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EFT Group Annual Review 2013/2014

EFT Group Annual Review 2013/2014 1

Towards Full Potential 02

2013 Results at a Glance 04

Long Term Performance 06

Group Structure 08

The SEE Electricity Market in 2013 10

EFT News 14

Trading News 18

EFT Investments 20

Stanari Mine 22

TPP Stanari 24

HPP Ulog 26

Fatnicko Polje-Bileca Accumulation Tunnel 28

EFT Across Europe 30

Products and Services 32

EFT Trading Floor 34

Power Exchanges 36

ENTSO-E Transmission Network 38

Our International Network 40

The EFT Group is at the forefront of energy trading and investment in the electricity infrastructure of south-east and central Europe.

EFT Group Annual Review 2013/2014 3EFT Group Annual Review 2013/20142

Our Theme This Year

Despite remaining a single overall team, under one management and with globalised risk, credit, trading and settlement functions, we have nevertheless now formalised a division between long-term and short-term trading functions, recognising the marked change in our clients’ preferences for managing their own energy balances. This has in turn allowed us to focus on maximising profits, while controlling risk and also reducing the amount of working capital consumed by the trading business.

The result is the availability of increased shareholders’ funds for investment in our major infrastructural projects, notably TPP Stanari and HPP Ulog. Progress with TPP Stanari is positive and we expect in the second half of 2015 to be delivering power for the first time to the regional grid as the unit is tested and moves towards commissioning. HPP Ulog in the meantime is progressing, albeit at a slower pace versus plan, owing to a decision to commission additional technical studies to confirm earlier preliminary investigations.

The Group has focused on achieving cost efficiencies over the past year, examining the regulatory environment carefully and concluding where it is no longer necessary to have physical presences in order to participate in local markets. This has led to the closure of a number of units and the redeployment of staff. In addition, the overall structure of the group has been simplified, with the recent concentration of all subsidiaries, both investment and trading, under a single operating holding company, based in London. The overall rationalisation of the group’s physical structure has markedly decreased expenses, the full effect of which will be enjoyed henceforward.

The two fundamental pillars of its business remain electricity trading and production, with the emphasis continuing to shift from the former to the latter, if measured by the quantity of shareholders’ funds dedicated to the respective activities. Of particular note is the rapid advancement of the Stanari mine and thermal power plant project — running as scheduled, but also therefore consuming investment capital.

This change also reflects a mature approach to the management of risk exposures in an increasingly complicated and changing regional energy market in south-east Europe. The landscape has continued to shift over EFT’s history, from the dominance of annual supply tenders, towards a dynamic and real-time balancing of regional utility portfolios. This in turn has led to a transformation in the approach to our clients’ requirements.

At first glance, the large-scale reduction in turnover that has resulted may suggest a diminution in the overall scale of the business — after all, turnovers in excess of EUR 2bn were the norm in the past two years — yet 2013 shows a reduction to just 766m. This change belies the significant strengthening of the Group’s overall performance, with gross profits growing from 34.4m to 48.2m.

Moving into its fourteenth year of operation, EFT is an increasingly mature business. It has left behind it the rapid adolescence of growth at an extraordinary pace and is now consolidating and developing into a long-term enterprise, determined to negotiate the pathway that will allow it to reach its full potential.

EFT Group Annual Review 2013/2014 5EFT Group Annual Review 2013/2014 5EFT Group Annual Review 2013/20144

GIGAWATT HOURS OF ENERGY DELIVERED IN 2013

Results at a Glance 2013

MILLION EUROS TURNOVER

814

<0.1% SYSTEM OPERATORS

POWER UTILITIES

55%

TRADERS

27%

INDUSTRIAL CONSUMERS12%

ENERGY EXCHANGES6%

Recent results reflect evolution in the business strategy, reducing risk, redeploying capital into investment for the future and an emphasis on improved margins.

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Bre

akd

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n (

Sal

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NUMBER OF COUNTRIES TO WHICH ENERGY DELIVERED

21


The long-term involves more than the numbers. Turning to ecology, for example, reforestation at Stanari will gradually return the mine site to nature.

Pro

fit

per

MW

hG

ross

mar

gin

2011

2011

2012

2012

2013

2013

1.6%

EUR 0.13

1.5%

EUR 0.23

5.9%

EUR 0.8

222,559GIGAWATTS OF ELECTRICITY DELIVERED SINCE 2000

11 B

ILLI

ON

+ E

UR

OS

IN

VOIC

ED

SIN

CE

200

0

Long TermPerformance

9

EFT Switzerland

EFT Serbia

EFT Stanari (BiH)

EFT Ulog (BiH)

EFT Romania

EFT Albania

EFT Bosnia & Herzegovina

EFT Bulgaria

EFT Croatia

EFT Greece

EFT Hungary

EFT Macedonia

EFT Slovenia

EFT Turkey


GroupStructure

EFT London (UK) GROUP HOLDING COMPANY

Czech Republic

Kosovo

Slovak Republic

Licences



The SEE ElectricityMarket in 2013

Low prices were the most striking feature of 2013’s electricity market in south-east Europe (SEE) — the lowest wholesale levels since the credit crunch emerged. Taking spot prices on the Hungarian HUPX exchange as a proxy for much of the region, these fell over EUR 9/MWh by comparison with 2012 on a yearly basis — the average monthly figure dipping below EUR 30/MWh in May.

Four main reasons stand out:

The first is a fall in regional consumption (for the second year running) of 1.2%. In absolute terms, consumption has nearly returned to 2005 levels — partly influenced by favourable weather conditions, but also by weak demand from industrial consumers. In some countries, falling industrial consumption threatens continued economic recession.

A second factor was the strong performance of the hydro sector in H1 2013, 31% higher than long-term averages, and just 3% below 2010’s record levels, with some individual months setting new benchmarks.

A third factor was the very low level of German prices and the knock-on reduction in prices for imports. The EPEXSPOT power exchange prices for Germany and Austria in 2013 fell below 2009 levels by EUR 1/MWh, with June’s average declining below EUR 28/MWh. The yearly cross-border spread between Hungary and Germany halved to EUR 4.5/MWh (year-on-year), but remained volatile on a monthly basis, ranging from a negative spread of >EUR 3/MWh in May to a positive spread of EUR 16/MWh in December.

A key price driver in Germany is subsidised production from renewables, a trend increasingly seen in SEE. This last factor is the fourth reason for continued depression in wholesale prices.

10

2005

270

05

01

275

06

02

280

07

03

285

08

04

290

09

TWh

TWh

2006 2007 2008 2009 2010 2011 2012 2013

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o

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EE

Reg

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SE

E H

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Pro

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2013

Jan

20122013Long-term averageLong-term bandwidth

Feb Mar Apr May SepJun OctJul NovAug Dec



Regional renewable production (excluding hydro) has increased since 2010, accelerating in 2013, with Romania investing heavily, adding some 700MW of new capacity in 2013, with some 2.6GW now installed, in windpower alone. In the region, substantial renewable capacity now exists in Bulgaria, Croatia, Greece, Hungary and Romania with more than 8GW of installed capacity (around 10% of total installed capacity) and with production of 17.2TWh in 2013, or 6.3% of regional production (source: ENTSO-E).

The electricity balances of SEE countries broadly match the characteristic trends of the past, with a slightly higher surplus in Serbia, and a larger deficit in Hungary in 2013. Imports to the region were reduced by 11.4TWh, or 4% of total — in other words, the region imported just one third of the comparable total for 2012, a notably dry year.

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EN

EW

AB

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PR

OD

UC

TIO

N (

TWh)

201

3

700MW

8GW

OF NEW RENEWABLE CAPACITY IN ROMANIA

RENEWABLE CAPACITY INSTALLED IN BULGARIA, CROATIA, GREECE, HUNGARY AND ROMANIA


2005

02

04

08

06

12

10

16

14

18

TWh

2006 2007 2008 2009 2010 2011 2012 2013

Ren

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rod

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(S

EE

) 20

05–2

013

-12

-04

00

-08

04

08

12

TWh

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bal

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s o

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EE

co

un

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AL BIH BG HR GR ROHU SER & KS

MK MNE SLO

200920102011

20122013


1/ TPP Stanari2/ TPP Stanari FX3/ Ulog4/ Hidroelectrica5/ Romania6/ Albania7/ Enhanced Performance8/ Trading News


FIRST EQUIPMENT SHIPMENTIn July 2013, the first shipment of equipment arrived on site, and work on the main structures advanced, with the boiler house steel structure completed in September. The two-year construction project for the vital substation that will link the unit to the grid commenced in April.

THE LONG MARCH BACKIn the wake of catastrophic system losses and collection arrears, the electricity sector in Albania entered 2013 owing substantial amounts to its foreign suppliers. As one of the country’s longest-standing and most faithful supporters, the EFT Group stood by its historic partner and assisted the process of slow recovery to more regularised commercial operations and the normalisation of payments. For the whole year, this involved deliveries of nearly 1TWh of electricity to KESH, CEZ-Shperndarje and KURUM International.

The energy sector is regaining strength, and good progress is being made by new incumbents at both the distribution company and the regulator in improving performance, regularised commercial operations and the normalisation of payments.

AN EFT SUCCESS STORYDespite the considerable disruption caused to EFT’s operation by Hidroelectrica’s technical insolvency, the Group operated highly successfully in the local market throughout the year. In a hugely competitive environment, the Group has continued to win major supply business from the top tier of industry in a variety of medium-term supply contracts, across a variety of

different industrial sectors — its clients include enterprises such as Pirelli, Lafarge and the Heidelberg Group. In a new departure, EFT concluded its first power purchase offtake agreements in the solar generation sector, contracting with two power units to take their power and including them in our balance circle.

HEDGING COMPLETEDEFT entered 2013 with a currency mismatch between the sources of financing for the Stanari project and the bulk of the EPC expenditure. EFT has successfully negotiated with its banks to hedge out this exposure fully.

STEADY BUT SUREExcavation works around the dam and power house started in May 2013, signalling the commencement of the construction of the main site structures. Land acquisition is nearing completion, as are the access roads. The site power supply is fully installed.

CONFUSION REIGNSIn the wake of the state-backed move to declare Hidroelectrica bankrupt in 2012 as a mechanism to attempt to escape its contractual obligations, the saga continues, with the firm emerging from insolvency mid-2013, only for this move to be reversed in early 2014. Chaos continues to mount. In the meantime, Hidroelectrica’s international creditors — the EFT Group included — are mounting arbitration actions to recover substantial losses caused by the unilateral cancellation of long-term energy contracts.

In the discussion of EFT’s strategy to reach its full potential — see pages 2 and 3 — we highlight the improvement in operating performance for the Group despite a substantial reduction in the overall volumes of energy bought and sold in 2013 by comparison with the previous two to three years. Careful expense control supported a

highly focused transaction selection process, backed by a heightened approach to risk management which has largely eliminated the speculative element from the Group’s trading strategy — the results speak for themselves with greatly improved metrics.

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TPP

Sta

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Ulo

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adin

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New

sBOSNIA & HERZEGOVINA Exceptional hydrology tended to limit EFT’s trading activities to the very short-term end of the market.

BULGARIA Despite the tax factors rendering Bulgaria’s energy largely uncompetitive for the export market, EFT nevertheless succeeded in structuring transactions with all three of the country’s major producers, enabling a meaningful quantity of exports.

CROATIA Increased renewable investment and a reduction in consumption has prompted a move away from securing future deliveries on annual or quarterly basis, with a new emphasis on short-term balancing trades — an ideal match for EFT’s skills and abilities in meeting client requirements.

GREECE Despite remarkable falls in consumption (back to 2004 levels), Greece continues to be the region’s leading importer and EFT maintained its position as a key supplier both to PPC and the Pool.

HUNGARY The Group maintained a high degree of activity across the market of this central hub. Good co-operation continued with the FKF waste-to-energy plant, and wide ranging business both with MVM and in the wider OTC market brought excellent results.

MACEDONIA Continuing a long history of success in the local market, EFT and EDS completed a final year of exclusive co-operation in meeting the supply needs of a variety of major industrial consumers, as well as using the country as a crucial transit route south. With effect from 2014, EFT is now operating independently, through EFT Macedonia, offering a full range of products and services.

SERBIA Hydrology contributed to significant sales of surpluses, in which EFT participated to a healthy degree, utilising its dynamic portfolio to place energy where required.

SLOVENIA A successful first year was completed under the three-year deal announced earlier for EFT’s supply to TALUM, the aluminium smelter. There was also an entirely satisfactory outcome for the final period of the two-year tertiary reserve contract agreed with Slovenia’s system operator, ELES, commenced in 2012.

TURKEY Our local company, the first private company to enter the market back in 2009, more than doubled its sales inside the country on a year-on-year basis.

UKRAINE EFT extended its successful co-operation with partners in the west of Ukraine, evacuating power via the Burshtyn island into our main territory.



The full potential of the EFT Group involves combining significant generation assets, owned or controlled by the Group within its traditional geographic territory, and the unrivalled knowledge and experience gained in trading electricity in south- east Europe over a decade and a half.

The EFT Group is one of very few investors driving forward the construction of new generation infrastructure at the heart of its historic trading region — indeed the Group is the leading investor in the energy sector of Bosnia & Herzegovina.

From first visionary steps that saw the Fatnicko Polje-Bileca tunnel project completed using energy deliveries as payment, through to the ground-breaking construction projects currently underway in Bosnia & Herzegovina, to build the Stanari and Ulog power plants, the EFT Group has led from the front in developing new components in the south-eastern European grid.

The Group’s projects are designed to protect the environment, in accordance with EU directives and guidance, while local employment and investment are emphasised throughout. A successful year in 2013 saw EFT draw closer to its goal of building the first privately owned power generation company operating in south-east Europe.

EFT Investments


EFT Group Annual Review 2013/201422 EFT Group Annual Review 2013/2014 23

In 2013, the Stanari Mine continued operating successfully, while preparing for increased coal production and supply of TPP Stanari in the amount of 2.3 million tons annually from 2016.

For the year, coal sales of 883,026 tons were achieved in the local Bosnia & Herzegovina market and in neighbouring countries. Excellent production results were continued, with overburden excavation of 6,781,513 m3. The total amount of uncovered coal at the Raskovac open pit has been significantly increased and currently exceeds 6 million tons.

The coal supply planned for TPP Stanari will use a coal-crushing and conveyor system being constructed under an EPC Contract by FAM (Germany). The implementation of the contract commenced in April 2013 with scheduled completion in June 2015. In the course of 2013, planned EPC activities were realised in accordance with the schedule, i.e. design preparation, commencement of equipment manufacturing, and site preparations for the erection of the coal conveyor system.

In accordance with the project schedule, the preparation of areas within the Stanari mine for the future safe disposal of ash from TPP Stanari continued. In the northern zone of Raskovac open pit, additional geological investigation works were conducted with the aim of increasing available coal reserves. Based on investigative works, geological coal reserves of 10 million tons were defined. In 2014 there is a plan in place to finalise the mining design documentation which will define the economic feasibility of exploiting this zone of Stanari mine.

StanariMine

MILLION TONS OF COAL PRODUCTION ANNUALLY

TONS OF UNCOVERED COAL AT THE RASKOVAC OPEN PIT

MILLION TONS OF COAL SALES IN BOSNIA & HERZEGOVINA +

NEIGHBOURING COUNTRIES

M3 OVERBURDEN EXCAVATION

6,000,000

883,026

6,781,513


The EPC contract for the power unit was signed with Dongfang Electric Corporation (DEC) in May 2010 and works under the contract commenced on 21 December 2012, following a successful financial closing. TPP Stanari is scheduled to achieve commercial operation in September 2016.

In 2013, the main EPC activities were implemented on a timely basis and in accordance with the schedule defined under the contract.

On 18 May 2013, construction works on the main structures of the thermal plant commenced. The occasion coincided with the eighth anniversary of EFT Group taking ownership and management control of the Stanari mine.

The event was attended by the President and Prime Minister of Republika Srpska, numerous diplomats, representatives of regional power utilities, international financial institutions and EFT’s partners.

Adjacent to the Stanari mine, EFT is developing a 300 MW coal-fired thermal power unit. TPP Stanari is one of very few energy infrastructural projects within hundreds of kilometres that is in full implementation.

Sources of finance for the Stanari Mine and TPP Project: Commercial loans from China Development Bank, local commercial banks, and EFT Group equity.

The first shipment of equipment arrived on site in July 2013 and work commenced with the erection of boiler house steel structure in September 2013.

TPP Stanari will be linked to the power transmission network through the 400/110/35/10 kV substation Stanari, with a direct connection to the existing 400 kV and 110 kV transmission network. The implementation of the contract for the construction of substation Stanari commenced in April 2013 with scheduled completion of works in April 2015.

TPP Stanari will be the first power generation unit of its type and size to be built in Bosnia & Herzegovina in three decades and it will set new standards in the region for minimising any environmental impact.

Upon commencement of commercial operation, TPP Stanari will have an annual production of 2,000,000 MWh.

The entire Stanari project is designed with the environment in mind — both to protect it during the project’s life and to leave minimum traces of its existence for distant generations. A programme of substantial recultivation of the site is already underway, and reforestation of the mine site will return it to nature.

MIL

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TO

TAL

PR

OJE

CT

CA

PE

X IN

EU

RO

S

TPP Stanari

DEBT-TO-EQUITY RATIO

~65:35%



PROJECT DEVELOPMENTIn April 2013, a construction permit was obtained from Republika Srpska’s Ministry of Spatial Planning, Civil Engineering and Ecology for the building of the main HPP Ulog structures: the river dam, the headrace tunnel and the powerhouse. Prior to this, numerous preparatory activities were completed in order to secure the permit, i.e. the completion of technical documentation, a wide variety of approval documents, land acquisition, etc.

The access roads are nearly completed, and the electric power supply for the construction site has been installed.

HPP Ulog

The Ulog hydro power plant, featuring two Francis turbines and one SHPP turbine is located on the upper stream of the river Neretva, in Bosnia & Herzegovina.

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The land acquisition progress has so far been satisfactory. Of a total requirement of 140 hectares for the project, including the storage area, 106 hectares have so far been acquired.

The excavation works around the dam and the power house, which signal the commencement of the building of the main structures, started in May 2013. EFT has concluded an EPC contract with China’s Sinohydro to build the Ulog HPP, to include civil works, including detailed design, equipment manufacturing, commissioning, performance test and trial run. During 2014, the fourth phase of the geological research works, necessary for the preparation of the detailed design, will be completed. By the end of 2014, the access roads to each point of the construction site and the future main structures will be completed, as well as the excavations around the dam and the power house.

RATED CAPACITY

WATER STORAGE VOLUME

AVERAGE ANNUAL ENERGY PRODUCTION

TOTAL HEAD / NET HEAD

HEADRACE TUNNEL LENGTH / DIAMETER

PENSTOCK LENGTH / DIAMETER

INSTALLED FLOW (M2 / S)

35MV6,500,000m2

85000MWh

120/109m

2500/4m

163/2x2.1m

35+ 0.52 SHPP

Sources of finance for HPP Ulog Project: EFT is in negotiations with China Development Bank for the provision of suitable commercial credit facilities. Project commissioning is expected in November 2018.

DEBT-TO-EQUITY RATIO

TOTAL PROJECT CAPEX

~65:35%

EUR 65m


Fatnicko Polje-Bileca Accumulation Tunnel

The overall system concept is to accumulate water in eastern Herzegovina during rainy periods and later move it through a system of tunnels, thereby producing energy and creating arable land. The “Upper Horizons” project commenced in 1969 but was not completed owing to construction difficulties and later regional conflict. Among the unfinished components of the design was the Fatnicko Polje-Bileca tunnel.

In 2001, Bosnia & Herzegovina organised an international tender, seeking the completion of the tunnel. EFT’s winning bid (in consortium with Bosnia’s Hidrogradnja) involved funding EUR 26 million for the tunnel excavation, completion of its concrete lining and the installation of control mechanisms and infrastructure.

In August 2007, the tunnel was commissioned, signalling the successful completion of the biggest civil engineering project in Herzegovina in decades. The tunnel now produces some 150 GWh of energy per year by supplying additional flood waters to existing hydro-electric power plants in eastern Herzegovina.

The project directly employed some 400 people during construction, and several hundred more indirectly. It is environmentally sound and sustainable, and has no adverse effects on its surroundings.

FINANCING Owing to a lack of local funding, the financing of the tunnel was achieved through EFT’s off-take of energy generated by additional flood waters supplied by the tunnel, over a period of seven years. The ownership of the tunnel and accompanying infrastructure remained with the EPRS throughout. With the end of the off-take period, EPRS simply has an enhanced portfolio, and its water management capacity has been enhanced. It was a project of considerable elegance.

It was a project of considerable elegance – the Fatnicko Polje-Bileca accumulation tunnel is an integral part of the “Upper Horizons” hydro system in eastern Herzegovina.

"The Fatnicko Polje-Bileca Tunnel has significantly enhanced the management process for regulating water flowing into the Bileca Reservoir."

TIHOMIR DABOVIC Director of Generation Department Power Utility of Republic of Srpska



01. UK The London office provides the Group companies with a wide range of support services, including financial modelling, legal and treasury advice and documentation control.

02. SWITZERLAND Energy Financing Team (Switzerland) AG is the principal trading company within the Group. It has the strongest balance sheet of all the Group companies and accounts for most of the Group’s client business. It also covers tasks related to risk management, treasury, controlling and marketing.

03. ALBANIA EFT remains the leading bilateral electricity trading partner of KESH, the Albanian state-owned power utility, as well as the electricity distribution company CEZ Shpërndarje (currently administered by the state).

04. AUSTRIA EFT remains an active participant on cross-border auctions in Austria owing to its important geographical position connecting the illiquid and liquid markets.

05. BOSNIA & HERZEGOVINA Moderate presence in the trading activities of all three state-owned power utilities in Bosnia & Herzegovina, on both the buy and sell sides.

06. BULGARIA The existence of ad-hoc changeable charges (a de facto export tax) rendered Bulgarian electricity uncompetitive on the regional market for most of 2013, though the situation is improving with the taxes reducing. After EU pressure, there is now finally harmonisation between internal and external market pricing.

07. CROATIA Croatia’s power utility HEP remains an important client, and the Group has maintained its position as one of its key suppliers. Opening of the retail market was completed by the end of the 2013.

08. CZECH REPUBLIC & SLOVAKIA Market coupling between the countries and also with Hungary resulted in very limited possibilities for trading activity.

09. GERMANY Europe’s largest and most liquid market, closely connected to the Austrian market with no cross-border restrictions. Besides Hungary, the most important balancing and hedging hub for EFT Group transactions. Germany accounted for 38% of EFT purchases and 33% of sales in 2013.

10. GREECE In a partnership that has now lasted for more than a decade, EFT supplied electricity to PPC, the Greek state owned power utility, as well as delivering energy to the country’s exchange LAGIE, during 2013. In addition, Greece represents an important transit route to the Turkish market.

11. HUNGARY Important regional energy hub and a source market for EFT. Apart from trades with counterparties operating in the deregulated market, EFT also operates contracts with a number of independent power producers. Hungary accounted for 28% of Group sales and 28% of purchases in 2013. The Hungarian market is a regional price driver, owing to the existence of a transparent and liquid exchange (HUPX) as well as its links with western European energy markets.

EFT Across Europe

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12. ITALY Following market coupling with Slovenia, Italy has become an important day-ahead market for the Group. EFT also actively trades on the submarine Italy-Greece interconnection.

13. KOSOVO EFT is one of the main suppliers of electricity to Kosovo distribution company KEDS, now part of Turkey’s Çalik-Limak Group.

14. MACEDONIA The Group supplies were mainly to privatised distribution company and indirectly and partially to large industrial clients. Also, Macedonia represents an important transit route to the Greek market.

15. MONTENEGRO The Montenegrin power utility EPCG has substantially reduced the volume of its energy purchases and sales with external counterparties, leading to lower levels of bilateral business.

16. ROMANIA EFT maintains a strong position in the internal retail market, and also remains a key supplier to major industrial consumers.

17. SERBIA Only a small percentage of EFT’s trades occur in Serbia, mainly with the state-owned utility EPS. Retail market opening is underway, with expected full opening either by mid-2014 or early 2015.

18. SLOVENIA EFT supplies electricity distribution companies and large industrial consumers, as well as tertiary reserve services to the local system operator.

19. TURKEY EFT’s Turkish operation focuses on arbitration activities in cross-border trading on the Bulgarian and Greek borders, supported by a strong in-house treasury capacity to manage the appreciable currency risk.


33EFT Group Annual Review 2013/201432 EFT Group Annual Review 2013/2014

Productsand Services

More tailor-made services might include:

EXTENDABLE DELIVERY PURCHASE AND SALES CONTRACTS These contracts typically have an above or below market unit price but with an embedded option permitting the holder the right but not the obligation to extend the contract term, at the same quantity and price, for a pre-agreed period.

INTERRUPTIBLE DELIVERY PURCHASE AND SALES CONTRACTS The buyer as well as the seller has the right to interrupt, stop or postpone the delivery of energy.

EMERGENCY DELIVERY OF ENERGY ON SHORT AND LONG-TERM NOTICE The flexibility of EFT’s portfolio allows it to market reserve energy services to several transmission system operators. Unlike a stand-alone power plant, EFT is able to optimise its entire portfolio to provide the most efficient and finest priced reserve energy service. From just 15 minutes’ notice (up to several hours) EFT is poised to start delivering emergency supplies.

UPWARD RESERVE POWER Delivery of reserve power — on a tertiary reserve basis — with activation on minute and hourly notice.

DOWNWARD RESERVE POWER EFT is able to guarantee energy off-take for its partners at times of unexpected surpluses in their portfolios.

CBCS AND POWER EXCHANGE SERVICE EFT can assist customers and end users in obtaining CBCs on relevant borders and access to power exchanges, from source to sink, from power exchange to metering point, according to need.

PHYSICAL LOCATION AND TIME SWAPS These swaps aim to circumvent congested borders by swapping like-for-like quantities of physical energy in different countries at some fixed or floating formula agreed by the parties.

More than a decade of experience and a remarkably diversified portfolio combine to mean the EFT Group can offer a vast range of solutions to its clients’ energy problems and requirements, over and above standard products such as base or peak power, across any combination of workdays; or hourly, daily, monthly, quarterly, yearly and longer term deliveries.

EFT Trading Floor


TRADING DEPARTMENT A centralised operation optimises a large-scale portfolio of electricity contracts in more than 20 countries, ensuring our client’s demands are met at all times, whatever the circumstances. Its design allows immediate response and accommodation of the ever-changing state of the region’s transmission grid and generation capacities, whether hours from delivery, or at long-dated time horizons. Continuous trading activities are conducted with a wide array of clients including end-users of varying size, energy exchanges and system operators — the range of traded products also ranges widely, from multi-year standard products to day-ahead and intra-day non-standard hourly power diagrams, and any combination in between.

24/7 STATE-OF-THE-ART OPERATIONS EFT runs an innovative 24-hour trading and scheduling centre. This unique centre ensures any possible client requirements are met at any time, day or night, with intra-day trading and scheduling, both internally and cross-border.

PORTFOLIO MANAGEMENT The portfolio management team analyses, buys and manages long-term cross-border capacity rights and provides long term alternative plans to build and optimise the Group’s portfolio on a yearly, quarterly and monthly level, in close collaboration with the trading and analytics teams. The analytics team forecasts medium- and long-term electricity consumption, production and energy balances for EFT’s geographic territory. It monitors global macroeconomic trends and the influence of other energy related commodities on the forward and spot prices of electricity.

EFT’s Belgrade trading floor is the first and so far the largest of its kind in south-east Europe. Its activities range from portfolio planning to final settlement, from Turkey to Germany.

RISK MANAGEMENT The risk management team computes confidence levels for the portfolio, providing an objective view of potential uncertainties, including risks arising from the market, currency, credit, liquidity, counterparties, politics and operational matters.

SCHEDULING The scheduling team optimises capacity usage through short-term and day-ahead plans, all in 24-hour resolution. The team supports spot arbitrage in close collaboration with the traders, and communicates EFT’s internal and cross-border nominations to the TSOs.

SETTLEMENTS The settlements team handles deal confirmations, invoicing and statistical reporting for the Group.

STRONG IT SUPPORT EFT operates two bespoke IT platforms — EPOX and InBalance.

1. EPOX is used internally. It facilitates all activities connected with electricity trading, scheduling, settlement, portfolio and risk management. It also provides reports suitable for activities related both to ex-ante planning, and ex-post or even online analyses.

2. InBalance is used externally, mainly by EFT’s clients in Romania. It enables consumption forecasting and firm schedule data exchange, as well as visualisation of scheduled vs. realised consumption and related deviations, aiding better consumption forecasting and reduced costs for balancing energy.

The entire EFT Group international network is strongly supported with a dedicated and highly-qualified 24-hour IT service, based in-house in Belgrade.



PowerExchanges

EFT Group companies now trade daily on twelve European power exchanges.

Participation on European power exchanges allows EFT to balance out its portfolio and achieve greater levels of flexibility on the day-ahead markets. In combination with greater access to cross-border capacity rights, it allows the Group to provide a wider range of tailor-made products to its clients.

The role of power exchanges in congestion management on national borders has become pivotal through the introduction of the market coupling model of implicit auctions for day-ahead cross-border trading in several European regions (north-western Europe, Czech Republic, Slovakia and Hungary, Slovenia and Italy, Iberian Market). The goal is to optimise the use of day-ahead cross-border capacities, based on all day ahead power exchange placed orders.

In south-east Europe, market coupling commenced on the Slovenian/Italian border in early 2011, followed in 2012 by the coupling of the Czech, Slovak and Hungarian day-ahead markets, with plans to expand to Romania and Poland. After the successful operation of Trilateral Market Coupling since November 2006, north-western European market coupling was launched in February 2014, and linked four exchanges and thirteen TSOs. From France to Finland, there is now a common day-ahead power price calculation.

For the first time, exchanges in countries which account for 75% (more than 2000TWh) of European electricity consumption are calculating prices at the same time and in the same way — a significant step towards a common European power market. NORDPOOL Lysaker, Norway www.nordpoolspot.com founded in 1993

OPCOM Bucharest, Romania www.opcom.ro founded in 2000

LAGIE Athens, Greece www.lagie.gr founded in 2000

EEX Leipzig, Germany www.eex.com founded in 2000

BSP SouthPool Ljubljana, Slovenia www.bsp-southpool.com founded in 2002

EXAA Vienna, Austria www.exaa.at founded in 2002

OTE Prague, Czech Republic www.ote-cr.cz founded in 2003

GME Rome, Italy www.mercatoelettrico.org founded in 2004

EPEX SPOT Paris, France www.epexspot.com founded in 2008

HUPX Budapest, Hungary www.hupx.hu founded in 2010

PMUM Ankara, Turkey www.pmum.gov.tr founded in 2010

OKTE Bratislava, Slovakia www.okte.sk founded in 2011


ENTSO-ETransmissionNetwork

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Hydro Power plant

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www.entsoe.eu


WWW.EFT-GROUP.NET [email protected] St Gallen +41 71 226 1030 Belgrade +381 11 30 11 021 ATHENS EFT (Hellas) S.A. Kifisias Avenue 171, 3rd Floor Marousi 151-24 Athens, Greece Tel. +30 210 80 67 500

BELGRADE EFT Trade d.o.o. Španskih boraca 3/IV 11070 Belgrade Republic of Serbia Tel. +381 11 30 11 021

BILECA Energy Financing Team d.o.o. Srpske vojske 9, 89 230 Bileca Republika Srpska Bosnia & Herzegovina Tel. +387 59 270 410

BUCHAREST EFT Furninzare European Business Center 2nd Floor, 24 Blvd Mircea Voda CP 030667 Bucharest 3, Romania Tel. +40 21 302 36 23

BUDAPEST EFT Budapest Zrt. Sas u. 10-12. Budapest H-1051 Hungary Tel. +36 1 202 5207

ISTANBUL EFT (Turkey) A.S. Skyport Hurriyet Bulvari No:1 K:15 D:149 Beylikduzu,

.Istanbul 34520

Turkey Tel. +90 212 347 6787

KALINOVIK EFT HE Ulog (BiH) d.o.o. Kalinovik, Kara –dor –deva 28b 71230 Kalinovik Republika Srpska Bosnia & Herzegovina Tel. +387 57 625 080

LJUBLJANA Elektricni Financni Tim d.o.o. Cesta v Mestni log 88A (TMF) 1000 Ljubljana, Slovenia Tel. +386 1 565 44 88

LONDON EFT International Investments Holdings Ltd 3 First Street, London SW3 2LB, UK

SKOPJE EFT Makedonija DOOEL Partizanski odredi 15A 2–6 1000 Skopje, Macedonia Tel. +389 2 3129 000

SOFIA EFT Bulgaria E.A.D. George Washington No. 19 1000 Sofia, Bulgaria Tel. +359 2 439 9010

ST GALLEN Energy Financing Team (Switzerland) AG Pestalozzistrasse 2 CH-9000 St Gallen Switzerland Tel. +41 71 226 1030

STANARI EFT Rudnik i Termoelektrana Stanari d.o.o. Stanari bb, 74208 Stanari Republika Srpska Bosnia & Herzegovina Tel. +387 53 209 930

TIRANA EFT Albania Sh.p.k. Murat Toptani Street 3rd Floor, Tirana, Albania Tel. +355 4 453 6881

ZAGREB EFT Hrvatska d.o.o. Trnjanska cesta 65 10000 Zagreb Croatia Tel. +385 1 619 4748

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