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TOPLIFIKACIJA GROUP
ANNUAL REPORT
2012
CONTENT
REVIEW OF 2012 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1
KEY NUMBERS TOPLIFIKACIJA GROUP - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -2
INFORMATION FOR THE INVESTORS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10
PRICE OF THE HEAT ENERGY- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14
FINANCIAL STATEMENTS FOR TOPLIFIKACIJA GROUP- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -16
CORPORATE GOVERNANCE- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - -25
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REVIEW OF 2012
Year 2012 for Toplifikacija Group was fulfilled with challenges especially in the regulated businesses
production, distribution and heat supply.
Even though the legislative according to which Toplifikacija AD, Distribucija na toplinata DOOEL,
Snabduvanje Centar DOOEL, Snabduvanje Istok DOOEL, Snabduvanje Zapad DOOEL and Skopje Sever
AD are working guaranties realization of income from the business, adequate for covering the
operational costs as well as gaining profit form the invested assets, profit that covers the cost for
invested capital, however in 2012 Toplifikacija Group failed to achieve the approved regulated
return on capital by the Energy Regulatory Commission.
The reasons for this were the decisions of the Energy Regulatory Commission issued in July 2012 with
which the regulated business production of heat was damaged for approx. 132 million denars. This
amount is not approved based on three points. The Energy Regulatory Commission didn’t approve
purchased heat energy from TE-TO AD in amount of 52 million denars without VAT, also ERC
approved fuel oil costs for 2012 reduced for 5% of the actual cost (cca amount of 35 million denars)
and reduced income inamount of cca 45 million denars as surplus of income earned in 2011.
The companies’ parts of Toplifikacija Group which are performing this regulated businesses are
taking all legal measures to solve these problems.
During 2012 Toplifikacija bought heat from the independent producer TE-TO AD Skopje in January,
February and March 2012. The price of this heat is for 5% lower than the price of the heat produced
by the regulated producer based only on the price of the fuel. This enables cost reduction and
ultimately lowering the cost of heat for the end user.
Toplifikacija AD in August 2011 returned the license for heat production, and for the distribution and
supply of heat the licenses were returned in November 2012.
Detailed information for the business plan in the upcoming 5 years for Toplifikacija AD and the
reasons for returning the licenses for the regulated businesses are published on the web site of the
Macedonian Stock Exchange and on the web site of Toplifikacija AD Skopje.
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KEY NUMBERS TOPLIFIKACIJA GROUP
Key Ratios (in denars)
2012 2011 2010 2009 2008 2007
Net Income Per Share 85.41 19.71 277.07 66.25 11.55 261.56
P/E ratio 24.80 173.33 13.56 59.09 738.23 41.10
Operating CF Per Share 316.51 -256.20 495.26 -217.53 -32.81 -12.32
P/CF ratio 6.69 n.a 7.58 n.a. n.a. n.a
Book Value Per Share 3712.64 3695.86 3651.96 3514.21 3529.71 3705.26
P/Book ratio 0.57 0.92 1.03 1.11 2.40 2.90
Dividend Per Share n.a n.a 44.44 33.33 n.a. 55.56
Dividend Yield n.a n.a 0.01 0.01 n.a. 0.01
Statement of comprehensive income (in million denars)
2012 2011 2010 2009 2008 2007
Sales Revenue 2,593.5 2,358.5 2,047.1 1,569.0 1,798.5 1,495.3
EBITDA 191.5 178.5 362.9 229.2 61.8 23.0
EBIT 36.4 44.9 240.4 134.2 -7.4 -222.8
EBT 46.4 14.9 133.5 30.5 7.8 136.7
Comprehensive income before minority
interest 38.4 8.9 124.9 29.8 5.2 117.7
Comprehensive income after minority
interest 38.4 8.9 124.9 29.8 5.2 117.7
Statement of financial position (in million denars)
2012 2011 2010 2009 2008 2007
Total Assets 3,727.4 3,947.2 3,558.7 3,879.2 3,278.4 2,554.7
Accounts Receivables 910.3 1,064.1 751.5 790.6 918.3 757.5
Short-term Liabilities 1,582.5 1,872.1 1,269.1 1,847.8 1,292.1 849.2
Total Capital 1,670.7 1,632.3 1,643.4 1,581.4 1,578.5 1,598.3
Leverage 53.7% 58.2% 53.8% 59.2% 51.9% 37.4%
Cash Flow (in million denars)
2012 2011 2010 2009 2008 2007
Operating cash flow 142.4 -115.3 222.9 -97.9 -14.8 -5.5
Investment cash flow 7.1 -139.8 234.0 -783.5 -711.2 -19.4
Key numbers for 2012, 2011 and 2010 refer to Toplifikacija Group, unlike for the previous period
when they apply for Toplifikacija AD-Skopje.
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Toplifikacija Group consists of 11 companies in which Toplifikacija AD – Skopje is parent company.
Name of the company Area of business 2012
Share
Toplifikacija AD - Skopje Production of heat
Distribucija na toplina DOOEL - Skopje Distribution of heat 100.00%
Snabduvanje Centar DOOEL - Skopje Heat supply 100.00%
Snabduvanje Istok Heat supply 100.00%
Snabduvanje Zapad Heat supply 100.00%
Proizvodstvo na toplina DOOEL - Skopje Production of heat 100.00%
Skopje Sever AD - Skopje Production, distribution and supply of heat 99.74%
Toplifikacija - Inzenering DOOEL - Skopje Designing, engineering, trade, transport and etc. 100.00%
Servisi za greenje DOOEL - Skopje Maintainance of heat instalation 100.00%
Toplifikacija - Bitola DOO - Skopje Heat supply 98.34%
Gas Trade DOOEL - Skopje Trade and distribution of gas and gas fuels 100.00%
Toplifikacija AD
Toplifikacija AD – Skopje in 2012 operated the heat production. It is the parent company of all other
companies in the Toplifikacija Group. In August 2011 Toplifikacija AD returned the license for heat
production and the employees of Toplifikacija AD were transferred in the new formed company
Proizvodstvo na toplina DOOEL Skopje.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 1,755,960 2,187,267
EBITDA 28,502 64,190
EBIT -39,118 7,840
EBT 29,763 2,720
Net Profit/Loss 28,292 1,753
Total comprehensive income/Loss 28,292 1,753
Number of employees 0 0
Statement of financial position
In (000) denars 2012 2011
Total Assets 3,403,826 3,789,166
Accounts Receivables 630,613 911,724
Total Liabilities 1,793,509 2,207,041
Long-term Liabilities 716,167 641,917
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Proizvodstvo na topline DOOEL Skopje
Proizvodstvo na topline DOOEL is limited liability company established in 2011. During 2012, in the
second part of the heating season i.e October-December 2012, the company had operated with the
regulated business heat production.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 839,183 24,841
EBITDA 33,411 30
EBIT 33,411 30
EBT 33,163 29
Net Profit/Loss 32,898 28
Total comprehensive income/Loss 32,898 28
Number of employees 180
Statement of financial position
In (000) denars 2012 2011
Total Assets 304,714 12,749
Accounts Receivables 288,462 12,728
Total Liabilities 271,481 12,414
Long-term Liabilities / /
Distribucija na toplina DOOEL Skopje
Distribucija na toplina DOOEL – Skopje in 2012 operated with the business distribution of heat i.e. it
takes the produced heat from the producer and it distributes to the supplier of heat energy. The
company was formed in May 2009 and the employees that worked in this regulated businesses in
Toplifikacija AD, were transferred to the new company.
In 2012 the number of employees was 97.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 594,037 191,890
EBITDA 14,928 20,052
EBIT -3,383 2,034
EBT 5,205 10,358
Net Profit/Loss 4,967 10,242
Total comprehensive income/Loss 4,967 10,242
Number of employees 97 86
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Statement of financial position
In (000) denars 2012 2011
Total Assets 577,786 486,375
Accounts Receivables 269,063 162,004
Total Liabilities 218,286 114,448
Long-term Liabilities / /
Snabduvanje Centar DOOEL
Snabduvanje Centar DOOEL – Skopje is limited liability company for supply of heat. The company is
established in November 2008 by Toplifikacija AD as single founder.
Snabduvanje Centar DOOEL in 2012 preformed the regulated activity heat supply to the consumers.
The company operates i.e. supplies heat in municipality Centar, municipality Kisela Voda,
Municipality Cair and part of municipality Aerodrom.
As a licensee, the Company is responsible for providing heat and distribution capacity for delivery of
heat, measuring, reading and billing of the delivered heat.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 1,236,056 1,090,764
EBITDA 57,256 41,642
EBIT 46,504 24,346
EBT 49,658 26,842
Net Profit/Loss 48,614 25,020
Total comprehensive income/Loss 48,614 25,020
Number of employees 30 31
Statement of financial position
In (000) denars 2012 2011
Total Assets 444,233 470,998
Accounts Receivables 441,592 467,581
Total Liabilities 392,548 416,382
Long-term Liabilities / /
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Snabduvanje Istok DOOEL
Snabduvanje Istok DOOEL – Skopje is limited liability company for supply of heat. The company is
established in November 2008 by Toplifikacija AD as single founder.
The Company was established to liberalize the heat market and to improve the quality of the services
to the consumers and it begins to work actively from February 2009 with the resources which were
previously used for performing the activity supply of heat.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 644,050 587,352
EBITDA 21,033 14,156
EBIT 10,161 1,361
EBT 8,831 619
Net Profit/Loss 7,754 -613
Total comprehensive income/Loss 7,754 -613
Number of employees 31 28
Statement of financial position
In (000) denars 2012 2011
Total Assets 156,062 197,412
Accounts Receivables 153,063 193,049
Total Liabilities 145,942 191,274
Long-term Liabilities 0 0
Snabduvanje Zapad DOOEL
Snabduvanje Zapad DOOEL is limited liability Company for heat supply. The company was established
in November year 2008 by Toplifikacija AD as single founder.
By obtaining the license for heat supply issued by the Energy Regulatory Commission, Snabduvanje
Zapad DOOEL operates in the municipality Gorce Petrov, municipality Karpos, and part of
municipality Centar.
In 2012 Snabduvanje Zapad performed its regulated business in accordance with its own business
strategy realizing the following activities: invoicing the heat to the consumers; delivery of invoices;
collection of receivables; contracts with existing and new consumers; communication,
correspondence and reporting to customers; determining the quality of the delivery of heat at level
of the consumer and other activities.
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Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 706,155 629,587
EBITDA 23,185 16,741
EBIT -5,722 -1,823
EBT -6,920 -3,850
Net Profit/Loss -9,786 -5,692
Total comprehensive income/Loss -9,786 -5,692
Number of employees 30 31
Statement of financial position
In (000) denars 2012 2011
Total Assets 196,544 249,440
Accounts Receivables 192,185 245,248
Total Liabilities 205,003 248,012
Long-term Liabilities / /
Skopje Sever AD
Skopje Sever AD – Skopje is shareholder company established in year 1998. From year 2001 performs
regulated activities production, distribution and supply of heat. The regulated activities are
performed in the municipality Butel and part of municipality Cair.
In year 2012 the company operated with 16 employees.
Key number
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 95,506 107,438
EBITDA 15,609 18,118
EBIT -2,672 7,683
EBT 1,491 12,887
Net Profit/Loss 573 12,829
Total comprehensive income/Loss 573 12,829
Number of employees 16 14
Statement of financial position
In (000) denars 2012 2011
Total Assets 264,085 268,729
Accounts Receivables 88,641 82,090
Total Liabilities 79,577 84,794
Long-term Liabilities 0 0
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Toplifikacija Inzenering DOOEL
Toplifikacija Inzenering DOOEL – Skopje is a company for designing and engineering services of
distribution network, development and designing of measuring control equipment, reconstruction of
substations, as well as engineering services in heating and air conditioning.
In 2012 the number of employees was 7.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 41,285 21,376
EBITDA 3,931 4,375
EBIT 3,719 4,203
EBT 4,359 4,763
Net Profit/Loss 4,337 4,752
Total comprehensive income/Loss 4,337 4,752
Number of employees 7 5
Statement of financial position
In (000) denars 2012 2011
Total Assets 37,358 25,131
Accounts Receivables 18,363 11,074
Total Liabilities 10,704 2,814
Long-term Liabilities / /
Servisi za greenje DOOEL
Servisi za greenje DOOEL is limited liability company founded by Toplifikacija AD – Skopje for
performing maintenance on heat installations and other activities. The company is established in
May 2011 with its location on Londonska bb, Skopje.
In 2012 the number of employees was 16.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 9,121 4,929
EBITDA -3,321 940
EBIT -3,456 940
EBT -3,622 940
Net Profit/Loss -3,649 940
Total comprehensive income/Loss -3,649 940
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Number of employees 16 18
Statement of financial position
In (000) denars 2012 2011
Total Assets 2,251 3,247
Accounts Receivables 1,350 2,448
Total Liabilities 4,653 2,000
Long-term Liabilities / /
Toplifikacija Bitola DOO
Toplifikacija Bitola DOO - Skopje is a company for heat supply in the town Bitola in Republic of
Macedonia. In 2012 the company didn’t operate, i.e. it didn’t supply its customers with heat energy.
The company currently works for the collection of debts from its customers. The number of
employees in the company was 1.
Key numbers
Statement of comprehensive income
In (000) denars 2012 2011
Total Revenue 472 352
EBITDA -1,928 -614
EBIT -3,167 -614
EBT -2,713 -302
Net Profit/Loss -2,713 -302
Total comprehensive income/Loss -2,713 -302
Number of employees 1 1
Statement of financial position
In (000) denars 2012 2011
Total Assets 29,074 33,253
Accounts Receivables 17,101 19,806
Total Liabilities 51,480 52,945
Long-term Liabilities / /
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INFORMATION FOR INVESTORS
The shares of Toplifikacija Group are registered for trade on Macedonian stock exchange. They are
classified on the official market in the segment of Super quotation – ordinary shares under the
symbol of TPLF.
The share of Toplifikacija Group is a part of the MBI 10 index and is one of the most liquid shares on
the Macedonian stock market.
A total of 450,000 ordinary shares have been issued after the nominal value of 51.13 euro. Out of
them, 884 are treasury shares, while the others are available for trade.
Stock-market performance
Table 1 – Trading data (price, value and capitalization are in denars)
month Average Number of
transactions
Traded Traded
Quantity
Market
Capitalization price values
January 2,313 46 2,244,166 974 944,766,000
February 2,278 116 6,245,098 2,730 1,072,174,500
March 2,074 50 1,790,851 903 810,000,000
April 1,786 74 3,095,766 1,717 895,882,500
May 1,983 90 5,265,167 2,611 1,116,900,000
June 2,424 101 7,998,304 3,203 900,000,000
July 2,408 134 6,362,054 2,608 1,064,812,500
August 2,239 70 3,648,349 1,614 1,013,071,500
September 2,097 51 3,837,058 1,838 937,741,500
October 1,837 32 1,141,448 621 708,975,000
November 1,685 29 1,029,486 619 765,000,000
December 1,537 6 123,220 80 688,500,000
Total 2,118 799 42,780,967 19,518 688,500,000
In 2012 a total of 19,518 ordinary shares of Toplifikacija Group were traded on the Macedonian stock
market, which represents 4.34% of the total number of issued shares. The total traded value
amounted to 42,780,967 denars and it was realized in 799 transactions.
In average, about 24 shares per transaction were traded.
During the trade in 2012, the highest realized price was in the amount of 2,798 denars on the other
hand, the lowest realized price was 1,530 denars .
The comparison of the movement of the main stock exchange index MBI 10 of the Macedonian stock
market and the price of the share of Toplifikacija Group is shown in the following chart.
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Graph 1 – Comparison of the movement of the MBI 10 and TPLF in 2012
The movement of the price of the share of Toplifikacija Group is shown in the following figure.
Graph 2 – Movement of the price of TPLF in 2012 in denars
The following chart shows the realized average price and quantity of trade per months in 2012.
Graph 3 – Quantity and average price of trading by months in 2012
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(den.)
Key ratios
Table 2 – Key ratios
Ratio 2012 2011 Change
2010 2009 2008 %
EBITDA Per Share (in denars) 425.57 396.66 7.3% 806.49 509.35 137.30
EBIT Per Share (in denars) 80.93 99.70 -18.8% 534.22 298.24 n.a.
Basic Earnings Per Share (in denars) 85.41 19.71 333.3% 277.07 66.25 11.55
Diluted Earnings Per Share (in
denars) 85.41 19.71 333.3% 277.07 66.25 11.55
Return on Assets (ROA) 2.23% 0.52% 325.4% 7.50% 1.85% 0.40%
Return on equity (ROE) 5.17% 1.19% 333.8% 17.43% 4.19% 0.73%
Book Value Per Share (in denars) 3712.64 3695.86 0.5% 3651.96 3514.21 3529.71
P/E ratio 24.80 173.33 -85.7% 13.56 59.09 738.23
P/Bоок ration 0.57 0.92 -38.3% 1.03 1.11 1.11
Dividend Per Share n.a. n.a. n.a. 44.44 33.33 n.a.
Dividend Payout ratio n.a. n.a. n.a. 16.04% 50.31% n.a.
Dividend Yield n.a. n.a. n.a. 1.18% 0.85% n.a.
The key numbers for 2012,2011 and 2010 are referring for Toplifikacija Group, unlike previous
periods when they referred for Toplifikacija AD –Skopje.
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Shareholder structure
The shareholders’ structure of Toplifikacija AD – Skopje is diversified to a great extent. The biggest
shareholder is KARDICOR INVESTMENTS LIMITED from Cipar with 16.44% (date taken from the
Shareholders’ Book of Toplifikacija AD – Skopje on 31.12.2012). All other shareholders participate
with 1.8% or less in the equity.
The total number of shareholders with the balance on 31.12.2012 was 2,704.
Their structure is shown in the following chart.
Graph 4 – Shareholder structure as on 31.12.2012
75%
25%
natural legal
18%
82%
foreign domestic
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PRICE OF HEAT
The activities from public interest production of heat, distribution of heat and supply of heat during
2012, were carried out by Toplifikacija AD, Distribucija na toplina DOOEL, Snabduvanje Istok DOOEL,
Snabduvanje Centar DOOEL and Snabduvanje Zapad DOOEL, in compliance with the Energy Law of
Republic of Macedonia. These activities are regulated by the independent body of the Energy
Regulatory Commission of Macedonia (ERC) on the basis of a Rule Book on the manner and the
conditions for regulation of prices for heat energy used for heating.
From 1st
of January 2010 the price of heat energy is given separately for all activities for each
company, in compliance with Tariff system for district heating sale. The price of heat energy for tariff
consumers is given separately under the Decisions for the heat supply companies.
The following table shows the price of the heat energy for tariff consumers in 2012:
TARIFFS
Unit Price from Price from
measure 01.01.2012 01.08.2012
Category HOUSEHOLDS
1 Heat capacity denars/kW/year 1,001.4692 665.2155
2 Delivered Heat denars/kWh 2.9403 3.3755
Category OTHERS
1 Heat capacity denars/kW/year 2,022.9384 1,330.4310
2 Delivered Heat denars/kWh 5.8806 6.7511
Changes in the heat price
The price of the heat energy for heating was corrected two times in 2012, in compliance with the
decisions of the Energy Regulatory Commission of Macedonia.
On 30th
December 2011 Energy Regulatory Commission issued decisions for approval of regulated
maximum revenue and tariffs for regulated period with validity from 1st
January 2012;
On 27th
July 2012 Energy Regulatory Commission issued decisions for approval of regulated
maximum revenue and tariffs for regulated period with validity from 1st
August 2012;
Submitted documentation for heat price
The documentation for price of heat energy was submitted two times for 2012, in compliance with
the Rule Book on the manner and the conditions for regulation of prices for energy used for heating:
In November 2011 documentation was submitted as request for maximum allowed income and price
for year 2012 for all three regulated businesses.
In June 2012 by five companies that perform three regulated activities was submitted economic -
technical documentation to the ERC for regular control of the approved cost/price of heat.
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Discrepancies
During 2012 there were discrepancies with the Energy Regulatory Commission regarding the
requirements of the regulated companies, which affected negative the approved price of the heat
energy. The reason for these discrepancies is the decision from July 2012 made by Energy Regulatory
Commission in which ERC didn’t approve purchased heat energy from TE-TO AD in amount of 52
million denars without VAT, also ERC approved fuel oil costs for 2012 reduced for 5% of the actual
cost (cca amount of 35 million denars) and reduced income in amount of cca 45 million denars as
surplus of income earned in 2011.
There are still discrepancies with the ERC in regard to cost of the write-off the receivables from
consumers. The Energy Regulatory Commission in compliance with the Rulebook on the manner and
conditions for regulations of the prices of district heating, in article 7 has obligated the companies
with regulated activities for the application of International accounting standards, but it does not
recognize the cost of writing-off of the receivables from the consumers, which is in accordance with
these standards. Also, due to lack of Property List of the heat plant “11 October”, the Energy
Regulatory Commission does not take into consideration the fixed assets in determining the return of
capital, although these assets are registered in Book Inventory of the company.
All companies have appealed against the Decisions of Energy Regulatory Commission since July 27th
2012 to Commission for resolving appeals in the area of energy of Macedonia. The appeals were
rejected by the Commission. Next step for the companies is starting all necessary legal proceeding
for the mentioned problems.
Licenses
In August 2011 Toplifikacija AD had returned the license for production of heat to Energy Regulatory
Commission. The reasons for the return of the license are the problems with the methodology for
price calculation of produced heat and the decisions issued by the Energy Regulatory Commission
which have negative effect on the financial results of the company i.e. creating operational losses in
the business. In November 2012 the company Distribucija na topline Dooel Skopje has returned the
license for distribution of head, also the companies Snabduvanje Zapad Dooel, Snabduvanje Istok
Dooel and Snabduvanje Centar Dooel returned the licenses for supply of heat.
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FINANCIAL STATEMENTS FOR TOPLIFIKACIJA GROUP
Consolidated statement of comprehensive income
2012 2011
во (000) ден. во (000) ден.
Revenues 2,593,459 2,358,494
Cost of sales 2,034,340 1,888,419
GROSS PROFIT (LOSS) 559,119 470,075
Other operating income 97,385 123,518
Employees expenses 229,397 219,812
Depreciation 84,554 81,568
Impairment losses on bad receivables 70,534 52,063
Other operating expenses 235,599 195,287
OPERATING PROFIT (LOSS) 36,420 44,863
Financing income 177,757 115,033
Income from investments - -
Financing expenses 167,816 144,978
PROFIT (LOSS) BEFORE TAXATION 46,361 14,918
Income tax 7,928 6,048
NET PROFIT (LOSS) FOR THE YEAR 38,433 8,870
Other comprehensive income:
Gains on revaluation on fixed assets - -
Total other comprehensive income - -
TOTAL COMPREHENSIVE INCOME 38,433 8,870
Attributable to:
Owners of the parent 38,476 8,842
Non-controlling interests in subsidiaries -43 28
38,433 8,870
Basic earnings (loss) per share (In MKD) 86 20
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Consolidated statement of financial position - assets
31.12.2012 31.12.2011
во (000) ден. во (000) ден.
ASSETS
Non-current assets
Property, plant and equipment 1,174,066 1,240,992
Long-term loans 45,822 879,984
Investments in associates 462 462
Investments available-for-sale 5,319 5,319
Total non-current assets 1,225,669 2,126,757
Current assets
Inventories 84,963 99,749
Trade receivables 910,281 1,021,758
Receivables for advances 15,229 14,694
Other current assets 63,709 48,564
Short-term loans 1,377,745 471,591
Bank deposits 25,073 64,669
Cash and cash equivalents 24,733 99,442
Total current assets 2,501,733 1,820,467
TOTAL ASSETS 3,727,402 3,947,224
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Consolidated statement of financial position - equity and liabilities
EQUITY AND LIABILITIES 31.12.2012 31.12.2011
во (000) ден. во (000) ден.
Equity
Shareholders capital 1,394,100 1,394,100
Treasury shares (-) -1,257 -1,257
Reserves 111,976 109,600
Revaluation reserves 3,675 3,675
Accumulated profit (loss) 162,396 126,295
1,670,890 1,632,413
Non-controlling interests -203 -159
Total equity 1,670,687 1,632,254
Long -term borrowings 474,201 442,917
Current liabilities
Trade payables 432,687 489,544
Payables for advances 2,983 3,495
Short term borrowings 840,159 1,138,553
Current portion of long-term borrowings 241,965 199,000
Other short term liabilities and accrued expenses 64,720 41,461
Total current liabilities 1,582,514 1,872,053
Total liabilities 2,056,715 2,314,970
TOTAL EQUITY AND LIABILITIES 3,727,402 3,947,224
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Consolidated cash flow statement - operating activities
2012
000 денари
Cash flows from operating activities
Profit (loss) before taxation 46,361
Adjustments for:
Depreciation of property, plant and equipment 84,554
Impairment expenses for bad and doubtful
trade receivables 70,534
Interest expenses (income), net 108,109
Income and expenses from heating
network agreement, net 0
Income from write-off trade payables and
inventory surpluses -2,100
Caring amount of disposal of fixed assets 0
Profit (loss) before adjustments in working capital 307,458
Trade receivables 40,943
Receivables for advances -535
Other short term assets and accrued expenses -18,316
Inventories 14,786
Trade payables -54,757
Payables for advances -512
Other short term liabilities and prepaid expenses 23,952
Net cash used in ordinary business 313,019
Paid interest -165,394
Collected (paid) income tax -5,194
Net cash flows from operating activities 142,431
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Consolidated cash flow statement - investment and financing activities and net cash flow
Cash flows from investing activities
Bank deposits collected (given) 39,596
Long-term loans collected (given) -14,882
Property, plant and equipment additions -17,628
Net cash flows from investing activities 7,086
Cash flows from financing activities
Proceeds (repayment) from short term borrowings, net -298,394
Proceeds (repayment) of long-term borrowings, net 74,249
Paid dividends -81
Net cash flows from financing activities -224,226
Net increase (decrease) of cash and cash equivalents -74,709
Cash and cash equivalents at the beginning of the year 99,442
Cash and cash equivalents at the end of the year 24,733
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Notes to the consolidated financial statement
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Realized financial result
The profit before taxation for 2012 is in amount of 46,361 thousand denars, income tax is in amount
of 7,928 thousand denars and net profit is in the amount of 38,433 thousand denars, i.e. total
comprehensive income is in amount of 38,433 thousand denars.
Operating profit for 2012 amounts to 36,420 thousand denars.
Revenues from sale
Revenues from sale for 2012 are in amount of 2,593,459 thousand denars. This income is related to
revenues from sale of heat energy towards the end consumers according to the approved tariffs from
Energy Regulatory Commission divided in two categories households and other users.
Other operating income
Other operating income in 2012 is in amount of 97,385 thousand denars. It consists of income from
investment in maintenance and expansion of the distribution network, income from projects, income
from written off value receivables, income from other services, extraordinary income and other
incomes. The biggest part in this category is income in the amount of 39,659 mostly composed of
income of projects, income from performing of projects, sale of equipment. Second biggest income is
income from investment in maintenance and expansion of the distribution network in the amount of
38.850 thousand denars.
Cost of service sold
Cost of service sold in 2012 amounts of 2,038,340 thousand denars. These include the cost of fuel
(fuel oil and natural gas), costs for supplied heat, costs for electricity and cost for consumed water.
In 2012 total cost for fuel is in amount of 1,527,951 thousand denars, out of which 626,366 thousand
denars for fuel oil and 901,585 thousand denars for gas. Costs for supplied heat are in amount of
416,324 thousand denars of which 52 milion denars are contentious because ERC didn’t recognized
that amount of cost/quantity or purchased heat.
Costs for electricity for 2012 is in amount of 73,380 thousand denars, while total costs for consumed
water is in amount of 16,685 thousand denars.
Employees’ costs
Employees’ costs are in amount of 229,397 thousand denars. In 2012 the gross salaries of employees
were paid in amount of 214,088 thousand denars, the rest of the costs are referring to other costs
associated with employees in the Toplifikacija Group.
Depreciation
Depreciation of Toplifikacija Group for 2012 is 84,554 thousand denars. It is calculated by straight line
method for long-term assets adopted by the Group.
Impairment losses on bad receivables
In 2012 impairment losses on bad receivables is in amount of 70,534 thousand denars.
Other operating expenses
The other operating expenses in 2012 are in amount of 235,599 thousand denars. These includes
costs for provisions for payment and bank services, costs for loan provisions and bank guarantees,
costs for fee for pledged shares, services for investment and current maintenance, costs of sold goods
and services, costs for material and spare parts, telephone and internet costs, cost for investment
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maintenance of the distribution network, expenses for use of distribution network, , costs for
projects, costs for court fees, various types of services, contributions, dues and other expenses.
In the following chart is shown the participation of each group of expenses out of total amount of
costs.
Graph 1 – Participation by each group of costs for 2012
Financial income
Financial income in 2012 is in amount of 177,757 thousand denars. It consists of income from
interests by end consumers, income of loans given to the unrelated companies, income from positive
exchange rates and income from bank interests.
Financial expenses
Financial expenses in 2012 are in amount to 167,816 thousand denars. The biggest cost in this
category includes interest from banks on taken loans for realization of investment in the gas plant for
combined production of electricity and heat energy TE-TO AD – Skopje in amount of 61,783 thousand
denars, then interests from bank loans taken for reparation for old debt in amount of 50,166thousand
denars and loans for current operations in amount of 42,918 thousand denars. Other expenditures in
this category are interests from suppliers and loss of negative exchange rate differences.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Total assets
Total assets in 2012 are in amount of 3,727,402 thousand denars. They are composed of current and
non-current assets.
Total non-current assets are in amount of 2,571,299 thousand denars. They are composed of material
assets and long term financial loans.
Material assets
Material assets are in amount of 1,174,066 thousand denars, and this category is composed of total
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movable and immovable properties owned by the Toplifikacija Group
Long-term loans
In the long term loans, the biggest category are the loans given to TE-TO AD – Skopje as investment in
building a gas plant for combined production of electricity and heat energy TE-TO AD – Skopje. Long-
term loans are in amount of 1,423,567 thousand denars. The loans with due date after 31.12.2013
are in the group non-current assets and are in amount of 45,822 thousand denars.
Total current assets are in the amount of 2,501,733 thousand denars. They are composed of cash
equivalents, trade receivables, receivables from loans, receivables for advances, other current assets,
paid expenses for future periods and inventories.
Trade receivables
Trades receivables of Toplifikacija Group are in amount of 910,281 thousand denars and here the
biggest category are receivables from sale of heat energy towards the end customers.
Receivables from loans
These are receivables from loans given as investment in building a gas plant for combined production
of electricity and heat energy TE-TO AD – Skopje. These are receivables that are due or the due date is
during 2013 in amount of 1,337,745 thousand denars.
Equity
Equity of Toplifikacija Group is in amount of 1,670,687 thousand denars. It is composed of
shareholders capital in amount of 1,394,100 thousand denars, reserves in amount of 111,976
thousand denars, revaluation reserves in amount of 3,675 thousand denars and accumulated profit in
the amount of 162,396 thousand denars, deducted for treasury shares and non-controlling interests.
Liabilities
Liabilities in 2012 are in amount of 2,056,715 thousand denars. They are composed of current and
non-current liabilities.
Long-term borrowings
Long-term borrowings are in amount of 474,201 thousand denars.
Total current liabilities are in amount of 1,582,514thousand denars. They are composed from
liabilities of trade payables, payables for advanced, short term borrowing, current portion of long-
term borrowing, and other short term liabilities and accurate expenses.
Trade payables
Trade payables are in amount of 432,687 thousand denars. Most of these categories are liabilities
towards fuel suppliers (fuel oil and natural gas), supplier of heat, suppliers for materials and fixed
assets.
Short term borrowings
Short term borrowings in 2012 are in amount of 840,159 thousand denars. They are completely taken
by Toplifikacija AD – Skopje and they are used for operating activities.
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CONSOLIDATED CASH FLOW STATEMENT
Cash flow from operating activities
Cash flow from operating activities for 2012 is positive and it is in amount of 142,431 thousand
denars. In order to calculate the cash flow from operating activities, the income before tax is adjusted
for depreciation, impairment receivables and write-off of liabilities income, interest expenses and
interest income. Profit before adjustments in current assets is 307,458 thousand denars. In the cash
flow from operating activities major positive category are trade receivables arising from more
receivables paid in the year of receivables made for the same period. The paid amount of interest as a
negative category is 165,394 thousand denars.
Cash flows from investing activities
Cash flows from investing activities are positive in amount of 7,086 thousand denars. Given loans are
in amount of 14,882 thousand denars while outflow for bought assets and equipment is in amount of
17,628 thousand denars.
Cash flows from financing activities
Net cash flows from financial activities in 2012 are in amount of 227,226 thousand denars (negative).
During 2012 the Group has net returned more short-term borrowings in the amount of 298,394
thousand denars. Here, positive category are long term loans net inflow in amount of 74,249
thousand denars.
Cash and cash equivalents at the end of the year amounted to 24,733 thousand denars.
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CORPORATE GOVERNANCE
Managing structure
The management is organized on the basis of a two-level system.
The highest managerial body is the Shareholders’ Assembly. The shareholders with their votes elect
the members of the Supervisory Board through the Shareholders’ Assembly. In compliance with the
legal regulations during the year one regular Assembly is hold on which the results achieved in the
past year are discussed. If deemed necessary, as well as following the initiative of the shareholders,
special Assemblies may be hold.
In 2012 one regular Shareholders’ Assembly was held where the Financial statements, the Annual
Report of the company for the year 2011 and the Report for the work of the Management and
Supervisory Board of Toplifikacija AD – Skopje were reviewed and adopted, also it has been taken a
decision for non-distribution of profit.
The Supervisory Board in 2012 consists of the following 5 members:
• Ljupco Sandrevski, President of the Supervisory Board, mandate until May 2015
• Zoran Kovacevski, member of the Supervisory Board, mandate until May 2015
• Grozdan Delidinkov, member of the Supervisory Board, mandate until May 2015
• Skubin Gorazd, member of the Supervisory Board, mandate until May 2015
• Goshelj Janez, independent member of the Supervisory Board, mandate until May 2015
The Management Board is composed of 7 members:
• Dr.Ec.Sci. Dimitar Hadimisev, President of the Management Board - mandate until May 2015
• Hristo Kirovski, member of the Management Board - mandate until May 2015
• Gorgi Ninevski, member of the Management Board - mandate until May 2015
• Dine Iliev, member of the Management Board - mandate until May 2015
• Aleksandra Maroevik, member of the Management Board - mandate until May 2015
• Bisera Krstevska, member of the Management Board - mandate until May 2015
• Emilija Jakimovska Miseva, member of the Management Board - mandate until May 2015
During 2012 the Management Board held 45 meetings.
Risk management at the operation of the company
On the basis of the acquired experience and the problems which it faces in everyday operation,
provoked by the influence of the internal and external factors, the company has identified 7 main
risks:
• Organizational risk
• Technological risk
• Operational risk
• External risk
• Financial risk
• Liquid risk
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• System risk
There is an elaborated and adopted risk management procedure for the management of these risks.
In the discussions in the frames of the meetings of the Management Board, it was emphasized that
two risks are dominant:
• Liquid risk
• System risk
The liquid risk in the company may influence the regular and timely fulfillment of the liabilities
towards its creditors, employees and shareholders and the same may appear due to:
• Non-fulfillment of the norms in the part of the collection of the invoiced realization
• Inadequate and untimely approved price of heat energy by the regulatory body - ERC
• Limiting the financial assets of the company for the main inputs, i.e. for fuel for very short
periods of maturity
The system risk results from the determination of the price of the heat energy in the part of the
activities of supply of heat by the regulatory body – ERC.
Code on corporate governance
Toplifikacija AD – Skopje organizes its operation and management in compliance with the Code on
corporate management of joint stock companies listed on the Macedonian stock market of
securities.