 107,1 101

EMPLOyEE QUALifiCATiON STRUCTURE AS Of DECEMbER 31, 2008 TOTAL NUMbER Of EMPLOyEES: 1729

SHAREHOLDERS' ASSEMBLY

SUPERVISORY BOARD

GENERAL MANAGER

EXECUTIVE SECRETARY AUDIT BOARD INTERNAL AUDIT DEPARTMENT

MANAGEMENT BOARD

COMPANY'SDIVISION

ProcurementDepartment

EducationDepartment

GoodsProcurement

Unit

Works and ServicesProcurement Unit

ImplementationUnit

Trade Department

ElectricityPlanning

and AnalysisUnit

ElectricityBilling Unit

ElectricityTrade Unit

MeteringDepartment

Education ¸Unit

Unit forRelations

with RegulatoryCommissions

MeteringUnit

ProjectImplementation Unit Advisers

Public RelationsDepartment

EXECUTIVE DIRECTOROF POWER

GENERATIONDIVISION


DISTRIBUTIONDIVISION


SUPPLY DIVISION

EXECUTIVE DIRECTOROF FINANCIAL AFFAIRS

AND ACCOUNTINGDIVISION

EXECUTIVE DIRECTOROF LEGAL, PERSONNEL

AND GENERALAFFAIRS DIVISION

EXECUTIVE DIRECTOROF DEVELOPMENT

DIVISION

FINANCIAL AFFAIRSAND ACCOUNTING

DIVISION

Planning andAnalysis Unit

AccountingUnit

FinancialAffairs Unit

LEGAL, PERSONNELAND GENERAL

AFFAIRS DIVISION

Legal Unit

Personnel Unit

GeneralAffairs Unit

Translation Unit

DEVELOPMENTDIVISION

Power FacilitiesDevelopmentDepartment

IT andTelecommunications

Department

RestructuringDepartment

Standards andEnvironmental

ProtectionDepartment

Standards Unit

EnvironmentalProtection Unit

TelecommunicationsUnit

IT Unit

Power NetworksDevelopment Unit

Energy SourcesDevelopment Unit

POWER GENERATIONDIVISION

POWER DISTRIBUTIONDIVISION

POWER SUPPLYDIVISION

POWER GENERATION DIVISION

DIRECTOR'SOFFICE

GenerationControl Center

NERETVA River Basin Unit VRBAS River Basin Unit

TECHNICAL DEPARTMENTDEVELOPMENT DEPARTMENT

ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENTLEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT

BIS DEPARTMENTSections

HPP RAMA, ProzorHPP MOSTAR, MostarHPP PEĆ MLINI, Grude

HPP MOSTARSKO BLATO under Construction, MostarAutonomous Section

PSPP ČAPLJINA, Čapljina


ECONOMIC AND FINANCIAL AFFAIRS DEPARTMENTLEGAL, PERSONEL AND GENERAL AFFAIRS DEPARTMENT

BIS DEPARTMENTSections

HPP JAJCE IHPP JAJCE II

POWER DISTRIBUTION DIVISION

DIRECTOR'SOFFICE

Distribution AreaUnit SOUTH

Distribution AreaUnit CENTER

Distribution AreaUnit NORTH

Distribution AreaUnit SOUTH

Distribution AreaUnit CENTER

Distribution AreaUnit NORTH



BIS DEPARTMENTCONTROL AND METERING DEPARTMENT

HNC SectionsMostarDoljaniČapljinaRavno

WHC SectionsGrude

Š. BrijegPosušjeLjubuški

HBC SectionsLivnoDrvar

GrahovoGlamoč

TomislavgradKupres




MBC SectionsNovi

TravnikNova BilaKiseljak

Vareš

POWER SUPPLY DIVISION




PC SectionsOrašje

DomaljevacOdžak

UsoraBusovačaUskopljeKreševoŽepče

DobretićiVitezJajce

FojnicaNovi Šeher

BILLING DEPARTMENTCOLLECTION DEPARTMENT

ECONOMIC AFFAIRS DEPARTMENTLEGAL, PERSONNEL AND GENERAL AFFAIRS DEPARTMENT

BIS DEPARTMENTMETERING DEPARTMENT







DIRECTOR'S OFFICE

RamaČitlukNeumStolac

HNC SectionsMostarDoljaniČapljinaRavno

WHC SectionsGrude

Š. BrijegPosušjeLjubuški

HBC SectionsLivnoDrvar

GrahovoGlamoč

TomislavgradKupres

PC SectionsOrašje

DomaljevacOdžak

RamaČitlukNeumStolac

MBC SectionsNovi

TravnikNova BilaKiseljak

Vareš

UsoraBusovačaUskopljeKreševoŽepče

DobretićiVitezJajce

FojnicaNovi Šeher


0

50

100

150

200

250

300 over 3530-35 20-29 10-19 under 10

Dec.31, 2008Dec.31, 2007Dec.31, 2008Dec.31, 2007Dec.31, 2008Dec.31, 2007Dec.31, 2008Dec.31, 2007

Power Generation Power Distribution Power Supply Company's Division and other organizational units

EMPLOyEE AGE STRUCTURE

Years of age Power Generation Division Power Distribution Division Power Supply Division Company’s Division and

other organizational units Total Index 11/10 Structure

in %Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008 Dec.31, 2007 Dec.31, 2008

1 2 3 4 5 6 7 8 9 10 11 12 13

under 30 29 35 69 67 83 79 11 87 192 268 139,6 16

30-39 87 84 189 176 116 109 22 39 414 408 98,6 24

40-49 129 123 242 244 164 162 15 18 550 547 99,5 32

50-59 153 155 146 165 78 97 21 20 398 437 109,8 25

over 60 17 26 30 27 9 11 5 5 61 69 113,1 4

Total 415 423 676 679 450 458 74 169 1615 1729 107,1 100

JP “Elektroprivreda HZ Herceg-Bosne” d.d. Mostar has a good age structure. About 40% are employees under 40 and this enables comparatively easy adjus-tment to new working and operating conditions.

JP “Elektroprivreda Hrvatske zajednice Herceg Bosne“, a joint stock compa-ny, headquartered in Mostar, 106 A Mile Budaka (hereinafter called: Com-pany) has had the legal continuity since November 17, 1992 when the public company “Elektroprivreda Hrvatske zajednice Herceg Bosne“ Inc. was registered in the register of companies of the Higher Court in Mostar under No. 1-3177. In July 1996, the Company was transformed into a limited liability company with the name Javno poduzeće “Elektroprivreda Hrvatske zajednice Herceg Bosne“ d.o.o. Mostar.

According to the valid Decision on Approval of Registration of Privati-zation in the Register of Companies made by the Agency for Privatization in BiH Federation No: 03-19-185/04 of January 15, 2004, 10% state capital of the Company was privatized.

Pursuant to the provisions of the stated Decision of the Agency for Privatization in BiH Federation and provisions of Article 76 of the Law on Amendments of the Law on Economic Subjects (Official Gazette of BiH Fe-deration No.29/03), the first meeting of the Shareholders’ Assembly of JP “Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar was held on March 8, 2003.

There was made the decision on change of the Company organization and adjustment of its status to the Law on Economic Subjects and the sta-ted decision of the Agency for Privatization in BiH Federation, the Company by-law was adopted and its bodies were appointed.

Based on the stated documents, the Company was transformed into a joint stock company, its name was replaced by the name : Javno poduzeće “Elektroprivreda Hrvatske zajednice Herceg Bosne“ dioničko društvo Mo-star, and it adjusted the capital and activities.

The Company activities are determined by the Company by-law.The Company bodies are appointed according to the Company by-law:

the Shareholders’Assembly, Supervisory Board, Audit Board, and Manage-

ment Board consisting of the general manager and executive directors of the Company.

The Company was registered in the Register of Companies of the Higher Court in Mostar (it is now under jurisdiction of the Municipal Court) un-der No. 1-3177 as well as in the Register of the Securities Commission of BiH Federation based on the Commission Decision No: 03-19-221/04 of April21, 2004. On April 28, 2004, the Company concluded a contract with the Securities Agency of BiH Federation. The contract stipulates registration, keeping and updating of the data on the Company’s securities.

According to the standard classification of activities, the Company was, as a legal entity, registered under the activity subclass code: 40,100 – Power generation and distribution.

The Company identification number is 4227248350007.VAT ID No is 227248350007.The Company stock capital amounting to BAM 736,166,000 is divided

into 7,361,660 ordinary shares.The nominal value of a share is BAM 100.00. The stock capital consists of:

- 10% private capital - 90% state capital

Activities of the Company are: power generation, distribution and su-pply, trading, representing and agency services in the domestic electricity market, manufacture of the power distribution and control equipment , construction and maintenance of hydro power plants, electrical installation and other installation work, civil engineering construction, maintenance of facilities in civil engineering and building construction, wholesale of mac-hines for industry, handicraft sector and navigation, telecommunications, renting of own property, machines and equipment, consulting services for computer equipment (hardware), data processing, accounting, bookkee-

LEGAL STATUS AND ORGANizATiON Of COMPANy

EMPLOyEE ExPERiENCE STRUCTURE


ping and auditing business concerning taxes, architectural and enginee-ring activities and technical consulting, research and experimental develo-pment in technical and technological sciences and other business activities.

Foreign trade operations of the Company are: - Electricity imports and exports - Foreign trade transactions in free zones - Imports of goods and providing of services within the scope of the

registered activities - Agency services and representing in goods and services trade and - Imports of spare parts, raw materials and equipment for carrying

out of activities

STRUCTURE Of COMPANy SHAREHOLDERS

According to the Decision of the Agency for Privatization in BiH Federation on Approval of Privatization Program and Company Initial Balance Sheet,

The largest share among residents-legal entities is owned by the Government of BH Federation (6,626,306 shares or 90%) and the rest (735,354 shares or 10%) is owned by investment funds, residents and non-residents – legal entities and physical persons.

STOCk TRADE – SASE

On September 15, 2004, JP “Elektroprivreda Hrvatske zajednice Herceg Bo-sne d.d. Mostar was included in SASE- the Sarajevo Stock Exchange under the issuer symbol JPEMR and the initial share value was BAM 50. During the period of 2.5 years, the JPEMR share value was increased by more than 3 times and on December 31, 2006, the stock exchange quotation was BAM 155. At the beginning of 2007, the share value was BAM 154.1 and JPEMR was included in the MFTS trading plan. This is a continuous trading plan and it is characteristic of the shares with a certain level of liquidity, frequency and intensity of trading in the stock exchange.

At the beginning of 2008, the share value was BAM 180. After that, its value decreased and on December 31, 2008 dropped to 55% of its no-minal value (55%).

The graph shows the share value of the issuer JPEMR and number of shares traded by month in 2008.

SHARES iN RELATED LEGAL ENTiTiES

JP “Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar has a sha-re in the stock capital of the company “Konstruktor-Neretva” d.o.o. Čaplji-na amounting to BAM 859,665. During 2006, the Company stock capital was increased by investment of the member Konstruktor-inženjering d.d. Split. This resulted in the decrease of our Company share to 14%.

In the stock capital of the company Elektrokontrol HZ H B Čapljina amo-unting to BAM 432,500.00, JP “Elektroprivreda Hrvatske zajednice Herceg Bosne d.d. Mostar has a share of BAM 247,139 or 57.14%.

Number oftraded shares

36

715

410 414

100

1.000

206

872

522

41 52

204

10

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

180,00

200,00

Jan. 3 Feb.1 March 3 April 1 May 5 June 6 June 30 July 31 Aug. 29 Sept. 26 Oct.31 Nov.20 Dec 31

0

200

400

600

800

1.000

1.200

Shar

eva

lue

SHARE vALUE Of iSSUER JPEMR AND NUMbER Of SHARES TRADED by MONTH iN 2008

in 2002, the public subscription for shares in the second round was carri-ed out and 10% total capital amounting to BAM 73,616,600 was sold. Based on the data from the Securities Agency, on May 27, 2008 (30 days before the sixth meeting of the Shareholders’ Assembly on June 26, 2008), there were 1,635 shareholders. The ownership structure was as follows:

STRUCTURE Of COMPANy SHAREHOLDERS Shareholders Number of shares % of share

Residents – physical persons 176.588 2,4

Residents – legal entities 7.156.280 97,2

RESIDENTS 7.332.868 99,6

Non- residents – physical persons 6.527 0,09

Non- residents – legal entities 22.265 0,31

NON-RESIDENTS 28.792 0,40

TOTAL 7.361.660 100HPP Rama - dam


In the period January – December 2008, JP “Elektroprivreda HZ Herceg-Bosne” d.d. Mostar operated at a gross profit of BAM 7,333,131.

The application of new tariffs from January 1, 2008 according to the FERC’s decision on tariffs for non-eligible (tariff) customers and the pla-nned reduction of delivery to the 100 kV and higher level customers (Alu-minij d.d. Mostar) had a positive influence on the Company performance.

As Aluminij d.d. Mostar also purchased electricity from other suppliers (HEP, EP BiH, Aluminij as an eligible customer), an adverse effect of the difference between the purchase and selling price according to tariffs was eliminated. So, in 2008 we did not have the problem we had during the whole year 2007.

PROfiT AND LOSS ACCOUNT

The total income amounted to BAM 339,296,892. It was 23% higher than the plan and 2% lower than in the previous year.

The operating income (income from sales of electricity and services) amounted to BAM 319,254,145. It was 23% higher than the plan. The income from sales of electricity included the income from sales to tariff cu-stomers at the distribution voltage levels (63.3%) and at 110 KV and hi-gher levels (28.9%), and the income from international trade – electricity exports (7.8%).

The income from sales of services amounted to BAM 21,481,691. It included the income from sales of services to third parties (BAM 2,883,481) and the income from sales of reserve power in the international market according to the concluded contracts (BAM 18,598,210).

The income from sales of services to third parties included the income from: issue of power connection certificates, project reviews, maintenan-

COMPANy PERfORMANCE


ce and reconstruction of the power network (Power Distribution Division), inspection of metering points, meter calibration, replacement of time swit-ches, and cutting and reconnection of customers (Power Supply Division).

The other income (BAM 19,449,456) included the income from: pre-mium of life insurance of all employees of the Company from the insurance company “Croatia osiguranje” d.d. Ljubuški (BAM 12,382,251), donations

(BAM 3,380,088), compensations for damages from insurance companies (BAM 267,048), collection of written-off receivables (BAM 2,714,284) and the income from previous years (BAM 414,822).

The total expenses amounted to BAM 331,963,761. They were 20% higher than the plan and 18% lower than in the previous year. The ex-penses were higher than the plan because we had to purchase 64% more

PROfiT AND LOSS ACCOUNT

Item Description Jan.-Dec. 2007Realization

Jan.-Dec. 2008Plan

Jan.-Dec. 2008Realization

Index5/3

Index5/4

3 Plan Realization 5/3 5/4

1 Operating income (1.1.+ 1.2.) 334.649.501 258.890.346 319.254.145 95 123

1.1.Income from electricity sales (1.1.1.+1.1.2.+1.1.3.+ 1.1.4.)

332.480.424 244.890.346 297.772.454 90 122

1.1.1. Income from tariff customers at distribution voltage levels 153.081.253 163.253.577 171.709.247 112 105

1.1.2. Income from other 35 kV customers 14.973.530 19.108.889 16.741.968 112 88

1.1.3.Income from 110 kV and higher level customers and other non-tariff customers

113.365.456 62.527.880 86.078.497 76 138

1.1.4. Income from electricity trade 51.060.185 0 23.242.742 46 0

1.2. Income from sales of services 2.169.077 14.000.000 21.481.691 990 153

2. Financial income 3.226.724 3.350.000 593.291 18 18

3. Other income 7.623.149 14.250.000 19.449.456 255 136

4. TOTAL INCOME ( 1+2+3) 345.499.374 276.490.346 339.296.892 98 123

5. Operating expenses (5.1.+ 5.2.+ 5.3.+ 5.4) 381.730.104 263.879.000 316.974.634 83 120

5.1. Costs of electricity purchases 232.804.544 98.500.000 161.549.160 69 164

5.2. Operating expenses 72.011.544 73.519.000 66.312.780 92 90

5.3. Depreciation costs 38.423.298 42.035.000 39.818.327 104 95

5.4. Staff costs 38.490.718 49.825.000 49.294.367 128 99

6. Financial expenses 1.842.351 2.050.000 1.899.285 103 93

7. Other expenses 21.198.012 10.000.000 13.089.842 62 131

8. TOTAL EXPENSES (5+6+7) 404.770.467 275.929.000 331.963.761 82 120

9. Gross profit/loss (4 -8) -59.271.093 561.346 7.333.131

electricity than we plannned (generation was lower than the plan due to unfavourable hydrological circumstances).

The operating expenses amounted to BAM 316,974,634, financial ex-penses (interest and negative exchange rate differences) BAM 1,899,285 and other expenses BAM 13,089,842.

The largest portion of other expenses included the bad and doubtful debts (BAM 8,395,301) written-off according to accounting policies as fo-llows: for households - after one year and for other classes of customers - after three years.

The remaining portion included penalties and compensations for da-mages (BAM 323,426), subsequently determined expenses from the previ-ous years (BAM 3,431,750), shortages (BAM 761,257) and other expenses (BAM 178,108).

The operating expenses (without depreciation costs, costs of electri-city purchases and staff costs) were 10% lower than the plan and 8% lower than in the previous year. They were lower than the plan due to the reduced costs of raw materials and materials (76.1%), maintenance services (78.4), spare parts (85.7%), insurance of property and persons (58.2%), contributions, membership fees and other levies (94.8%), PTT services (90.5%), other staff costs (85.4%).

The total expenses were 19.9% higher than the plan and 17% lower than in the previous year.

The salary budget was 1% smaller than the plan. It was 28% bigger than in the previous year due to the increase according to the Collective Agreement signed between the Trade Union of Electricity Workers of BiH and the Government of FBiH.

This Agreement stipulates the new payroll computation method based on the lowest net hourly rate of BAM 2.45 and average number of working hours of 174. This method was applied retroactively from January 1, 2008.

On December 31, 2008, the total receivables were BAM 200,715,197. They were lower than on December 31, 2007 by 3% or by BAM 5.76 M since the electricity purchased by Elektroprivreda BiH in December 2007

was paid in 2008 (BAM 7,949,757).Receivables from the tarrif customers at distribution voltage levels were

lower than at the end of the previous year. They were reduced to the grea-test extent (by BAM 4.8 M) in the Supply Area Unit SOUTH.

bALANCE SHEET

On December 31, 2008, the Company assets value was BAM 1,181,281,837. It was 2.5% higher than on December 31, 2007. The value of the fixed assets (real property, facilities and equipment) was increased by 2.4% and of the current assets (raw material, material and spare part inventories) by 3.6%.

CAPiTAL STRUCTURE AS Of DECEMbER 31, 2008

Revaluation reserves262.970.224

Retained earnings18.673.600

Accumulated losses92.162.950

Stock capital 736.166.001


POWER GENERATiON DiviSiON

In the total assets, a share of the fixed assets was 88% and of the current assets 12%.

In the liabilities, a share of the capital was 78%, of the long-term lia-bilities 15% and of the current liabilities 7%.

bALANCE SHEET (iN bAM)

Item DESCRIPTION As of Dec.31, 2007 As of Dec.31, 2008 Share (in %) Index 4/3

1 2 3 4 5 6

I ASSETS

1. Fixed assets 1.018.122.574 1.042.470.262 88 102,4

2. Current assets 134.017.473 138.811.575 12 103,6

A TOTAL ASSETS (1+2) 1.152.140.047 1.181.281.837 100 102,5

Contingent assets 326.719.721 326.719.721 100,0

II LIABILlTIES

1. Capital 918.087.149 925.646.875 78 100,8

2. Ling-term liabilities (2.1+2.2) 141.718.830 172.564.354 15 121,8

2.1. Long-term financiaI commitments 66.155.599 98.611.602 57 149,1

2.2. Long-term accruals and provisions 75.563.231 73.952.752 43 97,9

3. Current liabilities (3.1+3.2+3.3) 92.334.068 83.070.608 7 90,0

3.1. Short-term financiaI commitments 8.887.450 10.819.955 13 121,7

3.2. Trade payables and other Iiabilities 82.851.531 71.668.870 86 86,5

3.3. Other current Iiabilities 595.087 581.783 1 97,8

B TOTAL LIABILlTIES (1+2+3) 1.152.140.047 1.181.281.837 100 102,5

Contingent liabilities 326.719.721 326.719.721 100,0

In the long-term liabilities, a share of the deferred income was 43% and of the long-term credits 57%.

The capital consists of the stock capital amounting to BAM 736,166,001.00, revaluation reserves BAM 262,970,5224, retained earnings BAM 18,673,600 and accumulated losses BAM 92,162,950.

The Power Generation Division is a part of JP “Elektroprivreda HZ Herceg Bosne” d.d. Mostar which core activity is power generation but auxiliary and system services are also provided.

The total capacity of six hydro power plants (HPPs Rama, Mostar, Jajce I, Jajce II, Peć Mlini and PSPP Čapljina) is 792 MW.The HPP Mostarsko Blato (2x30 MW) with the planned annual output of 167 GWh is expected to be put into operation in the last quarter of 2009.

The operating conditions in all hydro power plants are very good and they are included in the system of generation remote control from the Main Dispatch Centre of EP HZ HB in Mostar.

Activities on the projects of power generation from renewable sources are in progress. This would provide additional MWs for the needs of EP HZ HB.

HPP Mostar - dam


HPP MOSTAR

The hydro power plant Mostar is the last plant in the range of the plants constructed on the Neretva river and is located 3.73 km upstream of the city of Mostar in Herzegovina- Neretva Canton. It was put into operation in 1987 and again in 1997 after rehabilitation of the war damages.

HPP RAMA

The hydro power plant Rama is the largest plant in the system of the hydro power plants on the Neretva river. It is located in Herzegovina- Neretva Canton. The power house is situated by the road Jablanica-Rama and the dam and reservoir in the very vicinity of the town of Prozor-Rama. It was put into operation in 1968.

MAI

NDA

TA

Number of generating sets 2

Installed capacity 160 MW

Plant type Diversion - storage

GENE

RATO

RS

Type 3-phase synchronous S-4758-16

Manufacturer Končar

Put into operation 1968

Nominal power 90 MVA

TURB

INES Type Francis

Manufacturer Litostroj


DAM

and

RESE

RVOI

R

Dam construction height 103 m

Dam height 96 m

Hydraulic height 89 m

Crest length 230 m

Headrace tunnel length 9536 m

Headrace tunnel diameter 5 m

MAI

NDA

TA



Plant type Adjacent-to-dam - storage

GENE

RATO

RS

Type 3-phase synchronous S-6546-40


Put into operation 1987/1988


TURB

INES Type Kaplan K - 5


Installed capacity 23.6 MW

DAM

and

RES

ERVO

IR

Dam construction height 44 m

Dam height 28 m

Crest length 255.6 m

Crest elevation 81 m a.s.l.


HPP PEĆ MLINI

The hydro power plant Peć Mlini is located in the municipality of Grude in West Herzegovina Canton. It uses energy potential at a head of 107 m between the Imotski-Grude field-Nuga reservoir and power house in the Petnik hill foot in Peć Mlini. It was put into operation in 2004.

PSPP ČAPLJINA

The pumped storage power plant is located on the lower Trebišnjica river in Herzegovina- Neretva Canton. It collects its catchment inflow water and the Trebišnjica water through the Popovo field. It was put into operation in 1979.

MAI

N DA

TA Number of generating sets 2


Plant type Diversion - run-of-river

GENE

RATO

RS

Type3-phase synchronous




TURB

INES Type Francis K - 5


Installed capacity 15.88 MW

DAM

and

RES

ERVO

IR

Upper reservoir level - maximum 252 m a.s.l.

Upper reservoir level - minimum 249 m a.s.l.

Nominal discharge 15 m3/sec


Headrace tunnel diameter 3.6 m

MAI

NDA

TA



Plant type Reversible - pumped storage

GENE

RATO

RS


Manufacturer AEG



TURB

INES Type Francis

Manufacturer Riva - Calzoni


DAM

and

RES

ERVO

IR

Upper reservoir level - maximum 231.5 m a.s.l.

Upper reservoir level - minimum 224 m a.s.l.

Nominal discharge – turbine mode 112 m3/sec

Nominal discharge – pumping mode 85 m3/secPSPP Čapljina

HPP Peć Mlini HPP Peć Mlini


HPP JAJCE ii

The hydro power plant Jajce II was constructed on the Vrbas river 17 km downstream of the town of Jajce in Middle Bosnia Canton. It was put into operation in 1954.

HPP JAJCE i

The hydro power plant Jajce I is located on the left bank of the Vrbas river by the road Jajce- Banjaluka in Middle Bosnia Canton. It is 7 km far from the town of Jajce. It collects the water of the Big Pliva lake which is situated at the height of 428 m asl. It was put into operation in 1957.

MAI

NDA

TA




GENE

RATO

RS





TURB

INES Type Francis

Manufacturer KMW


DAM

and

RES

ERVO

IR

Minimum operating reservoir level 425.8 m a.s.l.

Maximum operating reservoir level 427.1 m a.s.l.



MAI

NDA

TA




GENE

RATO

RS




Nominal power 12.5 MVA

TURB

INES Type Francis

Manufacturer Voith + Litostroj


DAM

and

RES

ERVO

IR

Minimum operating reservoir level 326.5 m a.s.l.

Maximum operating reservoir level 328.5 m a.s.l.

Headrace tunnel length 2880 m a.s.l.



HPP MOSTARSkO bLATO UNDER CONSTRUCTiON

The hydro power plant Mostarsko Blato is located south-west of Mostar and will use energy potential of the Lištica river at the head of 176 m between Mostarsko Blato and Mostarsko Field.

Construction period: 2006 – 2009The hydro power plant Mostarsko Blato will be connected to the 110 kV

Mostar 4 (Čule) – Mostar 5 (Rodoč) transmission line.

PREPARATiON AND DELivERy Of GENERAL AND fiNAL DESiGNS fOR HPP MOSTARSkO bLATO

The design team of Elektroprojekt prepared the general designs for the HPP Mostarsko Blato and in 2008, preparation of the final designs was in the final stage.

CONSTRUCTiON Of iNTAkE STRUCTURE, HEADRACE TUNNEL, SURGE CHAMbER AND vALvE CHAMbER

In 2008, we started the intensive work on construction of the intake struc-ture, headrace tunnel, surge chamber and valve chamber. We also started installation of the trashrack in the intake structure and grouting of the rein-forced concrete lining in the headrace tunnel. With this, construction of the headrace tunnel as a big and important facility will be completed.

CONSTRUCTiON Of PENSTOCk, POWER HOUSE, TAiLRACE bASiN AND fLOOD CHANNEL

The penstock supports and power house were constructed. This enabled installation of the mechanical and electrical equipment.

Installation of the generating sets (turbines-generators) and other equipment started in the power house.

In 2008, all preparations were made for construction of the tailrace basin and flood channel.

MECHANiCAL AND ELECTRiCAL EQUiPMENT

Most of the mechanical and electrical equipment was manufactured, fac-tory tested, transported to the site and partially installed. We started in-stallation of the generating sets 1 and 2 and other equipment.


0

10

20

30

40

50

60

70

80

DecemberNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary

HPP Jajce IIHPP Jajce IHPP MostarHPP Rama

POWER GENERATiON iN HyDRO POWER PLANTS iN 2008 by MONTH (GWH) HPP Rama PSPP Čapljina HPP Mostar HPP Jajce I HPP Jajce II HPP Peć Mlini TOTAL

January 56,37 14,09 25,78 19,72 15,45 7,58 139,00

February 60,48 8,25 16,76 13,77 11,43 4,86 115,54

March 13,03 14,19 26,51 23,63 16,97 11,60 105,93

April 16,45 5,33 35,02 30,55 19,44 13,85 120,65

May 24,10 0,00 21,79 23,32 17,27 7,20 93,67

June 75,93 0,44 14,88 17,36 12,81 2,84 124,26

July 55,85 0,90 9,52 10,89 9,11 0,94 87,20

August 58,43 1,16 8,06 7,95 6,89 0,24 82,73

September 77,35 2,36 12,00 7,16 6,34 0,03 105,24

October 68,72 3,58 19,35 8,66 7,58 0,05 107,95

November 35,05 17,80 22,68 13,05 9,51 3,81 101,89

December 15,54 47,33 37,88 33,15 19,59 18,09 171,59

TOTAL 557,31 115,42 250,25 209,21 152,38 71,08 1355,64

POWER GENERATiON iN HyDRO POWER PLANTS iN 2008 PER MONTHS

POWER GENERATiON fROM 2000 TO 2008 (GWH)

2000 2001 2002 2003 2004 2005 2006 2007 2008

HPP Rama 653,80 722,90 455,00 570,00 674,98 729,26 864,64 467,03 557,31

PSPP Čapljina 121,65 283,18 117,00 162,00 327,20 317,59 331,68 111,24 115,42

HPP Mostar 181,13 197,34 199,00 200,00 257,10 239,02 242,47 193,33 250,25

HPP Jajce I 197,95 226,81 229,00 163,00 241,48 240,63 229,07 170,90 209,21

HPP Jajce II 152,63 170,31 173,00 137,00 161,00 173,65 161,70 141,79 152,38

HPP Peć Mlini 6,89 68,53 55,22 39,79 71,08

TOTAL 1307,17 1600,54 1173,00 1232,00 1668,65 1768,69 1884,79 1124,07 1355,64

SHARE Of PLANTS iN TOTAL POWER GENERATiON iN 2008

TOTAL POWER GENERATiON iN 2007 AND 2008(GWH)2007 2008

HPP Rama 467,03 557,31

PSPP Čapljina 111,24 115,42

HPP Mostar 193,33 250,25

HPP Jajce I 170,90 209,21

HPP Jajce II 141,79 152,38

HPP Peć Mlini 39,79 71,08

TOTAL 1124,07 1355,64


42%

9%

18%15%

11%

5%


POWER GENERATiON TREND fROM 2000 TO 2008

POWER GENERATiON iN 2007 AND 2008 by MONTH


HPP Rama PSPP Čapljina HPP Mostar HPP Jajce I HPP Jajce II HPP Peć

Mlini TOTAL

2000 653,80 121,65 181,13 197,95 152,63 1307,17

2001 722,90 283,18 197,34 226,81 170,31 1600,54

2002 455,00 117,00 199,00 229,00 173,00 1173,00

2003 570,00 162,00 200,00 163,00 137,00 1232,00

2004 674,98 327,20 257,10 241,48 161,00 6,89 1668,65

2005 729,26 317,59 239,02 240,63 173,65 68,53 1768,69

2006 864,64 331,68 242,47 229,07 161,70 55,22 1884,79

2007 467,03 111,24 193,33 170,90 141,79 39,79 1124,07

2008 557,31 115,42 250,25 209,21 152,38 71,08 1355,64

0

500

1000

1500

2000

2000. 2001. 2002. 2003. 2004. 2005. 2006. 2007. 2008.


0

500

1000

1500

2000


0

50

100

150

200

ProsinacNovemberOctoberSeptemberAugustJulyJuneMayAprilMarchFebruaryJanuary

2007 2008


In order to have our own development program and meet the demands of our customers, we launched development projects having in mind the electricity demand up to 2023.

Our development is based on: - Use of wind energy - Use of hydro energy - Kongora lignite mine and thermal power plant

In addition, the preparations are made for the project of use of solar energy and we have to consider the place and role of EP HZHB in the pro-jects of gasification in this area.

According to the strategic plan and program for BiH energy, the develo-pment projects of EP HZHB are included in the top-priority projects in BiH.

USE Of WiND ENERGy

After the activities on research and development that started in 2004, three wind farm projects are ready for implementation: Borova Glava - Livno (26 wind turbines x 2 MW), Mesihovina - Tomislavgrad (22 x 2 MW) and Velika Vlajna - Mostar (16 x 2 MW). The foreseen annual output in these wind farms is 370 MWh.

In 2008, we started preparation of the general design for the 20/110 kV substations for the wind farms Borova Glava, Mesihovina (Tomislavgrad Municipality) and Velika Vlajna. For these substations, the research work was carried out, research reports were prepared and preliminary design was prepared and reviewed. The activities on issuing of the building per-mits for the first three wind farms were intensified.

Within the bilateral cooperation between the Federal Republic of Ger-many and BiH, the German Development Bank (KfW) indicated its willin-gness to finance construction of the wind farm Mesihovina with a possibi-lity of extension of the cooperation to other projects. The Loan Agreement

for construction of the wind farm Mesihovina was concluded between the Government of the Federal Republic of Germany and the Council of Mini-sters of BiH. The funds would be available in 2009.

Before providing the credit funds for construction of the wind farm Mesihovina, KfW provided a grant for preparation of the feasibility study that confirmed a possibility of use of wind energy in three sites: Mesiho-vina, Borova Glava and Velika Vlajna. KfW accepted the study in October, 2008. The Development Department of EP HZHB gave the technical support for preparation of the study and reviewed it. We started the activities on preparation of a comprehensive environmental and social impact asses-sment also financed out of the grant funds provided by KfW.

Similar arrangements were negotiated with other potential financiers and significant progress was made in the field of cooperation with some financial institutions (EIB, EBRD, WB).

USE Of HyDRO ENERGy

Elektroprivreda HZHB d.d. Mostar works on the projects of research and de-velopment of small, pumped storage and conventional hydro power plants in the Neretva, Tihaljina – Mlade – Trebižat (T-M-T), Lištica, Upper Cetina and Vrbas river basins. The total installed capacity of these plants will be about 213 MW and annual output about 546 GWh. The Development Department prepared the study “Hydro Power Solutions in Neretva River Basin down-stream of HPP Mostar” and after that the Faculty of Civil Engineering of Mostar University prepared the pre-feasibility study for the HPP Skakala.

In the T-M-T and Lištica river basins, the research work was carried out and the research reports were prepared for the small hydro power plants Kravice, Stubica, Dubrava, Luke and Fratarska. The studies of alternatives were prepared for the stated small hydro power plants in the T-M-T and Lištica river basins.

DEvELOPMENT PROJECTS


In the Vrbas river basin, the study “Hydro Power Plants on Ugar Ri-ver” for three plants: Ugar Ušće, Ivik and Vrletna Kosa was prepared and reviewed. For the HPP Bravnice (Han Skela) on the Vrbas river, the tender documents were prepared and the procedure for public procurement of the service of the design preparation was carried out.

In the Upper Cetina river basin, the research program was prepared within the preparation of the feasibility study for the PSPP Vrilo. Based on this program, the Financing Agreement for the project implementation was signed between KfW and JP EP HZHB.

The European Bank for Reconstruction and Development (EBRD) finan-ces the study “Strategic Environmental Assessment of Trebižat and Cetina River Basins” to be prepared in accordance with the EU directives (Directive 2001/42/EC) and appropriate documents. The Draft Final Report was pre-pared and we started the activities for carrying out of public consultations.

kONGORA LiGNiTE MiNE AND THERMAL POWER PLANT

In the period 2007 -2008, JP Elektroprivreda HZHB d.d. Mostar carried out the detailed geological research in the Kongora Lignite Deposit in To-mislavgrad.

This research supplemented the previous research. In 2008, the fo-llowing documents were prepared: Report on Research Drilling and Exca-vation, Study on Coal Quality and Study on Geomechanical and Laboratory Testing of Physical-Mechanical Features of Coal and Accompanyng Seams. Preparation of the Study on Kongora Lignite Deposit Classification, Catego-rization and Estimate of Reserves was started.

The results of the geomechanical testing and hydrogeological research prove that this deposit is suitable for surface extraction with application of the latest technologies. The obtained results confirm the assumptions. In some important parameters (weighted lower heating value, total sulphu-re and total balance reserves) they are even better than the assumption. It enables continuation of preparation of the designs and studies for the Kongora Lignite Mine and Thermal Power Plant.

We started preparation of the hydrogeological study for the Kongora

Deposit. Preparations were started for the analysis of the level of explorati-on for coal in the rest of Herceg Bosnia Canton.

GiS PROJECT

The official cadastral plans and maps M 1:2500 and 5000 were vectorized for the project of the PSPP Vrilo. The usufruct data base was made for the projects of the wind farms Mesihovina, Borova Glava and Velika Vlajna, and the small hydro power plants Kravice, Stubica, Dubrava, Luke and Fra-tarska. The 3 D models were created for making of complex geoanalyses, automatic calculation of surface and cubic volume within the given area, automatic profile generation etc. on the basis of the created network 3D models in the GIS tool environment. Table – Installed capacity and annual output of existing and new genera-tion facilities

Item Name Capacity Year

Annual output 2005 2010 2015 2020

1. Wind farmsMW 0 128 338 466GW 0 368 886 1254

2. Hydro power plantsMW 792 837 990 1078GW 1860 2078 2420 2704

out of which

2. 1. Pumped storage power plant MW 440 440 544 544GW 600 600 766 766

2. 2. Small hydro power plantsMW 0 15,28 37,62 47,62GW 0 49 123 159

3. Thermal power plantsMW 550 550GW 3000 3000

4. Renewable energy sourcesMW 792 965 1328 1544GW 1860 2494 3429 4117

5. Fossil fuelsMW 0 0 550 550GW 0 0 3000 3000

7 TotalMW 792 965 1878 2094GW 1860 2494 6429 7117

Map of existing and planned generation facilities of JP EPHZHB


DiSTRibUTiON fACiLiTiES

35/x kV SS 15 pcs.

10(20)/0.4 kV SS 2.772 pcs.

35 kV overhead lines 278 km

10(20) kV overhead lines 3.015 km

1 kV overhead lines 7.101 km

35 kV underground lines 7 km

10(20) kV underground lines 544 km

1 kV underground lines 576 km

In 2008, a share of the Power Distribution Division in the total investment of the Company was 35.5%

The network and facilities are operated conventionally through five dispatch centers in the headquarters of the distribution areas units and sections.

The modern SCADA/DMS system of operation is planned to be esta-blished soon.The feasibility study was prepared in 2008.

In 2008, there were 8,346 power connection applications out of whi-ch 8,091 were approved.

TELECOMMUNiCATiONS AND COMPUTER NETWORk

As late as 2005, establishment of the connection system through HT was

completed. This enabled closing and connecting of the distribution busine-ss system. Using the established computer network, the work of users was organized and connection to Internet was made. Internet access is contro-lled through the ISA server and antivirus protection is ensured through the system.

In 2008, the computer equipment was procured and development of the computer networks continued.

We started preparation of the telecommunication infrastructure pro-ject of installation of optic cables between the 110/xkV substations and office buildings. This would enabled closing of the telecommunications system through OPGW cables.

METERiNG iN POWER SySTEM

At the points of electricity acceptance from TRANSCO, meters are installed by TRANSCO. At the 0.4 and 10 kV points of electricity acceptance between power companies, meters are installed by the Power Distribution Division in cooperation with the Power Supply Division. Meters are installed and electricity and power are metered in all points.

Activities on installation of control meters started. This project is finan-ced out of the EBRD credit funds and also includes construction of the dis-tribution metering center in Mostar. This is a very important project because its implementation will make it possible for us to have exact data on losses in the MV network and locate losses in the LV network.

POWER DiSTRibUTiON DiviSiON


DAU

SUBSTATIONS LINES

35/10(20) kV substations 10(20)/0.4 kV substations 35 kV MV lines 10(20) kV MV lines 0.4 kV LV lines

Number of substations

Installed power MVA

Number of substations

Installed power KVA

Length of overhead

lines (km)

Length of underground lines (km)

Total length (km)

Length of overhead

lines (km)


Total length (km)

Length of overhead

lines (km)


Total length (km)

1 w2 3 4 5 6 7 8 9 10 11 12 13 14

DAU SOUTH 8 27 2.389 662.156 199 4 202 2.219 435 2.654 4.807 450 5.257

DAU CENTER 4 22 713 221.660 59 2 61 579 76 655 1.854 108 1.962

DAU NORTH 3 28 287 81.420 21 1 22 218 33 251 440 18 458

TOTAL 15 76 3.389 965.236 278 7 285 3.015 544 3.559 7.101 576 7.677

PDD

Substations Lines

x/10(20) kV substations 10(20)0.4 kV substations 35 kV MV lines 10(20) kV MV lines 0.4 kV LV lines

Number of 110/10(20)

kV substations

Number of 35/10(20)

kV substations

Installed power MVA

Total number of substations

Installed power KVA

Length of overhead lines (km)

Length of underground

lines (km)

Total length (km)



lines (km)

Total length (km)



lines (km)

Total length (km)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15HNC TRANSCO 4 13 809 212.295 81 0 81 783 228 1.011 1.372 240 1.612WHC TRANSCO 1 0 576 112.870 50 1 51 626 95 721 2.192 121 2.313HBC TRANSCO 3 14 574 102.560 68 3 71 787 74 861 1.243 89 1.332MBC TRANSCO 4 22 571 123.860 59 2 61 563 66 629 1.833 98 1.931PC TRANSCO 3 28 241 64.250 21 1 22 218 29 247 440 18 458TOTAL 15 76 2.771 965.236 278 7 285 3.015 544 3.559 7.101 576 7.677

DiSTRibUTiON fACiLiTiES iN 2008 20(10) line in Herzeg Bosnia Canton


SAU NORTHSAU CENTERSAU SOUTH

70%

22%

8%

POWER SUPPLy DiviSiON

The organizational parts of the division are:1. Executive Director’s Office2. Supply Area Unit SOUTH3. Supply Area Unit CENTER4. Supply Area Unit NORTH

Supply area units consist of departments and sections carrying out the activity of power supply.

The employees of the division are responsible for safe and reliable sup-ply to customers as well as for electricity billing and collection. On Decem-ber 31, 2008, there were 183,570 customers.

NUMbER Of CUSTOMERS by CLASS AS Of DECEMbER 31, 2008:

Class Number of customers

110 kV 3

35 kV 3

10 (20) kV 119

Households 167.101

Other consumption 14.870

Street lighting 1.474

Total 183.570

CUSTOMERS by SUPPLy AREA UNiT

ACCEPTED ELECTRiCiTy by SUPPLy AREA UNiT

SAU NORTHSAU CENTERSAU SOUTH

65%

26%

9%


200

100

300

400

500

June 26, 2008

December 31, 2008

COLLECTiON RATE AT DiSTRibUTiON LEvEL:

• Supply Area Unit SOUTH 99,69 % • Supply Area Unit CENTER 99,73 % • Supply Area Unit NORTH 99,47 %

DiSTRibUTiON NETWORk LOSSES:

• Supply Area Unit SOUTH 18,34 % • Supply Area Unit CENTER 18,37 % • Supply Area Unit NORTH 10,26 %

NUMbER Of SUiTS bROUGHT fOR DEbT:

• Supply Area Unit SOUTH 2.691 • Supply Area Unit CENTER 1.760 • Supply Area Unit NORTH 101

NUMbER Of iNSPECTiONS Of METERiNG POiNTS AND CONNECTiONS:

• Supply Area Unit SOUTH 33.968 • Supply Area Unit CENTER 16.646 • Supply Area Unit NORTH 3.444

STRUCTURE Of biLLED ELECTRiCiTy (MWH)

RATiO Of ELECTRiCiTy ACCEPTED by CUSTOMERS AT DiSTRibUTiON LEvEL AND by OTHER TARiff CUSTOMERS

MAxiMUM (DECEMbER 31, 2008 AT 7 P.M.) AND MiNiMUM (JUNE 26, 2008 AT 5 A.M.) DAiLy CONSUMPTiON iN 20081 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MAX (MW) 324 299 288 285 286 293 312 348 377 387 389 382 374 382 386 393 415 442 444 433 414 384 373 353

MIN (MW) 258 217 208 207 204 208 256 288 307 316 320 326 324 303 322 319 309 302 294 296 302 315 308 282

MAxiMUM AND MiNiMUM HOURLy CONSUMPTiON by MONTH iN 2008mjesec I II III IV V VI VII VIII IX X XI XII

MAX (MW) 415 392 387 346 336 334 344 348 385 353 402 444

MIN (MW) 242 241 229 219 212 204 224 224 226 225 226 212

DAiLy LOAD DiAGRAM35 kVStreet lightingOther 35 kV

customers10 kVOther

consumptionHouseholds

53%

20%11%

11%2%

61%

39%

Other tariff customers Tariff customers (distribution level)


In 2008, the total power generation in the hydro power plants operated by our Company was 1355.64 GWh or 88.7% of the plan.

Power generation in all hydro power plants except in the HPP Mostar was lower than the plan due to unfavourable hydrological circumstances.

The total power consumption (2,432.04 GWh) was higher than the plan (107.4%).

The losses at the distribution voltage levels of 15.62% were still higher than the plan (13.77%) but lower than in the previous year (16.63%).

The collection rate was 97.83%. It was at the level of the plan (97%). Achievement of the planned collection rate had a positive influence on the Company liquidity. All liquidity ratios – ratios of current liquidity, day-to-day liquidity, accelerated liquidity and financial stability were within the scope of the plan and better than in 2007.

In the period January – December 2008, the planned investment amo-unted to BAM 144,943,321 and realized investment BAM 72,591,576 or 50%.

As a result of the good Company performance in 2008, the profitability ratios – gross profit margin, ROA (return on assets), ROE (return on equity), ROI(return on investment), EBITDA (earnings before interest, taxes, depreci-ation and amortization) and EBIT (earnings before interest and taxes) were better than in the previous year.

The investment indicators – labour productivity and EPS (earnings per share) were better than in 2007.

The economic indicators - coefficients of economy of all business ac-tivities, and operating and working factors were better than in 2007 and were at the level of reference values except the coefficient of economy of financing that was below the reference value since the financial expenses (interest on loans from the previous years) were higher than the financial income (return interest and positive exchange rate differences).

After evaluation of the Company’s performance in 2008, the Mana-gement Board set the following tasks to be carried out in the following period:

- Electricity loss minimization and collection rate increase through implementation of the project of remote reading and consump-tion control for theft prevention and proper control of the power distribution system

- Conclusion of flexible contracts with customers and suppliers of electricity with delivery risk sharing

- Cultivation of good business relations with all customers for joint planning of the future services

- Safe and reliable supply to customers at all voltage levels - Control of operating expenses in all business activities - Successful human resources management in the Company

MANAGEMENT bOARD’S EvALUATiON Of COMPANy PERfORMANCE

245 kV switchgear of PSPP Čapljina

46 2008 ANNUAL REPORT

Documents

2008 ANNUAL REPORT - Elektroprivreda HZ HB