Annual report - HSE

Production management
The HSE Group’s electricity production is managed from the Control Centre in Maribor. The
main objectives of production management are as follows:
• to ensure minimum deviations of production and of the balancing group from schedules;
• to ensure optimal distribution of power among available turbines;
• to promptly activate back-up capacities in emergency situations.
The quality of management of the HSE balancing group is reflected in the minimisation
of deviation costs thanks to the deviations of balancing group members being reduced
through adjustment of their production. In 2012, the members of HSE balancing group
were production units of the HSE Group, including small HPPs, PV, larger consumers
connected to transmission network, balancing subgroup of four distribution companies,
one balancing subgroup SODO and some smaller consumers. The balancing group’s
deviations include all production and consumption deviations from forecast schedules.
The HSE Group estimates that the management of balancing group of the HSE Group in
2012 was successful since deviations arose in the framework of set goals. The capacity
was allocated optimally with regard to daily conditions, while all reserve capabilities were
timely activated in case of emergencies.
It has been estimated that quantity risks were managed appropriately, taking into account
given limitations.
Financial risks
Difficult economic conditions and global financial and economic crisis had an important
impact on operations and operational uncertainty also in 2012. The financial conditions on
the markets in Slovenia and Europe are worrying. Consequences of financial and economic
crisis, European debt crisis, bad economic situation in the Eurozone, plummeting credit
rating of Slovenia, poor capital situation of domestic and Eurozone banks make the financial
markets conditions all the more severe. Lending activities of banks have been limited and
loans have been granted under the strictest conditions. In addition to blocked economic
growth, companies have been tackling issues with obtaining new financial resources and
extending repayment of the current ones, which can lead to deterioration of solvency and
delayed settlement of liabilities.
In 2012, the HSE Group continued to focus on its exposure to various types of financial
risks and to carry out risk management measures and activities. Management and thus
limitation of financial risks in such conditions is crucial for ensuring stable operations and
development and, consequently, stable growth and value of the Group. It was another
year for the HSE Group to carry out its operations with the diligence of business and
financial expertise, and to strive to maintain its short-term and long-term solvency and
capital adequacy. In 2012, the HSE Group companies were successful in adapting to severer
operating conditions and changes in financial markets, as well as in managing financial
risks, which helped them to preserve a stable financial position.
More detailed disclosure of financial risks (liquidity, credit, interest, currency risk) is
available in the financial part of this Annual Report, in Notes 4.5.8.8 and 5.5.8.8.
The risk of financial discipline of banks and financial institutions arising from investing
of available funds has also been managed adequately, as the company considers the
principle of dispersion of all deposits in individual banks, with cash investments for daily
short-term operations (in the form of ‘overnight’ and ‘redeemable at notice’ deposits) and
through cash pooling.
Transactions of derivatives for hedging against interest rate and currency risk are concluded
with commercial banks on the basis of standard ISDA contracts and it is estimated that the
possibility of their non-performance is minimal.
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Moreover, the data on current operations of banks, with which the controlling company
cooperates, is also monitored. The controlling company sends subsidiaries within the HSE
Group recommendations in relation to investment of available funds.
It has been estimated that financial risks were managed adequately, considering the given
limitations.