business results 2007

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2 We are aware of our role and responsibility. We ensure a reliable transmission of natural gas and maintain the pipeline network infrastructure. We supply energy to people. 2 business results 2007

3 Table of contents Foreword by General Manager 5 Geoplin plinovodi Company Profile 6 Financial Results of Geoplin plinovodi in Auditor s Report Balance Sheet Income Statement business results

4 Marjan Eberlinc, General Manager In the third year of its independent operations, the company Geoplin plinovodi d.o.o. reached a new level of maturity. Net profit improved by 10 per cent compared to the 2006 result and amounted to eur 10.5 million. Our good performance is a consequence of dedicated work of employees and excellent co-operation with the network users, regulators, ministries, the owner and suppliers. 4 business results 2007

5 Foreword by General Manager In the third year of its independent operations, the company Geoplin plinovodi d.o.o. reached a new level of maturity and successfully achieved the set goals. The company has become one of the most prominent investors into the infrastructure in the Republic of Slovenia. At the end of 2006 and in 2007, the construction of facilities from the adopted investment programme started in order to enable an increase of transmission capacity of the natural gas network by more than 100 per cent by the end of the investment cycle. As the first facility, the Rogatec Rogaška Slatina pipeline (length 8.1 km, pipe diameter 800 mm, pressure 70 bar) was completed in 2007 in line with the planned financial framework and time plan. In the middle of 2007 also the construction of the Šentrupert Šoštanj pipeline began (length 16.4 km, pipe diameter 400 mm, pressure 70 bar), and in the beginning of 2008 it already allowed the Šoštanj Thermal Power Plant to use natural gas for electricity production for the first time in its history. By using natural gas, fuel efficiency of the power plant was importantly improved; moreover, the volume of emissions into the environment per unit of produced electricity was reduced. Besides several important projects which are part of the investment programme, there were regular investments into expansion and upgrade of the system. The fact that in 2007 the amount of EUR 25.2 million was directed into investments speaks of intensive investment activities, since this sum is about 2.5 times higher than the calculated depreciation. As the system operator we will continue to implement our investment programme also in the coming years to reduce carbon dioxide emissions as well as other harmful emissions. Replacing ecologically less suitable fuels with natural gas is besides the use of alternative energy sources and rational use of energy - one of the most efficient ways of reducing climate changes in the modern world. Apart from intensive investment activities we focus on quality of our services. Professional and regular maintenance of natural gas network as well as continuous system monitoring and management provides the basis for its safe and reliable operations. There are 143 highly trained employees in the company, with 45 per cent of the staff holding at least a college degree. They make sure that the network users are provided with high quality services at all times. In 2007 the network transmission capacity of 10.5 million Sm 3 /day was leased, about half of this volume to supply natural gas consumers in the Republic of Slovenia. 1,115 million Sm 3 of natural gas was trasmitted to Slovenian customers; that is an increase of more than 2.2 per cent compared to 2006, in spite of the relatively warm winter. The company's business results reflect its good performance. Net profit increased by 10 per cent compared to 2006 and amounted to EUR 10.5 million. In accordance with the development-oriented dividend policy, the profit from 2007 and previous years has been retained by the system operator throughout the years of its operations as an independent company, to form a basis for adequate financial structure of the company Geoplin plinovodi, and to enable a successful implementation of the investment programme and the natural gas transmission network development plan. We were actively involved in preparation of the Decree on Functioning of the Natural Gas Market which will importantly influence the activities on the Slovenian natural gas market. International co-operation within the International Gas Union (IGU) and Gas Infrastructure Europe (GIE) has continued, and as a system operator we take part especially in those international projects that affect the circumstances in Slovenia. Good performance in 2007 is a consequence of dedicated work of our employees and excellent co-operation with the network users, regulators, ministries, our owner and suppliers. I would like to thank to all of them and invite them to join us on the way towards our development goals in the years ahead. Marjan Eberlinc, General Manager business results

6 Geoplin plinovodi Company Profile In line with the European Gas Directive and the Slovenian Energy Act, company Geoplin plinovodi is the operator of a natural gas transmission system. As a system operator, the company ensures the safe, reliable, economically, and environment-friendly transmission of natural gas via the natural gas pipeline network in the Republic of Slovenia, and is in charge of planning, developing and maintaining the network. It owns the entire natural gas transmission network in Slovenia. The company s sole owner is Geoplin d.o.o. Ljubljana. Basic information about the natural gas transmission network: 970 km of pipelines; 213 metering-regulation stations; Kidričevo compressor station (2 compressor units); pipeline pressure up to 67 bars; a dispatch centre for remote network supervision, continuous control and management of the natural gas transmission network. The Slovenian natural gas pipeline network is an important link in international transmission routes for natural gas. The company actively participates in the International Gas Union (IGU), Gas Infrastructure Europe (GIE) and other international organisations and associations. 6 business results 2007

7 Financial Results of Geoplin plinovodi in 2007 business results

8 The energy of our business and social opportunities runs in the endless network of pipelines. Our proud mission is to direct the flow of natural gas and ensure the safety of its transmission. 8 business results 2007

9 B alance Sheet The balance sheet total as of 31 December 2007 was EUR million. This is an increase of 15 per cent compared to the beginning of the year. In the assets column, there was an increase in non-current assets by 2 percentage points, which equals the decrease in current assets. Non-current assets, which are almost totally represented by intangible and tangible assets, increased by 18 per cent since the beginning of the year. Total investments into new intangible and tangible assets amounted to EUR 25.2 million, which is 2.5 times as much as the calculated depreciation for the financial year. Current assets increased by 4 per cent in The highest growth was in operating receivables due to increased operations in December and government receivables due to receivables from value added tax. Inventories increased by 2 per cent, while financial investments including cash grew by 4 per cent. Since the beginning of the year capital increased by 8 per cent from profit of the financial year. Profit from the previous year was not distributed, and was allocated to other reserves from profit in line with the General Assembly resolution. Total non-current provisions decreased by 10 per cent in They were decreased for provisions draw-down for extensive maintenance works and increased for provisions for long-service awards and severance benefits as well as for new non-current deferred connection-fees. At the end of 2007 the company disclosed non-current financial liabilities to companies in the group. Among current liabilities only current trade payables were disclosed which grew by 5 per cent in comparison with the beginning of the year. Due to dynamic investment activities particularly trade payables to suppliers increased, while corporate income tax was lower. business results

10 Balance sheet as of in EUR thousand balance as of balance as of ASSETS 155, ,657.4 A. Fixed assets 122, ,512.5 I. Intangible assets and non-current deferred expenses and accrued revenues 14, , Concessions, patents, licences, trademarks, and similar rights and assets 14, ,405.6 II. Tangible fixed assets 108, , Land and buildings 72, ,106.4 a. Land 2, ,725.8 b. Buildings and other real estate 69, , Other plant and equipment 16, , Tangible fixed assets in acquisition 18, ,077.6 a. Tangible fixed assets under construction or in production 14, ,077.6 b. Advances for tangible assets acquisition 3,488.5 VI. Deferred tax receivables B. Current assets 32, ,103.3 II. Inventories 1, , Materials and spare parts 1, , Commercial goods III. Current financial investments 23, , Short-term loans 23, ,956.0 b. Short-term loans granted to others 23, ,956.0 IV. Current operating receivables 5, , Current trade receivables from companies in the group 3, , Current trade receivables from customers Current receivables due from other entities 1, ,137.3 V. Cash 1, C. Deferred expenses and accrued revenues LIABILITIES 155, ,657.4 A. Capital 135, ,008.0 I. Called-up capital 98, , Share capital 98, ,733.8 II. Equity reserves 8, ,151.5 III. Profit reserves 18, , Legal reserves 1, Other reserves from profit 17, ,116.7 V. Net profit (or loss) brought forward 9,084.6 VI. Net profit (or loss) for the financial year 9,988.7 B. Provisions and non-current accruals and deferred revenues 1, , Provisions for long-service awards and severance benefits Other provisions 1, , Non-current accruals and deferred revenues C. Non-current liabilities 8,349.6 I. Non-current financial liabilities 8, Non-current financial liabilities to companies in the group 8,345.9 II. Non-current trade payables 3,7 4. Non-current received advances and collaterals 3.7 Č. Current payables 9, ,603.5 III. Current trade payables 9, , Current trade payables to companies within a group Current trade payables to suppliers 7, , Current operating liabilities from advances Other current trade payables 1, ,199.3 D. Current accruals and deferred income OFF-BALANCE SHEET ITEMS 12, business results 2007

11 Income Statement In 2007 the company achieved a net profit of EUR 10.6 million, which was 29 per cent of net sales revenues. 94 per cent of profit resulted from operations and 6 per cent from financing. Profit increased by 10 per cent compared to The majority (99 per cent) of the net sales revenues, which totalled to EUR 36.5 million, came from charges for access to the transmission network, access to the transmission network from one transmission network to another and balancing daily discrepancies as well as balancing of the transmission network. The difference is represented by revenues from sales of material and other services, related to the company's basic operations. Gross profit from sales amounted to EUR 34.4 million and increased by 5 per cent compared to General distribution and administrative costs were in 2007 EUR 21.8 million; that is 90 per cent of total expenses. These include costs of material, services, labour, other costs and business expenses as well as the calculated amortisation. Due to the mild winter the operation of the compressor station decreased in comparison with 2006, and that contributed importantly to reduction of material costs. At the same time the calculated amortisation increased due to new investments. Revenues from financing were achieved with financial investments interests and revenues from received discounts for early payments totalling to EUR 0.9 million. This is an increase of 29 per cent in comparison with Income tax was calculated at the rate of 23 per cent in compliance with the tax legislation and with consideration of expenditures not recognised and tax relief. business results

12 Energy shows its true value only when it is spread among people. By caring for the environment and supporting the development of social potentials we nurture the positive energy of our future. 12 business results 2007

13 INCOME STATEMENT for the period from to in EUR thousand , Net sales revenues 36, , Cost of goods sold 2, , GROSS PROFIT FROM SALES 34, , Marketing and sales and administrative costs 21, ,578.3 a. Estimated marketing and sales and administrative costs 21, ,569.6 b. Operating expenses from revaluation of intangible fixed assets and tangible current assets c. Operating expenses from revaluation of current assets Other operating revenues (including revaluation operating revenues) Financial income from loans b. Financial income from loans to others Financial income from trade receivables b. Financial income from other trade receivables Financial expenses for financial liabilities a. Financial expenses for financial liabilities to companies in the group 3.3 č. Financial expenses for other financial liabilities Financial expenses for trade payables b. Financial expenses for trade payables to suppliers and bills of exchange payables Other income Other expenses Income tax expense 3, , Deferred taxes NET PROFIT OR LOSS FOR THE FINANCIAL YEAR 10, , Net profit/loss brought forward 9, , Decrease (release) of capital reserves 20. Decrease (release) in profit reserves 21. Increase (additional formation) of profit reserves 9, , DISTRIBUTABLE PROFIT 9, ,084.6 business results

14 Connected with energy for a sustainable future. The future brings new challenges and opportunities. Connected with natural energy we will achieve our business goals and develop our potentials. We are on the right path. 14 business results 2007

15 Geoplin plinovodi d.o.o. Družba za upravljanje s prenosnim omrežjem, d.o.o Cesta Ljubljanske brigade 11 p.p. 3706, 1001 Ljubljana, Slovenija Phone: Fax: Public by: Geoplin plinovodi d.o.o. / Production: Agencija25 / Ljubljana, august 2008 business results

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