Slovenia Business & Investment 2011 by Slovenia Times

INTRODUCTION

Tough Decisions Ahead

elcome to our third annual Business and Investment Slovenia publication – a definitive look at the country’s economic performance during the past twelve months. Over the next 136 pages, our journalists review what 2010 held for a variety of business sectors. Together, these incisive analyses reveal the extent to which this year has been one of economic spring cleaning for Slovenia. While in 2009 the government showed an indiscriminate willingness to rescue struggling firms, in 2010 it was a case of tough love. A determination to let badly managed companies go meant that 2010 saw the insolvencies of big name firms such as retailer Merkur, real estate developer Vegrad, and car seat manufacturer Prevent. Despite – or perhaps in part because of – such developments, 2010 officially saw Slovenia exit recession. The biggest driver of the economy, and of the admittedly still weak recovery, was exports. Economists continue to strike a note of caution about this, and particularly the dependence on the country’s largest export market of Germany. Many feel that if sustainable and ongoing economic growth is to be secured, Slovenia must now focus on penetrating the so-called BRIC countries (Brazil, Russia, India and China). But there is plenty more on the “to do” list. It has also been argued that a traditionally hostile attitude to foreign capital must finally be fully abandoned, that legislative changes must be made to improve the overall business environment, and that the government must be prepared to lead the country through a period of austerity. As this publication shows, only limited progress has been made in the past twelve months in reaching these goals. Yes, austerity

budgets have been created and passed. But pension reform, for instance – which both the government and the International Monetary Fund insist is crucial to securing long-term fiscal sustainability for Slovenia – has proved challenging to implement. Heavy opposition to the government’s initial proposals have seen amendment after amendment with the result that there is now little room for negotiation without jeopardising the fundamental purpose of the reforms. Undoubtedly this issue will be one of the first big tests of the government’s resolve in 2011. It won’t be the last. While in 2010 the government could still afford to debate and postpone crucial reforms, 2011 will have to be a year of decisiveness if Slovenia is to avoid being overrun by its competitors – in the past year, the country fell a striking 20 places in the global competiveness list. The thorny issue of privatisation must now be confronted once and for all. Consensus has to be found soon if the state is to avoid having to quickly sell its assets for below the value price. In a country that has often been blamed for lack of good investment projects, this pressing need to decide on privatisation seems like good news. These and other issues will undoubtedly be the cornerstone of 2011 edition of Business Investment Slovenia. But for now, I invite you to look back at 2010 – a year of bailouts, bankruptcies, and reforms... and of the first green shoots of economic recovery.

Maja Dragović Editor-in-chief 1

INTRODUCTION

Dear Reader,

he assessment of the economic situation in Slovenia in 2010 demands meticulous analysis and much more room than this esteemed publication allows for. We can undoubtedly be satisfied with the signs of revitalisation of the economy in 2010, despite the fact it was not quite what we expected. Nevertheless, demand for products and services is growing. After the steep decline in gross domestic product (GDP) in 2009, a slight growth can be discerned and will continue over the next two years. The fact remains that the Slovenian economy was much more severely struck by the crisis than a number of other economies. The reasons are manifold. First of all, many Slovenian enterprises failed to take advantage of what was perhaps the most lucrative economic conjuncture ever. Those, on the other hand, who understood that maintaining long term competitiveness on the global market requires constant innovation of products, services and business processes, made it through the worst crisis significantly less affected. These healthy enterprises – as I tend to call them – have benefited most from the governmental measures and incentives initiated by the Ministry of the Economy over the last two years. Despite calls to save failing business entities, the Ministry believed that a time of crisis has to be used for a thorough 2

renovation of the economy on the entrepreneurial level; for organising new investment projects; for the introduction of new technologies; and for finding new markets. The measures and incentives were accordingly focused on strengthening enterprises’ developmental activities, thus securing their competitiveness once the crisis is over. Most state incentives were directed to cofinancing developmental and investment projects; into purchasing new technologies; launching new, innovative enterprises for enhancing the business-conducive environment; into projects supporting knowledge transfer into enterprises; and finally into developmental projects in tourism, foreign direct investments and internationalisation. The Ministry of the Economy has supported over 3,500 projects and provided more than EUR 500m in incentives. In addition to this there were incentives from other ministries and SID Bank development funds which make the total over EUR 1 billion. I wish to emphasise particularly the three priority projects carried out by the Ministry of the Economy in 2010. First, the launch of the financial engineering programme 2010-2013, which will facilitate better access to funding sources for small and medium sized enterprises (SMEs). Second, the launch of the Slovenian economy developmental centres project which aims to set up a comprehensive infrastructural environment where new high technology and innovative enterprises can be

INTRODUCTION

established and progress. The third project aims to encourage the internationalisation of the Slovenian economy, with the goal of improving its competitiveness of in international exchange and reducing the costs and risks for enterprises entering foreign markets. The improvement of the Slovenian economy’s competitiveness remains our central goal for the coming years and, it is clear, represents an important challenge for all of us. If over the past years the main activities were centred on strengthening the developmental activities of Slovenian enterprises, the crucial task now is to strengthen the competitiveness of the business environment. Hence our goal is to create a business environment where innovative, creative, developmental and socially responsible enterprises – both domestic and foreign – will be able to create high added value and quality jobs. The most important challenge for 2011 is to increase flexibility on the labour market, to prepare a stimulating tax policy, to relieve the developmental human resources of the burdening labour expenses, and to effectively eliminate administrative obstacles. These are crucial obstacles which prevent Slovenia from climbing up the ladder of competitiveness. In addition to the Ministry’s concept of a new competitiveness policy – which will endorse general measures for enhancing

business environment competitiveness – the priority project in 2011 is the promotion of so-called smart specialisation. That is support of the most propulsive enterprises and services, where know-how and competences exist and can be used to facilitate the desired developmental breakthrough. An important goal remains the internationalisation of the Slovenian economy by incorporating enterprises in international development chains and, concomitantly, by motivating foreign investments in Slovenia. The fact is that Slovenia has certain attributes which can attract foreign investors. The challenge remains how to present Slovenia to foreign investors to convince them to invest here. This crisis gave Slovenia another chance to make a step from a society of mediocrity to the path of excellence, innovativeness and creativity. The Ministry of the Economy’s policy is ready to take this path. We know that knowledge, creativity and innovativeness are the fundamental generators of successful economic development and that a healthy economy is the sole warrant of social security and social welfare of all citizens. The potential is there and I believe we will make good use of it.

Mag. Darja Radić, Minister of the Economy 3

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INTRODUCTION

10 Economy overview

Energy

Foreign direct investment

50 Energy sector overview

14 FDI overview 18 Igor Plestenjak, JAPTI 20 Current investment opportunities in Pomurje

Innovation 22 New Generation of Innovators

Transport & Logistics 24 Logistics overview 26 Current investment opportunities in Transport & Logistics

54 GEN-I 56 Termoelektrarna Toplarna Ljubljana 58 BISOL

Finance 60 Finance sector overview 62 NLB Group 64 Louise Chatwood, KD Funds 66 Klemens Nowotny, Raiffeisen Bank

28 Gregor Veselko, Luka Koper

Business & media services

30 Project Aeropolis Ljubljana

68 Overview of business & media services

Automotive industry 32 Automotive industry overview 34 Christof Droste, Hella Saturnus Slovenija 36 Thierry Villard, Goodyear Dunlop CSEE

Electro industry 38 Electro industry overview 40 BSH Hišni aparati Information & Communication

Technology

42 ICT overview 45 Dejan Turk, Si.mobil 46 Igor Zorko, ZZI 48 Simon Kaluža, SAP Slovenia & SAP Adriatic 6

52 Current investment opportunities in Energy

70 Jani Zupan, Profil 72 Goran Novković, Žurnal Media 74 AJPES 76 The Slovenia Times

Real estate & construction 78 Overview of real estate & construction sectors 80 Branko Kastelic and Mitja Majnik, IMOS 82 Zoran Madon, Tridana 86 Knauf Insulation

Retail 88 Retail overview 90 Jože Mermal, BTC 94 Studio Moderna

INTRODUCTION

Food and Drinks 96 Food and drinks sector overview

Healthcare & Pharmaceuticals 98 Healthcare & Pharmaceuticals overview 100 Current investment opportunities in Healthcare

Education 102 Education overview 104 Prof. Dušan Mramor, University of Ljubljana, Faculty of Economics 106 Prof. Danica Purg, IEDC-Bled School of Management

Tourism 108 Tourism overview 110 Current investment opportunities in Tourism 112 Dimensions of Slovenian tourism 119 Marjan Batagelj, Postojnska Jama 120 Maja Pak, Slovenian Tourist Board 122 Barbara Vajda, Ljubljana Tourist Board 124 Zdravko Počivalšek, Terme Olimia 126 Alenka Iskra, Terme Maribor 128 Jerneja Kamnikar, Vivo Catering 130 Slovenia’s water resources 131 Useful information

Publisher: The Slovenia Times Domus, d.o.o. Trg MDB 12 1000 Ljubljana, Slovenia T: +386 (0)1 520 50 85 F: +386 (0)1 520 50 82 info@sloveniatimes.com www.sloveniatimes.com Editor-in-chief: Maja Dragović Editor: Jaka Terpinc Assistant editor: Claire Read Design & Layout: Maja Kaplan Translation: Martin Pogačar, Polona Cimerman, Rok Podgrajšek, Grah prevodi, s.p. Marketing: Uroš Prezelj, Irena Kržan, Marko Stijepić, Goran Mladenović, Gordana Čevnik For advertising opportunities e-mail marketing@sloveniatimes.com Printed by Littera picta Medvode Price: EUR 25

INTRODUCTION

Slovenia: Name: Republic of Slovenia Political system: parliamentary democracy since 1991 International membership: member of the EU; NATO; OECD Capital: Ljubljana Official language: Slovene with some broder areas speaking Italian and Hungarian Currency: Euro International dialing code: +386

Facts Religion: Roman catholic 57.8%, Muslim 2.4%, Orthodox 2.3%, other Christian 0.9%, unaffiliated 3.5%, other or unspecified 23%, none 10.1% Main cities: Ljubljana (261,700), Maribor (108,600), Kranj (39,400), Celje (38,400)

GEOGRAPHY Area: 20,273 km2

Internet address: .si

Time zone: GMT/UTC +1

POLITICS

Length of coastline: 46.6km

President of the Republic: H.E. Dr Danilo Turk (since December 2007) Prime Minister: H.E. Borut Pahor (Slovenian Democrats Party) (since 2008) Government: Prime Minister, 15 ministers, 3 ministers without portfolio

POPULATION Number of inhabitants: 2.032.362 (December 2008) Population density: 99.1 inhabitants per km2 Nationalities (2002 census): Slovene 1,631,363; Hungarian 6,243; Italian 2,258; other 324,172

Length of borders: 1,370km Landscape: Alpine in the north, Mediterranean in the south west, Dinaric in the south and Pannonian in the east Climate: continental in central Slovenia, alpine in the northwest and sub-mediterrenian along the coast and its hinterland Average temperature: January -2ºC; July +21C Highest mountain: Triglav, 2,864 meters Longest river: Sava, 221km Largest lake: Cerknica lake, 26km2 Highest waterfall: Čedca, 130m Longest and deepest tourist krast cave: Postojnska jama, 19.5 km Protected natural park: Triglav National Park, 83,808 ha

INTRODUCTION

Photo: Dreamstime

s & Figures Corporate income tax

20%

Tax relief

20-40% of the amount invested in R&D tax relief on employment of certain workers up to 30% of the amount invested in equipment and intangible long-term assets

Capital gains tax

0-20% (depending on a holding period)

VAT (Value added tax)

8.5% - reduced rate; 20% - standard rate

Social security contributions

16.1% paid by employer; 22.1% paid by employee

Payroll

progressive tax rates: 16%, 27% and 41%

2007 GDP (real growth rate)

2008

2009

2010*

2011*

6.9

3.7

-8.1

1.1

1.8

GDP (in EUR billion)

34,568

37,305

35,384

35,800

37,104

GDP per capita (in EUR)

17,123

18,450

17,331 23.9

24.3

9.1

10.6

Total gross fixed capital information (% of GDP)

27.7

28.8

23.9

Business investment - Gross fixed capital formation by the private sector (% of GDP)

23.5

24.5

19.1

Consumer prices (yearly average) (HICP)

3.8

5.5

0.9

Unemployment rate (yearly average), registered

9.4

7.7

6.7

Gross wage per employee (real growth rate)

2.2

2.5

Exports of goods and services (mio EUR)

19,404

19,809

16,018

Imports of goods and services (mio EUR)

21,508

23,046

17,115

Current account (% of GDP)

-2.5

-4.8

-6.2

Foreign direct investment, end-year stock (mio EUR)

9,765

10,996

General government surplus/deficit (mio EUR)

-232.04

37.05

General government surplus/deficit as a % of GDP

-0.7

0.1

62.02 0.2

External debt (% of GDP)

90%

105%

110%

Exchange rate (EUR/USD)

1.25

1.37

1.47

Sources: www.slovenija.si, www.wikipedia.com, Bank of Slovenia, Statistical Office of the Republic of Slovenia, Eurostat, Institute of Macroeconomic Analysis and Development / *forecast

ECONOMY

At a Crossroads When it comes to the Slovenian economy, 2010 will be remembered as a year of bankruptcies, unpopular but necessary government measures as well as some popular ones such as the increase in the minimum wage. It was also the year that saw the economy officially out of the red – but not out of the woods. By Maja Dragović

he economic recovery in 2010 was evident, though limited, with an expected growth in gross domestic product (GDP) of 1.1 percent. Yet it is still on the right side of zero compared to the whopping contraction of 8.1 percent in 2009. What 2011 and 2012 will bring remains to be seen as the austerity budgets for those two years, adopted by the government early in 2010 and including some major spending cuts, come into force.

Back in the black Slovenia’s overall economic activity improved throughout 2010 mainly due to a growth in exports, which were ten percent higher in October 2010 than they were in the same period of 2009. As

in % 8 6

-2 -4

-8 2007

2008

2009

2010*

2011*

2012*

* forecast

-6

in %

-10

Inflation rate

Source: Eurostat

Real GDP growth rate

2006

2007

2008

2009

2010*

ECONOMY

a result, Slovenia’s economy expanded at an annual rate of 1.7 percent in the third quarter of 2010. Quarterly growth adjusted for season and working days stood at 0.3 percent, down from 1.1 percent in the second quarter. The annual growth rate in the third quarter slowed from 2.2 percent in the previous quarter, when Slovenia emerged from recession after six consecutive quarters of negative growth. This progress was not transferred to the employment sector where the number of unemployed persons continued to increase. In October 2010, 10.9 percent of the active population were out of work. Registered unemployment continues to increase, according to seasonally adjusted data, even though the actual number of unemployed persons declined in September 2010. The highest number of those who lost their jobs was in the construction sector, followed by manufacturing, education and services. With many more bankruptcies expected in 2011, this number is not likely to go down any time soon.

Source: SURS

Unemployment on the rise in % of active inhabitants 12

In struggling to come out of the recession and decrease its spending, the government plans to halt the rise in public sector salaries which saw incredible resistance. Strikes were organised at the end of summer of 2010, causing some major disruptions on Slovenia’s borders. The seeds for the discontent were sown back in 2007, when the then government agreed to raise the salaries of public sector workers in line with inflation. However, this was before the financial collapse and the crisis that unfolded afterwards. Now that the situation has changed, the government wants to freeze the pay increase until the economic situation improves. In this Slovenia is far from unique – governments across the European Union and the world are cutting back on public spending. However, the unions are doing their utmost to prevent the government from introducing the cuts and organised strikes across various sectors in late summer. The government is looking for a compromise but Institute for Macroeconomic Analysis and Development (IMAD) has calculated that in the absence of a pay freeze, growth in the public sector would outpace that in the previous years. “In macroeconomic terms it is appropriate that the government stick with the planned pay freeze,” Boštjan Vasle, the institute’s director says. He notes that the freeze is in fact a mild measure considering that public sector workers face job cuts of as much as 25 percent elsewhere in the EU.

Gross external debt

Source: Banka Slovenije

Photo: Dreamstime

(Not) keeping the promise

in million EUR 50000

40000

30000 10 20000

10000

Jul 09

Oct 10

2006

2007

2008

2009

Oct 10

ECONOMY

Source: Eurostat

Government deficit % of GDP 0 -1 -2 -3 -4 -5 -6

2006

2007

2008

2009

Reforming pension

Raising the minimum In contrast, the rise in the minimum wage from EUR 460 net to EUR 562 net over three years was welcomed by workers. It took a few employers by surprise, though. In making the change at the beginning of the year, the government argued that it was necessary since the existing wage was below the minimum needed to survive each month. However, a 30 percent increase at a time when companies are curbing costs and looking to ride the waves of the crisis was viewed as by many businesspeople as an additional burden. Nevertheless, experts argued the move was unlikely to cause much disruption and very unlikely to cause any insolvencies.

Government’s austerity measures, especially the proposed pay freeze for public sector workers, have been met with protests

Europe are doing the same. But the difference is that Slovenia is a country where taxes already take a large chunk of companies’ expenditure. Unsurprisingly, then, an excise duty increase on electricity and gas proved extremely unpopular. Slovenian businesses complained that it was difficult for them to compete on the market in the wake of August gas and electricity excise duty hikes. Prices for electricity rose from EUR 1 per MWh to EUR 3.05 per MWh in August 2010, and was expected to almost quadruple in November 2010 to EUR 12.10 per MWh. Gas excise was planned to double to 3.63 cent per cubic metre.

Exports are on the rise again in million EUR 1800

1600

1400 Exports

Further rises

1200

As well as looking to cut its spending. the government also had to find ways to boost its own budget in the face of falling revenues. One of the measures was to temporarily increase certain taxes. Again, hardly a radical move given that governments across

1000

Imports

Aug 09

Sep 10

Source: SURS

Pension reform, by which the retirement age will go up to 65 years or 43 years of service for men and 41 years for women, is also in line with what is happening in other EU countries. And the resistance to this measure is also just as strong as elsewhere in Europe with the threat of mass protests hanging over 2011. Development Minister Mitja Gaspari warns that long-term economic recovery hinges on reform of the pension system. He says the problem of aging must not be tackled merely by trying to boost economic growth but also by extending years of service for the majority of people. “There is no other alternative,” argues Gaspari. “Without pension reform, we will hit a fiscal wall in five years’ time, the effects of which will be felt in pensions, health and the economy as a whole.” Amongst those opposing the reform is the pensioners’ party – part of the ruling coalition. Yet, despite the unpopularity of this measure, at the end of 2010 the national assembly passed the plans with an overwhelming majority, moving the plan one step closer to becoming law. The National Council, however, did not vote in favour of the reforms and the national assembly will have to vote again with only an absolute majority securing the passage of the new law. It does seem likely the government will have to take the final vote to a referendum for the reform to become law.

ECONOMY

Germany, Slovenia’s biggest export destination. However, a growing number of economists are warning the goverment not to be solely depended on this aspect for growth. In an interview with Slovenia’s daily Finance, Vasle argues that “Slovenia cannot perennially rely on exports to Germany and hope that the German economic train will not run out of steam. “For Slovenia’s small and open economy the only way forward is to seriously undertake structural reforms we’ve been talking about for a decade,” Vasle concludes.

Tough times ahead

Under pressure from industrial associations, and with independent figures warning about the negative effect it would have on the economy, the government backed off from the November excise increase. Shortly after, the Institute for Macroeconomic Studies lowered its forecast for inflation in 2010 to 1.8 percent.

Exports Slovenia’s recovery in 2010 has very much depended on the export sector, with domestic demand remaining low. The rise in exports has been primarily driven by the rise in demand from Source: SURS

Share of exports of GDP

Fiscal tightening in 2011 is expected to continue to hamper the domestic demand. The European Commission is forecasting 1.9 percent GDP growth for Slovenia in 2011, with a more promising growth of 2.6 percent in 2012. Those figures are below the eurozone average and, according to the Commission, Slovenia’s weak presence in high growth markets means “the pace of the export-led recovery is set by demand in the country’s main EU and Western Balkan trade partners. Accordingly, growth is expected to be moderate and to ease somewhat heading into 2011”. The report adds that “faster growth is also being hampered by the tight credit conditions in the indebted corporate sector and slow adjustment in the construction sector, which may take until late 2011 or 2012 to complete”. Slovenia’s budget deficit is expected to stand at 5.8 percent of GDP in 2010, but it is expected to fall to 5.3 percent in 2011 and to 4.7 percent of GDP in 2012. Slovenia’s government’s deficit projection for 2011 is somewhat smaller at 4.8 percent. What is certain is that 2011 will be another tough year for the Slovenian economy. Minister of Economy Darja Radić is expecting bankruptcies to continue and the Prime Minister, Borut Pahor, has been bracing the nation for a challenging year also due to the world’s many current uncertainties. “This is more important than we would like to think,” Pahor says. “We are a small and open economy, which is much more susceptible to global economic and political events.” Slovenia’s economy may depend on some outside factors, but it is the vision, the strategy, and the resolve of the government to introduce the necessary measures that will ultimately guide Slovenia on long term recovery. The main question now is how much opposition it can expect to face as it undertakes that difficult process.

in % 80

2006

2007

2008

2009

Exports, especially in the automotive industry, have been driving the recovery in 2010

FOREIGN DIRECT INVESTMENT

Business Without Borders When thinking of a location for foreign direct investment, Slovenia might not be the first country to spring to mind. The labour costs are too high, administrative procedures take too long, and there aren’t many tax incentives for foreign investors. On top of that, the government has so far opted to keep the majority of Slovenian companies in Slovenian hands. Pre-crisis, all of this didn’t hamper the growth of the Slovenian economy, often talked about as the “lighthouse of Europe”. But with the economic downturn, everything is changing. By Maja Dragović

FOREIGN DIRECT INVESTMENT

Some incentives No surprise that 2010 therefore saw a minor shift in the attitude towards foreign direct investment (FDI). The government introduced regional aid programme for troubled areas like Pomurje in the northeast, where many people have lost their jobs due to company insolvencies in industries that are dying out, including the textile industry. The programme has earmarked EUR 33m for the region in the 2010-2015 period. The idea is to create as many new companies as possible and secure 1,000 new jobs, especially those with high value added. Then the government conducted public tenders for applications under the FDI cost-sharing grant scheme which amounted to EUR 4.9m in 2010 with the planned amount for 2011 being EUR 8m.

Other facts and figures

Countries with largest number of FDIs in Slovenia in % 50

30 20

Austria

Switzerland

France

Netherlands

Photo: Alenka Slavinec

According to figures from Banka Slovenije, a total of EUR 281.3m of fresh foreign direct investment flowed into the country

in the first ten months of 2010. Of the total, EUR 103.8m was net investment in ownership capital and reinvested profit, whereas the remaining EUR 177.5m was in the form of debt. Proportionally, in 2010 the share of Slovenian companies with FDI was 4.7 percent. Foreign direct investment in 2008 amounted to EUR 1.33 billion of which EUR 398m was ownership capital and reinvested profit. However, the amount fell dramatically to EUR 418.6m in 2009 caused by Slovenian companies repaying loans to foreign investors, according to Banka Slovenije. At the end of 2009, Slovenia had a total of EUR 10.5bn in total FDI, of which ownership capital and reinvested profit accounted for EUR 7.4bn.

Source: Ministry of Economy

hat was the immediate impact of the crisis on the Slovenian economy? A very harsh one. In 2009 the GDP contracted by a whopping eight percent; local capital dried up, sending many companies into bankruptcy; and Slovenia dropped from 32nd to 52nd place on the competitiveness list. Now, the government has little option but to look for funds from abroad. “Slovenia faces real competition from other countries and if it wants to be successful it has to have a competitive economy with competitive companies”, says Dr Peter Kraljić, Director Emeritus of international management consultancy firm McKinsey and Company.

At the FDI summit organised by the Slovenia Times in October 2010, it was evident that many companies with foreign ownership have registered good results despite the recession

FOREIGN DIRECT INVESTMENT

SKB bank, part of Société Générale group, are steadily increasing its market share in Slovenia

The success stories

Share of Slovenian companies with FDI is 4,7% and they account for in % 35 30 25

Source: Ministry of Economy

The figures may not be impressive compared to some other EU members but many foreign-owned companies that are in Slovenia registered good results in 2010 despite the economic downturn. SKB Bank, BSH Hišni aparati, Hella Saturnus, Knauf Insulation are just a few of the foreign companies that expanded their operations and registered profits, some significantly above

expectations. In December 2010, daily newspaper Delo published a list of most successful industrial companies for 2009 and seven out of top ten were foreign-owned. All those companies would cite one of the main reasons behind their success being their employees. Slovenia is known for its educated, hard working, and loyal workforce. Foreign managers agree that the workforce is Slovenia’s big advantage over other countries. “Companies investing in cheaper destinations like Slovakia and Romania are now having trouble finding the necessary workforce to extend their operations,” points out Christof Droste, managing director of Hella Saturnus, the automotive parts manufacturer. However, there is a problem arising in that Slovenia now lacks engineers and technicians in certain areas. The explanation lies in history. During socialist times, engineering courses were popular and the country had many qualified employees in this area. However, after independence, the problem was that there were too many engineers and not enough qualifications in business and finance. So there was a shift as those courses became popular. Twenty years later, the shift has happened again but this

FDI stock

Inward

in billion EUR

Outward

12 10

2 0

Capital

Assets

Employees Net sale Total exports revenue of goods & services

2008

2009

Source: Banka Slovenije

In terms of countries, the biggest investor – holding almost half of all FDI – is Austria. If one just looks at European foreign investors in Slovenia, Austria’s share approaches 90 percent. It is followed by France, Italy and Germany. The United States represents less than five percent of all FDI stock, even though it is the biggest foreign direct investor in the world.

FOREIGN DIRECT INVESTMENT

Hella Saturnus, manufacturer of lightning system for automotive industry, exceeded its own profit expectations for the financial year 2009/2010

Drywall producer, Knauf Insulations, won the InvestSlovenia FDI award 2010 in the category of company performance

Another issue Slovenia has faced in 2010 – and one that will be even more significant in 2011 – is that of privatisation. Putting state owned and partially state owned companies into the public sector has been an ongoing debate for many years now, and any progress thus far has been slow. Ironically, this may actually play to Slovenia’s advantage at a time when cash and credit is drying up since the country still has a number of assets to choose from if it wants to raise fresh capital. That is not to say that privatisation – and allowing companies to have foreign ownership – is not a pressing issue. “I think that one of the specifics of Slovenia is that the nationality of the owners is very important,” reflects Andre Marc Prudent, chief executive of SKB Bank. “In all countries it is

important, of course, but in Slovenia it is in some cases the most important principle and criteria.” But, as Prudent rightly points out, you cannot make capitalism without capital. Many in and outside government now feel the solution lies in letting foreigners acquire some state owned companies. But the big question remains: what should fall into foreign hands and what should remain Slovenian? The government is currently working on a list of companies that should be earmarked for privatisation. It is expected to be published in 2011. Professor Mojmir Mrak from the Faculty of Economics in Ljubljana predicts that 2011 will therefore see privatisation becoming a key aspect of FDI in Slovenia: “Slovenia has never been considered as a top location for greenfield FDIs and I do not see convincing explanations that this will be changed in any significant manner in the forthcoming period,” he says. “What we can expect, though, are some privatisation-related FDIs as the government is expected to start selling more aggressively its shares in some of the entities with still significant direct or indirect state ownership.”

Established companies by foreign investors

Value of FDI of GDP

in numbers 2500

Source: SURS

The question of privatisation

Source: SURS

time there is a lack of engineers and too many with business qualifications. Professors at Slovenia’s universities say that this is slowly balancing out, however.

in% 30

2000

1500 25 1000

500

2005

2006

2007

2008

2009

2010

2006

2007

2008

FOREIGN DIRECT INVESTMENT

Igor Plestenjak, Director Public Agency for Entrepreneurship and Foreign Investments

Opening the Doors

For Eastern European countries, the transition from socialist to market economy in the late 1980s and early 1990s brought huge inflows of capital from the West. Greenfield and brownfield investments have always been welcomed and promoted in Slovenia by the Public Agency for Entrepreneurship and Foreign Investments (JAPTI). According to agency director Igor Plestenjak, JAPTI plays a big role in encouraging foreign investors and can take some credit for the increase in foreign direct investment in recent years. How does foreign investment help the Slovenian economy? Foreign direct investment (FDI) helps the Slovenian economy in a number of ways. It has been demonstrated that the entry of foreign capital provides new jobs, new knowledge and transfers new technology into the domestic environment. FDI also contributes to more balanced regional development as well as increasing connections between foreign investors and Slovene companies, especially regarding supplies to foreign investors and knowledge and technology transfers. Moreover, FDI contributes to the increase of companies’ productivity. It does this by bringing access to new global knowledge and technologies and aiding companies in penetrating new markets, so contributing to the sector’s or company’s competitiveness. What have been the biggest foreign investments in Slovenia in recent years? After 2002, 2007 recorded by far the biggest influx of FDI. Country-wise, the biggest foreign investors in the Slovenian economy are Austria, Switzerland, Holland, France, Germany, Italy, and Luxembourg. In terms of activity, the bulk of FDI is in the finance broking field and the fields of chemistry, commerce and real-estate trade. KBC, a banking and insurance giant from Belgium; Sandoz, a world-renowned drugs producer; and Goodyear, a famous tyre maker, are just a few of the companies that have invested in the country. Moreover, there are a number of smaller cases of FDI, which are very important and a model for the positive effect of foreign investment on the Slovenian economy. Carthago, Wolford, and XAL are, for instance, just a few of the smaller foreign investors we have welcomed to the crisis-hit Pomurje region in north-east Slovenia. What is JAPTI’s role in encouraging foreign investment? JAPTI plays more than one role. This is evident in our work, which involves providing services for a foreign investor right from 18

the preliminary phase of determining an investment’s location – and providing all sorts of information, consultancy and other services in the investment phase to investor-monitoring in the post-investment phase. In addition, JAPTI plays an active role in promoting Slovenia as an attractive FDI location on target markets and worldwide generally. Each year JAPTI, through a public tender for foreign direct investment stimulation, cofinances certain costs of a foreign investment that has been rated as beneficial and therefore helps in creating new jobs. What business environment are foreign investors looking for? A company’s motive to invest in a foreign market originates in the need for market expansion, cutting production or service costs, or exploiting primary resources and raw materials, with the main objective of profit-making. A foreign investor’s exact combination of requirements is unique. In general, however, investors are looking for tax benefits, access to knowledge and skilled labour, as well as for an opportunity to exploit a good geographical position. Which sectors need foreign investment today? The right question is which sectors currently have enough strength and competitiveness to attract foreign investors. As this year’s research of Slovenia’s competitiveness has revealed, these sectors range from food and beverage production to car making and production of electric appliances. COMPANY NOTES Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments (JAPTI) Verovškova 60 1000 Ljubljana, Slovenia T: +386 (0)1 589 18 70 japti@japti.si www.japti.si

We provide support for foreign investors looking to take advantage of the country’s strengths. We continue to work with businesses under our aftercare programme to ensure your investment is a success.

www.investslovenia.org

Financed by the Ministry of the Economy

Slovenia’s time-tested qualities make it a prime location for greenﬁeld production, regional HQ, distribution and logistics centre or R & D facility.

FOREIGN DIRECT INVESTMENT

JAPTI - Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments Verovškova cesta 60, 1000 Ljubljana T: +386 (0)1 589 18 70, F: +386 (0)1 589 18 77 fdi@japti.si, www.investslovenia.org

Current investment opportunities: Pomurje

Springboard for FDI

XAL, a company that specialises in manufacturing illumination and lighting systems, has production facilities in Pomurje

ommitment to restructuring Pomurje’s economy has created a string of industrial zones boasting modern infrastructure with paperwork is fast-tracked to facilitate investment. The region’s people are its most valuable asset. A long industrial tradition, intimate knowledge of the markets in south eastern Europe, command of foreign languages, high productivity, competence and motivation, are the qualities appreciated by foreign investors employing local people in their production facilities in Pomurje. Navigating through the economic downturn has taken a heavy toll on the enterprises in agriculture, food and textile industries – once the driving force of Pomurje’s economy. In an effort to encourage economic growth and investment in geographic areas targeted for economic revitalisation, the Slovenian government passed the Act on Development Support to the Pomurje region in the period 20102015. It is designed to encourage businesses to locate and expand in Pomurje. The measures in place until 2015 include:

The Pomurje region consists of 1,337 square kilometres in the north-eastern part of Slovenia bordering on Austria, Hungary and Croatia. Its rolling hills do not limit one’s view but let the eye travel far, just as its people are free to accept change. The fact that the pan-European Transport Corridor V – one of the European Union’s strategic routes – runs through Pomurje means that it can be a springboard for foreign direct investment and serve as a base for expansion into the emerging markets of southeastern Europe. • A government-backed program designed to sharpen the competitive edge of the Pomurje region: grants are available for business environment improvement and capital investments • On the jobs front: tax incentives and refunds of social and health insurance contributions paid by employers • Fiscal incentives for investment: pre-tax profit can be reduced by 70 percent of capital expenditure for investment, making the tax charge proportionally lower • Priority treatment of investment projects to be located in Pomurje when bidding for financing from national development funds and the EU Cohesion Fund • Institutional support provided by the Government Office for Local Government and Regional Policy in Pomurje Pomurje is also a holiday destination where investment must meet the most stringent criteria for both risk and reward. Its natural thermal waters can be used to treat various disorders and ailments or for a range of spa experiences. There is a favourable environment for investing in tourism and support infrastructure projects that will certainly provide “win-win” situations for both sides. An assessment of Pomurje’s geothermal resources and the possibilities for their exploitation beyond bathing in the mineralrich water from the thermal springs is among the development priorities of the region. COMPANY NOTES

Austrian high-end clothes maker Wolford opened a production facility in Murska Sobota in 2010 which secured 145 new jobs

Mura Regional Development Agency Lendavska 5a 9000 Murska Sobota, Slovenia T: +386 (0)2 536 14 61 F: +386 (0)2 536 14 65 feri.gonc@rra-mura.si www.rra-mura.si, www.investpomurje.eu

October 2011, Slovenia A two-day business summit devoted to the foreign direct investment (FDI) in Slovenia and the region Organised under the patronage of the President of the Republic of Slovenia, Dr. Danilo Türk

Comprehensive management of state competitiveness and credible leadership as a key element of economic development

Contacts Marko Stijepić, Project Director T: +386 (0)1 520 50 85 F: +386 (0)1 520 50 82 E: marko.stijepic@sloveniatimes.com

www.fdi.si

organised by

Download the Conclusion Paper on FDI Summit Slovenia 2010 at www.fdi.si

INNOVATORS

A New Generation of Innovators If one were to judge by populist reports in the media, one would come to the conclusion that Slovenia is not an ideal place for start-up companies – or, indeed, for doing business in general. It is a viewpoint with which Marjana Majerič, deputy director of Ljubljana Technology Park, strongly disagrees. But she does concede that there is still much room for improvement when it comes to making Slovenia a business-friendly land. And the government seems to agree. By Simon Demšar

ccording to Marjana Majerič, the perception that Slovenia is not friendly to business stems from a lack of communication. “People are simply not aware of the possibilities,” reflects the deputy director of Ljubljana Technology Park. It is a situation which she and her colleagues are trying to address: “We can provide in one place a range of facilities, activities and assistance to new companies that are looking for ways to enter domestic or global markets,” she says. Those services include tax consultancy, assistance in calls for tenders, international regulations, connections with national and foreign governments, networking, accountancy, lectures by internationally renowned authorities, and similar, including business premises. Membership is free but usually limited to three years, after which it is accepted that a company has grown enough. Technology Park Ljubljana and other similar institutions basically provide a bridge between the technological sector and the business sector and a stimulating environment for doing business. Envit, Visionect and Calypsocrystal are just three out of dozens start-up companies but each represent a good example of companies that usually seek “refuge” under the umbrella of science parks.

Filling the gap Less than half a year after its establishment, Envit became the start-up company of the year in Slovenia. However, success didn’t come overnight – the company was a spinoff of 15 years’ worth of research work at the University of Ljubljana. Established by three internationally renowned specialists, the firm deals with environmental technologies and engineering. Envit’s innovative and patented technology enhances the efficiency of removing heavy metals from soils, resulting in comparatively lower costs 22

of rehabilitation. The company’s business opportunity lies in the current lack of adaptable technologies while its researchers have developed a new and efficient method. Envit’s studies have shown that in Europe there are at least 90,000 heavy-metal polluted areas requiring immediate attention. The value of environmental rehabilitation is estimated at EUR 7,500 billion. Similar to other start-up companies, Envit is seeking so-called risk capital to facilitate its entry into the global market.

Digitisation is the future Visionect, meanwhile, is a mobile electronics company manufacturing energy efficient, high durability products for the Frequent use of copper-based fungicides (“Bordeaux broth”) has polluted much vineyard soil. (Photo: Metka Udovič)

Courtesy of Calypsocrystal.com

INNOVATORS

Calypsocrystal’s lead-crystal hand-made and hand-crafted dock

Calypsocrystal’s iPhone stand is created using traditional fired-glass-mass techniques dating back 300 years

business, health and education sectors. Established in 2007, the company aims to change the way members of an organisation are connected. They have provided solutions for more than 20 thirdparty companies and recently completed their first end product – eMeni. The device – which resembles an iPad and is primarily aimed at hotels and similar hospitality industries – is designed to enhance customer experience. It allows guests to access every hotel service from the privacy of their room, using their own language and all with a simple touch of the display. It can even be used to access partner services such as car rental, shuttle services, news, weather information and so on. But the device is also invaluable to the owners of hospitality businesses, allowing them to quickly and easily gain feedback from guests. In this way it reduces the workload of the staff but also helps advertise services. “Digitisation of processes will be the future and we want to be there to enable it,” is one of Visionect’s slogans.

Aiming high Calypsocrystal is a start-up company that has set its sights on affluent iPhone owners. Established by iPhone fan Matej Kurent, the company has aimed high from the very beginning. Its lead-crystal hand-made and hand-crafted dock is created using traditional fired-glass-mass techniques dating back 300 years and incorporates the Apple dock connector to charge the iPhone and synchronise it with the computer. The docks cost between EUR 199 and EUR 349 but price is not an issue here. Calypsocrystal Mitja Gaspari, Minister without Portfolio Responsible for Development and European Affairs, presents the “Start Up” award to Neža Finžgar, chief executive of Envit. (Photo: Institute for the research of entrepreneurship)

counts on well-off customers, willing to pay for the design rather as well as its practical value. Kurent is not afraid of the challenge or of the Chinese competition. “A good quality whiskey glass costs USD 200 and a perfume at Sephora is between EUR 80 and EUR 100,” he says. “EUR 200 is not a lot when buying a gift for someone you care about. Regarding the Chinese, they can make a similar-looking product for EUR 50 but not from crystal and their customers are not my customers.” Kurent used his own money for the investment, which runs into six-digit numbers. Planning to sell 10,000 units in the first year, he predicts his investment will pay off in two to three years. His long term ambition is to become a leading manufacturer of designer mobile phone accessories within the high-end market.

Plans for the future In order to build on the success of companies such as those, a group of academics, scientists and business professionals have suggested a set of measures designed to boost innovation and transfer know-how from higher education and research institutions to companies. One of the problems in Slovenia, the group argues, is that it is difficult to build on the competitive edge of the country’s economy when one considers that only 250 doctors of science are currently employed in Slovenian companies. One of the reasons is that scientists are too expensive for the economy as Slovenia’s tax wedge is much higher than abroad. Hence, the group has proposed making taxes and contributions on income lower for scientists who could raise the economy’s development potential. Other suggestions proposed by the group include making amendments to the system of evaluating the work of scientists. Companies want to see the product of their employees’ work, while scientists are evaluated only based on the number of articles they publish in science journals, so they are not motivated to work in companies. Companies also have problems attracting young engineers because the education system allows graduates to keep student status for a year or two after they have graduated, during which time even those that are prepared to work lose touch with current trends. This is why the group has proposed motivating students to get employed as soon as possible after completing their studies. The positive sign is that the government is ready to implement some of the measures suggested, indicating that it too is aware of the importance of the issue. But how quickly the measures are implemented will be crucial if Slovenia is to shed its image as a land hostile to innovative, technological companies. 23

TRANSPORT & LOGISTICS

SALZBURG

Capitalising on Potential The idea of Slovenia as a logistics platform is one which has dominated the Ministry of Transport’s thinking in 2010. Patrick Vlačič, the department’s minister, has repeatedly expressed his desire to greatly improve the nation’s logistics infrastructure, both in terms of quality and quantity. But just when will this vision become a reality?

JESENICE

LJUBLJANA NOVA GORICA

VENEZIA

By Aleš Šinkovec

he theory is a simple one and it goes something like this. Firstly, Slovenia has an excellent geographical position for logistics, lying as it does in the heart of Europe and with European corridors five and ten intersecting and crossing the country. Secondly, making Slovenia a logistics hub would bring greater added value, increase trade, and thereby increase all economic activity. Thirdly: Slovenia should be turned into a logistics hub. The theory may be simple, but making it a reality is still proving challenging. Progress this year – or lack thereof – has largely focused on the idea of a logistics holding company which would unite the Port of Koper, Intereuropa, and Slovenian Railways. The idea is to merge the administrative elements of the various forms and phases of the logistics chain. Proponents of the plan argue it would mean customers would only have to deal with one company rather than various different players. In this way, they suggest, Slovenia’s potential as a logistics platform would at last be realised.

Holding hold-ups The idea has heavyweight support. It is backed by Patrick Vlačič’s Ministry of Transport and was shaped by Hartmut Mehdorn, former chief executive of German national railway company Deutsche Bahn. It is worth noting that Mehdorn is largely credited with turning the company around and bringing it back to profitability. But others strongly oppose the plan for a holdings company, seeing it as an unnecessary structure that would only add to the risk of a possible future takeover by a foreign company or individual. Some have noted the precarious nature of Intereuropa’s financial position (it has debts surpassing EUR 200m). Others fear the enormous monopoly the new company would constitute. Whilst that seems positive to people who believe it would cut down 24

TRIESTE KOPER KOPER/CAPODISTRIA

administrative delays and therefore offer an expedited logistics service, it could also have the opposite effect. Without any competition, the new holding could effectively control prices and stifle innovation. Managers at Luka Koper are especially opposed to the plan, pointing out that the firm is increasingly recognised as a forward moving company, meeting market demands, and expanding for the future. For now, the holdings company remains unformed and the debate continues.

Come fly with me Outside of the debate over the holding and its constituent parts, logistics in 2010 saw some focus on Slovenian airports. And yet as the year comes to a close, there is little progress to report in this area either. Throughout 2010, attempts were made to try and reinvigorate the Maribor area. One of the major initiatives was the leasing of its international airport, Edvard Rusjan – the lease becoming available because of bankruptcy proceedings for previous owner Prevent Global. Although a call for proposals was extended, and even specific parties approached, no offers were received. Nonetheless, the airport has recently received a facelift with a new passenger terminal set for final completion some time in 2011. The airport has been touted as a great location for charter, low fares, and cargo transportation. The Maribor airport remains, however, worlds apart from Ljubljana’s Jože Pučnik airport. The Ljubljana Airport has seen its revenue and profits drop because of

TRANSPORT & LOGISTICS BUDAPEST

V CORRIDOR

MURSKA SOBOTA

MARIBOR

CELJE

X CORRIDOR ZAGREB NOVO MESTO

Back on the rails For the first time in many years, 2010 saw more government focus on Slovenian’s railways than its airports. Towards the very end of 2010, an agreement was finally drawn up that lays the foundations for progress to be made in the railway system. A new organisation is to be created to deal with the planning and implementation of the necessary upgrades and expansion to the system. The projected cost is EUR 9 billion, most of which will be collected from highway tolls through cross-financing. The organisation will be able to select specific construction companies or have a public call for offers. While the initiative has the potential to reinvigorate the economy in the coming year, there are worries. The major one is that the project has no clear timeline. And so even though the foundation seems to be in place, upgrading or expanding the network could be delayed for years, as it has been in the past.

In the pursuit of progress Over at Luka Koper, plans are afoot for expansion and the construction of a third pier, which the firm argues is necessary for the port to stay competitive. The major setback is that spatial

Transport tonne-km in m, y-o-y growth rates in %

Source: BS, SURS; calculations by IMAD

the crisis but still remains in the black. It too is going through a major transformation – hoping to create a centre for logistics. It is a plan which has been put on hold because of the recession.

planning hasn’t yet been confirmed. Suggestions have been made that the plan will be accepted in 2011, but any delay is detrimental to the economy. There is no doubt that as the world moves out of recession, Luka Koper is strategically placed to handle the increase in trade. But if it cannot expand to capture the uptake in container traffic, then clients will simply shift their focus elsewhere. And so as 2011 approaches, the question is much the same as in 2010: will this finally be the year in which Slovenia confirms its promise and becomes a true transports and logistics hub? We’ll know the answer in twelve months.

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TRANSPORT & LOGISTICS

Current investment opportunities

Selection of National Development Projects

Photo: Slovenske železnice

Modernisation of the existing rail network and construction of some new infrastructure, along with investment in highways, will increase traffic flow and safety as well as improve mobility. Investment in the railway infrastructure will improve the rail service and hopefully reduce carriage of goods by road – in Slovenia, road transit currently accounts for well over 70 percent of all land transportation. The EU Cohesion Fund priorities aim at enhancing the territorial cohesion between member states – rail, road and maritime infrastructure, and Slovenia’s priorities will be co-financed by EU funds. The development projects envisage the enhancement of one third of Slovenia’s rail network infrastructure (428km of the total length of tracks of 1,228km) and improved rail service. The route sections Trieste-Divača/Koper-Divača will increase the freight capacity of the line that continues via Ljubljana to Budapest and the Ukrainian border, and is considered vital to positioning Luka

Koper as the port of choice in the northern Adriatic Sea. National operator Slovenian Railways is also looking for developers and funders for the construction of a logistics hub. The aim is to make the best use of available trade and transportation related assets and eliminate bottlenecks that might increase transaction costs and create unnecessary delays. In addition to catering to distribution and storage needs, the logistics hub would also accommodate a technology park with enterprise incubators, manufacturing facilities, service companies, retail tenants and so on.

Motorways The investment in the motorway network will lead to a reduction in bottlenecks, meaning greater traffic fluidity and safety and ensuring good traffic links inside Slovenia and with other European regions. Currently, there are about 630km of well-maintained motorways and around 1,050km of major roads Photo: SCT

Railways

TRANSPORT & LOGISTICS JAPTI - Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments Verovškova cesta 60, 1000 Ljubljana T: +386 (0)1 589 18 70, F: +386 (0)1 589 18 77 fdi@japti.si, www.investslovenia.org

in Slovenia. Between 1994 and the end of 2008, almost 500km of motorways, major and local roads were built. The completion of the extended motorway network is scheduled for 2013. The reconstruction and modernisation of some 215km of roads (65km of which will be part of the Trans-European Network) complements investments in the Slovenian port infrastructure in an effort to promote motorways of the sea and the importance of inter-modal freight terminals.

Sea shipping

Photo: Luka Koper

The Port of Koper, Slovenia’s only cargo port, facilitates international trade between Europe and overseas markets. It is the shortest transport route linking Central and Eastern Europe with the Mediterranean countries and the countries along the Suez Canal. Shipping to the Port of Koper means gaining seven to 10 days for ships arriving from Asia in comparison with Europe’s northern ports. The port currently has 11 modern and fully equipped specialised terminals, indoor and outdoor warehouses for general cargo and several custom-built warehouses, as well as other facilities including an economic zone. The port operator, Luka Koper, has been independently audited and certified to be in compliant with ISO 9001 and ISO 14001 standards. Its quality management system demonstrates its ability to consistently provide product that meets customer and statutory and regulatory requirements. Effective application of the system has ensured customer satisfaction, which is the backbone of the port’s growth so far and the basis for further expansion including construction of a new railway track.

In line with a commitment to overcoming congestion of the main land-corridors and enhancing maritime links and the multimodal aspect of the trans-European transport network (TEN-T), Luka Koper is championing two development projects: the construction of a new pier and the construction of a modern passenger terminal. Pier III for another container terminal capable of berthing vessels having a draught of up to 17 metres will be complemented by some 200,000 square metres of storage areas, rail service, access roads and other infrastructure. The budget of the project has been set at EUR 490m. Since the port sector handles more than 90 percent of the EU’s trade with third countries and approximately 30 percent of intra-EU traffic – plus a couple of hundred million passengers every year – it is a lucrative deal. The promotion and integration of sea shipping into environmentally-friendly multimodal transport networks is an objective of the EU’s transport policy and a window of opportunity for Luka Koper and investors. The project will be executed in phases so part of the terminal will be available for use before the completion of all facilities six years after the start date. Koper’s cruise ship terminal will offer ideal facilities for cruise arrivals and departures. The number of passengers going through the terminal is expected to exceed 100,000 by 2015 and the Koper passenger port will boast facilities and services to make it as bustling as the commercial port. The estimated cost of the project is EUR 10.7m and the project should be completed within two years. Potential investors will appreciate the many opportunities for associated investments: hotel and restaurant businesses, retail, entertainment and so on.

TRANSPORT & LOGISTICS

Gregor Veselko PhD, Managing Director Luka Koper

Back to Basics Since being appointed Luka Koper’s (Port of Koper) managing director in 2009, Gregor Veselko has made a number of changes in order to improve the port’s performance. The changes are now bearing fruit enabling the company to plan for significant increase in profits in 2011. 2010 was a tough year for many companies. How was it for Luka Koper? For Luka Koper 2010 was also quite challenging in many ways. We have made progress in total traffic, but nevertheless had to seek remedies for the mistakes and bad decisions made by the previous management. It was necessary to conduct internal reorganisation and withstand pressures from outside. Among the latter I can name the state spatial plan which is due to be adopted and will enable future expansion of the port. Another issue we faced was the government’s plan to establish Slovenian Logistics Holding (which will merge Luka Koper, Slovenian Railways and Intereuropa). The experts here agree this is not a necessity, yet the final word will be that of the government. How have you adapted your strategy to cope with current market conditions? When I was appointed in June 2009, I set up a 10-step plan to stabilise the business and re-focus the Luka Koper group to its primary, port business. These steps were successfully implemented and now it is time for a new strategy which is already being designed as a joint effort with my colleagues. I believe it will be ready in the first half of 2011. It depends, however, on numerous external factors. In addition to the already mentioned state spatial planning we also have to consider the Ljubljana-Koper second railway line and the collaboration with strategic partners. You plan to sell stakes in some companies. Is there a specific reason for this and what do you plan to do with additional funds? This is also part of the new strategy. Our investments were categorised in portfolio as strategic and non-strategic investments. The managing board gave us green light to sell non-strategic assets. The funds thus acquired will be invested in our primary business. A number of countries have expressed interest in Port of Koper. What is your advantage over your competitors in Italy and Croatia? The North Adriatic ports are only in competition in a few segments, particularly the container traffic. In this segment we are all extremely ambitious and we are all planning large investments. At the same time, there is a good deal of cooperation between the ports as well, with the aim to win over the cargo from overseas markets and thus make most of our investments. Still, the fact 28

remains that Luka Koper in 2010 grew at a faster pace than other North Adriatic ports. Primarily, we aim to set up an excellent service, good infrastructure and connections and also high level of organisation. The entire port area is managed by Luka Koper d. d. which makes it extremely flexible to adjust to the needs of any single client. Where is the biggest potential for growth for Luka Koper? The biggest potential is definitely container traffic which has expanded enormously over the last few years. The storage capacity and years-long experience ensure us growth also in automobiles – at present Luka Koper is one of the largest terminals in the Mediterranean. The investment in perishable goods terminal already bears fruit. In the future we will continue to invest in these areas. The growth in container port traffic has forced ports to build new major container terminals. Are there plans to expand Luka Koper’s capacities? Certainly. We do, however, first need the state spatial plan which will provide for the construction of a designated container traffic terminal. This will increase the capacity in container traffic to 1.6m. Your plan for 2011 is to make profit of EUR 6.7m. How do you plan to do that? We plan to increase profits primarily by increase in traffic and hence income. The continual internal reorganisation and rationalisation will yield greater cost efficiency which in the case of Luka Koper is crucial, as these costs in work-intensive activity are rather high. We aim to sell-off non-strategic investments, as already mentioned. We will continue to rationally and thoughtfully invest in new capacities with a view to increase profitability. COMPANY NOTES Luka Koper, d.d. Vojkovo nabrežje 38, 6501 Koper, Slovenia T: +386 (0)5 665 61 00 portkoper@luka-kp.si www.luka-kp.si

Port and Logistic system

TRANSPORT & LOGISTICS

Aeropolis Ljubljana

Crossroad of Opportunities In the next 10 years a real city will grow – Aeropolis Ljubljana – close to Slovenia’s main airport. Extending on more than 80 hectares of land, this is one of the boldest development projects of national importance, located on the strategic crossroad of two European corridors.

eropolis project is the central development project which will give Aerodrom Ljubljana d. d. the necessary infrastructural competitive edge and answer the needs for accommodation, offices, shopping facilities and logistics – a selection of facilities which a modern airport user may deem self-evident, but are still not available on Ljubljana Jože Pučnik Airport.

Phases of development The development of Aeropolis rests on four base projects and promises to radically change the looks of the airport as it is today. The construction phases will constantly be tuned to market fluctuations, and overlap as necessary. The traffic infrastructure will be developed along with the four base projects. The work for Terminal II has almost began, while a new ring-road, railroad connection, communications nexus and several car-parks are also planned.

Development phase I (7 ha) The first phase comprises the construction of buildings which can be connected to the existing supply road. The airport lacks a much needed business-congress and accommodation facilities 30

which makes the construction of a hotel and a congress centre a priority task. This phase also includes expansion of the logistics park.

Development phase II (7 ha + 17 ha) Relocation of the existing supply road and completion of Terminal II will dictate the rhythm of Aeropolis’ expansion in the second phase. Greater fluctuation at the airport will require greater logistics and infrastructural capacities. Therefore, there are plans to further expand the logistics centre, build a new bus/ coach station and commence the construction of the business park.

Development phase III (7 ha + 17 ha + 11 ha)

In the third phase, the Aeropolis development will proceed accordingly with the growth in airport passenger and cargo traffic. If the traffic grows as expected, the demand for increased capacity will require to further develop existing projects. At this stage, the completion of the business centre will be possible, the business park will be finished as well, while the logistics centre can further be expanded.

TRANSPORT & LOGISTICS

Development phase IV (7 ha + 17 ha + 11 ha + 7 ha) In the final phase, the railroad connection will round up the new look of the Ljubljana Jože Pučnik Airport. Public transport will be organised within the frame of the new communications nexus, greater traffic fluidity and airport accessibility will be best apparent in further logistics centre expansion.

Projects details Hotel and congress centre On an area of 30,000 m2 a four storey modular building (B+G+4) is planned with over 25,000 m2 of gross space. It is comprised of three wings, two of which will be finished in 2011, while the third will be built later according to the development and the needs of the airport. The complex will feature a hotel with 168 beds, a congress centre and business areas for short term lease. Business centre The business area will comprise 22,000 m2 which means 20,000 m2 will be built in accordance with spatial planning provisions.

The business centre will host business services, office branches and high-technology businesses. The ground level will be devoted to cafes, bars and other complementary services. Business-shopping park Aeropolis’s business park is intended for businesses which require international connections and wish to build their reputation with the business park. The area of 50,000 m2 next to the new ring-road will comprise of low-construction buildings and 60 percent of green areas. Logistics park The demand for complete logistics solutions and services in Slovenia significantly exceeds the offer. On the way from Luka Koper to the Austrian border there are no logistics distribution centres which make Aeropolis’s logistics park a unique business opportunity. COMPANY NOTES Aerodrom Ljubljana, d.d. Zgornji Brnik 130a 4210 Brnik-aerodrom, Slovenia T: +386 (0)4 206 10 00 info@lju-airport.si www.lju-airport.si

AUTOMOTIVE INDUSTRY

Crisis? What Crisis? Conventional wisdom has it that the automotive industry was one of the most severely affected by the global economic downturn. Take a look at the Slovenian automotive sector in 2010, however, and it quickly seems as though few people got that memo. For this is an industry which has generally fared well in the past twelve months and which is dedicated to developing further in the coming year. By Claire Read

n November, respected Slovenian daily newspaper Delo published its list of the country’s best performing companies. The number of automobile companies on it was striking. Four, in fact, made the top twenty – headlight manufacturer Hella Saturnus, which took second spot; Revoz, the Slovenian branch of French car giant Renault, which secured the number six spot; caravan and motor home producer Adria Mobil, which came in at number 19; and Cimos, the car component manufacturer, which was awarded the twentieth position. In some ways, this news is unsurprising. The automotive industry is big in Slovenia. There are now more than 85 companies operating in the sector. Together they employ 24,500 people and are responsible for a striking 21 percent of the total goods exported from Slovenia. That represents an impressive 10 percent of gross domestic product (GDP). So by any measure this is a significant industry. But one might not have expected the companies operating within it to have performed so well on Delo’s end-of-year list. After all, the automotive industry is widely recognised as having been one of the hardest hit by the global economic downturn. And in increasingly environmentally aware times, the necessity of the products it sells is being fundamentally challenged. Surely this is an industry that should have suffered significantly in 2010?

Preventing a fully positive year To be clear, some have suffered. In July, car seat manufacturer Prevent declared insolvency after months of problems. Although there were hopes of going through a debt restructuring process, it ultimately proved impossible – not least because the firm only had one client. Prevent’s woes would always have been big news. But somehow they stood out even more because they were an unusual instance of a Slovenian automobile company in trouble in 2010. Generally speaking, these past 12 months have been good ones for this 32

industry. Take the company which was, according to Delo, the second best performer of the year. Hella Saturnus recorded a profit almost four times higher than expected in 2009/10. Hardly a bad year. So how did Hella Saturnus and others manage to not just survive but prosper in what should have been tough times? According to Dušan Bušen, president of the Automotive Cluster of Slovenia, a big reason is the sheer quality of the industry here. “Slovenian suppliers keep high standards in business relationships with buyers, and that is something which is appreciated in the automotive industry,” says Bušen. “Customers’ trust in the Slovenian car industry is high.”

A helping hand Of course trust can only take a company so far. Ultimately, the product needs to be a good one and one that is in line with customers’ evolving needs and demands. Here too Bušen argues the Slovenian industry excels. “On average, Slovenia’s automotive companies invest five percent of their turnover in development and 12 percent in new technologies. That means we have been able to seize the opportunities offered by development trends in the automotive industry including hybridization and making vehicle technology electric so as to radically reduce the use of engines.” In this area, the industry has benefited significantly from government support. In association with the SID Bank – which in turn cooperated with the European Investment Bank – the government organised loans for long-term development projects within the automotive industry. Specifically, it has helped fund products and technologies that will reduce harmful carbon dioxide emissions and enable cost-effective energy use in vehicles. “This did not only enable continued investments,” says Bušen, “but was a clear sign to customers that the automotive industry is one of the key priorities of industrial politics in the future.”

AUTOMOTIVE INDUSTRY

Basic facts about automotive industry in Slovenia: There are 85 automotive companies and 600 contractors The sector employs 24,500 highly qualified staff and a further 147,000 employees which are indirectly related Represents 10% of Slovenian GDP Contributes EUR 550m to the state budget

A total of 64,571 vehicles were sold in Slovenia in 2010, a 5,9% increase over the year before

“The loans were awarded to nine companies to find 19 projects totalling EUR 136m,” explains Stanka Ritonja, a spokesperson with the Ministry of the Economy. “We supported some 20 patents and innovative solutions. The companies that have received the funds will reduce carbon dioxide emissions by approximately 4.5 million tons each year.”

Photo: Revoz

Continuing commitment It seems the government is committed to continuing such assistance in 2011. Ritonja says the state will be co-financing a development centre for the automotive industry and that it will continue to offer comprehensive sources of funding. Undoubtedly, this support will prove important as the Slovenian car industry faces the challenges ahead. The worry of living up to the sometimes spectacular performances of 2010 must be minor

Source: ACS and SURS

Exports 80% of its production, which accounts for 21% of total exports of Slovenia

in comparison to finding ways to adapt to the increasing number of customer demands. “As an industry, we have in front of us important challenges in the fields of ecology, security and reliability, as well as challenges relating to improving our use of materials and technologies,” Bušen reflects. “Our main objective is creating a car which will be affordable, offer more comfort and security, and not release extra omissions into the environment.” He is confident that these are challenges which can be met by Slovenian firms. “With its technologically sophisticated production, high productivity, quality, cost efficiency and close associations with public research institutions, the Slovenian automotive industry can be an equal partner to vehicle manufacturers,” he argues. It is certainly a feat the industry managed in 2010. Now all attention turns to whether it’s one which can be repeated in 2011. 33

AUTOMOTIVE INDUSTRY

Christof Droste, Managing Director Hella Saturnus Slovenija

A Year of Success Despite being in an industry hit hard by the financial downturn, Hella Saturnus’ profits for 2009/2010 were significantly higher than expected; the company has been named one of the best Slovenian industrial companies and demand for its products is still going strong. According to the company’s managing director Christof Droste, there are multiple reasons for the automotive supplier’s impressive level of success – and plenty of plans to maintain this success in the future. The car market was one of the first to be affected by the crisis. How did you adapt your strategy to cope with the current economic situation? Importantly, we have not increased our fixed costs that much. We did not invest in new buildings, but instead rented an external warehouse, mainly for packaging and the like. We adopted a flexible approach to our activities. We are pretty much at the edge of our capacities and even though this is very challenging, we still have everything under control. The secret is not to make any mistakes in planning and operations – and as our outstanding business results show, we have been managing to do so. Over 90 percent of your work is export-oriented. What are the major markets for Hella Saturnus? Our major markets are in the European Union. We deliver to Belgium, Germany, England, France, Austria, Italy and others. Outside the EU, we deliver directly to China, Mexico and Brazil and indirectly to all BRIC countries (Brazil, Russia, India and China) as well. The profit for the financial year 2009-2010 was much higher than expected. What is the outlook for 2011? In my opinion, the market is now overheated, so it is very difficult to give a precise estimate at the moment. But I can say that we hope and expect to exceed expectations again in 2011 – although perhaps not in the same way. You have taken on an additional 800 employees in the last two years. What were the specific reasons behind that? First, we had planned an increase because of several new projects. But the second reason was the crisis, which, because of subsidies and car scrapping initiatives provided by many countries, saw our business go up rather than down. We planned a turnover of EUR 135m and we made EUR 225m. For that you need people. We mainly hired people in production – direct workers, transporters, foremen, technologists and even production engineers. But we also started to create new jobs in the development department. We created 30 new workplaces in that field and we are now filling them. Twelve of them have already been filled and we are looking 34

for another 18 engineers by the end of May 2011. This is one of our plans for this financial year. What are your other plans for 2011? On our roadmap, there are four main points. We want to be the leader in technology; we want to be the service leader; we want to be the cost leader and last, but not least, the quality leader. This is Hella’s strategy and it is the right one. Why is it important to do so – it is the only way we can gain a competitive advantage. We plan to move forward in terms of technology. The headlights we make are mainly halogen, but increasingly there is a switch to xenon. The output of xenon lamps is higher and their lifetime is longer, but they require electronics and that increases expenses. Also important for the future will be LED lamps. From the energy point of view, these are the lights of the future. How is Hella Saturnus performing in comparison to the rest of the Hella group? We are very successful in Slovenia and that makes us a very successful part of the Hella group and we are perceived as such. We have the auxiliary lamp competence centre in Slovenia, which means that we are responsible for fog lamps and the like. This shows that we are important within the Hella group. In the longer run, we want to play a big role in the international development network inside the Hella group. That does not mean that our people are not good enough in technical terms, they are, but we want to make sure that we are really working at an international level and in international teams inside of the Hella group. COMPANY NOTES

Hella Saturnus Slovenija

Hella Saturnus, Slovenija d.o.o. Letališka c. 17, 1001 Ljubljana, Slovenia T: +386 (0)1 520 33 33 F: +386 (0)1 520 34 01 info@saturnus.hella.com www.hella-saturnus.com

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Hella Saturnus Slovenija d.o.o., Letališka c. 17,1001 Ljubljana,Tel.: 01/520 33 33, Fax: 01/520 34 01, info@saturnus.hella.com, www.hella-saturnus.si

AUTOMOTIVE INDUSTRY

Thierry Villard, Managing Director Goodyear Dunlop CSEE

A Step Ahead

Sava Tires, Goodyear’s company in Slovenia, is the leading tyre manufacturing company in Central and Southeastern Europe (CSEE). Since 2006, the company has been part of Goodyear Dunlop CSEE organisation – whose headquarters are in Kranj – uniting 13 countries and 1,500 associates. According to Managing Director CSEE Thierry Villard, Slovenia is therefore at the centre of regional operations for the group. 2010 was an important year for Goodyear Dunlop CSEE and Sava Tires as a part of it. You took over as the new Managing Director (CSEE) in April 2010, and at the same time relocated the headquarters from Prague to Kranj in Slovenia. What led you to such a decision? Did the move bring any specific benefits? 2010 was undoubtedly a big year for Goodyear Dunlop CSEE. On the one hand, markets started to regain their power after the crisis. On the other, relocation of our headquarters was a major step. Several factors affected the decision to relocate. The most important was definitely production location as the majority of the region’s tasks are performed in Kranj where the factory is also stationed. By relocating we were also able to unite all the managing functions like sales, finance, and human resources in one place, resulting in improved communication. Kranj has since become the central point of business management for the whole region though we regularly visit different markets. How well is Goodyear doing on the Slovenian market and what are the specifics that influence the business? The Slovenian market is rather specific: it is quite small on the one hand but very important and extensive on the other. Car ownership is high and so the demand for tyres is high as well. Also interesting is the high demand for winter tyres. Therefore the Slovenian market is one of our main markets and at the same time a great prediction of sales movement in other countries in the region. Goodyear has been present in Slovenia since 1998. How good have these years been? In the 12 years since Sava Tires started operating, the business has grown steadily and consistently and so the plant and product lines have too. Productivity per employee has practically doubled over the decade. This is the combined result of production technology modernisation along with continuous business process optimisation. In this period, Sava Tires has changed from a low-value added tyre producer to a producer of high performance tyres with higher value added margins. These products require higher technological equipment and work skills. 36

Sava Tires is one of the biggest exporters in Slovenia – it exports over 90 percent of its production to European and other countries through the Goodyear Group sales network. How do you see the future of Sava Tires as part of Goodyear Dunlop CSEE? Sava Tires is one of the leading Goodyear factories in Europe in terms of product quality and efficiency of production. Our goal is to maintain and always improve this position and at the same time emphasise our cooperation with the local community. We strive for the best possible results in the production process as well. Tyre production has traditionally demanded the use of high quantities of solvents which are harmful to the environment. We are therefore aiming for zero solvent use in our production process. Our environmental efforts are also present in separate litter disposal inside the Sava Tires facility. Our care for the correct disposal of litter has resulted in a unique, fun and useful campaign Pozor(!)ni za okolje (Be aware of the environment) within which our cooperation with the community in Kranj and high school youth brings obvious environmental improvements. As ever, we will continue to focus on improving road safety – both in terms of our tyres and in terms of educational campaigns. For example, in 2010, we began implementing the activities of the “111 Safe” (Varnih 111) campaign. And to build upon 2009’s “For Child Safety” campaign, it was carried out again in the last months of 2010. COMPANY NOTES Sava Tires, d.o.o. Škofjeloška 6 4000 Kranj, Slovenia T: +386 (0)4 207 70 11 public_relations@goodyear.com www.sava-tires.si Sava Tires is part of Goodyear Dunlop Tires Central and Southeastern Europe organization

Goodyear adVoCateS road traFFiC SaFety

n Sava Tires road traffic safety of everyone comes first. We are striving to improve the road traffic safety through educational campaigns – in 2010, we thus began implementing the activities of the “111 Safe” (Varnih 111) campaign. And to build upon last year's “For Child Safety” campaign, it is again being carried out in the last months of the year.

ambassadors like Brane Küzmič, car racing legend, and Nina Jerančič, who advocates safe driving as well as the Formula 1 commentator Miran Ališič, we encourage drivers to adopt the principles of safe driving. All interested drivers were able to apply through our web site www.varnih111.si, and among all the applications we drew the names 111 drivers, who did not commit a single traffic violation within the period of five months. The draw of lucky winners took place on 22 October 2010, and the winners were listed on the www.varnih111.si web site and notified by mail.

For Child SaFety With the “For Child Safety” project we wish to educate children about safe behavior in traffic. The campaign is intended for all participants in traffic, since every individual that purchased four Goodyear winter car tires in October and November 2010 received a reflective vest they could give the youngest participants in traffic. The all-Slovenian project,

The 111 Safe campaign was organized, in cooperation with the Road Safety Council of Slovenia, with the aim to raise awareness about the importance of the technical conformity of the vehicles, and especially the suitability of tires. With

PROMOTiONAl ADD

Vulco dealer Benedičič and mayor of Tržič distributed safety vests among children in primary school OŠ Križe (2009)

Children of kindergarten Tržič are equipped with safety vests (2009)

in which more than 130 sales locations participated (www. goodyear.si), ensured greater road traffic safety for children. The project is a continuation of the campaign in 2009 involving over 40 kindergartens and elementary schools. The success of the “For Child Safety” campaign is further proved by the membership in the “european road Safety Charter” Association that operates under the auspices of the European Commission.

ELECTRONICS INDUSTRY

On the Mend

It is fair to say that 2010 didn’t represent a complete recovery for Slovenia’s electronics and electrics industry. Production and sales figures from this year remain considerably down from those of the pre-crisis days. But progress is being made, and there is a belief that the innovation and knowledge found in the industry can see it shake off the downturn for good in 2011. By Martina Budal

Good news and some struggles 2010 has also seen Gorenje expand its business. The year began with the grand opening of a store in Wenzhou, China selling only Gorenje products. Then in the summer 2010 the firm completed its first capital increase, allowing it to complete the acquisition of Swedish home appliances firm Asko Appliances Group. An autumn attempt to increase capital was unsuccessful, however, as shareholders failed to show sufficient interest. Gorenje’s year neatly sums up the experience of the whole electronics and electrics industry in Slovenia: some good news and still some struggles. The industry is bouncing back from the crisis, it seems, but there is still a way to go. “In 2010 we noticed a revival in demand in almost all sectors and companies were successful on tenders for centres of competence and development centres”, says Janez Renko, director of the Chamber of Electronic and Electrical Industry (CEEI) at the Chamber of Commerce. But it was no picnic, as companies struggled with long delivery times, longer pay times, the consequences of the crisis in the building sector, and troublesome financing for small and medium sized companies. 38

The power of innovation The outlook for 2011 looks better as orders in some segments at least are picking up. Innovation and knowledge remain the biggest assets of the industry and most successful firms are proving it with their work. According to Jožica Rejec of Domel, it is this expertise that has enabled the vacuum machine engine producer to keep its competitive edge, market share, and number one position in Europe. He says that the difficult economic times have not prevented the firm from innovating and creating new environmental and consumer friendly products. They even got a couple of new costumers. The figures bear out Rejec’s positive assessment of the year. After a drop in production of 33 percent in 2009, Domel planned a 15 percent increase in 2010. The results show that realisation will be about seven percent higher than planned and on some programmes it has already reached the 2008 level. Total turnover is expected to reach EUR 86m and profit should reach about

Turnover in electrical devices

Source: SURS

t has been an unsettled year for the 30,000 people who together make up Slovenia’s electronics and electrics industry. While electrical devices were one of the engines of export growth this year – the industry has foreign sales of almost EUR 2.5 billion – market share for Slovenian firms diminished, most notably in Germany. Few employees in the industry had a more unsettled year than those at Gorenje. After more than 60 years of production of electrical water heaters in Gorenje Tiki, the firm moved its production line to Serbia. It was a move greeted with sadness – especially by employees who had worked at the firm their whole adult lives – but one which seems to have assisted the group towards a successful year. By September, the company had already met and exceeded its expectations for 2010 with EUR 966m of income resulting in a profit of EUR 16.8m.

jan-oct 2009/2010 index 120

0 domestic

foreign

EUR 1.5m. And this is a firm which continues to have significant success abroad – more than 80 percent of its sales were created in foreign markets, the most important being Germany, Hungary, Italy, China and France, and much has been invested in the Russian and American markets. 2011 is expected to be an even better year for the firm, with 10 percent growth compared to 2010 expected. Domel plans to invest EUR 6.2m, a quarter more than this year and it should

Planned sales income in Gorenje

Source: Gorenje

Photo: BSH Hišni aparati

ELECTRONICS INDUSTRY

in million EUR 1500

1200

900

2009

2010

2011

2012

2013

keep all of its current workforce. In 2011 they also plan to start production on new highly efficient engines for a Swedish buyer.

Big plans Ventilator and fan producer Hidria Rotomatika is looking to new markets in 2011 as well. The firm’s traditional market is Western Europe but the company is now looking to the east too, where most the most promising market is that of Russia. In 2010, 85 percent of the parent company’s income was from overseas. This is likely to increase further in 2011 with the recent acquisition of the German firm Dr Kark Bausch. The automobile industry, a big customer for Hidria Rotomatika’s products, is already well on the road to recovery. But the firm does expect the crisis in the building sector to influence the air conditioning part of production at least for another year. Gorenje’s plans for 2011 are also well evolved. In February the company accepted its strategic plan for the period from 2010 until 2013. Home appliances remains the firm’s most important division, creating almost 80 percent of all income, and will remain so in the future. The firm says significant effort will be put into accelerating sales in the higher price range; cutting expenses in processes and in materials; expansion into business sectors with higher added value in their strategic sectors; and going to markets with double growth rate as compared to world growth rate. This is clearly an industry with big plans. After a tricky 2010, it is more than ready to have the opportunity to put these plans into action and finally bid farewell to the economic crisis. 39

ELECTRONICS INDUSTRY

BSH Hišni aparati

No Slowing Down In 2010, the factory which is now home to BSH Hišni aparati entered its fortieth year of operation. Unlike many of those approaching middle age, the facility shows absolutely no signs of slowing down. These past twelve months have seen revenues and production grow along with the workforce. It is a feat which the home appliances company is very much hoping to repeat in 2011.

ack in 1970, when a new factory was built in the small Slovenian town of Nazarje, it would surely have been tough to envisage what the facility might be like 40 years later. Even those with a crystal ball probably couldn’t have predicted the facility would be home to one of the country’s most successful companies – and one of the biggest foreign investors in this Balkan nation. And yet here we are in 2010, and that self-same Nazarje factory is at the centre of one of Slovenia’s business success stories. It is now the production facility for BSH Home Appliances (BSH Hišni aparati), the Slovenian branch of the Bosch and Siemens Home Appliances Group. The German giant became the sole owner of the factory back in 1993. That year, the factory employed

466 people and produced 900,000 appliances. Today, it has more than 1,000 employees who together ensure the company’s output is in the millions rather than the thousands.

Record production “The Nazarje factory will have produced a total of more than 6.5 million home appliances in 2010,” explains company chief executive Rudolf Klötscher. “That is an increase of almost one million pieces compared to 2009 and 15 percent more than planned.” Unsurprising, then, that Klötscher describes 2010 as “a satisfactory year”. He is not alone in this view. Respected daily newspaper Delo recently placed the company at number four in its top 50 industrial companies for 2010. At the factory’s fortieth anniversary celebration, none other than former economy minister Matej Lahovnik praised the company for successfully combating the economic crisis. He proclaimed that he would “like to see other companies going the BSH way.”

The BSH way So what exactly is the BSH way? How has the firm managed to prosper in a year when so many others have fallen by the wayside? According to Klötscher, the firm’s success can be explained in large part by a “focus on long-term, sustainable development and sticking to our strategy of sales enlargement and marketing on the principle of value for money.” It’s a strategy which saw the company further strengthen its position in all its markets in 2010 (the firm focuses on the 40

ELECTRONICS INDUSTRY

From strength to strength – BSH Hišni aparati’s milestones 1993

The German Bosch and Siemens Home Appliances Group becomes the 100 percent owner of the former Gorenje MGA factory in Nazarje. That year, BSH Hišni aparati’s 466 employees manufacture 900,000 home appliances. The production programme focuses on motor-driven products, such as hand mixers and meat slicers.

1995

The firm becomes the BSH Group’s competence centre for small domestic motor-driven appliances. It now employs 540 people and the Nazarje factory produces 1.1 million appliances.

2003

A marketing, sales and after-sales department opens in Ljubljana. It covers the entire Adriatic East region and is responsible for all small and major domestic appliances branded Bosch, Siemens, Gaggenau and Ufesa. The factory produces 4.3 million appliances.

2007

The company invests more than EUR 7m in a production hall for the new Tassimo multi-beverage appliance. It also opens a brand office in Zagreb, Croatia. Production grows to 4.7 million appliances a year.

2008

The Tassimo production hall sees the firm win the prize for the best foreign direct investment of the year in Slovenia. A branch office opens in Serbia and the workforce swells to 946.

2010

The firm’s workforce numbers more than 1,100 people and production grows to 6.7 million appliances. Delo names the firm the fourth best industrial company in Slovenia.

2011

Yet further growth and success?

Adriatic East region, classified as incorporating Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Kosovo, Albania and Bulgaria.) It has helped that BSH Hišni aparati has kept its debts low, allowing it to invest money in production, research and development, and new staff. The results speak for themselves. “At the end of 2010 we will have achieved two digit percentage increases in sales and revenue,” Klötscher says. “In both categories we will also exceed our planned rates by a double-digit percentage.”

More of everything Little wonder that the plan and hope for 2011 can be summed up as “more of the same”. “In 2011 we will aim to further increase sales,” reveals Klötscher. “Plans for production are even higher than this year, though not so much in terms of quantity as in terms of production value. Increasingly, we are focusing on higher value-added appliances.” For, while Nazarje may have started as a pure production site, it has turned into something else – a modern competence centre

Rudolf Klötscher, chief executive

for research and development. Now the firm’s development and production programme includes technologically complex small domestic motor-driven appliances and hot beverage machines. Investment in these areas will continue in 2011. “We plan to invest more than EUR 11m in the company in 2011,” says Klötscher. “And more than 50 percent of it will be invested in new products such as fully automated coffee machines, Tassimo (multi-beverage appliance, a joint project with Kraft Foods) and other small kitchen appliances. We will also be hiring more staff. We plan to recruit around 40 new people, particularly in the areas of research and development, technology and sales.” And early 2011 will see the firm opening a third branch office. It will be located in Sofia, Bulgaria, and follows the opening of similar facilities in Croatia and Serbia.

Expansion But while Klötscher may be aiming for another record year he is not optimistic at the cost of being realistic. He knows that the economic downturn isn’t completely over. He knows that the next twelve months will undoubtedly bring challenges. “Business-wise, we believe 2011 will still be quite a demanding year,” he admits. “But with our great teams and great products we remain optimistic that it can also be a highly successful one.” COMPANY NOTES BSH Hišni aparati, d.o.o. Savinjska cesta 30 3331 Nazarje, Slovenia T: +386 (0)3 839 82 22 F: +386 (0)3 839 82 00 Sales and Marketing Litostrojska 48, 1000 Ljubljana www.bsh-group.si

Information & COMMUNICATION Technology

Yet Another Challenging Year The Slovenian ICT industry may have weathered the economic storm better than most, but that doesn’t mean that 2010 has been pain-free. Spending on ICT has once again fallen, leaving firms facing the challenge of customers with flat budgets. But there is optimism that better days lie ahead.

Photo: Dreamstime

By Miran Varga

Information & COMMUNICATION TECHNOLOGY

Photo: BOBO

his time last year, leading market intelligence firm IDC Adriatics reported that the ICT market in Slovenia had shrunk by 10.3 percent. One year later and their latest analysis is good news only in the sense that matters haven’t got much worse. By half way through 2010, ICT spending was already down 1.3 percent on last year’s numbers. That has left IDC Adriatics predicting that the total spend in Slovenia in 2010 will eventually amount to USD 2,033m – essentially the same level as last year. “We expect Slovenian IT spending to remain flat year-on-year in 2010,” explains Darja Jama, country manager at the market intelligence firm. “Over the five-year forecast period, the country’s IT market is [expected] to expand at a compound annual growth rate (CAGR) of 4.4 percent to reach USD 1.13 billion in 2014 and the total ICT market at a CAGR of 1.9 percent to reach USD 2.26 billion in 2014.”

Fighting the decline Spending may have remained largely flat, but Slovenia’s ICT companies managed to stay afloat and generate revenue. Naturally, some sectors of the industry fared better than others. Telecommunication services contracted by 1.4 percent and there was a one per cent decline in combined IT spending (hardware, software and IT services). Last year’s biggest losers were businesses selling hardware, mainly server equipment and printers. It is likely that there is another tough year ahead as companies stick with their equipment as long as it works given there is no fresh money to be had for upgrades. Investments in IT gear were small this year as the trend of limited and stricter investment policies continued. Projects are still being broken into smaller pieces or even revoked entirely. In practice this means that very few investments are taking place and the ICT sector is, for the time being, mainly focused on the maintenance of existing infrastructure. The only investments that are realised are those with clear cost cutting elements in place.

Numbers don’t lie No wonder that there was a 7.7 percent year-on-year decline in IT services spending in 2009, and a further 0.9 percent drop predicted for 2010. At least the forecast for 2011 brings back hope with predictions of one digit growth. A similar fate was experienced by packaged software license and maintenance which dropped 7.3 Source: IDC Black Book, Q2 2010

Moderate growth Telecom services in % 20 15 10 5 0 -5 -10

Gregor Golobič: “Despite having many renowned and successful experts, Slovenia does not have an adequate number of its own experts to be globally competitive in this [ICT] field. We also need experts from other countries, and we hope that the internationalisation, similarly to the field of higher education, will be stimulated with a fresh impetus. Mobility and cultural diversity are of key importance for a country with a population of only two million.” percent in 2009 and will be happy to hit the expected flat growth in 2010. The ICT work horse that is telecommunications services declined 7.5 percent year on year in 2009. By the end of the year another 1.4 percent fall in spending in this area is expected, while in 2011 IDC analysts predict flat growth. And it is no fun to be hardware reseller these days. After a one fifth drop in income in 2009, the fight for customers was on this year. Despite great efforts hardware sales are still expected to have declined by 1.7 percent in 2010. The forecast for 2011 is better, though – the big winners are expected to enjoy double digit growth. That said, the current downturn has already felled some large companies which were unable to change their business model, had payment liquidity issues, or faced customers changing previously agreed projects. “IT solution providers find it hard to do business on this changed playing field,” explains Jama of IDC Adriatics. “Not even two years ago they had more say in, and more impact on, the conditions of how IT projects will be run and financed. Now they simply have to satisfy the customer’s every wish in order to get the contract. Flexibility of companies is playing a key role and, as it is not very likely that all companies can change in time, we believe that the future will bring additional consolidation in this sector, mainly through mergers and acquisitions.”

Change is good 2007/06

2014/13

Amidst this change and instability there is hope. The ICT sector may be struggling all around the globe but it has proved 43

Information & COMMUNICATION TECHNOLOGY

Source: IDC Black Book, Q2 2010

Better prospects for the future in % 20 15 10 5 0 -5 -10

Hardware total Total IT

-15

Services total Packaged software total

-20 2007/06

2014/13

says Mark McDonald, group vice president and head of research for Gartner EXP. The first signs of these changes can be seen in business priorities which lead companies to greater cost-based efficiencies. The largest productivity gains nowadays come from collaborative and innovative solutions which include cloud and so-called social computing. By now CIOs should have a clear view of the new challenges – the biggest one being the transition of IT from a support function to strategic contributor. When companies realise what the digital era is all about, they will eventually seek for innovation and competitive advantage in the ICT field where they should have looked in the first place. That promises better days ahead for Slovenia’s ICT industry. Photo: Dreamstime

in the past that this is an industry that can adapt rather quickly and this leads to the expectation of better times ahead. Many new developments will rely on new technologies such as cloud computing and the workforce itself which is becoming more mobile and interconnected. Work to ensure Slovenia is at the front of these developments is progressing well. In September 2009, the University of Maribor joined with various partners to establish the first Slovenian Cloud Computing Centre. The Centre provides state-of-the-art cloud infrastructure and comprehensive knowledge and experience. The aim is to increase awareness of this important new IT development. It is already having some success. “We have observed the most interest for infrastructure (IaaS) and software (SaaS) part, and a little less for platform (PaaS),” explains Professor Matjaž B. Jurič, who runs the Centre. “The important message is that companies have understood that cloud computing is much more than using virtual servers remotely.” Jurič is confident that the interest will increase further. “We expect that the interest will grow further in the coming months,” he says. “It seems that the prediction that the impact of cloud computing will be even bigger than the impact of e-business holds true.” Still, business leaders have to adapt companies’ business models and manage businesses more effectively. The general opinion in the ICT sector is that the recession ends with 2010. But things will never be the same again as the new economic reality sets it. Faced with multiple budget cuts, the corporate and public sectors will still be delaying their ICT spending. The demand side will also change in nature while companies will see increased demand for services with reduced resources. “While technologies are transitioning from ‘heavy’ owneroperated solutions to ‘lighter-weight’ services, chief information officers (CIOs) are, in turn, transitioning IT beyond merely managing resources to taking responsibility for managing results,”

Cloud computing is increasingly being used by companies to help ease their buisness processes globally

Information & COMMUNICATION TECHNOLOGY

Dejan Turk, President of the Board Si.mobil

Personal Touch Si.mobil was the first private mobile operator in Slovenia and remains a strong player in the market. According to Dejan Turk, president of the board, the firm’s success is down to focusing on customers as well as technology. You were the first private mobile operator in Slovenia. How has the firm grown and differentiated itself from the competition? Si.mobil was set up in 1998 and we started operations in 1999. But it was not until 2003 or 2004, when we formed a partnership with Vodafone, that people really became aware of us. At the moment we have more than 600,000 customers and almost a 29 percent market share. I believe the biggest turnaround was that we stopped thinking about ourselves as a solely technologically driven company, and started to think of ourselves as a people’s company as well. We said we do not have to be the first with the latest and best technology, but to think about the customers and their experience with Si.mobil as a whole.

companies in Slovenia do business, and where the biggest saving potentials are. And with our Vodafone partnership, we are linked to the biggest operator in the world. So we do not only offer a local footprint, but also a worldwide one.

In addition to basic services, what else do you offer to your customers? Today a mobile operator has to offer a whole range of products. Next to mobile voice and texting – which are still the best selling products – mobile internet is becoming very important. There is of course the need to educate people on how to use these services properly. Here again one of our core strategic advantages comes into play. We have people in call centres and in the shops to not just sell the phones but to explain the services on offer.

How have you adapted your strategy to cope with the current global downturn? First of all, we reorganised the market part of the business, so we segmented the departments oriented towards the market: sales, marketing, and customer service, which I see as one big entity now. Secondly, we completed a huge reorganisation in the technical area. Finally, we reacted to the cost-consciousness we saw out there due to the crisis by introducing new price plans.

You won the Golden Thread 2009 award for best employer in the category of big companies. What are the reasons behind this win? Quite simply, we try to give our employees a comfortable working atmosphere. We have also tried to significantly change the leadership and management style of the company, which I believe was very autocratic in the past. We try to be much more open, communicative, but at the same time also have some fun, bearing in mind that there is a tough business plan we have to deliver and fulfill. Si.mobil is owned by Telekom Austria Group. Does it help being part of a large group and having a foreign owner? It is very important being a part of a large group. It helps attract big corporate accounts: these companies are too big and too linked to the world to be connected to a small local operator. We can offer the footprint of the Telekom Austria Group, which is leading in the Balkan region, including Austria, where the majority of

Si.mobil generated EUR 12.7m in operating profit in the first six months of 2010, which is up 22.1 percent over the same period last year. Has this exceeded expectations? The primary goal for 2010 was to be better than last year. Even though it was still a very difficult first half of the year, we are very optimistic for the whole of 2010. This is especially in terms of customers where we have been growing significantly, not only in terms of the number of customers but also in customer satisfaction ratings.

What are the expectations and the strategy for 2011? The most important thing is that we will continue to do what has really made us great: focusing on the customer, focusing on the market, trying to understand the customer and really being close to them. We also plan to upgrade our system with significant amounts of new technology. And we are looking at ways to integrate fixed lines into our services. We still think there is room to grow, and we would like to add one percent market share or more per year for the following years – that’s one of the primary goals. COMPANY NOTES Si.mobil, d.d. Šmartinska 134b 1000 Ljubljana, Slovenia T: +386 (0)40 443 000 info@simobil.si www.simobil.si

Information & COMMUNICATION TECHNOLOGY

Igor Zorko, CEO ZZI

Paperless Business is a Reality Logistics and transport companies, just like electronic exchange, depend on the automation, full surveillance and process time reduction. All three goals can be reached at the same time only if partners connect and operate electronically, explains Igor Zorko, CEO of ZZI, a company that supports implementation and promotion of international e-document standards and e-business. Why is paper not enough anymore? Companies exchange data and documents electronically with a lot of business partners. If you don’t want to use a courier for a delivery, you can use postal service for paper or electronic exchange network for electronic documents. If you exchange edocuments, they have to be stored and used in the electronic form. Long term e-archiving services are not a newcomer any more. Many companies in Slovenia trust service providers with their archives. How did ZZI grow from a software development company to its e-exchange specialisation? Roots of the ZZI company date back to 1991. We started with development of the first independent Customs information system in Slovenia. We used the vast experience from the development and implementation of Customs electronic exchange solutions with thousands of partners to set up our own network and solutions for paperless processes among business partners. Our goal from the beginning was to provide one point of service for a company for its communication with all of its international and local partners, different national institutions in different countries, banks and locations. We promote one set of documents and one B2B gateway in the cloud for each company. Slovenian Customs is one of the most modern and electronically advanced in the region and EU. How did Customs administration impact paperless business in Slovenia? Slovenia’s Customs information system has been for many years now one of the most modern and advanced in the region. In 1996 the Slovenian Customs established electronic procedures with the business community. Almost all customs’ declarations were input 46

in Customs information system in electronic form before 2000. EU Customs’ procedures are based on the exchange of electronic messages between trading partners, national customs, EU customs and other institutions. Is ZZI considered to be a leading provider of electronic business solutions? Yes, by all means. ZZI is a high tech company with clear specialisations that were mentioned above. Customs administrations in the region have chosen ZZI as their partner. ZZI is one of the key solution providers that offers electronic document creation and exchange. We have built our own electronic integration network, which enables safe and reliable connectivity and integration between companies of different types. How big is ZZI e-document exchange network? ZZI is currently providing e-communication, e-exchange and estorage services and solutions to over 700 companies from the EU and in the Balkans region. E-document exchange and automation is present in the automotive industry, public sector, pharmaceuticals, commerce, logistics and food-processing industry. COMPANY NOTES ZZI d.o.o. Pot k sejmišču 33 1231 Ljubljana-Črnuče, Slovenia T +386 (0)1 530 33 00 F +386 (0)1 530 33 40 info@zzi.si www.zzi.si

Keeping paper in its natural form.

• • • • •

Dematerialization of paper documents and processes. Adaptation of paperless procedures according to local regulations and EU recommendations. Support of world standards and connectivity to the global network. Connectivity and integration of companies through an electronic integration network. Safe, reliable and proven solutions for automatization of e-business processes in the cloud.

ZZI d.o.o., Pot k sejmišču 33, 1231 Ljubljana - Črnuče, Slovenia, www.zzi.si ZZI d.o.o. Podgorica, Bul. Sv. Petra Cetinjskog 106, 81000 Podgorica, Montenegro, www.zzi.me ZZI d.o.o. Beograd, Bul. Zorana Đinđića 69 lok. 14, 11000 Beograd, Serbia, www.zzi.si

Information & COMMUNICATION TECHNOLOGY

Simon Kaluža, Managing Director SAP Slovenia and SAP Adriatic

Technology Matters

Since Slovenia was one of the fastest growing countries in the region in the past decade, SAP Oesterreich GmbH recognised the potential and established a branch in the country in 1999. But the demands and needs of the fast developing Slovenian market were so big that SAP AG decided to open an independent local office. Managing director of SAP Slovenia and SAP Adriatic Simon Kaluža believes the company has a bright future as it continues to deliver innovative solutions for all kinds of businesses.

Why has SAP decided to set up a branch in Slovenia? Slovenia was a fast developing market, with a very high potential for the future. Slovenian customers demanded a lot and since fast localisation of SAP software was a crucial point in decision making process of the Slovenian companies when considering IT support, establishing a local office was the only option. As a local office now we can offer best support to our customers.

our business. Of course government organisations are a big opportunity for further growth and we will be participating in government tenders, however relying on just this aspect of the business is not our strategy. In the past year we have secured longterm contracts with the Slovenian tax administration and public utilities company Javni Holding Ljubljana. This proves we have the great solutions for almost every business environment.

What are the biggest potentials in Slovenia’s IT industry? IT industry as a whole is changing and every change also means a great opportunity. As I see it, IT industry has to accept the fact that IT is a support function for running businesses and companies. Our main focus has to be in helping our clients run their businesses. For that reason we have to understand the environment in which they are working and challenges they are facing. And here the potentials are enormous.

What are SAP’s most popular products in Slovenia? How does this compare to other markets? The most obvious distinction from other markets is that in Slovenia we have hardly any large companies or global players. Slovenian companies can be seen as medium enterprises from global point of view. In recent years we were developing product solutions that are focused on Slovenian SME market for which we received a great feedback, since these new product offerings are better suited to their needs. The same can be said for the whole Adriatic region. In terms of business software sales the demand is also increasing for business intelligence products – they can deliver comparative advantages to companies that are using this kind of software to better understand and support their business. Most popular SAP

Many IT companies in Slovenia rely on jobs provided by the government organisations. Is this the case with SAP, too? SAP Slovenia is a partner of both private and public sectors. At the moment the private sector represents a bigger share of 48

Information & COMMUNICATION TECHNOLOGY

products in Slovenia are SAP Business Suite and SAP Business Objects – our Business Intelligence platform. SAP is known for having an enterprise oriented customer base, but the company has also approached SMB segment in recent years. This should help Slovenian SAP office to attract even more customers? Yes, indeed. SAP has developed a product called SAP Business All-in-One which takes care of all business aspects for companies with up to few hundred employees. We were very quick to localize it and it has already proven to be a great success in our market and the region. Customers that use this product include Akrapovič, Mikro+polo, Sip Strojna and Unichem with numerous companies due to follow their lead shortly.

clients and we will engage even more in solving their problems and challenges. We strongly believe that this change in the mindset of IT industry has the biggest potential for the future – understanding the clients’ business and offering the best solution and instant help when needed. Our global slogan “Best Run Business Run SAP” is definitely true in Slovenia.

How many partners do you have in Slovenia and how many clients? We have seven SAP certified partners and approximately 80 local SAP customers (without international branch offices that are also using SAP). SAP is leading the Slovenian EAS (enterprise application software) market in the last years, securing almost a third of the market. This shows that our clients are satisfied with our products and our services and this is something we are going to build on even more in the future. The new technology, cloud computing, is said to be changing the IT industry fast and that companies are queuing to adopt the new software service provider. What is the uptake on the new technology in Slovenia and how is cloud computing being received by businesses across the country? Cloud computing is not something that is coming; this is something that we are already using. This is a logical upgrade of IT industry and is somehow an answer to the existing needs. Like all upgrades, cloud computing will also have an impact on the way we do things, however this is not a revolution. Quite a few positive effects are rising from the “clouds” – companies no longer need to invest in expensive IT infrastructure; they can simply lease it for a limited time and in desired capacity – just to complete a task. And because they pay only for what they use, great cost savings are in place. SAP has already begun migration of its software solutions to the clouds as we want to offer our customer the best possible solutions for their business. Many analysts believe that business in general is going mobile. What is your opinion? I think a great part of business will definitely be mobile in the future. Even today we can see that mobile workforce is becoming a reality. Business software providers such as SAP know this and are preparing all necessary solutions to support mobile business models. In 2010 SAP AG acquired Sybase Inc., a mobile solutions provider, for approximately USD 5.8 billion. With this intellectual property SAP will be able to migrate all of its core business solutions to mobile devices. What SAP technology solution are you most proud of ? I believe this would be one of SAP’s latest achievements – the inmemory computing inside SAP HANA. SAP’s High-Performance Analytic Appliance (HANA) enables organisations to instantly explore and analyse all of their transactional and analytical data from virtually any data source in real-time. This way SAP HANA paves the road to analysing business as it happens and adds value to business data and information. What are SAP Slovenia’s plans for 2011? We will continue to offer the best products and best services to our

COMPANY NOTES SAP d.o.o. Dunajska 156 1000 Ljubljana, Slovenia T: +386 (0)1 588 12 55 F: +386 (0)1 588 13 85 www.sap.com/slovenia/

ENERGY

Turbulent Year 2010 was a turbulent year for the Slovenian electricity sector. A number of quarrels over the country’s future energy needs rumbled on, overshadowing the positive performances of some companies in the sector. By Martina Budal

Electricity production in Slovenia

Positive energy With the negativity swirling around the sector, it was easy for more positive stories to get overshadowed. Take the tale of Bisol, the only producer of photovoltaic panels in Slovenia. Its president and chief executive Uroš Merc, the Entrepreneur of the Year in 2009, was busy this year too. His firm built the biggest on-roof photovoltaic power plant in Slovenia (on the roof of Cimos TAM in Maribor); opened offices in Italy and France and retained their position in Belgium; bought land for a new factory in Murska Sobota; and received the prestigious Ruben d’Honneur award for its innovative work. These are just a few of the firm’s many accomplishments – it should end 2010 with EUR 55 million in sales and 100 percent growth compared with year 2009. They plan the same growth rate for 2011 but Merc says much is dependent on prices in the photovoltaic market at the beginning of 2011. 50

Hydro power plants: 29.1%

Other power plants on transmission grid: 0.7%

Source: Energy Agency

Photo: Dreamstime

quick review of the Slovenian energy sector over the past twelve months reveals a large number of negative headlines. There was the news that customers had been paying too much for power – after progressive rises in the price of electricity – and that suppliers would have to return overpayments. There were the massive and ongoing arguments about the planned Unit 6 at the Šoštanj thermal power plant. These were arguments which saw two directors swept away, quarrels in the government coalition, and a fundamental review of the whole project – necessary not least because of suggestions of improprieties over the plans, environmental worries, and the fact there is only enough lignite in Velenje Coal Mine to feed Unit 6 up to 2054. Then there was the controversial proposal to join Slovenia’s two energy pillars. The two firms, established to enable privatisation of Holding Slovenske Elektrarne and create competition in the electricity market, are now supposed to join back together to form a single electricity production company. The idea caused plenty of debate, immediately gaining both strong supporters and strong opposition. The final decision will be taken in coming years.

Thermal power plants: 40.4% Nuclear power plant: 24.8%

Power plants on distribution grid: 4.9%

ENERGY

in one of its units, thus reducing carbon dioxide emissions and improving the air in Ljubljana.

Growing renewable sector 2010 saw continued growth in the renewable sector. According to the Energy Agency, by November 269 new power plants had been put in the power grid with 15.4 MW installed power. 257 of them were photovoltaic, most of them smaller that 50 kW installed power, which suggests many individuals decide to put a photovoltaic power plant on their roof. For now such power plants remain a marginal but valuable part of the Slovenian energy sector – they produced 695,068 MWh electricity from January to the end of September, enough to power 236,000 households. But as per the government-adopted National Action Plan for Renewable Energy Sources 2010-2020, further growth is expected.

Stable gas market The gas market on the other hand remained stable with total natural gas consumption at around one billion standard cubic metres (Sm3). The crisis has resulted in a small decrease in use in the industrial sector but use of gas in power plants increased. After stable low prices in 2009, the gas price went up in 2010 but is expected to remain the same in next year as no major change in the oil market is expected. According to Geoplin, the biggest gas provider in Slovenia, the gas price follows oil prices but is also affected by the exchange rate between Euros and US dollars, transportation costs, usage dynamics, and some home costs like excise duty or network duty.

What will 2011 bring?

Use of other energy sources

in billion Sm3 12 10

Source: Statistical Office

Gas usage

Source: Energy Agency

Another success story was found at Tetol, Ljubljana’s own power and heating plant. Its mobile website was recognised as one of the five best in the world in terms of environmental information. The company also gained all permissions to operate biomass co-firing

2011 promises a variety of important decisions that will affect the energy sector in Slovenia. Parliament is to pass a new energy law and the 2011 National Energy Plan will be adopted, establishing Slovenian energy policy and strategy. The latter puts a lot of emphasis on electricity, while the gas sector is not completely covered, and there is a lot of emphasis on renewables and energy efficiency as priority issues for both European and Slovenian energy policy. The new year will also see the Agency for Cooperation of Energy Regulators start work in Ljubljana, the first European Union agency with headquarters in Slovenia. Above all, most will hope that 2011 brings a more settled year for this currently turbulent sector.

January to October 2010 (in millions tonnes) Brown coal and lignite

Liquid gas

8 6

Unleaded gas 4 2 0

Gas oil

2010

2011 expectations

0.5

1.5

2.5

3.5

ENERGY

Current investment opportunities Kozjak Pumped Storage Plant The construction of the Kozjak Pumped Storage Plant on the Drava River –25km west of Maribor and 2.2km upstream of the existing Fala Hydroelectric Power Plant – is included in the Government Resolution on National Development Projects for 2007-2023. The new storage dam and reservoir standing 700 metres above the riverbed will help ensure a safe and high-quality supply of electricity by eliminating the shortage of peak energy at the electricity energy system and provide tertiary regulation energy, contributing to more reliable electricity energy system operation.

Investment opportunity Budget/total cost The required investment is estimated at EUR 323m with an internal rate of return of eight percent. The construction of the plant is scheduled to be completed in five years.

Pumped storage hydroelectric plants use excessive electricity available during the night to pump water into the higher reservoir. At the time of increased electricity demand during the day, the accumulated water is used for electricity generation. The Kozjak facility, with an installed power of 2 x 220 MW in the turbine mode and 2 x 176 MW in the pumping mode, will generate 985 GWh of electricity a year to ensure high availability and reliability for peak load operation: high during the daytime and low during the night.

Project finance/support Finance contract(s) to cover approximately 50 percent of the total investment.

Project Leader: HSE (Holding Slovenske Elektrarne)

Soške Elektrarne Nova Gorica: Main Development Projects Učja River Hydropower Facility

Kanalski Vrh Wind Power Plant

Kneža River Hydropower Facility

Photovoltaic Power Plant at Kanalski Vrh

Discharge water flow (Qi): 2 m3/s Average annual power production: 5 GWh Tentative funding required: EUR 2.5m Planned construction period: 2011-2012

Average annual power production: 1.1 GWh Tentative funding required: EUR 3.3m Planned construction period: 2012

Discharge water flow (Qi): 20 m3/s Average annual power production: 31 GWh; tentative funding required: EUR 55m; planned construction period: 2012 – 2015

Drinking water and micro hydropower facility Možnica II Discharge water flow (Qi): 1 m3/s Average annual power production: 3.5 GWh Tentative funding required: EUR 3.2m Planned construction period: 2012-2015

Project Leader: Soške Elektrarne Nova Gorica

Average annual power production: 32 GWh Tentative funding required: EUR 10m Planned construction period: 2012-2013

ENERGY JAPTI - Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments Verovškova cesta 60, 1000 Ljubljana T: +386 (0)1 589 18 70, F: +386 (0)1 589 18 77 fdi@japti.si, www.investslovenia.org

Reconstruction of Trbovlje Thermal Power Plant Trbovlje Thermal Power Plant (TET) is one of two coal-fired power plants in Slovenia that use locally-mined coal. It boasts a long tradition in the energy sector and rich experience; the first kWh of electricity was produced there back in 1906. TET is the largest energy facility in the Zasavje region. The thermal power plant has two production units – a steam plant having capacity of 125 MW, which produces electricity from brown coal from the Zasavje coal mines, and two steam plants with combined power capacity of 2 x 31.5 MW that burn fuel oil and function as a reserve in the Slovenian power generating system. The annual production of electricity in the thermal power plant is approximately 600 GWh.

Investment opportunity Budget/total cost The reconstruction of the boiler with other minor investment requires EUR 70m with an expected internal rate of return of seven percent. The project will take three years to complete. Project finance/support Finance contracts to cover approximately EUR 35m or 50 percent of the total investment.

The site for TET 3 can accommodate a unit with a capacity of up to 300MW. It is also possible to transfer the same capacity into the transmission grid without any major investment needed. The potential investor may choose between a stake in the company’s capital and a loan agreement secured by electricity produced after the reconstruction of the facility. A minimum investment needed is funding for the boiler reconstruction. Other solutions for investment having a total capacity of 300MW would be welcomed. Project Leader: HSE (Holding Slovenske Elektrarne)

TE-TOL Utility Company TE-TOL is Slovenia’s biggest power cogeneration facility producing electricity and heat. TE-TOL covers practically all heating for Ljubljana or some 50 percent of thermal energy supplied to the district heating system across Slovenia. It produces three percent of the country’s electricity supply. The project envisages a new combined cycle gas turbine unit for heat and electricity production. The gas gen-set with power of 60-90 MWe will be constructed including heat recovery steam generator (HRSG) and steam gen-set or two smaller gas gen-sets. Each will have a power of 40-50 MWe and equipped with its own HRSG instead of one single larger gas gen-set. Natural gas will be used as primary fuel and heating oil as reserve fuel. In line with the TE-TOL development strategy, the PPE-TOL Unit is stage one of the TE-TOL gasification process.

Investment opportunity Budget/total cost The investment is worth EUR 119.5m (without VAT and financing costs) or EUR 13.7m with financing costs until PPE-TOL starts to operate. Project finance/support: TE-TOL envisages funding the larger part of the investment with debt financing. Up to EUR 60m is planned to be provided by the European Investment Bank.

Combined heat and power (CHP) is an efficient, clean, and reliable approach to generating power and thermal energy from a single fuel source. TE-TOL uses heat that is otherwise discarded from electricity generation to produce thermal energy to provide heating for Ljubljana. Cogenerations’ higher efficiencies reduce emissions of the greenhouse gasses associated with climate change. The implementation of new CCGT will improve the fuel consumption rate by around 90 percent as opposed to 80.3 percent for the existing coal-fired units. Project Leader: Termoelektrarna Toplarna Ljubljana

ENERGY

Igor Koprivnikar PhD, member of the management board, GEN-I

GEN-I: Growing the Smart Way

Since its establishment in 2004,the Slovenian-based GEN-I energy group has been penetrating multiple electricity markets in Central and South Eastern Europe. Now present in 16 countries, the group specialises in electricity supply activities – everything from purchasing electricity from producers to trading electricity and selling it to end customers. According to Igor Koprivnikar – member of the GEN-I management board and general manager of the group’s affiliated trading companies abroad – the firm’s success is the result of a variety of innovative products and a flexible yet reliable approach.

GEN-I is known for its competitive approach on the domestic market. What are the results of your sales activities? From the very beginning, the Slovenian market and the general public have positively embraced our activities on the market. That’s because GEN-I brought incentives for better services, products and particularly appreciated economic benefits for Slovenian end customers. This is evident in the consistent increase in our market share on the Slovenian market. This year we will sell around three terawatt hours (TWh) of electricity – roughly a quarter of Slovenian consumption. Sales to Slovenian end consumers show a growth in volume of approximately 60 percent compared with the previous year. Initially we focused on sales to big corporates and industrial companies, where we are already strong market leaders. Last year we started the focus to households and small and medium sized companies, where we have already reached a relatively high number of clients. However, in terms of supplied electricity the Slovenian market represents just a small portion of our portfolio. The majority of our transactions are concluded abroad. 54

Over the years you have consistently strengthened your position in all the markets in which you’re present. How have you gone about this? And how can you build on this success? We started to build an international trading infrastructure almost immediately and today it already covers 16 markets. By operating through 11 subsidiaries, we have established effective cross-border trading links between the liquid markets of the West and the developing markets of South and Eastern Europe. These companies are equipped with the entire infrastructure necessary for cross-border electricity trading and most are also licensed for the supply of electricity to end-consumers. In terms of traded volumes market share we are already considered one of the dominant players in electricity trading in South Eastern Europe. The key to success no longer lies in a simple increase in traded volumes, though. It now lies in building an in-depth understanding of individual markets, and specialised knowledge on how to master these specifics in a globally oriented portfolio.

ENERGY

Following this approach the optimal realisation of trading opportunities and systematic risk management are incorporated in the very essence of our trading activities. How would you describe your business model? The company is basing its strategy on two pillars: one is trading of electricity and the other is the sale of electricity to end customers. Although we are talking about the same commodity, they are like two different worlds that need to be balanced – retail needs more of a local infrastructure and intense presence, while wholesale requires a top-down, centralised approach. When it comes to trading, margins can nowadays only be secured through effective management of time and geographic components of the portfolio. The central part of the strategy is to create relationships based on partnerships, both on the selling and buying side. We offer different structures of products, which vary in pricing and profile attributes, providing the high-quality solutions for various individualized requirements for optimisation of either consumption or production. We specialise in harnessing the volatility of liquid markets to secure the maximum benefits for our partners – that simply means that we provide the infrastructure so that producers can sell when prices are on the highest level and consumers can buy when market prices are low, while deciding for themselves what level of risk they are willing to take. Our trading floor follows the 24/7 approach, meaning that our team is active on the market round-the-clock and continuously looks for new opportunities. Such an approach is what really brings fun to our business and there is already a substantial track record of our activities, which proves that the chosen business model works. GEN-I has shaken up the Slovenian electricity market with its “Affordable Electricity” brand. Do you plan similar moves abroad? Yes – we are already implementing this strategy abroad. A few end consumers in Austria and Italy are already receiving our energy and we have signed some significant contracts in these markets for next year. In addition, this model is going to be implemented in the Croatian and Greek markets and we keep looking further. As we are licensed to sell electricity in several other countries in the region, we are increasing our sales efforts in Albania, FYR Macedonia, Bulgaria, Romania and Bosnia. The good business results in your annual reports speak for themselves. What are the expectations for the rest of 2010? The forecasts for 2010 suggest the company will again show very good results, despite the market conditions having been a lot harder this year. The real growth can be seen in revenues,where we have exceeded our expectations – on the consolidated level we will reach a turnover of EUR 600m, which represents more than a 40 percent increase on the previous year. Strong growth is seen in traded volumes.This year we have traded more than 12 TWh, which is approximately the total yearly consumption volume of the whole Slovenian market. GEN I has been increasing its employee numbers recently. Can we expect further new additions to your team? The company is constantly searching for well educated, highly ambitious and versatile specialists to join our team – they are our biggest asset. By the end of 2010 the group will already employ more than one hundred people. The majority have completed university degrees and 10 percent have also completed postgraduate studies. In 2011 we plan to increase our workforce by more than 10 percent. I personally enjoy working with such a

creative and hardworking team and it is satisfying to see that all our efforts are reflected in good results. What are the plans and expectations for 2011 and beyond? We want to diversify our trading activities to several new markets like France, the Czech Republic, Slovakia and, slowly but surely, Turkey. We will also focus on strengthening our retail pillar. To support our goals it will be very important to adopt all the internal processes and the internal philosophy of organisational culture. Internal orientation is required, because we want and need to grow, but in a smart way. Our goal is to be the best at positioning ourselves as a strong and reliable partner. COMPANY NOTES GEN-I, trgovanje in prodaja električne energije, d.o.o. Cesta 4. julija 42 8270 Krško, Slovenia info@gen-i.si www.gen-i.si

ENERGY

Termoelektrarna Toplarna Ljubljana

Avenue of Sustainable Energy Toplarna Ljubljana thermal power station (TE-TOL) is the main producer of energy for Ljubljana’s district heating system. Recently, the strategic development plans for the plant have been steered toward sustainable energy policies. The planned diversification of primary energy sources (coal, biomass and gas) will enable the largest co-producer of heating and electric energy in Slovenia to increase environmental and energy efficiency and reduce single source dependency.

ver the last ten years, TE-TOL has been using coal with the lowest sulphur and ash content in the world, thus achieving relatively low emission values in comparison to legally allowed values. However, TE-TOL has decided to focus its development plans on decreasing the use of coal – particularly in light of forthcoming environmental legislation and the fact that the existing coal furnaces have reached their maximum capacity. Two years ago the company entered the most ambitious investment cycle which is based on environmental protection, energy location and complementarity, ie. replacing existing technology with less environmentally problematic ones.

CO2 emissions down by 10 percent with biomass

The first strategic project on reducing negative influences on the environment, now in its second year, was the introduction of a renewable energy source. In 2008, the company decided – despite the non-stimulating atmosphere – to boldly go where only a few have gone before. The project required demanding reconstructing and technological work, and building new facilities. The achieved results have exceeded expectations. “In 2009 we produced 31GWh of green electricity and 90 GWh heating energy out of wood chip, which amounts to eight percent of gross TE-TOL production,” explains TE-TOL director Blaž Košorok. “We have used approximately 64,000 tons of wood chip and effectively reduced coal consumption by 36,000 56

ENERGY

tons.” He adds that the key reason for taking this path is to reduce greenhouse gas emissions. “Wood energy has helped us reduce CO2 emissions by 68,000 tons: a good 10 percent. We have cut down SO2 emissions by 40 percent, NOx by five percent and ash and slag by 11 percent.” This is an important improvement in Slovenia’s fulfilment of international requirements on increasing the use of renewable energy sources. Significantly, in 2009 TE-TOL co-produced 60 percent of biomass energy in Slovenia.

Natural gas to substitute half of coal An important contribution to the national energy level – and the key developmental potential for TE-TOL – is the introduction of natural gas. By 2015 the company plans to substitute nearly half of the coal it currently uses (average yearly coal consumption is 400,000 tons). The planned combined gas and steam turbine and process will produce the same amount of heating energy while at the same time facilitating a two-fold increase in electricity production. Decreasing use of coal will also considerably reduce CO2, NOx, SO2 and dust emissions.

TE-TOL activities can be followed via a mobile website which shows 24/7 emission values and data on energy production. The TE-TOL mobile portal was declared one of the five best socially responsible practices in the field of mobile accessible environmental content in the world by the World Summit Award (WSA), part of Global Information Society Summit of the UN. Košorok believes this investment is worth significant attention and hard work. Despite the non-stimulating investment atmosphere he strives towards continuity and intensity of project activities: “The combined gas and steam unit is vital for TE-TOL particularly in the light of the forthcoming environmental regulations of NOx emissions. We plan to launch the turbine at the end of 2014, or in early 2015,” he explains. The building permit and the energy and environmental permits have already been obtained. Soon the tender for main equipment will be published. The investment value according to the investment plan is an estimated EUR 130m. The financing will be provided by the European Investment Bank, bank loans, TE-TOL’s own resources, and a strategic partner.

District cooling challenges producers and investors

In order to increase appliances outcomes that is to increase heating demand in the summer TE-TOL is also working on a district cooling project. Košorok explains that, apart from environmental effects, the project represents an important opportunity for development of Ljubljana’s energy system, mostly by efficient energy use.

Blaž Košorok, Director of TE-TOL

Marko Notar PhD, Deputy Director of TE-TOL

Waste to Energy – an opportunity for Ljubljana The evermore present environmental problem is essentially becoming a problem of waste management and demands special treatment from the point of achieving sustainable and sensible economy. With the municipality of Ljubljana, the Public Holding Ljubljana and the companies that form the Holding, TE-TOL is coordinating a project proposal on constructing a facility for waste usage in Ljubljana. The head of the “Waste to Energy” (WtE) project, Marko Notar PhD, TE-TOL’s deputy director, says that despite waste burning being a compulsory state public service the WtE project remains part of TE-TOL developmental strategy. “The environmental legislation calls for locating such facilities in localities where a remote heating system is already in place,” says Notar. “In Slovenia, there are not many opportunities for such an approach. This makes Ljubljana, especially in view certain activities already under way, a logical choice of location for the WtE facility.” The value of the planned 30 MW WtE facility – which also best corresponds to the capacity of the planned regional waste management centre in Ljubljana – is estimated at EUR 90m. Notar explains: “Project financing at the moment is not yet clear. The most viable, particularly with respect to the present situation in the country, is the option to apply for a European Union Cohesion grant as defined in the Operational Programme Infrastructure and Environment by 2013.” If the project is to be initiated in Slovenia by 2016, it is time to make decisions. “If we want to keep with the timing of building the regional waste management centre we need to make great efforts also on state level,” says Notar. “We need to break records in state spatial planning activities as well as in de-bureaucratising EU grants applications procedures.” TE-TOL believes that an excellent team, the approval of the local community, and state support will help them realise the project within a reasonable timescale. COMPANY NOTES Termoelektrarna Toplarna Ljubljana, d. o. o. Toplarniška 19 1000 Ljubljana, Slovenia T: +386 (0)1 587 52 00 info@te-tol.si www.te-tol.si, m.te-tol.si

ENERGY

Sunny Outlook The Slovenia-based BISOL company is one of the leading European manufacturers of solar photovoltaic modules. With a dedication to technology and customer satisfaction, the firm has proved itself a strong and reliable business partner and gained wide recognition in the global market of photovoltaic solutions.

ISOL, a rapidly growing and innovative and ambitious company, has rich international experience in the production of crystalline silicon photovoltaic modules, which are the basic elements of solar power plants. Implementing a modern, hi-tech manufacturing process, BISOL represents an advanced provider of the latest technology solutions, which exceed the expectations of even the most demanding customers. In its four years of existence the company has recorded over EUR 110 million of income from sales. In the last year the company saw a hundred per cent growth, doubling the number of employees and the annual production capacity, currently at 110 MW.

Customers are key Customer feedback is the most important element of BISOL’s work. Its experts, working in the most advanced laboratories, constantly strive for further improvements to fulfil the specific technology demands of customers. The company implements its strategy of strengthening its position in the global market by stimulating sustainable growth and lowering production costs. The latter is achieved by constant innovations in technology, development of new products, and increasing productivity. BISOL products can be found in a variety of international markets, where the BISOL trademark represents an established symbol of top quality. International business activities are strengthened by a network of subsidiaries in Belgium, France and Italy. The firm’s business strategy involves local presence at all important markets for the photovoltaic industry around the world. BISOL’s subsidiaries follow the company’s main goal: to meet the highest quality standards and to carry on the tradition of a customer-friendly company.

Quality certification BISOL is one of the few European manufacturers of photovoltaic modules listed among MCS certified products, which are permitted to be sold in Great Britain. The internationally recognised quality certificate was approved for advanced design and production qualities of photovoltaic modules. BISOL 58

modules provide exceptionally high energy yield, in areas with both high and low solar radiation. BISOL successfully implements years of experience with manufacturing photovoltaic modules into the construction of photovoltaic power plants. High quality standards, precise knowledge of particular building elements of photovoltaic or PV systems, and its own grid solutions make BISOL a reliable partner for turnkey projects. Customers are offered complete solutions in the construction of solar power plants, from initial consulting, engineering, assistance with legal and administrative procedures, to setting up the power plants as a turnkey product as well as maintenance. Photovoltaic modules and BISOL’s own team of highly skilled engineers, project managers and installers can guarantee quality photovoltaic power plants with highest energy yield. For its exceptional quality at all levels, the company holds a fifty per cent market share in Slovenia. BISOL directly provides turn key projects in Belgium, the United Kingdom, France, Italy and the Czech Republic, where the firm has completed the construction of the country’s most demanding 2.4 MW solar power plant. The plant is a unique achievement in technology as it is laid on a rough terrain with inclinations of between thirty and fifty degrees. The sun is the most self-sufficient and effective source of energy and considering the long existence of mankind, it is an inexhaustible source of energy that has determined our past and will shape our future. The visionary and progressive thinking of BISOL represents itself through its supreme quality, which rounds up the integral offer of the prime class elementary benefit – the green electricity! COMPANY NOTES BISOL, d.o.o. Latkova vas 59a 3312 Prebold, Slovenia T: +386 (0)3 703 22 50 F: +386 (0)3 703 22 63 info@bisol.si www.bisol.com

FINANCE

Ongoing Struggles Just a few years ago money was an easy commodity for banks to come by. During the boom years, banks in Slovenia happily made the most of the cheap money that was sloshing around Europe. Come the economic downturn, loans made with that money turned sour and the caretakers and lenders of Slovenia’s money started to struggle. As 2010 draws to a close and 2011 begins, that struggle is not yet over.

obody ever said that turning around the Slovenian banking sector would be easy. This is a sector suffering a severe hangover from both the boom and the bust and, as with any hangover, a bitter pill or two will have to be swallowed for the headache to subside and for the appetite to return. Many feel that, by taking the necessary write-downs as quickly as possible and cleaning up the balance sheet, Slovenia’s banks have made a good start on the road to recovery. While these actions will hurt profits in the short term – a write-down is simply an admission that the bank does not expect to get all of its money back – they will undoubtedly boost confidence in the long run. If the banks are to start lending again, however, cleaning up the balance sheets just won’t be enough. Losses on bad loans have eaten into banks’ capital, seriously reducing their capacity to lend. In July, Slovenia’s biggest bank only just squeezed through the European Union’s stress tests – tests meant to demonstrate the stability of Europe’s major financial institutions. For Nova Ljubljanska Banka (NLB), the exercise only demonstrated an urgent need to raise fresh capital.

The state to the rescue

That NLB has managed to stay above water is thanks in large part to the actions of the state, which is not coincidentally a part owner in the firm. The state also has stakes in the two other biggest banks –Nova Kreditna Banka Maribor (NKBM) and Abanka. When the financial crisis hit after the demise of the US investment bank Lehman Brothers in late 2008, the government quickly moved to safeguard the stability of the financial system: it guaranteed all bank deposits and established a guarantee scheme for banks, allowing them to raise debt on international financial markets on better terms.

Feasting on money from abroad There is no doubt that the evaporation of liquidity in the wake of the Lehman bankruptcy hit Slovenia’s banks hard. They had got used to cheap whole-sale financing from abroad – something which had increasingly replaced deposits as the main source of funds to be lent to companies and households. At the height of the credit boom when credit growth exceeded 30 percent year-

FINANCE

Sudden stop Credit growth, loans to non-financial sector, year-on-year in % Source: Banka Slovenije

0 Q1 2007

Q3 2010

Raising capital

on-year, almost a third of Slovenia’s banks’ financing came from international financial markets. When the financial downturn hit and the cheap financing dried up, banks got into a tight spot. Unable to refinance their debts, they were left with two choices – calling in their loans to repay their foreign creditors or finding alternative sources of funding. The former would have sparked off bankruptcies in a corporate sector itself mired in recession. Fortunately, the European Central Bank (ECB) stepped in with unlimited cheap funds while the government deposited EUR two billion from the proceeds of bond sales in the country’s banks.

As these debates continue, the corporate sector is already complaining that it cannot refinance its loans, raising the spectre of a credit crunch that could bring the economy to its knees. Restoring the banks to health with sizeable capital injections is therefore becoming of paramount importance. At NLB at least this process seems to have started. Although disagreements over strategy had emerged between the bank’s two principal owners – the government and Belgian financial group KBC – it now seems that both sides have decided to put stability first. They have committed to raising EUR 250m in additional capital. This will help NLB reverse its losses and satisfy regulatory demands regarding capital adequacy. Some other banks in which the government owns a stake have managed to stay profitable through these tough economic times. It seems, however, that in order to restore Slovenia’s financial system back to health, taxpayers will have to cough up some more money. In this they share the fate of their kind all over the world.

Photo: Dreamstime

Capital punishment With the ECB funds and government deposits, banks stayed liquid. Now that liquidity concerns have been taken care of, there is a more difficult task in hand for Slovenia’s banks: rebuilding depleted capital, making sure they can stay solvent in what is increasingly an adverse economic environment. Some feel that before doing this, banks need to look back and understand how they came to this point. There is a school of thought – its disciples doing the rounds of the nation’s talk shows and writing columns in major newspapers – which contends that it was actually state ownership of the country’s major banks which precipitated the banking crisis. Others argue that nothing could be further from the truth. They point out that capital dwindled because of the losses on loans to real-estate developers (as in Ireland), leveraged buyouts gone awry (as in the US), and the inability of the recession-struck corporate sector to generate sufficient funds to repay its debts. Subsidiaries of foreign banks such as Unicredit, the fourth biggest bank in Slovenia, have been competing vigorously for business, chipping away at the market shares of the big hitters. But many point out that these supposedly more efficient, privatelyowned banks have been involved in as many cases of bad lending as their state-owned counterparts.

Finance Minister Franc Križanič claims the worst times are over and that economic growth has been restored. He has also announced a new state bond issue worth EUR 3bn for 2011.

FINANCE

NLB Group

The Biggest Financial Firm As 2010 ends, NLB Group successfully maintains its position as the largest Slovenian international financial group offering universal banking and financial services on local and foreign markets. With 51 members on 18 markets, the NLB Group is a stable partner offering numerous combinations of financial services for every type of business. The firm prides itself on an ability to support its clients and create relationships based on trust, high-quality service, strong business expansion, intelligent cost efficiency and risk management.

LB has a tradition of placing its customers first, and therefore always aims for customer satisfaction. With 12 banks, ten leasing companies, ten companies for international trade financing (factoring, forfeiting, export financing), five insurance companies, a company in asset management, and 14 other companies, NLB is a complete and time-tested, traditionally trustworthy partner which helps firms realise their business visions both at home and abroad. With 1,500 correspondence relations in 140 countries, NLB Group is the largest Slovenian international financial group. As of 31 December 2009, the company had 8,991 employees.

Nova Ljubljanska banka NLB traces its origins back to the nineteenth century and the 1889 foundation of the City Savings Bank in Ljubljana. Under its present charter NLB was established by a legislative act of the National Assembly of the Republic of Slovenia on 27 July 1994. As the parent company of NLB Group, NLB bank is a universal bank with a leading position in retail, corporate and investment banking. NLB is the largest institution, accounting for approximately fifty per cent of the Group’s total assets and loans to non-banking customers.

Corporate strategy The NLB Group strategy is to put its customers, their wishes and needs at the centre of its activities, to maintain a leading position in Slovenia and an important position in the region of Central and Southeastern Europe. The strategy represents the core guidelines for NLB’s future development and the groundwork for measuring the firm’s performance.

Active and strategic role on financial markets

NLB is continually consolidating its influence in the financial markets through its active and strategic role in all fields of social development. By implementing business goals on the basis of 62

tradition and trust and by cultivating business values, NLB is creating a new image of banking culture.

Shareholder structure NLB is a company jointly owned by shareholders and its shares are not publicly quoted on the Stock Exchange. The largest NLB shareholders are the Republic of Slovenia (33.1 percent) and KBC Bank NV (30.57 percent).

International ratings, rankings and awards

International rating agencies place NLB among the best graded banks in Middle and East Europe. • Long-term credit ratings (investment grade risk): Moody’s A3, FITCH A-. • At ‘The Best banks in the World’ awards of The Banker, London, NLB was selected as Slovenia’s award winner for 2000, 2001, 2003, 2004, 2005 and 2007. • In 2010 the renowned magazine Global Finance named NLB the best bank in Slovenia for the 13th consecutive year and it was also named the best bank for foreign exchange trading in Slovenia for the eighth consecutive year. • In 2009 NLB was awarded the Euromoney Annual Award for Excellence for the eleventh consecutive time. • NLB was also selected as a Trusted brand for four consecutive years. COMPANY NOTES NLB Group in Slovenia Headquarters Nova Ljubljanska banka d. d. Trg republike 2 1520 Ljubljana, Slovenia T: +386 (0)1 425 01 55 F: +386 (0)1 425 03 31, 252 24 22 info@nlb.si www.nlb.si, www.nlbgroup.si

I have chosen a reliable partner.

NLB d.d., Trg republike 2, 1000 Ljubljana

Life tends to surprise us with new and new challenges every day. However, it’s easier to face them, if we have a solid, reliable, and expert financial institution at our side. NLB Group is the biggest Slovenian international financial institution, which uses experiences, knowledge, awareness of local markets and habits to successfully help its customers on their way towards business and personal accomplishments. Banking, leasing, commercial finances, insurance operations,

www.nlbgroup.eu

and asset management are only some services offered by the NLB Group which guarantee stability, safety, reliability, and partnership, which is already appreciated by satisfied customers, who are being provided for by experts on eighteen markets of the NLB Group. Our size and power have been created by individuals, who are pleased with our work. We are aware of that, and this is where we lay foundations for our future development. Because we know why.

FINANCE

Photo: Mojca Brecelj

Louise Chatwood, Member of the Management Board, KD Skladi (KD Funds)

Your Gateway to SEE and CEE Markets As the oldest management company in Slovenia, KD Skladi (KD Funds) has been actively managing equity and fixed interest securities throughout Central and South Eastern Europe for many years. The firm, established in 1994 and headquartered in Ljubljana, is an innovator in the Slovenian market, managing the oldest Slovenian mutual fund KD Galileo, creating the first Slovenian fund of funds and money market fund. KD Funds has a strong reputation in the management of mutual funds and regional CEE/SEE portfolios for well-informed investors, winning the Lipper award for KD Galileo and numerous other awards for management of portfolios. According to Australian-born Louise Chatwood – a member of the KD Funds’ management board who has lived in Slovenia for the past five years, and has 20 years’ worth of international experience in the financial industry – the firm is cautiously optimistic that 2011 will bring good news for the region’s markets. Does KD Funds invest globally or just in Eastern Europe? KD Funds manages a broad range of 17 mutual funds and well informed investor portfolios which have investment policies that are global, regional, or sector focused (eg. energy, healthcare, financial etc). The core focus of the KD Funds investment team is the South Eastern European and Central Eastern European markets. KD Funds is one of the few managers which invests in the region, is based in the region with investment professionals located across the core markets. However, the team also closely monitors the global macro-economic environment as an input for the country and sector allocation of the portfolios. In the region they undertake an extensive company visitation programme. They speak to key decision makers, suppliers and service providers of 64

the companies in which shares are held, as well as to prospective companies. They also assess independent analyses of companies with the aim of finding any unidentified value not reflected in the share price. What are some of the unique aspects of Eastern European markets? Eastern European investment markets are relatively young, socalled ‘frontier’ markets. They have, however, developed rapidly since the transition to democracy in the early 1990s. Some countries are already in the European Union and the Eurozone and others are on the accession path to European Union membership or preparing to adopt the single currency, the Euro.

FINANCE

Emerging European Union CEE: Central & Eastern Europe Poland:

EU Member 2004

Czech Rep.:

EU Member 2004

Hungary:

EU Member 2004

Finland Norway

SEE: South East Europe Slovenia:

EU Member 2004

Estonia

Sweden

Russia

Euro adoption 2007 Romania:

EU Member 2004

Bulgaria:

EU Member 2004

Croatia:

EU Candidate 2003

Macedonia:

EU Candidate 2004

Serbia:

EU Accession 2009

Latvia Denmark

Lithuania Belarus

Ireland

Poland

Netherlands Germany Belgium

Slovakia France

Bosnia & Herzegovina: ???

Austria Switzerland

Moldova

Hungary

Slovenia Croatia BiH

Romania Serbia Bulgaria

Italy

Core Region

Macedonia Portugal

Narrow Strategic Region

Kazakhstan

Ukraine

Czech Rep.

Spain

Greece

Turkey

Broad Strategic Region

At KD Funds we see tremendous opportunity for investors as Eastern European countries go through the transition process. The integration into one union with a common currency means a common legislation and regulatory environment and coherent policies. This results in an opening up of the financial markets, access to capital, trade liberalisation, market efficiency and the convergence of the real economy. The outcome is a reduction in systematic risk due to increasing transparency, improving corporate governance, and the eventual removal of exchange rate risk. As convergence with Europe proceeds and markets open there are many companies that are opening facilities in Eastern Europe, accessing the highly skilled, well educated and cheaper workforce. Slovenia is well down the convergence track and thus well-positioned to assess the convergence path of other countries. The KD Funds investment team apply the knowledge gained in Slovenia, as the first ’2004’ country to join the Eurozone, when analysing companies from other countries. This uniqueness of the convergence process combined with a relatively low correlation to developed and emerging markets presents an attractive opportunity for investors. What are the issues confronting the Slovenian capital market in 2011? Companies in Slovenia are not growing at this time due to poor decisions made in the past. Aleš Lokar, Senior Portfolio Manager and Head of Portfolio Management at KD Funds, believes the solution for Slovenia to get back on track is two-tiered. Firstly, the completion of the privatisation of those companies in which the government owns a majority stake. Secondly, independent asset managers who should run government controlled funds free from the influence of daily politics. Foreign investors will facilitate this process through their demands for developed market corporate governance, transparency will improve and thus companies can focus on their underlying business and build market share. Lately we are observing shareholders becoming more active in local companies and the outcome of this activism, if positive, should see the underlying value of companies reflected in the share price.

How is the region faring post-financial crisis? As countries across the world emerge from recession and some positive news emerges leading to some improvement in stock markets, it is fair to say that SEE in particular, is lagging behind global and emerging markets. In terms of the investment markets this, in part, can be explained by the relatively higher risk attributable to these markets and high risk aversion amongst market participants. The immediate impact of the crisis, when the sub-prime crisis saw the collapse of the US financial system, was not really felt in the region due to low personal debt levels. However, as the crisis deepened and the broader economy was impacted, the effect was also felt in Eastern Europe. For example, Germany is one of the major export markets for Slovenian companies – particularly in the automotive sector supplying auto parts to German car makers. As orders declined so did the demand for parts which negatively impacted the Slovenian economy. Now that the German economy is improving the knock-on effect is already being felt in some sectors of the Slovenian economy. The KD Funds investment team currently have a view of ‘short term caution, long term optimism’ for the Balkans. Global and emerging markets are entering a consolidation phase following a strong rebound over the last 18 months, regional markets have not experienced the same trend hence the team have an overall positive outlook for 2011. The Simplified Prospectus of Subfund KD Galileo, fleksibilna struktura naložb (KD Galileo, flexible asset structure), the Umbrella Fund Prospectus Including the Management Rules, and the annual and semi-annual reports of the Umbrella Fund are available free of charge at the Management Company’s headquarters and subscription offices. The electronic versions and the list of subscription offices can be consulted at the website www.kd-skladi.si. The investor has the right to request these documents.

COMPANY NOTES KD Skladi, družba za upravljanje, d.o.o. Celovška cesta 206 1000 Ljubljana, Slovenia T: + 386 (0)1 582 67 80 kd-skladi@kd-group.si www.kd-skladi.si

FINANCE

Klemens Nowotny, President of the Board Raiffeisen Bank

Tailor Made Services Raiffeisen Group is a major player in the Central and Eastern Europe and according to Klemens Nowotny – president of the board of Raiffeisen Bank in Slovenia – the bank is also successful in Slovenia, thanks to the bank’s innovative approach to serving its customers’ needs. What were Raiffeisen Bank’s expectations when it entered the Slovenian market and have they been met so far? According to our group-strategy to be a major player in the Central and Eastern-European territories we entered Slovenia in 2002 when Krekova Banka with a 10 years’ history was looking for an investor and we found a perfect match in the bank for our plans and our philosophy. Currently we rank 11th in Slovenia and are so far satisfied but of course we intend to grow more. Strategically we perform an organic growth that led from a strong focus on market share to profitability. What has Raiffeisen Bank brought to Slovenian customers? Our main contribution was the introduction of foreign funds to Slovenia, which still is one of our major competitive advantages. By attracting international funds to come to Slovenia we contributed to open international markets for investment in Slovenia. Furthermore, we introduced a customer-friendly “open branch concept” and we perform a solution-oriented financial advising with the focus on customers’ needs. Thus we advise our clients rather than just sell them our products. Where do you see the strengths of Raiffeisen Bank in comparison to other financial groups on the Slovenian market? 66

Our biggest strength is our group’s wide spread network that exactly fits to the Slovenian economy needs. With our services everything becomes easier. For example, money-transfers within Raiffeisen-group are done much more quickly; the “Parent Account Manager’s” principle eases opening of banking relationships all over the Raiffeisen network and secures good terms and conditions. This and the prime service-level are our major competitive advantages – as I call it “from Raiffeisen to specifics”. The banking sector was especially hurt by the financial crisis. How were you affected by it? Of course the crisis also had an impact on our business. Due to the structure of our balance sheet we started increasing our primary funds even before the crisis broke out – we had a relatively high loan/deposit ratio as a result of a quick growth of corporate assets. This ultimately led, during the crises, to the low liquidity on the interbank-market and liquidity problems of competitors even to over-liquidity. Due to the high interest rates on the market for deposits, that of course had a negative impact on the costs for loans. We finally decided not to participate in the competition for domestic primary funds, but subsidize them with much cheaper wholesale-funding of the meanwhile again functioning interbank-

FINANCE

market and at the same time use the natural out-flow to reduce our over-liquidity. The Raiffeisen Group quite comfortably passed the European Central Bank stress test in 2010. Can you tell us a little more about the results? The group showed a solid equity-basis that let us pass the stresstest easily. Locally Slovenia’s central bank calculation showed that we needed additional capital of roughly EUR 8m, based on yearend figures for 2009. Due to an active portfolio restructuring, including additional collateralisation, we could reduce the needs down to roughly half of it. As a proof of our strong dedication to the Slovenian market, the owner decided to increase the core capital, in order to enable us a sustainable performance, by using our profit for the growth. Your market share in Slovenia is currently three percent. How do you plan to grow in the next five to ten years? According to our simulations, a market share above 5 percent would enable us to gain economy of scales effects. Currently due to low numbers and minimum standards we have a number of small groups that require over-proportional staffing. Due to the market conditions we have currently no plans to boost our investment in Slovenia but we do plan to record a steady organic growth. Therefore the one off effect of more strict equity needs was covered by an approved equity increase, to allow us to use the profit for growth in 2011. This increase proves that we are serious about the Slovenian market and disqualifies any rumours whether Raiffeisen will leave or stay in Slovenia. Our philosophy remains the same: we want to show that we are serious about the market which is why we have a local bank here rather than just a branch. What are your plans in Slovenia for 2011 and beyond? In the first three quarters of 2010 we posted a profit before tax of EUR 3m. Our plans for the future are further ambitious. We are quite confident that we will achieve our goal since the development of earnings is promising, especially now that the economic turnaround is here, the portfolio is stable and costs are under control. We would like to continue to develop the support for our clients in terms of providing solutions, rather than just selling standards. We spend a lot of time discovering what both the private and corporate clients really need. We target a “one-shop-stop” concept for all financial needs of our customers to ease their life. That will lead to a future much closer co-operation with suppliers of services, peripheral to banking. We understand very clearly what the client needs and then provide the services that are required. So you simply need to tell us what you intend to do and we will deliver the solution. We believe that this particular attitude might change the whole banking environment in Slovenia, because the clients will require it. Our clients should be free to focus on their business; we want to care about their financials in order to support them with our expertise. COMPANY NOTES Raiffeisen Bank d.d. Zagrebška cesta 76 2000 Maribor, Slovenia T: +386 (0)2 229 31 00 pr@raiffeisen.si www.raiffeisen.si

BUSINESS & MEDIA SERVICES

A Mixed Picture A lack of up-to-date data makes assessing the 2010 performance of the Slovenian business services sector a tricky proposition. What is clear is that the year brought upheavals which affected both this sector and the related media sphere. It is also clear that the impact of these events will last for some time.

producer price indices for selected business services, 2006=100 120

110

100 Legal, accounting, consultancy Employment

Q1 06

Q3 09

Photo: Dreamstime

Not so explosive anymore

Source: SURS

n end of year analysis in most sectors involves poring over the previous twelve months’ data, examining both specific figures and general trends. In the business services sector it’s not quite that simple. As of December 2010, the most recent available data on the sector’s performance comes from 2008. 2009 data will only become available in October 2011. Statistics from the European Federation of Management Consultancies Associations show that in the 1990s, the Slovenian management consulting industry had an average growth rate of 13 percent a year. 2005, the year following EU membership, saw an additional 9 percent growth, generating a EUR120 million profit for that year. 2007 saw the industry grow by a whopping 19,5 percent, and in 2008 the trend continued with 17 percent growth. In the absence of recent solid statistics, it becomes necessary to rely on the testimonies of those working within the industry.

And they are testimonies which suggest it has been a mixed year. Some have actually benefited from the effects of the downturn – tax advisors and accountants are in high demand as businesses are forced to keep a close eye on every Euro while negotiating tax and accounting regulations. But for others, such as management consultants, it has been a much tougher year. “The development and growth of the management consulting industry in Slovenia is much more dynamic than that of older European Union members,” comments American firm A.T. Kearney. “Yet the share of gross domestic product (GDP) represented by the business consultancy services market is well below the average of developed states. And due to the global

BUSINESS & MEDIA SERVICES

Financial firms hit Naturally, financial services have also suffered badly. Some brokerage firms in Slovenia were even forced to shut this year. One of the most notable casualties was renowned brokerage and financial consulting firm Poteza. It was their stake in national bank NLB, purchased just before the crisis hit, which brought them down in the end. And while some global stock exchanges began showing signs of recovery towards the end of 2010, the Ljubljana Stock Exchange is still suffering. End of year rises were minor, and Slovenian financial consultants are now keenly hoping for a more marked upward trend in 2011. There are some parts of the business services sector which already seem to be coming out of the recession, however. Jani Zupan, chief executive of the Profil consultancy, says that demand for his firm’s human resources service is slowly growing. “Growth is starting. 2009 came as a shock and our turnover fell, but now we’re doing pretty well,” says Zupan. He says companies are no longer thinking about cost cutting at the expense of investing in new employees. However, with almost 110,000 unemployed in Slovenia it seems that the skills of the nation’s workforce don’t necessarily correspond to those needed in areas where there are vacancies.

Changes in media Just as the crisis forced companies to cut back on human resources, so too were they forced to scale back their public relations and marketing activities. It’s a development which significantly affected the media. 2010 saw multiple changes in this sector, with ownership of media companies changing in sometimes peculiar ways. Take Večer. Delo was ordered to sell the regional paper back in 2009 by the Office for Competition Protection and in 2010 a potential buyer came on the scene – a minor IT company. Eyebrows were raised when it became clear the company was tiny and had no previous experience in the media field. While the deal became slightly less controversial when Matej Raščan – already owner of Delo Revije, the publisher of most of Slovenia’s tabloid newspapers – became involved, the transaction has still not been concluded.

Ironically, Večer’s current owner Delo is expected to be sold itself soon. Struggling brewery Laško seems likely to dispose of its stake in Slovenia’s most influential daily paper in 2011. Local daily newspaper Primorske Novice already has new owners, changing its structure so that it is now owned by several owners with minor shares. The biggest stake was bought by Splošna Plovba, a Slovenian shipping company owned by German shipping company Peter Doehle. Print was not the only area of the media to experience upheaval in 2010. A new law regulating the public television and radio RTVSLO was prepared by the government and accepted in the Parliament. However, the opposition opted for a referendum which took place in the beginning of December and, with a turnout of only 11 percent, the law was rejected. Nonetheless, a new media law is currently being prepared and expected to come to a vote in the first half of 2011.

Lobbying change Legislative change affected the business services sector too this year. The introduction of the new law on corruption and integrity sees lobbying legally defined for the first time. Until now, lobbying has primarily been offered as a public relations service in Slovenia. With the new regulation, which falls under the authority of the Agency for the Prevention of Corruption, every person who intends to influence government or other public decisions will have to register as a lobbyist. They will have to report on their activities to the agency, together with the fees they charged for each project. The law was passed primarily as a consequence of the Patria affair, which saw allegations of so-called lobbyists bribing government officials with a view to winning a major arms deal with the Slovenian government. Although the matter has not yet made it to the courts and no one has been found guilty of any misdoing, it has left a question mark over lobbying and lobbyists. And so 2011 will see lobbying defined as a business service for the first time, with regulations and requirements surrounding it. Lawyers, PR professionals and company chief executives will now have to register as lobbyists if they want to influence publicly elected officials. Quite how this will affect lobbying practices remains to be seen. Just, in fact, as it remains to be seen exactly what 2011 holds in general for the business services and media sectors.

Quite a company number of firms and employed in selected business services in 2008 12000

Source: SURS

financial crisis, we have witnessed one of the largest drops in business volume in the history of the industry over the last two years.”

8000

4000

0 Legal and accounting

Advertising

Employment

BUSINESS & MEDIA SERVICES

Jani Zupan, MBA, Director Profil

High Profile Headhunting is often regarded as the queen of the consulting business. Succeeding in it involves understanding the organisational systems, the recruitment process, and the market. According to Jani Zupan, chief executive of the Profil management consultancy, it’s a skill that his firm has well and truly mastered. When was Profil established and how has it grown? It was established in 1989 as a private equity between two partners and owners – Franc Jamšek and Primož Klemen. When they started they focused on so-called executive search activity: headhunting. That was back in socialism and as such it was pretty innovative for those times. Over the years Profil has developed not only a portfolio of products and clients but also our presence in the region – Profil now has legal entities and offices in Slovenia, Serbia, Croatia, Bosnia and Herzegovina as well as an office and legal entity in Macedonia which covers Albania too. We are the leading human resources consultancy in the region and, with our international partners, also cover the rest of the world.

How long does it take to find the right person for a job? In general our contractual obligation is 30 days to do the search and selection process and suggest at least three appropriate candidates – but usually we do it quicker. When we’re doing the search over a holiday period and people are not available, we ask clients to give us more time, 45 days or even 60. The idea is to ensure that we don’t miss the right candidate.

How are you organised? In Slovenia, we have six senior consultants in our office in Ljubljana as well support personnel. Every consultant is focused on specific fields. If you’re working in as a small market as Slovenia, the consultant can’t be oriented to one branch only. In any case, being knowledgeable in more than one industry has its advantages. If you’re focusing on only one branch, then you may be missing some specialties which are also useful for the recruitment process in another field.

How do you differ from other companies in your field? Competition is always welcome if it’s based on quality. It makes you and everybody else better. We have been on the market for over 20 years and this puts us one step ahead. We are thinking globally – we understand international measures and quality standards – but we’re acting locally and regionally. Our expert teams are another advantage. We have very well-educated, trained and experienced consultants with different career backgrounds, who all speak English as well as a variety of other languages.

What are the main services that Profil offers? The core business is executive search and selection. We cover the recruitment of top management, mid-management and high professionals. These include highly specialised positions which demand special competences, specific experience and background. The second area in which we work is management consulting in the area of human resources. This portfolio of services and products is wide and includes consulting activities such as executive evaluation and development, promotion and motivation systems, appraisal processes, measurement of organisational culture and climate, employee satisfaction surveys, organisational development, client satisfaction surveys, compensation and benefits surveys, assessment centres, coaching, mystery shopping and so on. The third area where we help our clients is people development or training. Our trainers usually run tailor-made training sessions and our approach is therefore different from other providers in the market. We mainly offer training in the fields of sales and leadership.

What is your strategy for the next five years? The goal is to remain the leading consultancy in South East Europe with a diversified portfolio of services. We also want to continue with long-term partnerships – in many instances we’ve worked with companies right from the beginning of their existence. We’ll focus on quality of services to give our partners additional value, support and long term satisfaction.

How much do you charge for your services? For the executive search our pricing is based on the market salary of the position we are recruiting, that’s about 25 percent of the annual salary or three monthly salaries.

COMPANY NOTES Profil d.o.o. Parmova ulica 53 1000 Ljubljana, Slovenia T: +386 (0)1 280 54 00 F: +386 (0)1 280 54 09 profil@profil-group.com www.profil-group.com

Leading HR Consultancy in South East Europe VAŠ NAJPOMEMBNEJŠI PARTNER V TRETJEM TISOČLETJU

YOUR MOST IMPORTANT PARTNER IN THE THIRD MILLENIUM

Naš logotip pove vse: Trije smejoči se obrazi, ki predstavljajo zadovoljnega naročnika, zadovoljnega kandidata in zadovoljnega svetovalca

Our logo says it all: Three smiling faces, representing happy Client, happy Appointee and happy Consultant.

BUSINESS & MEDIA SERVICES

Goran Novković, President of the Board of Žurnal Media and Editor-in-Chief of Žurnal and Žurnal24

Pioneering Approach

In 2003, a brand new newspaper arrived on the Slovenia market. Seven years later this weekly free newspaper is the most read print media in Slovenia. It now has a sister publication, with the daily Žurnal24 launched in 2007. Goran Novković, president of the board of Žurnal Media and editor-in-chief of Žurnal and Žurnal24, is proud of how his company has shaken up the media landscape, and says the innovations are far from over. How and why has Žurnal changed Slovenian media? In 2007, when I joined Žurnal Media and we launched the Žurnal24 daily, the Slovenian print media space was very specific. It was much more conservative than it is today. That meant there was a great opportunity to win a large share on the market by adopting a fresh approach and creating quality content for a wide circle of readers. Our main strategy was to connect daily newspaper articles with online content. Our journalistic approach was “time efficiency”, meaning a large number of concise news articles to satisfy the need for information of the widest circle of readers. The newspaper has a strong regional aspect with five different covers and pages dedicated to regional news. Another key reason for our success is efficient distribution. Stands carrying Žurnal24 are located in all larger Slovenian towns, meaning our newspaper is available everywhere in the country. Have attitudes to free newspapers changed in the three years since Žurnal24 was introduced to the market? Yes, the attitude on the market has changed considerably. When we introduced Žurnal24 to the market, we contacted the Faculty of Social Sciences and offered journalism students the opportunity for internships. Back then, we were not able to become a partner of the Faculty, but today things are completely different. Three years after Žurnal24 was established, the Faculty contacted us and suggested that students work as interns with us. We see this as an important indicator of our success and the quality of our work. We have managed to beat the prejudice against free publications. Digitisation has come to all media. How have you connected print and digital media? We launched the zurnal24.si website at the same time as launching the Žurnal24 daily. Even then, journalists for both media worked together. In December 2008 we began the intense integration of digital media and printed media. Our newspaper and website journalists share the same workspace and interact constantly with one other. They work together well but they also maintain a healthy sense of competition. We are already strongly integrated, but the launch of new platforms (mobile portal, iPad app) will bring about even deeper connections and integration. 72

You have a website, a mobile portal, iPad accessibility… Is that because you think print is going to die out? The Žurnal24 readership is proof that newspapers will not die as long as their content and business model are adapted to readers. We have considerably more young and active readers than older readers. This means increased advertising interest and is a good guarantee for the future. According to the results of the National Readership Survey, the readerships of Žurnal and Žurnal24 have been on the increase for a number of years. We adapt constantly to the tastes of new generations and we have two of the most popular printed publications in Slovenia, so we are not worried about the decline of print. But you do use the internet. How are you harnessing its power? Creating an online community has always been our main aim. We want to do more than just publish news – we particularly want to interact with our readers/users and encourage interaction among them. So far, we are doing great. Ours is the best visited newspaper site in Slovenia and it is becoming increasingly interactive and user friendly. We are also achieving high interactivity on various social networks. Žurnal24’s first three years had a very quick pace with a number of new features introduced. Will you continue at this pace in the future? Of course. One of our philosophies is not to only follow trends, but to create them. We have shown this with all our media and we will continue to do so in the future.

COMPANY NOTES Žurnal media, d. o. o. Bravničarjeva ulica 13 1000 Ljubljana, Slovenia T: +386 (0)1 620 26 00 info@zurnal24.si www.zurnal24.si

PANTONE 292 541 C PANTONE 541 C

PANTONE 292 C

BUSINESS & MEDIA SERVICES

AJPES

Primary Source of Business Information The Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES) is an indispensable primary source of official public and other information on business entities in Slovenia. Most importantly, both locals and foreigners can access all information on current and future business partners online at www.ajpes.si.

or the foreign business community, AJPES positions itself as a central institution for services that in other developed countries are provided by business register organisations, and also offers market services that are generally provided by credit rating agencies.

Registration of business entities Since 2008 Slovenian companies have registered via a national, electronically-guided system called “One Stop Shop” (eOSS). Within the eOSS (eVEM) system, AJPES performs several functions, the most important being management and administration of the business/court register and the provision of services for businesses as a single point of contact. Via single points of contact you can hand in applications for the registration of a company as well as for sole proprietorship. In 12 regional branches AJPES offers free services for the registration of simple private limited companies – these are companies established by one individual or several members of a company and they pay their initial capital in cash. The registration of joint-stock companies or private limited companies which pay their initial capital with material investments is performed by notaries public via the eOSS system. Companies can register via the eOSS system through which they are entered into the court register – entries are decided by registration courts. Applications that are filled in correctly take two days to process. Registration of sole proprietorship is also done via the eOSS system and takes less than a day. With the establishment of registrations of companies via the eOSS system, Slovenia improved by 99 places in 2008/2009 on the “Starting a Business” scale. Importantly, it improved its position against all the conditions of “Doing Business” as specified by the World Bank and the International Finance Corporation. The entire eOSS system, which is managed by 74

the Ministry of Public Administration, received the first prize at a United Nations competition among North American and European countries (The United Nations Public Service Award – UNPSA 2009) in the field of improving the delivery of services. AJPES also publishes all publicly available documents of the court register concerning the registration of companies and all other legal entities in the court register on its website, which have replaced the publications in the Official Gazette of the Republic of Slovenia.

Publication of procedures for insolvency The judicial branch of the government also publishes procedural acts and public documents regarding procedures for insolvency (bankruptcy, compulsory settlement, liquidation) for companies, sole proprietors, individuals and consumers on AJPES’ website. In this way, the interested business public and other people can be informed daily about the latest insolvency procedures.

The Slovenian Business Register AJPES manages the Slovenian Business Register as a central public database on all business entities, their subsidiaries, and other organisation segments located in Slovenia which perform profitable or non-profitable activities. A constituent part of the business register is the court register, which includes legal entities (companies and their subsidiaries, subsidiaries of foreign companies, co-operatives, public and private institutes, public agencies and other legal entities). Public information on business entities is available on the AJPES website in both English and Slovenian and can be viewed free of charge.

BUSINESS & MEDIA SERVICES

AJPES is a member of the European Business Register All public data on the companies in the business register is sent to a network called the European Business Register (EBR – www. ebr.org). The EBR network currently includes 26 members, 22 of which are members of the European Union. EBR’s information system provides users with simple and easy access to data on business entities from all members of EBR. It also enables the ordering of various documents connected to the companies’ business operations. At the same time, AJPES’ portal offers all Slovenian business entities and the rest of the public access to data on business entities in all the 26 members of EBR. This service can be paid for electronically, for example with online banking, credit cards or mobile paying.

Register of transaction accounts In 2010, AJPES established a central Register of Transaction Accounts of business entities and natural persons. This was to guarantee accessibility of data to creditors in the cases of legal and tax enforcements. Keeping the transaction accounts data accurate and up-to-date is guaranteed via exchange with banks and other official registers. Users of AJPES’ website are guaranteed free access to data on transaction accounts of business entities.

The register of non-possessory liens and seized movable property includes data on non-possessory liens on property which is seized from the owner officially or the owner has given it by of his or her own volition. AJPES ensures an entry into the register, based on the request of a notary public, an executor, a debt collector or any other person authorised by the law. The register includes non-possessory liens on different types of property, like vehicles, equipment, supplies and animals. Access to register data is free on the AJPES website.

annual reports. Annual reports of non-profit organisations and associations are available in AJPES’ 12 branches across Slovenia.

Credit ratings Credit ratings according to the AJPES S.BON model are a source of indispensible information when becoming acquainted with Slovenian companies and reducing risks, particularly during a time of global economic crisis. Credit ratings AJPES S.BON predicts a payment default for a period of a year since the last annual report and is created for most companies in the country. The model includes European standards for credit rating agencies and classifies Slovenian companies into 10 credit rating scores according to their credit risk. AJPES offers credit rating information, which entails: • Credit ratings according to the AJPES S.BON model • Data on the short-term payment discipline of the company (existence of unpaid liabilities) • Other financial information on the company and its operations AJPES arranges credit rating information in English, German, Italian, Croatian and Hungarian. The AJPES website offers the quickest access to the credit ratings of Slovenian companies, in both Slovenian and English.

FI-PO AJPES – internet toolkit for financial analyses

For a financial analysis of how Slovenian business entities have operated over a longer time period (from 1994 onwards), AJPES offers access to a database of complete financial statements and the most important financial indicators about companies, cooperatives, sole proprietors and associations. The FI-PO AJPES database, which is available online – coupled with the current credit rating AJPES S.BON – represents an additional analytical tool for getting to know Slovenian companies and other business entities. It also enables comparisons of business operations for individual years with chosen competitors or activities. The database is available in both Slovenian and English.

Annual reports In Slovenia, companies (including banks, insurance companies, investment funds and co-operatives), sole proprietors, legal entities governed by public law, non-profit organisations, and associations have to present their annual reports to AJPES for the purpose of presenting them publicly and for tax and statistical purposes. Annual reports intended for the public – except those of nonprofit organisations and associations – are published on the AJPES website and can be viewed without charge. For companies with a mandated statutory audit, AJPES publishes audited

COMPANY NOTES The Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES) Tržaška cesta 16 1000 Ljubljana, Slovenia T: +386 (0)1 477 41 00 info@ajpes.si www.ajpes.si

BUSINESS & MEDIA SERVICES

The Slovenia Times

Your Gateway to Business Networks The Slovenia Times magazine

The introduction of smart meters is certainly among the most dramatic change in the metering business in the last decade, as such a large roll-out (due to the change of technology from electromechanical to electronic meters) is rare for any industry and can, to some extent, even be compared with the IT boom from the 1990s.

Our research and development department is one of the biggest in the country, employing 130 people, so we are well poised to take advantage of new technological developments. What exactly is Iskraemeco doing in the R&D department to keep pace with the competition? We have been developing smart meters for seven years now, constantly updating ourselves on the most advanced technologies available. Our research and development department is one of the largest in the country, employing around 130 people; almost 7% of our turnover is invested in this. We see the biggest potential in advanced metering infrastructure (AMI); this refers to systems that measure, collect and analyse energy usage. Smart metering and system solutions are where our focus is at the moment. The shift from electromechanical, analogue meters to electronic smart meters that require sophisticated software is of unprecedented importance to our industry. Iskraemeco has developed the software that allows users to enter the so-called multi-utility segment of the market; our meters are able to communicate not only with other electric meters, but also with those measuring gas and water consumption. How are your customers responding to these more complex, advanced products that you are bringing on the market? Your competitors must be doing the same. They are responding positively indeed; nevertheless, we still have the edge over them, and this fact is recognized by our customers. Take Électricité de France (EDF), a French electricity provider that is also the biggest utility company in the world. Recently, we were chosen by EDF as one of only three suppliers to provide them with one hundred thousand meters for a pilot project. The whole roll-out performed by EDF will include an exchange of 35 million meters in the next five years. This is certainly an achievement to be proud of. This is not all, however. We have been able to convince utilities from the Netherlands, Germany, Spain and the United Kingdom to enter into pilot projects with us, which testifies to the quality of our products. Obviously, utilities where governments usually have significant ownership stakes are your biggest customers. They already decided to introduce smart meters, but when will this start happening on a large scale? We expected this to happen by 2010, but with the recession the things have changed. Because state budgets are strained, we now expect the introduction of smart meters to happen somewhere in 2011 and 2012.

very well in our approach to markets, as we have opened a couple of new ones. As far as our plans for 2009 are concerned, the recession has taken its toll. At the moment, we are running 20% behind the plan, but other firms in the industry are also hurting. What is important is that our sales this year will not be dramatically lower than in 2008. We are also tightly controlling costs.

Many companies in Slovenia are having problems with excessive debt, which could hamper their efforts to take advantage of the recovery when it comes. If you take into account the fact that Iskraemeco was flirting with bankruptcy in 2006, the way we have turned around the company is all the more impressive. Moreover, in a time when other companies have been taking on increasing amounts of debt, we have managed to lower our debt burden and pay our obligations for both debt and normal operations. We will certainly be in great shape when the economy starts to grow again.

Company notes Iskraemeco, d.d. Savska loka 4 4000 Kranj T: +386 4 206 40 00 info@iskraemeco.si www.iskraemeco.si

Are you satisfied with your 2008 business results? Well, things could always be better. However, 2008 was the first year since 2004 that Iskraemeco was profitable. Most importantly, we have changed our way of thinking. This, I think, has reflected

Economy

Among 10 leading banks in Central Europe: 10th place in Tier 1 capital

(The Banker, London, July 2009)

to customers, trade and financial credit lines in favor of foreign banks. NLB takes over specific country risks, confirms banking instruments and provides guarantees, counter-guarantees and silent confirmations. Additionally, NLB Group is active also in corporate international Cash management, and financial advisory services, as well as leasing products, factoring, asset management, pension and life insurance. With an extensive worldwide network we are on the spot from Frankfurt/Main, Germany to Skopje, Macedonia and from London, U.K. to Moscow, Russia. In South Eastern Europe the Group member banks include NLB Razvojna banka, Banja Luka; NLB Tuzlanska banka, Tuzla; NLB Banka Beograd, NLB Montenegrobanka, Podgorica; NLB Tutunska banka, Skopje and NLB West-East Bank, Sofia.

Božo Jašovič, president of the board

International Awards

Regional leader NLB traces its origins back to the 19th century when the City Savings Bank in Ljubljana was founded in 1889. Under its present charter NLB was established by legislative act of the National Assembly of the Republic of Slovenia on 27th July 1994. As the parent company of NLB Group, is a universal bank with a leading position in retail, corporate and investment banking. NLB is the largest institution, accounting for more than 50% of the Group’s total assets. The NLB Group strategy is to put its customers, their wishes and needs at the centre of its activities, to maintain our leading position in Slovenia and to become a leading banking

“Creating a new model of banking culture based on excellence, trust and tradition” is the basic mission, leading NLB in its everyday business, when meeting our customers, employees, shareholders and other investors.. and financial Group in the region of Central and Southeastern Europe. The strategy represents the core guidelines for NLB’s future development and the groundwork for measuring our performance. During long tradition NLB Group has determined and respects the values and rules of ethical behaviour.

The Slovenia Times, Slovenia’s leading monthly publication in the English language, offers a critical, in-depth and vivid analysis of the social and economic situation in this South Eastern European state. The magazine also covers tourism, culture, sports, recreation and other lifestyle-related topics. With a circulation of 10,000 copies, the magazine is distributed: • To over 2,000 subscribers • To all foreign embassies and consulates in Slovenia • To the management boards of the 100 biggest Slovenian enterprises • To members and partners of foreign chambers of commerce What type of presentation youetc.) choose in Slovenia (DESLO, Amcham, will BCCS, in BIS 2011? • On flights to and from Slovenia (Adria Airways, Austrian Airlines, Czech Airlines, Air France, etc.) You may present your enterprise or business story on two or three pages in the • form At ofthe “business lounge” at Jože Ljubljana an advertorial or make it more personal in the Pučnik form of an interview with a Airport of the management Regardless of a communication means you • representative On international railboard. routes a noticeable image advert of your enterprise, product or service merges your • opt Atfor,high-end hotels in the country presentation into a prominent whole. Naturally, the decision is yours, but we will • eagerly At business organised byourthe publication provide you events with professional assistance by highly-skilled editorial(FDI staff. Summit 2011, Guest Star 2011, etc.) Presentation Type Presentation Fee (EUR) • At specialised international trade fairs abroad (MIPIM Cannes, EIRE Milano, Real Vienna, Expo Real Munchen, 2-page presentation (2/1); options: • 2/1 interview Gitex Dubai) or • At prominent international and social business conferences • 2/1 advertorial 3,500.00 or in Slovenia (Bled Strategic Forum, Golden Drum, etc.) • 1/1 interview + 1/1 advert • At the Slovenian Tourist Board’s branch offices abroad or • At tourist information centres all over Slovenia • 1/1 advertorial + 1/1 advert • At prominent sport events in Slovenia (Vitranc Skiing Cup, Golden Fox Skiing Cup) 3-page presentation (3/1); options: • 2/1 interview +and 1/1 advert • At economy business faculties and schools (University of or Ljubljana, University of Maribor, IEDC 4,800.00 Bled, Gea College, etc.) • 2/1 advertorial + 1/1 advert • To orselect institutional investors worldwide • 1/1 interview + 1/1 advertorial + 1/1 advert across the world • Online, making it accessible 49

In The Best banks in the world global awards of The Banker, London, NLB was selected as the Slovenia’s award winner for 2000, 2001, 2003, 2004, 2005, 2007.

The renowed magazine Global Finance named NLB the best bank in emerging markets for the third consecutive year and it was also named the best bank for foreign exchange trading in Slovenia for the eleventh consecutive year. In 2008 NLB was awarded with the Euromoney Annual Award for Excellence for the eleventh consecutive time.

is aware that the successful development of society as a whole also increases the reputation and value of the bank as a part of this society.

Shareholder structure

NLB is a company jointly owned by shareholders and its shares are not publicly quoted on the Stock Exchange. The largest NLB Shareholders are Republic of Slovenia (33,1%) and KBC Bank NV (30.57%).

Company notes

Focus on strategy

NLB Group in Slovenia Headquarters Nova Ljubljanska banka d. d. Trg republike 2 1520 Ljubljana T: +386 (0)1 425 01 55 info@nlb.si www.nlb.si, www.nlbgroup.si

NLB is continually consolidating its influence in the financial markets through its active and strategic role in all fields of social development. By implementing business goals on the basis of tradition and trust and by cultivating business values, NLB is creating a new image of banking culture. As the largest Slovenian bank, NLB understands well the significance of its mission, and *All data included in the text as of 31 December 2008

Economy

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A presentation includes an enterprise’s business card with its logo.

Each participating enterprise will receive 60-90 copies of the publication for the Slovenia: and Investment purpose of its ownBusiness distribution.

Slovenia: Business and Investment is a unique annual publication with an international reach. It intended for foreign a-kind Emonika City Center designed as a unique of business, General termsis and conditions forcombination participation in BIS 2011 and domestic businesspeople as well as a diplomatic audience. The shopping and entertainment centers, an upscale business hotel, a high class Emonika City Center is to be a multifunctional complex development set to

become the leading business and entertainment hub of Ljubljana. The one-of-

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residential tower, andis bus andthe railway stations. • The offer valid until publication’s completion, and an advertiser should sign the offer no later than 10 December 2010.

deadline for the delivery of all necessary materials for the presentation is 17 December 2010. 76 •• The An order is confirmed upon a contracting authority’s sending a duly filled-in order form or upon

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entering into a cooperation contract.

The offer becomes valid upon its confirmation by the contracting authority.

The participating partners are given a possibility of being issued an invoice for either 2010 or 2011

majority of the publication is dedicated to editorial analyses of the Slovene economic environment and an overview of the most dynamic economic sectors in the country. The aim of the publication is to increase international business circles’ awareness of the potential of economic cooperation with leading Slovenian enterprises. It also aims to raise the profile of investment opportunities in one of the most educated and logistically appealing business destinations in the Central European area. The publication has become a new tool for Slovene companies and institutions, enabling them to present Slovenia’s business story to the foreign public and most importantly to their existing and potential partners. With a circulation of 20,000 copies the publication is a communication tool for Slovenian economic diplomacy through embassies and consulates worldwide. It is also distributed to all regular readers of The Slovenia Times.

BUSINESS & MEDIA SERVICES

Other highly reputable supplements

The Slovenia Times also publishes highly reputable supplements on topics such as relations between Slovenia and its trade partners. The supplements, which are used by government institutions, include an analytical overview of the business cooperation between Slovenia and the trade partner that includes the following content: • Analysis of past and current trade flows • Views from influential governmental figures such as ministers of foreign affairs of each country as well as its respective ambassadors • Opinion articles from experts who dealt with the markets in question • Examples of companies that are present on the given market To support such publications, The Slovenia Times team organises business events that include informative round table discussions, as well as presentations by renowned professionals and politicians as well as business experts. At the same time, attendees are offered networking opportunities with top-level professionals from both the Slovenian and international business community.

investor of the year is to highlight those companies with foreign capital in Slovenia whose presence in the market has a significant impact on the Slovenian economy as a whole, the competitiveness of the Slovenian market, and on the broader social environment. Guest Star (Guest Star Award Ceremony) Guest Star is an annual campaign that aims to recognise those individuals from the expat community whose talent and personality directly contributes to the development and openness of Slovenian society. The campaign celebrates Slovenia’s expat community by identifying the most remarkable individuals who are not of Slovene descent but who have decided to live and work in Slovenia

Business events by The Slovenia Times FDI Summit Slovenia The FDI Summit Slovenia, together with the FDI of The Year Award Ceremony, is a two-day business summit devoted to the foreign investment environment in Slovenia and the region. It is a business event at the highest level hosting participants from management boards of Slovenian FDI companies; potential foreign investors; government officials responsible for shaping the investment environment; foreign ambassadors to Slovenia; representatives of academic institutions; lobbyists; advisers; other interested members of the business public; and media. The FDI Summit Slovenia builds on the previous annual awards ceremonies honouring foreign investors of the year in Slovenia (FDI of The Year Award Ceremony), the event that has been organised in collaboration with JAPTI (Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments) since 2006. The purpose of selecting a foreign

The Slovenia Times has been organising the Guest Star awards since 2004

nevertheless. In a world that is becoming ever smaller international relations are increasing in importance and cooperation between those from different cultural backgrounds allows us to build and develop cohesive societies. In this light, expat communities are essential to their host nations. Since expats are active in many different fields – all equally important – the Guest Star committee has a number of categories: • Diplomacy • Business • Sports • Culture The Slovenia Times continues to play an important role within the government’s economic diplomacy efforts as well as in the internationalisation of Slovenian companies. COMPANY NOTES The Slovenia Times Trg MDB 12 1000 Ljubljana, Slovenia T: +386 (0)1 520 50 80 F: +386 (0)1 520 50 82 marketing@sloveniatimes.com www.sloveniatimes.com

Dr Danilo Türk, the President of the Republic of Slovenia, was the honorary patron of FDI Summit Slovenia 2010

REAL ESTATE & CONSTRUCTION

Cleansing Time In the real estate and construction sector, 2010 will be remembered as the year that the economic downturn tightened its grip and turned into a full blown recession. By Aleš Šinkovec

Construction output - quarterly variation % change compared with the previous quarter 0 -1 -2 -3 -4 -5 -6 -7

Q4-09

Q1-10

Q2-10

Q3-10

Source: Eurostat

any sectors of Slovenian business suffered in 2010 but arguably none more than the real estate and construction industry. The knock-on consequences for the nation’s economy have been significant and the reason is the sheer size and importance of the sector. Slovenia may be an export driven economy but the importance of the construction companies cannot be underestimated – their economic activity represents roughly double the percentage of Slovenia’s gross domestic product; a far higher rate than seen in other Eurozone countries. The liquidity of the markets in 2007 and prior saw a gigantic expansion of construction projects in Slovenia. Just three years later and construction companies have such high levels of debt to equity that their survival seems nigh on impossible without serious state intervention. Perhaps the worst news to come out this year in construction – and there’s a lot to choose from – is that it’s possible that collusion and corruption has been just as destructive as the crisis.

Most of construction’s 2010 woes can be understood by taking a look at the cases of Vegrad and SCT. The former was one of the biggest construction companies in Slovenia, primarily involved in the construction and sale of apartment buildings. With the crisis in real estate, Vegrad’s largest project – the Celovški Dvori in Ljubljana – had its completion delayed multiple times, causing the company’s cash flow to almost stop entirely. Soon the company had built up a debt in the region of half a billion euro. Ultimately, it defaulted on its loans and bankruptcy proceedings were the predictable result. This development would have been devastating enough in and of itself, but investigation proved there were plenty of reasons for depression at the outcome. Vegrad general manager, Hilda Tovšak, did not communicate what was happening with the company to the board of supervisors and it now seems she frequently mislead them. She repeatedly stated that she had a solid plan to allow the company to go into debt restructuring to avoid bankruptcy. This ordeal lasted many months, during which time workers did not receive any wages and the company did not pay welfare benefit contributions to the state. On top of all this, at a time which the company could not afford any further negative press, stories surfaced about missing funds from an account that was created by the workforce as a charity for the families of two deceased workers. After Vegrad went into bankruptcy proceedings, remains of almost unidentifiable documents were found burned behind one of the company’s offices. It remains to be seen how such revelations will affect the work the bankruptcy administrators – and whether any criminal investigations will be successful.

Troubles for SCT

Selected monthly indicators of construction activity in % 0

2009

Se 10/Au 10*

Se 10/Se 09** Ja-Se 10/Ja-Se 09**

-5

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Sources: BS, SORS; calculations by IMAD.

The troubles at SCT have been different but no less significant. Slovenia’s biggest construction company was instrumental in the construction of the Slovenian highways. But this year it has been claimed that project had gigantic cost overruns, coming in at 287 percent higher than initially decided upon; costing the tax payer in the region of EUR 4 billion. In spite of this, the company is said to have debts as high as EUR 200m. The company also hasn’t paid the hundreds or thousands of sub-contractors for the last six months of 2010. Speculations towards the end of 2010 that the company was facing possible debt restructuring or recapitalisation or failing that, bankruptcy. have been vigourously denied by the managing director Ivan Zidar. However,

Confidence indicator in construction sector in % points 20

10 0 -10 -20 -30 -40 -50 -60

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Q1 10

Q2 10

Q3 10

rumours have proven right as the company declared insolvency and launched debt resettlment proceedings at the end of December 2010. SCT’s long term survival depends on future deals - at the beginning of 2011, the company worked on 64 sites in Slovenia and was also working in Bosnia-Herzegovina, Serbia, Albania and Kosovo. At the time of this article being written, the company was counting on securing multi-billion dollar deals in Russia and Lybia. SCT was on a verge of securing contracts in Libya worth over one billion Euros but could not complete these proceedings until it received guarantees for the financing which are now unlikely to happen. While foreign contracts are valuable, domestic works must not be overlooked. It seems there is reason for optimism here. Slovenia is finally taking a credible initiative in its railroad infrastructure. The estimated worth of the project of renewing lines and building new ones is in the region of EUR 8-9 billion.

Looking ahead Although 2010 was marred by bad news, some feel there is now light at the end of the tunnel. Some see the crisis as a cleansing time, with badly managed companies providing average quality developments being forced out of the market while quality firms remain. It is true that a number of high quality projects are now taking place in and around Ljubljana. Most hope that 2011 will be a long-overdue good year for the real estate and construction sectors.

Monthly production indices for total construction base year 2005=100

Source: SURS, seasonally adjusted

The perfect example

Source: SURS; Seasonally adjusted data

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130

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Photo: Dreamstime

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**working-day adjusted data

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Oct 10

REAL ESTATE & Construction

Branko Kastelic (left), President of the Board, IMOS Holding Mitja Majnik, Chief Executive, IMOS

Building for the Future Many Slovenian construction companies have been felled by the economic downturn. But IMOS has soldiered on, completing major projects and securing more. President of the board of IMOS Holding Branko Kastelic and Mitja Majnik, chief executive of IMOS d.d., admit the crisis in construction is far from over but say they are already planning for better days. You merged IMOS Engineering and IMOS Investment in 2003. Has this proved to be a good decision? Kastelic: In 2003 IMOS was two sister companies – IMOS Inženiring d.d. and IMOS Investicijske gradnje d.d. – that were doing basically identical things. We have seen many positive effects from the merge – among them the strengthening of the company’s structure, easier specialisation, and cost rationalisation. In 2005, we went on to establish a few subsidiaries. IMOS d.d. is the biggest – it covers all personnel resources, especially development processes. Then we decided to take care of the management of the buildings we construct. So we established Unih d.o.o which now manages these projects. Due to our many lines of work we also created a company in which all our accountancy and payment transaction staff work – IMOS LINK d.o.o. The reason for the subsidiaries is more transparent management, especially in regards to bigger projects like Tobačna City, Litostroj, and a project we have in Savudrija, Croatia. The global downturn has had a significant impact on the construction industry. How have you adapted your strategy to cope with the crisis? Kastelic: Our changed organisational structure has made our lives easier. The activities in the three firms offer us various 80

REAL ESTATE & CONSTRUCTION

opportunities. It’s easier to set our priorities according to the projects due to our transparency. The crisis made us put greater emphasis on cost control. Relatively speaking, we have slowed down our projects, especially those where we don’t have customers yet. At the same time we have accelerated development of projects we believe will be the most interesting after the crisis ends. Majnik: When it comes to development projects we are sticking to our normal pace, working first towards obtaining building permits – which does not automatically mean we’re going to continue with the process. In fact we conduct market research to find out if the project has a chance to be successful or not. What was has been the most challenging building project so far? Kastelic: Our philosophy is that every project is important, be it big or small. But if we talk about the biggest ones, these are Tobačna City, Litostroj, Črnuški bajer in Ljubljana, Podbreznik in Novo mesto and Savudrija in Croatia. We’ll work on them for at least five years. I should also mention the project in Mostec. It was one of the most interesting and challenging we’ve undertaken. We were building about 600 apartments in Ljubljana and so the project was hard because of its size, but also because we worked on it in partnership with one building firm. Only later did we realise that the collaboration was not such a good idea. We as a development company and they as a building contractor had rather different interests. In spite of all this, today Mostec is one of the most prestigious quarters in Ljubljana and the prices there are also interesting for customers. We’re proud of it and satisfied with what we did despite some financial deficits. How many projects do you have at the moment – regardless of which phase they’re in? Majnik: Besides the ones mentioned, we have three or four more development projects. The total number of projects is almost 100. Some are in the final stage, some are stagnating because of clients’ decisions. You are involved in a few projects that aim to revitalise an area. Why do you place so much focus on those? Kastelic: One important reason is that these are areas of greater size which means there are usually less competitors interested. Another thing is that these locations are really good and even though some may not believe it, our satisfaction when we carry out such projects is greater and we get the feeling that we did something good for the environment and for society. What are your plans and strategies for 2011 and beyond? Kastelic: For the moment, we’re not thinking about new projects due to the crisis. In the next five years we wish to carry out projects according to our priorities: first is work on Tobačna City because it’s a big, demanding and interesting project. We see our strength in excellence and we hope we will see the rewards in the strengthening of trust with all our business partners. These may just sound like nice words without any serious intentions behind them, especially in times when our branch has experienced a loss of trust due to some short-sighted aims of some construction companies. Our strategy is to use our advantage. This is a priority of our development; however we have yet another goal – management of liquidity with the goal of carrying out what we agree upon with our partners. This is our special emphasis for 2011 – remaining true to our mission regardless of the events around us. Majnik: We already fully respect the contractual obligations towards subcontractors. We’re one of the rare companies in Slovenia which does that and our future activities in this respect

Tobačna City

Litostroj business area

are going to be the same. We hope the subcontractors will appreciate this and that society together with the media are going to recognise this. Not everybody behaves badly towards their subcontractors. This negative public image needs to be fixed because everybody will benefit from it – be it us or the buyers. So in fact the crisis is an opportunity for starting something better. We want to establish our reputation, fortify our position in the market as one of the larger and more concrete builders and sellers of apartments. What makes your industry and your company unique? Kastelic: Civil engineering is a branch which is based on trust. The reason for this is that we’re selling something that does not even exist just yet. That’s why we sometimes say that signing a contract with the customer is similar to marriage because this is the time when it all really begins. If it’s going to work out depends on both partners. So here’s where trust kicks in. There are five of us in the management of IMOS d.d and I’m the eldest. All of us have been in civil engineering since sort of forever; we have two economists, two civil engineers and one architect. So we needn’t fear the future at all since we have the continuity and the vision needed to succeed. COMPANY NOTES IMOS, d.d., Ljubljana Fajfarjeva ulica 33 1000 Ljubljana, Slovenia T: +386 (0)1 473 33 00 info@imos.si www.imos.si

REAL ESTATE & CONSTRUCTION

Zoran Madon, Chief Executive Project development company Tridana

An Interesting Development

The Situla project – a building complex comprising residential, business and service facilities – was first conceived in 2007. According to Zoran Madon, chief executive of project development company Tridana, the complex is progressing well and will offer high quality accommodation for a variety of businesses and individuals. Can you tell us what the Situla project is all about? Situla is a prestigious building complex covering almost 80,000 square metres (m2). It is being built very close to the city centre, near Vilharjeva Street, and is part of the spatial framework of Ljubljana Commuter Centre spatial planning area. It will host 228 flats, 6,000 m2 offices, 5,000 m2 shopping and service areas, and almost 850 parking spaces. The development is comprised of four underground levels, lower and ground floors; and a two-floor interconnecting inner passageway. On the ground there will be three buildings: six, eight, and 20 storeys high. The complex is envisaged as a “Miniature City” and represents an urban hybrid of innovative and unique architecture, luxury homes and exclusive business offices. It will host highly professional services designed for the daily needs of Situla’s visitors. The construction is being carried out by Bevk & Perovič architects who won the public call published jointly with the Chamber of Architecture and Spatial Planning. What sort of residential properties will be available in Situla? Situla contains various types of flats, from exclusive prestigious duplexes to large multi-roomed dwellings, to smaller two-room flats (ranging in size from 45 m2 to 233 m2). The 72-metrehigh residential tower offers fabulous views of the city centre and Ljubljana Castle, Rožnik Hill, Šmarna Gora, and the Kamniške and the Julian Alps. The flats will provide for a truly high-quality 82

living style and the highest level of living culture. In addition to the beautiful views there will be private terraces, green roofs, Japanese gardens, plenty of natural light, high ceilings, and a concierge service. Residents will live just above the vibrant city centre but will have the chance also to retire to the privacy of their own heavenly “sanctuaries.” All flats are deluxe, both in size and furnishing. Almost all flats have an external area (balcony or terrace); floor levels are the same throughout. The noise of the city centre is diminished thanks to high-quality glass-walls and fully automated air conditioning with controllable humidity, which is a novelty in residences in Slovenia. Flats are equipped with low-temperature floor-heating and extra ventilation convectors with the capacity to instantly warm up or cool down the room should the weather and temperature swiftly change. Residents will of course have full control of the air conditioning system in individual rooms as well as of lighting and communication systems through a top-notch interface. In addition, the second floor will host flats that comprise the qualities of a house with a garden and the advantages of multiunit buildings, duplexes and penthouses. And what about business premises? The offices will be cosy yet stylishly designed to fulfil high working environment standards and will offer maximum personalisation. To support working processes and the use of

REAL ESTATE & CONSTRUCTION

modern communications and electronic devices, the complex will be wired with the most advanced electronic and communications networks. What services will be on offer at the complex? The service part is dedicated to a holistic daily service for visitors and includes a specialised delicatessen, a florist, a photocopying and stationery shop, a newsstand, a bank, a wellness/fitness centre, a restaurant, a cafe, and a hand carwash. The 24/7 concierge will provide an exclusive high quality professional security service. In addition, 150 parking spaces will be reserved for visitors. Tridana is the project company for the Situla development. What are the roles of the individual partners within Tridana? The leading partner in the Situla project is Architron d.o.o. which focuses mainly on development of real estate projects. Apart from that they offer technical and economic counselling services primarily for investors in the most demanding large scale real estate projects. They also design engine installations and provide technical support. Kraški Zidar d.d. took over construction activities of the project. Kraški Zidar is one of the leading Slovenian construction, engineering and real estate companies with a long tradition and a number of successfully completed investment projects. It boasts contemporary and high quality construction technologies and procedures. Metropola has been involved from the very beginning of the Situla residential-business complex project in 2007. The company specialises in marketing residential and business facilities and has to date successfully accomplished 25 larger projects and also taken on the entire marketing of Situla. Where are you at with the project? The complex construction will be realised in one phase. At the moment we are on the fourth level above ground and expect a technical inspection of the complex in April 2012. The first residents are expected to move in July 2012 at the latest.

How does Situla differ from other developments in Ljubljana? What makes Situla different from other investment projects is the idea to simultaneously combine an excellent location, prestigious homes, state-of-the-art materials and the best home technology. At the same time its servicing component gives a comfort and ease of living comparable to state-of-the-art residential-business complexes in developed Europe. Situla’s unique multi-layered aluminium-glass facade addresses the demands of rational heating and prevention of overheating the interior. It is complemented by a fully automated air conditioning central ventilation system in all flats. Aluminium and glass are 100 percent recyclable and the life span of such a facade is expected to exceed 50 years at low maintenance input. The terraces and balconies are paved with wood, the exterior and interior are covered in granite. What kind of clientele is the development aimed at? Situla is designed for people who love city life and demand a high level of living culture. Situla will give them the room to develop their unique, high-quality lifestyle. The diversity of flats enables people to find out what fulfils their needs. With different transport options (train, bus, aeroplane) on their doorstep, the complex is also appropriate for businessmen who also require access to the fastest communication networks. In the end, Situla is an opportunity for investors into real-estate. For more information visit www.situla.eu. COMPANY NOTES Tridana d.o.o. Slovenska cesta 58 1000 Ljubljana, Slovenia T: +386 (0)1 430 53 77 F: +386 (0)1 430 54 87 info@situla.eu www.situla.eu

REAL ESTATE & CONSTRUCTION

Knauf Insulation

The Insulation Experts With 30 years’ wor th of experience in the insulation industr ,yKnauf Insulation is one of the most respected names in insulation worldwide. It is also one of the fastest growing companies in the field, committed to meeting the increasing demand for energy efficiency in new and existing homes, non- residential buildings and industrial settings.

he company’s financial performance is strong and steady with a turnover of over EUR 1.2 billion in 2009. The company employs nearly 5,000 people in more than 35 countries and operates more than 30 manufacturing sites. It is part of the Knauf group, a family-owned multinational manufacturer of building materials and construction systems. The group was established in 1932, had a turnover of more than EUR 5.6 billion in 2009 and employs more than 20,000 people worldwide with more than 150 factories in more than 40 countries. In order for Knauf Insulation to improve services for its industrial customers, a special business unit Knauf Insulation OEM Solutions (KI OEM) was created. Its core purpose is to provide industrial customers with insulation products and solutions that meet their specific needs. To achieve that, the KI OEM unit drives its own innovative development and design of new products. The KI OEM team is focused on large and medium sized industrial companies which use different insulation products and integrate them into their finished products or systems. Products and services are tailored to meet customers’ requirements so as to optimise the performance of their products. Since the required properties vary by application, KI OEM has developed a wide range of insulation products. Some of the key areas on which 86

KI OEM focuses are sandwich panels, fire protection doors, domestic appliances, chimney and fire place systems, flat thermal solar collectors, cars and other vehicles and horticulture.

Meeting customer needs Rock or glass mineral wool insulation products are used depending on the final application. Both types of products have

Domestic appliances

REAL ESTATE & CONSTRUCTION

Thermal solar panels

good fire protection, thermal insulation, sound absorption and mechanical strength properties, but the optimal combination of properties depends on customer need. The developed products can be further processed to any type or shape. Often products and solutions are developed in close collaboration with customers. They are also highly encouraged to include the KI OEM team of specialists in the early stages of their product development. This is the best way for customers to bring insulation expertise to their finished products or system. The KI OEM headquarters for European and Commonwealth of Independent States countries is based in Škofja Loka, Slovenia, where the main OEM manufacturing plant is located (ex Termo) as well as the global research and development (R&D) centre for the development of rock mineral wool products and technologies for its production. The proximity of the R&D centre enables the KI OEM team to offer its customers the newest and most advanced insulation products in a relatively short time. Slovenia is not a low labour cost country but significant investments in new production lines and technologies carried out in recent years enable the company to produce products with higher added value and to be more efficient in the production of insulation products of even higher quality. The company also runs a big optimisation initiative, which touches all areas of the business. By doing this the company was able to compensate for the significant price increases of raw materials and energy in 2010. Proof that the company is on the right track came with the prize for best foreign direct investment company in Slovenia for 2010. The award was presented to Knauf Insulation in October by The Slovenia Times and the Agency for Direct Foreign Investments sponsored by the President of Slovenia Danilo Türk.

New products, new markets Several of KI OEM’s areas of activity are strongly linked to construction and they were to a certain extent affected by the global economic downturn. To compensate the KI OEM team

Prefabricated building elements

launched innovative new products to the market and to expanded geographic reach. Customers from as far afield as the USA and Australia have been interested in the firm’s most demanding products. KI OEM has also moved beyond its standard products and industries into new areas, including the automotive industry. Insulation products are already considered to be sustainable. But Knauf Insulation has now made even greater steps towards the production of sustainable products. Products produced using ECOSE Technology do not use a phenol-formaldehyde binder, as this is replaced with a bio-based binder made from completely renewable sources. At the same time an insulation product with almost zero emissions for use in domestic appliances such as ovens and water heaters was developed. The sustainability efforts have brought the company into the horticulture area, where new products which have positive effects on the environment and which help save water have been developed.

Good relations The management at Knauf Insulation has developed a good relationship with employees, unions and local communities. Therefore there were no big tensions even during the financial downturn. In general the company is viewed as one which devotes a lot of time and energy to promote development and prosperity but does not neglect social responsibility and care for the environment. All of these developments go perfectly in hand with Knauf Insulation’s global sustainability strategy. The company declares itself positive about both the near and more distant future. It strongly believes that motivated and skilled people, modern technologies, high quality products and loyal customers are a good base for its further development and expansion. COMPANY NOTES Knauf Insulation d.o.o., Škofja Loka Trata 32, 4220 Škofja Loka, Slovenia T: +386 (0)4 511 41 04 oem@knaufinsulation.com www.oem.knaufinsulation.com

Doors

RETAIL

The Driving Force Slovenian retail in 2010 will always be marked by an insolvency declaration from Merkur. But this is only part of the story. As an industry, retail has not generally suffered significantly due to the economic crisis and remains one of the main driving forces behind the Slovenia economy. The sector actually experienced growth this year, leaving expectations for 2011 high and five year predictions very optimistic.

Towards the end of the year, Slovenia’s largest retailer published its expectations on revenue for 2011 as well as its five year projections. Mercator is optimistic about the future, projecting a 2010 revenue of EUR 2.78 billion EUR – already more than both 2008 when its revenue reached EUR 2.71 and EUR 2.64 billion in 2009. Profit for 2010 should just exceed EUR 30m. The company does believe that weak economic conditions will still be felt on the markets of their operations in 2011, however. They therefore only expect a two percent increase in sales on 2011 on the Slovenian market, while they hope their international operations sales will increase by 16 percent primarily due Sources: BS, SORS; calculations by IMAD

Real turnover in retail trade y-o-y growth rates, in % 15 12 9 6 3 0

to planned expansion. In 2011, the firm plans to open three large shopping centres in Serbia; two in Slovenia, Bosnia and Herzegovina and Bulgaria; and one in Croatia. The firm plans to expand to Macedonia and Kosovo by 2013 and, interestingly, by 2015 expects to create 55 percent of its revenue on foreign markets. By 2015 the plan is to increase revenue to EUR 4.21 billion, while profit should reach EUR 100m.

More energy at Petrol Mercator is far from the only Slovenian retailer feeling positive as 2010 draws to a close and 2011 begins. Petrol Group

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– Slovenia’s second largest company and a large retailer not only in the energy sector but also through their market programme – reported very positive results at the end of 2010. It will have generated an estimated EUR 2.7 billion in net sales revenues in 2010, 17 percent more than in 2009 and seven percent more than planned. Net profit is estimated to amount to EUR 47million – nine percent more than planned and significantly better than in 2009, when net profit of EUR 10.4m was generated. These are results which seem to endorse the work of the new management, who had their first full year in charge in 2010. They have introduced a number of changes and expanded Petrol into new markets, such as electricity, as well as making new investments in the Western Balkans. This expansion seems likely to continue in the coming year. Petrol plans EUR 88.8m of investments in 2011. These will be aimed at the expansion of the firm’s oil trading activities in the markets of South Eastern Europe; of other energy activities both in Slovenia and regional markets (gas, electricity, efficient energy use, environmental projects); and of the strengthening of its oil trading position in Slovenia.

Getting Merkur back into the kitchen On the back of the success stories, hardware retailer Merkur is the black sheep of the year in Slovenia’s retail industry. Its former chief executive Bine Kordež, once a respected Slovenian manager who was named Manager of the Year in 2007, failed in his attempt to lead a group in the managerial buy out of Merkur. It is a failure which left the company struggling and ultimately declaring insolvency in September of this year. The main problem was the way in which the company was privatised three years ago, leveraged with reckless amounts of debt. But the crisis in the construction sector affected the firm as well and, as a result, its annual turnover dropped from EUR 1.5 billion to EUR 800m. The new management is negotiating with banks to get loans which would enable running company operations again. While Merkur’s debts amount to well over EUR 500m – the firm entered formal debt restructuring in November in 2010 – creditors have said they are committed to keep Merkur running. Slovenia’s leading appliance maker Gorenje, for instance, is willing to accept an equity stake in place of receivables. Even the Economy Minister Darja Radić has said she is confident the insolvent hardware retail and wholesale chain can

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be restructured to make it profitable again. She has said the state is willing to help the company.

Retail in Slovenia is back on track That’s a declaration which becomes less surprising when one considers the massive part retail plays in the Slovenian economy. According to 2010 mid-year government figures, most of the total net profit within the Slovenian economy was generated by companies in retail and maintenance. There is concern, however, that the market may be reaching saturation point – particularly in Slovenia’s capital. At the Ljubljana Forum in December 2010 a roundtable discussion revealed that, if all planned projects for the coming years are realised, Ljubljana will have 700,000 square metres of shopping areas. This is more than Vienna. Chairman of the board of SKB Banka Cvetka Selšek warned that Ljubljana was on the brink of an explosion of the retail bubble. She argued that as many as possible industries should be developed in Ljubljana, pointing to potential in tourism, services, logistics, innovative companies, green technology, IT and energy. Nonetheless, it has generally been a good year for Slovenia’s retailers – and the good times look set to continue well into 2011.

RETAIL

Jože Mermal, President of the Management Board and CEO BTC

Shopping and the City In 1 954, the company now named BTC was founded as a small warehousing firm. Fifty six years later it is still in the logistics trade but is also the firm behind Slovenias’ largest shopping complex. President of the Board Jože Mermal says the unique philosophy behind BTC Cit y has seen it continue to do well through the economic downturn – and says the firm is striving to maintain the complexs’ position as the biggest and best shopping facilit y in Europe. BTC City is your company’s most well known project. What is the philosophy behind it? The development of BTC City was, and remains, based on the idea of creating not just a classic shopping centre but a place where in addition to shopping, there are other activities such as business, entertainment, recreational and cultural. It has become one of the most recognizable commercial hubs in the past decade and we’re going to build our future on these key points. How have you dealt with the current economic downturn? Purchasing capacity is weaker and that is somewhat evident in sales. The reason we have not been greatly affected is that we developed a commercial city with a wide range of attractive shopping and other services. This is our advantage and saved us from the falling numbers of visitors which means that even in these times we’re on the right track. 90

The current market situation has certainly had an impact on our partners. You need to know that we change at least five to seven percent of our shop partners every year which equates to a total of 15 to 20 clients. Without such measures we’d be in serious trouble; we’d have too many bad dealers and wouldn’t be ready to face challenges, plus we’d have problems finding good ones. Even in good times we constantly sought better merchants. This is part of our policy – permanent flexibility. What about the visitors? Have they changed along with the crisis or not? The number of visitors hasn’t changed. Also certain purchases stayed on the same level. But like all around the world, some are changing. In the future we won’t have the same shopping habits for sure, but we can’t yet tell just where all this is going. We’ll have to adapt to demands of the consumers. Maybe there will be an increase in ecological fashion products, for instance.

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BTC City is the biggest shopping area in Slovenia. Aside from size, what differentiates you from other shopping areas in Slovenia as a whole? It is not only the strongest and largest in Ljubljana and Slovenia, but also in Europe. We have more than 450 shops in one place. At the moment there is no other hub in Europe that has such a concentration of shops, not even in London or Moscow. And most similar centres don’t have accompanying attractions. So we’ve become the biggest in all aspects. The formerly leading shopping centre in Vienna is now smaller by 30 percent and takes third or even fourth position. We’ve taken over the leading role in Europe. Yet Ljubljana only has 300,000 inhabitants. So how is this possible? The reason is that we’re unique; we’re moving away from the shopping mall industry. In the world only 15 to 20 centres have this kind of philosophy. But this is the most appropriate one for the new times. Crystal Palace, the business centre building, is due to be completed in 2011. How much of the premises are already taken? At the moment the occupancy rate is 70 percent which is a top result for these times and one with which we’re extremely satisfied. One year ago we didn’t know how it was going to turn out because of the real estate crisis. We’re sure the positive result is due to the exceptional location. BTC’s 21 million visitors per year speak for themselves. Are there any big international companies that will take up premises in Crystal Palace? We have signed a contract with one of the most renowned multinational company, IBM as well as with the German pharmaceutical firm Merck. Other major international companies, such as Apple, have also expressed serious interest. We’re going to have a number of major global actors. Our two skyscrapers are going to be the main Slovenian international business hubs. In the existing skyscraper we already have BMW headquarters, Unicredit Bank, MSD and Microsoft.

Crystal Palace

Are the occupied offices generally sold or rented? Partly rented, partly sold. We made a mix because we don’t know the future of the real estate markets; we want to protect ourselves against cancellations. If they happen, they’ll harm everybody so it’s better to disperse the risk. Insecurity is still relatively high. That’s why we have top level construction standards but at a standard price. If we set too high a price we would not be successful in these times. If you don’t understand this philosophy or you can’t practice it, then you simply can’t be doing this business. What is the division between foreign companies and local ones? More than half of the sold or rented premises is to the worldfamous blue chips. So we’re really going to be a leading international business centre. There’s no other that strong, our competition is behind us by more than 50 percent. This is a reality and the big companies know why they’re coming to us. We have credibility and references and they want the best. How many floors does the Crystal Palace have? There are 20 floors, 20,000 square metres (m2) for offices, 3,000m2 for shopping and 20,000m2 for underground parking which makes a total of 600 parking spaces. These are large numbers, not only for Slovenia but also for Central Europe. It has been reported that IBM will establish the biggest research centre in Europe in BTC’s Crystal Palace. Is this true? This contract has already been signed. They’ll create the most modern innovation centre in South East Europe on the third floor. They will have four floors altogether: three for offices, one for the innovation centre. You have also established a separate logistics centre. What is the thinking behind that? Due to the great location next to the motorway we decided to move all our logistics services to a new location on Letališka cesta. The logistics centre brings us 30 percent of income so it’s an extremely important pillar of our company. Our company has a 56-year-long tradition in logistics services and in 2008 our director was named the best in Slovenia. We provide top services and we’re fully occupied. We do a vast amount of business with foreign business partners, our longterm partner is the retailer Spar Slovenia. We offer complete distribution and transport, a full service: acceptance of goods, running the books, storing goods in warehouses, offering entire IT logistics support, commissioning and issuing goods, distribution of goods all over Slovenia to consumers, business partners and petrol stations. These are complex operations which require accuracy and speed. You need to be very professional and have knowledge of IT. Our problem is that we are lacking capacity for all the interested clients. But this means we get to choose our partners which is essential. Good partners make the entire business easier. In 2010 BTC received an award for being an environmentally friendly company. How important was that to you? We’re very proud of that award. For the last three years we’ve been developing our sustainability development concept which doesn’t just include classic development but is supported by ecological projects. Our employees are also heavily involved in these projects and in 2008 they have put together 80 action plans from the field of ecology, that include useful and concise suggestions to improve treatment of the environment. It is here that we see long-term possibilities for our development which will also make us stable 91

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BTC City Ljubljana has more than 450 shops, 8,500 free parking spaces and Water Park Atlantis amongst other facilities

in the future. One cannot expect stable growth and normal functioning of the whole system without the ecological concept. For six or seven years we’ve had our own eco station with disposal units for different types of waste. We don’t just collect paper, glass, metal and organic waste. We also collect batteries, oils and all the rest so it’s much broader than the average facility. We have our own presses which treat the rubbish; only then do we send it to be recycled. We expect this ecological commitment from our business partners as well and strive to educate consumers too. Our system is quite advanced and we are in line with European directives in this field. We’re also building two solar power stations. One is already finished and is undergoing probation at the logistics centre. The other solar power plant is on the facade of the skyscraper, it is a hanging one; the panels are already built in and in spring this one will start working too. And we have a special pool for rainwater collection to cool down the activity of the entire system. So you don’t use tap water but rainwater. Also the windows have the best glass available. You need to think 20, 50 years ahead and have the top standards available and then add what you can. We also have two power stations for electric cars and have an electric car for the use of employees and company guests. It’s small and you can park it anywhere. And we have our own city bus to encourage people to use cars less. It takes you from one building to another. But visitors are still getting used to it. It seems like you cater for all needs and offer a range of services. How do you plan to grow? COMPANY NOTES Skai Center d.o.o. Šmartinska 152 1000 Ljubljana, Slovenia www.kristalna-palaca.com

Globally, there are problems with corporate governance. Despite the many seminars, the results all around the world are zero. That’s why I have invited the most competent and well-wishing Slovenians from various fields of expertise to help us direct BTC. These people will help us establish a long-term vision and development of our system. It’s an honorary function not governed by profit and I’m glad they’ve dedicated their time to do it. This is the second year of collaboration now and together with them we are preparing for future challenges. You need to be not just economically but also mentally, sociologically and partly philosophically prepared to do business. What are your expectations for 2011? From the revenue point of view we plan a growth of three percent. Profits should remain the same as in 2010. We also plan to finish the skyscraper and the solar power plants, we’ve built new warehouses in Novo Mesto and they are now fully occupied (Harvey Norman, Delphi, Revoz). Where do you see BTC in the next five, ten years? It’s important to maintain our strong position in Slovenia and Europe. Everybody wants to get ahead and competitors are coming from stronger and bigger countries. So we need to keep our level and the position of our system in the long run. Larger companies can be much more rigid. We’re going to continue looking for dynamics in new programmes and development projects as well as focusing on sustainable development.

COMPANY NOTES BTC, d. d. Šmartinska 152 1000 Ljubljana, Slovenia www.btc.si www.btc-city.com

Goodbye boredom! Hello multimedia.

Nokia C7

50 €

on subscription plan L ZAME or L PODJETNI with option

Mini Plus

Nokia N8

50 €

*Telephone prices are available on minimum 24-month contract to subscription on stated price plan ZAME or PODJETNI together with stated data option Plus and are valid for new and under the conditions of PNT also for existing subscribers until 31. 1. 2011. Phones are subject to availability. More information on www.simobil.si, in Si.mobil’s stores or at call center on 080 40 40 40. Si.mobil d.d., Šmartinska 134b, SI-1000 Ljubljana.

on subscription plan L ZAME or L PODJETNI with option

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Studio Moderna

Living on the Edge “To sell a product is easy; the trick is to preser ve the customers’ trust ”, says Sandi Češko, president of the board of Studio Moderna, one of the biggest direct marketing company in Eastern Europe and Turke.yIn less than a decade the companys’ unique approach has changed the entire field of commerce.

eško’s entrepreneurial beginnings originate immediately after Slovenia’s independence when, together with his business partner Branimir Brkljač, as a sort of “garage band”, he began marketing Kosmodisk and doing sales via television. Everything from that moment onwards may seem as a self-evident story of success but this can be deceiving. Behind the success lies a very deliberate strategy, vision, courage and above all 4,000 plus employees who help create and improve company’s blueprints. Today Studio Moderna operates in 22 Eastern and Central European countries covering a market of 400 million potential customers.

A range of brands While Kosmodisk was undoubtedly the first and, in terms of recognisability, the most important brand, it is no longer the only one; the Top Shop brand today covers fitness, health, beauty and household products. Other brands have also become prominent, especially Dormeo, Wellneo (health and beauty products) and Delimano (cooking utensils). Dormeo is present on all continents and is part of the largest commercial chain in Japan; it is also sold via the internet as well as Tesco’s catalogue. Increasingly Studio Moderna is becoming the new interface between producers and buyers, and, as Češko points out: “Many opportunities are being presented to us, even for managing famous brands in order to facilitate their growth on Eastern markets. For this reason we have also entered Eastern Europe’s field of fashion, and we offer on the Stilago website hundreds of leading brands”. Recently a contract was signed with the Canadian Postal Service in Toronto, which will use the internet advertising platform of CentrSource, whose co-owner is Češko. It is a new internet advertising model linking advertisers and costumers in such a way as to enable quick and clear access to searched products and services as well as provide result-based payment to advertisers.

Unique model This unique business model obviously works, since the company has managed to grow and develop also under current difficult 94

market conditions. The success of Studio Moderna is the result of being a company driven by the customers and customers’ desires. “A good merchant always tracks the needs and requirements of the customer, and it is also important to enable the customer an easy access to the desired products; trends need to be followed and sometimes also created,” says Češko. His innovative ideas are also recognised by renowned establishments. Češko was invited to the prestigious Harvard Business School to present Studio Moderna’s business model, after which the school prepared a case study for its students. As a lecturer he is regularly invited by Slovenian and foreign business schools – this year a case study on Studio Moderna was also prepared by the eminent Stanford University.

Competitive advantage Studio Moderna took over the American model of direct marketing, which was at the same time adapted to the specific market situation. The most important is a decentralised decisionmaking system and the execution of all important functions within the company (in-sourcing). Branches headed by local

Enviable profile Studio Moderna is one of the biggest advertisers on television. The company owns five TV sales channels called Top Shop TV, 120 localised web pages, 170 stores and more than 1,000 Top Shop corners inside various shopping malls. Direct sales of their products occur on 300 local TV stations, with 22 call centres receiving orders. All this is supported by sale catalogues that reach circulation of more than 10 million copies per year!

Foto: Robert Logie

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At the sixth annual Clinton Global Initiative that took place in September 2010 in New York, Studio Moderna presented two innovative projects designed to encourage use of public transportation. One thousand foldable BigFish bicycles for covering short distances between public transport stations and the final destination (home, office, etc.) have been made available in a wider Los Angeles area. The foldable bicycles, designed by Studio Moderna in 2002, are easily used, transported and stored. The project commenced in December 2010 and will last from one to two years. The second initiative will help companies in a wider Los Angeles area fulfil their commitment to sustainable development by facilitating transportation to work for employees. At the conference both projects received support from the Slovenian President Dr Danilo Türk and the former US President Bill Clinton.

managers are located in 22 countries and a special information system was developed in order to facilitate their communication. Digital technologies are introduced in all areas of marketing. The company has developed its own tools to precisely measure the business effect of each TV advert and every investment made into marketing activities. This is especially important since sales are executed via complex multichannel marketing that enables the customer to order the product anywhere, be it via the phone, internet, other retailer, catalogue, telemarketing, in Studio Moderna’s own stores, or elsewhere. An important competitive advantage of digital entrepreneurism is also quick responsiveness. As Češko points out, “we have an IT platform without which it would be impossible to manage such complex sales system”. “All the decision-making and information distribution power is dealt on the local level – both geographically in terms of individual countries where we have our branches and also on the sales channel itself. Because we put the power of decision-making and information distribution at the forefront, those who deal with sales in an individual sales segment can see and assess the effects of their work immediately”. Each day around 500 people take their decisions on the basis of information that is directly available on the company’s IT platform. Microsoft has invited Studio Moderna, alongside 40 other companies from all over the world, to join their Customer Advisory Board, and ranked them amongst the most advanced IT platform users.

Attractive to others Due to its broad and versatile market, the company is very interesting and attractive to numerous manufacturers, who through cooperation with Studio Moderna hope to expand their own markets as well. The largest number of products still originates in the USA, though the number of European and also Slovenian suppliers is increasing very rapidly.

Secret of success “We always select the most daring, steepest and stormy path there is”, Češko says. “To succeed we have to dance on the edge of a very steep cliff, which turns every single day into a new beginning. But then again such edges are usually not that crowded, which is good for us – if you are not living on the edge than you are taking up too much space,” he says. COMPANY NOTES Studio Moderna d.o.o. Podvine 36 1410 Zagorje, Slovenia T: +386 (0)1 589 97 00 info.si@studio-moderna.com www.studio-moderna.com

FOOD & DRINKS INDUSTRY

Seeking a Sustainable Future The past t welve months have shown that Slovenias’ food and drinks industr y is not immune to the effects of the world economic downturn. Some firms saw their profits halve in 2010 compared with 20 09 . However , the year did see some positive legislative measures introduced. And with others planned for 20 11 there is hope that growth can begin again.

he Slovenian food industry generates an impressive 20 percent of its revenues on foreign markets, more than the European Union average. But with the credit crunch, this sector has, along with the rest of the economy, seen a decline in revenues and profits. Companies in the food sector registered a 10 percent year-on-year fall in sales revenues in 2009 with the worst results in meat processing industry, dairy products and bakeries. Times have been especially hard for the red meat processing sector with major food-processing company MIP declaring bankruptcy in 2009 and imports increasing greatly as a result. Meanwhile aggressive ownership consolidation has been seen in the brewing and beverage industry. Experts claim this has worsened operating results and weakened the long term competitive ability of the companies involved in the sector.

Being self-reliant is essential With dramas in the sector, Slovenia’s food self-sufficiency ratio has declined from 85 percent in 2000 to less than 50 percent in 2010. The most problematic area is vegetables, where only 30 percent of needs are covered by home-grown produce. According to Ciril Smrkolj, head of the Chamber of Agriculture and Forestry (KGZS), Slovenia still generates a surplus in milk production and has minor surpluses in grape, wine, hops and poultry production. But many feel the government must now take action to make the distribution of costs and revenues in the chain from farmers to shops fairer – and to help farmers by means of tax policy. There are positive developments in some areas. Representatives of Slovenian grain producers and the milling and bakery industry signed an agreement in Ljubljana in December 2010 in a bid to 96

improve grain self-sufficiency and buy-in of home-grown grains. The most important part of the accord is a buy-in model based on four quality parameters – protein content, sedimentation values, falling number and hectolitre weight – and the model to form the base price of wheat. The price will take into account the calculation by the Agriculture Institute, stock market trends, and buy-in prices in neighbouring countries. It is hoped that the agreement will stop disagreements over the buy-in price of wheat which have been accompanying the harvest every year. The disagreements culminated in 2010 when millers bought 20,000 of the 137,000 tonnes of wheat produced by farmers – although they needed 150,000 tonnes – while farmers used the wheat for fodder or sold it abroad. Another positive legislative development should occur in 2011 when a long-awaited law regulating the promotion of Slovenian food products is expected to be passed. The bill was adopted by the government at the end of 2010 in a bid to boost consumer trust in domestic food. It will promote milk, meat, fruit, vegetables, wine, bread, olive products and honey in line with EU regulations.

Significant sales Regardless of ongoing problems, Slovenian food brands continue to enjoy high customer loyalty based on a long tradition and have survived changes both of regime and economic policy. The past decade has seen a series of mergers and ownership changes. A typical example is the sale of Droga Kolinska, taken

Photo: Dr

eamstim

FOOD & DRINKS INDUSTRY

nearly halved in the first nine months of 2010, to EUR 10m, with operating profit dropping by over a third to EUR 22m. Net sales revenues dropped 6.5 percent year-on-year to EUR 239.9m on the back of a 8.1 percent drop in volume sales. Water sales contracted by 17 percent and beer sales, which account for 44.2 percent of group revenues, were down 5.5 percent. The Pivovarna Laško group includes the namesake brewery as well as brewers Pivovarna Union and Jadranska pivovara, soft drinks producers Radenska and Fructal, and newspaper publishers Delo and Večer. The group has been making headlines for most of 2009 and 2010 due to alleged corruption charges and bad business moves made by former director Boško Šrot. The company is now deep in the red and its debt-reducing strategy for 2011 includes selling off non-core investments in retailer Mercator and newspaper publisher Delo, and disposing of fruit juice subsidiary Fructal. The aim is to reduce debt to EUR 160m by the end of 2011 from over EUR 440m in late September 2010. Delo has already been put up for sale in an international tender and the disposal of the 23.3 percent stake in Mercator will be accelerated. The results of Slovenia’s main representatives in the food and drinks sector clearly show that the downturn has left its mark on the industry. Some have suffered badly, some have continued to grow, and some have fallen somewhere in between. What is clear is that companies are being proactive as well as reactive when it comes to looking for ways to grow and cope with the current situation. The 15,477 employed by the Slovenian food and drink sector will hope that is enough – and that passed and planned legislative changes can help the industry move forward.

over in 2010 by the Croatian Atlantic Grupa. Droga Kolinska had spent many years acquiring the cream of Slovenian and exYugoslavian food brands and so the sale was undoubtedly the biggest development in the food and drinks sector last year. It is not yet clear what impact the acquisition has had on the fortunes of the company. It reported EUR 8.8m net profit for the first nine months of 2010, after a EUR 3.3m net loss in the same period last year. The sales revenues of the group, however, stood at EUR 232.2m for the same period, down four percent year-on-year. At Slovenia’s biggest poultry producer it seems things have largely remained stable during the crisis. Perutnina Ptuj was under a lot of pressure due to the financial downturn but with innovative and dynamic approach to cost cutting, the company says it continues its steady path to growth. In 2009 – the latest available results – the group registered EUR 231.2m in revenue, an amount similar to the year before. Its core business, poultry production, grew by seven percent and the revenue from that segment represents 98 percent of total group’s revenue. Bread and pasta maker Žito has also introduced measures to consolidate its operations as it seeks to boost profit and revenues by two percent a year until 2015. The total would amount to EUR 121m. Exports are to account for 20 percent of all revenues under the strategy with the focus on south east Europe.

Troubled waters Other companies, however, continue to struggle. The group around the troubled brewery Pivovarna Laško saw its net profit

Pivovarna Laško brewery continues to consolidate its debt

Healthcare & PHARMACEUTICALS

A Healthy Change? The landscape of the pharmaceutical industr y changed considerably in 2010, not least due to a massive number of mergers and takeovers. 20 11looks likely to bring fur ther change to an industr y struggling to develop new treatments while dealing with new regulations and strict governmental cost saving programmes. Can the industr y meet the challenge? By Lucija B. Petavs

optimise the efficiency of drug expenditure and introduce a more efficient approach, allocate more money to better and newer therapies, and lower the prices of old medications. It says price regulation will eliminate discrimination between generic and innovative producers without a patent, organise the system of

Krka Pharmaceuticals stock exchange value per share in EUR 75

Drug price worries But the innovative medication producers and generic industry alike face a massive challenge – the pressure to lower prices. In the next year, governments everywhere are going to put pressure on drug prices and this seems highly likely to have a noticeable effect on pharmaceutical companies. The pharmaceutical industry around the world has revolted against government programmes of drug savings introduced due to the tough economic situation. In Slovenia, four new drug regulations are to be adopted. The Ministry of Health wants to 98

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010 will go down as a year of mergers and takeovers in the pharmaceutical industry. In the past year, the majority of the innovative pharmaceutical multinationals rationalised and optimised their business transactions, cut costs, and searched for expansion of opportunities. Mergers and takeovers were often the method decided upon. The large multinationals that control the market took over a lot of generic producers and biotechnological companies, in this way expanding their business activities to also cover “popular” vaccines. The most active firm when it came to takeovers was Sanofi-Aventis which carried out an incredible 15 takeovers worth USD (?) 30 billion in total. Its largest takeover is not yet completed – the company is still fighting for the American technological company Genzyme. The survival of such innovative medication producers is of course dependent on finding new treatments. The majority of such companies in Slovenia are counting on a wide range of new medicines to bring them success as 2010 draws to a close and 2011 begins. At Roche they have 12 molecules which is believed in the future will bring new treatments in the field of oncology, viruses and respiratory diseases. Pfitzer and Merck Shark & Dohme also plan to devote significant funds to the development of new drugs. GlaxoSmithKlein (GSK) plans to introduce five new medications to the market in the coming year alone.

Healthcare & PHARMACEUTICALS

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medications to a totally unrealistic level. They believe these measures will affect their transactions in the coming year and that certain drugs will no longer be available on the Slovenian market. Nevertheless, the Ministry of Health plans to introduce the new regulations shortly. Innovative as well as generic producers are therefore increasingly turning their attention to the Indian and Chinese markets and their massive populations. China has the fastest-growing pharmaceutical market with a yearly increase of 20 percent. Getting business here won’t necessarily be easy – governments in these countries plan to develop local companies with budget funds investments.

Health system reform – not in the full swing yet

Employment in chemical and pharmaceutical industries

number of employed persons, in tousands 12 10 8

y-o-y growth rates in % 0

-1

2009/08

Q3 10/Q3 09

Ja-Se 09/ Ja-Se 10

Source: SURS; calculations by IMAD

Employment in chemical and pharmaceutical industries

Source: SURS; calculations by IMAD

defining maximum retail prices, and get rid of the overestimation of generic drugs. The generic industry in Slovenia, which has domestic Krka as its market share leader, is complaining about the regulations. The industry argues they will push the prices of some generic

Drug market regulations aren’t the only changes being made to healthcare. In Slovenia, the Health Ministry has this year also focused on regulating waiting times and changing the law concerning professional qualifications for healthcare workers. The latter is a welcome change as it will allow easier and faster entrance to the Slovenian health system – lack of staff is the system’s biggest challenge after lack of money. More changes are ahead. The announced system organisation and healthcare funding reforms – in the form of a new law on health care service and a law on health care and health insurance – are expected in the next year. This reform aims to manage the relationship between private and public health care – including the question of whether a doctor who is employed in a public hospital can work in a private one in his or spare time – manage the public health network, deal with issues of giving concessions to private doctors and bestowing greater competence and responsibilities on the management in public network health institutions. The largest project regarding the funding of healthcare is going to be the decision on whether supplementary payments in health insurance should be cancelled. Opinions are divided: supporters believe that the supplementary insurance should cover things which should be impossible to insure and would thus require an additional payment. Those who oppose the idea come mostly from the insurance companies and think that the abolition would mean the end of solidarity of the Slovenian healthcare system. It seems, then, that 2011 will bring just as much change to healthcare as 2010 did. Lucija B. Petavs is the editor of Medicina Danes (Medicine Today), a supplement published by daily Finance

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HEALTHCARE & PHARMACEUTICALS

Current investment opportunities: Healthcare

Selection of National Development Projects A commitment to eliminating the disparity in the quality and capacity of the tertiary health care infrastructure between Slovenia and other EU member states calls for increased efficiency of healthcare services and skilled health professionals. It also necessitates increased patient mobility between Slovenia and the EU.

esign and construction of healthcare facilities includes a new University Medical Centre in Ljubljana with 660 beds and a floor area of 80,000 metres squared (2011-2015: EUR 268.9m). The current University Medical Centre in Ljubljana serves in part as a secondary-level general hospital for the Ljubljana region, and in part as a tertiary institution for the whole of Slovenia. The new healthcare centre will be located in the immediate vicinity of the Ljubljana-East motorway exit. The establishment of a new University Medical Centre in Maribor is expected to help reduce the shortage of highly-skilled health professionals such as physiotherapists and nurses all over Slovenia. Given the demographic trends, these highly-skilled healthcare professionals will be of great importance in the future. Foreign investors are welcome both as funders and suppliers for two new departments: oncology and radiotherapy. The project encompasses construction works and equipment supply and installation and the first implementation phase, worth EUR 27m, is already in progress. Upgrading the existing network of emergency medical centres in Slovenia will enable optimal speed and efficiency of treatment in case of emergency as well as levelling off the differences between 100

regions. Upgrading and establishing a healthcare system to deliver a life-saving service when a condition requires urgent treatment includes the establishment of emergency medical centres in the University Medical Centres of Ljubljana and Maribor, as well as in the regional hospitals of Celje, Izola, Jesenice, Murska Sobota, Nova Gorica, Novo Mesto, and Slovenj Gradec. The investment required has been estimated at EUR 40m for a network of 10 such centres to be completed by 2015. There is a host of investment opportunities for funders, suppliers of goods and engineering and construction companies for the next three years in all general hospitals located in the regional administrative centres all over Slovenia. With the exception of the investments in Ljubljana (EUR 106m for renovation, refurbishment and construction works), bills range from EUR 10m to EUR 47m-50m for Celje hospital; EUR 14m for Jesenice hospital; EUR 8m for the hospital in Novo Mesto; EUR 7m for the nuclear medicine hospital; and EUR 13m for the Blood Transfusion Institute. Sustainable use of energy as one of the priorities co-funded by the EU aims to promote more sustainable use of energy. The aim is to contribute to the reduction of greenhouse gas emissions and increase the share of renewable energy sources in primary energy. The contracting authority for this latest project, as well as for other healthcare projects, is the Ministry of Health of the Republic of Slovenia, and the funding required has been estimated at EUR 52m (proposals for public-private partnerships will have an advantage). The project will focus on energy efficient restoration of the existing healthcare facilities and on efficient use of energy. In healthcare systems, information and communication technologies should provide better and more easily accessible healthcare services to citizens. For healthcare workers they should simplify work and provide quicker access to necessary information. The focal point of the EU’s e-health strategy is on healthcare information systems. The e-Europe and e-Health system aims to improve quality of life in terms of health through wider use of communication and information systems. Contract notices for goods and services for the country’s e-health service system are published according to availability of funding.

WWW.TWENTY.SI

EDUCATION

Aiming Higher Slovenia’s higher education establishments are on a mission to gain greater recognition on the world stage. For some, the ultimate desire is to gain membership of the select group of top educational institutions worldwide. 2010 has undoubtedly seen significant progress towards meeting these goals. But all acknowledge that more must be done if these ambitious plans are ever to be truly realised. By Claire Read

n September, UK newspaper The Guardian reported that the University of Cambridge had taken over from Harvard at the top of the list of the world’s best universities. The paper noted that in general British universities had made a strong showing in the list. But it went on to sound a note of caution. It cited a report from the Organisation for Economic Cooperation and Development which showed that the share of public spending on British higher education was 0.7 percent, placing the country behind the US, Canada, Sweden, Germany, Poland... and Slovenia. This result, of course, can be explained in part by the austerity measures being put in place by the British government – the higher education sector is facing cuts of more than £1bn by the end of 2013. But it also serves to highlight just how much of a focus the Slovenian government is now placing on the country’s universities. In 2009, public funding for the higher education sector increased by around 14 percent on the year before. “Higher education and related scientific research are at the heart of the Republic of Slovenia’s development ambitions,” explains Nataša Gerkeš, spokesperson for the Ministry of Higher Education, Science and Technology. “Higher education is a priority for Slovenia.”

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This commitment will be enshrined in a document which has been the focus of much of the Ministry’s work in 2010. The new National Higher Education Programme, to be considered by the National Assembly in 2011, sets down a clear vision for the sector in the coming decade. “The measures in the plan are aligned such that, in 2020, Slovenian higher education will rest on four pillars,” explains

EDUCATION

Gerkeš. “First, diversification. Second, internationalisation and openness in the international arena, which is necessary for the operation of higher education institutions in the contemporary global situation. Thirdly, quality. And finally the wider, social dimension which will allow equitable access to higher education and the smooth completion of study.”

Student success Such recognition should of course not overshadow the experiences of students at Slovenia’s higher education institutions. According to Irena Forštnarič of the University of Maribor, 2010 was a good year in this sense as well. “We had 620 students graduating at the undergraduate level in 2010,” she says. “We also had 98 students graduate at the Master’s level and two students successfully gained their doctorates.” Given the government’s desire to internationalise the sector, it is notable how many of Slovenia’s students either came from overseas or visited there. Forštnarič says the Maribor Economics Faculty alone had close to 80 foreign students and that just as many of the institution’s home students studied abroad for at least three months. It is a trend the University of Maribor is looking to continue in 2011. At Ljubljana too an aim for the next twelve months is to increase the number of students going on international exchanges. And at IEDC-Bled, the goal is to have around twenty countries represented in each MBA class.

Anniversary year For the management school, 2011 is a highly significant year – it marks the institution’s twenty-fifth anniversary. A series of events are planned to celebrate the occasion.

IEDC-Bled business school will organise a number of academic events in 2011 to mark the institution’s twenty-fifth anniversary

“The main one will be the Presidents’ Forum in October,” says marketing and communications manager Tanja Zabukovnik. “We’ll be inviting some great speakers and business leaders from Slovenia and abroad. President of Slovenia Dr Danilo Türk has already confirmed his participation.” The event will surely serve to highlight just how far IEDC-Bled has come since it was founded in 1986 – from small institution in Communist Yugoslavia to respected educational institution whose annual forum this year hosted none other than former US Secretary of State Colin Powell. Reflecting on such progress makes it seem more likely that Slovenia’s higher education sector can realise its current goals. Maybe in another 10 or 20 or 25 years, the Universities of Primorska, Ljubljana and Maribor really can be ranked alongside the universities of Oxford and Cambridge. If it does happen, IEDC-Bled will already be well placed to compete with Britain’s universities on the sporting as well as the academic front – it plans to establish a rowing team in 2011.

Photo: IEDC-Bled

The plan is unquestionably an ambitious one. But review developments in the sector last year and it becomes clear that the institutions themselves are already committed to the aims of it. At the University of Ljubljana, for instance, the Faculty of Economics gained international recognition in 2010 with accreditation from both the European Quality Improvement System and the Association to Advance Collegiate Schools of Business. It is one of only 70 institutions in the world to have won both accreditations, and a spokesperson says they are crucial for improving the school’s reputation: “They help in establishing professional and scientific contacts and cooperation with the best schools globally.” 2010 was also a year of accreditations at Slovenia’s leading private higher education institution. IEDC-Bled School of Management received full reaccreditation from the Association of Masters of Business Administration (AMBA). And the School’s president received individual recognition – in June, Professor Danica Purg was named international Educator/Dean of the Year by the prestigious Academy of International Business (AIB). She was only the third European to receive the honour.

Photo: IEDC-Bled

Already progressing

Total public expenditure for formal education as a % of GDP by level of education Year

Total

pre-school education

2005

5,67

2006 2007 2008

basic education

upper secondary education

tertiary education

0,59

2,45

1,38

1,25

5,67

0,62

2,39

1,42

1,23

5,19

0,56

2,26

1,16

1,21

5,22

0,49

2,36

1,15

1,22

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Prof. Dušan Mramor, Dean University of Ljubljana, Faculty of Economics

Balancing Act With 8,000 students, the Faculty of Economics of the University of Ljubljana is by far the largest higher education institution in Slovenia. Dean of the Faculty professor Dušan Mramor says he is proud of the school’s increasingly strong reputation, but conscious that maintaining and enhancing it will necessitate a difficult balancing act. How does the performance of your institution compare to others in Slovenia, and others in Europe? It is good to compare performance on objective measures; the best objective measure for us is a peer review that was done by the Association to Advance Collegiate Schools of Business (AACSB), and by the European Foundation for Management Development (EFMD). Both institutions consider the faculty a high quality business school – they granted us accreditations. Our school is the first to be accredited with both accreditations in the region, and we are also top in the region on other objective measures like research output. And if we look at our institution’s impact on economy and society in general, this school has given nine ministers since 1991. In addition, a lot of top position managers are our graduates. In short, we’re a leading institution in Slovenia and in the wider region. How often do you introduce new courses to keep up with job market demands? We have completely changed our programmes three times in the past ten years to keep up with demands. We now have around 280 accredited selective courses but we don’t necessarily offer all of them every year – we can choose among them based on demand. 104

The whole university is offering a lot of new programmes and courses, partly because the government motivated us to do that. We were paid according to the number of students and graduates so we wanted to attract students. This is changing now because it has negative effects alongside the positive – quality becomes a problem in this sort of financing environment. So now we’re more selective. What does the government need to do to ensure Slovenia has a world-class education system? We’re in the process of adopting a new national programme of education which addresses a lot of important issues – internationalisation, for instance, and financing on the basis of quality not just quantity which is extremely important. However, the government needs to do more: there are currently a lot of students’ rights which stop them from studying hard. You can repeat an exam as many as six times; you have an additional year for your thesis or diploma; you can prolong your studies also for another year and so on. This needs to be abolished. The other issue that should be addressed is our very high student inclusion rate. It’s a burden on the system and a huge burden for professors because it means they spend most of their time on weaker students. We

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should be reducing enrolment and making the students study harder. Are there any changes institutions need to make? Internationalisation is one of the key changes but it is also among the most difficult. It’s very hard to combine being a Slovene institution paid by Slovenian taxes which should also develop Slovene language and be based within the culture and at the same time be internationally orientated. Our school is a leader in the field of internationalisation. Preserving our own culture and being global at the same time that is the issue we’re dealing with. So, internationalisation is one of the changes. Second is close ties to the community. Our school is close to business and also to the government itself. Finally, of course, there is quality. The new Slovenian Quality Assurance Agency for Higher Education will I’m sure foster quality so things should be better in the future in that regard. How closely do you work with the future employers of your students? In Slovenia, where there are only two million people, it may be easier to work closely with businesses than in the USA for example. Here everybody knows those businesses. But we work really closely with them. We have very strong Alumni Club and a business advisory board that comprises of 27 presidents of the boards, directors, CEOs and entrepreneurs from the most successful Slovenian companies as well as multinationals. They offer their support which is fantastic. Each year we also bring around 280 guest visitors from businesses that studied at our faculty. They come to the class and hold discussions with students. Then we have a special conference where students design and present solutions for particular companies, under the advice of professors. This is done in English and the chief executives of those companies come to these presentations and debate about solutions with students. There are a lot of other things we do in this sense – we believe contact with future employers is the key. Do any international companies seek graduates from your institution? Of course – international corporations such as IMF, P&G, Ernst & Young, Deloitte, Microsoft, IBM and others regularly come

to our faculty. Some of our graduates started working for those companies in Slovenia but now work abroad. Our graduates also work in financial institutions such as the World Bank or European Investment Bank. Students are great promoters of the school. Do you provide tailor-made programmes for foreign students? We have summer school that is tailor-made for foreign students. In 2010 we had 370 participants, which is the biggest number of students ever. The previous year there were 160 students. This summer school is really popular and students and professors come from 36 countries. This year the biggest number of participants came from France, Spain, Portugal, and Germany. But we have many students from abroad attending our regular programmes as well. Some of the courses are only in English, so they are also tailor-made for foreigners but Slovenians can attend them, too. Do you collaborate with other universities from abroad? Our school has 168 partner institutions worldwide. With them we have exchange programmes, double degree programmes and joint programmes in tourism and ecology to mention just a few. What is your strategy for 2011 and beyond? In June 2010 we adopted a completely new strategy. We did numerous analyses, but we set a very simple vision and mission statement: we want to be among the top schools. We extended the vision to 2020, to be among the top one percent of schools in the world. Now we’re practically there, between 130 and 200. We would like to be among the top 100. COMPANY NOTES University of Ljubljana Faculty of Economics Kardeljeva ploščad 17 1000 Ljubljana, Slovenia T: +386 (0)1 589 24 00 F: +386 (0)1 589 26 98 info@ef.uni-lj.si www.ef.uni-lj.si

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Prof. Danica Purg, President IEDC-Bled School of Management

Pioneering Spirit The IEDC-Bled School of Management, founded in 1989, is today recognised institution in the world for its innovations in management development, including art, philosophy and other topics in management education that stimulates creativity and reflection in the management processes. The school’s founding president Professor Danica Purg acknowledges the school has achieved a lot since its establishment but she still has big plans to maintain and enhance its position both regionally and globally. You are the third European dean to win the prestigious Dean of the Year Award by the Academy of International Business. What were the reasons for your important designation? As listed in the Nomination for the 2010 Educator/Dean of the Year Award, these are five main reasons why the Academy of International Business (AIB) awarded me this high level of recognition: the pioneering work in founding management education in Slovenia; important contribution made by founding and extending CEEMAN which is a global association of 185 business schools from 43 countries; recognition of the never ending desire and ability to support others, with the result that I am a role model par excellence for deans, faculty members, and managers throughout the region and beyond; the innovations in how management education is conceptualised, designed, and delivered; my contribution to having the world recognise the powerful role that management education plays in the functioning of civil society, as exemplified by the President of the Republic of Slovenia awarding me the “Honorary Order of Freedom” in 2001. 106

I see this award as recognition not only to IEDC-Bled School of Management, and to my team who inspired and supported me, but also to Slovenia and whole Central and Eastern Europe. IEDC has been one of the pioneers in the field of management education in Central and Eastern Europe. What motivated you personally to become so involved? My motivation has been the understanding that leadership and management development would be one of the most needed activities to make it possible for countries like Slovenia and other countries in Central and Eastern Europe to develop and to level up with Western Europe and other developed economies. Through my research and contacts outside of Yugoslavia I started to be convinced that only a school with an international orientation could make the difference. What are the benefits of the school that encourage companies and individuals to come to study at IEDC? At IEDC we have never compromised on quality and have

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been international from the beginning. Over the years more than 52,000 executives from 70 countries have participated in the IEDC programs and more than one half of them came from countries other than Slovenia. The reason for this are our innovative programs, top-class professors coming from the best business schools in the world, strong international orientation, excellent networking opportunities, immediate practical use of knowledge and skills gained in our courses and, of course, the stunningly beautiful environment. In addition, our prices are reasonable too. Art as inspiration for managers and leaders, and learning from other professions are special features of the IEDC approach. Can you elaborate on that? In differentiating IEDC-Bled School of Management from other schools in the world and making us special, we created a series of events with artists, in which the participants are also going through the process of learning from the art. Art and artists namely stimulate us to see more, to hear more and experience more of what is going on within us and around us. We believe that the business school is not only a business meeting point and a place to come to learn, but also a place for reflection. The School itself is an art gallery with some hundreds of pieces of art – as we say “creative environment for creative leadership”. We teach on important issues in a more and more complex environment, from international business, marketing, product development to issues like sustainability and best practices of corporate governance. “What you learn today, you can use tomorrow,” our students are often saying, thus we are very much oriented into the practice. How much attention does IEDC pay to management ethics? Twenty years ago, we were one of the first schools in the world to introduce ethics in our programmes. More than ethics as such we discuss dilemmas that management face – which option is ethical. We try to make people think in this direction because very often you have to choose the lesser of two evils or weighing things against each other. Sustainability and the care for environment are other similar issues that we have successfully incorporated into our philosophy. Recently Coca-Cola invested in IEDC and established The Coca-Cola Chair of Sustainability. What are the aims of this Chair and what does this mean in practice for IEDC? The Coca-Cola Chair of Sustainability is about IEDC’s long term commitment to management development and helping clients, including Coca-Cola, to achieve the much sought-after status of being described as a High Performance Organisation. This investment by Coca-Cola contributes significantly to IEDC vision to be the leading business school in the new Europe; to be an agent for change, a center for leadership development and the meeting place for managers and leaders. It’s an interdisciplinary initiative aimed at creating cutting-edge knowledge in the field of sustainability, promoting the concepts of sustainable development, sustainable value, and embedded sustainability, and providing support for the needs of Central and Eastern Europe while connecting the international sustainability community to the realities and innovations of the region. IEDC pioneers in many areas. What are the plans for the coming years? We were pioneers of leadership education in this part of Europe. Today, we are again pioneers in terms of introducing innovations to the leadership development. This is recognised by the Aspen Institute from the USA, rating IEDC among the 100 most

innovative business schools. I would like IEDC to be one of the ten most innovative institutions in the world, focused on the development of responsible, ethical and environmentally conscious leaders. Our goal is to be trendsetters of developing responsible and creative leaders and potential leaders for better future. Looking at the nearby future, year 2011 marks IEDC’s 25th Anniversary. We plan some events to celebrate our achievements, and the main one will be the Presidents’ Forum on October 14 2011, taking place at Brdo conference centre which is symbolic as we started with our school at Brdo. Dr Danilo Türk, president of Slovenia, already confirmed his participation. We also plan to establish an IEDC rowing club and start to cooperate with teams from schools around the world. We plan to employ a pianist from Canada (also having PhD in sociology and psychology) who will develop further our curriculum on art and leadership; and we plan to attract still more international public to our school, so that we could have around twenty countries represented in each MBA Class. COMPANY NOTES IEDC - Bled School of Management Prešernova cesta 33 4260 Bled, Slovenia T: +386 (0)4 579 25 00 F: +386 (0)4 579 25 01 www.iedc.si

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Green as a Football Field Economic recovery might not be enough in itself to make the figures for the tourism business as green as they once were. That’s why the Slovenian Tourist Board is betting on a well aimed promotion of this green and joyful destination, with the aim of tapping as yet unexploited markets. By Jaka Terpinc

ourism accounts for over 10 percent of the Slovenian economy. While seasonal moods may influence the demand for particular resort types, visitors remain steady throughout the year here. The undisputable winners are spa and wellness facilities; then the-ever popular mountain resorts; the small but crowded coast; and finally the capital – Ljubljana. The champion attraction remains Postojna cave, attracting around half million visitors every year, the overwhelming majority of which are foreigners. The stalagmite beauty is followed by Bled and Ljubljana’s castle. While the industry has undoubtedly been affected by the unfortunate events on the global markets, it hasn’t suffered nearly as much as some other sectors. During Dimitrij Piciga’s term as head of the Slovenian Tourist Board (STO) – which began in 2006 and ended in 2010 – there was a sharp growth in tourism. Speaking at the last results presentation of his term, Piciga noted that: “Slovenia’s tourism grew at a rate above the average global and regional rates and we still have a lot of potential.” The figures back up this statement. In the past four years, visitor arrivals rose by 10 percent to 2.72 million, while overnights were up eight percent to 8.3 million. While the economic crisis put an end to quick growth – there was a 3.2 percent decrease in visits in 2009 – the latest figures show a recovery. Data from the Statistics Office shows that the end of 2010 saw a six percent increase in arrivals and a three percent growth in overnight stays. While most of Slovenia’s foreign visitors still come from Italy, Austria and Germany, figures from 2010 show increasing demand 108

from the Russian Federation and the United Kingdom. Tourists from the ex-Yugoslav countries, who are now allowed visa-free travel, also seem to be increasingly rediscovering Slovenia.

I feel efficient branding Slovenia’s biggest attraction to these tourists is its sheer diversity. But traditionally that has led to problems with branding. It is not easy to unite Slovenia’s many qualities under one slogan. The attempts began two decades ago with »Slovenia my country« as a tourist promo campaign – a phrase which ultimately turned into a political slogan for national independency. Then throughout the years, a couple of partial, not very successful branding attempts were made, which obviously weren’t meant to last. To end the confusion, the Government Communications Office was tasked with coming up with a new campaign and slogan. The result was I feel Slovenia, which applies to any representation of Slovenia, including tourism. Indeed, tourism was the first to actively and systematically use this brand for its promotion. While recent years have seen Slovenia’s standing improve on European markets, the country still seems to be relatively anonymous in global terms. That is why Slovenia is attempting to emphasise the possibility of a unique, memorable experience rather than citing a list of properties. »The empirical promise of I feel Slovenia brand is a promise of the Slovenian green, something you can experience here only”, says Konečnik Ruzzier. An expert in branding, she believes the

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Top 10 attractions (2008, foreign visitors)

promotion efforts by STO are positive – especially considering the financial means available. That’s why she welcomes the 2011 promotional strategy of STO, which aims to take advantage of communication technologies. These technologies have already proven to be successful in destination marketing.

The master plan Despite a relatively successful period in tourism, the newly appointed Economy Minister Darja Radić is demanding a more focused approach – a demand used to explain the change in STO management. The minister says the Board should essentially concentrate on marketing and finding new customers. The key activity of STO is therefore now centred on the promotion of Slovenia on the back of the new branding. Essentially the organisation intends to develop partnerships and create efficient co-branding campaigns together with other recognisable brands. The partnerships aren’t limited only to the homeland. An example of cross-border links is the cooperation with Croatian Tourist Board. The two countries plan joint promotion campaigns to conquer the lucrative markets such as China and India.

match against the United States will be also remembered as the day when “Slovenia” recorded its highest ever number of Google searches. Sports have once again proven to be a great platform for promotion and plans for London Olympics are already underway. Cultural and political events are no less attractive in this regard. 2011 brings the twentieth anniversary of Slovenian independence (to be marked by a project entitled “Homecoming”) and Maribor will be the European Culture Capital in 2012. And so the tourist image of Slovenia is one of a small yet diverse country, where many pleasures are in reach. Beside the already mentioned wellness, it flourishes with possibilities for active vacations any time of the year. As such it can offer a unique experience for nearly any type of traveller, from backpackers and families to congress visitors and more luxurious guests. A new positional slogan, Slovenia Green, emphasises the country’s natural environment, its importance in tourism, and most of all a commitment to preserve it. Marjan Hribar, the head of Tourism Directorate at the Ministry of Economy, has put it simply: “Our vision is clear – Slovenia will become the safest, healthiest and most accessible destination in Europe”.

Total overnight stays y-o-y growth rates in %, new methodology from 2009 onwards 8

Source: SURS

Photo: STO

Postojna cave 473.639 Bled castle museum 145.178 Predjama castle 88.779 Škocjan caves 73.254 Lipica stud farms 70.220 Savica waterfall 56.253 Kobarid war museum 40.853 Bled vintgar gorge 35.294 Ptuj municipal museum 15.873 Celje old castle 13.940

6 4 2 0

The green land of champions

-2

The greatest promotional opportunity in 2010 came with the unforeseen success of the Slovenian football team and their appearance in South Africa for the World Cup. The day of the

-4

2007

2008

2009

Q1 10

Q2 10

Q3 10

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Current investment opportunities Negova Castle The Ministry of Culture wishes to grant a lease for the historic Negova Castle situated in the Municipality of Gornja Radgona in the south-eastern part of Slovenia. The Negova Castle, one of the best preserved medieval buildings in Slovenia, has grounds of some 3,000 square metres and it is listed as a place of heritage value for the Republic of Slovenia.

Intended function

Total cost/budget The cost of the castle renovation works is in the range of EUR 2m. The amount of investment necessary to develop visitor facilities will depend on the scope of the activities to be conducted on the site.

The renovated castle should become a visitor attraction complete with a restaurant and coffee shops, and be equipped to host cultural events and conferences and provide accommodation to visitors. The old castle could become a high-end hotel with a couple of luxury suites or it could be turned into an exhibition space such as a museum or a gallery.

Gradac Castle The Ministry of Culture is seeking investor and developer clients with the ability to take over the running of the Gradac Castle on either a leasehold or freehold basis. The castle, located in the south-eastern part of Slovenia, is one of the best-preserved medieval fortifications in Bela Krajina and is built on the remains of the prehistoric settlements at the river bend. Total cost/budget

Intended function

The estimated cost of the castle renovation is EUR 4.9m. The cost of restoring the gardens and the damaged statues to their previous splendour has been estimated at EUR 12m.

According to the master plan prepared in 2008, Gradac Castle will be a small hotel. A number of activities could be organised in the ancillary buildings. Property development is also possible since the surroundings have been earmarked for tourism, hospitality and leisure.

Dornava Manor The Ministry of Culture is seeking to lease the Dornava Manor located in the south-eastern part of Slovenia. The castle and the park grounds are situated in the immediate vicinity of Ptuj, a town which dates back to Roman times and is the oldest in Slovenia.

Intended function Total cost/budget The renovation works have been estimated at EUR 4.1m. The price tag for the renovation of the gardens is in the region of EUR 10m.

Since it is the only Baroque castle in Slovenia, its new owner will have to design the renovation works around the architectural constraints. The castle should serve as a cultural centre with halls to host exhibitions and music events, as well as a coffee shop and a restaurant, as already envisaged in the master plan. Limited accommodation facilities could be arranged in the attic for those persons engaged in running cultural events (performers and other staff ) but no hotel accommodation will be allowed.

Project Leader: Ministry of Culture

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TOURISM JAPTI - Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investments Verovškova cesta 60, 1000 Ljubljana T: +386 (0)1 589 18 70, F: +386 (0)1 589 18 77 fdi@japti.si, www.investslovenia.org

Pišece Castle The Ministry of Culture is seeking a developer or a funder interested in restoring the Pišece Castle located in the eastern part of Slovenia.

Intended function Total costs/budget The estimated cost of the investment is EUR 2.5m.

The Pišece Castle has all the attributes of a prime hotel facility suited for cultural events, conferences and other gatherings capable of satisfying even the most discerning guests.

Rihemberk Castle The Ministry of Culture is seeking a developer or a funder with the ability to take over the running of Rihemberk Castle, either as a leasehold or a freehold. The castle, likely built in the early years of the twelfth century, is located near Nova Gorica close to the border that once separated Slovenia from Italy.

Total cost/budget Renovation of the castle has been estimated at EUR 4m.

Intended function The function of the renovated castle will be discussed with qualified investors. However, the castle or a part of the castle should remain open to the public.

Thermal SPA Centre Benedikt There is an opportunity to purchase and finish a thermal spa centre project that includes a large contemporary water park and a high-class hotel with an apartment village. It also has a wide range of additional activities and benefits such as thermal and mineral water use, organic food production, healing plant cultivation, walking trails, cycle lanes, agro tourism, golf courses and similar facilities. The spa centre will be located in Benedikt, a village and municipality close to the border with Austria. Benedikt is in the vicinity of Maribor, which has an international airport. The entire project cost is estimated to be EUR 47.2m, with return on investment and return on equity after 20 years, net present value of EUR 1.5m and internal rate of return of 6.3 percent. Negotiations are taking place with some state owned banks to provide 40 percent loan-to-value. Project Leader: CMInženiring

Other available investments Rimske Terme Total cost of the project is in the range of EUR 50m. Project Leader: Rimske Terme d.o.o. Livade resort The estimated investment value of the complete project is EUR 106m. Project Leader: TPC Livade.

Rimski Vrelec The asking price for the estate and its mineral water spring is EUR 690,000. The cost of redevelopment is estimated at EUR 400,000. Project Leader: Municipality of Ravne na Koroškem Kolpa River Wellness & Spa Resort The total estimated project value is EUR 21.51m. Project Leader: Municipality of Metlika

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Dimensions of Slovenian Tourism Photos: STO

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Wellness Spas, health resorts and wellness centres reflect modern trends but are based on a rich natural and historical tradition. From the Roman ages throughout the industrial revolution, the natural essentials have remained pretty much the same. What has changed is that now guests can choose between a variety of joys, relaxations and treatments. Dozens of pools, hot tubs and saunas vary in size and level of comfort, and can perfectly satisfy both bigger and smaller budgets. 113

TOURISM

Mountains Slovenia’s precious highlands attract hikers in summer and skiers (and some hikers) in winter. With a wide range of pleasures and challenges, the mountain huts and valley hotels of the highlands appeal to adrenaline seekers as well as families and older people. Add world-class winter sport events and the Slovenian mountain world really does offer everything in small and sustainable portions.

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The Coast A 42-kilometre coastline may seem insignificant compared to the longer coastlines of Slovenia’s neighbours, but Slovenians decided to make their country the best place to anchor a boat or tanker. This window to Mediterranean offers the best in hotel services, gastronomy, entertainment and offers everything else you would expect of a coastline, including the romantic millennium town of Piran or the lively Portorož.

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Ljubljana The capital of Slovenia reflects the whole nation in that it has everything seen in other capital cities, just in smaller proportions. This is a town which can be entirely discovered by foot and which is full of history, culture and places to meet friends. 116

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Small towns A town of around ten thousand inhabitants is a typical Slovenian settlement. It also has a variety of other characteristics: very old, well preserved and surrounded by nature. Add in a square, a castle, many monuments, a welcoming attitude, a number of attractive events and there is an abundance of options for curious tourists and explorers. 117

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Countryside Somebody said that Slovenia can be referred to as one big, continuous village. It is difficult to find an unsettled place, nor a point of really dense population. But if you were to teleport to a random point in the country you would most likely find yourself somewhere in the hills, among the vineyards, with at least two churches and one castle at your sight. The nearest place to stay would be a tourist farm and on the way you would most certainly meet a group of bikers or hikers. 118

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Marjan Batagelj, Director of Postojna Cave operator Postojnska Jama

Promoting a National Treasure Postojna Cave is one of Slovenia’s most beautiful natural wonders, and also its most popular tourist attraction. Even so, numbers of visitors have fallen in recent years – a trend which Marjan Batagelj, director of Postojna Cave operator Postojnska Jama, is determined to reverse. Your company has the licence to manage the large Postojna Cave system. Can you tell us more about the caves and how you preserve them? The Postojna Cave system consists of 20 kilometres of underground tunnels and halls is entered in the register of natural values as a natural wonder of state significance. It is also the most important tourist attraction of Slovenia with the highest number of visitors of any venue in the country. Our company has been entrusted with the task of managing this natural gem by the Slovenian government for the next two decades, which we view as tremendous honour. We manage the cave very diligently and under the permanent professional control of the Institute for the Exploration of Karst from the Scientific-Research Centre of the Slovenian Academy of Sciences and Arts. Every year we prepare proposals for new investments, maintenance and protection of cave infrastructure. You aim to increase the number of visitors to the Postojna Cave from the current half million to one million per year by 2020. How do you plan to achieve this? 20 years ago, before Slovenia became independent, the Postojna Cave received one million visits per year. People from the former Yugoslavia and tourists from all over the world who were spending their holidays along the Adriatic Coast came to see it. The biggest daily number of visitors – as high as 12,000 per day – was recorded during the rainy days of July and August when tourists headed into the interior of the country for one-day trips. Since independence, the number of visitors to the cave has fallen. We plan to return to the pre-independence levels of visitors by increasing our marketing activities. Our marketing will centre on the idea that if you have not visited the Postojna Cave then you have not visited Slovenia. We simply believe that the uniqueness and wonder of the cave make it a “must see” for anyone who visits Slovenia. Will you focus your attention on domestic visitors or do you also have plans to attract more visitors from abroad? Certainly we want all Slovenians to realise the full significance of the Postojna Cave as part of their history; to appreciate its tradition and its striking beauty. But we also want to present

this to the rest of the world as well, since the Postojna Cave can compete with any of the biggest natural wonders of the world. For this reason we have increased our marketing activities in northern Italy, Austria and Bavaria, and we expect more tourists from the USA when the economic situation improves. Many cruise ships moor at Port Koper. Do you plan to take advantage of that? Yes. Next year there will be around 115,000 such visitors and we would like them to also visit the Postojna Cave and the Predjamski Castle. Talks with cruise organisers and representatives of the City of Koper are already taking place and we expect that around 20,000 such passengers will visit the two destinations in 2011. What are the plans and the strategy for 2011? We have a large number of plans for 2011. We will completely remodel our marketing and sales departments; modernise the ticket sales system; change our pricing policy, enabling tourists to visit more destinations in the region for less money; increase catering, not least by building a self-service restaurant at the cave entrance; renovate some of our facilities; and alter our corporate visual identity to emphasise the ancient and established name of the Postojna Cave. We also plan to open two permanent exhibitions displaying the development of man and a paleontological exhibition, and will have a variety of one-off events throughout the year. As you see, we have many plans in the works and all aim to restore the former glory and worldwide reputation of the Postojna Cave. COMPANY NOTES Postojnska Jama Jamska cesta 30 6230 Postojna, Slovenia T: +386 (0)5 700 01 00 F: +386 (0)5 700 01 94 info@postojnska-jama.si www.postojnska-jama.si

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Maja Pak, Director of Slovenian Tourist Board

The Green Theme

Slovenian tourism’s opportunities lie in developing and marketing sustainable tourism, believes Maja Pak, who took on the role of the director of Slovenian Tourist Board (STO) in August 2010. At a time when many traditional recipes for success began to lose ground, the future in this business seems to be favouring those that are innovative. The Minister of Economy has expressed the need for a “focused” approach in tourism instead of dispersed one practiced under the previous management. Can you explain briefly what this means and what actions will you take to achieve this goal? Among the five key goals for 2011 the most important one is strengthening and concentrating promotion on key European markets that account for three quarters of lodgings in Slovenian tourism. We are talking about markets such as Germany, Austria, Italy, the Benelux countries, Croatia, Serbia, the UK and Ireland, Russia and the Ukraine. The STO will spend 60 percent of its promotion budget on promotional activities on these markets in 2011. Our goal is to present Slovenia and Slovenian products in a more innovative and clear-cut manner via collaboration with the Slovenian tourist industry. We will help the Slovenian tourist industry in finding new target markets that are poised to see Slovenia as a high quality tourist-service provider with a high added value. When it comes to making Slovenian tourism more competitive, Slovenia should improve its accessibility as an air travel and cruise destination, improve its railway connections and simplify visa regulations. We made a big step forward by signing an agreement between the Ministry of Economy and the Ministry of Foreign Affairs, which will facilitate procedures for acquiring visas. In 2011 our promotion will be thematically based: 20th anniversary of independence – we will invite Slovenian emigrants 120

to Slovenia as part of the project “Homecoming”; European Cultural Capital – Maribor 2012; and we will also prepare a communicative plan tied to the organisation of the European Basketball Championship in 2012. What are other novelties you intend to introduce as head of the STO? We need to increase the recognisability and effectiveness of the brand I FEEL SLOVENIA. The more we manage to coordinate our promotional activities, the stronger the brand will become. Slovenia as a brand is something that every one of us helps to build, be it the people working in tourism, economy, sports, culture, politics or anyone else. The development of informationcommunication technology obliges us to intensify web marketing and introduce innovative marketing measures. Web marketing will be executed in the form of independent campaign or part of a communication campaign. A number of activities will be implemented via social networks such as Facebook and Twitter. In the field of marketing we need to upgrade segmentation and find target groups who are willing to spend more for their holidays in Slovenia. Therefore it is also necessary to create attractive and innovative products with high added value, excellent service and proper positioning of Slovenia as a tourist destination. The role of STB is encouraging the production of high added-value products that provide a unique tourist experience and foster long-term

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European Destinations of Excellence 2010: the Kolpa River

relations with our guests. We are aware of the fact that tourist mentality is changing and that green destinations are more in demand so it is necessary to adapt to the new reality. Speaking of tourism in general, what would you highlight as an example of good practice and where do you see most of the unexploited potential? Tourism industry demands that different levels of operation work together, particularly when it comes to various providers at the level of the destination. An example of good practice or harmonisation of a tourist product at the level of the destination is Olimje. Part of it is Terme Olimje where guests are treated to a unique experience. Good practices in Slovenian tourism can also be found in the area of sustainable development, which is gaining ground in European and global tourism. The STO is especially interested in speeding up the development and marketing of green tourist products, particularly at the level of the destination (development of green destinations). As examples of good practices of tourist companies I can highlight Terme Snovik, the first tourist company that received EU Daisy in Slovenia, and the eco hotel Eko park Bohinj, the first hotel in Slovenia with the Green Globe certificate that also received the Zlati Sejalec (Golden Sower) Award for 2010. When it comes to the development and marketing of green tourism at the level of the destination we should not forget European Destinations of Excellence: the Kolpa River with its product Kolpa (2010); Solčavsko with its product Harmonija treh dolin (Harmony of the Three Valleys) (2009); and Dolina Soče (The Valley of the Soča River) (2008). As far as unexploited potential in the development and marketing of Slovenian tourism is concerned, I see the biggest room for improvement in the implementation of sustainable, green tourism. In fact Slovenia has all the prerequisites for developing green tourist products. We are surrounded by many globally renowned destinations (Austria, Italy, the Croatian coast). How should we compete against them? Slovenia is a very varied and “boutique” Central European tourist destination with a variety of tourist products. When talking about

competition in tourism among different countries, we are primarily referring to competition in terms of individual tourist products that we offer to our customers. Slovenian tourism positions itself as a varied, boutique and green destination at the junction of the Mediterranean, the Alps and the Panonnian Plain, having a recognisable and successful tourist brand with a strong emotional charge providing the guest with a quality and individualised experience in Slovenia. Another factor that is becoming more and more important in the modern world is safety. Slovenia is in an excellent position to establish its reputation as a safe destination (based on the results of the global peace index for 2009 we rank 9th among 144 countries). Where do you plan to focus you promotional activities in the future? Apart from the key European markets that will receive the largest portion of our promotional budget, STO will also promote Slovenia to other European markets with around 18 percent of its promotion budget (Hungary, France, Nordic countries, the Czech Republic, Slovakia, Poland, Spain, Israel and Switzerland). New growing markets with a big potential for growth will receive around 6 percent of the budget. We will focus on select products, themes and special events; respecting the peculiarities of each market we are focused on seven priority overall tourist products – active vacation, towns and culture, natural environment, ecotourism and village tourism, gastronomy, health and wellness, business and entertainment tourism. COMPANY NOTES Slovenian Tourist Board - STO Dimičeva ulica 13 1000 Ljubljana, Slovenia T: +386 (0)1 589 85 50 info@slovenia.info www.slovenia.info

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Photo: S. Jeršič

Barbara Vajda Director of Ljubljana Tourist Board

A City That Pleases All Senses

Ljubljana enjoys the status of a modern, developed European capital, proud of both its safety and its quality of life. As an increasingly popular place to travel, it has to respond to new challenges in city tourism. According to the director of the Ljubljana Tourist Board, Barbara Vajda, it is very successfully doing just that.

What’s the future of Ljubljana’s tourism in these uncertain times? International trends in city tourism play in favour of everything Ljubljana already has on offer. That is not to say that crisis measures are not unnecessary. These trends reflect in the lowering of prices for all kinds of tourism and tightening of the competition. The key to restoring growth is understanding these trends and adapting to the circumstances. The competition in city tourism is based on what they offer culturally. Since most European cities offer a relatively conservative type of culture, innovative cultural events bring an opportunity. This is the forecast, it is wise to be aware of it and we are surely going to keep it in mind. Ljubljana is not a mass-tourism destination, 122

and nor would we want it to be. We are one of the few European capitals which can be explored by foot, which is a real advantage in terms of congresses and major business events. At the same time we don’t mind shaping ourselves as a “holiday destination”. We should direct our efforts into getting more guests in the slack time from November to February. Looking beyond current trends, can you describe the long term strategic plan to position Ljubljana? The still valid strategic plan extends through the period from 2006 to 2013. The main goal is to make Ljubljana a symbol of Photo: T. Jeseničnik

n May this year Ljubljana overcame a negative trend in visitors which had lasted since August 2008. Slovenia’s capital recorded 718,000 stays in 2010, five percent more than the previous year. This figure sets the direction for an expected annual growth in tourism: 4.5 percent in arrivals, 5.5 percent in stays. The most frequent visitors to Ljubljana are Italians and Germans, followed by Britons, Spaniards, Americans and French. Other encouraging figures show that in only five years Ljubljana has seen a 35 percent increase in hotel beds, used almost exclusively by foreign guests. Less encouraging is the fact that the connections to its airport remain relatively poor. Seasonally, Ljubljana becomes a typical summer destination with notable amount of business and expert events in late spring: its worst time is between November and February. But Vajda strongly believes that this is a city with something for everyone.

Photo: D. Mladenovič

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Ljubljana Castle

Evidently, much effort has already been made since 2006… The already mentioned strategic plan is implemented through the action plan. Most of our goals have been met. For example: the variety of Ljubljana’s attractions for tourists has increased significantly. Furthermore, the city has made giant leaps in the field of tourist and supplementary infrastructure resulting in the revitalisation of the old town and Ljubljanica river. In the field of marketing we have developed a clear identity for Ljubljana as a brand, we maintain high standards tourist reception services, the smart tourist pay card is in use. The internet site can easily compare with Europe’s best and we are also promoting ourselves through social networks. Our destination management is extending towards the entire Central Slovenia. Given the fact that we have acquired many additional lodging facilities of all kinds, we now strive to make them as full as possible. Pricing policy of hotel managers is of course one instrument, but no less important is what is provided for, and available to, guests. What are the foundations for Ljubljana’s branding? Following an international tender, our expert group chose a solution by the British designer John Morgan. The slogan: Ljubljana – Where all of Europe meets sends a message on multiple levels: we do not mean only the people, but all the architecture, religion, culinary types which have ended up in Ljubljana. The graphic solution is clean and consistent. So clean that we have found it useful to combine it with other symbols. We decided to run another tender to combine the Ljubljana dragon with existing graphics. The dragon is definitely one of the dominant identification elements of the city and we are determined to use it in promotion. Still, it all depends who we are addressing and what we want to say. Our efforts will continue in positioning Ljubljana as a meeting capital in the sense of congresses. Secondly, we are working to promote Ljubljana as a city of culture and trying to enhance what it offers on the cultural front. The next theme is a city of rich and various experiences, and finally, Ljubljana is a place for discovering all of Slovenia – a recognisable and attractive entry point for exploration of a country, which begins in its capital city from where you can keep looking for the country’s treasures in the north, south, east and west.

Stožice sports complex seem to have opened up a whole new chapter in hosting sports events. How do you face challenges in sports tourism? Stožice Sports Park is an essential and great achievement which allows us to do far more than just organising sports events. We could only dream of European Basketball Championship without Stožice, as well as many other sports and cultural events. The true value of Stožice is yet to show fully. In any case this is an asset, which is with all its positive effects closely linked to tourist activity. Even though 2013 seems far away, we have already told the Slovenian Tourist Board that we wish to take the leading role at the Slovenian showcases at great European tourist fairs: London 2012 and Berlin 2013. Our effort is not to attract sports fans from abroad – they will come over themselves. No special invitation is needed here. But what we do see as our mission is to keep them here as long as possible and in the meantime convince them that we are an attractive and interesting tourist destination. Photo: BOBO

Slovenia’s international identity. Furthermore this vision foresees Ljubljana as a charming, rich tourist destination with high quality of life and an enchanting atmosphere. A city which pleases all senses, which invites and unites people. This demands more effort in enhancing recognition and competitiveness of the destination through diversifying and efficient management.

Stožice Sports Hall

COMPANY NOTES Turizem Ljubljana Krekov trg 10 1000 Ljubljana, Slovenia T: +386 (0)1 306 45 83 info@visitljubljana.si www.visitljubljana.si

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Zdravko Počivalšek, General Manager Terme Olimia

Being Different is our Obsession As Zdravko Počivalšek – general manager of Terme Olimia and the Manager of the Year 2010 – points out, fifteen Slovenian villages contribute to over a third of Slovenian tourism. Slovenian spas and health resorts scattered across the Slovenian countryside represent the most vital part of the national tourist industry. Počivalšek’s village, Olimje is an outstanding example.

hen Počivalšek became the general manager of the facility, it was merely a “yet another health resort” in eastern part of Slovenia. In a matter of decade, he has transformed it into a modern wellness complex with stunning architecture and attractive high-end service, perfectly harmonized with its natural surroundings. In the meantime, the company has also purchased and refurbished Croatia’s Terme Tuhelj. In the past 10 years they have doubled the number of guests, while the revenue and the profits went up three times. Despite the unpleasant market conditions, Terme Olimia reported the unexpected 12 percent rise of profits in 2010. Figures show there’s no need to panic among the thermal resorts because of the economic crisis. There are two reasons: our products sell well both at home and abroad. Besides, we work all year round, all 12 months. Our key foreign markets seem to have overcome the economic shock. People from these countries – bearing in mind Italy and Germany – can get more for their money here than at home. We should also not overlook the fact that from 2010, Serbs no

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longer need visas for Slovenia. We knew this would allow us to make a giant leap in a relatively short period of time. Similar is expected for Bosnia, for which the visa ban was lifted at the end of 2010. Even so, Terme Olimia still makes an exceptional success story and it is quite ahead of its competitors. Where’s the secret? Our success is the fruit of our efforts over the past years, defined by our strategy of “being different”: different, better, innovative. Only that can afford you a higher price. We are too small to deal with the masses. The key strategic element was our connection to other local tourist services: gastronomic, cultural, and sports. We have a rich tradition, beautiful nature, herbal world: it is a valuable additional content. The inclusion of the whole environment makes us special. Features like the possibility to trade a hotel meal for a dinner at another restaurant in the area without extra charges are unique. We also try to achieve a difference in architecture, which has to be in harmony with nature - our hotel Sotelia was awarded Plečnik award for the best creation in architecture in 2006. What matters even more is the soft side of our business – our people. Much has

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been done, but there is still a long way to go to meet the goals, there is much more ground to cover. Let’s take a look at your investment activities - the past and the future. The large part of our investment cycle is at some 75 per cent. We have set our wellness services at a solid four-star range. Health aspect has shrunk a bit comparing to the past, but we believe that the aging population will restore the demand for it. A combination called medico-wellness is a trend for the future and definitely something we will develop further. Congress tourism is oscillating in line with the economy in general. The most recent increases have been made in sports tourism, as we had opened a brand new sports hall and a stadium in cooperation with the municipality. These four elements are the core of our future development. Our primary goal is to maintain and upgrade our original infrastructure such as Aqualuna Water Park. We plan to add a theme park for children under ten to attract more families. Lodging facilities will get upgraded as well. We see much unexploited potential in expanding camping and caravanning. What about your ventures in former Yugoslavia? In Croatia, Terme Tuhelj was purchased and swiftly refurbished in 2003. It comprises a modern thermal park with 5000 m2 of water covered areas, high-end wellness centre and to date the biggest Croatian sauna park. In Terme Tuhelj, lack of lodging capacities makes us more weather-dependable which is why we decided to build another 130-beds hotel. The construction will begin in spring 2011. Our plans in Gevgelija, Macedonia, are currently on hold. In this case we are largely aiming for the crisis- affected Greek guests. A potential, but still questionable project in Palić, Serbia, was widely covered in the media even before we could make ourselves a bit more clear about it. In the current situation, we are focused at keeping Terme Olimia in a good condition. We don’t want to make it vulnerable because of too many investments elsewhere. What about other Slovenian “villages”? Do you want to get involved there and possibly take over any other hotels? I prefer creating something new or just work on the existing inventory. From the perspective of national economy, I consider it a better effort. We could as well go for takeovers to create additional synergies and economics, but from the aspect of tourism this does nothing apart from moving things from one place to another. It would make more sense for us to find another village with some tourist potential and enrich it with a new wellness resort. You have already spoken critically of the national strategy in tourism. What should the government’s priorities be in regards to tourism? This question demands some considerations, mostly because I don’t want to offend somebody. But on the other hand, you need to be direct in order to get things moving. Personally I think we need a bolder strategy. We have great natural conditions and skilled people. It wouldn’t be wrong to set the goals higher rather than just aim to expand in percentage terms. This of course takes a thorough approach to foreign markets. However, this cannot be done by each company separately. It takes experts, politicians and the economy to act together. A thoughtful, revolutionary step with a bigger promotional budget would be essential in this regard. We need a promotional push in the 500km-radius for car passengers and a clearly defined interest in air travel. Much nonsense has gathered around the air travel policy, as if the head didn’t know what the hands are doing. For example, years ago

Wellness Orhidelia is the newest and most modern part of Terme Olimia, intended for the most demanding guests seeking new dimensions of relaxation and pampering. It represents the most luxurious spa experience in this part of Europe, offering its guests entirely new worlds of thermal indulgences, which will soothe their senses and enable them to re-discover their true relaxed selves. Orhidelia has convincingly won “the best Slovenian wellness 2010” title.

a line with Kiev was established with big expectations which is going to be abolished soon. The complex visa policy is partly to blame. Waging heavy battles for a tourist visa at your embassy is no way to stimulate tourism. The government might even argue that it is a Schengen regime which dictates such procedures, but at the same time tourists can get a visa at another “Schengen” embassy with significantly less problems. COMPANY NOTES Terme Olimia d.d. Zdraviliška cesta 24 3254 Podčetrtek, Slovenia T: +386 (0)3 829 70 00 info@terme-olimia.com www.terme-olimia.com

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Alenka Iskra, President of the Board Terme Maribor

Rich and Original Since 2002, Terme Maribor has secured an increasingly visible spot in the congress tourism map. According to Alenka Iskra, president of the board of Terme Maribor, the Maribor-Pahorje region has plenty to offer to those looking for an impressive conference location – not least a wide range of tourism experiences. How would you assess business tourism in 2009 and 2010? This year hotels within the Terme Maribor group generated a 12 percent increase in overnight stays compared to the same period last year. In 2009 we recorded a 10 percent drop in overnight stays compared to the previous year. The greatest drop was in business guests. The biggest growth in 2010 – of 20 percent – was in the sale of tourist packages while business-related overnight stays saw an 18 percent increase. We are satisfied with these numeric indicators, such as the growth in overnight stays, the number of business meetings and their participants. Up until two years ago we had recorded ongoing growth in overnight stays and revenues in the business tourism field. 2008 was particularly successful, mostly due to the Slovenian presidency of the European Union (EU). In 2009 and 2010, there was a drop in demand, cancellations of traditional corporate events, lower participation in congresses, shortening of events as well as lower consumption per participant. Therefore, average paid rates for business overnight stays and events fell by up to 30 percent. What do you offer to event organisers and participants? In the congress tourism field, Terme Maribor guarantees professional and high-quality organisation of events in our hotels. We no longer simply provide event organisers and participants with the hire of up-to-date equipped halls and technical equipment because their expectations are continually growing. And we adapt to their expectations with pleasure. That’s why we have complemented our services with an array of additional activities that are on offer in our region. That means our events are truly rich and original. Their framework is becoming ever more complex. The “value for money” principle is no longer the only one. It has been complemented by the principles of “experience for money” and “emotion for money”. The concept of our services focuses on a business guest’s individual needs and his or her experience. How have you drawn up your business plan to adapt to your clients and business guests? Can you tell us about your plans for 2011 and who will be your target group? 126

In the past three years, Terme Maribor has been engaged in discovering new business-tourism trends. On the basis of the recognised needs and wishes of users, we have created new, targetorientated products. Consequently, our product range is diverse. We have substantially upgraded marketing and sales activities, and have been intensively engaged in the expansion of our sales network. These activities have enabled us to enter new markets and gain the trust of new customers. We are pleased to co-organise business events with our clients. In the case of low turnout at the event, we share risks, deliver added value, and reduce the costs of event execution by providing good organisation. In a more difficult economic climate, established destinations have an advantage. How do you persuade potential guests to opt for a less well-known location? Maribor-Pohorje is undoubtedly a young congress destination that has just started making its name on the domestic and foreign maps of congress providers. Our advantage is definitely the diversity of additional activities we can offer, which are available at competitive prices. Unforgettable experiences are offered by Maribor’s well-preserved old city centre by the River Drava, rich cultural experiences, a diversity of winter and summer sports activities, outstanding spa and wellness products as well as quality cuisine and wine routes. In addition, accessibility is nowadays essential for any congress destination. The MariborPohorje congress destination has good road connections as well as proximity to three international airports. COMPANY NOTES Terme Maribor d.d. Ulica heroja Šlandra 10 2000 Maribor, Slovenia T: +386 (0)2 234 43 50 F: +386 (0)2 234 43 30 marketing@termemb.si www.termemb.si

the Entrepreneurship Forum was fantastic, along with the associated programme Jernej, Entrepreneur

“

www.termemb.si

A Natural Environment for Business Meetings Business tourism, when undertaken in the surrounds of the beauties of the Pohorje mountain range, provides a unique experience that visitors to your event will always remember. The services we offer have been tested extensively and we bring a vast wealth of experience to every occasion. We go the extra mile for you. This is our home. Welcome! For conferences, business meetings, motivational seminars, exhibitions and other business events, you can reach us at: Hotel Habakuk Pohorska ulica 59 2000 Maribor Tel.: +386 2 30 08 100 habakuk@termemb.si

Hotel Bellevue Na Slemenu 35 2208 Pohorje Tel.: +386 2 60 75 100 bellevue@termemb.si

Hotel Piramida Ulica heroja Šlandra 10 2000 Maribor Tel.: +386 2 23 44 400 piramida@termemb.si

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Jerneja Kamnikar, Director Vivo Catering

Here Is Our Chance! Tourism is an important segment of country’s economy and it has many variants, congress tourism being one of them. The availability of airports and facilities forms the base for its existence, however, the potential for superlatives and “that special something” lies somewhere else. Jerneja Kamnikar, the director of the thriving Vivo Catering company, believes that catering in proper organization can make a crucial difference and make the congresses vitally different.

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What is the situation in the field of business tourism in Slovenia? For the past five years, intensive investments have been made to support and encourage its development. These are long-term international projects that give results after approximately three years of constant efforts. This market forms itself a few years in advance, so at the moment the years 2013 and 2015 are being planned and considered. Slovenia has gained an excellent reputation so all the hard work is paying off. How does Vivo participate in this? Vivo is an active member of the Slovenian Convention Bureau that organizes workshops outside of Slovenia which present and promote Slovenia to foreigners as a congress destination. Besides that we are part of Conventa, South-East European platform for the meeting industry. We support both organizations and help shaping them by executing their programmes and investing financially. We build our Vivo Congress brand inside of this international base and support business tourism in order to make Slovenia recognizable. We can thus get a chance to carry out our services. Just recently Vivo worked on a congress with 1,600 attendees and the organization linked Israel, Switzerland and us as catering providers, all thanks to the international business tourism projects we are involved in. Why is congress tourism so important? It goes hand in hand with private component of tourism. If the business tourists are satisfied - or rather impressed by the service and the entire experience, there is a chance they will want to return to the country and explore it with their families and friends. So this means congress tourism plays a double role: an independent one and that of promotion which means an extension of leisure tourism. How can catering add to the story of success? Slovenia is a young congress destination and it needs to show all its trump cards. At the international presentations and exhibitions, Slovenia promotes its locations, capacities alongside with its culinary heritage and wine. This is where we come in with our two tasks. We need to provide qualitative food to 500 participants of the congress or more which is very complex in terms of logistics. Our other mission is to promote Slovenia right on the spot, at the congress. At Vivo we usually organize a gala dinner outside of the congress centre and this is our chance to impress them with what our country has to offer. As I said before, we would like the congress attendees to return to Slovenia on a different occasion. What is important for a professional execution of catering service in congress tourism? In this case, we need to keep in mind our double role. The first part of our service is merely taking care of food. In Vivo’s case, this means meeting our high standards which are necessary for a top-service; it involves a lot of planning and organization. There is no place for making thematic, original stories here. The creative component where we aim to fascinate and be unique comes on the gala dinner and here we let our imagination flow. At all times we must consider the multicultural structure of the guests and this makes it a challenge to find the proper concept in terms of choice of food and its service. Slovenian cuisine is based on strong, floury tastes. In some cultural environments, this is unusual and rare. We thus need to prepare such a menu that combines the essence and qualities of our cuisine with different expectations and habits that come from people around the world. When we achieve this, we are sure to get the top marks for our service and this is good for us and for our country too. We help Slovenian tourism to get to the next level.

What is the future of business tourism in Slovenia? Business tourism is a huge bonus in the country’s tourist offer. The Ministry of economy is making great efforts to accelerate it and the prospects are good. The goals remain the same, it is the path that keeps changing. I see Slovenians as innovative; we just need to learn to work together as a team. Co-operattion will enable us to make the best of the opportunities that business tourism brings. COMPANY NOTES Vivo Catering, d.o.o. Pot na fužine 2 1000 Ljubljana, Slovenia T: +386 (0)1 546 16 57 catering@vivo.si www.vivo.si

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Water, Water Everywhere Slovenia is well known as a country of significant natural beauty. One of the main reasons is its abundance of water. Be it steam, liquid or ice, Slovenia has it. It’s a simple fact but a major attraction to the thousands of tourists which visit the country every year. By Renata Picej

ater. The source of life. A source of relaxation. A source of pleasure. A source of health. A source of adventure. Also, a key characteristic of Slovenia. Whether you want to ski, take a boat trip, or enjoy the healing properties of a natural spring, you can do it in this Alpine land. Increasingly, those trying to encourage people to visit Slovenia are focusing on the many natural water phenomena the country plays host to. Those considering a visit are quickly made aware that this is a nation which has fresh, salt, surface, subterranean, intermittent, standing, running, falling, healing, thermal and mineral water as well as a range of aquatic peculiarities such as ponds, marshes, alpine bogs, a lake with an island, karst rivers and swamps.

From the very beginning Interestingly the very beginnings of tourism in Slovenia were closely tied to water. As early as 1855 the Swiss hydropath Arnold Rikli was among the first to recognise the remarkable value of Bled and emphasised that the town’s geographical position was perfect for water, air and light. Portorož and its surrounding areas, meanwhile, were already well known in the thirteenth century when the first health seekers arrived, pinning their hopes on brine and salt mud. And the Romans are known to have looked for water in Koroška – finding it in the spring near Kotlje, the area under the Uršlja Gora mountain – and there was also that renowned and famous “Römerquelle” with its healing drinking water. Over in Dobrna, the thermal water temple has a rich and proud 600-year long tradition. And then there’s the mineral water story, which is actually the story of the Radenci Health Resort – otherwise known as the tale of a marvellous spring with bubbles since this is how the locals described the bursting and bubbly spring. In 1833 a medical student named Karl Henn passed the remarkable spring in his carriage on route to Ljutomer. It caught his eye and when he returned 32 years later as an acknowledged balneologist – the term given to those who study the science of baths and bathing – he discovered that the water from the spring had not yet been claimed. He immediately purchased the piece of land with the spring and installed an oak tube. In 1869, from a depth of 17 metres, the excellent sparkling mineral water Radeiner 130

Sauerbrunn emerged. It was then transported to major European cities to be tasted exclusively by dignitaries, diplomats and royalty. The Radenci Health Resort continues to welcome thousands of visitors each year, keen to sample the healing properties of the liquid discovered by Henn. In this and so many other ways, water remains at the very heart of Slovenia tourism – a position it seems likely to retain for many years more.

Slovenia, land of water For such a small country, Slovenia boasts an impressive number of types of water and water features: • Fresh/salt water: from healthy drinkable water to the sea and salt pans • Surface and subterranean waters • Intermittent lakes such as Lake Cerknica. The mechanism of this lake was described by Janez V. Valvasor 400 years ago, earning him a place in the prestigious English Royal Society • Sinking rivers which suddenly appear and disappear – the best example being the Ljubljanica River • Healing waters • Thermal waters • Picturesque karst and other springs • Mineral waters • Standing/running waters: alpine bogs: Pohorje, Jelovica; lakes – even with a little island, ponds; wetlands that are protected by the Ramsar Convention; alpine and Pannonian rivers • Falling waters: there are numerous waterfalls and cascades

USEFUL INFORMATION

How to Get Around Travelling in Slovenia is easy and comfortable. The variety of public transport makes it possible to discover the country in a relatively short time. There are good connections with European countries and the rest of the world.

he majority of trips within Slovenia start from the capital, Ljubljana. The railway station is the city’s main transport hub and there are regular train connections with all major towns in Slovenia. During high season, additional trains are available from Maribor to Koper, via Ljubljana. When travelling to major towns, it is advisable to take the Eurocity, Intercity or ICS (the fastest) trains, as regional trains stop frequently and take more time. There are several direct trains a day departing for Munich, Vienna, Graz, Villach, Salzburg, Venice, Budapest, Sofia, Prague, Thessalonika, Zagreb, Rijeka, Opatija, Pula, Skopje, Belgrade, Zurich and Trieste. All are air-conditioned and comfortable. The network of bus stations and stops throughout the country makes travelling by bus easy and convenient. Again, the hub for these services is Ljubljana, from where it is possible to reach almost any part of the country within a couple of hours. Taxis are plentiful and do not have a daily or night rate, but prices can differ enormously depending on whether you hail one on the street or call by phone. The most expensive ones are in front of the railway station. Arguably the best way to see the country is by car, especially if you want to visit the more remote mountainous regions. Cars can be rented from agencies at Ljubljana Airport and from tourist agents in towns. Radio Slovenia International provides regular updates on traffic jams and is therefore well worth a listen before setting off. Being a small country, Slovenia does not have internal airlines, but it does have good international flight connections. There are three international airports. Ljubljana Jože Pučnik Airport is the largest and is situated 20 kilometres north of the capital. Ten airlines with more than 30 destinations throughout Europe serve Ljubljana. Two of them are low cost airlines: easyJet (Ljubljana-London Stansted) and Wizz Air (Ljubljana-Brussels). Major international airlines like Air France, Swiss Air and Austrian Airlines as well as the Slovenian carrier Adria Airways fly on a daily basis or several times a week to most European capitals and major cities. The most convenient access to the airport is by the E61 Motorway. There are two secure parking areas with 2,200 parking spaces right in front of the passenger terminal. A taxi from Brnik to Ljubljana centre costs around EUR 35. There are also frequent bus connections to Ljubljana. The journey takes about 45 minutes and tickets are purchased on the bus. It is also possible to travel to or from Kranj by train, from where there are good bus connections to the airport. It is advisable to check for any traffic jams before heading for Brnik due to road closures and roadworks in the direction of Gorenjska. Maribor Airport is the second international airport, serving the city of Maribor. It is located a few kilometres south of the city, near Slivnica. The airport currently has numerous seasonal charter flights to coastal destinations especially during the summer holidays. Portorož Airport is the third international airport, mainly used for private flights.

Bank Working Hours

Monday - Friday Saturday Sunday

Store Working Hours

Monday - Friday Saturday Sunday

9 a.m.- 5 p.m. 8 a.m.- 12 a.m. Closed 8 a.m.-7 p.m. 8 a.m.-1 p.m. 8 a.m.-12 p.m.

Except special 24hrs shops and shops at 24hrs gas services. Big shopping malls are open Saturdays until 9 p.m. and Sundays until 3 p.m.

Automobile Speed Limits

Highway Main Roads Populated areas

130 km/h 90 km/h 50 km/h

Important Emergency Telephone Numbers

Ambulance 112 Police 113 Fire Department 112 Automobile Association of Slovenia: 080 1980 Transportation Telephone Numbers

Ljubljana Airport T: +386 (0)4 206 10 00

Ljubljana Main Rail Station T: +386 (0)1 291 33 32 Ljubljana Main Bus Station T: +386 (0)1 234 46 00 Maribor Main Rail Station T: +386 (0)2 292 21 64 Maribor Main Bus Station T: 080 11 16

Koper Main Rail Station T: +386 (0)5 639 52 63 Koper Main Bus Station T: +386 (0)5 662 51 05

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USEFUL INFORMATION

Partners of the Publication Office of the President of the Republic of Slovenia Erjavčeva 17 1000 Ljubljana, Slovenia T: +386 (0)1 478 12 22 gp.uprs@up-rs.si www.up-rs.si

Ministry of the Economy of the Republic of Slovenia Kontnikova 5 1000 Ljubljana, Slovenia T:+386 (0)1 400 3311 gp.mg@gov.si www.mg.gov.si

Ministry of Foreign Affairs of the Republic of Slovenia Prešernova cesta 25, P.P. 481 1001 Ljubljana, Slovenia T: +386 (0) 1 478 2000 info.mzz@gov.si www.mzz.gov.si Economic diplomacy Trubarjeva 3 1001 Ljubljana, Slovenia T: +386 (0)1 478 6642 gospodarska-diplomacija.mzz@gov.si

JAPTI - Public Agency for Entrepreneurship and Foreign Investments Verovškova ulica 60 1000 Ljubljana, Slovenia T: +386 (0)1 589 18 70 fdi@japti.si www.investslovenia.org

Slovenian Tourist Board - STO Dimičeva 13 1000 Ljubljana, T: +386 1 589 85 50 info@slovenia.info www.slovenia.info

Slovenian-German Chamber of Commerce (AHK) Tomšičeva 3 1000 Ljubljana, Slovenia T: +386 (0)1 252 88 60 ahk@ahkslo.si http://slowenien.ahk.de

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Chamber of Commerce and Industry of Slovenia Center for Competitiveness Dimičeva 13 1504 Ljubljana, Slovenia T: +386 (0)1 589 81 87 ck@gzs.si www.gzs.si

Ljubljana Jože Pučnik Airport Zg. Brnik 130a 4210 Brnik-aerodrom, Slovenia Passenger information: +386 (0)4 20 61 981 T: +386 (0)4 20 61 000 info@lju-airport.si www.lju-airport.si

USEFUL INFORMATION

Foreign Embassies (in Ljubljana) Embassy of the Republic of Austria Prešernova cesta 23, T: +386 (0)1 479 07 00 laibach–ob@bmeia.gv.at Embassy of the Republic of Azerbaijan Mesarska cesta 22 Tel: + 386 (0) 30 321 231 e_hasanov@azermbassy.at Embassy of Belgium Trg republike 3/IX, T: +386 (0)1 200 60 10 ljubljana@diplobel.fed.be Embassy of Bosnia and Herzegovina Kolarjeva 26, T: +386 (0)1 234 32 50 ambihlju@siol.net Embassy of the Federative Republic of Brazil Kongresni trg 3 T: + 386 (0) 1 244 24 00 mail@brazil.si Embassy of the Republic of Bulgaria Opekarska cesta 35 T: + 386 (0) 1 283 28 99 Embassy of the People’s Republic of China Koblarjeva ulica 3 T: +386 (0)1 420 28 55 kitajsko.veleposlanistvo@siol.net Embassy of the Republic of Croatia Gruberjevo nabrežje 6 T: +386 (0)1 425 62 20 croemb.slovenia@mvpei.hr Embassy of the Republic of Cyprus Komenskega ulica 12 T: + 386 (0) 1 232 15 42/3/4 embassy.cyprus@siol.net Embassy of the Czech Republic Riharjeva ulica 1 T: +386 (0)1 420 24 50 ljubljana@embassy.mzv.cz Embassy of the Kingdom of Denmark Eurocenter, Tivolska cesta 48 T: +386 (0)1 438 08 00 ljuamb@um.dk Embassy of the Arab Republic of Egypt Opekarska cesta 18A T: + 386 (0) 1 429 54 20 embassy.ljubljana@mfa.gov.eg

Embassy of Finland Ajdovščina 4/8 T: +386 (0)1 300 21 20 sanomat.lju@formin.fi Embassy of the Republic of France Barjanska 1 T: +386 (0)1 479 04 00 contact@ambafrance–si.org Embassy of the Federal Republic of Germany Prešernova cesta 27 T: +386 (0)1 479 03 00 germanembassy–slovenia@siol.net Embassy of Greece Trnovski pristan 14 T: +386 (0)1 420 14 00 gremb.lju@mfa.gr Apostolic Nunciature of the Holy See Krekov trg 1 T: +386 (0)1 433 92 04 apostolska.nunciatura@rkc.si Embassy of the Republic of Hungary Ulica Konrada Babnika 5 T: +386 (0)1 512 18 82 mission.lju@kum.hu Embassy of India Maurerjeva ulica 29 T: +386 (0)1 513 31 10 amb.ljubljana@mea.gov.in Embassy of the Islamic Republic of Iran Ulica bratov Škofov 4 T: + 386 (0) 518 19 44 infoslo@mail.gov.ir Embassy of Ireland Palača Kapitelj, Poljanski nasip 6 T: +386 (0)1 300 89 70 ljubljanaembassy@dfa.ie Embassy of the Italian Republic Snežniška 8 T: +386 (0)1 426 21 94 archivio.lubiana@esteri.it Embassy of Japan Trg Republike 3/XI T: +386 (0)1 200 82 81 info@embjp.si Embassy of the Republic of Kosovo Dvorec Sela, Zaloška cesta 69 Tel: + 386 (0) 1 541 54 10 veleposlanistvo.kosovo@siol.net Embassy of the Republic of Latvia Ajdovščina 4

T: + 386 (0) 1 434 16 20 embassy.slovenia@mfa.gov.lv Embassy of the Republic of Lithuania Emonska cesta 8 T: + 386 (0) 1 244 56 00 amb.si@urm.lt Embassy of the Republic of Macedonia Rožna dolina, Cesta IV/2 T: + 386 (0) 1 421 00 21 makamb@siol.net Embassy of Montenegro Njegoševa cesta 14 T: + 386 (0) 1 439 53 64/65 embamon–lj@t–2.net The Embassy of the Kingdom of the Netherlands Palača Kapitelj, Poljanski nasip 6 T: + 386 (0) 1 420 14 60 lju@minbuza.nl Royal Norwegian Embassy Ajdovščina 4/8 T: +386 (0)1 300 21 40 emb.ljubljana@mfa.no Embassy of the Republic of Poland Bežigrad 10 T: +386 (0)1 436 47 12 lublana.amb.sekretariat@msz.gov.pl Embassy of Portugal Trg republike 3/X T: +386 (0)1 47 90 540 embportlju@siol.net

Embassy of the Kingdom of Spain Trnovski pristan 24 T: +386 (0)1 420 23 30 emba.espa.eslovenia@siol.net Embassy of Switzerland Trg republike 3/VI T: +386 (0)1 200 86 40 lju.vertretung@eda.admin.ch Embassy of the Republic of Turkey Livarska ulica 4 T: +386 (0)1 236 41 50 turkemb.ljubljana@mfa.gov.tr Embassy of Ukraine Teslova ulica 23 T: +386 (0)1 421 06 04 emb_si@mfa.gov.ua Embassy of the United Kingdom Trg republike 3/IV T: +386 (0)1 200 39 10 info@british–embassy.si Embassy of the United States of America Prešernova cesta 31 T: +386 (0)1 200 55 00 usembassyljubljana@state.gov Embassy of the Bolivarian Republic of Venezuela Emonska cesta 8 Tel: + 386 (0) 82 051 280 emba.venez.eslovenia@siol.net

Embassy of Romania Smrekarjeva ulica 33a T: +386 (0)1 505 82 94 embassy.of.romania@siol.net Embassy of the Russian Federation Tomšičeva ulica 9 T: +386 (0)1 425 68 75 ambrus.slo@siol.net Embassy of the Republic of Serbia Slomškova ulica 1 T: +386 (0)1 438 01 10 amba.srbije.lju@siol.net Embassy of the Slovak Republic Tivolska cesta 4 T: +386 (0)1 425 54 25 emb.ljubljana@mzv.sk Embassy of the Sovereign Military, Order of Malta Ciril–Metodov trg 8 T: + 386 (0) 1 234 26 74 slovenianembassy@orderofmalta.org

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USEFUL INFORMATION

Slovenian Embassies Abroad Albania Ambasada E Republikës Së Sllovënissë EGT Tower, P.11/1 kati i 3 Rr. »Abdyl Frasheri«, Tiranë T: 00 35 54 22 74 8 58 F: 00 35 54 22 21 3 11 vti@gov.si Argentina Embajada De La Republica De Eslovenia Avenida Santa Fe 846 p. 6° C1059ABP Buenos Aires T: 00 54 11 48 94 06 21 F: 00 54 11 43 12 84 10 vba@gov.si Australia Embassy of the Republic of Slovenia PO BOX 284, Civic Square Canberra, ACT 2608 T: 00 61 2 6290 0000 F: 00 61 2 6290 000619 vca@gov.si Austria Botschaft Der Republik Slowenien Nibelungengasse 13/3 A-1010 Wien T: 00 43 1 586 13 09 F: 00 43 1 586 12 65 vdu@gov.si Belgium Ambassade De La Republique De Slovenie Rue du Commerce 44, 4eme etage 1000 Bruxelles T: 00 32 2 213 6327 F: 00 32 2 213 6429 vbr@gov.si Bosnia and Herzegovina Ambasada Republike Slovenije Bentbaša 7 Konzularni oddelek: Bjelave 73 7100 Sarajevo T: 00 387 33 572 450 F: 00 387 33 271 270 vsa@gov.si

Consulate office in Banja Luka Ul. Kralja Petra I. Karađorđevića 85a 78000 Banja Luka T: 00 387 51 211 210 Brazil Embaixada Da República Da Eslovênia SHIS - QL 8 - Conjunto 8 - Casa 7 - Lago Sul CEP: 71620-285 Brasília / DF T: 00 55 61 3365 1445 vbi@gov.si Czech Republic Velvyslanectví Republiky

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Slovinsko Pod Hradbami 15, 160 41 Praha 6 T: 00 420 2 33 08 12 11 F: 00 420 2 24 31 41 06 vpr@gov.si

46, Poorvi Marg Vasant Vihar, New Delhi-110 057 T: 00 91 11 4166 2891 F: 00 91 11 4166 2895 vnd@gov.si

Chaoyang District 100016 Beijing T: 00 86 10 6 468 11 54 F: 00 86 10 6 468 10 40 vpe@gov.si

Montenegro Veleposlaništvo Republike Slovenije Atinska ulica 41, 81000 Podgorica T: 00 382 20 618 150 F: 00 382 20 655 671 vpg@gov.si

Iran Embassy of the Republic of Slovenia No. 30, Narenjestan 8th Alley, Pasdaran Ave.(North of Dr.Lavasani Ave.) P.O. Box 19575-459, Tehran T: 00 98 21 2283 6042 F: 00 98 21 222 90 853 vte@gov.si

Kosovo Embassy of the Republic of Slovenia Anton Ceta Street, No. 6, 10000 Priština T: 00 381 38 224 112 F: 00 381 38 246 256 mpi@gov.si

Denmark Embassy of the Republic of Slovenia Amaliegade 6, 2nd fl., 1256 Copenhagen T: 00 45 33 73 01 20 F: 00 45 33 15 06 07 vkh@gov.si Egypt Embassy of the Republic of Slovenia 21 Soliman Abaza St., 6th Floor, Mohandessin, Cairo T: 00 20 2 3749 98 78 F: 00 20 2 3749 71 41 vka@gov.si Finland Embassy of the Republic of Slovenia Etelaesplanadi 24A, FIN-00130 Helsinki T: 00 358 9 228 99 417 F: 00 358 9 69 44 775 vhe@gov.si France Ambassade De La Republique De Slovenie 28, rue Bois-le-Vent, 75116 Paris T: 00 33 1 44 96 50 71 F: 00 33 1 45 24 67 05 vpa@gov.si Greece Embassy of the Republic of Slovenia 280, Kifissias Ave. & 1, Dimokratias Str. 154 51 Neo Psychico, Athens T: 00 30 210 672 00 90 F: 00 30 210 677 56 80 vat@gov.si Croatia Veleposlanštvo Republike Slovenije Alagovićeva 30, 10000 Zagreb T: 00 385 1 63 11 000 F: 00 385 1 61 77 236 vzg@gov.si India Embassy of the Republic of Slovenia

Ireland Embassy of the Republic of Slovenia Morrison Chambers, 2nd Floor 32 Nassau Street, Dublin 2 T: 00 353 1 6705 240 F: 00 353 1 6705 243 vdu@gov.si Italy Ambasciata Della Repubblica Di Slovenia Via Leonardo Pisano 10, 00197 Roma T: 00 39 06 80 914 310 F: 00 39 06 80 81 471 vri@gov.si Israel Embassy of the Republic of Slovenia Top Tower 19th Floor, 50 Dizengoff Street POB 23245, Tel Aviv 61321 T: 00 972 3 629 35 63 F: 00 972 3 528 22 14 vta@gov.si Japan Embassy of the Republic of Slovenia 14-12 Minamiaoyama 7-chome Minato-ku Tokyo 107-0062 T: 00 81 3 5468 6275 F: 00 81 3 5468 1182 vto@gov.si

Hungary Szlovén Köztársaság Nagykövetsége Cseppkő ut. 68, 1025 Budapest II. T: 00 36 1 438 56 00 F: 00 36 1 325 91 87 vbp@gov.si FYR Macedonia Ambasada na Republika Slovenija Vodnjanska 42, MK-1000 Skopje T: 00 389 2 317 87 30 F: 00 389 2 317 66 31 vsk@gov.si Germany Botschaft Der Republik Slowenien Hausvogteiplatz 3-4 D-10117 Berlin T: 00 49 30 206 145-0 F: 00 49 30 206 145-70 vbn@gov.si Netherlands Embassy of the Republic of Slovenia Anna Paulownastraat 11 2518 BA The Hague T: 00 31 70 310 8 690 F: 00 31 70 362 6608 vhg@gov.si Poland Ambasada Republiki Słowenii Ul. Staroscinska 1 m. 23-24 02-516 Warsaw T: 00 48 22 8 49 82 82 F: 00 48 22 848 40 90 vvr@gov.si

Canada Embassy of the Republic of Slovenia 150 Metcalfe Street Suite 2200 Ottawa, Ontario K2P 1P1 T: 00 1 613 565 57 81 F: 00 1 613 565 57 83 vot@gov.si

Portugal Embassy of the Republic of Slovenia Avenida da Liberdade 49, 6° Esq 1250 - 139 Lisboa T: 00 351 21 342 33 01 F: 00 351 21 342 33 05 vli@gov.si

China Embassy of the Republic of Slovenia No. 57, Block F, Ya Qu Yuan, King’s Garden Villas 18 XIAO Yun Road

Romania Embassy of the Republic of Slovenia Str. Puskin Alexandru 10 Sector 1, Bucharest T: 00 40 21 300 27 80

USEFUL INFORMATION

F: 00 40 21 315 09 27 vbk@gov.si Russian Federation Embassy of the Republic of Slovenia Ul. Malaja Dmitrovka 14/1 127006 Moskva T: 007 495 737 63 55 F: 007495 694 15 68 vmo@gov.si Slovakia Embassy of the Republic of Slovenia Ventúrska 5, 813 15 Bratislava T: 00 421 2 5726 7700 F: 00 421 2 52 45 00 09 vbs@gov.si Serbia Ambasada Republike Slovenije Dositejeva ulica 41, 1000 Beograd T: 00 381 11 303 84 77 F: 00 381 11 328 86 57 vbg@gov.si

Spain Embajada De La Republica De Eslovenia Hermanos Bécquer,7-2 28 006 Madrid T: 00 34 91 411 68 93 F: 00 34 91 564 60 57 vma@gov.si

Turkey Embassy of the Republic of Slovenia Kiralngiç Sokak No. 36 06700 G.O.P., Ankara T: 00 90 312 405 4221 F: 00 90 312 426 02 16 e-mail: van@gov.si

Great Britain Embassy of the Republic of Slovenia 10 Little College Street London SW1P 3SH T: 00 44 20 7222 5700 F: 00 44 20 7222 5277 vlo@gov.si

Sweden Embassy of the Republic of Slovenia Styrmansgatan 4, 1st fl. 114 54 Stockholm T: 00 46 8 54 565 885 F: 00 46 8 662 92 74 vst@gov.si

Ukraine Embassy of the Republic of Slovenia Bogdana Khmelnytskogo 48 01030 Kiev T: 00 380 45 585 23 30 F: 00 380 44 585 23 43 vki@gov.si

United States of America Embassy of the Republic of Slovenia 2410 California Street, NW Washington, D.C. 20008 T: 00 1 202 386 66 10 F: 00 1 202 386 66 33 vwa@gov.si

Switzerland Botschaft Der Republik Slowenien Schwanengasse 9, CH-3011 Bern T: 00 41 31 310 90 00 F: 00 41 31 312 44 14 vbe@gov.si

Vatican Ambasciata Di Slovenia Presso La Santa Sede Via della Conciliazione, 10 00193 Roma T: 00 39 06 683 30 09 F: 00 39 06 683 07 942 vva@gov.si

Permanent Representations Austria Permanent Representation of the Republic of Slovenia to the United Nations, OSCE and other International Organisations in Vienna Gumpendorfer Strasse 11/18 A-1060 Wien T: 00 43 1 581 34 08 25 F: 00 43 1 581 34 17 mdu@gov.si Belgium Représentation Permanente De La République Aupres L’union Européenne Rue du Commerce 44, 1000

Bruxelles T: 00 32 2 213 63 00 F: 00 32 2 213 63 01 spbr@gov.si Representation Permanente De La Repuplique De Slovenie Aupres De Nato In Weu NG Building, Nato HQ Blvd. Leopold III, 1110 Bruxelles T: 00 32 2 707 27 69 F: 00 32 2 707 97 00 mna@gov.si France Representation Permanente De La République De Slovénie

Aupres Du Conseil De L’europe 40, Allee de la Robertsau, 67000 Strasbourg T: 00 33 3 88 36 60 25 F: 00 33 3 88 37 14 44 msb@gov.si Permanent Representation of the Republic of Slovenia to OECD 28, rue Bois-le-Vent, 75116 Paris T: 00 33 1 44 96 50 69 F: 00 33 1 45 24 64 29 mpa@gov.si Switzerland Permanent Mission of the Republic of Slovenia to the UN

Office and other International Organisations in Geneva 37 - 39 Rue de Vermont, 1202 Geneve T: 00 41 22 716 17 80 F: 00 41 22 738 66 65 mge@gov.si United States of America Permanent Representation of the Republic of Slovenia to the United Nations 600 Third Avenue, 24th Floor New York, N.Y. 10016 T: 00 1 212 370 30 07 F: 00 1 212 370 18 24 mny@gov.si

General Consulates Austria Generalkonsulat Der Republik Slowenien Radetzkystraße 26 A-9020 Klagenfurt T: 00 43 463 54 6 05 F: 00 43 463 50 95 62 kce@gov.si

China Consulate of the Republic of Slovenia in Shanghai 2107A Westgate Tower 1038 West Nanjing Road 200041 Shanghai T: 00 86 21 621 830 55 F: 00 86 21 621 832 35

Italy Consolato Generale Della Repubblica Di Slovenia Ul./Via S. Giorgio 1 34123 Trieste T: 00 39 040 30 78 55 F: 00 39 040 30 82 66 kts@gov.si

Hungary Szlovén Köztársaság Fökonzulátusa, Kossuth u. 39 H-9970 Szentgotthárd T: 00 36 94 553 110 F: 00 36 94 383 164 kmn@gov.si

Germany Generalkonsulat Der Republik Slowenien P.F. 150829, D-80045 München Lindwurmstr. 14 D-80337 München T: 00 49 89 543 98 19 F: 00 49 89 543 94 83 kmu@gov.si

Consulate General of the Republic of Slovenia 600 Third Avenue, 21st Floor New York, N. Y. 10016 T: 00 1 212 370 30 06 F: 00 1 212 370 35 81 kny@gov.si

United States of America Consulate General of the Republic of Slovenia 55 Public Square, Suite 945 Cleveland, Ohio 44113 T: 00 1 216 589 92 20 F: 00 1 216 589 92 10 kcl@gov.si

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INDEX OF ADVERTISERS

Aerodrom Ljubljana 30-31 AJPES 74-75 BISOL 58-59 BSH Hišni aparati 40-41 BTC 90-92 GEN-i 54-55 Goodyear Dunlop 36-37 Hella Saturnus 34-35 IEDC-Bled School of Management 106-107 IMOS 80-81 Japti 18-20, 26-27, 52-53, 100, 110-111 KD Funds 64-65 Knauf Insulation 86-87 Ljubljana Tourist Board 122-123 Luka Koper 28-29 NLB Group 62-63 Postojnska Jama 119, 138 Profil 70-71 Raiffeisen Bank 66-67 Riko 84-85 SAP 48-49 Si.mobil 45, 93 The Slovenia Times 21, 76-77, 137 Slovenian Tourist Board 120-121 Studio Moderna 94-95 Terme Maribor 126-127 Terme Olimia 124-125 Termoelektrarna Toplarna Ljubljana 56-57 Tridana 0, 82-83 University of Ljubljana, Faculty of Economics 104-105 Vivo Catering 128-129 ZZI 46-47 Žurnal Media 72-73 136

POSTOJNSKA JAMA CAVE-GROTTA-HÖHLE