DELOITTE. Banja Lukablberza.com/Cms2FileCache/files/cms2/docver/13358... · Deloitte d.o.o. Banja Luka Braće Mažar i majke Marije 58 i 60 78000 Banja Luka . ... presentation of

TELEKOMUNIKACIJE REPUBLIKE SRPSKE A.D., BANJA LUKA Financial Statements For the Year Ended December 31, 2009 and Independent Auditors’ Report

“TELEKOMUNIKACIJE REPUBLIKE SRPSKE” A.D., BANJA LUKA

CONTENTS Page Independent Auditors’ Report 1 - 2 Financial Statements:

Statement of Comprehensive Income 3

Statement of Financial Position 4

Statement of Changes in Equity 5

Statement of Cash Flows 6

Notes to the Financial Statements 7 - 65

Deloitte d.o.o. Banja Luka Braće Mažar i majke Marije 58 i 60 78000 Banja Luka Republic of Srpska Bosnia and Herzegovina Tel: +387 51 223-500; +387 51 223-501 Fax: +387 51 224-990 www.deloitte.com Municipal Court Banja Luka, Registry File 1-10826-00 Identification No: 1913239; Business accountsi: 562-099-00001310-56; 552-002-00017739-98 567-162-11000129-31; 571-010-00000438-11 Inscribed and paid capital: BAM 5.000,00

INDEPENDENT AUDITORS’ REPORT To the Management Board and Shareholders of “Telekomunikacije Republike Srpske” a.d., Banja Luka We have audited the accompanying financial statements (pages 3 to 65) of “Telekomunikacije Republike Srpske” a.d., Banja Luka (the “Company”), which comprise the statement of financial position as at December 31, 2009, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

(Continued)


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STATEMENT OF COMPREHENSIVE INCOME Year Ended December 31, 2009 (In BAM)

Note

Year Ended December 31,

2009


2008 Operating income Sales of goods and services 5 476,174,053 463,438,156 Other operating income 6 11,244,708 7,602,867 487,418,761 471,041,023 Operating expenses Cost of telephones and other commercial goods sold (4,996,009) (6,330,329) Direct materials consumed 7 (1,128,553) (1,368,267) Other materials, energy and fuel 8 (8,331,153) (8,238,267) Staff costs 9 (82,911,468) (75,848,116) Depreciation and amortization charge 11, 12 (98,985,652) (82,676,407) Indirect taxes and contributions (1,229,005) (1,597,532) Other operating expenses 10 (173,612,436) (159,612,412) (371,194,276) (335,671,330) Profit from operations 116,224,485 135,369,693 Finance income/(expenses) Interest income 5,446,039 3,636,067 Other finance income, net 238,215 406,624 Interest expense (7,723,504) (6,295,618) Foreign exchange gains/(losses), net 72,666 (130,539) (1,966,584) (2,383,466) Profit before taxation 114,257,901 132,986,227 Income taxes 33 (11,624,686) (13,776,724) Net profit 102,633,215 119,209,503

Other comprehensive income: Losses on available-for-sale financial assets, net of tax

(7,693) (9,800)

Other comprehensive income for the period, net of tax

(7,693) (9,800)

Total comprehensive income for the year

102,625,522 119,199,703

Earnings per share - Basic earnings per share 35 0.2089 0.2426

The accompanying notes form an

integral part of these financial statements.

The accompanying financial statements of “Telekomunikacije Republike Srpske” a.d., Banja Luka were approved for issuance by the Company’s Management Board on March 16, 2010. Signed on behalf of the Company by: Predrag Ćulibrk General Director

Vesna Labus Acting Executive Director of Finance


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STATEMENT OF FINANCIAL POSITION As of December 31, 2009 (In BAM)

Note December 31,

2009 December 31,

2008 ASSETS Non-current assets Intangible assets 11 126,410,750 96,297,716 Property and equipment 12 629,928,059 626,108,468 Advances for property and equipment 13 3,220,704 2,857,189 Equity investments 14 12,656 12,656 Other financial assets 15 117,419 125,112 Long-term receivables and borrowings 16 11,720,673 6,941,522 Deferred tax assets 33c) 705,428 780,998 772,115,689 733,123,661 Current assets Inventories 17 20,750,414 24,774,807 Accounts receivable 18 44,236,520 46,140,725 Other receivables 19 2,483,158 717,466 Short-term financial placements 21 26,559,287 30,472,910 Prepayments 22 5,855,399 9,336,022 Cash and cash equivalents 23 91,887,927 182,316,022 191,772,705 293,757,952 Total assets 963,888,394 1,026,881,613 LIABILITIES AND EQUITY Equity 24 Share capital 491,383,755 491,383,755 Legal reserves 35,347,789 29,387,314 Investments revaluation reserve 2,107 9,800 Other reserves - reserves arising on the execution of

the investment commitment 97,791,500 97,791,500 Retained earnings 93,622,605 159,083,663 718,147,756 777,656,032 Long-term liabilities and provisions Long-term liabilities 25 111,561,428 99,485,688 Deferred income 26 7,772,705 8,295,675 Employee benefits 27 10,030,375 11,346,542 Provisions 28 1,281,826 1,341,826 130,646,334 120,469,731 Current liabilities Current portion of long-term liabilities 25 40,984,767 41,991,473 Short-term borrowings 29 483,090 483,090 Accounts payable 30 46,504,756 51,419,959 Accruals 31 11,409,796 14,684,025 Dividend payable 35 6,843,078 3,861,803 Income tax payable 33d) - 5,902,266 Other current liabilities 32 8,868,817 10,413,234 115,094,304 128,755,850 TOTAL LIABILITIES AND EQUITY 963,888,394 1,026,881,613

The accompanying notes form an

integral part of these financial statements.


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STATEMENT OF CHANGES IN EQUITY Year Ended December 31, 2009 (In BAM)

Other Reserves Investments Arising on Share Legal Revaluation Commitment Retained Capital Reserves Reserve to Invest Earnings Total Balance at January 1, 2008 491,383,755 25,432,710 - - 68,094,908 584,911,373 Telekard Merger (Note 43) - - 19,600 - (1,724,905) (1,705,305) Profit allocation: - dividends to shareholders - - - - (22,541,239) (22,541,239) - legal reserves - 3,954,604 - - (3,954,604) - Payments of the investment

commitment by the majority owner of the Company (Note 24) - - - 97,791,500 - 97,791,500

Total comprehensive income for the period

- - (9,800) - 119,209,503 119,199,703 Balance, December 31, 2008

491,383,755 29,387,314 9,800 97,791,500 159,083,663 777,656,032 Balance at January 1, 2009 491,383,755 29,387,314 9,800 97,791,500 159,083,663 777,656,032 Profit allocation (Note 35): - dividends to shareholders - - - - (143,249,028) (143,249,028) - Interim dividend paid to shareholders (Note 3.19) - - - - (18,884,770) (18,884,770) - legal reserves - 5,960,475 - - (5,960,475) - Total comprehensive income for the year - - (7,693) - 102,633,215 102,625,522 Balance, December 31, 2009

491,383,755 35,347,789 2,107 97,791,500 93,622,605 718,147,756

The accompanying notes form an integral part of these financial statements.


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STATEMENT OF CASH FLOWS Year Ended December 31, 2009 (In BAM)


2009


2008 Cash flows from operating activities Cash receipts from customers 466,690,803 459,540,109 Other cash receipts 3,306,551 102,203,915 Cash paid to suppliers (176,238,074) (170,897,010) Cash paid to and on behalf of employees (86,689,940) (72,473,466) Interest paid (6,914,542) (6,239,321) Income taxes paid (18,991,969) (9,861,845) Other taxes and duties paid (1,309,116) (2,029,947) Net cash provided by operating activities 179,853,713 300,242,435

Cash flows from investing activities Purchases of property, equipment and intangible assets (74,985,060) (88,510,467) Interest received 4,974,178 3,639,294 Cash provided by/(used for) long-term financial placements 377,316 (714,236) Cash provided/(used in) by short-term financial placements 3,950,000 (30,000,000)

Net cash used in investing activities (65,683,566) (115,585,409)

Cash flows from financing activities Cash used for long-term financial liabilities (45,445,719) (31,363,263) Dividends and interim dividends paid to the shareholders (159,152,523) (29,848,193)

Net cash used in financing activities (204,598,242) (61,211,456)

Net (decrease)/increase in cash and cash equivalents (90,428,095) 123,445,570 Cash and cash equivalents at the beginning of year 182,316,022 58,870,452 Cash and cash equivalents at the end of year 91,887,927 182,316,022

The accompanying notes form an integral part of these financial statements.


NOTES TO THE FINANCIAL STATEMENTS Year Ended December 31, 2009 All amounts expressed in BAM, unless otherwise stated.

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1. FOUNDATION AND ACTIVITY

The basic public company (“JODP”) Telekom Srpske, Banja Luka (hereinafter: the “Company”) was registered on December 20, 1996 and it operated as an enterprise entirely owned by the State, until December 12, 2002, when it was organizationally transformed into a shareholding company and changed its name into Telekomunikacije Republike Srpske a.d., Banja Luka.

The Company’s principal business activity is the provision of telecommunication services the most significant of which are domestic and international telephony traffic. In addition, the Company offers a wide range of other telecommunication services, including other fixed telephone services, data transfer, line leases, private conduits, services throughout the entire network area, additional services in the area of mobile telephony, as well as internet and multimedia services. The Company also provides services in the area of leasing, construction, management and security of the telecommunication infrastructure. During 2000, the Company introduced GSM network mobile telephony.

As of December 31, 2009, the Company provided telecommunication services in fixed telephony to 354,800 legal entities and private individuals on the territory of the Republic of Srpska (December 31, 2008: 359,784 subscribers), as well mobile telephony services to 1,231,489 subscribers on the territory of Bosnia and Herzegovina (December 31, 2008: 1,109,686 subscribers). In addition, as of December 31, 2009, the Company provided services to 95,556 internet users (December 31, 2008: 65,416 users).

The Company is domiciled in Banja Luka, in the Republic of Srpska at the following street address: 93 Kralja Petra I Karađorđevića. At December 31, 2009, the Company had 2,464 employees (2008: 2,504 employees). At December 31, 2009, the Company had sixteen Working and Operating Units on the territory of Bosnia and Herzegovina.

In 2002, in accordance with the RS Law on Privatization, and the Decision of the Republic of Srpska Government, 20 percent of the state-owned capital in the Company was transformed into private ownership via voucher privatization offerings. Based on the information provided by the Privatization Agency, 10.5 percent of the Company’s state-owned capital was privatized via vouchers sold to various investment funds, whereas private investors purchased the remaining 9.5 percent of the offering.

In accordance with the December 12, 2002 Decision of the Basic Court of Banja Luka numbered U/I 3077/02, the Company registered a change of name to Telekomunikacije RS a.d., Banja Luka, as well as the change in the ownership status reflecting its organizational transformation following the aforedescribed sale of a portion of its state-owned equity.

Based on a Decision issued by the Basic Court in Banja Luka dated June 28, 2007, a status change – the ownership transformation through the sale of the total state-owned capital to “Telekom Srbija” a.d., Beograd (Note 24), was registered.



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1. FOUNDATION AND ACTIVITY (Continued)

At December 31, 2009, the Company was the sole owner of two subsidiaries, as follows:

1. TT Inženjering d.o.o., Banja Luka, and 2. M:TEL, Multimedijalne komunikacije d.o.o., Zagreb (Republic of Croatia). On June 26, 2008, the Shareholding Assembly of the Company enacted a Decision on the consent to the merger and acquisition of “Telekard, Telefonske usluge” d.o.o., Banja Luka, fully owned by the Company. The registration of the forgoing status change was inscribed in the registers maintained by the Basic Court in Banja Luka on September 30, 2008, whereby the process of merger and acquisition of the aforementioned subsidiary was officially completed. The effect of Telekard’s merger on the Company’s financial statements prepared as of and for the nine-month period ended September 30, 2008 is presented within Note 43 to the accompanying financial statements.

2. BASIS OF PREPARATION AND PRESENTATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING CONVENTION

2.1. Basis of Preparation and Presentation of the Financial Statements These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The accompanying financial statements have been prepared at cost principle, except for the revaluation of certain financial instruments. The financial statements are stated in convertible marks (BAM), which is the functional and reporting currency of the Republic of Srpska. In the preparation of the statement of cash flows for the year ended December 31, 2009, the Company applied direct method in reporting on cash flows. In the preparation of the accompanying financial statements, the Company has adhered to the accounting policies described in Note 3 to the financial statements. Standards and Interpretations in Effect in the Current Period The following amendments to the existing standards issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) are effective for the current period:

• IFRS 8 “Operating Segments” (effective for annual periods beginning on or after January 1,

2009), • Amendments to IFRS 4 “Insurance contracts” and IFRS 7 “Financial Instruments: Disclosures”

- Improving disclosures about financial instruments (effective for annual periods beginning on or after January 1, 2009),

• Amendments to IFRS 1 “First-time Adoption of IFRS” and IAS 27 “Consolidated and Separate

Financial Statements” – Cost of investment in a subsidiary, jointly-controlled entity or associate (effective for annual periods beginning on or after January 1, 2009),



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2. BASIS OF PREPARATION AND PRESENTATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING CONVENTION (Continued)

2.1. Basis of Preparation and Presentation of the Financial Statements (Continued)

Standards and Interpretations in Effect in the Current Period (Continued)

• Amendments to various standards and interpretations resulting from the Annual quality

improvement project of IFRS published on May 22, 2008 (IAS 1, IFRS 5, IAS 8, IAS 10, IAS 16, IAS 19, IAS 20, IAS 23, IAS 27, IAS 28, IAS 29, IAS 31, IAS 34, IAS 36, IAS 38, IAS 39, IAS 40, IAS 41) primarily with a view to removing inconsistencies and clarifying wording (most amendments are to be applied for annual periods beginning on or after January 1, 2009),

• Amendments to IAS 32 “Financial Instruments: Presentation” and IAS 1 “Presentation of

Financial Statements” – Puttable financial instruments and obligations arising on liquidation (effective for annual periods beginning on or after January 1, 2009),

• IAS 1 (revised) “Presentation of Financial Statements” – A revised presentation (effective for

annual periods beginning on or after January 1, 2009), • IAS 23 (revised) “Borrowing Costs” (effective for annual periods beginning on or after January

1, 2009), • Amendments to IFRS 2 “Share-based Payment” – Vesting conditions and cancellations

(effective for annual periods beginning on or after January 1, 2009), • Amendments to IFRIC 9 “Reassessment of Embedded Derivatives” and IAS 39 “Financial

Instruments: Recognition and Measurement” -Embedded Derivatives (effective for annual periods ending on or after June 30, 2009),

• IFRIC 13 “Customer Loyalty Programmes” (effective for annual periods beginning on or after

July 1, 2008), • IFRIC 15 “Agreements for the Construction of Real Estate” (effective for annual periods

beginning on or after January 1, 2009), • IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” (effective for annual periods

beginning on or after October 1, 2008). The adoption of these amendments to the existing standards and interpretations has not led to significant changes in the Company’s accounting policies. Standards and Interpretations in Issue not yet Adopted

At the date of authorization of these financial statements the following standards, revisions and interpretations were in issue but not yet effective:

• IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after January 1,

2013), • IFRS 3 (revised) “Business Combinations” (effective for annual periods beginning on or after

July 1, 2009), • IFRS 1 (revised) “First-time Adoption of IFRS” (effective for annual periods beginning

on or after July 1, 2009),



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2. BASIS OF PREPARATION AND PRESENTATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING CONVENTION (Continued)

2.1. Basis of Preparation and Presentation of the Financial Statements (Continued)

Standards and Interpretations in Issue not yet Adopted (Continued) • Amendments to IFRS 2 “Share-based Payment” - Group cash-settled share-based payment

transactions (effective for annual periods beginning on or after January 1, 2010), • Amendments to IAS 24 “Related Party Disclosures” - Simplifying the disclosure requirements

for government-related entities and clarifying the definition of a related party (effective for annual periods beginning on or after January 1, 2011),

• Amendments to IAS 27 “Consolidated and Separate Financial Statements” (effective for

annual periods beginning on or after July 1, 2009), • Amendments to IAS 32 “Financial Instruments: Presentation” – Accounting for rights

issues (effective for annual periods beginning on or after February 1, 2010) • Amendments to IAS 39 “Financial Instruments: Recognition and Measurement” - Eligible

hedged items (effective for annual periods beginning on or after July 1, 2009), • Amendments to various standards and interpretations resulting from the Annual quality

improvement project of IFRS published on April 16, 2009 (IFRS 2, IFRS 5, IFRS 8, IAS 1, IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9, IFRIC 16) primarily with a view to removing inconsistencies and clarifying wording, (most amendments are to be applied for annual periods beginning on or after January 1, 2010),

• Amendments to IFRIC 14 “IAS 19 — The Limit on a defined benefit Asset, Minimum

Funding Requirements and their Interaction” - Prepayments of a Minimum Funding Requirement (effective for annual periods beginning on or after January 1, 2011),

• IFRIC 17 “Distributions of Non-Cash Assets to Owners” (effective for annual periods

beginning on or after July 1, 2009), • IFRIC 18 “Transfers of Assets from Customers” (effective for transfer of assets from

customers received on or after July 1, 2009), • IFRIC 19 “Extinguishing Liabilities with Equity Instruments” (effective for annual periods

beginning on or after July 1, 2010).

The Company’s management has elected not to adopt these standards, revisions and interpretations in advance of their effective dates. The management anticipates that the adoption of these standards, revisions and interpretations will have no material impact on the financial statements of the Company in the period of initial application.



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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1. Revenue Recognition Income from the sale is presented at invoiced value, less any effective discounts and sales taxes. Income is recognized and recorded concurrently with rendering the contracted services. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate.

3.1.1 Fixed Telephony Income a) Telephone Traffic Income from telephony traffic is billed to the subscribers of the Company, and is recorded at invoiced value, less effective discounts and sales taxes at the moment upon which services have been provided.

b) Telecommunication Subscription The telecommunication subscription to fixed telephony is invoiced on a monthly basis, one month in arrears. The telecommunication subscription includes a tax for the possession of a radio or television signal receiver (referred to as the “RTV fee”) which the Company collects on behalf of the Radio and Television of the Republic of Srpske (“RT RS”) and the Public Radio-Television Service of Bosnia and Herzegovina (“JS BiH”), pursuant to the Law on the Basis of the Public Radio-Television system of Bosnia and Herzegovina and the Law on the Radio-Television Service of the Republic of Srpska. In addition, on November 22, 2005, the Company and the other two telecommunication service operators in Bosnia and Herzegovina (BH Telekom d.d., Sarajevo and Hrvatske Telekomunikacije d.d., Mostar, hereinafter referred to as: the “Telekom Operators”), entered into an Agreement on the Collection of the RTV Fees with the three Public Broadcasters in Bosnia and Herzegovina (namely, “RT RS,” “JS BiH” and “Radio Televizija Federacije Bosne i Hercegovine”). Under the terms of the aforecited agreement, the Telekom Operators are to perform the RTV Fees billing of, and collection from, their own fixed telephony users, on behalf of the Public Broadcasters. Pursuant to this agreement, the Public Broadcasters are under an obligation to pay a monthly fee to each Telekom Operator in the amount of 4 percent of the collected income from the RTV Fees. The terms of the aforecited Agreement have been applied commencing as of January 1, 2006 and are effective up to December 31, 2010.

Television subscription fees, except for the fee on the collected income, are not included in the Company’s income. The risk of collection of television subscriptions rests with RT RS and JS BiH. c) New Subscribers Income from the connection of new subscribers to fixed telephony represents income earned on invoiced fees for the connection of new subscribers and installation costs. The bills for new customer connections are recorded in the period in which the user is connected.



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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

3.1. Revenue Recognition (Continued)

3.1.1 Fixed Telephony Income (Continued) d) Other Income from Telecommunication Services Other income primarily includes the lease of telephony capacities (i.e., telephone lines, call listings, voice mail and other services). Such income is recognized and recorded in the accounting period during which it arises.

3.1.2. Mobile Telephony Income Mobile telephony income is associated with the income earned from users who use prepaid and postpaid services (i.e., impulses spent, messages, income from subscriptions, mobile telephones sold, etc.). Income is recorded at the invoiced value, less any applicable sales taxes, at the moment in which the services have been provided. Uninvoiced income earned on mobile telephony services provided in the period from the invoice date up to the end of the period of calculation is accrued up to the end of the calculation period. Prepaid services are recognized and recorded at the moment of sale of the prepaid cards, and at the end of the accounting period, whereas any unbilled revenue is deferred.

3.2. Multi-Element Agreements (МЕA)

Multi-element agreements (MEA) are treated as agreements the components of which are independent and to which different accounting treatments are applied, if the following conditions are met: Each agreement element has the value for the beneficiary, independently of other

elements to the agreement: The Company mostly does not sell devices separately from the agreement for other

services; Devices are sold by any other seller (other operators or dealers) and the dealers can

purchase devices directly from the manufacturer; There is secondary market for the aforementioned devices, where there is no

obligation that such market is observable. The fair value of each separate agreement element can be reliably determined (the

relative fair value or residual value). A mobile phone is recognized as an expense, and the income earned on the sale of a mobile phone is credited to income when the sale is realized, i.e., when the device is delivered to the package user. The discounts granted for the sold mobile phones are treated as an expense in the period it was incurred and is recognized when the device is delivered. The revenue from the activation is also stated in the moment of delivery of the appliance up to the amount of discount granted. Other income from rendering services to users as agreed in the multi-element agreements (МЕA), are deferred in the period defined in the agreement.



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3.3. Income and Expenses from International Settlements

a) Income and Expenses from International Traffic

The Company has entered into various agreements for international traffic in fixed and mobile telephony. The respective income (expense) and receivables (payables) that have originated under these agreements are presented in the accompanying financial statements, and are associated with the income generated on all incoming and outgoing international calls realized in countries maintaining direct international traffic and accounting. A portion of the income earned or expenses incurred is recorded on the basis of an estimate made in accordance with the internal settlements for realized traffic. The Company recognizes income (receivables) only when it can be measured with reasonable certainty. Where evidence exists that an expense (payables) may be incurred, a full provision is recognized, in the instance in which such an estimate is possible. When it is not possible to estimate the extent of a liability, an appropriate disclosure is made in the financial statements.

b) Income and Expenses from Roaming

Income and expenses arising from roaming with foreign operators are recorded at the values set by the clearing house - Mach, Luxemburg. Income and expenses arising on roaming are recognized in the gross amount based on the traffic realized throughout the period.

3.4. Maintenance and Repairs

The maintenance and repairs of property and equipment are expensed as incurred at the effective amounts. Maintenance and repairs primarily relate to the maintenance of telecommunication equipment, local networks and computer software.

3.5. Operating Leases

Operating leases relate to the rental of internet service, telephone lines, business premises, warehouses and other rental expenses. Such expenses are recorded in the statement of comprehensive income at the moment in which such expenses arise, on an accrual basis, in accordance with the relevant operating lease agreements.

3.6. Foreign Currencies

Assets and liabilities denominated in foreign currencies have been restated at the exchange rate in effect at the statement of financial position. Transactions in foreign currencies are translated into BAM by applying the exchange rate in effect on the date of each transaction. The foreign exchange gains or losses arising upon the translation of transactions, and assets and liabilities components denominated in foreign currencies are included in the statement of comprehensive income.



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3.7. Taxes and Contributions

Current Income Tax

Current income tax relates to the amount payable in accordance with the Income Tax Law, which came into effect as of January 1, 2007. Current income tax is payable at the rate of 10% on the tax base reported in the annual corporate income tax return, being the profit before taxation as reduced by any effects of reconciliation of income and expenses.

The tax regulations effective in the Republic of Srpska do not envisage that any tax losses of the current period be used to recover taxes paid within a specific carry-back period. However, current year losses may be used to reduce or eliminate taxes to be paid in future periods, but only for a duration of no longer than five ensuing years. Deferred Income Taxes Deferred income tax is provided using the balance sheet liability method, for the temporary differences arising between the tax bases of assets and liabilities and their carrying values in the financial statements. The currently-enacted tax rates or the substantively-enacted rates at the statement of financial position date are used to determine the deferred income tax amount. Deferred tax liabilities are recognized for all taxable, temporary differences. Deferred tax assets are recognized for all deductible temporary differences, and for the tax effects of income tax losses available for carryforwards, to the extent that it is probable that taxable profit will be available against which the deductible temporary difference and the tax loss carryforwards can be utilized. Indirect Taxes and Contributions Indirect taxes and contributions represent the amounts paid under republic and municipal laws in order to finance various municipal and republic public expenditure requirements. These taxes and contributions are included under Other operating expenses. Value Added Tax Pursuant to the Value Added Tax Law, system for the payment of value added tax (VAT) was introduced on territory of Bosnia and Herzegovina, commencing on January 1, 2006, by which previously-applied taxation system for payment of sales tax on products and services was changed.



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3.8. Intangible Assets

As of the balance sheet date, intangible assets include the telecommunications licenses, rights to the permanent use of land, acquired computer softwares and other licenses. Intangible assets are recorded at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of intangible assets comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The telecommunications licenses are amortized on a straight-line basis over their useful lives as delineated under IAS 38 “Intangible Assets.” The rights to the open-ended beneficial use of land relate to the land property that was granted to the Company by the Government of the Republic of Srpska, in accordance with the provisions of the Law on the Opening Balance Sheet in the Process of Privatization of the State-Owned Capital in Enterprises. In accordance with the applicable accounting regulations, the aforementioned land is not subject to amortization.

3.9. Property and Equipment Items of property and equipment are recorded at cost less accumulated depreciation and accumulated impairment losses, if any. The cost is comprised of the purchase price or expenses incurred in construction, including import duties and non-refundable taxes, and any directly attributable costs of bringing the asset to working condition for its intended use. Any trade discounts and/or rebates received are deducted in arriving at the purchase price. The cost of the constructed fixed assets represents their costs as of the date of construction or development. Fixed assets represent assets with an expected useful economic life of over one year. Gains on the disposal of fixed assets are credited directly to the statement of comprehensive income within “Other income,” whereas any losses arising upon their disposal are charged to “Other expenses.” Capital improvements, renewals and repairs that extend the useful life of an asset are capitalized. Repairs and maintenance are expensed as incurred and are presented as operating expenses.



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3.10. Depreciation and Amortization

The depreciation and amortization of property, equipment and intangible assets are provided at the rates correlating with the estimated useful life, cost and estimated value of the assets on a straight-line basis. The estimated useful lives of particular classes of property and equipment, as well as intangible assets used in the calculation of depreciation and amortization, and prescribed annual depreciation and amortization rates in use for the year ended December 31, 2009 are as follows:

Estimated Useful Life

(in Years)

Rate (%)

GSM and UMTS licenses 15 6.67 Intangible assets, except for GSM and UMTS

licenses 3 - 5

20 - 33.33 Buildings 40 - 55 1.82 - 2.5 Network construction and cabling 14 - 20 5 - 7.14 Switches 10 - 15 6.67 - 10 Transmission devices 9 - 12.5 8 - 11.11 Telephone booths 7 14.29 Telephone hoods 7 14.29 Trucks and motor vehicles 6 - 7 14.29 - 16.67 Computers 4 25 Office furniture and other equipment 5 - 12.5 8 - 20

3.11. Impairment of Property, Equipment and Intangible Assets At each balance sheet date, the Company’s management reviews the carrying amounts of the Company’s fixed assets in order to determine the indications of impairment loss. If there is any indication that such assets have been impaired, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. In cases where it is impossible to assess the recoverable amount of an individual asset, the Company assess the recoverable value of the cash generating unit to the asset belongs. The recoverable value of an asset is the higher of net selling price and value in use. The estimate of the value in use comprises the assessment of future cash inflows and outflows discounted to their present value by applying the pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the estimated recoverable amount of assets (or cash generating unit) is below their carrying value, the carrying amount of the asset (or cash generating unit) is reduced to its recoverable amount. An impairment loss is recognized as an expense of the current period under operating expenses, except in case of land and buildings that are not used as investment property which is stated at revalued amount in which case impairment loss is presented as a loss on revaluation of assets.



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3.11. Impairment of Fixed Assets (Continued) Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable value. However, this is performed so that the increased carrying amount does not exceed the carrying value that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately, unless the respective asset is carried at a revalued amount, in which instance, the reversal of the impairment loss is treated as a revaluation increase. At December 31, 2009, based on the management’s assessment, there are no indications that the values of intangible assets, property, plant and equipment have suffered impairment.

3.12. Financial Assets Investments are recognized and derecognized on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs. Financial assets are classified into the following specified categories:, ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Effective interest method The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognized on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL. Held to maturity investments Bills of exchange and debentures with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost using the effective interest method less impairment, with revenue recognized on an effective yield basis.



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3.12. Financial assets (Continued) Available for Sale Investments Unlisted shares and listed redeemable notes held by the Company that are traded in an active market are classified as being AFS and are stated at fair value. For such investments a reasonable estimate of fair value is determined by reference to the current market value of another instrument which is substantially the same or is based on the expected cash flows or the underlying net asset base of the investment. Investments whose fair value cannot be reliably measured are carried at cost. Gains and losses arising from changes in fair value are recognized directly in equity in the investments revaluation reserve with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets, which are recognized directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized in the investments revaluation reserve is included in profit or loss for the period. The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the balance sheet date. The change in fair value attributable to translation differences that result from a change in amortized cost of the asset is recognized in the statement of comprehensive income, and other changes are recognized in equity. Loans and Receivables Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortized cost using the effective interest method less any impairment. Interest income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. Allowance for Impairment Accounts receivable are stated at their nominal value less allowance for impairment of receivables deemed irrecoverable. The provisions are formed for accounts receivable which are past their due date (over 60 days), and such accounts receivable are written off if their uncollectability is certain and documented. The estimate of the amount of uncollectible receivables is based on the historical evidence on the amount of the losses incurred thereof. Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held in commercial banks and any other highly-liquid investments that are readily convertible to known amounts of cash, and are subject to an insignificant risk of changes in value.



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3.12. Financial assets (Continued) Impairment of Financial Assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For unlisted shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or • default or delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organization.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, delays in collecting payments after maturity period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortized cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in the statement of comprehensive income. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through the statement of comprehensive income to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. In respect of AFS equity securities, impairment losses previously recognized through profit or loss (the statement of comprehensive income) are not reversed through the statement of comprehensive income. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.



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3.12. Financial assets (Continued) Derecognition of Financial Assets The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay.

3.13. Financial Liabilities Financial liabilities comprise long-term liabilities (long-term borrowings and other long-term liabilities), short-term operating liabilities and other liabilities. Financial liabilities are initially recognized in the amounts of funds received. Once recognized, financial liabilities are measured at amortized value and increased by the amounts of capitalized interest, net of any amount of write-off as approved by a creditor. Financial liabilities were stated at amortized cost by applying the effective interest rate. Interest accrued on financial liabilities is charged to expenses of the respective period and is presented within other short-term liabilities. Financial liabilities cease to be recognized when the Company fulfills the respective obligations, or when the contractual repayment obligation has either been cancelled or has expired.

3.14. Inventories

Inventories are primarily stated at the lower of cost or net realizable value. The net realizable value is the price at which inventories may be realized throughout the normal course of business, after allowing for the costs of realization. Materials, spare parts and supplies are valued at cost, using the weighted-average methodology. Cost includes the invoiced value, transport and other attributable expenses. Small tools are fully written off when issued into use. Inventories of goods shall be measured at the lower of the average cost and net realizable value. The cost of inventories shall comprise all costs of purchase. The inventories mostly relate to the inventories of mobile and fixed line phones purchased with the intention to sell them further to the customers within special sale packages or separately. Provisions that are charged to Other operating expenses are made where appropriate in order to reduce the carrying value of such inventories to the management’s best estimate of their net realizable value. Inventories found to be damaged, or of a substandard quality are written off in full.



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3.14. Inventories (Continued) Valuation of Mobile Telephones on Stock The sale of mobile phones in the Company is mostly realized through MEAs (multi-element agreements). The sale of mobile phones within MEA is an activity which is executed with a view to stimulate and increase the sale volume of certain services (packages) to the users. The mobile phones are sold at lower prices as a part of the Company’s business strategy. The Company, in return, enters agreements with the package users for a certain periods of time which ensure future economic benefits to the Company. The Company expects to compensate for the cost of a mobile telephone which it sells at lower prices, at the same time stimulating and enhancing sale of different services to the package user. The valuation of inventories is carried at cost whereas the expense (cost of commercial goods sold) is realized when the mobile phone is sold, i.e., delivered to the user based on a multi-element agreement. The sale of mobile phones performed at lower prices is treated as an expense of the accounting period, and is recognized through the statement of comprehensive income as discounts granted in the moment of sale/delivery of a device (Note 10).

3.15. Accrual and Prepayments Accruals are primarily comprised of the computed and unbilled income from international traffic for services performed during the current year, which are billed in the subsequent year due to the long reconciliation period of mutual liabilities and receivables between the international traffic operators. Estimated expenses in international traffic for services received in the current, but invoiced in next accounting period are recorded within accruals.

3.16. Provisions

Provisions are recognized and calculated when the Company has a pending present legal or

contractual obligation as a result of a past event, and when it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are comprised of provisions for litigation filed against the Company, employee benefits, contingent liabilities and provisions for future likely events, based on the guidance and recommendations of the Supreme Office for the Republic of Srpska Sector Auditing. Provisions for litigations represent the Company management’s best estimates of the probable expenditures required to settle such liabilities.

3.17. Deferred Income Deferred income relates to the deferred income arising from grants received as in accordance with the requirements of IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”. Movements in deferred income arising on grants received in the period are presented in Note 26.



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3.18. Employee Benefits

a) Employee Taxes and Contributions for Social Security

In accordance with local regulations, the Company is obligated to pay contributions to the State Social Security Funds. This obligation involves the payment of contributions on behalf of the employee, by the employer in an amount computed by applying the specific percentages stipulated under the relevant regulations. The Company is also obligated to withhold contributions from gross payments to employees, on behalf of the employees, to the same funds. These contributions, payable on behalf of both the employee and employer are charged to expenses in the period to which they relate. b) Obligations for Jubilee Awards and Retirement Benefits

Pursuant to the Company’s signed collective bargaining agreements (CBAs), the Company is obligated to pay retirement benefits in an amount equal to three monthly salaries earned by the employee in the month prior to his/her retirement, which is not to be less than three times the average gross salary effective in the Company at the time of the employee’s retirement. As the basis for calculation, the Company used the highest monthly salary earned in the last twelve months prior to the employee’s retirement. In addition, the Company provides between one and three average monthly salaries of the Company to be paid out as a jubilee award. The number of monthly salaries that is paid out for the employment jubilee awards corresponds to the total number of the employee’s years of service as presented in the table below:

Total Number of

Number of Service Years Salaries

10 1 20 2 30 3

IAS 19, “Employee Benefits,” prescribes the calculation of the present value of accumulated retirement benefits and jubilee awards. For defined benefit retirement benefit plans and jubilee awards, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. In accordance with the aforementioned, the Company engaged a certified actuary to calculate the present value of the accumulated employee entitlements to retirement benefits and jubilee awards as of December 31, 2009. In computing the said present value of the accumulated rights of employees to retirement benefits and jubilee awards, the certified actuary relied upon the following assumptions: the discount rate of 6% annually, projected salaries’ growth of 5.5% annually, anticipated annual inflation rate of 3.5%, years of service upon regular retirement – 40 for men and 35 for women, projected fluctuation of employees based on historic turnover data dating from previous periods, officially published mortality rates in the environment, as well as other conditions necessary to vest in the right to retirement benefits and jubilee awards.



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3.19. Interim Dividend In the business year 2009, based on the interim financial statements and the May 8, 2009 Decision issued by the Shareholder Assembly, the Company performed the distribution of interim dividends to its shareholders in accordance with the local Company Law (Article 225). The amount of interim dividends paid, was below 50% of the prior year profit, as stipulated by the Company Law.

3.20. Fair Value

It is the policy of the Company to disclose the fair values of those asset and liability components for which published market information is readily available, and for which their fair value is materially different from the recorded amounts. In the Republic of Srpska, there is insufficient market experience, stability and liquidity for the purchase and sale of financial assets or liabilities for which quoted prices on an active market are not presently, readily available. Hence, fair value cannot be reliably determined. The Company’s management assesses its overall risk exposure, and in instances in which it estimates that the value of assets stated in its books may not have been realized, it recognizes a provision. As per the Company’s management, amounts expressed in the financial statements reflect the fair value which is most reliable and useful for the needs of the financial reporting.

4. SIGNIFICANT ACCOUNTING ESTIMATES

The presentation of the financial statements requires the Company’s management make best estimates and reasonable assumptions that influence the: assets and liabilities amounts, the disclosure of contingent liabilities and receivables as of the date of preparation of the financial statements, as well as the income and expenses arising during the accounting period. These estimations and assumptions are based on historical experience and other information available to us, as of the date of preparation of the financial statements. However, actual results may vary from these estimates. Basic assumptions relating to the future events and other significant sources of uncertainties in rendering an estimate as of the balance sheet date, which bears the risk that may lead to significant restatement of the net book value of assets and liabilities in the ensuing financial year, were as follows: Estimated Useful Life of Property, Equipment and Intangible Assets The estimate of useful life of property, equipment and intangible assets is founded on the historical experience with similar assets, as well as foreseen technical advancement and changes in economic and industrial factors. The adequacy of the estimated remaining useful life of fixed assets is analyzed annually, or in cases where there are indications of significant changes in certain assumptions. The Company’s management assesses that the accounting estimates with reference to the estimated useful life of an item of property and equipment, as well as intangible assets, are important accounting estimates, as they include the assumptions on technological advancement in a very innovative industry.



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4. SIGNIFICANT ACCOUNTING ESTIMATES (Continued)

Estimated Useful Life of Property, Equipment and Intangible Assets (Continued) Additionally, due to the significance of fixed assets in the total Company’s assets, any change of in the aforementioned assumptions may lead to material effects on the Company’s financial position, as well as on its financial performance. As an example, if the Company was to shorten the average useful life by 10%, this would result in additional depreciation and amortization expense for the year 2009 by approximately BAM 9,898,565 (FY2008: BAM 8,267,641). Impairment of Trade Receivables Impairment for doubtful accounts are calculated based on estimated losses resulting from the inability of our customers to make required payments. The management estimates are based on the aging of account receivables balance and historical write-off experience, customer credit-worthiness and changes in customer payment terms when evaluating the adequacy of the impairment loss for doubtful accounts. Тhese involve assumptions about future customer behavior and the resulting future cash collections. The management believes that there is no further impairment provision required in excess of the allowance for doubtful debts already recognized in these financial statements. Provisions Provisions in general are highly judgmental. The Company assesses the probability of an adverse event as a result of a past event to happen and if the probability is evaluated to be more than fifty percent, the Company fully provides for the total amount of the liability. The Company is rather prudent in these assessments, but due to the high level of uncertainty, in some cases the evaluation may not prove to be in line with the eventual outcome of the case. Deferred Tax Assets Deferred tax assets are recognized for all tax losses to the extent to which taxable profit will be available against which the unused tax losses can be utilized. A significant estimate of the managements is necessary to determine the amount of deferred tax assets which can be recognized, based on their inception periods and the amount of future taxable profits and the tax policy planning strategy. Income and Expenses from International Traffic

The Company has entered into various agreements for international traffic in fixed and mobile telephony. The respective income (expense) and receivables (payables) that have originated under these agreements are presented in the accompanying financial statements, and are associated with the income generated on all incoming and outgoing international calls realized in countries maintaining direct international traffic and accounting. A portion of the income earned or expenses incurred is recorded on the basis of an estimate made in accordance with the internal settlements for realized traffic.



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5. SALES OF GOODS AND SERVICES

In BAM

Year Ended December 31, 2009 2008 (a) Domestic Sales Fixed Telephony - traffic revenue 76,009,379 84,536,705 - subscription fees 36,789,678 36,330,844 - income from interconnections with domestic operators in BiH 47,921,403 44,690,450 - installation fees 565,289 1,087,989

161,285,749 166,645,988 Mobile Telephony - traffic, subscription and package revenue (post paid) 72,838,221 68,357,403 - prepaid cards and packages 153,599,618 137,923,008 - installation fees 776,381 760,148

227,214,220 207,040,559 Internet services: - rentals 167,074 446,414 - direct access 3,540,704 3,009,554 - ADSL subscription fees 11,726,023 3,388,479 - other 248,149 454,231 15,681,950 7,298,678

- Sale of telephones and other goods 4,995,497 6,331,311

Other income from telecommunication services: - leased transmission lines 6,664,035 6,578,998 - fiscal cash register 2,406,087 1,035,097 - other 1,193,715 627,723

10,263,837 8,241,818 Total domestic sales 419,441,253 395,558,354

(b) Sales on foreign market: b1) Revenues generated by the related parties abroad - International settlements (fixed telephony) 18,152,704 29,013,256 - Roaming 2,584,811 3,163,318 - International transit telephony traffic 13,081 4,362 - Other income from international telephony traffic 273,324 114,472 21,023,920 32,295,408 b2) Revenues generated by other foreign legal entities - International settlements (fixed telephony) 13,219,758 13,995,018 - Roaming 22,099,091 21,418,087 - International transit telephony traffic 341,871 41,131 - Other income from international telephony traffic 48,160 130,158 35,708,880 35,584,394

Total sales on foreign markets 56,732,800 67,879,802

476,174,053 463,438,156



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6. OTHER OPERATING INCOME

In BAM Year Ended December 31, 2009 2008

Income from the Agreements made with the RS Government

(Note 16) 4,604,569 - Rentals 1,066,572 919,344 Sale of rights - 250,000 Participations in tenders and auctions 6,328 3,800 Commission for RTV fee collection 778,910 688,750 Other operating income 43,110 361,774 Surpluses 145 - Write-off of other liabilities 168,288 8,289 Collected receivables previously written off 98,216 250,712 Gains on disposal of property and equipment 97,424 44,408 Reversal of deferred income (donations) 1,141,250 2,688,712 Release of long-term provisions: - litigations 60,000 780,389 - employee benefits 1,316,167 - Proceeds from the sale of material 91 121,628 Penalties and damage collected 289,311 258,854 Subsequently received rebates 744,233 881,823 Other income 830,094 344,384 11,244,708 7,602,867

7. COST OF DIRECT MATERIALS

In BAM Year Ended December 31, 2009 2008

Cost of SIM cards and top-up cards (vouchers) 769,295 1,213,507 Cost of other material consumed for a package 359,258 154,760 1,128,553 1,368,267



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8. COST OF OTHER MATERIAL, FUEL AND ENERGY

In BAM

Year Ended December 31, 2009 2008

Electricity 3,194,325 2,721,114 Material for maintenance of property and equipment 1,668,949 1,781,854 Fuel and lubricants 1,472,685 1,752,004 Office material 976,091 1,070,298 Other material 1,019,103 912,997 8,331,153 8,238,267

9. STAFF COSTS

In BAM


Net salaries 31,236,913 29,667,932 Vacation allowance 2,024,403 2,035,600 Employee meals 3,980,953 3,161,661 Winter food and heating allowance 4,022,946 4,042,869 Overtime work and other payments to employees 4,830,814 4,226,236 Transportation in public traffic 1,190,735 1,185,690 Taxes on salaries and benefits 3,453,739 3,874,775 Contributions on salaries and benefits 22,872,884 19,142,188 Remunerations to members of the Board of Directors and Supervisory Board 177,903 167,398 Severance pays – incentives 33,968 3,914,755 Retirement benefits 45,274 66,014 Severance pays upon termination of employment 4,986,153 - Financial assistance to employees 474,848 400,025 Business trip per diems 1,450,705 1,785,615 Religious holiday allowance 1,048,853 1,141,824 Jubilee awards and other payments to employees 1,080,377 1,035,534 82,911,468 75,848,116 Severance pays made upon the termination of employment in 2009 amounted to BAM 4,986,153 and represents calculated and paid out severance pays to 102 employees and based on the Decision on the termination of employments due to redundancy, organizational and economic reasons dated September 15, 2009.



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10. OTHER OPERATING EXPENSES

In BAM


Approved discounts for the sale of telephones and packages 25,422,971 24,527,738 International settlements, except roaming 19,546,753 19,249,259 Cost of interconnections 19,271,244 18,284,279 Roaming 11,946,785 10,631,215 Leasing of third-party transmission lines 3,645,231 3,262,950 Other production related services 887,539 915,428 Preparation, delivery of telephone bills and other related costs 4,722,457 4,323,264 Transportation services 504,117 222,899 Maintenance 11,709,607 10,621,358 Lease of premises and equipment 11,751,567 9,366,581 Marketing and advertising 14,027,707 13,411,973 Dealers’ fees for GSM services 11,906,219 9,852,136 Dealers’ fees for “short” numbers 3,812,544 3,283,342 Services of Mach Luxembourg clearing house 535,209 459,241 Cost of SMS and roaming 2,305,189 1,502,940 Public utilities 294,825 255,818 Other production services 825,975 862,201 Costs of temporary relocation of employees by the Parent Company (Telekom Srbija a.d., Beograd) 131,618 139,032 Employee professional trainings 1,922,822 2,478,964 Intellectual services 491,300 671,432 Other non-production services 1,090,129 646,619 Entertainment 390,622 895,073 Insurance premiums 422,896 465,284 Bank charges 2,130,476 2,235,455 Communication Regulatory Agency fee 5,889,491 5,020,619 Membership fees 111,605 114,938 Administrative taxes 1,077,108 737,263 Fees charged by the youth cooperatives and organizations 2,168,424 1,575,894 Other non-material expenses 308,013 332,181 Loss on disposal of fixed and intangible assets 514,929 2,918,321 Shortages of fixed assets 34 166 Shortages of inventories 32,075 26,764 Provisions - 1,094,636 Allowance for impairment of short-term receivables 10,461,234 7,003,659 Allowance for impairment of long-term financial placements

due to fair value adjustment - 17,214 Write-off of material and spare parts 475,624 1,143,596 Write-off of receivables 207,004 73,155 Litigations ruled against the Company 2,011,725 139,829 Support to the Company’s Trade Union 405,413 377,877 Other expenses 253,955 471,819 173,612,436 159,612,412



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11. INTANGIBLE ASSETS In BAM

2009 and 2008

GSM

License

UMTS

License

Other

Licenses

Other Intangible

Assets

Total Intangible

Assets Cost Balance, January 1, 2008 117,182,447 - 1,458,977 13,124,858 131,766,282 Additions - - 2,742,561 5,171,721 7,914,282 Transfer from Telekard upon merger - - 419,418 - 419,418 Disposals - - (19,150) (342,648) (361,798) Balance, December 31, 2008 117,182,447 - 4,601,806 17,953,931 139,738,184 Balance, January 1, 2009 117,182,447 - 4,601,806 17,953,931 139,738,184 Additions - 22,510,899 2,774,349 850,779 26,136,027 Transfer from property under

construction - - 2,765,605 16,050,009 18,815,614 Disposals - - (194,242) (724,140) (918,382) Other - - - (2,471) (2,471) Balance, December 31, 2009 117,182,447 22,510,899 9,947,518 34,128,108 183,768,972 Accumulated Amortization Balance, January 1, 2008 25,064,023 - 452,612 6,814,024 32,330,659 Charge for the year 7,812,164 - 512,942 2,649,916 10,975,022 Transfer from Telekard upon merger - - 419,418 - 419,418 Disposals - - (14,069) (270,562) (284,631) Balance, December 31, 2008 32,876,187 - 1,370,903 9,193,378 43,440,468 Balance, January 1, 2009 32,876,187 - 1,370,903 9,193,378 43,440,468 Charge for the year 7,812,163 1,000,990 1,022,349 4,980,408 14,815,910 Disposals - - (185,002) (710,683) (895,685) Other - - - (2,471) (2,471) Balance, December 31, 2009 40,688,350 1,000,990 2,208,250 13,460,632 57,358,222 Net Book Value December 31, 2009 76,494,097 21,509,909 7,739,268 20,667,476 126,410,750 December 31, 2008 84,306,260 - 3,230,903 8,760,553 96,297,716 The GSM license represents a special permit to provide GSM services on the territory of Bosnia and Herzegovina that has been issued by the Communication Regulatory Agency of Bosnia and Herzegovina (“RAK”), for a period of fifteen years from the date of the issuance of the license commencing as of October 12, 2004. Another telecommunication license of significance relates to the license for the Universal Mobile Telecommunication Systems (UMTS license). Namely, on March 26, 2009, RAK issued to the Company a license to provide mobile services within universal mobile telecommunication systems (UMTS license), in effect from April 1, 2009 to April 1, 2024 (15 years).



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12. PROPERTY AND EQUIPMENT

In BAM 2009 and 2008

Property under Total Land Buildings Equipment Construction P&E Cost Balance, January 1, 2008 1,010,124 499,092,449 522,726,655 61,870,223 1,084,699,451 Additions - 1,118,704 4,823,894 156,864,423 162,807,021 Grants received - - - 1,702,700 1,702,700 Activations and transfers 44,486 32,627,249 103,623,583 (136,295,318) - Disposals - (2,842,814) (50,533,784) (107,193) (53,483,791) Shortage - - - (166) (166) Sale - - (62) - (62) Transfer from Telekard upon merger - - 3,651,792 - 3,651,792 Dismantling of equipment - - (2,955,180) 1,749,501 (1,205,679) Balance, December 31, 2008 1,054,610 529,995,588 581,336,898 85,784,170 1,198,171,266

Balance, January 1, 2009 1,054,610 529,995,588 581,336,898 85,784,170 1,198,171,266 Additions 29,723 430,456 2,596,101 104,037,811 107,094,091 Grants received - - - 618,280 618,280 Activations and transfers 43,751 37,952,659 56,811,870 (94,808,280) - Transfer to intangible assets - - - (18,815,614) (18,815,614) Disposals - (227,753) (4,942,885) (192,832) (5,363,470) Shortage - - - (34) (34) Sale - (36,150) - (213,674) (249,824) Dismantling of equipment - (2,783) (5,387,845) 2,829,229 (2,561,399) Other - - (167,418) - (167,418) Balance, December 31, 2009 1,128,084 568,112,017 630,246,721 79,239,056 1,278,725,878

Accumulated Depreciation Balance, January 1, 2008 - 257,500,509 291,111,036 - 548,611,545 Charge for the year - 23,371,298 48,330,087 - 71,701,385 Disposals - (2,800,435) (47,842,202) - (50,642,637) Sale - - (11) - (11) Transfer from Telekard upon merger - - 3,598,764 - 3,598,764 Dismantling of equipment - - (1,205,679) - (1,205,679) Other - - (569) - (569) Balance, December 31, 2008 - 278,071,372 293,991,426 - 572,062,798

Balance, January 1, 2009 - 278,071,372 293,991,426 - 572,062,798 Charge for the year - 25,105,852 59,063,890 - 84,169,742 Disposals - (149,112) (4,722,126) - (4,871,238) Sale - (4,555) - - (4,555) Dismantling of equipment - (2,783) (2,558,616) - (2,561,399) Other - - 2,471 - 2,471 Balance, December 31, 2009 - 303,020,774 345,777,045 - 648,797,819 Net Book Value December 31, 2009 1,128,084 265,091,243 284,469,676 79,239,056 629,928,059 December 31, 2008 1,054,610 251,924,216 287,345,472 85,784,170 626,108,468



31 31

13. ADVANCES FOR PROPERTY AND EQUIPMENT

In BAM December 31,

2009 December 31,

2008

Advances paid for property and equipment 3,247,572 2,884,057 Less: Provision for advances paid (26,868) (26,868) 3,220,704 2,857,189

14. EQUITY INVESTMENTS

In BAM Share

(%) December 31,

2009 December 31,

2008 Equity investments in subsidiaries - ТТ Inzеnjering d.o.o., Banja Luka 100 17,750 17,750 - M:TEL Multimedijalne komunikacije d.o.o.,

Zagreb, Croatia

100 5,476 5,476 23,226 23,226 Equity investments in other legal entities: - Center for International Law and International

Business Cooperation d.o.o., Banja Luka 22.97 400 400 Less: Provision for equity investments (10,970) (10,970) 12,656 12,656

15. OTHER FINANCIAL ASSETS

In BAM

December 31, 2009

December 31, 2008

Available-for-sale securities: - Nova banka a.d., Banja Luka 26,600 26,600 Securities held-to-maturity: - Long-term bonds of the Republic of Srpska 108,312 108,312 Less: Fair value adjustment (17,493) (9,800) 117,419 125,112

Available-for-sale securities are comprised of the shares of Nova banka a.d., Banja Luka (7 securities comprising 0.02% of the Bank’s capital). These shares are listed in an active, but insufficiently developed, financial market of the Republic of Srpska and valued at fair value as of the balance sheet date where the changes in fair values were credited or charged to investment revaluation reserves.



32 32

15. OTHER FINANCIAL ASSETS (Continued) Securities held-to-maturity relate to the bonds of the Republic of Srpska issued by the RS Ministry of Finance in order to pay the debt of budget beneficiaries towards to the Company. The bonds were issued with maturities of up to 15 years, starting from December 31, 2007 and an interest rate of 1.5% annually, with the grace period of 5 years and valued at amortized value applying the effective interest rate.

16. LONG-TERM RECEIVABLES AND BORROWINGS

In BAM

December 31, 2009

December 31, 2008

Long-term receivables: - Long-term receivables from the RS Government 5,698,807 - - Other long-term receivables 494,783 805,149 Less: Current portion of long-term receivables (Note 21) (459,505) (384,936)

Total long-term receivables 5,734,085 420,213 Long-term loans to employees 407,696 474,646 Less: current portion of long-term borrowings (Note 21) (72,511) (87,974) Total long-term loans to employees 335,185 386,672

Other long-term placements: - Komercijalna banka a.d., Banja Luka 5,000,000 5,000,000 - NLB Razvojna banka a.d., Banja Luka 2,107,500 2,107,500

Total other long-term placements 7,107,500 7,107,500 Total long-term receivables 13,176,770 7,914,385 Less: Fair value adjustment:

- long-term receivables from the RS Government (968,285) -

- other long-term receivables (5,517) (79,445) - long-term borrowings (95,678) (131,791) - long-term placements (386,617) (761,627)

(1,456,097) (972,863)

11,720,673 6,941,522



33 33

16. LONG-TERM RECEIVABLES AND BORROWINGS (Continued) Long-term receivables as of December 31, 2009 mostly relate to long-term receivables from the Government of the Republic of Srpska in the net amount of BAM 4,730,522. On June 22, 2009, in accordance with the Agreement on the Sale and Purchase of the Company’s Shares, the Company signed an agreement with the RS Government (the Ministry of Finance) on the settlement of liabilities of the RS Government towards the Company in the amount of BAM 5,698,807, based on the payables discharged to Pošte Srpske a.d., Banja Luka in the period of the Company’s privatization (Note 24). Pursuant to the Agreement, the RS Government committed to discharge the said liability in equal annual annuities over the period of 5 years with a 2-year grace period, without any interest accrued. The Company recognized assets and income arising from these assets (Note 6) following the closure of the aforementioned Agreement with the RS Government in 2009, where these long-term receivables represented contingent assets in the prior accounting periods given that the Company did not obtain the final consent of the RS Government (the Ministry concerned). Other long-term receivables stated as of December 31, 2009 relate to accounts receivable rescheduled for more than one year, and mostly relate to amounts due from the Clinical Center of Banja Luka. Namely, on February 12, 2008, the Company entered into a Receivable Rescheduling Agreement with the Banja Luka Clinical Center, as a debtor, and the Health Insurance Fund of the Republic of Srpska, as a guarantor. According to the aforementioned Agreement, the total rescheduled debt of BAM 849,552 is to be settled until December 31, 2011, by paying the installments of BAM 10,000 in the first 12 months and by paying the installments of BAM 30,398 in each of the remaining 24 months. Long-term loans to employees primarily relate to long-term loans approved to employees of the Company for the period of up to 25 years free of interest. Aforementioned loans extended are valued at amortized cost by applying the interest rate at which the Company could obtain long-term borrowings, which corresponds to the effective interest rate (5.5% p.a.). Other long-term placements as of December 31, 2009 in the amount of BAM 5,000,000 relate to assets deposited with Komercijalna banka a.d., Banja Luka extended for the period of 37 months, commencing November 27, 2007 at interest rate of 4% annually. Cash assets are deposited as collateral of the cash receivable to which the bank is entitled based on the Agreement on a long-term foreign currency loan with the related party “MTEL” d.o.o., Podgorica (the Republic of Montenegro) in the amount of EUR 2,500,000. Pursuant to the Agreement on the specially purposed depositing of assets, the bank has the right to collect its receivables from the entity “MTEL” d.o.o., Podgorica, as provided in the Agreement on the long-term loan in foreign currency. Other long-term placements as of December 31, 2009 of BAM 2,107,500 relate to the interest free time deposits with NLB Razvojna Banka a.d., Banja Luka for the period of 10 years, intended for a collateral of the repayment of a loan which NLB Razvojna banka a.d., Banja Luka (as of the signature date of the Agreement – VB banka a.d., Banja Luka) approved to the Company employees in the course of 2002. The Company pays the interest accrued on the aforementioned loans in the name of its employees.



34 34

17. INVENTORIES

In BAM December 31,

2009 December 31,

2008

Materials 13,574,688 11,783,276 Spare parts 514,443 555,988 Tools and fixtures 517,181 760,252 Goods for resale 6,053,881 11,597,927 Advances to suppliers 100,812 87,955 20,761,005 24,785,398

Less: Allowance for impairment of advances to suppliers (10,591) (10,591) 20,750,414 24,774,807

18. ACCOUNTS RECEIVABLE

In BAM December 31,

2009 December 31,

2008 Accounts receivable: - related parties 2,867,717 5,416,206 - domestic 71,422,318 61,632,530 - foreign 4,677,373 5,270,463 78,967,408 72,319,199 Less: Allowance for impairment of accounts receivable (34,730,888) (26,178,474) 44,236,520 46,140,725 The total gross accounts receivable as of December 31, 2009 amounted to BAM 78,967,408. The Company made provisions against the accounts receivable over 60 days in default, since the earlier experience shows that receivables over 60 days past due are usually uncollectible. The total amount of allowance for impairment thereof as of December 31, 2009 amounted to BAM 34,730,888 and it represents 43.98% of the total gross value of accounts receivable. The changes on the account of allowance for impairment of receivables are presented in Note 20 to these financial statements. The aging structure of accounts receivable as of December 31, 2009 and 2008 was as follows: In BAM

December 31,

2009 December 31,

2008

0-30 days 42,555,918 42,121,958 30-60 days 1,680,602 4,018,767 60-120 days 1,998,516 4,117,059 120-180 days 1,551,701 2,029,223 180-270 days 2,118,886 2,244,100 270-360 days 4,394,778 1,801,975 Over 360 days 24,667,007 15,986,117 78,967,408 72,319,199



35 35

18. ACCOUNTS RECEIVABLE (Continued) As of December 31, 2009, the matured accounts receivable up to 30 days past due, and from 31 to 60 days past due, for which the allowance for impairment had not been made, amounted to BAM 44,236,520. The average days outstanding’ for the year ended December 31, 2009 was 58 days. The Company calculates statutory penalty to its customers for all receivables past due as specified within each account. The statutory penalty is charged for each day of a customer’s default. Calculation of interest is performed automatically (billing), whereas the amount of interest accrued is presented on each telephone bill received by the user (as in fixed telephony so in mobile one).

19. OTHER RECEIVABLES

In BAM December 31,

2009 December 31,

2008 Prepaid income taxes 1,465,016 - Other prepaid taxes 322,285 249,007 Receivables for sick leave allowances 624,870 298,089 Receivables for RTV fees 111,904 141,353 Other 131,934 124,865 2,656,009 813,314 Less: Allowance for impairment of other receivables (172,851) (95,848) 2,483,158 717,466



36

20. ALLOWANCES FOR IMPAIRMENT OF RECEIVABLES AND PLACEMENTS

In BAM 2009 and 2008

Advances for Property and

Equipment

Other

Financial Assets

Long-Term

Accounts Receivable

Other Receivables

Short-Term

Financial Placements

Equity

Receivables and

Advances for

Investments Borrowings Inventories (Note 13) (Note 14) (Note 15) (Note 16) (Note 17) (Note 18) (Note 19) (Note 21) Total Balance, January 1, 2008 26,868 17,008 - 1,882,281 28,924 20,985,735 102,564 - 23,043,380 Charge for the year - - - - - 7,003,659 - - 7,003,659 Reversal of allowance for impairment of long-term

receivables and loans for the purpose of fair value adjustment - -

- (834,774)

- - - - (834,774) Allowance for impairment for fair value adjustment

of long-term receivables - -

- 17,214

- - - - 17,214 Fair value adjustment of other financial assets - - 9,800 - - - - - 9,800 Telekard merger - (6,038) - - - 51,045 5,900 - 50,907 Write-off - - (91,858) (18,333) (1,869,763) (12,616) - (1,992,570) Foreign exchange differences - - - 7,798 - - 7,798

Balance, December 31, 2008

26,868 10,970 9,800 972,863

10,591 26,178,474 95,848 - 27,305,414 Balance, January 1, 2009 26,868 10,970 9,800 972,863 10,591 26,178,474 95,848 - 27,305,414 Charge for the year - - - - - 10,384,231 77,003 - 10,461,234 Fair value adjustment of long-term receivables from

the RS Government - -

- 1,094,238

- - - - 1,094,238 Reversal of allowance for impairment of long-term

receivables and loans for the purpose of fair value adjustment - -

- (584,408)

- - - - (584,408) Fair value adjustment of other financial assets - - 7,693 - - - - - 7,693 Write-off (3,867) (1,829,398) - - (1,833,265) Transfer to short-term financial placements - - - (22,729) - - - 22,729 - Foreign exchange differences - - - - - (2,419) - - (2,419)

Balance, December 31, 2009

26,868

10,970

17,493 1,456,097

10,591 34,730,888 172,851 22,729 36,448,487



37 37

21. SHORT-TERM FINANCIAL PLACEMENTS

In BAM

December 31, 2009

December 31, 2008

Short-term deposits 26,050,000 30,000,000 Current portion of long-term placements (Note 16) 532,016 472,910 26,582,016 30,472,910 Less: Fair value adjustment of financial placements (22,729) - 26,559,287 30,472,910 The summary of short-term deposits is provided below:

In BAM

Maturity December 31,

2009 December 31,

2008 Short-term deposits: - Komercijalna banka a.d., Banja Luka June 25, 2010 13,500,000 10,000,000 - Intesa Sanpaolo Bank d.d., Sarajevo June 26, 2010 6,500,000 - - NLB Razvojna banka a.d., Banja Luka June 25, 2010 6,000,000 6,000,000 - NLB Razvojna banka a.d., Banja Luka Dec 31, 2010 50,000 - - Volksbank a.d., Banja Luka - - 7,000,000 - Hypo Alpe-Adria-Bank a.d., Banja Luka - - 4,000,000 - Unicredit Bank a.d., Banja Luka - - 3,000,000 26,050,000 30,000,000 The Company’s short-term deposits with commercial banks in the Republic of Srpska are placed for the period of up to one year at an interest rate ranging from 2.5% to 6.2% annually.

22. PREPAYMENTS

In BAM December 31,

2009 December 31,

2008 Accrued but uninvoiced income from domestic and

international traffic 1,512,996 1,758,060 Prepaid expenses 1,328,291 737,480 Advance payment of value added tax 11,239 2,963,692 Deferred input and output advance invoices for the

purpose of VAT accrual 2,435,875 3,781,653 Other prepayments 566,998 95,137 5,855,399 9,336,022



38 38

22. PREPAYMENTS (Continued)

Deferred input and output invoices necessary for the accrual of VAT as of December 31, 2009 amounted to BAM 2,435,875 and were associated with deferrals made in accordance with Article 55 of the Value Added Tax Law (Official Gazette of BiH numbers 9/05, 35/05), stipulating that the receiver of the advance is under obligation to issue an invoice to the payer before goods/services are delivered. The advance invoice represents the basis for recording output VAT by seller and input VAT by the purchaser. In addition, when recording these business transactions, the Company performed adequate deferrals on the positions of accruals (Note 31).

23. CASH EQUIVALENTS AND CASH

In BAM

December 31, 2009

December 31, 2008

Gyro accounts 83,383,956 81,797,490 Cash on hand 22,301 36,396 Foreign currency accounts 8,481,670 100,482,136 91,887,927 182,316,022

24. CAPITAL

Share Capital

The Company’s share capital structure (as per the Book of Shareholders maintained by the Republic of Srpska Central Register of Securities A.D., Banja Luka) effective as of December 31, 2009 and 2008, was as provided below: December 31,

2009 December 31,

2008

% % “Telekom Srbija” a.d., Beograd, Serbia

319,428,193

65.01

319,428,193

65.01

RS Pension and Disability Insurance Fund

49,183,532

10.01

49,183,532

10.01

ZIF Zepter fond, Banja Luka 25,224,888 5.13 25,224,888 5.13 RS Restitution Fund 24,715,439 5.03 24,715,439 5.03 Other shareholders 72,831,703 14.82 72,831,703 14.82 491,383,755 100.00 491,383,755 100.00 The individual par value of a Company share as of December 31, 2009 was BAM 1.00. The Company’s shares are listed on Banja Luka Securities’ Exchange in the Republic of Srpska (whose market is active, but insufficiently developed). The market value of a single share at December 31, 2009 was BAM 1.49 (December 31, 2008: BAM 0.95). Earnings and dividend per share are presented in Note 35 to the financial statements.



39 39

24. CAPITAL (Continued) Legal Reserves Legal reserves represent allocation from profit distribution pursuant to Article 51 of the Law on Business Entities, in the amount of 5% of the profit for the current year, until the reserves reached the statutory proportion of no less than 10% of the Company’s share capital. In case legal reserves decreased, they have to be supplemented until they reach the prescribed level. Other reserves - reserves arising on the execution of the investment commitment As of December 31, 2009, other reserves in the amount of BAM 97,791,500 entirely related to capital reserves formed during 2008 based on the execution of the commitment to invest undertaken by the majority owner (“Telekom Srbija” a.d., Beograd), as the purchaser of the majority block of the Company’s shares from 2007. Pursuant to the Sales and Purchase Agreement for the Company’s shares dated January 19, 2007, the Purchaser (“Telekom Srbija”) committed to invest into the Company within a year from the transaction date (June 18, 2007), in cash or in kind, an amount equaling or exceeding EUR 50,000,000 (the final date for fulfillment of the investing commitments was extended for the additional 6 months, i.e. until December 18, 2008). The majority owner paid in the entire amount within the time envisaged, and the Company recorded these payments amounting to BAM 97,791,500 as other reserves. Company Privatization On January 19, 2007, the Republic of Srpska Directorate of Privatization signed in the name and on behalf of the Republic of Srpska Government a Sale and Purchase Agreement for the state-owned shares in the Company (319,428,193 shares or 65.005851% of the total share capital) with Telekom Srbija a.d., Beograd (the “Purchaser”) for the total amount of EUR 646,000,000 (equivalent of BAM 1,263,466,180). Upon obtaining the approval of all competent institutions in the Republic of Srpska and Bosnia and Herzegovina, the process of registration of the aforementioned transaction finalized on June 18, 2007, ever since the Buyer has been registered in the Central Register of Securities of the Republic of Srpska as the owner of 319,428,193 shares, i.e., 65.005851% of the total share capital of the Company capital. On June 28, 2007, the change in the ownership structure of the Company was registered with the Basic Court in Banja Luka (Decision number 1-9317-00) based on the Shareholders’ Book as of June 18, 2007.

Pursuant to the Sale and Purchase Agreement, the Seller (the Directorate for Privatization of the Republic of Srpska, on behalf of the Republic of Srpska Government) committed to compensate to the Company 50% of the amount which the Company pays to Pošte Srpske a.d., Banja Luka of no more than BAM 12,200,000, i.e., compensate for the total amount in excess of BAM 12,200,000 based on the accrued and paid consideration to Pošte Srpske in 2007 (the consideration which the Company allocated from its profit for Pošte Srpske in the prior periods), as well as based on the lease of business premises which the Company rented from Pošte Srpske. On June 22, 2009, the Company executed an Agreement with the RS Government (the Ministry of Finance) regarding the settlement of the Government’s liabilities to the Company thereof amounting to BAM 5,698,807 (Note 16). The RS Government committed to discharge the forgoing liability in equal annual annuities within the period of five-year interest free, and with a two-year grace period.



40 40

25. LONG-TERM LIABILITIES In BAM

December 31, 2009

December 31, 2008

a) Long-term borrowings: - cash loans 10,367,869 25,896,373 - commodity loans 79,940,976 65,167,034 90,308,845 91,063,407 b) Other long-term liabilities 62,237,350 50,413,754 Total long-term portion of liabilities 152,546,195 141,477,161 Less: current portion: - long-term borrowings (28,735,695) (30,380,978) - other long-term liabilities (12,249,072) (11,610,495) (40,984,767) (41,991,473) 111,561,428 99,485,688

a) Long-term borrowings Current Portion Long-Term Portion

December 31,

2009 December 31,

2008 December 31,

2009 December 31,

2008 Cash loans – at amortized cost: EBRD, loan no. 26590 7,113,193 14,226,387 - 7,113,193 Republic of Srpska Ministry of Finance

(EBRD, loan no. 676) 1,302,117 1,302,117 1,952,559 3,254,676 8,415,310 15,528,504 1,952,559 10,367,869 Commodity loans - at amortized cost: Nokia Siemens Networks Osterreich GmbH,

Vienna, Austria 4,358,533 4,358,533 37,195,972 34,587,773 Huawei Technologies Co. Ltd., Shenzhen,

People’s Republic of China 7,421,101 4,168,805 10,168,239 9,389,124 Commerzbank AG, Hamburg Branch,

Germany 2,150,377 - 8,600,277 - Unicredit Bank Austria AG, Slovakia 3,761,754 - - - Alcatel - Lucent, S.p.A., Milan, Italy 277,304 3,591,693 - 277,305 Intracom Telecom d.o.o., Beograd, Srbija 1,156,649 1,156,649 578,324 1,734,974 Spinnaker New Technologies d.o.o.,

Beograd, Serbia 813,620 813,620 - 813,620 S&T Serbia d.o.o., Beograd, Serbia 381,047 763,174 - 381,590 Government of the Kingdom of Spain - - 3,077,779 3,130,174 20,320,385 14,852,474 59,620,591 50,314,560 28,735,695 30,380,978 61,573,150 60,682,429

The average interest rate accrued on long-term borrowings (cash and commodity loans) amounts to six-month EURIBOR as increased by the margin, ranging from 0.8% to 2.5% annually (2008: six-month EURIBOR as increased by the margin ranging from 1% to 2.5% annually). The outstanding interest payables related to the aforementioned loans are presented within Other short-term liabilities as of December 31, 2009 (Note 32).



41 41

25. LONG-TERM LIABILITIES (Continued)

a) Long-term borrowings (Continued) a1) The long-term liabilities arising on loans obtained from the European Bank for

Reconstruction and Development, as of December 31, 2009 totaling BAM 7,113,193 relate to the liabilities arising from the loan agreement numbered 26590 with the European Bank for Reconstruction and Development (EBRD). The aforementioned loan agreement contains loan covenants which the Company must comply with, involving the maintenance of certain ratios, calculated based on the financial statements prepared in accordance with International Financial Reporting Standards and International Accounting Standards. Given that the loan fully matures in February 2010 and is therefore classified within current liabilities, and since the Company fully discharged the liability thereof when due the Company’s management assesses that it is unnecessary to calculate the aforementioned ratios and quotient as of December 31, 2009 and that no adverse effects could arise thereof.

a2) The long-term liabilities to Nokia Siemens Networks Osterreich GmbH, Vienna (Austria) as

of December 31, 2009 totaling BAM 41,554,505 pertain to the commodity loan, pursuant to several Agreements on delivery of mobile equipment for spreading the GSM network and UMTS network. Based on the Agreements, the Company will acquire the aforementioned equipment from two suppliers, i.e., Nokia Siemens Networks Osterreich GmbH, Vienna (Austria) and Nokia Siemens Networks Oy, Espoo (Finland).

On September 4, 2009, Nokia Siemens Networks Osterreich GmbH, Vienna (Austria) ceded a portion of its receivables arising from the aforementioned commodity loans in the amount of BAM 10,750,654 to Commerzbank AG, Hamburg Branch, Germany.

a3) The long-term liabilities towards Huawei Technologies Co., Ltd., Shenzhen, (People’s

Republic of China) amounting to BAM 17,589,340 at December 31, 2009, relate to the liabilities for the commodity loan, and originate in two Agreements on the acquisition of telecommunication equipment.

On February 23, 2009, the creditor Huawei Technologies Co., Ltd., Shenzhen, (People’s Republic of China) ceded the portion of its receivables arising from the aforementioned commodity loans obtained to Unicredit Bank Austria AG, Slovakia in the amount of BAM 6,253,207.

b) Other Long-Term Liabilities Current Portion Long-Term Portion

December 31,

2009 December 31,

2008 December 31,

2009 December 31,

2008 At amortized cost: - Communication Regulatory Agency of Bosnia and Herzegovina a) for GSM license 12,249,072 11,610,495 26,554,187 38,803,259 b) for UMTS license - - 23,434,091 - 12,249,072 11,610,495 49,988,278 38,803,259 Other long-term liabilities as of December 31, 2009 in the amount of BAM 62,237,350 relate to the liabilities towards the Communication Regulatory Agency of Bosnia and Herzegovina (“RAK”), based on the two telecommunication licenses allocated (GSM and UMTS licenses, Note 11).



42 42

25. LONG-TERM LIABILITIES (Continued)

The maturities of long-term borrowings and other liabilities are presented in the following table:

In BAM December 31,

2009 December 31,

2008

Current portions 40,984,767 41,991,473 Between one and two years 36,229,800 40,266,765 Between two and three years 27,973,235 20,249,601 Between three and four years 12,565,979 18,640,390 Between four and five years 12,164,901 4,358,533 After five years 22,627,513 15,970,399 Total long-term portion of borrowings and other long-term liabilities 111,561,428 99,485,688 152,546,195 141,477,161

26. DEFERRED INCOME

In BAM December 31,

2009 December 31,

2008

Donations received 7,772,705 8,295,675 7,772,705 8,295,675 Deferred income arising from the grants received as of December 31, 2009 amounted BAM 7,772,705 (December 31, 2008 - BAM 8,295,675) entirely relates to the net book value of equipment donated to the Company in the period until December 31, 2009 which was recorded in accordance with IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance,” as deferred income. The movements in deferred income in the year ended December 31, 2009 and 2008 were as follows: In BAM Year Ended December 31, 2009 2008 Balance, January 1 8,295,675 9,217,693 Grants in the form of equipment 618,280 1,702,700 Grants in the form of inventories - 63,994 Released provisions for grants received (1,141,250) (2,688,712) Balance, December 31 7,772,705 8,295,675



43 43

27. EMPLOYEE BENEFITS

Provisions for employee benefits as of December 31, 2009 in the amount of BAM 10,030,375 (December 31, 2008 - BAM 11,346,542) relate to the provisions formed based on the calculation of present value of accumulated employee entitlements to retirement benefits and jubilee awards in accordance with IAS 19 “Employee Benefits”. The basic assumptions applied in the calculation of employee benefits are disclosed in Note 3.18.

The movements on the employee benefits in year ended December 31, 2009 and 2008 were as follows:

In BAM Year Ended December 31, 2009 2008 Balance, January 1 11,346,542 10,251,906 Charge for the year - 1,094,636 Released provisions for retirement benefits (1,316,167) - Balance, December 31 10,030,375 11,346,542

28. PROVISIONS

In BAM December 31,

2009 December 31,

2008

Litigations 131,333 191,333 Other contingencies 1,150,493 1,150,493 1,281,826 1,341,826 Provisions for other contingencies as of December 31, 2009 in the aggregate amount of BAM 1,150,493 entirely relate to provisions formed based on the adjustment proposed by the Main Office for the Republic of Srpska Public Sector Auditing, based on the Auditors’ Report on Company’s financial statements for the period from January 1, 2003 through December 31, 2004. Namely, the aforementioned Report requires that the Company adjusts its financial statements for the year 2004, based on the unrecognized multilateral compensation dating from 2002, in the amount of BAM 1,150,493 (the provisions relate to the operating units whose entitlement to multilateral compensation was not disputed until the auditors' report issuance date, as for other operating units whose entitlement to multilateral compensation was disputed, the Company did record the respective liabilities).



44 44

28. PROVISIONS (Continued)

The movements on provisions in the year ended December 31, 2009 and 2008 were as follows:

In BAM Year Ended December 31, 2009 2008 Balance, January 1 1,341,826 2,628,385 Reversal of provisions in the amount of legal suits

paid - (506,170) Reversal of provisions for legal suits resolved

favorably for the Company (60,000) (297,299) Reversal of provisions for potential losses incurred by Telekard

(Gener s.a., Athens, Greece) - (483,090) Balance, December 31 1,281,826 1,341,826

29. SHORT-TERM BORROWINGS

In BAM Amount in

Currency December

31, 2009 December 31,

2008

GENER S.A., Athens (Greece) EUR 247,000 483,090 483,090 483,090 483,090 Short-term borrowings as of December 31, 2008 totaling BAM 483,090 entirely relate to a long-term loan of the closed-down related party “Telekard, Telefonske usluge” d.o.o., Banja Luka towards its previous owner GENER S.A., Athens (Greece). The aforementioned liability was assumed by the Company in 2008, once Telekard was merged. The liability pertains to the value of equipment and the worth of services rendered with reference to the system of the public payphones on the territory of the Republic of Srpska delivered upon the establishment of Telekard. On August 30, 2002, Telekard signed an Agreement with GENER which stipulates that the Telekard’s aggregate amount of debt to GENER as of June 30, 2002 amounted to EUR 480,000 (the equivalent of BAM 938,798) and where GENER renounced arising on the commodity loan in the amount of EUR 207,000, as well as its right to charge interest to Telekard, if the Telekard settles its liabilities until June 30, 2005. Subsequent to the assumption of the aforedescribed liabilities from Telekard, the Company will not pay the aforementioned liabilities until it has been determined whether the Greek legal entity in question still exists or it is in the liquidation process.



45 45

30. ACCOUNTS PAYABLE In BAM

December 31, 2009

December 31, 2008

Accounts payable: - related parties 2,703,048 13,163,408 - domestic 24,480,823 22,541,809 - foreign 17,039,099 13,055,265 - uninvoiced investments and services 2,281,786 2,659,477 46,504,756 51,419,959 Accounts payable are non-interest bearing. The Company regularly settles its liabilities to suppliers and has certain financial risk management policies in place which ensure that the liabilities are settled within the agreed time lines. The average days outstanding for payables in the year ended December 31, 2009 counted 72 days. The aging structure of accounts payable as of December 31, 2009 and 2008 was as follows: In BAM

December 31,

2009 December 31,

2008 0-30 days 43,655,465 47,510,120 30-60 days 750,918 377,583 60-120 days 961,170 95,134 120-180 days 478,892 1,132,329 180-270 days 658,311 1,704,811 270-360 days - 599,982 46,504,756 51,419,959

31. ACCRUALS In BAM

December 31, 2009

December 31, 2008

Deferred income from the sale of prepaid cards in mobile telephony (Note 3.1.2) 5,045,879 5,805,104 Deferred income from the sale of rights to top-up in the ensuing

periods (within MEA, Note 3.2) 1,283,563 1,743,559 Estimated expenses in international traffic for services received in the current year, but invoiced in the subsequent accounting period 2,561,430 2,555,370 Deferred input and output advance invoices for the purposes of

VAT calculation (Note 22) 2,149,819 3,625,122 Accrued VAT - 680,853 Other accruals 369,105 274,017 11,409,796 14,684,025



46 46

32. OTHER CURRENT LIABILITIES

In BAM December 31,

2009 December 31,

2008 Advance and prepayments received 2,393,817 3,000,379 Liabilities for incorrect payments of customers 284,734 272,690 Liabilities for RTV fees 138,421 210,182 Damages incurred in operations 1,833,338 - Other operating liabilities 606 605 Salaries and benefits - 392 Taxes and contributions on salaries - 208,217 Other taxes and customs’ duties from acquisitions - 5,674 Forest charge 175,953 251,385 Other taxes and customs’ duties charged to expenses 425,124 103,561 Withholding taxes 1,208 - Interest payables 2,209,690 1,400,728 Sponsorships and financial assistances 55,997 59,997 Value added tax payable 1,348,210 1,637,948 Retirement benefits - 3,242,368 Other liabilities 1,719 19,108 8,868,817 10,413,234

The liabilities arising from damages incurred in operations stated as of December 31, 2009 in the amount of BAM 1,833,338 entirely relate to the amounts payable to the company "Telrad" d.o.o., Bijeljina based on the decision enacted by the District Court in Bijeljina as of September 29, 2009. According to the aforementioned Decision, the Company was ordered to discharge its debt to this creditor in the amount of BAM 1,833,338, as well as the penalty interest accrued in the period from October 5, 2001 until the settlement date. Given that Article 4 of the Law on the Amendments and Supplements to the Law on Penalty Interest Rate sets forth that the amount of accumulated penalty cannot exceed the amount of principal debt, the Company calculated and accounted for the corresponding amount of penalty interest rate, in the amount of the principal debt totaling BAM 1,833,338. The aforementioned liability is recorded within the line item of Interest payables.

33. INCOME TAXES

a) Components of Income Tax In BAM

Year Ended December 31, 2009 2008 Current tax expense: - Company’s income taxes 11,308,279 13,820,476 - Taxes on the income earned by the operating units of Brčko

District 240,837 117,531 11,549,116 13,938,007 -Deferred income taxes – decrease/(increase) in deferred tax

assets 75,570 (161,283) 11,624,686 13,776,724



47 47

33. INCOME TAXES (Continued)

b) Numerical Reconciliation between Tax Expense and the Product of the Accounting Results Multiplied by the Statutory Tax Rate

In BAM

Year Ended December 31, 2009 2008 Net profit before taxation 114,257,901 132,986,227 Income taxes calculated at the rate of 10% 11,425,790 13,298,623 Tax effects of the interest income compounded on deposits with banks (413,195) (226,921) Tax effects of unrecognized salary and benefit costs 31,080 73,732 Tax effects of unrecognized shortages in material 3,211 2,419 Tax effects of allowance for impairment of accounts receivable 525,775 561,463 Tax effects of unrecognized portion of entertainment expenses 30,945 89,507 Tax effects of the delay in payments of taxes and contributions - 260 Telekarda’s tax credits - (22,357) Other 21,080 (2) Income taxes 11,624,686 13,776,724

c) Deferred tax assets In BAM


Balance, January 1 780,998 619,715 Temporary maintenance costs exceeding 5% of the net book value of property and equipment 59,084 150,000 Temporary differences for capitalization of interest expenses for capital expenditures (134,654) (43,567) Temporary differences for depreciation costs of property placed into use in the year - 54,850 (Decrease)/Increase in the period (75,570) 161,283 Balance, December 31 705,428 780,998

d) Prepaid income taxes/(Current tax liabilities) In BAM

December 31,

2009 December 31,

2008

Prepaid income taxes 1,465,016 - Current tax liabilities - (5,902,266)



48 48

34. RELATED PARTY TRANSACTIONS

The following table presents the receivables and payables arising from the related party transactions:

In BAM December 31,

2009 December 31,

2008 STATEMENT OF FINANCIAL POSITION ASSETS a) Equity investments - TT Inženjering d.o.o., Banja Luka 17,750 17,750 - M:TEL, Multimedijalne komunikacije d.o.o., Zagreb,

Croatia 5,476 5,476 23,226 23,226 Less: Provision for equity investments in subsidiaries (10,970) (10,970) 12,256 12,256 b) Accounts receivable: - Telekom Srbija a.d., Beograd 2,817,221 5,348,731 - MTEL d.o.o., Podgorica 49,773 66,725 - TT Inženjering d.o.o., Banja Luka 723 750 2,867,717 5,416,206 c) Calculated, but uninvoiced income from international traffic: - Telekom Srbija a.d., Beograd - 60,421 - MTEL d.o.o., Podgorica - 22,523 - 82,944 Total receivables 2,879,973 5,511,406

LIABILITIES a) Accounts payables: - Telekom Srbija a.d., Beograd (2,316,878) (12,559,129) - MTEL d.o.o., Podgorica - (134) - TT Inženjering d.o.o., Banja Luka (386,170) (604,145) (2,703,048) (13,163,408) b) Estimated costs of international traffic - Telekom Srbija a.d., Beograd (150,611) (34,096) - MTEL d.o.o., Podgorica (15,687) - (166,298) (34,096) Total liabilities (2,869,346) (13,197,504) Receivables/(Payables), net 10,627 (7,686,098)



49 49

34. RELATED PARTY TRANSACTIONS (Continued)

In BAM Year Ended December 31, 2009 2008 STATEMENT OF COMPREHENSIVE INCOME INCOME a) Sales of services: - Telekom Srbija a.d., Beograd 20,567,839 31,696,403 - MTEL d.o.o., Podgorica 456,081 599,005 - TT Inženjering d.o.o., Banja Luka 8,639 9,015 - TELEKARD, Telefonske usluge d.o.o., Banja Luka - 4,792

Total income 21,032,559 32,309,215

EXPENSES a) Costs of interoperator calculations exclusive of

“roaming” - Telekom Srbija a.d., Beograd (14,616,086) (12,658,227) b) Costs of “roaming” - Telekom Srbija a.d., Beograd (1,900,823) (1,577,441) - MTEL d.o.o., Podgorica (817,294) (686,295) (2,718,117) (2,263,736) c) Lease of third party transmission lines - Telekom Srbija a.d., Beograd (336,373) (374,890) d) Costs of employee secondment - Telekom Srbija a.d., Beograd (131,618) (139,032) e) Cost of internet access - Telekom Srbija a.d., Beograd (672,007) (550,135) f) Other non-production services - MTEL d.o.o., Podgorica (983) (1,252) - TT Inženjering d.o.o., Banja Luka (55,611) (48,926) (56,594) (50,178) Total expenses (18,530,795) (16,036,198) Income, net 2,501,764 16,273,017

Remunerations to members of the key management, Board of

Directors and Supervisory Board (1,064,345) (1,033,962)



50 50

35. EARNINGS AND DIVIDENDS PER SHARE

In BAM Year Ended December 31, 2009 2008 Profit for the period 102,633,215 119,209,503 Weighted average number of shares 491,383,755 491,383,755 Earnings per share (Basic) 0.2089 0.2426

On April 3, 2009, the Company’s Assembly enacted the Decision on the Distribution of Profit Earned in 2008, whereby the profit distributed to the equity holders in accordance with Article 225 of the Law on Enterprises and the Company’s Statute as follows:

- payment of dividends to the shareholders in the amount of BAM 113,249,028, - allocation into legal reserves of BAM 5,960,475.

Also, on May 8, 2009, the Shareholder Assembly enacted a decision on the distribution of profit for the first quarter of 2009 (interim dividend, Note 3.19) in the amount of BAM 18,884,770, as well as on the distribution of prior period retained earnings in the amount of BAM 30,000,000. The liabilities for the outstanding dividends owed to shareholders as of December 31, 2009 amounted to BAM 6,843,078 (2008 – BAM 3,861,803). Dividend per share for the financial year ended December 31, 2009 amounted to BAM 0.3300 (2008: BAM 0.0459).

36. LITIGATIONS

Various legal proceedings have been filed against the Company by its suppliers seeking monetary damages with respect to claimed debt for the goods and/or services provided. At December 31, 2009, the total amount of monetary damages claimed by the Company in legal proceedings amounted to BAM 39,330,966. Concurrently, the estimated contingent liabilities arising from lawsuits filed against the Company totaled BAM 5,495,213, without the amount of potential penalty interest. In addition, as previously disclosed in Note 32, based on the ruling of the District Court in Bijeljina on September 29, 2009, the Company also recorded the liability towards the Plaintiff ("Telrad" d.o.o., Bijeljina) equaling the amount of principal debt of BAM 1,833,338, as well the corresponding amount of penalty interest. Moreover, the Company’s management assessed the additional contingent liabilities which the Company could incur in other litigations. Pursuant to the assessment, the losses contingent on other litigations as of December 31, 2009 totaled BAM 131,333 (Note 27). The Company’s management assesses that there could be no additional materially adverse effects of other litigations and that the Company will not be exposed to materially significant losses thereof.



51 51

37. SEGMENT REPORTING 37.1 Segment information

The Company has adopted IFRS 8 - "Operating Segments" with effect from 1 January 2009. IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. Segment information reported was analysed on the basis of the types of services provided by the Company’s operating divisions. As of December 31, 2009, the Company’s reportable segments, under IFRS 8, are therefore as follows:

1. Fixed telephony and internet, and 2. Mobile telephony.

Information regarding the Company’s reportable segments is presented below. 37.2 Segment revenue and results The segment revenue and results for the year ended December 31, 2009 are presented in the review which follows: In BAM

2009 Fixed

Telephony

Mobile

and Internet

Telephony

Total

Operating income

Sale of goods and services 216,676,070

259,497,983

476,174,053 Other operating income 7,543,990

3,700,718

11,244,708

Inter-segment calculations 75,367,982

90,984,864

166,352,846

299,588,042

354,183,565

653,771,607

Operating expenses Cost of commercial goods sold (248,626)

(4,747,383)

(4,996,009)

Direct materials consumed (373,692)

(754,861)

(1,128,553) Materials, energy and fuel (5,587,963)

(2,743,190)

(8,331,153)

Staff costs (60,525,373)

(22,386,095)

(82,911,468) Depreciation and amortization (52,126,816)

(46,858,836)

(98,985,652)

Indirect taxes and contributions (612,414)

(616,591)

(1,229,005) Other operating expenses (76,246,510)

(97,365,926)

(173,612,436)

Inter-segment calculations (90,984,864)

(75,367,982)

(166,352,846)

(286,706,258)

(250,840,864)

(537,547,122)

PROFIT FROM OPERATIONS 12,881,784

103,342,701

116,224,485

Finance income /(expenses) Interest income 2,783,907

2,662,132

5,446,039

Other finance income 99,795

138,420

238,215 Interest expense (2,030,362)

(5,693,142)

(7,723,504)

Foreign exchange gains, net 18,585

54,081

72,666

871,925

(2,838,509)

(1,966,584)

Profit before taxation 13,753,709

100,504,192

114,257,901 Income taxes (2,988,311)

(8,636,375)

(11,624,686)

NET PROFIT 10,765,398

91,867,817

102,633,215



52 52

37. SEGMENT REPORTING (Continued) 37.2 Segment revenue and results (continued)

The segment revenue and results for the year ended December 31, 2008 were as presented in the table below:

In BAM

2008 Fixed

Telephony and Internet

Mobile Telephony

Total

Operating income Sale of goods and services 221,854,140

241,584,016

463,438,156

Other operating income 3,164,309

4,438,558

7,602,867 Inter-segment calculations 68,637,443

99,215,740

167,853,183

293,655,892

345,238,314

638,894,206

Operating expenses Cost of commercial goods sold (40,407)

(6,289,922)

(6,330,329)

Direct materials consumed (157,833)

(1,210,434)

(1,368,267) Materials, energy and fuel (5,774,261)

(2,464,006)

(8,238,267)

Staff costs (60,287,039)

(15,561,077)

(75,848,116) Depreciation and amortization (43,398,749)

(39,277,658)

(82,676,407)

Indirect taxes and contributions (848,579)

(748,953)

(1,597,532) Other operating expenses (73,319,098)

(86,293,314)

(159,612,412)

Inter-segment calculations (99,215,740)

(68,637,443)

(167,853,183)

(283,041,706)

(220,482,807)

(503,524,513)

PROFIT FROM OPERATIONS 10,614,186

124,755,507

135,369,693

Finance income /(expenses) Interest income 2,083,695

1,552,372

3,636,067

Other finance income 30,772

375,852

406,624 Interest expense (1,647,118)

(4,648,500)

(6,295,618)

Foreign exchange losses, net (64,734)

(65,805)

(130,539)

402,615

(2,786,081)

(2,383,466)

Profit before taxation 11,016,801

121,969,426

132,986,227 Income taxes (4,309,049)

(9,467,675)

(13,776,724)

NET PROFIT 6,707,752

112,501,751

119,209,503 Segment revenue and results reported above (for 2009 and 2008) represents revenue generated from external customers. There were no inter-segment sales during the year (2009 and 2008). The accounting policies of the reportable segments are the same as the Company’s accounting policies described in the Note 3. Segment profit represents the profit earned by each segment with allocation of all costs, on the basis of the revenues earned by individual reportable segments. This is the measure reported to the chief operating decision makers for the purposes of resource allocation and assessment of segment performance. The Company’s revenue from its major services is presented in detail in the Note 5 of financial statements.



53 53

37. SEGMENT REPORTING (Continued) 37.3 Segment assets and liabilities

Segment assets and liabilities as of December 31, 2009 are provided in the table below: In BAM

Fixed

December 31, 2009


Mobile Telephony

Total

ASSETS

Non-current assets Intangible assets 8,189,640

118,221,110

126,410,750

Property and equipment 393,183,202

236,744,857

629,928,059 Advances for property and equipment 1,481,523

1,739,181

3,220,704

Equity investments 5,822

6,834

12,656 Other financial assets 54,013

63,406

117,419

Long-term receivables and borrowings 8,007,109

3,713,564

11,720,673 Deferred tax assets 230,555

474,873

705,428

411,151,864

360,963,825

772,115,689

Current assets Inventories 11,830,032

8,920,382

20,750,414

Accounts receivable 26,977,665

17,258,855

44,236,520 Other receivables 1,254,731

1,228,427

2,483,158

Short-term financial placements 12,455,885

14,103,402

26,559,287 Prepayments 2,038,984

3,816,415

5,855,399

Cash and cash equivalents 43,431,040

48,456,887

91,887,927

97,988,337

93,784,368

191,772,705

Total assets 509,140,201

454,748,193

963,888,394

LIABILITIES Non-current liabilities Long-term liabilities 28,323,649

83,237,779

111,561,428

Deferred income 2,370,787

5,401,918

7,772,705 Liabilities for employee benefits 4,613,972

5,416,403

10,030,375

Provisions 589,640

692,186

1,281,826

35,898,048

94,748,286

130,646,334

Current liabilities Current portion of long-term liabilities 14,330,970

26,653,797

40,984,767

Short-term loans 483,090

-

483,090 Accounts payable 23,387,649

23,117,107

46,504,756

Accruals 2,128,699

9,281,097

11,409,796 Dividend payables 3,147,816

3,695,262

6,843,078

Other current liabilities 3,521,748

5,347,069

8,868,817

46,999,972

68,094,332

115,094,304

Total liabilities 82,898,020

162,842,618

245,740,638



54 54

37. SEGMENT REPORTING (Continued) 37.3 Segment assets and liabilities (Continued)

Segment assets and liabilities as of December 31, 2008 are provided in the table below: In BAM

Fixed

December 31, 2008


Mobile Telephony

Total

ASSETS Non-current assets Intangible assets 3,805,679

92,492,037

96,297,716


214,866,014


1,428,595

2,857,189

Long-term financial placements 3,737,590

3,341,700


480,710

780,998

420,514,605

312,609,056

733,123,661


11,536,068

24,774,807


12,602,897

46,140,725 Other receivables 530,379

187,087

717,466

Short-term financial placements 15,438,257

15,034,653

30,472,910 Prepayments 3,717,204

5,618,818

9,336,022


91,184,456

182,316,022

157,593,973

136,163,979

293,757,952


448,773,035

1,026,881,613

LIABILITIES Non-current liabilities Long-term provisions and deferred income 9,590,943

11,393,100

20,984,043

Long-term liabilities 30,341,214

69,144,474

99,485,688


26,800,984

41,991,473

Short-term borrowings 483,090

-

483,090 Accounts payable 27,915,586

23,504,373

51,419,959

Accruals 3,062,679

11,621,346

14,684,025 Other short-term liabilities 6,787,008

13,390,295

20,177,303

53,438,852

75,316,998

128,755,850

Total liabilities 93,371,009

155,854,572

249,225,581 For the purposes of monitoring segment performance and allocating resources between segments, all assets and liabilities are allocated to reportable segments. Assets used jointly by reportable segments, as well as liabilities for which reportable segments are jointly liable, are allocated on the basis of the revenues earned by individual reportable segments.

37.4 Information about major customers

Due to nature of telecommunication services, the Company does not have material concentration with reference to major customers, as it has a great number of unrelated customers with individually small turnover.

37.5 Geographical information

The Company’s country of origin and, at the same time, the center of business operations is Bosnia and Herzegovina. The Company generates most of its income on the territory of Bosnia and Herzegovina (88% of total operating income).



55 55

38. FINANCIAL INSTRUMENTS Capital Risk Management There is no formal capital risk management framework implemented in the Company. The Management Board of the Company focuses on capital risk on a case basis to mitigate risks and ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of debt, which includes the borrowings (disclosed in Note 25), cash and cash equivalents and equity, comprising issued capital, reserves and retained earnings. The Management Board of the Company reviews the capital structure on an as needed basis. As a part of this review the Board considers the cost of capital and the risks associated with each class of capital. Based on this review, the Company will balance its overall capital structure through the payment of dividends, new permanent investments as well as the issue of new debt or the redemption of existing debt. The Company’s overall strategy remains unchanged. The debt to equity ratios as of the period end were as follows:

In BAM December 31,

2009 December 31,

2008

Indebtedness (a) 153,029,285 141,960,251 Cash and cash equivalents 91,887,927 182,316,022 Net indebtedness 61,141,358 (40,355,771)

Equity (b) 718,147,756 777,656,032

Debt to equity ratio 0.09 - (a) Indebtedness relates to long-term and short-term loans, and current portion of

long-term liabilities. (b) Equity includes share capital, reserves and retained earnings. Significant Accounting Policies

The review of significant accounting policies, including the basis for measurement and recognition of income and expenses for each category of financial assets and financial liabilities, is set out in Note 3 to the financial statements.



56 56

38. FINANCIAL INSTRUMENTS (Continued) Categories of Financial Instruments Categories of financial instruments are presented as follows:

In BAM

December 31,

2009 December 31,

2008 Financial assets Loans and receivables (including cash and cash equivalents) 177,941,551 268,835,178 Financial assets available for sale 117,819 125,512 179,524,386 268,960,690 Financial liabilities - at amortized cost 209,133,749 201,090,657 In its regular course of business, the Company is exposed to certain financial risks, which are: market risk (comprised of currency risk, interest rate risk and price risk), liquidity risk and credit risk. The risk management in the Company is focused on minimizing the potential adverse effects on the Company’s financial position and business operations, contingent on the volatility of the market. The accounting policies adopted by the Company regulate the risk management. The Company does not enter into transactions with derivative instruments, such as interest rate swaps or forwards. In addition, in the year ended December 31, 2009, the Company undertook no transactions with financial instruments. Market Risk (a) Currency Risk The Company’s management assesses that the Company is not significantly exposed to currency risk, in transactions in the country and abroad, as it mostly performs its business operations in the local currency (Convertible Mark), as well as in EUR to which the Convertible Mark is indexed linked (EUR 1 = BAM 1.95583). The book value of financial assets and liabilities of the Company expressed in foreign currency as of the reporting date is as follows:

In BAM Assets Liabilities

December 31,

2009 December 31,

2008 December 31,

2009 December 31,

2008 EUR 16,870,641 110,653,037 106,388,189 113,820,582 USD 126,988 111,073 3,173,986 3,257,326 CHF - - 18,850 - GBP - - 879 - HRK - - 72 - SDR 82,848 83,117 82,848 83,117 17,080,477 110,847,227 109,664,824 117,161,025



57 57

38. FINANCIAL INSTRUMENTS (Continued) Market Risk (Continued) (b) Interest Rate Risk The Company is exposed to various risks which through the effects of the fluctuations in the market interest rates which influence their financial position and cash flows. Given that the Company has no interest-bearing assets, the Company’s income is to a great extent independent of interest rate risks. The Company’s risk from the changes in the fair value of the interest rates arises primarily on the long-term borrowings from banks and suppliers. The loans obtained at fluctuation interest rates make the Company’s cash flows susceptible to the risk of changes in fair value of interest rates. In the year ended December 31, 2009, considerable liabilities with reference to borrowings extended at a variable interest rate which was linked to EURIBOR (the liabilities with respect to the loan approved by EBRD and the liabilities arising on the commodity loans, Note 25). Borrowings with variable interest rates are mostly expressed in foreign currency (EUR). The Company analyses its exposure of interest rate risk on a dynamic basis taking into consideration the alternative sources for financing and refinancing, of long-term liabilities in the first place, as these represent the most important interest-bearing position. The Company still does not swap variable for fixed interest rates, and vice versa, but takes steps to securitize loans from banks at more favorable terms.

In case an interest rate on long-term borrowings as of December 31, 2009, exceeded/was less by 0.1 percentage point annually, where other variables remain the same, the Company’s net profit for the year ended December 31, 2009 would be greater/less by the amount of BAM 7,723 (2008 – BAM 6,286), as a result of a lower/higher interest expense. (c) Price Risk The Company is not exposed to risk from changes in prices of securities to a significant extent, as the Company does not have material investments classified in the balance sheet as assets available for sale, or financial assets at fair value where the effects of changes in their fair value are disclosed in the statement of comprehensive income. The Company’s equity investments are not publicly traded. In addition, the Company is exposed to the risk arising from the changes in the prices of services, as it is challenged by intensive competition in the field of mobile telephony and Internet.



58 58

38. FINANCIAL INSTRUMENTS (Continued) Liquidity Risk On the Company level, managing the liquidity is centralized. The Company handles its assets and liabilities in a manner which ensures that the Company is able to settle its liabilities at any moment. The Company has a sufficient amount of highly liquid assets (cash and cash equivalents), and continuous cash flows from service rendering which enables it to discharge its liabilities when due. The Company does not use financial derivatives. In the order to manage liquidity risk, the Company adopted financial policies which define dispersion on decision-making levels in the course of the acquisition of certain goods/services. This dispersion is ensured by limiting the authority of persons or bodies vested in authority to enact decisions with reference to certain acquisitions. The maturities of the Company’s financial assets and liabilities as of December 31, 2009 and 2008 were as follows:

In BAM

Financial assets December 31, 2009

Up to 3 Months

3 - 12

Months

1 - 2

Years

2 - 5

Years

Over 5

Years

Total Interest free 138,846,830 381,965 - 6,555,058 239,507 146,023,360 Instruments at fixed interest rate 1,111,957 27,482,750 5,197,044 - 114,269 33,906,020 Total 139,958,787 27,864,715 5,197,044 6,555,058 353,776 179,929,380 December 31, 2008 Interest free 230,295,953 576,108 415,096 1,705,516 92,794 233,085,467 Instruments at fixed interest rate 1,057,539 31,611,000 114,128 4,982,016 - 37,764,683 Total 231,353,492 32,187,108 529,224 6,687,532 92,794 270,850,150

In BAM Financial liabilities December 31, 2009

Up to 3 Months

3 - 12

Months

1 - 2

Years

2 - 5

Years

Over 5

Years

Total Interest free 52,821,747 2,185,611 - - - 55,007,358 Instruments at fixed interest rate 21,365,100 21,015,460 38,222,439 55,602,841 23,872,025 160,077,865 Total 74,186,847 23,201,071 38,222,439 55,602,841 23,872,025 215,085,223 December 31, 2008 Interest free 55,922,698 4,868,158 813,620 - - 61,604,476 Instruments at fixed interest rate 20,769,465 22,568,904 41,520,490 45,514,747 16,807,248 147,180,854 Total 76,692,163 27,437,062 42,334,110 45,514,747 16,807,248 208,785,330 The review of maturities of financial instruments (assets and liabilities) is made based on the undiscounted cash flows of financial assets and financial liabilities, including interest charged to those assets which will be earned (except from the assets based on which the Company expects cash flow in another period), i.e., based on the earliest date on which the Company can be expected to pay the liability in arrears.



59 59

38. FINANCIAL INSTRUMENTS (Continued) Credit Risk The credit risk is present in cash and cash equivalents, deposits held with banks and financial institutions, receivables from legal entities and individuals and in commitments, and it relates to the risk that the other party will not settle its liabilities to the Company when these fall due, and the Company will sustain a financial loss. The Company is exposed to the credit risk to a limited extent. As collateral against the credit risk, certain measures and activities have been taken of the Company level. In case a user falls behind in settlement of liabilities to the Company, further services to such users are suspended. In addition, the Company does not have material credit risk concentration with reference to receivables, as it has a great number of unrelated customers with individually small amounts of debt. Apart from disabling further use of services, the following procedures of collection are also in place: debt rescheduling, compensations with the legal entities, legal suits, out-of-court settlements and the like. The collection of loans extended to the Company employees is ensured through administrative injunctions, i.e., by decreasing salaries for the adequate amount of installments, whereas the employees leaving the Company enter agreements with reference to the repayment of the outstanding loan portion upon his/her leaving the Company. Fair Value

In BAM In BAM December 31, 2009 December 31, 2008

Carrying

amount Fair Value Carrying

amount Fair Value Financial assets Loans and receivables 177,941,551 177,941,551 268,835,178 268,835,178

Financial liabilities Borrowings and creditors 209,133,749 209,133,749 201,090,657 201,090,657 The assumptions used to estimate current fair values of financial assets/liabilities are summarized below:

• For short term loans and receivables and creditors and borrowings balances, the book value approximates to fair value because of their relative short maturities. The fair value of other financial assets and liabilities carried at amortized cost for disclosures purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.



60 60

39. OPERATING LEASE ARRANGEMENTS

Minimum rent recognized as an expense during the year ended December 31, 2009 amounted to BAM 11,709,607 (2008: BAM 9,366,581). The Company's outstanding commitments under cancellable operating leases relating to business premises and land are as follows:

In BAM December 31,

2009 December 31,

2008 Not longer than 1 year 4,559,759 4,058,572 Longer than 1 year and not longer than 5 years 10,122,423 9,785,370 Longer than 5 years 5,592,586 5,239,175

20,274,768 19,083,117 40. POST BALANCE SHEET EVENT

On February 1, 2010, the Company signed an agreement on the purchase of 49% equity interest in the entity Mtel d.o.o., Podgorica (Republic of Montenegro) with the company Olgar B.V. Holland, for the aggregate amount of BAM 19,558,300 (EUR 10,000,000). During the month of February 2010, the Company paid in the total purchase price agreed for the equity interest at issue. On February 16, the Central Registry of the Commercial Court in Podgorica issued a Registration Certificate (founder change) for the entity Mtel d.o.o., Podgorica.

41. TAXATION RISKS

The Republic of Srpska and Bosnia and Herzegovina currently have several tax laws in effect, as imposed by various governmental agencies. The applicable taxes include: a turnover tax, corporate tax, and payroll (social) taxes, among others. Following their introduction, the regulations governing these taxes were not enforced for substantial periods of time; in contrast to similar legislation in more developed market economies. Moreover, the regulations defining the implementation of these laws are often unclear or non-existent. Hence, few precedents with regard to tax issues have been established in the Republic of Srpska. Often, contrary opinions pertaining to legal interpretations exist both among, and within, governmental ministries and organizations, thusly creating uncertainties and areas of legal contention. Tax declarations, together with other legal compliance matters (e.g., customs and currency control matters) are subject to the review and investigation by a number of authorities that are legally enabled to impose extremely severe fines, penalties and interest charges. The interpretation of tax legislation by tax authorities as applied to the transactions and activity of the Company may not coincide with that of the management. As a result, transactions may be challenged by tax authorities and the Company may be assessed additional taxes, penalties and interest, which can be significant. In accordance with the Law on Tax Authority of the Republic of Srpska, expiration period of the tax liability is five years. This practically means that tax authorities could determine payment of outstanding liabilities in the period of five years from the origination of the liability. The afore-described situation creates tax risks in the Republic of Srpska and Bosnia and Herzegovina that are substantially more significant than those typically existing in countries with more developed tax systems.



61 61

42. CURRENT ECONOMIC SITUATION AND ITS IMPACT ON THE COMPANY

As expected, throughout 2009, like those of majority of other business entities in the Republic of Srpska, the Company’s operations were also under a certain influence of the recent financial crisis and deteriorating economic conditions on the market of the Republic of Srpska and Bosnia and Herzegovina. Due to the current global crisis in the market and its weakening effects on domestic economic activities on the local market in the Republic of Srpska and Bosnia and Herzegovina, the Company will probably operate in a more difficult and uncertain economic environment in 2010 and possibly beyond. The impact of this crisis on the Company’s business operations is currently not possible to fully predict and therefore there is an element of general uncertainty. So far, the ongoing financial crisis has had a limited and indirect impact on the financial position and performance of the Company, primarily due to weaker collection of accounts receivable which further led to increased allowance for impairment of receivables (Notes 10 and 18), as well as a decrease in revenues from international traffic (Note 5). The deteriorating economic situation in the country will probably lead towards a decreased use of telecommunication services on the Republic of Srpska market and its surroundings, which will probably result in decreased business activities in the Company. This may indirectly affect the amounts of expected operating income in 2010.

43. ACQUISITION OF TELEKARD

As disclosed in Note 1 to the accompanying financial statements, on June 26, 2008, the Shareholding Assembly of the Company enacted a Decision to consent to the merger and acquisition of “Telekard, Telefonske usluge” d.o.o., Banja Luka, fully owned by the Company. The registration of the forgoing status change was inscribed in the registers maintained by the Basic Court in Banja Luka on September 30, 2008, whereby the process of merger and acquisition of the aforementioned subsidiary was officially completed. Balance sheets of the Company and Telekard, as of the date of acquisition (September 30, 2008) are presented as follows:



62 62

43. ACQUISITION OF TELEKARD (Continued)

September 30, 2008

Telekomunikacije RS a.d.,

Banja Luka (before

acquisition)

Telekard d.o.o., Banja Luka

Eliminations

Telekomunikacije RS a.d.,

Banja Luka (after acquisition)


-

-

96,636,879


53,028

-


-

-

2,009,128

Equity investments 114,982

26,600

(10,465)

131,117 Long-term receivables 7,359,815

-

(469,442)

6,890,373

Deferred tax assets 619,715

-

-

619,715

703,154,779

79,628

(479,907)

702,754,500


15,787

-

23,406,608


51,204

(356,687)

48,311,360 Other receivables 6,176,893

-

-

6,176,893

Prepayments 14,634,645

-

-

14,634,645 Short-term financial placements 31,008,605

-

(640,000)

30,368,605


115,217

-

146,885,282

270,597,872

182,208

(996,687)

269,783,393


261,836

(1,476,594)

972,537,893

LIABILITIES AND EQUITY Equity Share capital 491,383,755

-

-

491,383,755

Permanent investment -

9,180

(9,180)

- Legal reserves 29,387,314

-

-

29,387,314

Revaluation reserves from investments -

19,600

-

19,600 Other reserves - reserves arising on

commitment to invest 68,454,050

-

-

68,454,050 Retained earnings/(Accumulated Loss) 134,899,697

(1,724,905)

480,501

133,655,293

724,124,816

(1,696,125)

471,321

722,900,012

Long-term provisions and deferred income 21,381,684

-

(483,090)

20,898,594

Long-term liabilities 101,711,740

469,441

(589,442)

101,591,739 Current liabilities

Current portion of long-term borrowings 34,933,009

1,123,090

(520,000)

35,536,099

Accounts payable 33,064,509

362,767

(355,383)

33,071,893 Accruals 31,954,702

-

-

31,954,702

Other current liabilities 26,582,191

2,663

-

26,584,854

126,534,411

1,488,520

(875,383)

127,147,548

Total liabilities and equity 973,752,651

261,836

(1,476,594)

972,537,893



63 63


The total Telekard’s accumulated losses as of September 30, 2008 amounted to BAM 1,724,905 and were included within the line item of the Company’s retained earnings as of the merger date. Had the Company operated from January 1, 2008 as if Telekard had already been merged, the Company’s income and expenses would have been higher by BAM 290,117 and BAM 866,310, respectively, and its net profit for the year 2008 would have been BAM 576,193 less. Also, had the Company operated from January 1, 2007 as if Telekard had already been merged, the statements of financial position and of comprehensive income as of and for the year ended December 31, 2007 would have been as follows:

2007

Telekomuni-kacije RS a.d.,

Banja Luka


Eliminations


Banja Luka (consolidated)

Operating income Sales of goods and services 381,257,326

502,384

-

381,759,710

Other operating income 7,794,201

18,991

(8,404)

7,804,788

389,051,527

521,375

(8,404)

389,564,498

Operating expenses Cost of telephones and other commercial

goods sold (1,470,933)

-

-

(1,470,933) Direct materials consumed (1,530,411)

(50,990)

-

(1,581,401)

Other materials, energy and fuel (7,209,787)

(22,895)

-

(7,232,682) Staff costs (79,362,580)

(279,793)

-

(79,642,373)

Depreciation and amortization charge (79,116,519)

(121,169)

-

(79,237,688) Indirect taxes and contributions (3,229,640)

-

483,090

(2,746,550)

Other operating expenses (1,249,556)

(3,983)

-

(1,253,539) Operating expenses (124,962,384)

(163,824)

8,404

(125,117,804)

(298,131,810)

(642,654)

491,494

(298,282,970)

Profit from operations 90,919,717

(121,279)

483,090

91,281,528 Finance income/(expenses)

Interest income 1,484,797

737

-

1,485,534 Other finance income -

1,324

-

1,324

Interest expense (7,807,711)

(2)

-

(7,807,713) Other finance expenses -

(500)

-

(500)

Foreign exchange (losses)/gains, net 610,437

-

-

610,437

(5,712,477)

1,559

-

(5,710,918)

Profit/(Loss) before taxation 85,207,240

(119,720)

483,090

85,570,610 Income taxes (8,719,193)

-

-

(8,719,193)

Net profit/(loss) 76,488,047

(119,720)

483,090

76,851,417 Earnings per share

- Basic earnings per share 0.1557

-

-

0.1564



64 64


December 31, 2007


Banja Luka


Eliminations


Banja Luka (consolidated)


39,000

-

99,474,623 Property and equipment 536,087,906

514,159

-

536,602,065

Advances for property and equipment 7,527,595

-

-

7,527,595 Equity investments 17,645

-

(9,180)

8,465

Long-term receivables and borrowings 6,323,744

7,000

(393,563)


-

-

619,715

650,012,228

560,159

(402,743)

650,169,644


17,744

-

20,815,298 Accounts receivable 36,870,317

99,658

(353,098)

36,616,877

Other receivables 1,748,244

2

-

1,748,246 Short-term financial placements 684,788

-

(520,000)

164,788

Prepayments 15,653,155

-

-

15,653,155 Cash and cash equivalents 58,870,452

155,735

-

59,026,187

134,624,510

273,139

(873,098)

134,024,551


833,298

(1,275,841)

784,194,195 LIABILITIES AND EQUITY

Equity Share capital 491,383,755

9,180

(9,180)

491,383,755 Legal reserves 25,432,710

-

-

25,432,710

Revaluation reserves -

122,658

-

122,658 Retained earnings 68,094,908

(1,262,650)

678,969

67,511,227

584,911,373

(1,130,812)

669,789

584,450,350

Long-term liabilities and provisions Long-term liabilities 94,029,144

589,442

(589,442)

94,029,144 Deferred income 9,217,693

-

-

9,217,693

Employee benefits 10,251,906

-

-

10,251,906 Provisions 2,628,385

-

(483,090)

2,145,295

116,127,128

589,442

(1,072,532)

115,644,038


520,000

(520,000)

27,821,487 Short-term borrowings -

483,090

-

483,090

Accounts payable 24,593,612

366,518

(353,098)

24,607,032 Accruals 14,258,288

-

-

14,258,288

Dividends payable 11,168,757

-

-

11,168,757 Other current liabilities 5,756,093

5,060

-

5,761,153

83,598,237

1,374,668

(873,098)

84,099,807

Total liabilities and equity 784,636,738

833,298

(1,275,841)

784,194,195



65 65

44. EXCHANGE RATES

The official exchange rates for major currencies used in the translation of the balance sheet components denominated in foreign currencies were as follows:

In BAM December 31,

2009 December 31,

2008 US Dollar (USD) 1.3641 1.3873 Swiss Franc (CHF) 1.3146 1.3071 Serbian Dinar (RSD) 0.0203 0.0221 EUR 1.9558 1.9558

Documents

DELOITTE. Banja Lukablberza.com/Cms2FileCache/files/cms2/docver/13358... · Deloitte d.o.o. Banja Luka Braće Mažar i majke Marije 58 i 60 78000 Banja Luka . ... presentation of