Cetis d.d.

Annual report 2009 Audited annual report on business operations for the company Cetis, d. d. for the financial year 2009, and audited consolidated annual report for company Cetis, d. d. for the financial year 2009

Cetis, Graphic and Documentation service, d. d. ﾄ経pova 24, 3000 Celje - Slovenia tel: 00386 34 278 500 fax: 00386 34 278 817 e-mail: info@cetis.si

w w w.cet i s. s i

Annual report 2 0 0 9 Audited annual report on business operations for the company Cetis, d. d. for the financial year 2009, and audited consolidated annual report for company Cetis, d. d. for the financial year 2009

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Contents

6 Introduction

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6

1. Letter from the General Manager

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2. Report of the Cetis, d. d. supervisory board on the results of examining the audited annual report of the company Cetis, d. d. for 2009 and the audited consolidated annual report of the Cetis Group for 2009

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3. Cetis Group - Presentation

14 Company Cetis, d. d., ID

14 Management and Administrative Bodies

14 Activities of Cetis Group

15 Companies of Cetis Group

15 Associate Company

16 Turning Points in the development and activities of Cetis, d. d.

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4. Highlights in 2009 in numbers for Cetis Group

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5. Review of important events

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6. Corporate governance – Cetis, d. d. and Cetis Group

22 Business report

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Business strategy of Cetis Group

23

General macroeconomic trends

25

Asset Management

25

Financial Management

26

Investments

28

Shares and shareholders

30

Sales

30

Sales of commercial printed matter

31

Sales of security printed matter

32

Sales by companies of the Group

35

Research and development

37

Production

38

Supplier relations and logistics

40

Quality Management

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Employees

46

Corporate social responsibility and care for the environment

46

Environmental responsibility

47

Social responsibility

50 Cetis company financial report

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Independent auditor’s report

51

Income statement

53

Balance sheet

55

Cash flow statement

57

Statement of changes in equity

58

Statement of management responsibility

59

Summary of significant accounting policies and notes to the financial statements

67

Income statement disclosures

70

Balance sheet disclosures

84

Cash flow statement disclosures

90 Cetis group financial report

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Independent auditor’s report

91

Consolidated income statement

92

Consolidated balance sheet

94

Consolidated cash flow statement

96

Consolidated statement of changes in equity

98

Statement of management responsibility

99

Summary of significant accounting policies and notes to the financial statements

111 Consolidated income statement disclosures

114

Consolidated balance sheet disclosures

130

Consolidated cash flow statemen disclosures

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People in Cetis create with all their talents.

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Courage, experience and knowledge are drawn from the past.

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1. Letter from the general manager

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Dear shareholders, suppliers, business partners, and employees, In 2009, Cetis Group had a smaller turnover compared to 2008. Cetis Group remains dedicated to its vision of being a global information integrator; new contracts entered into in the Republic of Guinea-Bissau and in Somalia in 2009 are the best proof thereof. We strive to be the best partner to companies and countries worldwide in the fields of identification, security and corporate communications, and a leading partner and consultant when dealing with the rationalization and management of costs in packaging, corporate communication systems, documents, and lottery games.

In 2009, net sales of Cetis Group reached 34 million Euros and are 5,6 % smaller when compared to net sales in 2008. In view of market trends, this was to be expected. Our business operations in 2009 were under the strong influence of the unfavourable economic situation in all markets. We took this as a challenge and tried to adjust to the new market conditions by means of better organisation, additional efforts to gain client confidence, and the application of innovative approaches. We expect that 2010 will bring even harsher market conditions. Therefore, we continue to better organise our work, to optimise and pool processes, lower productions costs, and expand in global markets.

The most important cotracts signed in 2009 include the production of passports and identity cards, and the establishment of a personalisation centre for Somalia with its head office in Dubai; and e-elections and driving licences for Guinea-Bissau: all this within our Document Selling Pillar. Within our Games-of-Chance Selling Pillar, we were awarded the printing of rubel tickets for one of the former Yugoslav Republic’s State Lotteries. We have also developed our own games systems. In terms of our Business Communication Systems Pillar, we need to mention the upgrading of card systems in the field of systematic integration for larger Slovenian business systems, and our joint development project with EMV (European Mastercard Visa). In the field of packaging, we continued to technologically upgrade and increase capacities as a precondition for market existence, and to improve our competitive position. Our biggest investments in 2009 included the purchase of a new printing machine and a machine for the application of holograms.

Market activities were directed towards buyers in the domestic market (via B2B marketing), and also in the foreign markets where we searched for resellers. We regularly take part in international tenders for governmental printing matter. However, contracts are hard to acquire, for not everything depends on a good offer. In the second half of 2009, we renewed our activities in Hungary and concluded the first contract. Furthermore, we started searching for material suppliers on the global market. Concurrently, we strive to rationalize operations by reducing delivery times for materials and thereby reducing inventories of materials. The purchasing value remained the same as in 2008. We introduced a new system of supplier appraisal, putting more emphasis on price and delivery times. We also automated our warehouse activities (which we had been planned to do for years) and thereby streamlined work in this field.

Despite negative market trends, Cetis’s parent company managed to achieve over 26 million EUR in net turnover, which is about 1,5 % better than in 2008. Within the framework of activities to optimise business operations by means of lower costs, our subsidiary Cetis-Zg established the company Cetis Direkt with its head office at the parent company’s address. This new company engages in activities connected to printing and packaging in envelopes. For the fifth year in a row, Cetis-Zg recorded positive results, and in 2009, the company made 19 % more income when compared to 2008. After management changes in 2008, and after the implementation of organisational optimisation and the optimisation of operating costs, the subsidiary Amba managed to achieve positive operating results in 2009 despite the general

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macroeconomic recession. Due to economies of scale, we closed down our representative office in Albania, however we are still present in the market with our sales agents. In the parent company Cetis d.d., we above all reorganised our production segment; it is now led by a new managing director. We are still reducing the number of employees using soft layoff methods and at the same time, we award those with high potential by investing in their further education in the field of health and safety at work.

We adjusted our corporate social responsibility to the economic situation.

However, funds for this purpose have been significantly reduced in the past years. In 2009, we helped those most affected by the crisis, those who live in poverty. At time same time, we continue to financially support sports and culture, but to a lesser extent.

As already mentioned, we expect 2010 to bring even harsher economic conditions. We shall continue to strengthen client confidence, to offer quality services and products, and to try to increase sales in domestic and foreign markets. However, the company’s strategic goals remain the same we are developing solutions for individual industries, and recognising and implementing new opportunities in the field of information security.

Before concluding the financial review for 2009, I wish to emphasize that this harsh economic situation and, in some cases, financial collapse of countries influences us all, and does not leave us unaffected. Therefore, in these troubled times, when some are barely able to stay afloat, some are experiencing total collapse, others are trying to build on new foundations, and others again are looking for new challenges and opportunities, we above all nurture the desire to grow and appreciate basic values, such as trust, team work, innovation, multidisciplinarity, openness to challenges, and a further inclination towards a more professional attitude: all these are goals that Cetis and Cetis Group strive to achieve.

I wish to thank all our business partners for their trust, our employees for their hard work, understanding and innovative ideas, and our owners who support and trust us. In 2010, we shall continue to increase global sales and drastically adjust our business operations to optimise performance and efficiency.

In summation, I wish to refer to Joel A. Barker: Vision without action is merely a dream.

Action without vision just passes time.

Vision with action can change the world.

We at Cetis believe that we can change the world. But only if we change ourselves.

March 2010

Simona PotoÄ?nik, MSc General Manager

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2. Report of the Cetis, d. d. supervisory board on the results of examining the audited annual report of the company Cetis, d. d.

For 2009 and the audited consolidated annual report of the Cetis group for 2009

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1.

Components of the Annual Report

In compliance with the legislation in force, the Cetis, d. d. Supervisory Board examined the legal aspects of the audited Annual Report of the company Cetis, d. d. for 2009 and the audited consolidated Annual Report of the Cetis Group for 2009 (hereinafter referred to as: the Annual Report).

The Supervisory Board established that the Management had prepared the 2009 Annual Report within legal deadline, as well as that the report contains all obligatory components required by the Companies Act currently in force (Official Gazette of the RS, no. 42/2006, as amended, hereinafter: ZGD-1).

The Annual Report comprises the following components: business report and financial report, the latter comprising a Balance Sheet, Income Statement, Statement of Other Comprehensive Income, Statement of Changes in Equity, Cash Flow Statement and explanatory accounting disclosures.

The Annual Report was audited by the selected auditor at the 14th General Meeting of the company Cetis, d. d. The auditing company ABC revizija d.o.o., Dunajska cesta 101, Ljubljana, prepared the auditor’s report for the company Cetis, d. d. on 31 March 2010 and for the Cetis Group on 12 April 2010. The company Cetis, d. d. received both on 20 April 2010.

In compliance with third paragraph of Article 272 of the ZGD-1, the Management of Cetis, d. d. submitted the prepared Annual Report together with the auditor’s reports to the Supervisory Board on 30 April 2010.

2.

The method and scope of examining the managing of the company

The Supervisory Board performed its supervisory role mainly at Supervisory Board meetings. In addition, individual Supervisory Board members also exercised their right, based on first paragraph of Article 282 of the ZGD-1, which enables each Supervisory Board member to examine all bases for the Annual Report.

The Supervisory Board members were regularly informed about all significant events that could, or did, affect the company’s business operations in 2009 at the Supervisory Board meetings, upon a request from Supervisory Board members or initiated by the company Management.

The Supervisory Board in 2009 had the following members: • • • • • •

Ljubo Peče, President of the SB, shareholder representative, Franc Ješovnik, shareholder representative, Dušan Mikuš, MSc, shareholder representative, Borut Bizaj, shareholder representative*, Bernard Gregl, employee representative, Marko Melik, employee representative.

In the financial year 2009, the Supervisory Board convened five meetings to perform its supervisory role, on 31 March, 29 May, 8 September, 17 November and 21 December. *Borut Bizaj was appointed as member of the Supervisory Board by the General Meeting at the session on 7 July 2010.

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The most important Supervisory Board resolutions

The Supervisory Board constantly monitored and adopted decisions regarding the matters most important to the company. In addition to monitoring and supervising the work of the Management and the company’s business operations, the Supervisory Board also adopted the following important resolutions, given below in chronological order: •

•

Resolutions adopted at the 57th meeting of the Cetis, d. d. Supervisory Board, on 31 March 2010: - The Supervisory Board took note of the unaudited financial statements for Cetis and Cetis Group for 2008, whereby it decided to discuss and adopt them when audited; - The Supervisory Board took note of the Management report on the business operations of Cetis, d. d. in writing for the period from 1 January 2009 to 28 February 2009, as well as of the oral Management report on the business operations of Cetis, d. d. for March 2009; - Dušan Mikuš, MSc, was appointed as Chairman of the Audit Committee; - Rules of Procedure for the work of the audit committee were adopted; - The Supervisory Board took note of the initiative to form a nomination board and decided not to establish such a board.

Resolutions adopted at the 58th meeting of the Cetis, d. d. Supervisory Board, on 29 May 2009: - The Supervisory Board took note of the Management report on business operations for the company Cetis, d. d. for the period from January to March 2009; - The Supervisory Board adopted the audited Annual Report and the audited consolidated Annual Report for the company Cetis, d. d. for the financial year 2008; - The Supervisory Board took note of the report prepared by the Cetis, d. d. Audit Committee and unanimously adopted the resolution to propose the company ABC Revizija, d.o.o., Dunajska cesta 101, Ljubljana, to be the auditor of the company Cetis and the Cetis Group for financial year 2009; - The Supervisory Board adopted the Report of the Cetis, d. d. Supervisory Board on the results of examining the audited Annual Report of the company Cetis, d. d. for 2008 and the audited consolidated Annual Report of the company Cetis, d. d. for 2008; - The Supervisory Board suggested the Assembly to elect the following as the Supervisory Board members: - Ljubo Peče, Cesta v Rošpoh 47, 2351 Kamnica - Franc Ješovnik, Ulica Veljka Vlahoviča 31, 2000 Maribor - Dušan Mikuš, MSc, Sneberska cesta 11f, 1260 Ljubljana - Anton Tropenauer, Lešane 51a, 9253 Apače.

- The Supervisory Board adopted the following agenda with proposals for resolutions for the 14th General Meeting of the company Cetis, d. d. to be held on 7 July 2009 at 10.00 at the business premises of the company’s registered office, conference room no. 608:

Agenda and proposals for resolutions: 1.

Opening the General Meeting, establishing a quorum and electing the Chairman of the General Meeting and two members to count votes

Proposal for a resolution: Quorum of the General Meeting is established.

The General Meeting elects Ljubo Peče as Chairman and two members to count votes, Miro Zakrajšek and Bernard Gregl, and establishes that in order to take minutes notary Srečko Gabril is present.

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2.

The General Meeting takes note of the Annual Report on business operations for the company Cetis, d. d. for the financial year 2008 and of the audited consolidated Annual Report for the company Cetis, d. d. for the financial year 2008 and of the Supervisory Board written report on the examination of the audited Annual Report on business operations for the company Cetis, d. d. for the financial year 2008 and the audited consolidated Annual Report for the company Cetis for the financial year 2008.

3.

Voting on utilisation of profit for appropriation and discharge of the Management and the Supervisory Board

Proposals for resolutions: 3.1. Profit for appropriation for the company Cetis, d. d. amounting to EUR 455.876,21 EUR in 2008 is retained and carried forward to be used in subsequent periods.

3.2. The work of the Management and Supervisory Board of Cetis, d. d. in the financial year 2008 is confirmed and approved, and the Management and Supervisory Board are discharged for 2008.

4.

Appointment of Cetis, d. d. Supervisory Board members

4.1. Proposal for the General Meeting to appoint new members Proposal for a resolution: The following are elected as the Supervisory Board members: - - - -

Ljubo Peče, Cesta v Rošpoh 47, 2351 Kamnica Franc Ješovnik, Ulica Veljka Vlahoviča 31, 2000 Maribor mag. Dušan Mikuš, Sneberska cesta 11f, 1260 Ljubljana Anton Tropenauer, Lešane 51a, 9253 Apače.

Mandate of the members starts on the date of election at the General Meeting and lasts for four years.

4.2. Information for the General Meeting on the extension of the Supervisory Board members’ mandates; the General Meeting takes note of the fact that on 26 April 2009 the mandate of the Supervisory Board members – employee representatives Bernardu Greglu in Marku Meliku – expired. Works Council again appointed Bernard Gregl and Marko Melik as new members of the Supervisory Board; their mandate started on 26 April 2009 and lasts for four years.

5.

Auditor appointment

Proposal for a resolution: The General Meeting appoints as the certified auditor for the financial year 2009: ABC Revizija, d.o.o., Dunajska cesta 101, Ljubljana.

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Resolutions adopted at the 59th meeting of the Cetis d. d. Supervisory Board, on 8 September 2009: - The Supervisory Board took note of the Management report on the business operations of Cetis, d. d. and the Cetis Group in writing for the period from 1 January to 30 June 2009, as well as of the unaudited consolidated report on the business operations for the company Cetis, d. d. and the Cetis Group for the first half-year of 2009.

•

Resolutions adopted at the 60th meeting of the Cetis, d. d. Supervisory Board, on 17 November 2009: - The Supervisory Board took note of the interim Management report for the period from January to September 2009; - The Supervisory Board took note of the evaluation of business operations and of the Management report for the period from January to October 2009; - The Supervisory Board took note of the proposals for Business Plans for the company Cetis, d. d. and the Cetis Group 2010. It suggested to the Management and charged it with the task to prepare more ambitious Business Plans until the next meeting and adapt them to the current business and financial situation of the company and the Group.

•

Resolutions adopted at the 61st meeting of the Cetis, d. d. Supervisory Board, on 21 December 2009: - The Business Plans for the company and the Group for 2010 were confirmed; - The Supervisory Board took note of the plan and the reasons for the acquisition of 9.125 own company shares.

Minutes were drafted for each Supervisory Board meeting and adopted with a resolution.

4.

Management reporting

Extensive reports from the Management in the financial year 2009 enabled the Supervisory Board to adequately perform its supervisory role. Management reports were in general prepared per segments operational within Cetis, with a joint and systematic overview of all business effects.

In its reports, and oral explanations when necessary, the Management presented all relevant items that affect the business operations of the joint stock company.

5.

Evaluation of business operations

The Supervisory Board of Cetis, d. d. analysed movements in certain relevant financial data and indicators expressing business efficiency for the company Cetis, d. d. and established that: • • • • •

•

net sales revenue was generated in the amount of EUR 26.047.444, which is 1,5 % more than the year before and 15,9 % less than planned; the total profit or loss before taxes is 65,6 % lower than in 2008 and 80,3 % lower than planned for 2009; the achieved net loss amounting to EUR 664.192 contributed to reducing the profit or loss by 59,3 % compared to 2008; return on capital in Cetis, d. d., calculated as the ratio between total profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, is -2,2 %; return on capital in Cetis, d. d., calculated as the ratio between net profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, for 2009 is -2,3 %, which is 0,91 percentage point less than in 2008; operating expenditure amounted to EUR 28.185.248, which is 0,35 % less than in the same period the year before. Operating costs are structured as follows: 60,6 % comprises the costs of goods,

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12 •

•

• • •

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material and services, 26,8 % labour cost, 11,1% amortisation and depreciation expense; and 1,5 % other expenditure, In the Income Statement for 2009, the company Cetis, d. d. disclosed financial revenue amounting to EUR 1.235.839 and financial expenditure amounting to EUR 525.684. The surplus of financial revenue over financial expenditure, amounting to EUR 710.155, is 39,6 % lower than in 2008; the company Cetis, d. d. does not disclose profit for appropriation for 2009, and the loss for the current year in the financial statements was covered by capital reserves amounting to EUR 162.533 and by net profit brought forward amounting to EUR 501.659; basic earnings per share in 2009 amounted to EUR -3,32; the book value of each share on 31 December 2009 was EUR 137,63 (on 31 December 2007 = EUR 143,27), which is 3,9 % less than in 2008; the number of employees in the company Cetis, d. d. on 31 December 2009 was 344, which is 9,5 percent less than at the end of 2008.

The Supervisory Board of Cetis, d. d. analysed movements in certain relevant financial data and indicators expressing business efficiency for the Cetis Group and established that: • • • • •

•

•

• • •

net sales revenue was generated in the amount of EUR 34.381.966, which is 4,4 % less than the year before and 16,8 % less than planned; the total profit or loss before taxes is 87,6 % lower than in 2008 and 94,3 % lower than planned for 2009; the net profit amounting to EUR 109.986 represents an increase in profit or loss by 27,4 % compared to 2008; return on capital in the Cetis Group, calculated as the ratio between total profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, is 0,03 %; return on capital in the Cetis Group, calculated as the ratio between net profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, for 2009 is 0,39 %, which is 0,1 percentage point more than in 2008; operating expenditure amounted to EUR 36.697.368, which is 4,28 % less than in the same period the year before. Operating costs are structured as follows: 63,6 % comprises the costs of goods, material and services, 24,7 % labour cost, 9,5 % amortisation and depreciation expense; and 2,2 % other expenditure; In the Income Statement for 2009, the Cetis Group disclosed financial revenue amounting to EUR 1.372.155 and financial expenditure amounting to EUR 601.168. The surplus of financial revenue over financial expenditure, amounting to EUR 770.987, is 37,3 % lower than in 2008; The Cetis Group does not disclose profit for appropriation for 2009 and the profit for the current year was used to cover losses from previous years; basic earnings in the Group per parent company share in 2009 amounted to EUR 0,58; the number of employees in the Cetis Group on 31 December 2009 was 400, which is 8,3 percent less than at the end of 2008.

Based on the stated indicators, the Supervisory Board established that in 2009 the company Cetis, d. d., including the Group, operated below the planned results, but taking into consideration the unpredictability in the market it created an acceptable basis for business operations in 2010 and beyond by increasing its activities.

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6.

Independent auditor’s report

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The Supervisory Board took note of the Independent Auditor’s Report and established that an unqualified opinion had been issued.

The Supervisory Board has no comments on the Auditor’s Report. The Supervisory Board establishes that the Auditor’s Report contains all the contents set out in second paragraph of Article 57 of ZGD-1.

The Supervisory Board notes that the auditor established the financial statements to be a true and fair presentation of the financial position of the company Cetis, Graphic and Documentation Services, d. d., as of 31 December 2009, and its profit or loss and cash flow for the year ended on that date in accordance with International Financial Reporting Standards. The auditor confirmed that the business report is in accordance with the audited financial statements.

Furthermore, the Supervisory Board notes that the auditor established the consolidated financial statements to be a true and fair presentation of the financial position of the Group of companies Cetis, Graphic and Documentation Services, d. d., as of 31 December 2009, and its profit or loss and cash flow for the year ended on that date in accordance with International Financial Reporting Standards. The auditor confirmed that the business report for the Group is in accordance with the audited financial statements.

7.

Comments of the Supervisory Board on the Annual Report for 2009

The Supervisory Board has no comments on the Annual Report for 2009 which would represent an obstacle in adopting a decision to approve the Annual Report.

8.

Approving the Annual Report for 2009

At the 63rd meeting, held on 12 May 2010, the Supervisory Board checked the Annual Report and established that: - the Annual Report was compiled on time, - the Annual Report was compiled in accordance with ZGD-1, International Financial Reporting Standards and the company’s Articles of Association, - the Annual Report includes all relevant data important in taking a decision with regard to adopting the report, - the financial statements and the underlying documents for the financial statements and the business report were reviewed by a certified auditor, who submitted an unqualified opinion to the company’s business operations.

In 2009 the Supervisory Board monitored and checked the company’s business operations on the basis of oral and written information from the Management, while the final opinion was based on the Annual Report mentioned above. The Supervisory Board is of opinion that the submitted Annual Report for the company presents a fair and true financial situation of the company, and therefore approves the audited Annual Report.

The Supervisory Board approved the Annual Report for financial year 2009 within an open deadline, i.e. before one month from the date when annual reports for 2009 were submitted to the Supervisory Board expired.

Celje, 12 May 2010

President of the Supervisory Board of Cetis, d. d.

Ljubo Peče, BSc Law, signed

The present Report was adopted by a resolution at the 63rd meeting of the Cetis, d. d. Supervisory Board held on 12 May 2010.

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3. Cetis group - presentation

Company Cetis, d. d., id 14

Company name:

Cetis, Graphic and Documentation Services, d. d.

Head Office:

Čopova 24, 3001 Celje, Slovenia

Registration number:

5042208

VAT number:

24635812

VAT ID:

SI24635812

Share capital: 10.015.022,53 EUR Entered in the Companies Register at the District Court of Celje under registration number 063/10147600.

Transaction accounts: Nova LB d.d.: SI 56 0223 4001 1655 374 Banka Celje d.d.: SI 56 0600 0002 6390 798 Abanka Vipa d.d.: SI 56 05100-8000027831 Probanka d.d.: SI 56 2510 0970 4894 196 Unicredit d.d.: SI 56 2900 0000 3262 161

Management and Administrative Bodies

Telephone number:

+386 3 4278 500

Fax:

+386 3 4278 817

E-mail address:

info@cetis.si

Website address:

www.cetis.si

Management:

Simona Potočnik, MSc, General Manager Ljubo Peče, Chairman of the SB, shareholderrepresentative Franc Ješovnik, shareholder representative

Supervisory Board:

Dušan Mikuš, MSc, shareholder representative Borut Bizaj, shareholder representative 1

Bernard Gregl, employee representative

Marko Melik, employee representative

Activities of Cetis group

1

Cetis group provides comprehensive solutions in the field of printed media combined with other media. It offers a wide range of security, variables, and printed commercial matter. Aside from these, the company offers services such as personalisation, documentation service, and the like. Its activities are directed towards foreign markets, especially towards the former Yugoslav markets, Africa, the Middle East, Asia, South America, and Eastern Europe.

On 4th January 2010, Bernard Gregl irrevocably resigned as employee representative in SB of Cetis, d. d. The Works Council nominated Brigita Banovič as employee representative for the period between 22nd February 2010 and 26th April 2013.

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Companies of Cetis group Cetis-ZG, Company for Trade and Services, d.o.o., Industrijska ulica 11, 10431 Sveta Nedelja, Croatia, e-mail: cetis@cetis.hr, web page: www.cetis.hr , t: +385 1 333 5000, f: +385 1 333 5001, Manager: Matej Polutnik.

Cetis-ZG, Printing and Enveloping d.o.o., Industrijska 11, 10431 Sveta Nedelja, Croatia, e-mail: cetis@cetis.hr, web page: www.cetis.hr , t: +385 1 333 5000, f: +385 1 333 5001, Manager: Luana Vozila.

2

Cetis-Tirana Sh.p.k., Twin Towers, Tower 1, Blvd. Deshmoret e Kombit, Kati IV, Tirana, Albania, e-mail: cetistirana@albnet.net, t: +355 4 280 424, f: +355 4 280 425, Manager: Marko Tumpej.

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Associate

2 3 4

Cetis-ZG Printing and Enveloping, Cetis Print and Cetis Direkt are subsidiaries of Cetis-ZG, Company for Trade and Services.

Cetis Tirana was wound up at the beginning of 2009. It is no longer active.

“DUF” Euroinvestment is an associate to Cetis-ZG.

Cetis Direkt, d.o.o., Čopova 24, 3000 Celje, Slovenia, e-mail: srecko.pilko@cetis.si, web page: www.cetis.si, Manager: Srečko Pilko.

Amba CO., Production and Trade, d.o.o., Čopova 24, 3000 Celje, Slovenia, e-mail: tajnistvo@amba.si, web page: www.amba-tc.si, t: +386 1 587 4300, f: +386 1 586 4305, Manager: Roman Žnidarič.

Cetis Print d.o.o., Breza 8, 11030 Beograd, Serbia, e-mail: cetisprint@cetisprint.rs, web page: www.cetisprint.rs, t/f: +381 11 2511 913, Manager: Milan Maksić.

Cetis MKD d.o.o. Skopje, Ul. Romanija br. b. b.

Skopje, Former Yugoslav Republic of Macedonia.

“DUF” Euroinvestment d. d., Muftije Muhameda Efendije Kurta 1, Tuzla, Bosna in Hercegovina.

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Turning points in the development and activities of Cetis, d. d.

The printed word has a long, 200-year tradition in Celje. The very first print-shop in Celje was opened in 1788. And it was around that time that the foundations of today’s Cetis were laid. Its predecessor was Tiskarna Družbe sv. Mohorja, and in 1949 this printing plant - Tiskarna Družbe sv. Mohorja - was transformed into the state-owned company Celjska tiskarna. Ten years later, Celjska tiskarna merged with the regional newspaper Celjski tednik under a new name Celjski tisk, but in 1965, Celjska tiskarna again became an independent company.

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The company changed its name to Cetis almost a quarter of a century ago, and began realising its set objectives, and the emphasis at that time was on the production of continuous forms for mechanographic data processing. Having merged with Aero in 1971, Cetis increased the production and technological growth of all of its printing techniques, and the production of continuous forms and self-adhesive labels was also accelerated. In 1990, the employees of what was then TOZD (Temeljna organizacija združenega dela - Basic Organization of Associated Labour) Grafika in Aero decided to separate TOZD from the parent company and in the following year, Grafika became the limited liability company Cetis.

Six years later, the company’s ownership transformation was concluded. Cetis was converted into a jointstock company and was entered into the register of companies on 13 February 1996. In 2001, the company renewed its entire graphic image, and a modern, market-oriented and technologically advanced company was formed. At a shareholders’ meeting in 2003, the shareholders confirmed the renaming of Cetis, Graphic Company, d. d. as Cetis, Graphic and Documentation Services, d. d., due to the company’s expanded activities and more varied product range. In 2007, the company thus divided into four selling pillars and adapted its business orientation, emphasizing the merger of the ‘black art’ with information technology.

The slogan Culture of Business Communication was replaced with the slogan Global Information Integrator.

4. Highlights in 2009 in numbers for Cetis group In EUR thousand 2008

2009

INDEX

Net sales revenue

35.967

34.382

95,6

Net profits or loss from ordinary activities

-1.168

-763

134,6

Financial data

Profit / loss before tax

63

8

12,7

Profit or loss for the period

86

110

127,9

Gross profit

10.399

9.739

93,7

Capital

28.495

27.488

96,5

Total assets

54.483

49.361

90,6

Long-term investment

13.443

12.359

91,9

Number of employees

436

400

91,7 100

Investment activities

Indicators Gross added value per employee

28

28

Net return on revenue

0,19 %

0,29 %

Net return on equity

0,26 %

0,39 %

Share market value as of 31st December (in EUR)

66,0

24,5

37

Basic earnings/loss per share (in EUR) Number of companies in the Group as of 31st December 2009

0,43

0,55

127,9

3

6

Share (Cetis, d. d.)

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5. Review of important events -

Signing of a contract with Somalia for the delivery of passports, identity cards and for the establishment of a personalised centre for the issue of governmental documents.

-

Signing of a contract with Guinea-Bissau for the implementation of e-elections, and the production of driving licences.

-

Production of certificates of vehicle ownership, and registration labels for Bosnia and Herzegovina.

-

Establishment of the company Cetis Direkt which engages in all activities connected to printing and packaging in envelopes.

6. Corporate governance – Cetis, d. d. and Cetis group The company Cetis, d. d. implements a transparent governance and management system, taking into account best practices and the highest business principles. Recommendations from our internal controls and auditors provide a solid foundation for effective and high-quality decision-making.

The governance and management of Cetis is based on a comprehensive set of positive relations between Management and the Supervisory Board, the shareholders and other stakeholders, and also on our mechanisms for control and supervision. Business operations comply with all legal provisions, the Rules of the Ljubljana Stock Exchange, and internal regulations.

Cetis, d. d. is managed by its Management; Management is supervised by the Supervisory Board. The management of subsidiaries and associates is performed in accordance with the provisions of their Articles of Association and Memorandum of Association.

1.

Compliance with the management code for publicly traded companies

On the basis of the provisions in the Rules of the Ljubljana Stock Exchange and legislation in force, the company Cetis, d. d. hereby expresses its Statement of compliance of conduct with the Management Code for Publicly Traded Companies (Official Gazette of RS No. 118/2005 of 27.12.05 as amended, hereinafter: Code) for the period from 1 January 2009 to the adoption of this Annual Report. The Code is available to the public in Slovenian and English on the Ljubljana Stock Exchange’s web site www.ljse.si. The Company operated in compliance with the provisions of the Code that was in force before the amendments were adopted, and, in 2009, it also followed the recommendations of the Management Code for Publicly Traded Companies with the amendments applicable from 5 February, 2007, with the exceptions listed below. Some recommendations of the Code are not relevant to the Company and cannot be breached, and are therefore not explicitly exposed. The obligations of the Company and its bodies respectively will be performed if there is such a case.

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INTRODUCTION

18

2. Derogations from the Management code for publicly traded companies 1.2.6. and 1.2.7.

The Company treats all the shareholders equally and does not specifically encourage them to exercise their rights.

3.1.5.

The Supervisory Board operates without the rules of procedure, but in accordance with legal regulations.

3.4.6. and 3.4.7.

The insurance of liability for damage of the Supervisory Board members has not been established.

3.6.-3.9.

With regard to the size of the Company and its organization, the Supervisory Board did not form any special committees, except for the audit committee.

4.3.

The Articles of Association do not define the types of operation that require the Management to obtain the consent of the Supervisory Board.

7.1.4.

Thus far, an auditor has not been present at the company General Meeting.

8.2.

The Company’s shareholders are mainly legal and natural Slovenian persons and, for this reason, publications are in Slovenian. Only our annual reports are published in English.

8.6.

The Company has not prepared a financial calendar for the forthcoming financial year because it is not currently possible to precisely determine the deadlines for individual publications. The Company promptly informs the shareholders of all relevant events.

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8.11.

The Company determines risk factors in the annual report.

8.15.5.

The Company has not adopted a special bylaw that would specify the rules on trading in Company shares as the Company does not consider it necessary. In this field the legislation in force is applied.

8.17.1. and 8.17.2.

The Company has not published its Articles of Association on the website, but it is available at the legal office of the Company’s registered office.

The Company has posted the name and contact information of a person in charge of investor relations on its website.

The Company will also respect the recommendations of the Code with the derogations described above in the future. If it appears that the Company cannot respect any of the Code’s provisions, the Management and the Supervisory Board will prepare a justified explanation.

3.

System of internal control and risk management with regard to financial reporting

High-quality financial reporting is of crucial importance for the effective operation of the governance and management system at Cetis, d. d.

The parent company’s management is responsible for risk management, its implementation, and the internal control system. Risk management is detailed further in the financial section of this report. In the first two months of 2009, the company employed, in the field of controlling and risk management, a Controlling Director. However, this person is now employed on a contractual basis (outworker).

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4.

Information from indents 3, 4, 6 and 9 of the sixth paragraph of Article 70 of the ZGD-1

The rules on the appointment and replacement of the members of the management or supervisory bodies are set out in the company’s Articles of Association, which comply with ZGD-1, and which are available for inspection at the company’s legal office. Amendments to the Articles of Association are adopted with a majority of at least three quarters of the share capital represented at the decision-making process.

Other relevant data with regard to the Company is presented in the sub-chapter Shares and Shareholders of this report.

5.

General Meeting of the company Cetis, d. d. and shareholder rights and the exercise of those rights

The convening of a General Meeting and other matters relevant to its implementation are set out in the legislation and the company’s Articles of Association, which are available at the Company’s registered office. The Management of the company usually convenes a General Meeting annually. The General Meeting is open to all shareholders or their representatives, who are obliged to confirm their participation at least three days prior to the meeting.

The General Meeting is announced within a legal deadline, i.e. at least 30 days before it is held, in the Official Gazette of the Republic of Slovenia, and on SEOnet. The company publishes important events on the electronic communication system of the Ljubljana Stock Exchange, SEOnet, and on its web page www.cetis.si.

At its 14th meeting on 7th July 2009, 97,36 % of the stakeholders were present. The shareholders considered and adopted proposals regarding the utilization of the profit for appropriation, the discharge of the Management and the Supervisory Board, the appointment of Supervisory Board

members, the presentation of the Audited Annual Report 2007 for the financial year 2009 and the Audited Consolidated Annual Report for the company Cetis, d. d. for the financial year 2009, changes in the Articles of Association, and appointment of an auditor for 2009.

6.

Company management and supervisory bodies

Management of the company Cetis, d. d.

The Management of Cetis, d. d. has one member, Simona Potočnik, MSc; her mandate started on 5 August 2005. The Management is appointed by the Supervisory Board. In accordance with the company’s Articles of Association, after five years, the Management can be appointed for another mandate. The Management manages the Company by concluding contracts in the best interests of the Company, independently, and on its own responsibility.

The Management reports to the Supervisory Board on Company in and the business system.

It also consults the Supervisory Board regarding important business issues, and the management of the whole group. The members of the Council and the advisers to Management are also involved in the decision-making process, ensuring highquality and effective decision-making.

The governance and management of subsidiaries The Management of Cetis, d. d. ensures effective management of the whole group and encourages the use of ethical business principles which comply with the legal framework of all the group’s companies. In this way the reputation of the company is upheld, which is also one of the elements of risk management. The management of subsidiaries is based on internal and external supervision and regular reporting.

Management of subsidiaries and associates In 2009, the following appointments occurred: Srečko Pilko was appointed Manager of the new company Cetis Direkt, d.o.o., Celje. Miroslav Njegać was appointed Manager of the new company Cetis MKD d.o.o.

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INTRODUCTION

Which makes us a lot richer.

20

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INTRODUCTION

Together, we create the presence here and now.

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Business report

Business strategy of Cetis group

22

Mission

Vision

Values

Strategic orientation

Cetis provides for safe data management. With printed and electronic media, the company offers comprehensive solutions in corporate communications and security printed matter. Its purpose is to provide services that enable clients to achieve optimal results and strengthen their position in the market, and thus enable Cetis to continually grow. This is why we have been striving to combine graphic services and information technology, and to manage both.

The company’s vision is to be a Global Integrator of Information. Cetis wants to be the best partner to companies and countries worldwide in the fields of identification, security and corporate communications, and a leading partner and consultant when dealing with the rationalization and management of costs in packaging, corporate communication systems, documents, and lottery games.

•

Innovation.

•

Multidisciplinarity.

•

Team work.

•

Openness to challenge.

•

Professionalism.

In Cetis, we are well aware of the importance of a modern model of strategic management aimed at increasing competitive advantage. We devote most of our attention to a policy of products and services that is in accordance with the needs and wishes of our clients. Our business strategy is to achieve the leading position in the field of high-quality commercial and security printed matter in high volumes, which is divided into four selling pillars: packaging, business communication systems, lottery games, and documents. This based on joint investments and on international action the company adapts income structure to value added. Value added is based on cost management aimed at ensuring anticipated profitability.

Development is oriented towards personalization and electronic solutions, and towards comprehensive solutions achieved by combining Cetis’ marketing programmes. It is also very important to develop key human resources, that the management successfully expands into new markets, and to transfer know-how within the company itself.

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General macroeconomic trends

2009, was the year of one of the greatest macroeconomic crises in recent decades. From the banking sector, the crisis affected the real sector, and this caused the reduction of production volumes and financial difficulties for many companies.

In Slovenia, for the whole of 2009, GDP fell by 7,8 % in real terms. Investment activity recorded the steepest decline (-21,6 %) in 2009 as a whole, falling in all sectors. Construction investment dropped as a result of the (expected) contraction in infrastructure investment; given lower demand, investment in machinery and equipment saw significantly lower capacity utilisation than in previous years; there was also a lower need for transport equipment purchases. In both sectors, investment was adversely affected by the tightening financial conditions, which aggravated access to sources of finance. Private consumption also fell (-1,4 %), as a result of the tougher labour market situation; government consumption was thus the only consumption aggregate to increase (3,1 %). The contribution of net exports was otherwise positive, as a result of a higher decline in imports than exports. As in other countries, the change in inventories made a sizeable contribution to GDP decline last year (-3,5 p.p.). In Cetis, the decline in economic activity was mainly evident in the field of commercial programs, such as self-adhesives and other labels, packaging, some types of business communication systems, and so on.

The decline in the number of persons employed in the manufacturing sector deepened further in the last quarter of 2009. The number of persons employed in manufacturing was 27.399 lower (-12,5 %) than in the comparable quarter of 2008. Once again, It fell least in manufacturing industries oriented mainly to the domestic market (by 4.874), with the highest number of jobs lost in the manufacture of non-metal mineral products (17,6 % or 1.730 workers). In mainly and highly export-oriented industries, where 22.552 jobs were lost, the greatest contributions to the decline came from the textile and metal industries, and the manufacture of ICT, electrical, other machinery and equipment (13.678 in total). Employment dynamics were significantly impacted on by measures for subsidising full-time work and the partial subsidising of payment compensation involving approximately one third of employees in manufacturing by the end of 2009. The majority were included in the scheme for the subsidisation of full-time work, the majority in the sectors that saw the greatest declines in production last year (textiles, metals, electrical equipment, machinery, and ICT). Last year, saw similar declines in the number of employees in these sectors (with the exception of the textile industry) as in manufacturing as a whole (10,1 %). As with many manufacturing companies, Cetis fought the crisis with reorganization measures starting at the end of 2008, but most activities were carried out in 2009. At the end of 2009, the parent company employed 49 less workers (a drop from 380 to 331 employees).

In 2009, inflation in Slovenia was amongst the highest in eurozone. On average, consumer prices in the eurozone went up by 0,9 % in 2009. In Slovenia, this increase was 2,1 %, and although this is a relatively low increase, it was still third highest amongst eurozone countries. A higher increase in consumer prices was only seen in Greece and Luxembourg, whilst Ireland had the highest reduction in consumer prices (by 2,6 %). Year-on-year inflation in the eurozone, which was lower in the first half of 2009 and even negative in the summer and autumn months, was, above all, influenced by slow economic activity, and basic effects connected to past changes in oil and food prices. Non-energy industrial good price movement, which largely follows movements in passenger car, clothing and footwear, purchases of which can be postponed in the short term, was very moderate in 2009. Prices of these goods otherwise rose negligibly in the euro area as a whole, while they declined in Slovenia and some other countries. As a consequence of weak demand, service prices also recorded slower growth in both the entire euro area and Slovenia last year.

In 2009, Cetis witnessed a positive price influence in the purchasing market, predominantly due to lower crude oil prices in the first half of 2009. These have an indirect impact on paper production (energy products), but are even more evident in polypropylene and other packaging prices, this packaging being the product of the petrochemical industry, and is thus directly influenced by crude oil prices on global markets. Despite a persistent growth in crude oil prices in the second half of 2009, Cetis was not influenced by higher prices until the last quarter of 2009 due to a time lag in petrochemical products prices.

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In the last quarter of 2009, Slovenia was in the mid-table in terms of euro area countries with regard to the deterioration of price competitiveness, whilst in 2009 as a whole, it was among the third of the Member States where deterioration was greatest. The real effective exchange rate, as measured by relative consumer prices, dropped after three months of growth and its year-on-year growth slowed down. It rose by 0,6 % q-o-q, and 2,3 % y-o-y in the last quarter as a whole, mainly due to the appreciation of the euro against the USD and GBP. 24

Insolvency of legal entities increased significantly in 2009. According to data collected by the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES), 5.252 legal entities had outstanding matured liabilities for more than five consecutive days in a month at an average daily amount of EUR 257 m in December 2009. In 2009, (December 2009 in comparison with December 2008), the number of these enterprises increased by 53,8 %, and the average daily amount of their outstanding matured liabilities by 74,3 %. The bulk (nearly one half ) of the increase in the amount of liabilities came from legal entities in construction, where outstanding liabilities almost doubled. One fifth of the total increase in the amount came from legal entities from the financial and insurance sector, where outstanding liabilities are highly concentrated in a relatively small number of legal entities. Contributing to the total outstanding matured liabilities are the distributive trades, professional, scientific and technical activities, and manufacturing. Enterprises are not only in arrears in terms of the above-mentioned payments; the share of enterprises falling behind in fulfilling their obligations to banks has also been rising in recent months. According to Bank of Slovenia data by sector on non-financial enterprises’ arrears in fulfilling obligations to banks, the share of enterprises that fall behind on payments to banks is highest in hotels and restaurants, while it is also above average in transport and storage, agriculture, real estate activities, the distributive trades, and in manufacturing.

Cetis fulfils its obligations to financial institutions in accordance with agreed repayment dates. Discrepancies between the days of operating current liabilities and the days of operating current assets from time to time cause delays in payments to suppliers. However, Cetis strives to minimise these delays and settle such liabilities on time.

(Source: Slovenian Economic Mirror, January and February 2010)

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Asset management Financial management

Company operating results were lower than those achieved in 2008. However, due to business opportunities and financial circumstances, the company managed to maintain a favourable financing structure, despite a small decline in long-term financial resources. The company estimated its financial situation through the break-down and analysis of past, current and hard-to-predict future cash flows. The company took into consideration the following known principles and rules of financing: - - - -

coherence of the extent, structure and trends in assets, as well as liabilities, consistency of business operations by providing rational financing, reduction of financial risks and optimal solvency, together with the appropriate financing economics, achieving a positive financial result as a net cash flow attributable to operating activities, the possibility of increasing financial strength through asset increase.

The company managed to abide by the above principles and rules, despite higher total revenue, whereby we need to mention that comparability is not possible due to the structure of sales and changes in prices.

The company financed current business operations, to a certain extent, with its own resources and resources acquired through the adjustment of its investment policy, and the disposal of some investments.

Compared to 2008, the extent of debt decreased slightly, and the structure of bank resources and other financing resources changed. Due to the prolongation of actual payment deadlines, both the extent of receivables and company liabilities towards suppliers increased.

The emphasis of the financial analysis was based on financial and capital structure, as well as on the latest estimate and provision of company creditworthiness. By determining assets not relevant to business operations, and by dynamically planning cash flow, the company managed to provide the resources and guarantees needed to ensure stable current business operations and crucial investments.

2009, was even more demanding for the company in terms of financing, and it required prompt adjustments pertaining to the new circumstances in domestic and international money and capital market.

In light of the above circumstances and the well-known situation on the market, the primary goal of the company in 2009 was to ensure permanent solvency. In doing so, the company still primarily took account of financing economics, while possibly controlling financial risks.

Compared to 2008, the debt to capital ratio did not change; in the structure of financing resources, this ratio was 61.3: 38.7. This ratio is the result of already implemented and on-going measures in the field of financing; in this respect, the company ensured that assets and resources were harmonised in terms of timetable, and it contracted a new long-term loan.

At the end of 2009, long-term assets were mainly financed through capital and long-term foreign resources. With regard to the financing structure, which is still quite balanced, those financial measures were implemented that led to an appropriate financial correction. Above all, the company used those internal measures that improved, in the short term, the level of self-financing.

In 2009, the company was less successful in managing receivables resulting from business operations in 2008. However, the company was also more efficient with regard to supplies: these were reduced in structure, in absolute value and also when compared to revenues. However, the fact remains that the result of financing in 2009 was positive and had a positive impact on the operating profit or loss of the company.

The company is well aware that because of the lower level of self-financing, regular business activities must, as soon as is possible, reach viable business operation levels, so that the re-payment of long-term liabilities is not jeopardized (the company regularly repays all of its long-term debts). The company must secure the acquisition of new or longer-term financial resources. Financial risks or individual exposure of the company are detailed in the financial report.

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Investments

26

Scope of investments in 2008-2009 Year

2008

2009

Intangible assets

511.938

618.725

Buildings

250.699

2.007.264

Equipment

502.752

1.784.526

1.265.389

4.410.515

Total

Compared to values for 2008, the company increased investment in intangible and tangible fixed assets.

Technological upgrading and an increase in capacity were a prerequisite for existence in the market and better competitiveness, especially in the field of labels and wrapping materials. The biggest investment in 2009 include: the purchase of a printing machine, a machine for the application of holograms, and real estate in Tirana. The company also invested a larger amount in intangible fixed assets, i.e. software, in the framework of both existing as well as new projects.

Despite harsher operating conditions, the company shall also continue investing in the market and in modern technology and knowledge in 2010 and in 2011. The main purpose is to ensure higher productivity, responsiveness, specialisation and the reliability of business processes and, consequently, lower costs, along with acquiring new contracts in the long run.

Cash flows – investments in 2008-2009 (non-consolidated) Inflows (offset)

Property, plant and equipment

2008

2009

765.142

1.025.934

Financial investments

1.692.985

316.125

Total

2.458.127

1.342.059

2008

2009

Intangible fixed assets

511.938

902.888

Property, plant and equipment

753.451

1.793.413

Outflows (offset)

Financial investments Total

3.600 1.265.389

2.699.901

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Gross added value 2008-2009

Gross value added in EUR thousand Chain index

27 2008

2009

10.350

9.112

86

88

Gross value added in 2009 was lower when compared to the previous year due to higher costs of material and services on one hand, and due to partially higher or lower reductions in sales prices on the other hand.

Depending on the needs and the defined strategy, the company will invest in property, plant and equipment and other long-term assets, and will dispose of all investments not relevant to its business activities.

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Shares and shareholders

28

The share capital of Cetis, d. d. is divided into 200.000 registered ordinary shares bearing the CETG mark, which are traded on the Ljubljana Stock Exchange. All shares are freely transferable. The company made no changes to share capital in 2009. The Company publishes all the required information on the SEO-net portal of the Ljubljana Stock Exchange.

The number of shareholders did not change significantly in 2009. At the end of 2009, the company had 1.022 shareholders. In comparison to the end of 2008, the number of shareholders increased by one (1).

Structure of shareholders as of 31. 12. 2009: Shareholder Cetis-Graf d.d.

Kovinoplastika d.d.

Balanced mutual fund Infond Kapitalska družba d.d.

Slovenska odškodninska družba VS Probanka Globalni naložbeni sklad Triglav naložbe d.d.

Cetis, d.d.

NFD Holding d.d.

Impala d.o.o.

Other legal and natural persons Total

Number of shares

Percentage of share capital in %

78.493 18.649 18.233 15.609 14.948 12.049 12.043 9.326 3.500 585 16.565 200.000

39,25 9,32 9,12 7,80 7,47 6,02 6,02 4,66 1,75 0,29 8,30 100,00

The ten largest shareholders own 91,7 % of total shares issued in dematerialised form by the Central Securities Clearing Corporation in Ljubljana.

With the exchange of securities in 2009, the company acquired 9.125 own shares; as of 31.12.2009, the company holds 9.326 own shares for the purposes stated in the second indent of Article 240 of the Companies Act (ZGD-1).

The General Manager as the only management board member holds 100 ordinary shares, i.e. 0,05 % of all issued shares. None of the securities holders have special control rights. The voting rights of the securities holders are not limited.

At the end of 2009, the share market value was EUR 24.50, which – based on the total number of issued registered shares - was 17,8 % of book value, which at the end of 2009 was EUR 137,63.

In 2009, both the book and market value of the share decreased.

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Movements of the market and book values of CETG shares in the years 2008 and 2009 (in EUR)

2008 2009

29

Market value of the share (31.12.)

Book value of the share in (31.12.)

Ratio between the two

66,00 24,50

143,28 137,63

46,1 17,8

Loss per share in 2008 and 2009 in EUR

Loss per share

2008

2009

-2,09

-3,32

The movement of the CETG share price in 2009 in EUR The average price of CETG shares on January 1st 2009 was 66,00 EUR; in June 2009 it was 57,90 EUR. At the end of 2009 it was 24,50 EUR. Dividend policy The management of the company is of the opinion that in the last two financial years, the company failed to achieve a positive result, and that it does not have undistributed profit at its disposal; therefore dividends will not be paid out until company operations significantly improve.

Depending on the market situation, management plans to realize long-term development, investment requirements, and company needs in the following years, and search for new opportunities, with the purpose of maximizing the company’s assets and the return on invested capital, and fulfil the expectations and interests of its shareholders.

BUSINESS REPORT

Sales

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The sales activities of Cetis, d. d. are based on four selling pillars: documents, packaging, lottery games, and business communication systems with a common denominator – to be a global information integrator.

The strategies relating to the selling pillars are well planned and divided within the parent company into security and commercial printed matter.

In the field of documents, we are directed towards developing strategic partnerships by upgrading integrated solution development. We seek possible potential for public-private partnership with public institutions, and develop comprehensive offers to support small-sized countries. We pay special attention to the development of smart card technologies. In the field of packaging, we strive to modernise production and to include consumers’ wishes regarding the development cycle of products and services, and the upgrading of packaging into special ecological and other packaging. In the field of lottery games, which is our third selling pillar, we strive to develop a global business model for lottery games, and new offers (services) in connection with other pillars. Cetis offers this model to the market with a view to promoting sales activity and advertising. The future of business communication systems lies in the systematic development of direct marketing solutions: the concentration of new service development connected to the pillar in the parent company, and the transfer of tested models to new print centres, and the standardisation of repeatable documents.

Sales of commercial printed matter The sale of commercial printed matter includes the sale of products and services of two of our pillars: packaging and business communication systems. In 2009, the commercial printed matter pillar received 10.577.000 thousand EUR in revenue. Packaging pillar sales revenues (self-adhesive labels, non-self adhesive labels, wrapping labels, and thermo-shrinkable sleeves) amounted to 5.386.000 EUR or 51% of total sales revenue in the field of commercial printed matter. Sales revenues in the field of business communication systems, forms, direct mail printed matter and photo bags amounted to 5.191.000 EUR, i.e. 49 % of total sales revenue in the field of commercial printed matter.

Packaging pillar Self-adhesive labels constitute 56 % of sales revenue in this field. In 2009, the company witnessed an 8 % drop in this field; however, the nominal value of production was greater. The reasons for this therefore lie above all in the great pressure to reduce sales prices and to adjust to market conditions. With the new machinery acquired at the end of 2009, Cetis can now offer better quality products, a better response time, repeated realisation, and new printing possibilities. This is evident in the company’s intensive presence on the market.

With additional selling activities, the company plans to improve sales revenues in 2010.

In the field of flexible packaging (wrapping polypropylene labels and thermo-shrinkablesleeves), the company maintained its market share in the domestic market, despite good competition. However, we sold less of these products, resulting in fewer orders for flexible packaging. In foreign markets, Cetis’s existing customers bought lower quantities, and in terms of new customers, Cetis performed product testing. The latter contracts will be realised in 2010.

The company acquired new customers and managed to increase the sale of non-self adhesive labels for beer and wine. By providing high-quality products, adequate delivery times, and after-sale activities, the company will continue to increase sales in 2010.

Business communication systems Forms constitute the greatest sales group, in terms of value, in the field of commercial printed matter. They hold a 60 % share in the relevant pillar. In 2009, the sale of commercial printed matter increased by 3 % when compared to 2008. Despite the decline of forms in copies, the company acquired new contracts, mainly in SE Europe, by means of successful processing and a changed strategy of sales price formation.

The company also intends to acquire new contracts on foreign markets in 2010.

In the field of direct mail, realisation was a few per cent lower than in 2008. In the segment of printing and packing of invoices in envelopes, the company retained all of its customers, and managed to acquire one new one which classifies as one of our most important customers. In the field of commercial printed matter for direct mail, the effect of recession was greatest; the number of such marketing activities declined. By changing its organisation and upgrading technology in the field of printing and packaging in envelopes at the beginning of 2010, Cetis now has new opportunities to acquire new contracts. To this end, the selling team improved and enhanced its activities.

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Sales of photo bags are still in decline; therefore sales revenue was lower than in 2008.

In the field of commercial printed matter, the company implemented its goal strategies in individual foreign markets, where it cooperated with new sales agents, expanded its sales networks to Hungary and Bulgaria, and increased its planning activities in the domestic market.

The goals for the sale of commercial printed matter in 2010 are: to increase sales in the domestic market with existing buyers, to systematically focus on all potential clients, and actively engage in foreign markets with a view to realising planned sales.

Sales of security printed matter In 2009, sales of security printed matter increased by 19 % when compared to 2008. Sales value reached 12,7 million EUR and constituted 54% of total company’s sales revenues. The extent of contracts acquired on foreign markets doubled when compared to 2008 and reached 40 % in the total structure of security printed matter. The company delivered security printed matter to 13 countries in Europe and Africa.

However, the company still sells most of its security printed matter in Slovenia (60 %), Africa (16 %), Bosnia and Herzegovina (10 %).

Security printed matter covers two selling pillars: documents and lottery games, i.e. three product groups: public documents, cards and lottery games. Public documents constitute 65 % of security printed matter total sales; cards constitute 27 %, and lottery games constitute 7 %. When compared to 2008, the public documents segment reached the highest growth (40 % increase in sales); passports, driving licences and protective labels were the products that contributed most to this increase.

Documents In the field of documents, the company produced Slovenian biometric passports improved with a new generation chip to store finger prints. The company continued to produce biometric passport for two African countries and visas and vehicle registration certificates for Slovenia, and it successfully concluded the development project for new driving licences in the form of a plastic card. In terms of Bosnia and Herzegovina, the company produced two million security forms and over two million security labels intended for a new Ministry of Transport project.

Forms with security protection The company produced health forms for Slovenia, and finished printing ballots for elections in Albania and Kosovo, and ballots for EU elections. Cetis concluded a contract for printing and supplying Slovenian vignettes for the next three years and has supplied the first six million vignettes.

Cards In the field of plastic cards, the company continued with the issue of new health insurance cards and international health insurance cards, it personalized bank cards, and continued the concession project for tachograph cards production. For the Czech Lottery, Cetis started issuing gift cards, and for Croatia, the company produces two million health insurance cards.

Lottery games In 2009, this segment continued to grow. With Cetis’s products, people in Slovenia, Serbia, Croatia, Macedonia, Monte Negro and Albania tried to find their fortune.

In Africa, the company continued with its long-term projects acquired in the preceding five years in Gabon, Burundi and Niger, and managed to acquire two new projects in Somalia and Guinea-Bissau.

Marketing and selling activities were also conducted in Central and South America. Cetis managed to position itself as a global producer of security printed matter and systemic integration. Together with local sales agents, the company is currently in the process of acquiring important projects.

Based on success in 2009, the sales plan for 2010 is very ambitious. The company decided to expand production in the groups of products where increase in sales is expected, mainly in the segments of cards and public documents. Our motto for 2010 is: creating our own trends instead of just following new ones.

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Sales by companies of the group CETIS ZG

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2009: The most profitable year For Cetis Zagreb, 2009 was the most profitable year. The company achieved its best results thus far.

Management predicted last year that the crisis could prove to be a good opportunity for successful companies, since in such times unsuccessful companies tend to go bankrupt. Therefore, the management planned revenue growth for 2009. Revenues grew by 19 %, and in light of the global recession, this is a great success. In the field of direct mail, Cetis Zagreb became an important market player in Croatia when the company signed a contract for T-mobile and B-net. In 2009, the company made 60 million A4 printouts for clients. This volume puts the company at top of the Croatian market.

Two new companies in 2009 Cetis Zagreb established a subsidiary in Celje. Its goal is to take over variable mail for the Slovenian market currently held by its parent company Cetis, d. d., Celje. With the parent company’s help, Cetis Zagreb is slowly becoming a leading player on the market in terms of variable mail in the former Yugoslav Republic.

Primarily, the company strove to gain a leading position on the Croatian market. Now, its newest goal is to be a regional leader in the field of direct mail. To this end, Cetis Zagreb established, with a local partner, a company in Macedonia where a direct mail centre is being established. Recently, the company successfully tendered for a contract for the Macedonian Tax Administration. This contract gives Cetis Zagreb a good head start, and promises good results in its first financial year. The company is present in four countries, and this is where there its maximum potential lies.

In 2009, Cetis Zagreb acquired ISO 27000 Certificate. With this certificate, the company is implementing its goal – orientation towards clients and their security; the company’s clients know that their information is safe with Cetis, and that the company will handle their information in line with legislation.

With regard to procurement, 2009 was quite stable. Printed matter and envelopes retained stable prices.

The price of paper, being the core component for printed matter and envelopes, was in decline. However, at the beginning of 2010, price started to rise. However, since, in 2009, the company did not pressure its suppliers to decrease prices due to the fall in paper value, the company does not expect its suppliers to raise prices in 2010.

With regard to envelopes procurement, Cetis Zagreb established a great working relationship with the manufacturer in 2009 - the company purchased one third of its production volume. This manufacturer is now Cetis Zagreb’s supplier of paper, which indicates strategic cooperation.

Difficult year for HR With regard to human resources, the company faced many problems. Four of its employees left the company on sick and maternity leave. Statistics shows that the number of employees increased; however, in reality, the company has one employee less than at the end of 2008. Four employees are absent, and three new employees were taken on. In 2009, the company had 25 employees, but only 21 are active.

Distributive trade An important share in total revenues is held by distributive trade. In Croatia, Cetis Zagreb is a sales agent for Cetis, d. d. and Cetis Graf d. d. In 2009, Cetis Zagreb managed to sell the largest volume of the parent company’s products since its establishment in 1991 – over 30 % more. This is due to the company’s active engagement on the market, and a contract signed with a company dealing in self-adhesive labels and thermo-shrinkable sleeves.

The company conducts its business operations in two profit centres performing two very different activities.

The direct mailing profit centre (PC mailing) is a production unit and its goal is to bring profit. The other profit centre is distributive trade (PC trade), and its goals is to place as many Cetis’s products as possible.

Profit is not the priority. Trade is still brings in higher profit than direct mail. However, according to the company’s plans, this should change in 2011.

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Plans for 2010 In 2010, Cetis Zagreb plans to invest in colour variable printing. This will give the company an advantage over its competitors, and bring more satisfactory results for its clients. The company wishes to consolidate and stabilize its operations in 2010. Significant growth in 2009 resulted in discrepancies in organisation and human relations. The company has to find its equilibrium and then grow and create strategic alliances.

Croatia is becoming a market where price and quality are most important, and therefore the company has nothing to fear.

The company will use streamlined technology, know-how and lower costs with regard to certain business processes on one hand, and favourable procurement on the other (due to a greater scale of operations), and this will bring profit in the future. And once former Yugoslav countries become EU Member States, the company’s goal is to establish the biggest direct mail centre in the Balkans and take advantage of globalisation. These are company’s goals for the future and solid motivators.

Amba

The business results at the end of 2009 confirmed that Amba did well in all of its areas of work. For the first time in the last five years, the company achieved positive results – it had a net profit of 95.771 EUR after tax, and this is a good foundation to build on.

The global economy faced disturbances. Financial crisis and economic recession caused great shifts in all segments. We witnessed numerous changes connected, above all, to developments in global markets.

In 2009, companies in general fought to retain orders, production and their revenues. Despite measures, including searching for new buyers, the company could not prevent the decrease in the realization of both revenues and production quantities.

Sales revenues decreased by almost 23 % when compared to 2008. Production volume decreased by 24 %. The decrease in sales revenues is mainly due to the decrease in number of orders resultant on the contraction in market. The company was also more cautious with regard to maintaining stock with buyers, and it also terminated cooperation with some of buyers as it could not negotiate favourable price, or could no longer bear the risks connected to the poor liquidity of these buyers. In 2009, there was a significant change in the sales structure relating to markets. The company suffered a severe decrease in sales on two very unfavourable markets (in terms of price), i.e. in Croatia and the Czech Republic, while the company managed to strengthen its position in Italy. It also managed to retain volume of sale on the demanding Austrian market where in the future an increase in sales is expected. On the Slovenian market, where Amba realizes half of its sales, there was a 20% decrease in sales, mainly due to lower prices and partly due to a decrease in the number of orders.

Savings in procurement and in services The Chairman of the Board of one of Amba’s biggest buyers in Slovenia said that 2009 was the year of procurement. Amba took notice of that ²hint,² and continued with an active procurement policy which was based on the company’s goal: there must be at least two confirmed suppliers for all crucial materials.

In this respect, Amba cooperated with its parent company through which Amba’s procurement is carried out. The company had a number of negotiations with potential suppliers, it carried out testing and, at the end, confirmed materials and concluded contracts with suppliers. New suppliers brought numerous advantages: the company was less dependent on a limited number of suppliers; it had more flexibility in the field of supplies; better supply conditions; and lower input material prices. However, it is hard to estimate how much Amba saved on its activities in the field of procurement. 2009 was a successful year in terms of procurement. This is shown by a decreased share of material costs in the company’s final results; when compared to 2008, this share is significantly better. When compared to 2008, the company managed to lower costs of material by 32 %. In light of a 24 % decrease in production, this is proving to be a good result.

The company was also active in the field of service cost reduction. It managed to reduce costs by 5 %, not

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taking into account rents. Amba reduced costs by means of the optimisation of existing services and the acquisition of new partners. These activities shall also continue in the future.

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With regard to human resources, Amba managed to solve the problems connected to the termination of a number of employment contracts in the preceding two years. Therefore, it did not have major difficulties due to the decreased number of employees. At the end of 2009, Amba had 33 employees. Difficulties related to a smaller number of employees were evident during the summer vacation and during the winter when many employees are on sick leave.

Production in the light of two development-investment projects With regard to production, the company had difficulties assuring quality. This was mainly due to poor investments in the past. Because of a reduction in stock, there was an increase in the volume of waste material. The company prepared plans to reduce the costs of complaints and waste in the production process. In terms of production, two investment-development projects were carried out. Because of those two projects, Amba can now manufacture more diverse products. They include investment in a corona treatment device for foils, and laser perforation device for foils. Both projects were successfully concluded and the first deliveries were realised.

In 2009, the company had many difficulties with regard to operating liquidity and the price of financial sources. With regard to finances, the company managed to fulfil most of its obligations, and to extend its long-term loan. This was due to a successful disposal of real estate at the location of manufacturing activity.

The company negotiated a long-term lease with the new owners, and this allows the company to perform its business activities smoothly. In this way, the company reduced the financing costs that were previously hindering business operations. In 2009, Amba had difficulties recovering its receivables, and faced strict payment terms with regard to its suppliers. The company expects to negotiate better payment terms with its suppliers on the basis of its new credit ratings, comparable to the payment terms which the company offers its buyers.

Plans for the future Amba has big plans for the new decade. It must retain its position as the most important Slovenian manufacturer of flexible packaging. In 2010, the company will focus on business processes, rationalisation and optimisation. In the field of sales, the company will continue its path: buyers, product quality, and service suitability come first. Sales activities will be directed into the more stable Western markets. An important starting point is to improve cooperation with existing buyers in Austria and to enter the German market. On the Slovenian market, the company expects a stable increase in sales (when compared to 2009).

It will strive to retain the confidence of existing buyers and look for new opportunities.

Management will continue to do all that is in their power to safeguard the company from market pressure, to strengthen the company’s position in the market, and to fulfil the expectations of Amba’s owners, business partners and employees.

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Research and development The Research and development division (R&R) is based on the close relationship between graphic and IT development. This enables Cetis to offer state-of-the-art technological solutions for its product pillars. With its experience and know-how, Cetis is a good partner to governments and companies in the field of systemic integration and project management. Being a global information integrator, the company directs its R&R efforts to the development old stable partnerships in third world countries undergoing democratisation: population censii, e-elections, the establishment of central registers, the production of personal identity documents, the personalization of personal identity documents, and identity management.

Achievements in 2009

Integrated solutions for countries

• •

Driving licences for Slovenia.

The systemic integration into the framework of biometric passports, visa and residence permits of an African state; the development of all these products, and IT infrastructure development for the personalization of and entry of data; managing a project to build a factory; the commencement of production; education and know-how transfer.

The Preparation of a project and the infrastructure required to produce and issue public documents, also for an African state.

The development of integrated solutions case studies to support democratic processes (population census, e-elections, establishment of central registers, production of personal identity documents, personalization of personal identity documents, identity management).

• •

Development of packages and services For bigger Slovenian business systems (insurance companies and trading companies), the R&R division produced forms, developed variable printing, data digitalisation services, and stored and safely destroyed documents containing personal data.

Innovative products, services and knowledge transfer

•

The company developed a new way of producing plates for lamination and intaglio printing, used to produce documents. The system was improved with a faster manufacturing process with a longer useful plate life.

The company also uses thermocromic dyes to produce protective elements for security printed matter.

With regard to polycarbonate, the development brought new protective elements, such as multipurpose dyes, transparent windows, hologram polycarbotate, and so on.

R&R optimised the production of the multi-layer protection of passports’ data pages (CSM – Cetis Security Multilayer).

With the National Institute of Chemistry Ljubljana, the company cooperates on a joint project entitled Materials and Structures for optically variable protective elements.

• • • •

Development in the field of smart cards and integrated card systems The company upgraded the Slovenian health insurance card with a new application for personalization and a web-based application supporting the system. With its strategic partner for EMV (European Mastercard Visa) card systems, Cetis engaged in the development of integrated solutions in this new field. This includes the development of web-based applications with supporting infrastructure in the field of smart cards (Pošta.net). This is the development and implementation of Elliptic Curve Cryptography, i.e. the final cryptographic algorithm that enables users to access the latest security and cryptographic technologies transparently. With regard to cards, this is reflected in the production of transparent and semi-transparent card combinations.

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Integrated systems Integrated systems facilitate work, supervision of this work, movements in the target population. This segment includes civil service activities and the usage of data for commercial and internal purposes.

Together with its partners, Cetis offers the preparation of comprehensive solutions in the field of sales and support services, data processing and the production and personalization of bank cards. In 2009, such a system was realised for an African country.

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Establishment of a public keys system Cetis also offers the establishment of Public Keys Infrastructure (PKI). Within these systems, data can be accessed only by duly authorised persons or institutions with a private key. CSCA and CVCA are systems that guarantee the credibility of data. This system is a component part of every integrated solution for a country. It involves personalization, which is a part of integrated solutions.

Plans for the future The development is strategically directed towards e-solutions, specialization of products and services, personalization and comprehensive solutions on the basis of pooling individual production programmes.

The company will also strive to develop strategic partnerships in the field of global integrated solutions development. The goal is to establish cooperation with research and development institutions. This is already the case in the system of Centre of Excellence in Nanotechnology and with the National Institute of Chemistry Slovenia. Innovative procedures for material processing are being implemented, with the emphasis on protection, safeguarding and digitalisation models. The company will continue to invest in the development of a comprehensive range of products supporting democratic processes in third world countries, in the development of smart cards technology and the development of web-based application for smart cards, such as identity cards and health insurance cards.

Information Technology support The Research and Development of Integrated Solutions Division R&D ISD is active in the field of research, development and support of innovative solutions in the field of information technology, in line with the vision of the company.

In 2009, the following important projects were concluded or begun: • • • • •

In 2009, much was achieved with regard to the introduction of new technologies in the field of server equipment by means of server infrastructure virtualization.

The establishment of a wireless network in the company in line with all safety standards.

Preparations for the start-up of a logistic information system for storage automation.

Remote access to business e-mail for all employees.

The centralized printing project continued. Results are evident, above all, with regard to lower printing costs and the rationalization of consumable material procurement.

Through the service centre “ME ServiceDesk” intended to monitor all requests regarding IT support to all users within the company, the Integrated Solutions Team processed more than 1.300 requests from employees.

R&R ISD worked with the Slovenian government on upgrading the following services in the field of comprehensive services for security printed matter: • • • •

the renewal and transfer to electronic exchange of data when ordering Slovenian second-generation health insurance cards, the commencement of the production of new driving licences, the transfer to a new generation of biometric passports (which store owner’s finger prints on a chip), the establishment of a system for the production, numbering and control over Slovenia vignettes.

R&R ISD underwent a quality evaluation by the following competent institutions: the issuer of credit and payment cards, lottery organisations, central banks, health organisations and authorised auditing firms.

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Production Highlights in 2009 In 2009, the focus was on improving the processes of production for all Cetis selling pillars. To this end, Operational Excellence Team was set up. This team has the following tasks: to list all processes for product groups, to define control methods and control cards, to permanently monitor and verify norms and to prepare and revise working instructions. The team is also engaged in improving processes to raise productivity and reduce material consumption and errors in production.

The goal was to reduce material consumption by 2 %. This goal was partly achieved; however, reduction of material consumption remains an important goal in 2010.

Despite disproportionate capacity usage, the company managed to implement the production of driving licences and Slovenian vignettes. Within the business communication centre, a new company Cetis Direkt was established. Its goal is to reduce the costs of production and maintenance with the help of new technology.

Within the packaging pillar, investment in a new printing machine was implemented. This investment provided production with additional capacity and better possibilities for the further development of this pillar. In the packaging production, a production visualization project started. This project brings a new alignment of machinery which improves the movement of material and introduces tables with specified key indicators. The purpose is to inform employees of deviations from goals and to introduce visualization of production as a whole.

Production has one additional advantage – its employees. With Matrix of Knowledge, the company measures the knowledge of all its employees. Based on its findings, a plan for further education is prepared.

The production segment introduced a new incentive to submit proposals entitled Where does the shoe pinch? Anonymously, employees can submit their proposals, complaints, opinions and thoughts regarding possible improvements within the company. Rules on proposals for innovation were also renewed. In 2010, the production segment plans to perfect these rules.

To improve production visualization, working environment, and create a positive work atmosphere, the company introduced a 5S system5 for a good and clean environment. First steps were taken at the end of 2009, and the work continues in 2010.

Based on an analysis, the company saw its opportunity mainly lay in improvements in work organisation and in preparation for work. To this end, more attention was given to the monitoring of production standstills, process control and the preparation of work orders prior to their submission to production.

Positive effects are already evident in the visualization of production and a greater emphasis has been placed on work preparation.

Plans for 2010 In 2010, Cetis will continue to achieve goals set in 2009. It will continue to reorganise its packaging selling pillar and also other pillars, to introduce a more effective and stimulating remuneration of employees, and to reorganise the Dyes division into Work preparation division.

5 5

5S method comes from Japan. It includes five steps, beginning with the letter S in Japanese (Seiri; Seiton; Seiso, Seiketsi, Shitsuke). These words have the following meaning: sorting, organising, cleaning, standardising, maintaining.

5S

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This new division will: • •

•

implement the 5S methods (better facilitated work, greater productivity, better working environment, fewer errors, improved security).

Implement the SMED system1 of rapid exchange with a view to reduce preparation by 15 % in 2010.

Preparation of documentation with the purpose to better control work processes, to standardize, to educate employees at different workplaces, to prepare a control plan and working instructions.

Ideas management. In 2009, the company received 24 ideas for improvement. In 2010, its goal is to receive 100 such ideas.

In 2010, Cetis will devote most of its attention to measures to improve, to better satisfy its buyers, and to strengthen confidence in the company.

Supplier relations and logistics After several years of economic growth, 2009 brought an uncertain economic situation. Most of the companies faced aggravated business operations, and recovery after the financial and economic crisis will take longer than predicted by economists. Companies tend to deliver faster now. Successful companies offer their products and services in the shortest possible time. The questions as to how one can deliver more effectively, at lower costs, and to stay at the forefront, are still very important.

Supply chain management means managing the flow of materials and services, costs and payments. In this respect, timely and accurate information is very important. At the very beginning of production, it is very important to procure appropriate materials with timely delivery and in sufficient quantities. Management is also very important in terms of stock reduction and accurate production planning. Logistics, being part of the supply chain, contributes, with modern information solutions to the following goal: the right product, at the right time, at the right place, at an appropriate price.

Orders and receipts in the last two years

Total number of orders

2008

2009

3774

4374

Total number of receipts

12.432

11.685

Purchasing value in EUR

10.417.097

10.478.545

Purchasing value remains at the level from 2008. Despite the lower prices of most raw materials, the unchanged purchasing value indicates that in terms of the purchasing structure, more expensive materials for printed matter with value were predominant. The company received more orders, and this brought breaking-down. At the same time, the company reduced the number of receipts. This indicates more purchasing of fixed assets, computer hardware and software and services that are not the subject of receipt. Total Purchasing for Amba is conducted outside Cetis’s information system.

SMED comes from the English language and means »single minute exchange of die«. It is intended to save every minute of time when exchanges at the 6

machine are made.

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Movements of prices of raw material and monitoring of the most favourable market price

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Savings in purchasing costs were a priority in 2009. In the second half of 2009, the price of raw material decreased on average by 15 %. With some materials – PVC, PC materials, dyes and cardboard - the reduction exceeded 15 %. The company found new suppliers and thereby managed to reduce the price of raw materials. Currently, the company has two or three confirmed suppliers of basic raw materials (with the exception of printed matters of value). Procurement was carried out under most favourable market prices.

Monitoring of material inventory and optimal ordering The same attention given to raw material prices was dedicated to the monitoring of the material inventory.

In general, the inventory was reduced, however, the number of orders and transport costs increased. The company continuously strives to optimise ordering, i.e. to accurately plan production and timely delivery, which are very difficult to achieve.

Relations with suppliers and complaints In 2009, the company carried out supplier evaluation based on a changed methodology. More emphasis was put on prices, delivery terms, and complaints and their resolution. Consequently, a new classification of suppliers was made: A – reliable, B – acceptable, and C – conditional.

A

B

C

2008

24

48

4

2009

20

52

1

This table includes all the suppliers and subcontractors with a minimum of 6 supplies a year. Despite the changed criteria, the structure has remained more or less the same through the years. Somewhat more suppliers fall into class B. Only the top 20 suppliers are informed of the results of the evaluation.

Each year, the company monitors the satisfaction of its suppliers. Only the strategically most important suppliers take part in this analysis are. The evaluation of supplier satisfaction is good feedback that helps determine the ‘right’ purchasing strategy with regard to individual suppliers, and is a solid source of information for improvement. Generally speaking, evaluations for 2009 were positive, with the exception of compliance with agreed payment terms.

Compared to 2008, there were fewer complaints filed – 67 total. Complaints are dealt with promptly and at the end of 2009, 94 % of complaints were solved.

Storage transport service In 2009, the number of employees in this segment was reduced to 27 (- 4 employees). Movement of raw material to production and logistics was facilitated at the end of 2008 when materials were moved from the Bukovžlak warehouse to the Čopova location. With this measure, the company saves approx. 100.000 EUR per year. Throughout 2009, preparations for warehouse automation were underway, including the marking of locations with bar codes and the renovation of shelves.

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Cost of transport in EUR Domestic market

40

155.428. (+6,7 % compared to 2008)

Abroad

160.201 (+15 % compared to 2008)

Raw material

55.498 (-26,7 % compared to 2008)

Postal services

18.063 (-15,5 % compared to 2008)

Costs of transport amounted to 420.142 EUR in 2009, i.e. 98,3 % of costs incurred in 2008 (427.239 EUR) or 88,3 % of costs incurred in 2007 (475.635 EUR). With regard to transport abroad, there was an increase in the transport of printed matter of value (Macedonia, Bosnia, Monte Negro, Serbia, etc.) and printed matter for elections (Albania, Kosovo). This also brought higher costs. With regard to raw material, there is a significant reduction in costs due to the relocation of the Bukovžlak warehouse. Costs of postal services were also lower, mainly due to the termination of the health programme (prescriptions, doctor’s referrals).

Quality management The safety and quality of products and services are the fundamental aims of Cetis’ business operations.

Cetis takes the following quality standards into consideration when assessing its business operations: • • • • • •

Certified ISO 9001:2008 Quality Management System.

Certified ISO 14001:2004 Environmental Management System.

OHSAS 18001 Occupational safety and health system.

Visa/Mastercard certified system for ensuring physical and logical safety.

CQM – (Card Quality Management) Mastercard standard ensuring the quality of bank cards.

Certified system of information security pursuant to ISO 27001:2005.

Good evaluations by independent institutions and business partners prove that the company is applying adequate management systems, which are also regularly maintained and improved. In 2009, the company successfully re-certified the evaluation of the quality management system in accordance with the new ISO 9001:2008 and the control evaluation of the environmental management system in accordance with ISO 14001:2004.

The suitability and effectiveness of the quality management system and environmental management system is verified through management controls and internal evaluations which are conducted by the company in line with the annual plan. Internal evaluations enable the company to detect any discrepancies early and to identify possible improvements in processes, and the system as a whole.

Most of the products are verified and tested for compliance and reliability in the company’s laboratory.

Criteria for verification and testing are in line with international standards. Cetis’s priority is to ensure the high quality and reliability of its products and services.

High-tech products and services require superior quality control. For this reason, Cetis takes due account of, and uses all technological possibilities to attain the highest quality in all aspects of products and services.

The main goal is to constantly improve all the business and production processes.

In 2010, the company plans the complete renewal of documentation related to quality management and environmental management systems; the implementation of re-certification evaluation in accordance with ISO 14001 and control evaluations in accordance with ISO 9001; target-oriented performance of internal evaluations in all processes; establishment of process control; and preventive activities intended to curtail different cases of poor quality.

Continuous changes in the environment and the ever-growing demands of buyers and business partners place new challenges before the company. The company will succeed with joint efforts, the good work of each employee, and continuous improvements in all business processes. This will enable the company to be competitive on demanding global markets, to satisfy its buyers and successfully conduct its business operations.

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Employees In 2009, the company carried out a significant reorganisation in the field of HR. With a view to streamlining business operations, management was reduced and units were functionally merged.

Company’s new macro-organisation

Management General Manager Simona Potočnik, MSc

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Commercial Department

Research & Development

Director

Director

GREGOR MLAKAR

MILAN KERIČ

Finances, Economics and Legal and HR department Director SREČKO GORENJAK

Production Director DAVORIN DOBOČNIK

At the same time, the company reformed job descriptions, taking into account newly defined competences for individual posts. HR will continue to train employees, for it is the knowledge and experience of each individual, with its useful value, that brings success to the company as a whole. In the second half of 2009, the company employed and trained new employees to satisfy the needs of the new vignette project.

Plans for 2010 Due to unfavourable results and due to streamlining operations and reducing costs, the company will continue to terminate employment contracts. The company will put more emphasis on the reduction in numbers of sick leaves and on training of its employees in the field of health care and prevention of diseases.

Number of employees per organisational unit (OU) 2008 OU

Number of employees

%

2009 Number of employees

%

IND 08/09

Management

10

2,63

4

1,16

40,00

Commercial department Finance, economics, legal and HR department

40

10,53

37

10,76

92,50

17

4,47

18

5,23

105,88

Research and development

33

8,68

35

10,17

106,06

Production

242

63,68

216

62,79

89,26

Total

380

100,00

344

100,00

90,53

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Annual Report 2 0 0 9

For the purpose of comparison with 2008, units that merged (Security and commercial printed matter, Cetis New Technologies, Business Integrations and Human Resources Management, Research and Development of Graphic Technologies) and their employees are pooled in a new organization adopted on March 1st 2009.

The reduction in the number of employees (soft layoffs – termination of fixed-term employments, registration at the Employment Service of Slovenia) continues. At the end of 2009, the company employed 344 workers; 37 with fixed-term employment. In 2009, the company terminated 80 employment contracts.

Number of employees

42

1. Plan for 2009 – as of 31.12.2009

276

2. Situation on 31.12.2008

380

3. New employments by

31. 12. 2009

44

4. Termination by

31. 12. 2009

80

5. Situation on

31. 12. 2009

6. Fluctuation rate 7. Decrease by

31. 12. 2009

8. Deviation from the plan as of

344

18,87

since 01. 01. 2009

-36

31. 12. 2009

68

Educational structure of employees Level of education

2008

2009

Number

%

Number

%

83

21,84

65

18,90

III. Qualified workers

II. Primary school

7

1,84

7

2,03

IV. Qualified workers

115

30,26

99

28,78

98

25,79

96

27,91

V. Secondary education VI. Higher education

26

6,84

29

8,43

VII. University degree

45

11,84

42

12,21

6

1,58

6

1,74

380

100

344

100

VIII. Master’s degree Total

In 2009, 7 employees (with contracts for further education) concluded their education: four of them succeeded at the higher education level, two at university degree level, and one at master’s degree level.

The company has 18 pending contract on further education. Investment into education amounted to 7.856,25 EUR in 2009.

Educational structure of employees in the Cetis Group Number Level of education I. II. Primary school

2009

2008

6

6

66

84

III. Qualified workers

8

8

IV. Qualified workers

109

125

V. Secondary education

123

125

VI. Higher education

31

28

VII. University degree

49

52

VIII. Master’s degree

8

8

400

436

Total

Cetis, d. d.

BUSINESS REPORT

Annual Report 2 0 0 9

In 2009, the number of workers with lower levels of education decreased. However, the number of workers with higher education levels increased.

Average salary compared to average in Slovenia 2008

2009

Average monthly gross salary in Cetis

1.233,93

1.336,68

Average monthly gross salary in Slovenia

1.391,14

1.435,16

-11

-6,86

Deviations from the national average in % Average gross salary in the industry

43 2008

2009

Average monthly gross salary in Cetis

1.233,93

1.336,68

Average monthly gross salary in the industry in Slovenia

1.211,65

1.246,08

Deviations from the average in the industry in % Labour costs in the revenues structure in %

1,81

6,78

31,73

28,17

Average monthly gross salary in Slovenia in 2009 was 1.435,16 EUR, while in Cetis average monthly salary was 1.336,68 EUR. Labour costs in the revenues structure was 28,17 %. Compared to salaries in the industry as a whole, the average monthly salary in Cetis is 6,78 % higher. In the printing and associated services industry, the average monthly gross salary is 1.246,08 EUR. Costs of education and training Type of education

2008

2009

IND 08/09

73.315,23

43.733,80

59,65

Computer science

7.519,50

666,44

8,86

Foreign languages

404,35

280,80

69,44

26.581,58

15.622,43

58,77

Seminars

Fairs and conferences Education for quality

4.038,55

Safety at work

1.298,31

In-house education Evening school Scholarships Total

4.838,10 11.600,68

7.856,26

67,72

14.571,99

9.931,73

68,16

133.993,33

88.266,42

65,87

Investments into education and training amounted to 88.266,42 EUR, i.e. 255 EUR per employee. The company continued to invest in education and training to compensate for a lack of competences at workplaces, thus putting emphasis on in-house education and training (4.838,10 EUR) and on education for quality (4.038,55 EUR).

BUSINESS REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Statistical data on employees 2008 Number of employees Share of women

44

2009

380

344

42,10 %

43,60 %

Share of men

57,90 %

56,40 %

Average age of females

41,91 let

41,07 let

Average age of males

42,15 let

41,71 let

Average period of employment of female employees

21,92 let

20,67 let

Average period of employment of male employees

21,49 let

20,82 let

Share of permanently employed

87,90 %

89,20 %

Share of temporarily employed

12,10 %

10,80 %

Fluctuation rate

18,63 %

18,87 %

Share of women in management

43,59 %

35,42 %

New employments

31

44

Terminations of employment

87

80

The Share of women in the company was 43,60 %, and 35,42 % work in the management structure. Age structure and period of employment decreased slightly when compared to 2008. This is mainly due to new employment and the reduction in the number of older employees. Fluctuation rates did not change significantly. However, it is still relatively high due to fixed-term employments.

Overview of sick leave per month in % Sickness benefits chargeable to the company

Reimbursed sickness benefits

Total

January

4,08

3,66

7,74

February

3,14

3,23

6,37

March

3,23

3,03

6,26

April

4,62

2,74

7,36

May

3,25

2,55

5,80

June

3,12

2,28

5,40

July

2,44

2,76

5,20

August

2,63

2,63

5,26

September

3,85

1,92

5,77

October

3,58

2,82

6,40

November

3,01

3,24

6,25

December

3,51

3,12

6,63

Average 2009

3,37

2,83

6,20

Average 2008

4,11

2,16

6,27

Cetis, d. d.

Annual Report 2 0 0 9

BUSINESS REPORT

In 2009, absence due to sick leave chargeable to the company was reduced by 0,74 %. Reimbursed sickness benefits over 30 days is higher by 0,67%. However, the share of employees on a longer sick leave increased.

The company regularly monitors sick leave. It conducts interviews with those absent for a longer period of time. Some sick leaves are due to injuries at work or injuries that occur on the way to work. However, this trend has been in decline in recent years. This shows that a lot is done with regard to health and safety at work, predominantly with regard to the training of employees in relation to safe and healthy working conditions.

Injuries at work in the last two years

On the way to work

2008

2009

4

4

At work

11

9

Total

15

13

It is impossible to avoid injuries at work. Because of new technological processes, training and verifications regarding safety at work, the number of injuries is decreasing. However, there are still too many cases of injuries at work that are mainly due to workers’ imprudence and non-compliance with basic rules regarding health and safety at work. At their workplaces, workers must be concentrated, rested, and disciplined; they must perform their assignments in a way that does not threaten their safety and health, and the safety and health of their co-workers. Workers must also respect obligatory safety measures (instructions on safe work) and use obligatory safety equipment. Their direct superior is responsible for the supervision over compliance with these requirements and for sanctions in cases of non-compliance.

(Source: Annual Report of VZD - Occupational Safety and Health Chamber - and VPP - Fire Safety)

45

BUSINESS REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Corporate social responsibility and care for the environment

46

Environmental responsibility A responsible, healthy attitude towards the natural environment is one of the conditions for a healthy working environment. The Company is well aware of this and it therefore observes the strict environmental guidelines defined in its environmental policy. Cetis is not a heavy polluter of the environment. Nevertheless, it has been working actively to minimise the effects of its business activities on the natural environment.

To this end, the company is raising environmental awareness and educating its employees, taking into account environmental aspects when acquiring and introducing new technology.

Implementation of environmental goals and programmes in 2009 • • •

The company started with separate collection of waste process water and thereby reduced the mercury emissions in the waste water.

Cetis removed type R22 cooling devices and reduced the threat of emissions of dangerous substances in the air.

The quantity of municipal waste was reduced by 12 %.

Plans for 2010 • •

Acquisition of an environmental permit for plants that cause emissions into water.

Reduction of municipal and dangerous waste by 5 %.

Long-term goals The company’s long-term goals are to continually reduce the quantity of waste and raise the environmental awareness of its employees.

Environmental investments in recent years Environmental investments in recent years

Investments in EUR

Introduction of CTP technology

400.000

Introduction of flexo CTP technology

117.892

Construction of a warehouse for hazardous waste

330.000

Total

847.892

Volume of municipal waste in the last two years

Municipal waste in tons

2008

2009

94,1

82,5

Cetis, d. d.

BUSINESS REPORT

Annual Report 2 0 0 9

In 2009, the company managed to reduce the volume of municipal waste by 11,6 tons, i.e. 12%.

47

Volumes of hazardous waste (in kg)

Adhesives Fixers Developers Waste water

2008

2009

Differ. in%

1.790

2.847

59

130

675

419

3.590

3.542

-1

20.474

43.293

14.372

7

Total

111

The volume of hazardous waste increased in 2009 because of great quantities of waste dyes (write-offs) and a separate collection of mercury polluted water.

Packaging Cetis generates waste packaging which is not considered municipal waste and is also an insignificant share of waste packaging from direct imports. In 2009, the Company generated 109.1 tonnes of waste paper packaging nationwide. The Company’s waste does not burden the environment, as the waste packaging is recycled, in line with national legislation. When compared to 2008, Cetis produced more waste packaging due to an important contract with one of its African partners.

Air emissions The advanced technological equipment and the Company’s dedication to using non-hazardous process materials have resulted in minimum air emissions. Heating is based on natural gas, which is considered an environmentally-friendly form of heating.

Electricity in kWh

Natural gas in Sm3

Water in m3

2008

6.776.730

211.731

15.782

2009

7.257.990

228.836

18.163

Preventive and corrective measures Most of the corrective measures are oral and are due to minor inconsistencies in waste separation, labelling waste containers, and so on. Written corrective and preventive measures are issued when significant potential inconsistencies or repeated smaller inconsistencies are discovered.

Environmental communication Pursuant to the Rules on Environmental Management, the company keeps internal and external records on environmental communication. Periodically, and in the annual report, Cetis’s employees and business partners are informed of the company’s environmental activities and of the implementation of major projects or investments.

The established channels of communication, such as notice boards, electronic mail and meetings, are used to regularly inform employees of the company’s environmental activities. Employees are also constantly trained in the field of environmental protection and safety at work, with the purpose of improving organisational culture in terms of higher environmental awareness. Each individual at Cetis is obliged to implement the company’s environment protection policy and to act in accordance with its provisions.

7

Company didn’t monitor volumes of hazardous waste water in 2008, because it wasn’t neccessary.

BUSINESS REPORT

48

Cetis, d. d.

Annual Report 2 0 0 9

Social responsibility As with many other companies, Cetis had to struggle with the difficult economic situation in 2009.

Therefore, cost-effectiveness was even more important. In line with this strategy, the company had to significantly limit the funds intended for socially useful activities. Cetis is still involved in various socially useful programmes and initiatives, yet to a much lesser extent when compared to previous years.

Cetis continues to sponsor sports teams. For several years, the Company has been a sponsor of the Pivovarna Laťko Handball Club, the Kladivar Athletics Club, Celje Women’s Handball and other sport associations and clubs. This was also the case in 2009. Other donations in 2009 were mainly made to individuals in distress.

Cetis supports the physical activity of its employees; within the company, we organise sports associations and the company supports them financially every year. However, in 2009 the company had to reduce the amount of these funds. In the light of the well-being of its employees and to raise awareness regarding the importance of health for the quality of life, Cetis introduced a new event three years ago – Health Day. Every year, at its employee new-year party, the company announces the best employees and presents them with jubilee awards.

Cetis, d. d.

Annual Report 2 0 0 9

BUSINESS REPORT

We drink from the cup of the presence; therefore, we look forward to the future.

49

FINANCIAL REPORT

Cetis company financial report Independent auditor’s report

50

Cetis, d. d.

Annual Report 2 0 0 9

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Income statement (IFRS)

Notes

Achieved in 2009

in EUR Achieved in 2008

1.

REVENUE

2

26.047.444

25.668.580

2.

Cost of goods sold

3

-1.323.866

-1.985.530

3.

Production costs

3

-16.610.399

-16.204.229

4.

Cost of goods sold and production costs

-17.934.266

-18.189.759

8.113.178

7.478.821

A.

GROSS PROFIT

5.

Other income (from operations)

4

790.280

1.054.091

6.

Distribution costs

3

-3.857.703

-3.696.083

7.

Administrative expenses

3

-6.115.045

-6.195.312

8.

Other expenses (from operations)

3

-278.234

-202.331

= Other income, expenses and costs (5+6+7+8)

-9.460.702

-9.039.634

B.

OPERATING PROFIT OR LOSS EXCLUDING FINANCE COSTS

-1.347.524

-1.560.813

9.

Finance income

5

1.235.839

2.375.754

Finance cost

5

-525.684

-1.199.722

710.155

1.176.033

-637.369

-384.780

10.

C.

NET FINANCE COSTS

D.

PROFIT (LOSS) BEFORE TAX

12.

E.

Income tax expense

6

PROFIT (LOSS) FOR THE PERIOD Basic and diluted earnings (loss) per share (in EUR)

24

-26.823

-32.248

-664.192

-417.028

-3,32

-2,09

51

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Statement of other comprehensive income in EUR 52

Net profit or loss for the period

Other comprehensive income in the period:

Gains on revaluation of intangible assets and property, plant and equipment

Available-for-sale financial assets Gains and losses from currency translation differences for financial statements of companies abroad Actuarial gains and losses of programs with defined benefits

Other components of comprehensive income

Total other comprehensive income for the period

Total comprehensive income for the period

2009

2008

-664.192

-417.028

534.680

-1.917.176

534.680

-1.917.176

534.680

-1.917.176

-129.512

-2.334.204

Attributable to:

- majority owners

- minority interest

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Balance sheet as at 31 December 2009

v EUR

Notes

31 December 2009

31 December 2008

ASSETS

Property, plant and equipment

8

16.814.841

16.691.900

Intangible assets

9

2.152.467

1.619.591

Investment property

10

429.226

203.129

Investments in group companies

11

3.615.411

3.615.411

Investments in associates

12

2.600

7.560

Available-for-sale investments

13

11.094.674

12.282.154

Loans

14

44.876

333.995

Non-current operating receivables

15

Deferred tax assets

16

Total non-current assets

535.307

741.136

34.689.401

35.494.876

Available-for-sale assets

17

2.296.668

2.381.259

Inventories

18

2.591.327

2.852.416

Current investments at fair value

19

Short-term loans

20

12.736

897.061

Operating and other receivables

21

5.318.330

4.179.217

Cash and cash equivalents

22

2.930

955.896

Total current assets

10.221.991

11.265.850

TOTAL ASSETS

44.911.391

46.760.726

53

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

in EUR 54

Notes

31 December 2009

31 December 2008

EQUITY

Issued capital

10.015.023

10.015.023

Share premium account

17.550.359

17.859.379

Reserves (legal and statutory)

2.027.420

1.926.717

Retained earnings

Treasury shares

-1.025.918

-26.001

Fair value reserve

-1.041.797

-1.576.477

Total equity

23

27.525.088

28.654.518

Borrowings

25

5.567.754

6.064.130

Non-current operating liabilities based on prepayments

26

Provisions

27

877.175

1.010.093

Deferred tax liabilities

16

Total non-current liabilities

Borrowings

25

Operating and other liabilities

455.876

3 5.744

26.135

6.450.673

7.100.362

4.221.784

5.730.199

28

6.713.847

5.275.648

Total current liabilities

10.935.631

11.005.846

Total liabilities

17.386.304

18.106.208

TOTAL EQUITY AND LIABILITIES

44.911.391

46.760.726

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

Cash flow statement (IFRS) in EUR (w/o cents)

A.

Cash flows from operating activities

a)

Profit / loss before tax Income tax and other taxes not included in operating expenses

b)

2008

-637.369

-384.780

-26.823

-32.247

-664.192

-417.027

2.898.691

3.430.248

-250.664

-251.477

90.589

78.118

-257.004

-2.352.772

497.291

1.156.919

2.978.903

2.061.036

-2.058.826

2.601.507

-5.251

-4.178

85.108

-2.296.668

Adjustments for Depreciation and amortisation (+) Operating revenue from revaluation of investment and financing items (-) Operating expenses from revaluation of investment and financing items (+) Finance revenue, excl. finance revenue from operating receivables (-) Finance expenses, excl. finance expenses from operating receivables (+)

b)

2009

Changes in net current assets (and accruals, provisions and deferred tax receivables and liabilities) of operating Balance Sheet items Opening less closing operating receivables Opening less closing deferred costs and accrued revenue Opening less closing deferred tax receivables Opening less closing assets (groups for disposal) for sale Opening less closing inventories Closing less opening operating debts Closing less opening accrued costs/expenses and deferred revenue, and provisions

261.089

455.652

2.125.090

-3.056.150

-119.337

-361.674

Closing less opening deferred tax liabilities c)

Excess operating proceeds or excess operating expenditure (a+b)

B.

Cash flow from investing activities

a)

Proceeds from investing activities Interest received and shares in profit received, relating to investing activities Proceeds from sale of intangible assets Proceeds from sale of property, plant and equipment (PPE)

287.873

-2.661.511

2.602.584

-1.017.502

236.130

764.068

63.358 1.025.934

808.548

55

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

in EUR (w/o cents) 2009

2008

Proceeds from sale of investment property Proceeds from sale of long-term investments Proceeds from sale of short-term investments 56

b)

2.465.687 316.125 1.641.547

4.038.303

-902.888

-511.938

-1.793.413

-753.451

Expenditure in investing activities Purchase of intangible assets Purchase of property, plant and equipment Purchase of investment property Purchase of long-term investments

-3.600

Purchase of short-term investments

c)

Excess proceeds from investing activities or excess expenditure from investing activities (a+b)

C.

Cash flow from financing activities

a)

-2.699.901

-1.265.389

-1.058.354

2.772.914

Proceeds from financing activities Proceeds from paid-up capital Proceeds from increase in long-term financial liabilities Proceeds from increase in short-term financial liabilities

1.769.912 1.769.912

b)

Expenditure in financing activities Interest paid in relation to financing activities

-492.408

-690.039

Repayment of long-term financial liabilities

-496.376

-2.380.627

Repayment of short-term financial liabilities

-1.508.414

Repayment of capital

Dividends and other shares in profit paid c)

Excess finance proceeds or excess finance expenditure (a+b)

Č.

Cash at end of period

x)

Cash for the period (sum of Ac, Bc and Cc excesses)

y)

Cash at beginning of period

-2.497.198

-3.070.666

-2.497.198

-1.300.754

2.930

955.895

-952.966

454.658

955.895

501.237

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Statement of changes in equity (IFRS)

A1.

A2.

B1.

B2.

B3.

C.

1.

A2.

B1.

B2.

B3.

C.

Balance at the end of the previous reporting period, at 31 December 2007 Opening balance for reporting period, at 1 January 2008 Changes in equity Total comprehensive income in the reporting period, at 31 December 2008 Entry of net profit or loss Gain on the revaluation of investments Other components of comprehensive income Movements in equity Allocation of part of net profit to form additional reserves pursuant to AGM decision Closing balance of reporting period, at 31 December 2008 Balance at the end of previous reporting period, at 31 December 2008 Opening balance of reporting period, at 1 January 2009 Changes in equity Purchase of treasury shares and own business shares Total comprehensive income for the reporting period at 31 December 2009 Entry of net profit or loss Gain on the revaluation of investments Other components of comprehensive income Movements in equity Allocation of part of net profit to form additional reserves pursuant to AGM decision Covering loss as deductible equity component Closing balance for reporting period, at 31 December 2009

Issued capital

Share premium

Legal and statutory reserves

Treasury shares

Retained earnings

Fair value reserve

Total equityl

10.015.023

17.859.379

1.900.717

-26.001

898.906

340.699

30.988.723

10.015.023

17.859.379

1.900.717

-26.001

898.906

340.699

30.988.723

-417.028

-1.917.176

-2.334.204

57

-417.028

-417.028 -1.917.176

-1.917.176

26.001

-26.001

26.001

-26.001

10.015.023

17.859.379

1.926.718

-26.001

455.877

-1.576.477

28.654.519

10.015.023

17.859.379

1.926.717

-26.001

455.876

-1.576.477

28.654.517

10.015.023

17.859.379

1.926.717

-26.001

455.876

-1.576.477

28.654.517

-309.019

-999.918

-999.918

-999.918

-999.918

17.550.359

534.680

-129.512

-664.192

-664.192

534.680

534.680

-1.041.797

27.525.088

100.703

208.316

100.703

-100.703

-309.019 10.015.023

-664.192

309.019 2.027.420

-1.025.918

The Management of Cetis d. d. approves the financial statements and notes thereto for the financial year ended 31 December 2009.

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Statement of management responsibility

58

The Management is responsible for the preparation of financial statements, thus presenting a true and fair view of the state of affairs at the end of the financial year, and of profit or loss for the period.

The Management confirms that suitable accounting policies have been consistently applied, and that the accounting estimates are reasonable and prudent. The Management also confirms that the financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on a going concern basis.

The Management recognises its responsibility for keeping proper accounting records, the adoption of appropriate measures for the safeguarding of the Company’s assets, and the prevention and detection of fraud, and other irregularities.

March 2010

Simona PotoÄ?nik, MSc General Manager

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Summary of significant accounting policies and notes to the financial statements

1.

Company profile

Registered office and legal form, country Cetis, Graphic and Documentation Services, d. d. is a company with its registered office at Čopova 24, Celje, Slovenia. The Company was entered as a joint stock company in the Register of Companies at Celje District Court on 13 February 1996 under entry No 95/00923, and on 25 November 2003 under entry No 1/01476/0. The share capital of the Company as at 31 December 2009 amounts to EUR 27.525.000, and is divided into 200.000 ordinary, no-par value registered shares, including treasury shares, issued as dematerialised securities at the Central Securities Clearing Corporation (KDD) in Ljubljana. The shares (designated as CETG) are traded on the entry market of the Ljubljana Stock Exchange.

Nature of operations and relevant activities The Company’s core business is the provision of comprehensive solutions in the field of communication using printed and other types of media. Our corporate vision places Cetis as the Slovenia’s leading company with appropriate developmental, investment and marketing activities, and the best qualified staff, looking ahead to an increased market share both domestically and internationally. The Company offers a programme of diversified printed matter, such as security, variable and commercial printed matter: graphic design, including accessory services, such as, the document personalisation, the implementation of microchips or magnetic tapes, archiving, identity management, consultancy, project management, and other services.

Parent CompanyFact Sheet Cetis, d. d. is the parent company of the Cetis Group, for which consolidated financial statements are prepared.

2.

Basis for the preparation of financial statements

Statement of compliance 2009’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and the

interpretations of the IFRS Interpretations Committee (IFRSIC), as adopted by the European Union.

The Management approved the financial statements as on 22 March 2010.

Basis for measurement 2009’s financial statements have been prepared on a historical cost basis, except for the following items that are measured at fair value: • •

financial instruments at fair value through profit or loss, financial instruments at fair value through equity or through financial assets available for sale.

The methods applied to measure fair value are as follows.

Functional and presentation method The financial statements are presented in euros, i.e. the functional currency for the Cetis d. d. company.

All accounting information presented in euros is rounded to the nearest thousand.

Use of estimates and judgements The preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) requires the Management to give the judgements, estimates and assumptions affecting the application of accounting policies, and the reported assets, liabilities, income, and expenses.

Actual results may differ from these estimates.

Estimates and underlying assumptions need to be reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, and in any future periods affected.

Information concerning significant risk assessment and critical judgement, which the Management prepared during the process of applying accounting policies, and which have the most significant impact on the amounts presented in the financial statements, are described in the following notes: • •

Point 16 – utilisation of tax losses Points 26 and 27 – provisions and contingencies

59

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•

Point 29 – valuation of financial instruments.

3. Relevant accounting principles applied The accounting policies stated below were consistently applied by the Company to all the periods presented in the enclosed financial statements. a)

60

Foreign currency

Transactions denominated in a foreign currency are translated into the Company’s functional currency, using the exchange rate effective on the transaction date.

Assets and liabilities expressed in a foreign currency are translated into EUR on the date of the event, and at the end of the accounting period, using the reference exchange rate (ECB) of the Bank of Slovenia.

Monetary assets and liabilities stated in a foreign currency on the balance sheet date are translated into the functional currency at the applicable exchange rate. Foreign exchange gains or losses are the differences between the amortised cost in the functional currency at the beginning of the period, adjusted by the amount of effective interest and the payments made during the period, as well as the amortised cost expressed in a foreign currency and translated at the exchange rate applicable at the end of the period. Non-monetary assets and liabilities stated in a foreign currency and measured at fair value are translated into the functional currency at the exchange rate effective on the date when the fair value was set. Foreign exchange gains and losses are recognised in the Income Statement. b)

Financial instruments

Non-derivative financial instruments Non-derivative financial instruments include investments in equity and debt securities, trade and other receivables, cash and cash equivalents, borrowing and loans, operating and other liabilities.

Non-derivative instruments are initially recognised at fair value, increased by costs directly attributable to the transaction. Subsequent to the initial recognition, non-derivative financial instruments are measured as follows.

Cash and cash equivalents are comprised of cash in hand and on demand deposits. Bank overdrafts that are repayable on demand and form an integral part of cash management are included as a component of cash and cash equivalents in the Cash Flow Statement.

The accounting of finance income and finance costs is discussed in Point k) – Finance income and finance costs.

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Financial assets available for sale Company investment in equity securities and certain debt securities are classified as availablefor-sale financial assets. Subsequent to the initial recognition, these investments are measured at fair value. Changes in fair value, except for impairment loss, are recognised directly in equity. When an investment is derecognised, the related gain or loss in equity is transferred to the profit or loss.

When accounting for regular purchases, or the sale of financial assets, the amount is recognised or reversed, respectively, taking into consideration the date of payment.

Investments at fair value through profit or loss An instrument is classified at fair value through profit or loss if it is held for trading, or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the company is able to manage such investments and make purchase and sales decisions based on their fair value. Upon initial recognition, the attributable costs of a transaction are recognised in profit or loss when incurred.

Financial instruments at fair value through profit or loss are measured at fair value, and a change in fair value is recognised in profit or loss.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Share capital Ordinary shares Ordinary shares form an integral part of share capital.

Share buybacks When treasury shares are repurchased, the amount of consideration paid, including directly attributable costs, and excluding the potential tax effect, is recognised as a change in equity.

The shares bought back are classified as treasury shares and deducted from equity. Upon sale of the treasury shares, the amount received is recognised as an increase in equity; a transaction’s surplus or loss is recognised in equity. c)

Property, plant and equipment

Items of property, plant and equipment are recognised at cost, less accumulated depreciation and accumulated impairment loss. As of the date of transition to IFRS, property, plant and equipment were stated at their historical cost as estimated on 1 January 2005.

Cost includes expenditure that is directly attributable to the acquisition of an asset. The cost of property, plant or equipment produced by

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the Company itself is comprised of material costs, direct labour costs and other costs that can be directly attributed to bringing the asset into the use it was intended, as well as the costs of dismantling and removal from the location where it was used, and restoring such a location. Purchased software that is integral to the functionality of related equipment is capitalised as part of that equipment.

Borrowing costs related to the purchase of and/or the construction of property are recognised in the profit or loss as incurred.

Parts of an item of property, plant and equipment with different rates of obsolescence are accounted for separately.

Gains or losses from the disposal of property, plant and equipment are determined as the difference between the income generated from the disposal of an asset and its book value, and are disclosed

Investment property Buildings Equipment for graphic activity Laboratory equipment Vehicles Telephony Furniture Typewriters, computer equipment Computer equipment for fire safety Measurement and control appliances Useful life is determined and examined in accordance with the Rules on Accounting and Finance.

Depreciation methods, Useful Life and Residual Value, are reviewed as on the reporting date, in accordance with the Rules on Accounting and Finance. d)

Intangible assets

Research and development Expenditure on research activities in order to obtain new scientific and professional knowledge and understanding is recognised in the Income Statement as part of Expenditure when incurred.

Development activities embody plans or designs for the production of new or substantially improved products and processes.

Development Expenditure is recognised if: it can be reliably measured; the product or process is technically and operationally feasible; there is potential for future economic benefits; the Company has adequate resources for the completion of development, and; it intends to

FINANCIAL REPORT

in the Income Statement among “other operating income,” or “other operating expenses”.

Subsequent costs related to property, plant and equipment The cost of replacing a part of an item of property, plant and equipment is recognised in the book value of the asset if it is probable that future economic benefits linked to the asset will flow to the company, and if its historical cost can be reliably measured. All other costs, such as day-today servicing, are accounted for in profit or loss when incurred.

Depreciation Depreciation is calculated on a straight-line basis over the useful life of each asset. Land and assets in the process of acquisition are not depreciated.

Depreciation rates are based on the useful life of the assets, as follows: In years min.

In years max.

7 7 3 3 5 3 5 3 3 4

40 40 20 10 8 5 6 8 3 6

use or sell such assets. Recognised expenditure is comprised of materials costs, direct labour costs, and other costs which can be directly attributed to readying the asset for its intended use.

Borrowing costs related to asset development and other expenditure are recognised in the Income Statement when incurred.

Capitalised development expenditure is measured at cost, less accumulated amortisation and incurred impairment losses.

Other intangible assets Other intangible assets acquired by the Company with finite useful lives are disclosed at historical cost reduced by accumulated depreciation and the current impairment losses.

Subsequent expenditure Subsequent expenditure related to intangible fixed assets is capitalised only when it increases the future economic benefit arising from the specific asset to which it is related. All other expenditure is recognised in the Income Statement as expenses when incurred.

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Amortisation Amortisation is calculated on a straight-line basis over the useful life of intangible assets.

Amortisation of assets begins when the asset is available for use. The estimated useful life for the current and comparative periods is accounted for as follows.

Amortisation rates are based on the useful life of assets: In years min 62

Intangible assets e)

3

In years max 10

Investment property

Investment property is property owned in order to generate rent or increase the value of a long-term investment, or both. Investment property therefore creates cash flow which is highly independent of other assets owned by the Company. Investment property is defined as: - - - - -

land, owned to increase the value of a longterm investment, not for sale in the near future as part of regular business operations, land for which the Company has not determined its future use; buildings owned or on lease, which are leased out on the basis of a single or multiple operational lease, vacant building owned to be leased out on the basis of single or multiple operational lease, in cases when, with regard to asset determination, a part of property is investment property and the remainder a tangible fixed asset, where they cannot be sold separately, the whole asset is determined as investment property if the part which is a tangible fixed asset is insignificant; otherwise, the whole asset is recognised as a tangible fixed asset.

Whether the proportion is significant or not is determined by the competent employee for the area.

Recognised value measurement The Company measures investment property based on a historical cost model.

The historical cost of purchased investment property comprises its purchase price and all directly attributable costs. Directly attributable costs include, for example, attributable fees for legal services, tax on property transfer, and other costs of the transaction.

The historical cost of a property constructed within the Company is comprised of its cost to the date when construction or development was completed. On that date, the property becomes investment property.

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Disposals Investment property ceases to be recognised upon disposal, or when it is permanently withdrawn from use and no future economic benefits can be expected from its disposal.

Profit or loss from the discontinuation or disposal of investment property has to be established as the difference between net gains upon disposal and the book value of assets, and recognised in the Income Statement.

Depreciation Investment property is depreciated at the same rate as investments used by the company. The method of determining their useful life is the same as that used to determine the useful life of property, plant and equipment. f)

Subsidiaries and associates

Long-term financial investment in the equity of subsidiaries and associates is valued according to historical cost. Participation in profit is recognised when the Company has obtained the right to have it paid out. g) Inventories Inventories are measured at historical cost or net realisable value, whichever is lower. The cost of inventories is based on the First-In-First-Out method (FIFO), and includes expenditure incurred in acquiring inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In terms of finished products and work in progress, cost includes an appropriate share of production overheads based on the normal use of production assets.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs of sale.

The realizable value of individual inventories is primarily checked as on the Balance Sheet date. All inventories older than one year are assessed to have a realizable value of zero. In terms of raw material inventories, subsidiary discrepancy accounts are prepared and attributed to operational expenses from the revaluation of current assets, and the product and goods inventories of subsidiary discrepancy accounts are attributed to operational expenses. h) Asset impairment Financial assets On the reporting date, the Company assesses the value of a financial asset in order to evaluate objective signs of asset impairment. A financial asset is considered to be impaired if objective

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evidence indicates that one or more events have had a negative effect on the estimated future cash flow arising from that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flow, discounted at the original effective interest rate.

An impairment loss in respect of a financial asset available for sale is calculated with reference to its current fair value.

Significant financial assets are evaluated for impairment on an individual basis. Remaining financial assets are collectively assessed for impairment, within groups that share similar credit risk characteristics.

Impairment losses are recognised in the Income Statement for the period. Any current loss in respect of a financial asset which was not recognised directly in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. When accounting for financial assets measured at amortised cost and financial assets available for sale that are debt instruments, reversal of impairment is recognised in profit or loss. For financial assets available for sale that are equity securities, impairment losses can not be reversed directly in profit or loss.

generating unit due to impairment are distributed to the assets in a unit (groups of units) in proportion to the book values of the individual assets in a unit.

In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of an asset. An impairment loss is reversed only to the extent that the asset’s book value does not exceed the book value that would have been determined, net depreciation or amortisation, if no impairment loss had been recognised in previous periods.

Non-financial assets At each reporting date, the Company assesses the residual book value of non-financial assets, excluding inventories and deferred tax liabilities, in order to establish whether there is objective indication of asset impairment. If there is such an indication, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives and are not yet available for use, impairment is estimated at each reporting date.

The recoverable amount of an asset or cashgenerating unit is its value in use or its fair value, less sales cost, whichever is higher. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money, and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the group of assets that generates cash inflows from continued use that are largely independent of the cash inflows resultant on assets or groups of assets (“cash-generating units”).

An impairment is recognised if the book value of an asset or a cash-generating unit exceeds its recoverable amount. Impairment is recognised in profit or loss. Losses that are recognised for a cash-

Short-term employee benefits

i)

Employee benefits

Other long-term employee benefits The net liability of the Company generated with regard to long-term employee benefits is the sum of future benefits that employees have gained in return for work carried out in the current and previous periods. Thus calculated, the sum of benefits is discounted in order to determine its present value, and then reduced by the fair value of all related assets. Any actuarial gains and losses are recognised in the profit or loss in the period in which they occur.

Liabilities for short-term employee benefits are measured on an undiscounted basis and are accounted for when the employee’s work related to a short-term return is provided.

A liability is disclosed as an amount for which payment in the form of a premium is expected, due twelve months after the period of work is completed, or according to the programme of profit distribution, if the company has a current legal or constructive obligation to make such payments because of employee performance in the past and this liability can be reliably measured. j)

Provisions

Provisions are recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of factors which create economic benefits will be required to settle the obligation. Provisions are determined by discounting expected future cash flows at a pre-tax interest rate that reflects current market assessments of the time value of money and, if required, the risks specific to the liability.

Warranties for products and services

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FINANCIAL REPORT

A provision for product and service warranties is recognised when the underlying product or service is sold. This provision is based on historical warranty data and an assessment of all possible outcomes against their associated probabilities. k) Revenue

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classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, financial asset impairment loss, and hedge instruments loss that is recognised in the Income Statement. All borrowing costs are recognised in the Income Statement, using the effective interest method.

Exchange gains and losses are disclosed in net amounts.

Revenue from products sold

64

Revenue from product sales is measured at fair value of the consideration received or the related receivables, net returns and price reductions, trade discounts and volume rebates. Revenue is recognised when the significant risk and reward of ownership is transferred to the buyer, when recovery of the consideration and the associated costs is probable, and the possible return of goods can be estimated reliably, and when there is no further management involvement with the sold goods, and the revenue can be reliably measured.

Transfers of risk and reward vary and are dependent on the individual terms of the contract of sale. For the sale of goods, transfer usually occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon loading onto the relevant carrier.

Supplied services revenue Revenue from services rendered is recognised in the Income Statement in proportion to the stage of completion of the transaction as at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

Rental income Rental income is recognised in income on a straight-line basis over the term of the lease. l)

Finance income and costs

Finance income comprises interest income on funds invested (including financial assets available for sale), dividend income, gains from the disposal of available-for-sale financial assets and changes in the fair value of financial assets held for trading through profit or loss, which are recognised in the Income Statement. Interest income is recognised as it accrues profit or loss, using the effective interest method. Dividend income is recognised in the Income Statement on the date that the shareholder’s right to receive payment is exercised; in the case of quoted securities, this is usually the ex-dividend date.

Finance costs are comprised of interest expenditure on borrowing, dividends on preference shares

m) Corporate income tax Corporate tax is comprised of current and deferred tax. Corporate tax is recognised in the Income Statement, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable profits for the financial year, using taxation rates enacted or substantively enacted as at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet liabilities method, taking into consideration temporary differences between the book value of assets and the liabilities for financial reporting purposes, and the amount used for taxation purposes. All temporary differences are taken into consideration. Deferred tax is recognised as the amount expected to be paid upon reversal of temporary differences, in compliance with laws enacted or substantively enacted on the reporting date.

The Company offsets deferred tax assets and liabilities if it is legally entitled to offset recognised assessed tax assets and liabilities, and if they refer to corporate income tax that belongs to the same tax authority in relation to the same taxable unit; or different taxable units that are intended for the settlement of assessed tax assets and tax receivables with the difference, or either simultaneously realise the assets and settle the liabilities.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which a deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the taxation benefit related to an asset will be realised.

Additional income tax that arises from the distribution of dividends is recognised at the time the liability to pay the related dividend is recognised. n) Basic earnings per share The Company presents basic earnings per share (EPS) data for its ordinary shares. The basic earning per share is calculated by dividing the profit or

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loss attributable to ordinary shareholders by the weighted average number of ordinary shares in the business year. Diluted earnings per share equal basic earnings per share as the Company does not have preferential shares or convertible bonds.

Segment reporting A segment is a distinguishable component of an enterprise engaged in providing products or services (business segment), or products and services within a particular economic environment (geographical segment), and that is subject to risks and returns that are different from those of other segments. The Company’s segment reporting is based on each business segment.

Inter-segment pricing is determined on an arm’s length basis.

Segment profit or loss, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated to a segment on a reasonable basis. Unallocated assets include investments, whereas unallocated liabilities include capital.

4. Determination of fair value The Company’s accounting policies and disclosures require the determination of fair value in numerous cases, for both financial and non-financial assets and liabilities. Fair values for certain groups of assets have been determined for measurement and/or reporting purposes based on the methods described below. Where required, further information about assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. a) Property, plant and equipment The fair value of property is the estimated value for which the property could be exchanged on the appraisal date and following adequate marketing between a willing buyer and a willing seller in an arm’s length transaction, wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipment is based on the offered market price of similar items.

Intangible assets The fair value of intangible assets is determined as the expected present value of estimated future cash flows originating from their use and eventual sale. b) Inventories The fair value of an inventory is determined on the basis of its estimated selling price in the ordinary course of business reduced by the estimated costs

of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory item. c)

Investments in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined with reference to their quoted bid price as on the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only. d) Operating and other receivables The fair value of operating and other receivables is calculated as the present value of future cash flows, discounted at the market rate of interest as on the reporting date. e) Non-derivative financial liabilities Fair value, which is specified for reporting purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market interest rate is determined by reference to similar lease agreements.

5. Financial risk management This section deals with the Company and its exposure to certain risks, its objectives, policies and procedures for risk measurement and management, and its equity management. Other quantitative disclosures are indicated below.

Management is entirely responsible for establishing the Company’s risk management framework.

Risk management policies are designed to identify and analyse risks that can pose a threat to the Company, on the basis of which adequate restrictions and controls are determined, as well as monitored risks and compliance with restrictions. Risk management policies and systems are subject to regular review, and provide updated information on market conditions and the activities of the Company. Through training, risk management standards and procedures, the Company endeavours to develop a disciplined and constructive environment within which all employees are aware of their roles and obligations.

Credit risk Credit risk is the risk of suffering financial loss when any of the Company’s clients or parties to a financial instrument contract fails to meet their contractual obligations. Credit risk mainly occurs in relation to the Company’s trade receivables and investment securities.

Operating and other receivables

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FINANCIAL REPORT

66

The Company’s exposure to credit risk is mainly dependent on individual client characteristics. The demographics of the Company’s client base, as well as payment risk in terms of the branch of industry or country in which a client operates, do not have such a great impact on credit risk. Approximately 3.5% of the Company’s revenue may be attributed to sales transactions with one client alone. In geographical terms, there is no credit risk concentration.

The Company shapes its credit policy, according to which a creditworthiness analysis of each new client is made, before the Company offers them its standard payment and delivery terms and conditions. The Company review includes any exterior assessments, if available, and also, in certain cases, bank references.

Purchase limits – determined in the form of a maximum outstanding amount – are separately set for each client and reviewed every three months. Any transactions with a client not meeting standard creditworthiness are carried out solely through advance payments.

Goods ownership is usually retained until those goods have been paid for in full. In the event of non-payment for goods, the Company’s claim is therefore secured.

The Company requires no surety for operating and other receivables.

The Company determines a value adjustment for the amount of impairment, which represents the amount of estimated losses arising from operating and other receivables and investments. The main elements of this value adjustment are a special portion of the loss related to individual key risks, and the total loss, formed for groups of similar assets due to incurred losses not yet defined. The value adjustment for the total amount of loss is determined by taking into account historical data related to payment statistics for similar financial resources.

Value adjustments for trade receivables are made on the basis of an analysis with regard to recovering each receivable. Adjustment is based on receivables which remain unpaid 90 days after maturity. Total past-due gross trade receivables as on 31 December 2009 amounted to EUR 470.413, and receivables that were not yet due amounted to EUR 4.706.732.

Guarantees In accordance with its policy, the Company solely provides financial guarantees or sureties to subsidiaries fully owned by the parent company. The amount of guarantees is evident in the off-balance-sheet records.

Liquidity risk Liquidity risk is the risk arising from the Company’s inability to meet its financial obligations when they fall due. The Company manages to ensure the highest possible liquidity by always having sufficient liquid assets available to settle obligations within set time limits, both under normal and stressful circumstances, without incurring unacceptable loss or risking harm to the Company’s reputation.

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The valuation of products and services is based on activities aimed at monitoring the Company’s cash flow needs and optimising the investment return.

As of 31 December 2009, the Company had credits lines based on the current account principle with domestic banks totalling EUR 950.000, based on revolving loan at the amount of EUR 2.450.000; the interest rate on that date was between 4,55% and 7% per year.

Market risk Market risk is the risk that changes in market prices, such as exchange rates, interest rates and equity instruments may affect the Company’s revenue or the value of financial instruments. The objective of market risk management is the management and control of market risk exposure within reasonable limits, whilst optimising profit.

The Company trades in financial instruments and assumes financial obligations with the aim of managing market risk. All transactions are carried out in compliance with the Company’s policy. In order to reduce fluctuations in profit or loss to the lowest possible level, the Company makes sustained efforts to use the appropriate measures for risk protection.

Currency risk The Company is not exposed to currency risk. The Company concludes the majority of purchasing deals in its functional currency. The volume of business not concluded in the Company’s functional currency, i.e.

USD, GBP and CHF is negligible. As far as sales and borrowing are concerned, transactions are carried out in euros.

Interest rate risk The Company is exposed to interest rate risks, since variable interest rates apply to the majority of its financial liabilities. The Company has, to date, had no specific protection against interest rates changes.

This is favourable for the Company in a period of low interest rates linked to Euribor.

Capital management The Management decided to retain a large volume of capital in order to maintain the confidence of investors, creditors, and the market, and for the Company’s sustainable development. The Supervisory Board monitors the return on equity defined by the Company as net profit or loss, divided by average equity, less net profit for the business year.

A minor change occurred in the reporting year with regard to the Company’s capital management, which has to be adjusted according to the current and anticipated scale of operations, and/or new circumstances.

Neither the parent company nor its subsidiaries were subject to capital requirements determined by external bodies.

1. Segment reporting

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Income statement disclosures

67

Sales revenue stated under ‘Other’ is comprised of revenue from material, merchandise and fixed assets sales. in EUR Breakdown per segment

Net sales revenue Net profit or loss Assets by business segment Unallocated assets Total assets

Security printed matter

Commercial printed matter 2009 2008

2009

2008

13.812.202

10.644.403

9.576.902

-714.553

-647.237

12.522.779

Other

Total

2009

2008

2009

2008

12.104.910

2.658.340

2.919.687

26.047.444

25.669.000

-495.446

-736.044

-137.525

-177.533

-1.347.524

-1.560.813

12.795.179

14.241.015

14.550.792

3.434.913

3.509.630

30.198.706

30.855.601

14.712.685

15.905.125

12.522.779

12.795.179

14.241.015

14.550.792

3.434.913

3.509.630

44.911.391

46.760.726

Total liabilities

7.209.740

7.508.270

8.198.981

8.538.471

1.977.583

2.059.467

17.386.304

18.106.208

Investments Amortisation and depreciation

1.717.659

524.731

1.953.337

596.728

471.142

143.930

4.142.138

1.265.389

1.202.027

1.422.453

1.366.956

1.617.626

329.708

390.169

2.898.691

3.430.248

The Company’s business in 2009 was primarily in Europe, which is why it has not reported by geographical segment.

Revenue in EUR Sales revenue by type Sale of products on the domestic market Sale of services on the domestic market

2009

2008

15.911.731

17.775.669

550.676

601.806

7.570.518

4.831.316

Sale of services on foreign markets

447.939

285.561

Sale of material and merchandise on the domestic market

867.052

1.277.103

Sale of material and merchandise on foreign markets

425.334

815.720

Sale of products on foreign markets

Gains from investment property Other rental revenue on the domestic market Total

98.765

55.020

175.430

26.386

26.047.444

25.668.580

Sales revenue in 2009 also includes revenue from the sale of products and services to group companies, totalling EUR 1.762.000. The Company did not generate any revenue from associates.

Expenses

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in EUR Expenses by primary type, change in value of inventories 68

Cost of goods and materials sold

2009

2008

1.323.866

1.985.530

15.768.641

13.509.867

Labour costs

7.560.556

8.480.289

Amortisation and depreciation

2.898.691

3.430.248

524.535

521.196

108.959

356.354

28.185.248

28.283.484

Cost of materials and services used

Other expenses (from operations) Change in inventories of finished products, work in progress and semimanufactured products Total (operating) expense

Costs charged by subsidiaries in 2009 amounted to EUR 194.790; no costs were incurred in connection with our associates.

In this reporting period, the Company adjusted the estimated useful life of its property, plant and equipment weighted to the expected wear and tear of individual items of equipment. The change in accounting estimate was recognised with the reduction of depreciation for the current period at the amount of EUR 167.994.

Labour costs Â

in EUR 2009

2008

5.462.284

6.091.527

Pension insurance cost

701.813

778.270

Cost of other social insurance

403.194

447.392

Gross wages and salaries

Other labour cost

993.264

1.163.100

Total labour costs

7.560.556

8.480.289

Wages and salary costs are accounted for in compliance with internal rules and regulations governing wages and other emoluments, the Decree on the amount of costs recognised as deductible expenditure, and individual employment contracts.

Other labour costs are comprised of meal and travel allowances, holiday, retirement and anniversary bonuses.

In 2009, the Company also allocated EUR 210.176 for supplementary pension insurance, jointly with employees, who voluntarily contributed 1,615% of their gross wages for the same purpose. In 2008, the Company paid EUR 236.044 for this purpose, under the same terms.

Other operating revenue Other revenue type

in EUR 2009

2008

Gain in disposal of fixed assets

187.306

251.477

Income from reversal of provisions

124.869

187.937

Reversal of trade receivables and inventories revaluations

145.484

181.625

Indemnities, subsidies and grants received

72.406

16.196

Other

260.215

416.856

Total

790.280

1.054.091

Net finance income/finance costs

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Interest income Share-based income Income from sale of investments Other finance income - change in fair value of investments through profit and loss - other Total finance income Interest expense Foreign exchange losses Other finance costs Finance costs arising from impairment Total finance costs Total net finance income

in EUR 2008

2009

69.038 208.942 957.859

245.951 537.769 1.584.605 7.429 7.429

1.235.839 386.948 11.981 126.755 525.684 710.155

2.375.754 755.121 10.041 2.281 432.278 1.199.721 1.176.033

2009

in EUR 2008

26.823 26.823

32.248 32.248

2009

2009

2008

in EUR 2008

21,0 % 13,9 % -12,4 % 1,0 % -26,6 % -1,1 % -4,2 %

-637.369

-133.847 -88.586 79.216 -6.300 169.502 6.837 26.823

22,0 % 74,7 % -28,7 % 2,3 % -74,0 % -4,8 % -8,4 %

-384.780

-84.652 -287.598 110.321 -8.815 284.710 18.282 32.248

2009

in EUR 2008

260.449 260.449

-419.063 -419.063

Tax

Current tax Deferred tax Total Effective corporate income tax rates

Total profit or loss before tax Tax effects: - tax at general tax rate - tax exempt income - non-deductible expenditure - tax relief - tax loss - other changes to the tax base Total tax expense Deferred taxes recognised directly in equity

Investments Total Disclosure of auditor fees Total auditing costs amounted to EUR 28.769 in 2009. The value of the contract to audit 2009’s financial statements amounts to EUR 11.400. The audit of financial statements was performed by ABC revizija d.o.o. auditing firm; other audits were performed by other auditing firms.

Property, plant and equipment

69

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Balance sheet disclosures In 2009, the Company invested EUR 3.780.766 in property, plant and equipment. Accounts payable for the purchase of property, plant and equipment amounted to EUR 461.804 at the end of 2009.

Movements in property, plant and equipment in EUR 70

Cost

Reclassification Balance at 31 December 2008

Balance at 1 January 2009 Transfer to investment property Transfer to available-for-sale assets Acquisitions in the period Acquisitions of investments in progress Transfers of investments in progress Disposals Reclassification Balance at 31 December 2009

Land

Balance at 1 January 2008 Transfer to investment property Transfer to available-for-sale assets Acquisitions in the period Acquisitions of investments in progress Transfers of investments in progress Disposals

Equipment

Other equipment

Buildings

PPE in progress

Prepayments

Total

1.220.109

14.730.612

39.767.838

27.603

350.800

64.842

56.161.805

-470.633

-470.633

-84.591

-84.591

181.906

768.961

950.867

753.451

753.451

-950.867

-950.867

223.251

4.874.109

43.405

5.140.766

1.220.109

14.218.633

35.662.689

27.603

68.794

21.437

51.219.265

1.220.109

14.218.633

35.662.689

27.603

68.794

21.437

51.219.265

-568.116

-568.116

11.024

721.575

26.837

759.437

3.780.766

3.780.766

-732.753

-732.753

5.862.129

446

5.862.575

1.220.109

13.661.541

30.522.136

27.157

3.116.807

48.274

48.596.024

in EUR

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Land

Buildings

Equipment

Other equipment

PPE in progress

Prepayments

Total

Balance at 1 January 2008

7.671.423

28.466.101

36.137.524

Depreciation Transfer to investment property Disposals

414.131

2.748.793

3.162.923

267.504

267.504

56.563

4.449.015

4.505.578

7.761.487

26.765.878

34.527.365

Balance at 1 January 2009

7.761.487

26.765.878

34.527.365

Depreciation Transfer to investment property Disposals

389.591

2.114.200

2.503.791

316.627

316.627

Value adjustment

Reclassification Balance at 31 December 2008

4.933.346

4.933.346

Reclassification Balance at 31 December 2009

7.834.451

23.946.732

31.781.183

Book value

1.220.109

7.059.189

11.301.737

27.603

350.800

64.842

20.024.281

1.220.109

6.457.146

8.896.811

27.603

68.794

21.437

16.691.900

1.220.109

6.457.146

8.896.811

27.603

68.794

21.437

16.691.900

1.220.109

5.827.090

6.575.404

27.157

3.116.807

48.274

16.814.841

Balance at 1 January 2008 Balance at 31 December 2008 Balance at 1 January 2009 Balance at 31 December 2009

Disposals made in 2009 are, in the main, comprised of the sale of commercially and technically outdated, yet still functional machinery.

The company has secured its long-term borrowing with mortgages on real property, liens on movable assets, and a lien on long-term financial investment, all of which were accounted for in off-balance-sheet records at an amount equalling debt as at 31 December 2009.

71

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Intangible assets Movements in intangible fixed assets in EUR

Long-term deferred costsi

Cost

72

Long-term property rights

Intangible assets in progress

Long-term deferred costs and accrued income

Total

Balance at 1 January 2008

303.454

2.812.457

16.497

Acquisitions in the period

329.162

329.162

Acquisitions of investment in progress

511.938

511.938

Transfers from investment in progress

-329.162

-329.162

Disposals

3.132.409

1.782

Balance at 31 December 2008

303.454

3.139.837

199.273

Balance at 1 January 2009

303.454

3.139.837

199.273

67.872

550.853

299.886

918.611

543.350

543.350

-559.074

-559.074

Acquisitions in the period Acquisitions of investments in progress Transfers from investments in progress Disposals Balance at 31 December 2009 Value adjustment Balance at 1 January 2008 Amortisation

3.642.565

315.101

315.101

371.326

3.375.589

183.550

299.886

4.230.352

136.573

1.620.858

18.647

248.677

267.325

1.782

1.782

Disposals Balance at 31 December 2008

155.220

Balance at 1 January 2009

155.220

1.867.753

Amortisation

1.782 3.642.565

1.757.431

1.867.753

2.022.973

2.022.973

22.438

347.575

370.013

315.101

315.101

177.658

1.900.227

Balance at 1 January 2008

166.882

1.191.599

16.497

1.374.979

Balance at 31 December 2008

148.234

1.272.084

199.273

1.619.591

Balance at 1 January 2009

148.234

1.272.084

199.273

1.619.591

Balance at 31 December 2009

193.668

1.475.362

183.550

Disposals Balance at 31 December 2009 Book value

2.077.885

299.886

2.152.467

Long-term property rights are mainly comprised of the purchases of computer software for the information system. Development costs are the recognised costs of projects that prove to be feasible in terms of project completion and eligible for use or sale. The aim

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

is to complete the project, sell and/or use it.

In 2009, the Company invested EUR 543.350 in long-term property rights stated under acquisitions in the period as investment in progress. Deferred development costs are recorded for the public documents project.

In accordance with the Accounting Principles Code, the Company classifies costs which are directly related to obtaining a business deal amongst ‘long-term prepayments and accrued income’ and form a part of intangible assets. These are previously lost assets that can only be treated as assets under the assumption that in the continuation of the business process they will be included in the sales value of business effects, and through this transformed into liquidity. Long-term deferred costs are charged to business effects in periods longer than one year; they are depreciated on a straight-line basis.

Investment property As of 1 December 2009, the Company reclassified a part of its fixed assets as investment property leased out in 2009. The Company measures investment property based on a historical cost model. Investment property is depreciated at the same rate as real property used by the company. The method for determining their useful life is the same as that used to determine the useful life of property, plant and equipment.

The fair value for investment property as at 31 December 2009 cannot be determined. The total area of the real property owned by the company measures 20.113 m2; investment property, comprising production, warehousing and office premises, as well as the corresponding functional area of the facility, is 1.110 m2.

The amount of income arising from investment property is disclosed under No 2.

Movements in investment property

Building

Cost Balance at 1 January 2008 Acquisitions in the period Acquisitions of investments in progress Transfers of investments in progress Disposals Balance at 31 December 2008

Balance at 1 January 2009 Transfer from fixed assets Acquisitions of investments in progress Transfers of investments in progress Disposals Balance at 31 December 2009 Value adjustment Balance at 1 January 2008 Depreciation Disposals Balance at 31 December 2008

Balance at 1 January 2009 Depreciation Transfer from fixed assets Balance at 31 December 2009

in EUR Total

470.633

470.633

470.633 568.116

1.038.750

470.633

1.038.750

267.504

267.504

267.504

267.504 24.875 317.145 609.524

267.504

267.504 24.875 317.145 609.524

470.633

470.633 568.116

73

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

in EUR

Building

Total

Balance at 31 December 2008

203.129

203.129

Balance at 1 January 2009

203.129

203.129

Balance at 31 December 2009

429.226

429.226

Book value Balance at 1 January 2008

74

Investments in group companies in EUR Breakdown per type Cetis Zagreb Cetis Tirana

2009

2008

1.690.629

1.690.629

5.236

5.236

Amba

1.919.546

1.919.546

Total

3.615.411

3.615.411

Companies in the group are: CETIS – ZG, Poduzeče za trgovino i usluge, d.o.o., Industrijska 11, Sveta Nedelja, Croatia, measured at cost.

AMBA CO d.o.o., Čopova 24, 3000 Celje, measured at cost.

The Company compiles a consolidated financial statement for the above two companies – Cetis-ZG, d.o.o. and Amba CO, both 100% owned by the parent company. The subsidiaries submit monthly business reports to the parent company; the latter conducts analyses and performs an annual internal audit.

Both companies are audited and included in consolidated statements.

Shares in the company CETIS – TIRANA Sh.p.k.,R.r. Deshmoret e4, Shkurit.P.7, Tirana, Albanija are valued at cost.

It is also 100% owned by Cetis, d. d. and all business transactions are included in the financial statements of Cetis. Cetis Tirana acts solely as an intermediary in acquiring business, and has the status of a small enterprise in compliance with local legislation, and is therefore not obliged to prepare its own financial statements.

Movement in investments in group companies in EUR

Balance at 1 January 2008

Cost

Value adjustment (impairment

Net amount

3.615.411

3.615.411

Acquisition

Balance at 31 December 2008

3.615.411

Balance at 1 January 2009

3.615.411

Acquisition Balance at 31 December 2009

3.615.411

3.615.411

3.615.411

3.615.411

Investments in associates Associated companies: Cetis MKD Skopje, in which the Company holds a 26% stake, was established in 2009. Investment is measured at cost.

Druckman Hungary, in which the Company holds a 33% stake, has not been in operation for several years, we have formed a value adjustment for the investment, and in March 2010, the company received information on company dissolution.

Lotaria Nacionale SH.A Rruga Kavajes, Porta Kry Esore, Misto Mame, Tirana was sold in 2009.

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

Breakdown per type

2009

Cetis MKD Skopje Lotaria Nacionale SH.A Rruga Kavajes, Porta Kry Esore, Misto Mame,Tirana – 46.6% ownership Druckman Ipari Kereskedelmi es Szolgaltto Korlatolt, Budapest, Hungary

2.600

Total

2.600

in EUR 2008

7.560

7.560

Information on the companies where the parent company, by itself or through a person acting for the Company, participated in capital with a share of at least 20 %, is disclosed in the chapter Financial Report for Cetis Group, under item 1. Group Profile.

Investments available for sale Amongst investments available for sale, 76,6 % are valued at the initially recognised amount, i.e. at cost. in EUR Breakdown per type Available-for-sale investments

2009

2008

11.094.674

12.282.154

Movements in available-for-sale investments

Balance at 1 January 2008

Cost

Value adjustment (impairment)

Net amount

13.016.258

13.016.258

Acquisition Transposition Sale Change in fair value

1.731.434

1.731.434

32.500

32.500

-2.433.039

-2.433.039

Balance at 31 December 2008

12.282.154

12.282.154

Balance at 1 January 2009

12.282.154

12.282.154

1.000

1.000

Acquisition Transposition Sale Change in fair value Balance at 31 December 2009

1.944.315

1.944.315

756.503

668

755.835

11.095.342

668

11.094.674

Loans granted in EUR Breakdown per type Loans granted

2009

2008

44.876

333.995

Loans granted as at 31 December 2009 include loans to employees for the purchase of apartments, construction, and deposits granted.

75

FINANCIAL REPORT

76

Cetis, d. d.

Annual Report 2 0 0 9

Movements in loans

Cost

Balance at 1 January 2008

Value adjustment (impairment)

Net amount

1.550.061

1.550.061

Increase

Repayments

1.186.637

1.186.637

29.429

29.429

Transposition Transfer to short-term loans Exchange rate differences Balance at 31 December 2008

333.995

333.995

Balance at 1 January 2009

333.995

333.995

Increase

17.538

Repayments Transposition Sale

17.538

293.921

293.921

12.736

12.736

Transfer to short-term loans Exchange rate differences Balance at 31 December 2009

44.876

44.876

Non-current operating receivables 2009

in EUR 2008

Other non-current operating receivables for associates Total Movements in non-current operating receivables

Balance at 1 January 2008 Transposition Long-term commodity loans abroad Balance at 31 December 2008 Balance at 1 January 2009 Transposition Long-term commodity loans abroad Balance at 31 December 2009

Cost

Value adjustment (impairment)

Net amount

877.939 877.939 515.641 515.641 515.641

515.641 515.641 515.641

877.939 877.939

515.641

515.641

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Deferred tax assets and liabilities in EUR

31 December 2008

Tax liabilities 31 December 2009

Tax liabilities 31 December 2008

31 December 2009

31 December 2008

266.193

445.198

5.744

26.135

260.449

419.063

57.076

49.186

57.076

49.186

148.039

179.554

148.039

179.554

63.999

67.199

63.999

67.199

535.307

741.137

529.563

715.002

Tax assets

Tax assets

31 December 2009

Investments Receivables Inventories Provisions for retirement bonus Other provisions Tax loss Total

Assets-liabilitiesi

77

5.744

26.135

The Company used a 20% tax rate in deferred tax accounting.

Deferred tax liabilities are based on surpluses arising from the revaluation of available-for-sale investments, measured at fair value through equity.

Deferred tax assets are based on provisions for anniversary and retirement bonuses, tax loss and temporary differences arising from accounting for income tax on receivables, and other provisions recognised for taxation purposes in subsequent periods.

The Company recognised deferred tax assets for the tax loss based on the estimate that, in the coming years, taxable profits will be available against which the deferred tax assets can be used in the future. In periods of tax loss utilisation, a decrease in deferred tax assets will represent a corresponding decrease in profits. The unused tax loss records as at 31 December 2009 amounted to EUR 2.309.387.

Movements in temporary differences in 2008 in EUR 1 January 2008

Recognised under income/ expenses

Recognised under equity

31 December 2008

Investments

-110.466

13.666

515.863

419.063

Receivables

52.230

-3.044

Inventories Provisions for retirement bonuses, and other Other provisions Tax loss Total

49.186

208.328

-28.773

81.296

-14.097

231.387

-32.248

179.554

67.199 515.863

715.002

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Movements in temporary differences in 2009 in EUR

78

1 January 2009

Investments

419.063

Receivables

49.186

Inventories Provisions for retirement bonuses, other Other provisions Tax loss Total

Recognised under income/ expenses

7.890

Recognised under equity

31 December 2009

-158.614

260.449

57.076

179.554

-31.420

148.133

-93

-93

67.199

-3.200

63.999

715.002

-26.823

-158.614

529.563

Assets held for sale Amongst other non-current assets, the Company lists the company SNLS GABON, in which it is a 93,63 per cent holder of issued shares. The investment is valued at cost. The investment was not sold in 2009 due to the political situation in Gabon. Activities related to the sale of the investment continue in 2010.

Breakdown per type

in EUR 2009

Property, plant and equipment

2008 84.591

Other non-current assets

2.296.668

2.296.668

Total

2.296.668

2.381.259

Inventories in EUR Breakdown per type Material

2009

2008

1.377.652

1.543.578

Work in progress

522.764

242.255

Products

674.382

1.063.850

16.530

2.733

2.591.327

2.852.416

Merchandise Total

For 2009, the Company wrote off assets at the amount of EUR 182.259 in relation to materials and products which were no longer usable. The largest product write-offs were related to documents, labels, wrapping, and lottery tickets as a result of the use of inadequate materials and of replacing existing documents with new documents. The Company managed to reduce the related costs, in part, through claims concerning the materials, which is reflected in production costs.

An inventory surplus of EUR 35.669 and a material assets deficit of EUR 31.729 were recorded in 2009.

Value adjustments are accounted for per type of inventory and movement. No new value adjustments were required, other than those made in previous periods. Value adjustments were reduced by EUR 82.249.

When examining material, product and merchandise inventories showing no change for more than 12 months, the Company applied the same policies as in preceding years.

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Current investments at fair value in EUR Breakdown per type

2009

2008

Current investments Total In the reporting year, the Company shows no current investments based on fair value.

Movements in current investments in EUR

Balance at 1 January 2008 Transfer to non-current assets Sale Change in fair value until transfer Balance at 31 December 2008

Cost

Value adjustment (impairment))

Net amount

2.162.775

6.492

2.156.283

-1.731.434

-1.731.434

-424.849

6.492

6.492

-424.849

Balance at 1 January 2009 Transfer to non-current assets Sale Change in fair value until transfer Balance at 31 December 2009 Short-term loans in EUR Breakdown per type

2009

Short-term loans

2008 568.200

Short-term deposits

300.000

Current portion of long-term loans

12.736

28.861

Total

12.736

897.061

Operating and other receivables in EUR Breakdown per type Current trade receivables Current operating receivables from group companies

2009

2008

4.287.593

3.716.360

819.405

126.174

Current operating receivables from associates Current operating receivables from third parties Current prepayments Total

13.540 205.935

309.603

5.398

13.540

5.318.331

4.179.217

79

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Cash and cash equivalents in EUR Breakdown per type

2009

2008

Cash in banks, cheques, and cash in hand

2.930

1.996

2.930

955.896

Deposits in banks Total

953.900

Equity 80

Total equity consists of issued capital, share premium account, legal and statutory reserves, retained earnings, treasury shares (deducted from equity), and fair value reserve. The Company issued 200.000 no par value shares registered at the Central Securities Clearing Corporation (KDD). in EUR Breakdown per type

2009

2008

Share capital

10.015.023

10.015.023

Total

10.015.023

10.015.023

Capital reserve at the amount of EUR 17.550.359 is comprised of a simplified reversal of share capital by withdrawing shares amounting to EUR 2.215.195, and a general capital value adjustment amounting to EUR 15.335.164.

Share premium account in EUR Breakdown per type Simplified reduction in share capital by withdrawing shares

2009

2008

2.215.195

2.215.195

General capital value adjustment

15.335.164

15.644.184

Total

17.550.359

17.859.379

Reserves in EUR Breakdown per type

2009

2008

Legal reserves

1.001.502

1.709.277

Reserves for treasury shares

1.025.918

26.001

Treasury shares

-1.025.918

Statutory reserves Total

-26.001 191.439

1.001.502

1.900.717

In December 2009, the Company acquired 9.125 treasury shares amounting to EUR 999.918 for the purposes set out in the second indent of Article 247 of the Companies Act (ZGD-1); shares offered for sale to company or associated company employees (4,56% of all issued shares). On 31 December 2009, the Company reported an ownership of 9,326 shares designated CETG (4,66 % of all issued shares). The shares are recognised at cost as a deductible item in equity.

The fair value reserve in 2009 increased as a result of a rise in stock exchange quotations. The accumulated reserve arising from value adjustment surpluses in long-term financial investments is negative, amounting to EUR 1.302.246. Pursuant to this, the Company formed deferred receivables at the amount of EUR 260.449.

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

Establishing profit for appropriation in EUR

Item

A.

NET PROFIT FOR THE BUSINESS YEAR

2009

2008 -417.028

B.

NET LOSS FOR THE BUSINESS YEAR

-664.192

C.

NET PROFIT FROM PREVIOUS PERIODS

455.877

872.905

309.019

Č.

REDUCTION IN CAPITAL RESERVES

D.

REDUCTION IN RESERVES FROM PROFIT

E.

INCREASE IN RESERVES FROM PROFIT

1. increase in legal reserves

2. increase in statutory reserves

3. increase in reserves for treasury shares and own business shares

F.

PROFIT FOR APPROPRIATION (A-B+C+D-E)

G.

ACCUMULATED LOSS (A-B+C-D+E)

-100.704

-100.704

455.877

Basic earnings per share in EUR

Basic earnings in EUR Weighted average number of ordinary shares Basic earnings per share in EUR

2009

2008

-664.192

-417.028

190.674

199.799

-3,48

-2,09

Net loss per share is calculated by dividing the basic net loss for the year by the weighted average number of shares. The diluted loss per share is identical, as the Company holds neither any preference, nor convertible shares.

Borrowings Borrowing is comprised of long-term and short-term borrowing, including the current portion of longterm borrowing.

Long-term borrowing in EUR Breakdown per type Bank loans

2009

2008

5.567.754

6.064.130

The largest single loan is for financing equipment, totalling EUR 2.000.000, with a 3-year repayment period.

Short-term borrowings in EUR Breakdown per type Current portion of long-term loans from banks repayable within one year Short-term bank loans Other short-term loans Total

2009

2008

2.496.377

2.590.627

1.375.407

1.900.000

350.000

1.239.572

4.221.784

5.730.199

81

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Loan repayments in EUR Total repayment 2009

Interest 2009

Principal 2009

Short-term loans up to 1 year

8.310.708

191.136

8.119.572

Long-term loans, 1 to 5 years Long-term loans with maturity longer than 5 years Total

1.462.079

184.496

1.277.583

1.313.043

1.313.043

11.085.830

375.632

10.710.199

Breakdown per type

in EUR

82 Total repayment 2008

Interest 2008

Principal 2008

Short-term loans up to 1 year

4.832.603

149.603

4.683.000

Long-term loans, 1 to 5 years Long-term loans with maturity longer than 5 years Total

1.980.449

575.038

1.405.411

1.313.044

1.313.044

8.126.096

724.641

7.401.455

Breakdown per type

The Company makes no distinction between interest on long-term loans by maturity, and therefore interest covers the period from 1 to 5 years.

Non-current operating liabilities in EUR Breakdown per type

2009

2008

Long-term operating liabilities arising from prepayments

3.780

Total

3.780

Provisions in EUR Breakdown per type

2009

2008

64.089

70.764

8.350

28.736

Provisions for anniversary bonuses

234.043

233.250

Provisions for retirement bonuses

570.693

677.343

Total

877.175

1.010.093

Provisions for warranties Provisions for legal actions Provisions for other costs

Movements in provisions in EUR 31 December 2009

31 December 2008

Made

Used

Reversed

Provisions for warranties

70.764

41.422

48.098

64.089

Provisions for legal actions

28.736

20.386

8.350

Provisions for anniversary bonuses

233.250

18.846

18.053

234.043

Provisions for retirement bonuses

677.343

106.651

570.693

124.703

68.483

877.175

Breakdown per type

Provisions for other costs

Total

1.010.093

60.267

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

Provisions are formed in accordance with contracts, legal bases, and expert opinions. The Company reviewed the provisions already made, took account of changes, and decreased total provisions for the purpose of long-term deferred expenses and provisions for long-term accrued costs.

Retirement and anniversary bonus provision On the basis of a calculation for each employee using the projected unit method, prepared by a certified actuary, the Company reduced provisions for retirement obligations and anniversary bonuses at the amount of EUR 105.857.

Operating and other liabilities in EUR Breakdown per type

2009

2008

4.876.644

3.986.937

75.371

19.025

Current operating liabilities based on prepayments

601.788

308.246

Short-term payables to employees

494.982

531.693

Short-term payables to state and other institutions

199.287

230.839

Other short-term payables

465.776

195.131

6.713.847

5.271.871

Short-term trade payables Short-term trade payables to group suppliers

Total

The bases for trade and other liabilities are the original documents that define an event in terms of time and substance.

Off-balance sheet record in EUR Breakdown per type

2009

2008

Mortgages

8.064.130

8.865.579

Other bank guarantees, liens granted and shares

2.498.899

7.498.191

Tax loss

2.309.387

1.547.473

Investment and other reliefs

79.244

49.243

Other

76.725

76.725

Total

13.028.385

18.037.211

83

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Cash flow statement disclosures

84

The Cash Flow Statement was prepared using the indirect method, incorporating data from the Balance Sheet as at 31 December 2009 and 31 December 2008, from 2009’s Income Statement, and the additional data required for the adjustment of inflows and outflows to ensure an adequate breakdown of major items.

Financial instruments risk management Risk exposure and management Currency risks in the Company with regard to the euro were almost entirely excluded. Almost all foreign transactions outside the EMU were made in EUR. The Company is aware of the importance attributed to the regular control and management of the financial risk to which the Company is exposed, and views it as a relevant precondition for successful operations and achieving strategic goals. In 2009, interest rate risk was predominant (high interest rates for new debt). The analysis of these risks resulted in an estimate that interest rate risk was higher due to the new Company short-term borrowings and/or or guarantees issued. The Company also expects these risks to increase in the future as a result of the operations of the parent company and its subsidiaries.

All long-term debt is denominated in euros. Interest rates are based on market principles governing the price of money in the European and local banking market. Interest rate risk has not been hedged thus far, as the Company assessed that the fixed interest rates offered are still above variable rates, and that longterm interest rate change will allow more favourable costs of financing during the borrowing period.

Interest rate risk increased due to the total amount of loans and change in interest rates. The interest rate level was assessed to be acceptable for all long-term loans taken, with its contractually agreed variability, and taking into account their maturity. The downward trends are favourable. The Company’s exposure to interest rate risk is otherwise estimated to be high.

Property and related risk in 2009 was systematically and analytically assigned to insurance companies.

Liquidity risk is low at Cetis in the short term as a result of efficient asset management, adequate credit lines for regulating cash flow, satisfactory financial flexibility, and good access to the necessary financial resources, whereby the Company takes into account the circumstances in the financial environment and financial markets.

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

Financial instruments – credit risk in EUR Breakdown per type Available-for-sale financial assets

2009

2008

11.094.674

12.282.154

57.611

1.231.056

5.318.330

4.179.217

Financial assets at fair value through profit or loss Loans granted Current and non-current receivables Cash and cash equivalents Total

2.930

955.896

16.473.545

18.648.323

The highest credit risk exposure for deposits or loans as at the reporting date by geographical region was as shown in the table below: Book value in EUR Domestic

2009

2008

57.611

662.370

Other European countries Other regions – Africa Total

568.200

57.611

1.230.570

The highest credit risk exposure for trade receivables at the reporting date by geographical region was as follows:

in EUR Domestic Euro zone countries Other European countries Other regions – Africa Total

Book value 2009

2008

3.695.472

3.093.559

352.443

451.789

1.127.977

331.206

142.438

302.298

5.318.330

4.179.217

The highest credit risk exposure for trade receivables at the reporting date by type of customer was as follows: Book value in EUR Wholesale customers

2009

2008

1.178.318

1.117.217

Customers, end users

4.140.012

3.062.000

Total

5.318.330

4.179.217

85

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Impairment losses Trade receivables as at the reporting date: 86 in EUR Non-past-due

Gross

Impairment

Gross

Impairment

2009

2009

2008

2008

4.847.915

Past due 0-30 days

211.561

Past due 31-120 days

164.654

Past due 121-365 days

3.330.897 515.000

4.000

7.264

212.189

15.000

57.761

56.656

123.000

37.000

758.328

657.971

705.466

652.059

6.040.219

721.891

4.886.552

708.059

2009

2008

Balance at 1 January

708.059

926.000

New value adjustments

103.133

58.207

Written-off value adjustments

-54.096

-55.395

Paid written-off value adjustments

-35.205

-220.753

721.891

708.059

More than one year Total in EUR

Balance at 31 December Currency risk

EUR

USD

GBP

CHF

DKK

31.12.2009

Trade receivables

5.279.256

Accounts payable

-4.861.033

-100.913

-11.135

-116.087

Balance sheet gross exposure

418.223

-100.913

-11.135

-116.087

EUR

USD

GBP

CHF

DKK

31.12.2008

-32.582

-977

Secured bank loans

Trade receivables

4.006.651

Accounts payable

-3.977.743

Secured bank loans Balance sheet gross exposure

-4.763

28.908

-4.763

The Company is not exposed to any specific currency risks.

-32.582

-977

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Liquidity risk

31 December 2009 Transaction account (TRR) overdraft Secured short-term bank loans

Contractual

Up to 6

From 6 to

From 1 to

From 2 to

Over 5

value

cash flow

months

12 months

2 years

5 years

years

617.407

-620.918

-620.918

758.000

-760.138

-551.856

-208.282

8.064.130

-8.423.368

-1.344.478

-1.334.882

-2.721.373

-3.022.635

350.000

-350.595

-350.595

6.713.847

-6.713.847

-6.713.847

16.503.384

-16.868.866

-9.581.694

-1.543.164

-2.721.373

-3.022.635

Secured long-term bank loans Other loans Accounts payable and other liabilities TOTAL

Book

3-month Euribor 31 December 2009

0,700

6-month Euribor 31 December 2009

0,993 Book

Contractual

Up to 6

From 6 to

From 1 to

From 2 to

Over 5

31.12.2008

value

cash flow

months

12 months

2 years

5 years

years

Transaction account (TRR) overdraft Secured short-term bank loans

8.655.000

-9.321.000

-1.482.000

-1.432.000

-2.696.000

-3.711.000

Secured long-term bank loans

1.240.000

-1.330.000

-351.000

-979.000

Other loans Accounts payable and other liabilities TOTAL

5.275.651

-5.275.651

-5.275.651

15.170.651

-15.926.651

-7.108.651

-2.411.000

-2.696.000

-3.711.000

3-month Euribor 31 December 2009 6-month Euribor 31 December 2009

2,928 3,000

Interest rate risk As at the reporting date, loan contracts concluded by Cetis, d. d. were with fixed and variable interest rates.

Instruments with a fixed interest rate Instruments with a fixed interest rate Financial assets Financial liabilities Difference

2009

2008

12.736

2.090.960

1.084.187

889.571

-1.071.451

1.201.389

Sensitivity analysis for instruments with a fixed interest rate A change in interest rates by one percentage point as at the reporting date would result in an increase or decrease in equity of EUR 912.

Instruments with a variable interest rate Instruments with a fixed interest rate Financial assets Financial liabilities Difference

2009

2008

8.711.606

10.904.757

-8.711.606

-10.904.757

87

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Sensitivity analysis of cash flow for instruments with a variable interest rate A change in interest rates by one percentage point at the reporting date would result in an increase or decrease in equity of EUR 9.556.

Interest rates used to determine fair value.

Cash, loans, deposits

2009

2008

0,05 % - 7,015 %

0,1 % - 7,015 %

Fair value 88

Overview of fair value and book value of assets and liabilities

Note Available-for-sale investments Loans granted

Book value 31 December 2009

Fair value 31 December 2009

Book value 31 December 2008

in EUR Fair value 31 December 2008

11.094.674

11.094.674

12.282.154

12.282.154

44.876

44.876

333.995

333.995

Non-current operating receivables Investments at fair value through profit and loss Operating and other receivables Short-term loans

5.318.330

5.318.330

4.179.217

4.179.217

12.736

12.736

897.061

897.061

Cash and cash equivalents

2.930

2.930

955.896

955.896

Long-term borrowings

-5.567.754

-5.567.754

-6.064.130

-6.064.130

Short-term borrowings

-4.221.784

-4.221.784

-5.730.199

-5.730.199

Operating and other liabilities

-6.713.847

-6.713.847

-5.271.871

-5.271.871

-29.839

-29.839

1.582.123

1.582.123

Total

Testing financial investments in terms of possible impairment The company performed no investment impairment. Upon acquiring an investment in mutual funds and other investment companies, the Company classifies them as long-term investments if the intention is to own such investment for more than one year. If such investment is listed on the stock exchange, it is entered in the books at fair value; if the investment is not listed, it is valued at cost. When an investment in mutual funds and other investment companies is valued at cost, it is tested five years from the date of acquisition in order to determine if the investment should be impaired.

Such investment is usually impaired if the purchase value in a period of five successive years exceeds the realisable value on the balance sheet cut-off date. When valued at fair value through capital, it is checked five years from the date of acquisition for the probability that such investment needs to be impaired. An investment is usually impaired when its fair value in five successive years is continuously lower than the investment purchase value. Impairment is performed in compliance with IAS 39.

For all other financial investments valued at fair value through capital, verification of possible impairment was performed on the Balance Sheet date, comparing the percentage of decrease in the fair value of a financial investment in the period from the date of its recognition up to the Balance Sheet cut-off date, as well as relative change in the Slovenian Share Index (SBI 20). The amount of investment revaluation that would have to be performed after checking for possible impairment is insignificant.

Loans granted and obtained are valued on the basis of recalculating the repaid value using the effective interest rate, which is the same as the contractual interest rate. Accordingly, the contractual interest rate is used in calculation.

In terms of trade and other receivables, fair value impairment is taken into account for the purpose of claim recovery. In view of their short-term nature, operating and other liabilities are not discounted.

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Other disclosures Disclosure by groups of persons: members of the Management and Supervisory Board. Total remuneration received by groups of persons for the performance of functions or duties in the financial year 2009: - -

Management EUR 118.717; Supervisory Board EUR 21.093.

Gross management member remuneration Gross management member remuneration in EUR in EUR Fixed part of remuneration*

Name and surname of Management member

Variable part of remuneration

Other remuneration of Management members

Stock option and other remuneration

Profit share

89 Total

Management

111.853

111.853

Simona Potočnik

111.853

111.853

* Receipts on the basis of salary, holiday and anniversary bonuses.

Gross management member remuneration - continuation in EUR Name and surname of Management member

Other remuneration (insurance premiums)

Other remuneration (commissions)

Other additional remuneration

6.671

193

Reimbursement of costs

Simona Potočnik

Total

6.864

Gross remunerations of Supervisory Board members in EUR Name and surname of Supervisory Board member

Fixed part of remuneration*

Reimbursement of costs

Variable part of remuneration

Participation in profit

Stock option and other remunerations

Other remuneration of Board member (benefits)

Total

20.169

924

21.093

Borut Bizaj

1.963

184

2.147

Bernard Gregl

2.325

2.325

Franc Ješovnik

2.992

222

3.214

Marko Melik

2.928

2.928

Dušan Mikuš**

4.723

296

5.019

Ljubo Peče**

5.237

222

5.459

Total

*Remuneration from meeting fees. **Includes remuneration from Supervisory Board commissions.

Related-party transactions The transactions between the Company and related parties were based on contracts of sale, whereby market prices of products and services were used.

Events after the balance-sheet date No important events occurred after the balance sheet date.

FINANCIAL REPORT

Cetis group financial report Independent auditor’s report

90

Cetis, d. d.

Annual Report 2 0 0 9

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Consolidated income statement

Notes

2009

in EUR 2008

1.

REVENUE

1

34.381.966

35.966.704

2.

Cost of goods sold

2

-2.814.796

-4.912.989

3.

Production costs

2

-21.828.442

-20.654.578

4.

Cost of goods sold and production costs

2

-24.643.238

-25.567.567

A.

GROSS PROFIT

9.738.728

10.399.137

5.

Other income (from operations)

3

1.552.204

1.202.812

6.

Distribution costs

2

-5.163.218

-5.777.094

7.

Administrative expenses

2

-6.697.817

-6.704.880

8.

Other expenses (from operations)

2

-193.095

-287.480

-10.501.925

-11.566.642

-763.197

-1.167.505

= Other income, expenses and costs (5+6+7+8)

B.

OPERATING PROFIT OR LOSS EXCLUDING FINANCE COSTS

9.

Finance income

4

1.372.155

2.425.353

Finance cost

4

-601.168

-1.195.008

770.986

1.230.345

7.789

62.840

-102.197

-12.393

109.986

75.233

10.

C.

NET FINANCE COSTS

D.

PROFIT (LOSS) BEFORE TAX

11.

E.

Income tax expense

5

NET PROFIT AFTER TAX

Profit attributable to minority interest

Profit attributable to majority owner

Basic and diluted earnings per share (in EUR)

-11.065

109.986

86.298

0,55

0,38

22

Statement of comprehensive income in EUR

Net profit or loss for the period

2009

2008

109.986

75.233

Other comprehensive income in the period:

Gains on revaluation of intangible assets and property, plant and equipment

534.680

-1.917.176

-9.018

-118.555

Gains on revaluation of available-for-sale financial assets Gains and losses from currency translation differences for financial statements of companies abroad Actuarial gains and losses of programs with defined benefits Other components of comprehensive income

Total other comprehensive income for the period

525.662

-2.035.731

Total comprehensive income for the period

635.648

-1.960.498

Attributable to:

- majority owners

635.648

-1.971.580

- minority interest

11.083

91

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Consolidated balance sheet

in EUR 92

Notes

31 December 2009

31 December 2008

ASSETS

1.

Property, plant and equipment

8

19.699.237

22.407.618

2.

Intangible assets

9

3.022.390

2.489.411

3.

Investment property

7

429.226

203.129

4.

Investments in group companies

5.

Investments in associates

10

1.274.796

6.

Investments available for sale

11

11.099.910

13.442.599

7.

Loans

12

58.301

333.995

8.

Non-current operating receivables

13

9.

Deferred tax assets

14

SA.

Total non-current assets

537.266

742.717

36.121.125

39.619.470

0.

Non-current assets held for sale

15

2.296.668

2.381.259

1.

Inventories

16

3.439.807

3.750.321

2.

Current investments at fair value

17

3.

Short-term loans

18

145.513

1.073.867

4.

Operating and other receivables

19

7.094.215

6.616.581

Cash and cash equivalents

20

6.

SB.

S.

Total current assets

TOTAL ASSETS

263.642

1.041.656

13.239.845

14.863.684

49.360.970

54.483.154

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

in EUR

Notes

31 December 2009

31 December 2008

EQUITY

1.

Issued capital

21

10.015.023

10.015.023

2.

Share premium

21

17.538.831

17.859.379

3.

Reserves (legal and statutory)

21

2.032.352

1.926.717

4.

Retained earnings from previous periods

21

183.200

Retained earnings for the period

21

86.298

5.

Treasury shares

21

-1.025.918

-26.001

6.

Fair value reserve

21

-1.041.797

-1.576.477

(Consolidated) equity revaluation adjustment

-35.677

-26.659

- from capital

-36.909

-27.811

- from profit

1.232

1.152

KO.A

Minority interest capital Total equity

4.900

53.382

27.487.715

28.494.863

1.

Borrowings

23

2.

Non-current operating liabilities

24

5.379

26.432

3.

Provisions

25

925.823

1.069.966

- for guarantees

64.089

70.764

- for lawsuits

8.350

28.736

- for anniversary bonuses and retirement bonuses

849.095

947.344

- other long-term provisions

5.

Deferred tax liabilities

KO.B.a)

14

Total non-current liabilities

7.559.636

8.769.779

4.289

23.122

5.744

310.195

8.496.582

10.176.372

1.

Borrowings

23

4.627.149

8.615.088

2.

Operating and other liabilities

26

8.749.523

7.196.831

Total current liabilities

13.376.672

15.811.919

Total liabilities

21.873.254

25.988.291

KO.B.b) KO.B

KO.

TOTAL EQUITY AND LIABILITIES

49.360.970

54.483.154

Off-balance sheet assets (liabilities)

27

14.257.113

23.172.182

93

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Consolidated cash flow statement

in EUR

94 A.

Cash flows from operating activities

a)

Net profit or loss

2009

2008

Profit / loss before tax

-451.054

131.110

Income tax and other taxes not included in operating expenses

-207.486

51.484

-658.540

182.594

b)

Adjustments for

Depreciation and amortisation

3.541.901

4.087.321

Operating revenue from revaluation of investment and financing items

-510.023

-244.918

Operating expenses from revaluation of investment and financing items

100.442

78.118

Finance revenue, excl. finance revenue from operating receivables

-351.410

-2.352.772

Finance expenses, excl. finance expenses from operating receivables

710.184

1.547.486

3.491.094

3.115.235

c)

Changes in net current assets (and accruals, provisions and deferred tax receivables and liabilities) of operating Balance Sheet items

Opening less closing operating receivables

Opening less closing deferred costs and accrued revenue

Opening less closing deferred tax receivables

Opening less closing assets (groups for disposal) for sale

Opening less closing inventories

d)

-2.120.732

2.557.204

-44.178

-4.178

85.108

-2.296.668

337.601

440.511

Closing less opening operating debts Closing less opening accrued costs/expenses and deferred revenue, and provisions Closing less opening deferred tax liabilities

3.069.775

-3.759.499

-200.976

-366.626

Excess operating proceeds or excess operating expenditure (a + b + c)

1.126.599

-3.429.256

3.959.152

-131.427

B.

Cash flow from investing activities

a)

Proceeds from investing activities

329.970

767.977

Interest received and shares in profit received, relating to investing activities

Proceeds from sale of intangible assets

Proceeds from sale of property, plant and equipment (PPE)

80.409 3.856.008

3.161.201

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

in EUR

Proceeds from sale of investment property

Proceeds from sale of long-term investments

Proceeds from sale of short-term investments

b)

Expenditure in investing activities Purchase of intangible assets

Purchase of property, plant and equipment

Purchase of investment property

Purchase of long-term investments

Purchase of short-term investments

Excess proceeds from investing activities or excess expenditure from investing activities (a + b)

2008

28.343

2.531.322

324.760 4.619.490

c)

2009

C.

Cash flow from financing activities

a)

Proceeds from financing activities

6.460.500

-938.992

-511.938

-2.135.132

-995.200

-228.324

-129.766

-3.302.449

-1.636.904

1.317.042

4.823.596

Proceeds from paid-up capital

Proceeds from increase in long-term financial liabilities

1.537.922

Proceeds from increase in short-term financial liabilities

1.772.130

b)

142.740

142.740

3.310.052

-663.706

-1.061.076 -5.408.029

Expenditure in financing activities

Interest paid in relation to financing activities

Repayment of capital

Repayment of long-term financial liabilities

-3.712.442

Repayment of short-term financial liabilities

-1.579.807

Dividends and other shares in profit paid

Excess financing proceeds or excess financing expenditure (a + b)

c)

-237.097

-1.499.179

-6.193.052

-7.968.284

-6.050.312

-4.658.232

Č.

Cash at end of period

263.642

1.041.655

x)

Cash for the period (sum of Ac, Bc and Cc excesses)

-774.118

33.937

y)

Cash at beginning of period

1.037.756

1.007.718

95

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Consolidated statement of changes in equity

96

Issued capital

Share premium

A1.

Balance at the end of previous reporting period, at 31 December 2007

10.015.023

17.859.379

A2.

Opening balance for reporting period, at 1 January 2008

10.015.023

17.859.379

10.015.023

17.859.379

10.015.023

17.859.379

10.015.023

17.859.379

B1.

Changes in equity

B2.

Total comprehensive income for the reporting period at 31 December 2008

Entry of net profit or loss

Change in surplus from revaluation of investments Gains and losses from translation of financial statements of companies abroad (currency translation) Movements in equity Allocation of part of net profit to form additional reserves pursuant to AGM decision Other movements in equity Closing balance for reporting period, at 31 December 2008 Balance at the end of the previous reporting period, at 31 December 2008

B3.

C. A1.

A2.

B1.

Retroactive adjustments Opening balance for reporting period, at 1 January 2009 Changes in equity

Entry of called-up share capital

Purchase of treasury shares and own business shares

B2.

Other movements in equity Total comprehensive income for the reporting period at 31 December 2009

Entry of net profit or loss

Gain on the revaluation of investments Gains and losses from translation of financial statements of companies abroad (currency translation) Movements in equity Allocation of part of net profit to form additional reserves pursuant to AGM decision Covering loss as deductible equity item

B3.

C.

-320.547

Other movements in equity Closing balance for reporting period, at 31 December 2009

10.015.023

17.538.832

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

in EUR Consolidated equity revaluation adjustment

Treasury shares

Retained profit

Fair value reserve

1.900.716

-26.001

306.284

340.699

30.396.100

30.396.100

1.900.717

-26.001

306.284

340.699

30.396.100

30.396.100

-27.745

-1.917.176

-26.659

86.299 -1.917.176 -114.044 26.001

-9.041

26.001

-26.001

Majority owner capital

Minority interest capital

97

Legal and statutory reserves

-1.971.580

11.083

86.299

-11.065

16.960

-1.960.497 75.234 -1.917.176

-1.917.176 -26.659

Total equity

-140.703

22.148

-118.555

16.960

42.299

59.259

16.960

42.299

59.259

1.926.718

-26.001

269.498

-1.576.477

-26.659

28.441.480

53.382

28.494.862

1.926.718

-26.001

269.498

-1.576.477

-26.659

28.441.480

53.382

28.494.862

-329.363 1.926.718

-26.001

-59.865

-999.918

-105.143

-329.363

-329.363 -1.576.477

-26.659

28.112.117

53.382

28.165.499

-1.105.061

-48.482

-1.153.543

4.900 -999.918 -105.143 109.985

534.680

105.143 635.647

635.647

109.985

109.985

534.680

534.680

-9.018

-9.018

-159.890

-159.890

534.680 -9.018 55.023

100.703

-100.703

-53.382

51.761

 -9.018

109.985

105.634

4.900 -999.918

-999.918

320.547 4.931 2.032.352

-164.821 -1.025.919

-159.890

-159.890 -1.041.797

-35.677

27.482.813

4.900

27.487.713

The Management of Cetis approves the consolidated financial statements and notes thereto for the financial year ended 31 December 2009.

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Statement of management responsibility

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The Management is responsible for the preparation of consolidated financial statements, thus presenting a true and fair view of the state of affairs at the end of the financial year, and of profit or loss for the period.

The Management confirms that suitable accounting policies have been consistently applied, and that the accounting estimates are reasonable and prudent. The Management also confirms that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on a going concern basis.

The Management recognises its responsibility for keeping proper accounting records, the adoption of appropriate measures for the safeguarding of the Company’s assets, and the prevention and detection of fraud, and other irregularities.

April 2010

Simona PotoÄ?nik, MSc, General Manager

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Summary of significant accounting policies and notes to the financial statements

1. Group profile The Group’s core business is the provision of comprehensive solutions in the field of communications through printed media and other types of media. The corporate vision is of the company as the leading company of its type in Slovenia, with appropriate developmental, investment and marketing activities and the best qualified staff, looking ahead to increase its market share outside Slovenia as well. The Company offers a programme of diversified printed matter, such as security, variable and commercial printed matter, graphic design, including accessory services, such as the personalisation of documents, the implementation and personalisation of micro chips or magnetic tapes, archiving, identity management and consultancy, project management, and other services.

The Group’s consolidated financial statements for the year that ended on 31 December 2009 are for the Company and its subsidiaries, as well as the Group’s stakes in associates. Consolidation for the companies Cetis Print, d.o.o., Beograd, Cetis direkt, d.o.o., Celje and Cetis-Zg, Printing and Enveloping, d.o.o., Sveta Nedelja was performed on the basis of the simultaneous consolidation method.

The group comprises Parent company share in equity

Company equity in EUR

Company profit or loss in EUR

Cetis-ZG, d.o.o., Zagreb

100 %

2.327.436

504.458

Cetis Print, d.o.o., Beograd (100% owned by Cetis-ZG, d.o.o.)

100 %

117.351

-8.356

100 %

622.775

213.619 -717

Cetis, d. d.

AMBA Co., d.o.o., Ljubljana La Societe Nationale des Loteries Sportives (SNLS), Gabon

93,63 %

Cetis Direkt, d.o.o. Celje (100% owned by Cetis-ZG, d.o.o., Zagreb)

100 %

129.283

Cetis MKD, d.o.o. Skopje (51% owned by Cetis d. d. and Cetis-Zg d.o.o.

Cetis-Zg Printing and Enveloping, d.o.o. Sveta Nedelja (100% owned by Cetis-ZG, d.o.o.)

51 %

10.000

100 %

2.740

-68

Company La Societe Nationale des Loteries Sportives, Gabon is classified to non-current assets available for sale and is not active, thus no consolidated financial statements were prepared as at 31 December 2009, and consequently the company was not included in consolidated financial statements. The conclusion was that the statements, due to the inactivity of the company, compared to 2007 when the Company assessed the importance of the investment share, did not share. Therefore according to Group policies, the investment represents an insignificant share and does not need to be included in the consolidated financial statements.

Associates Company

Ownership share in%

Druckman, Hungary – the company is not active

33 %

Duf Euroinvestment d. d. Tuzla

27 %

Company’s own capital (in EUR)

Company profit or loss (in EUR)

559.337

57.875

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2.

Basis for preparation of consolidated financial statements

a)

Statement of compliance

The 2009 consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the interpretations by the IFRS Interpretations Committee (IFRSIC), as adopted by the European Union.

100

The Company Management approved the consolidated financial statements on 7 April 2010. b)

Basis for measurement

2009’s consolidated financial statements were prepared on a historical cost basis, except for the following cases that were measured at fair value: •

financial instruments at fair value through profit or loss, • available-for-sale financial assets • investment property.

The methods used to measure fair value are described below. c)

Functional and presentation currency

The consolidated financial statements are presented in euros (EUR), i.e. the functional currency of the Company. d)

Use of estimates and judgements

The preparation of consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) requires the Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts for assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions need to be reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, and in any future periods affected.

3. Relevant accounting principles applied The accounting policies set out below have been applied consistently by Group companies for all periods presented in these consolidated financial statements. a) Basis for consolidation Subsidiaries Subsidiaries are entities, indirectly or directly controlled by the parent company. Control exists

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when the parent company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. When assessing the impact, the existence and effect of potential voting rights that are currently exercisable or convertible should be considered. The financial statements for subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases, based on the full consolidation method. When required, the accounting policies of subsidiaries have been modified or adapted to those of the Group.

Associates and joint ventures (jointly controlled entities accounted for using the equity method) Associates are those entities in which the parent company has indirectly or directly a significant influence, but not control, over the financial and operating policies. A significant influence exists if a parent company indirectly or directly holds from 20 to 50 per cent of votes in another entity.

Associates are accounted for using the equity method. Upon initial recognition, they are measured at historical cost. The Group’s investment comprises goodwill established upon acquisition, and net value of losses incurred due to impairment.

The consolidated financial statements include the Group’s share in profits and losses of associates, calculated using the equity method, after the alignment of accounting policies, from the date that significant influence commences until the date that it ceases. When the Group’s share of losses in a jointly controlled entity exceeds its share in the entity, the book value of that share (including all long-term investments) is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of a jointly controlled entity.

Transactions eliminated on consolidation Any balances, income and expenses, and unrealised gains and losses arising from intra-group transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same manner as unrealised gains, providing that there is no evidence of impairment. b)

Foreign currency

Transactions in foreign currency Any transactions disclosed in foreign currency are converted into the relevant functional currency of Group companies at the exchange rate applicable on the date of transaction.

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Assets and liabilities expressed in a foreign currency are translated into EUR on the date of the event, and at the end of the accounting period, using the reference exchange rate (ECB) of the Bank of Slovenia.

Monetary assets and liabilities stated in a foreign currency on the balance sheet date are translated into the functional currency at the applicable exchange rate. Foreign exchange gains or losses are the differences between the amortised cost in the functional currency at the beginning of the period, adjusted by the amount of effective interest and payments made during the period, as well as the amortised cost expressed in a foreign currency and translated at the exchange rate applicable at the end of the period. Non-monetary assets and liabilities stated in a foreign currency and measured at fair value are translated into the functional currency at the exchange rate effective on the date when the fair value was set. Foreign exchange gains and losses are recognised in the Income Statement.

Foreign entities Assets and liabilities of foreign entities are translated into EUR at the exchange rate effective on the balance sheet date. Revenues and expenses of foreign entities are translated into EUR at average exchange rates effective on the date of conversion. c)

Financial instruments

Non-derivative financial instruments Non-derivative financial instruments include investments in equity and debt securities, trade and other receivables, cash and cash equivalents, borrowing and loans, operating and other liabilities.

Non-derivative instruments are initially recognised at fair value, increased by costs directly attributable to the transaction. Subsequent to the initial recognition, non-derivative financial instruments are measured as follows.

Cash and cash equivalents are comprised of cash in hand and on demand deposits. Bank overdrafts that are repayable on demand and form an integral part of cash management are included as a component of cash and cash equivalents in the Cash Flow Statement.

The accounting of finance income and finance costs is discussed in Point m) – Finance income and finance costs.

Financial assets available for sale The Group’s investments in equity securities and certain debt securities are classified as availablefor-sale financial assets. Subsequent to the initial

FINANCIAL REPORT

recognition, these investments are measured at fair value. Changes in fair value, except for impairment loss, are directly recognised in equity. When an investment is derecognised, the related gain or loss in equity is transferred to profit or loss.

Investments at fair value through profit or loss An instrument is classified at fair value through profit or loss if it is held for trading, or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group is able to manage such investments, as well as make purchase and sales decisions based on their fair value. Upon initial recognition, the attributable costs of a transaction are recognised in profit or loss when incurred.

Financial instruments at fair value through profit or loss are measured at fair value, and a change in fair value is recognised in profit or loss.

Other Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Share capital Ordinary stocks or shares Ordinary stocks or shares form an integral part of share capital.

Share buybacks When treasury shares are repurchased, the amount of consideration paid, including directly attributable costs, and excluding the potential tax effect, is recognised as a change in equity. The shares bought back are classified as treasury shares and deducted from equity. Upon sale of treasury shares, the amount received is recognised as an increase in equity; a transaction’s surplus or loss is recognised in equity. d) Property, plant and equipment Presentation and measurement Items of property, plant and equipment are recognised at cost, less accumulated depreciation and accumulated impairment loss. At the date of transition to IFRS, property, plant and equipment were carried at their hypothetical cost at 1 January 2005.

Cost includes expenditure that is directly attributable to the acquisition of an asset. The cost of self-constructed assets includes the cost of materials, direct labour costs and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the

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assets and restoring the site on which they are located. Purchased software that is integral to the functionality of related equipment is capitalised as part of that equipment. Borrowing costs related to the purchase of and/or the construction of property are recognised in the profit or loss as incurred.

102

Parts of an item of property, plant and equipment with different useful lives are accounted for as separate items of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between the proceeds from disposal of the item compared to the carrying amount, and are recognised among ‘other operating income’ in the Income Statement.

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Subsequent costs related to property, plant and equipment The cost of replacing a part of an item of property, plant and equipment is recognised in the book value of the item if it is probable that future economic benefits related to that part will flow to the Group, and its purchase value can be reliably measured. All other costs, such as day-to-day servicing, are accounted for in profit or loss when incurred.

Depreciation Depreciation is calculated on a straight-line basis over the useful life of each asset. Land is not depreciated.

Amortisation rates are based on the useful life of assets: In years min.

In years max.

Investment property

20

40

Buildings

20

40

Equipment for graphic activity

3

20

Laboratory equipment

3

10

Vehicles

5

8

Telephony

3

5

Furniture

5

6

Typewriters, computer equipment

3

8

Computer equipment for fire safety

3

3

Measurement and control appliances

4

6

Useful life is determined and examined in accordance with the Rules on Accounting and Finance.

Depreciation methods, Useful Life and Residual Value, are reviewed as on the reporting date, in accordance with the Rules on Accounting and Finance. e)

Intangible assets

Goodwill Goodwill (badwill) arises upon the acquisition of subsidiaries, associates and joint ventures.

Acquisitions as from date of transition to IFRS. In acquisitions made on or after 1 January 2006, goodwill is defined as the surplus or difference

between the purchase price and the Group’s share in the net fair value of identified assets, liabilities and contingent liabilities of the acquired company.

If the surplus is negative (badwill), it is directly recognised in the Income Statement.

Subsequent measurement Goodwill is carried at cost, reduced by any accumulated impairment losses. For the recipient of investments calculated on the basis of the equity method, the book value of goodwill is included in the investment book value.

Research and development Expenditure on research activities in order to obtain new scientific and professional knowledge and understanding is recognised in the Income Statement as part of Expenditure when incurred.

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Development activities embody plans or designs for the production of new or substantially improved products and processes. An expense for development is recognised if it can be reliably measured, if the product or process is technically and operationally feasible, if there is a potential for future economic benefits, if the Group has adequate resources for the completion of development, and if it intends to use or sell such assets. Recognised expenditure is comprised of materials costs, direct labour costs, and other costs which can be directly attributed to readying the asset for its intended use.

Borrowing costs related to asset development and other expenditure are recognised in the Income Statement when incurred.

Capitalised development expenditure is measured at cost, less accumulated amortisation and incurred impairment losses.

Other intangible assets Other intangible assets acquired by the Group, which have finite useful lives, are measured at cost, less accumulated depreciation expense and incurred impairment losses.

other assets owned by the Company. Investment property is defined as: •

• •

•

•

land owned to increase the value of a longterm investment, and not for sale in the near future as part of regular business operations, land for which the Company has not determined its future use; building owned or on financial lease, which is leased out on the basis of a single or multiple operational lease; vacant building owned on the basis of single or multiple operational lease, and in cases when, with regard to asset determination, a part of property is investment property and the other part a tangible fixed asset, where they cannot be sold separately, the whole asset is determined as an investment property if the part which is a tangible fixed asset is insignificant; otherwise, the whole asset is recognised as a tangible fixed asset. Whether the proportion is significant or not is determined by the competent employee for the area.

Subsequent expenditure

Recognised value measurement

Subsequent expenditure related to intangible assets is capitalised only when it increases the future economic benefits arising from the specific asset to which it relates. All other expenditure is recognised in the income statement as expenditure when incurred.

The Company measures investment property based using an historical cost model.

The historical cost of purchased investment property is comprised of its purchase price and all directly attributable costs. Directly attributable costs include, for example, attributable fees for legal services, tax on property transfer, and other costs of the transaction.

The historical cost of a property constructed by the Company is comprised of its cost to the date when construction or development was completed.

On that date, the property becomes investment property.

Amortisation Amortisation is calculated on a straight-line basis over the useful life of intangible assets.

Amortisation of assets begins when the asset is available for use. The estimated useful life for the current and comparative periods are accounted for as follows.

Amortisation rates are based on the useful life of assets:

Intangible assets

f)

In years min

In years max.

3

10

Investment property

Investment property is property owned in order to generate rent or increase the value of a long-term investment, or both. Investment property therefore creates cash flow which is highly independent of

Disposals Investment property ceases to be recognised upon disposal, or when it is permanently withdrawn from use and no future economic benefit can be expected from its disposal.

Profit or loss from the discontinuation or disposal of investment property has to be established as the difference between net gains upon disposal and the book value of assets, and recognised in the Income Statement.

Depreciation Investment property is depreciated at the same rate as real property used by the company. The method for determining its useful life is the same as that used to determine the useful life of property, plant and equipment.

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g) Leased assets Leases, whereby the Group assumes all of the essential risks and rewards of ownership, are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the fair value or the present value of the minimum sum of lease payments, whichever is lower. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

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available for sale is calculated with reference to its current fair value.

Significant financial assets are evaluated for impairment on an individual basis. Remaining financial assets are collectively assessed for impairment within groups that share similar credit risk characteristics.

All impairment losses are recognised in the Income Statement for the period. Any current loss in respect of a financial asset which was not recognised directly in equity is transferred to profit or loss.

h) Inventories Inventories are measured at historical cost or net realisable value, whichever is lower. The cost of inventories is based on the First-In-First-Out method (FIFO), and includes expenditure incurred in the acquisition of inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In terms of finished products and work in progress, cost includes an appropriate share of production overheads based on the normal use of production assets.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs of sale.

The realizable value of individual inventories is primarily checked as on the Balance Sheet date.

All inventories older than one year are assessed to have a realizable value of zero. For raw material inventories, subsidiary discrepancy accounts are prepared and attributed to operational expenses from the revaluation of current assets, and the product and goods inventories of subsidiary discrepancy accounts are attributed to operational expenses.

An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and financial assets available for sale that are debt instruments, reversal of impairment is recognised in profit or loss. For available-for-sale financial assets that are equity securities, an impairment loss cannot be reversed through profit or loss.

Non-financial assets At each reporting date, the book value of the non-financial assets of the Group, other than inventories and deferred tax assets, is examined to discover any indication of impairment. If there is such an indication, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated at each reporting date.

Financial assets A financial asset is assessed by the Group at each reporting date to determine whether there is any objective sign that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flow arising from that asset.

The recoverable amount of an asset or cashgenerating unit is its value in use or its fair value, less sales cost, whichever is higher. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessment of the time value of money, and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the group of assets that generates cash inflows from continued use that are largely independent of the cash inflows resultant on assets or groups of assets (“cash-generating units�).

The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash-generating units that are expected to benefit from the synergy of the combination.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flow, discounted at the original effective interest rate.

An impairment loss in respect of a financial asset

An impairment is recognised if the book value of an asset or a cash-generating unit exceeds its recoverable amount. Impairment is recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are first allocated to reduce the book value of any goodwill allocated

i)

Asset impairment

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to the units and then to reduce the book value of other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each balance sheet date for any indications that the loss has decreased or no longer exists.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s book value does not exceed the book value that would have been determined, net depreciation or amortisation, if no impairment loss had been recognised in previous periods. j)

Employee benefits

Other long-term employee benefits The net liability of the Group that arises in connection with long-term employee benefits is a sum of future benefits paid to employees in exchange for their work performed in the current and previous periods. Any actuarial gains and losses are recognised in the profit or loss in the period in which they occur.

Short-term employee benefits Liabilities for short-term employee benefits are measured on an undiscounted basis and are accounted for when the employee’s work related to a short-term return is provided.

The liability is disclosed at the amount for which payment is expected in the form of a premium, payable within twelve months after the expiry of the period of performing the work, or a profit distribution scheme, if the Group has a present legal or constructive obligation to make such payments due to previous work performed by the employee and such obligation can be measured reliably. k) Provisions A provision is recognised if, as a result of a past event, the Group has current legal or constructive obligations that can be estimated reliably, and it is probable that an outflow of factors enabling economic benefits will be required to settle the obligation. Provisions are determined by discounting expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Warranties for products and services A provision for product and service warranties is recognised when the underlying product or service is sold. This provision is based on historical warranty data, and an assessment of all possible outcomes against their associated probabilities. l)

Revenue

Revenue from products sold Revenue from product sales is measured at fair value of the consideration received or the related receivables, net returns and price reductions, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer; when certainty exists regarding recovery of the consideration and the associated costs or possible return of goods, and when there is no further Group involvement with the products sold; and when the level of revenue can be reliably measured.

Transfers of risk and reward vary and are dependent on the individual terms of the contract of sale. For the sale of goods, transfer usually occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon loading onto the relevant carrier.

Supplied services revenue Revenue from services rendered is recognised in the Income Statement in proportion to the stage of completion of the transaction as at the reporting date. The stage of completion is assessed with reference to surveys of work performed.

Rental income Rental income is recognised in income on a straight-line basis over the term of the lease. m) Finance income and finance costs Finance income comprises interest income on funds invested (including financial assets available for sale), dividend income, gains from the disposal of available-for-sale financial assets and changes in the fair value of financial assets held for trading through profit or loss, which are recognised in the Income Statement. Interest income is recognised as it accrues through profit or loss, using the effective interest method.

Dividend income is recognised in the Income Statement on the date that the shareholder’s right to receive payment is exercised; in the case of quoted securities, this is usually the ex-dividend date.

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Finance costs are comprised of borrowing costs, dividends on preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets that are recognised in the Income Statement. All borrowing costs are recognised in the Income Statement, using the effective interest method.

Exchange gains and losses are disclosed in net amounts.

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time the liability to pay the related dividend is recognised. o) Basic earnings per share The Group presents basic earnings per share data for its ordinary shares. The basic earning per share is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in the business year.

Diluted earnings per share are identical, as the Group holds neither any preference nor convertible shares.

n) Income tax p) Segment reporting Corporate tax is comprised of current and deferred tax. Corporate tax is recognised in the Income Statement, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable profits for the financial year, using taxation rates enacted or substantively enacted as at the reporting date, and any adjustment to tax payable in respect of previous years.

A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.

The Group’s segment reporting is based on business segments.

Deferred tax is recognised using the balance sheet liabilities method, taking into consideration temporary differences between the book value of assets and the liabilities for financial reporting purposes, and the amount used for taxation purposes. All temporary differences are taken into consideration. Deferred tax is recognised as the amount expected to be paid upon reversal of temporary differences, in compliance with laws enacted or substantively enacted on the reporting date.

Inter-segment pricing is determined on an arm’s length basis.

The Group offsets deferred tax assets and liabilities if it is legally entitled to offset recognised assessed tax assets and liabilities, and if they refer to corporate income tax that belongs to the same tax authority in relation to the same taxable unit; or different taxable units that are intended for the settlement of assessed tax assets and tax receivables with the difference, or either simultaneously realise the assets and settle the liabilities.

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes for groups of assets based on the methods below.

When applicable, further information on the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

a) Property, plant and equipment

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which a deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the taxation benefit related to an asset will be realised.

Additional income tax that arises from the distribution of dividends is recognised at the

Segment profit or loss, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated to a segment on a reasonable basis. Unallocated assets include investments, whereas unallocated liabilities include capital.

4. Determination of fair value

The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The fair value of property is the estimated value for which the property could be exchanged on the appraisal date, and following

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adequate marketing between a willing buyer and a willing seller in an arm’s length transaction, wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipment is based on the offered market price of similar items.

FINANCIAL REPORT

This section deals with the Group and its exposure to the above risks, its objectives, policies and procedures for risk measurement and management, and its equity management.

Management is entirely responsible for designing the framework for the Group’s risk management.

b) Intangible assets The fair value of intangible assets is determined as the expected present value of estimated future cash flows originating from their use and eventual sale. c)

Inventories

The fair value of inventories in business combinations is determined on the basis of their expected sales value achieved in ordinary business operations, reduced by the estimated cost of completion and the estimated costs of sale and an adequate margin related to the work for completion and sale of inventories. d) Investment in equity and debt securities The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined with reference to their quoted bid price as on the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only. e) Operating and other receivables The fair value of operating and other receivables is calculated as the present value of future cash flows, discounted at the market rate of interest as on the reporting date. f)

Non-derivative financial liabilities

Fair value, which is specified for reporting purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest as on the reporting date. For finance leases, the market interest rate is determined with reference to similar lease agreements.

5. Financial risk management The Group is exposed to the following risks arising from financial instruments: • credit risk • liquidity risk • market risk.

Risk management policies are designed to identify and analyse risks that can pose a threat to the Group. On this basis, appropriate restrictions and controls are determined, and risks are monitored and restrictions considered. Risk management policies and systems are subject to regular review, and updated information regarding market conditions and the activities of the Group is therefore regularly communicated. The Group endeavours, through training, risk management standards and procedures to develop a disciplined and constructive environment in which all employees are aware of their role and obligations.

Credit risk Credit risk is the risk of suffering financial loss when any of the Group’s clients or parties to a financial instrument contract fail to meet their contractual obligations. Credit risk mainly occurs in relation to the Group’s trade receivables and investment securities.

Operating and other receivables The Group’s exposure to credit risk mainly depends on individual client characteristics. The demographics of the Group’s client base, as well as payment risk in terms of the branch of industry or country in which a client operates does not have such a strong impact on credit risk. Approximately 2.5% of Group’s revenues may be attributed to sales transactions with one client alone. In geographical terms, there is no credit risk concentration.

The Group shapes its credit policy on the basis of a creditworthiness analysis of each new client, which is made before the Group offers them its standard payment and delivery terms and conditions. The client review includes any external evaluations, if available, and in certain cases, bank references.

Purchase limits – determined in the form of a maximum outstanding amount – are separately set for each client and reviewed every three months.

Any transactions with a client not meeting the standard creditworthiness test are carried out solely through advance payments.

Ownership is retained in goods until they have been paid for in full. In the event of non-payment for goods, the Group’s claim is therefore secured.

As for operating and other receivables, the Group requires no surety.

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The Group forms value adjustments for the amount of impairment, representing the amount of estimated losses arising from trade and other receivables, as well as investments. The main elements of these value adjustments are a special portion of the loss related to individual key risks, and the total loss, formed for groups of similar assets due to incurred losses not yet defined. The value adjustment for the total amount of loss is determined by taking into account historical data related to payment statistics for similar financial resources.

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Value adjustments for trade receivables are made on the basis of an analysis with regard to recovering each receivable. Adjustment is based on receivables which remain unpaid 90 days after maturity.

Investments The Group reduces its credit risk exposure through investments in the liquid securities of contractual parties with adequate credit ratings.

Guarantees In accordance with its policy, the Group provides financial guarantees or sureties solely to subsidiaries fully owned by the controlling company. As of 31 December 2009, the Group records granted guarantees under off-balance sheet items.

Liquidity risk Liquidity risk is the risk arising from the Group’s inability to meet its financial obligations when they fall due. The Group manages to ensure the highest possible liquidity by always having sufficient liquid assets available to settle its obligations within the set time limits, both under normal and stressful circumstances, without incurring unacceptable losses or risking harm to the Group’s reputation.

The valuation of products and services is based on activities aimed at monitoring the Group’s cash flow needs and optimising the return on investments.

The Group also ensures it has sufficient cash (sight deposits) to cover operating expense for a period of 60 days, including servicing financial liabilities; the latter excludes any potential consequences of unpredictable extraordinary circumstances, such as natural disasters.

Market risk Market risk is the risk resultant on changes in market prices, such as exchange rates, interest rates and equity instruments that may affect the Group’s revenues or the value of financial instruments.

The objective of market risk management is the management and control of market risk exposure within reasonable limits, whilst optimising profit.

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The Group trades in financial instruments, and assumes financial obligations, both with the aim of managing market risks. All these transactions are carried out in compliance with the Group’s policies. In order to reduce fluctuations in profit or loss to the lowest possible level, the Group makes sustained efforts to use accounting treatment for risk protection purposes.

Currency risk The Group is exposed to currency risk in the spheres of both purchasing and sales - namely in transactions in currencies that are not functional currencies of Group companies. The Group conducts most of its transactions in EUR, HRK, USD, RSD, GBP, CHF, CFA and DKK. As far as borrowing is concerned, transactions are carried out in euros.

The Group has undertaken no special hedging against currency risks.

Interest rate risk The Group is exposed to interest rate risks, since a variable interest rate applies to most of its financial liabilities. The Group has thus far had no specific hedging against changes to interest rates.

Capital management The Management Board has made a decision to keep a large volume of capital, in order to maintain the confidence of investors, creditors and the market, and the sustainable development of the Group. The Supervisory Board monitors the return on equity defined by the Group as basic earnings divided by average equity, less net profit for the financial year.

During the reporting year, no change related to capital management occurred in the Group.

Neither the parent company nor its subsidiaries were subject to capital requirements determined by external bodies.

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FINANCIAL REPORT

Annual Report 2 0 0 9

6. Segment reporting in EUR Breakdown per segment

Security printed matter 2009

2008

Net sales revenue

13.812.202

Commercial printed matter 2009 2008

Other

Total

2009

2008

2009

2008

10.644.403

17.595.656

17.403.751

2.974.109

7.918.550

34.381.966

35.966.704

Net profit or loss Assets by business segment Unallocated assets

-714.553

-647.237

17.374

186.353

-66.018

-130.117

-763.197

-591.000

12.522.779

12.795.179

18.927.454

19.274.750

5.534.072

8.970.626

36.984.304

41.040.555

12.374.706

13.442.599

Total assets

12.522.779

12.795.179

18.927.454

19.274.750

5.534.072

8.970.626

49.359.010

54.483.154

Total liabilities

7.209.740

7.508.270

11.193.071

12.575.346

3.468.484

5.721.669

21.871.295

25.805.285

Investments Amortisation and depreciation

1.717.659

524.731

1.299.121

882.875

285.668

397.395

3.302.449

1.805.000

1.202.027

1.422.453

1.792.767

1.790.318

508.278

907.029

3.503.072

4.119.800

Sales revenue stated under ‘Other’ is comprised of revenue from material, merchandise and fixed assets sales.

The Group does business mainly in Europe, which is why it does not report by geographical segment.

109

FINANCIAL REPORT

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Parallel connection between these three dimensions is a compass enabling us to make links in order to advance and develop in time.

110

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FINANCIAL REPORT

Consolidated income statement disclosures

1.

Revenue

111 in EUR

Sales revenue by type Sale of products on the domestic market

2009

2008

20.383.880

20.402.237

Sale of services on the domestic market

627.587

738.031

Rental revenue on domestic market

167.914

87.998

Sale of products on foreign markets

7.619.769

6.532.279

398.985

375.638

4.758.497

1.229.498

425.334

6.601.023

34.381.966

35.966.704

Sale of services on foreign markets Sale of material and merchandise on the domestic market Sale of material and merchandise on foreign markets Total 2. Expenses

in EUR Expenses by primary type, change in value of inventories Cost of goods and materials sold

2009

2008

3.772.385

4.912.989

19.567.267

18.265.283

Labour costs

9.049.670

10.126.638

Amortisation and depreciation

3.503.072

4.119.800

803.594

621.112

1.380

291.198

36.697.368

38.337.020

Cost of materials and services used

Other expenses (from operations) Change in inventories of finished products, work in progress and semi-manufactured products Total (operating) expense Labour costs

in EUR Â Gross wages and salaries Pension insurance cost Cost of other social insurance

2009

2008

6.324.966

7.430.561

832.719

797.756

747.019

580.758

Other labour cost

1.144.966

1.317.564

Total labour costs

9.049.670

10.126.639

FINANCIAL REPORT

112

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The costs of wages and salaries are accounted for in compliance with collective agreements, internal rules and regulations governing wages and other emoluments, the Decree on the amount of costs recognised as deductible, and individual employment agreements. Other labour costs comprise those of meal allowances, commuting allowances, holiday bonuses, retirement bonus, and payroll tax.

3. Other operating revenue in EUR Other revenue type

2009

2008

446.665

268.835

Income from reversal of provisions

124.869

187.937

Reversal of trade receivables and inventories revaluations

411.871

212.409

Indemnities, subsidies, and grants received

111.662

16.299

Gain in disposal of fixed assets Reversal of impairment of property, plant and equipment

95.091

Other

457.137

422.241

Total

1.552.204

1.202.812

4. Net finance income/finance costs in EUR

Interest income Share-based income Foreign exchange gains Income from sale of investments Other finance income

2009

2008

75.469

248.940

312.585

562.771

1.195

15.741

957.859

1.584.605

25.047

13.297

- change in fair value of investments through profit or loss - other Total finance income Interest expense Foreign exchange losses

25.047

13.297

1.372.155

2.425.353

451.145

732.266

16.810

28.182

133.213

2.281

Loss in disposal of investments Other finance costs Finance costs arising from impairment

432.278

Total finance costs

601.168

1.195.008

Total net finance income

770.987

1.230.345

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FINANCIAL REPORT

Annual Report 2 0 0 9

Tax

113 in EUR 2009

2008

180.663

83.871

Deferred tax (from Income Statement)

-282.860

-96.264

Total

-102.197

-12.393

Current tax

Effective corporate income tax rates

in EUR 2009

Total profit or loss before tax

2009

2008

-57.385

2008 61.625

Tax effects: Tax at general tax rate

21,00 %

-12.051

22,0 %

13.558

Adjustment for tax rate from other tax territories

10,04 %

-5.764

-13,0 %

-8.000

159,85 %

-91.729

-466,6 %

-287.540

Tax exempt income

-3,32 %

1.907

4,0 %

1.818

Non-deductible expenses

Tax increased income

-159,42 %

91.485

209,5 %

129.091

Losses for which no deferred tax is recognised

99,56 %

-57.135

-74,3 %

-45.760

Tax relief

42,78 %

-24.551

-34,6 %

-21.340

Tax loss

-70,49 %

40.449

364,9 %

224.840

Other changes to tax base Total tax expense

78,08 %

-44.807

-30,9 %

-19.060

178,09 %

-102.197

-20,1 %

-12.393

Deferred taxes recognised directly in equity

in EUR 2009

Property, plant and equipment

2008 26.590

Investments

-183.511

515.876

Total

-183.511

542.466

6. Disclosure of auditor fees Total auditing costs of the Group amounted to EUR 38.090 in 2009. The value of the contract to audit 2009’s financial statements amounts to EUR 20.720. The auditing of financial statements was performed by ABC revizija d.o.o. and Revizija Uzor d.o.o. auditing firms; other audits were performed by other auditing firms.

FINANCIAL REPORT

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Consolidated balance sheet disclosures

114

7. Investment property in EUR 2009

2008

Land Buildings

429.226

203.129

Total

429.226

203.129

Movements in investment property in EUR Building

Total

470.633

470.633

Balance at 31 December 2008

470.633

470.633

Balance at 1 January 2009

470.633

470.633

568.116

568.116

1.038.749

1.038.749

12.189

12.189

Cost Balance at 1 January 2008 Additions Disposals Transfer from property, plant and equipment Other transfers

Additions Disposals Transfer from property, plant and equipment Other transfers Balance at 31 December 2009 Value adjustment Balance at 1 January 2008 Depreciation Transfer from property, plant and equipment

255.315

255.315

Balance at 31 December 2008

267.504

267.504

Balance at 1 January 2009

267.504

267.504

Depreciation

24.875

24.875

Transfer from property, plant and equipment

317.145

317.145

Balance at 31 December 2009

609.524

609.524

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FINANCIAL REPORT

v EUR Building

Total

203.129

203.129

Balance at 1 January 2009

203.129

203.129

Balance at 31 December 2009

429.226

429.226

Book value Balance at 1 January 2008 Balance at 31 December 2008 Book value

As of 1 January 2009, Group companies reclassified a part of their fixed assets as investment property leased out in 2009. The company measures investment property based on an historical cost model. Investment property is depreciated at the same rate as real property used by the Group. The method for determining their useful life is the same as that used to determine the useful life of property, plant and equipment.

The fair value for investment property as at 31 December 2009 cannot be determined. The total area of real property owned by the Company, which reclassified a part of the real property, measures 20.113m2; the investment property, comprising production, warehousing and office premises, as well as the corresponding functional area of the facility, is 1.690m2.

The amount of income arising from investment property is disclosed under No 1.

8. Property, plant and equipment Disposals made in 2009 are, in the main, comprised of the sale of commercially and technically outdated, yet still functional machinery.

The Group secured its long-term borrowings with mortgages on real property, pledged plant and equipment, and liens on long-term investments, all of which are recognised in off-balance sheet records.

115

FINANCIAL REPORT

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Movements in property, plant and equipment in EUR Land

Buildings

Equipment

Other equipment

3.910.164

17.561.071

42.532.430

27.236

Investment in progress

Prepayments

Total

548.650

64.704

64.644.254

Cost Balance at 1 January 2008 Transfer to investment property

-470.633

-470.633

Transfer for available-for-sale assets 116

-84.591

Adjustment to the opening balance Acquisitions in the period

181.906

45.972

45.972

922.478

1.104.384

Change to investment in progress Transfers Disposals

-84.591

197.837 693.631

786.317

4.906.223

Balance at 31 December 2008

3.216.533

16.683.862

38.594.657

27.236

Balance at 1 January 2009 Calculation 1 January 2009 as per 31 December 2009 exchange rate Transfer to investment property

3.216.533

16.683.862

38.594.657

27.236

753.451

753.451

-1.148.704

-950.867 43.405

6.429.577

68.807

21.299

58.612.393

68.807

21.299

58.612.393

Reclassification

57.137

57.137

-568.116

-568.116

Transfer for available-for-sale assets Adjustment to the opening balance 11.024

Acquisitions in the period

980.760

26.837

Change to investment in progress Transfers Disposals

1.018.622

3.780.766

3.780.766

-732.753

-732.753

1.618.472

1.313.822

5.887.773

446

8.820.513

1.598.060

14.812.949

33.744.781

26.790

7.887.677

29.452.644

37.340.321

10.939

10.939

-948

-948

3.278.170

3.803.241

Reclassification Balance at 31 December 2009

3.116.820

48.136

53.347.537

Value adjustment Balance at 1 January 2008 Adjustment to the opening balance Exchange rate differences Depreciation

525.072

Transfer to investment property

-268.000

Disposals

207.000

4.473.779

4.680.779

Balance at 31 December 2008

7.937.748

28.267.026

36.204.775

Balance at 1 January 2009

7.937.748

28.267.026

36.204.775

-581

-581

2.631.060

3.078.885

-268.000

Transfers Reclassification

Exchange rate differences Adjustment to the opening balance Depreciation

447.825

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FINANCIAL REPORT

Annual Report 2 0 0 9

in EUR Land

Buildings

Equipment

Other equipment

Investment in progress

Prepayments

Total

Transfer to investment property

316.627

Disposals

379.128

4.939.024

5.318.152

316.627

7.689.818

25.958.481

33.648.300

Transfers Reclassification Balance at 31 December 2009 Balance at 1 January 2008

3.910.164

9.673.394

13.079.785

27.236

548.650

64.704

27.303.933

Balance at 31 December 2008

3.216.533

8.746.114

10.327.631

27.236

68.807

21.299

22.407.618

Balance at 1 January 2009

3.216.533

8.746.114

10.327.631

27.236

68.807

21.299

22.407.618

Balance at 31 December 2009

1.598.060

7.123.131

7.786.300

26.790

3.116.820

48.136

19.699.237

Property, plant and equipment acquired under financial lease in EUR Breakdown per type Equipment 9.

2009

2008

32.597

63.814

Intangible assets

Long-term property rights mainly include computer software for the renovation of business information systems. Development costs are the recognised costs of projects that prove to be feasible for project completion and eligible for use or sale. The purpose is to complete the project and sell or use it in view of the probability of economic benefits, and the ability to reliably measure the costs attributable to the respective intangible asset.

117

FINANCIAL REPORT

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Movements in intangible assets in EUR

Cost 118

Balance at 1 January 2008

Goodwill

Long-term deferred costs

Long-term property rights

Intangible assets in progress

Long-term deferred costs and accrued income

627.437

303.455

2.897.095

140.027

3.968.013

Total

Acquisitions in the period

329.162

329.162

Change to investment in progress

511.938

511.938

Adjustment to the opening balance Transfers of investments in progress Disposals

77.226

77.226

-329.162

-329.162

3.782

3.782

Reclassification Balance at 31 December 2008

Balance at 1 January 2009

-964

-964

627.437

303.455

3.298.737

322.803

4.552.431

627.437

303.455

3.298.737

322.803

4.552.431

Acquisitions in the period

67.872

586.695

299.886

954.453

Change to investment in progress

543.350

543.350

Exchange rate differences

-2.848

-2.848

Transfers of investments in progress

-559.074

-559.074

Disposals

315.101

315.101

627.437

371.327

3.567.483

307.079

299.886

5.173.211

Balance at 31 December 2009 Value adjustment Balance at 1 January 2008

136.697

1.646.214

1.782.911

Amortisation

18.647

276.879

295.526

Disposals

1.704

1.704

Balance at 31 December 2008

155.344

1.921.389

2.076.734

Balance at 1 January 2009

155.344

1.921.389

2.076.734

Amortisation

22.438

366.750

389.188

Disposals

315.101

315.101

Balance at 31 December 2009

177.782

1.973.038

2.150.821

Book value

Balance at 1 January 2008

627.437

166.758

1.250.881

140.027

2.185.102

Balance at 31 December 2008

627.437

148.110

1.377.346

322.803

2.475.697

Balance at 1 January 2009

627.437

148.111

1.377.347

322.803

2.475.698

Balance at 31 December 2009

627.437

193.545

1.594.444

307.079

299.886

3.022.390

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FINANCIAL REPORT

10. Investments in associates

119

Associates include: - Druckman Hungary, in which the Company holds a 33% stake, for which it has made value adjustment for the entire investment, since the associate has not operated for several years and is not disclosed in movement in investments. After 2009’s financial statements were closed, the parent company received official documentation on removal of the aforementioned mentioned company.

- DUF Euroinvestment d.d. Tuzla, in which the Group has 27% share and which is consolidated based on equity method. in EUR Breakdown per type

2009

2008

Druckman, Hungary – not active DUF Euroinvestment d.d., Tuzla

1.274.796

Total

1.274.796

Movements in investments in associates in EUR

Balance at 1 January 2008 Balance at 31 December 2008

Cost

Net amount

17.677

17.677

15.626

15.626

Transfer to investment in associates

1.259.170

1.259.170

Balance at 31 December 2009

1.274.796

1.274.796

Attribution of proportional share of profit/loss

Associated company Lotaria Nacionale SH.A. Rruga Kavajes, Porta Kry Esore, Misto Mame, Tirana was sold in 2009.

11. Investments available for sale in EUR Breakdown per type Investments available for sale

2009

2008

11.099.910

13.442.599

FINANCIAL REPORT

120

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Movements in available-for-sale investments in EUR

Balance at 1 January 2006 Acquisition Disposal Change in fair value Balance at 1 January 2007 Acquisition Disposal Change in fair value Balance at 1 January 2008 Transfer from short-term investments Transfer to group companies Acquisition Disposal Change in fair value Balance at 1 January 2009 Transfer to investment in associates Acquisition Disposal Change in fair value Balance at 31 December 2009

Cost

Value adjustment (impairment)

Net amount

12.998

-172

12.826

2.474

2.474

-2.230

172

-2.058

723

723

13.965

13.965

4.620

4.620

-4.718

-4.718

438

438

14.305.354

14.305.354

1.731.434

1.731.434

128.650

128.650

32.500

32.500

-2.433.039

-2.433.039

13.442.599

13.442.599

1.259.170

1.259.170

104.961

104.961

1.944.315

1.944.315

756.503

668

755.835

11.100.578

668

11.099.910

12. Loans

Breakdown per type Loans

2009

in EUR 2008

58.301

333.995

Loans granted as at 31 December 2009 include loans to employees for the purchase of apartments, construction, and deposits granted.

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FINANCIAL REPORT

Annual Report 2 0 0 9

Movements in loans in EUR

Cost

Value adjustment (impairment)

Net amount

Balance at 1 January 2006

661

661

Increase

770

770

Repayments

93

93

Transfer to short-term loans

36

36

Exchange rate differences Balance at 1 January 2007

1.303

1.303

Increase

500

-301

199

Repayments

221

221

32

32

1.550.061

-301.150

1.248.911

1.186.637

-301.150

885.487

29.429

29.429

Transfer to short-term loans Exchange rate differences Balance at 1 January 2008 Increase Transfer to assets held for sale Repayments Transfer to short-term loans Balance at 1 January 2009

333.995

333.995

Increase

30.963

30.963

Disposal

293.921

293.921

Transfer to short-term loans

12.736

12.736

Balance at 31 December 2009

58.301

58.301

13. Non-current operating receivables in EUR Breakdown per type Other non-current operating receivables for associates Total

2009

2008

Movements in non-current operating receivables in EUR Cost

Value adjustment (impairment)

Net amount

Balance at 1 January 2008

877.939

877.939

Transfer to non-current assets held for sale

877.939

877.939

Long-term commodity loans abroad

515.641

515.641

Balance at 31 December 2008

515.641

515.641

Balance at 1 January 2009

515.641

515.641

515.641

515.641

Transfer to non-current assets held for sale Balance at 31 December 2009

121

FINANCIAL REPORT

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14. Deferred tax assets and liabilities Movements in temporary differences in 2009 in EUR

31 December 2009

Assets 31 December 2008

31 December 2009

Liabilities 31 December 2008

284.410

-284.410

266.193

445.198

5.744

26.135

260.449

419.063

57.076

49.186

57.076

49.186

149.998

181.135

149.998

181.135

Property, plant and equipment Investments 122

Assets Inventories Provisions for retirement bonus Other provisions Tax loss Total

Assets-liabilities 31 December 31 December 2009 2008

63.999

67.199

63.999

67.199

537.266

742.718

5.744

310.545

531.522

432.173

The Group used a 20% tax rate in terms of deferred tax accounting. Deferred tax liabilities are based on surpluses arising from the revaluation of available-for-sale investments, measured at fair value through equity.

Deferred tax assets are based on provisions for anniversary bonuses and retirement bonuses, tax loss, and temporary differences arising from accounting for income tax on investments, receivables, inventories and other provisions to be recognised for tax purposes in subsequent periods.

The Group recognised deferred tax assets for tax loss based on the estimate that taxable profits will be available in the coming years, against which deferred tax assets can be used in the future.

In periods of tax loss utilisation, a decrease in deferred tax assets will represent a corresponding decrease in profits.

Movements in temporary differences in 2008

1 January 2008

Recognised under income/expenses

Recognised under equity

in EUR 31 December 2008

Property, plant and equipment

-439.000

128.000

26.590

-284.410

Investments

-111.061

14.000

515.876

419.063

Receivables

52.410

-3.224

49.186

Inventories

210.012

-28.877

181.135

Provisions for retirement bonus Other provisions Tax loss Total

80.642

-13.443

67.199

-206.997

96.456

542.466

432.173

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Movements in temporary differences in 2009 in EUR

Property, plant and equipment

1 January 2009

Recognised under income/ expenses

Recognised under equity

31 December 2009

-284.410

284.410

Investments

419.063

-183.511

235.552

Receivables

49.186

7.890

57.076

Inventories

181.135

-31.043

150.092

Provisions for retirement bonus Other provisions Tax loss Total

-93

-93

67.199

21.696

88.895

432.173

282.860

-183.511

531.522

15. Non-current assets held for sale in EUR Breakdown per type

2009

2008

Investment SNLS Gabon

2.296.668

2.296.668

Total

2.296.668

2.381.259

Tangible assets

84.591

The investment in the company SNLS GABON is recognised amongst other non-current assets, and in which the parent company is a 93,63 per cent holder of issued shares. The investment is valued at cost. The investment was not sold in 2009 due to the political situation in Gabon. Activities related to the sale of the investment continue in 2010.

16. Inventories in EUR Breakdown per type Material

2009

2008

1.661.240

1.971.919

Work in progress

562.127

266.650

Products

849.941

1.180.803

Merchandise Total

366.499

330.950

3.439.807

3.750.321

For 2009, the Group wrote off assets related to materials and products which were no longer usable. The largest product write-offs related to labels, plastic cards and wrappings, as well as documents, as a result of using inadequate material.

Value adjustments are accounted for per type of inventory and movement. When reviewing inventories in warehouses storing items under complaint, inventories of materials, products and merchandise that showed no movement for more than 12 months, the Group applied the same policies as in preceding years.

17. Current investments at fair value in EUR Breakdown per type Current investments Total

2009

2008

123

FINANCIAL REPORT

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Annual Report 2 0 0 9

Movements in current investments at fair value in EUR Cost

Value adjustment (impairment)

Net amount

Balance at 1 January 2008

2.162.775

6.492

2.156.283

Reclassification to non-current investments (EU Commission Regulation)

-1.731.434

-1.731.434

Disposal Change in fair value until transfer 124

Balance at 1 January 2009

-424.849

-424.849

6.492

6.492

6.492

6.492

Disposal Change in fair value until transfer Balance at 31 December 2009

18. Short-term loans in EUR Breakdown per type Short-term loans Short-term deposits Current portion of long-term loans Total

2009

2008

30.788

615.239

101.989

429.766

12.736

28.861

145.513

1.073.867

19. Operating and other receivables in EUR Breakdown per type Current trade receivables

2009

2008

6.784.019

6.107.095

Current operating receivables from associates Current operating receivables from third parties Current prepayments Total

14.000 304.799

415.629

5.398

80.461

7.094.215

6.617.185

20. Cash and cash equivalents in EUR Breakdown per type Cash in banks, cheques and cash in hand

2009

2008

263.642

87.756

263.642

1.041.656

Deposits in banks Total

953.900

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

21. Equity

125

The total equity of the Group consists of issued capital, totalling EUR 10.015.023; share premium accounts amounting to EUR 17.538.831; legal and statutory reserves, totalling EUR 2.032.352; treasury shares (deducted from equity) in the amount of EUR 1.025.918; and a fair value reserve, which is negative, amounting to EUR 1.041.797. Profit for the period, generated by the Group, shall be used to cover the losses generated by the Group in the previous period.

The Group issued 200.000 unit shares, subscribed with the Central Securities Clearing Corporation (KDD). in EUR Share capital

2009

2008

Share capital

10.015.023

10.015.023

Total

10.015.023

10.015.023

Capital reserves at the amount of EUR 17.538.831 correspond to a simplified reversal of share capital by withdrawing shares amounting to EUR 2.215.195 and general capital value adjustment amounting to EUR 15.323.636. in EUR Share premium accounte Simplified reduction in share capital by withdrawing shares

2009

2008

2.215.195

2.215.195

General capital value adjustment

15.323.636

15.644.184

Total

17.538.831

17.859.379 in EUR

Legal and statutory reserves

2009

2008

Legal reserves

1.006.434

1.709.277

Reserves for treasury shares

1.025.918

Statutory reserves Total

26.001 191.439

2.032.352

1.926.717

The Group’s fair value reserve in 2009 increased because of a growth in exchange quotations. The accumulated reserve arising from value adjustment surpluses in long-term financial investments is negative, amounting to EUR 1.041.797. Pursuant to this, the Group formed deferred receivables at the amount of EUR 260.449.

Capital value adjustment relates to currency differences arising from, and including financial statements of, subsidiary companies abroad in consolidated financial statements.

Minority interest capital includes shares of minority interest in the subsidiary company Cetis MKD, Skopje.

FINANCIAL REPORT

126

Cetis, d. d.

Annual Report 2 0 0 9

In December 2009 the parent company acquired 9.125 treasury shares amounting to EUR 999.918 for the purposes set out in second indent of Article 247 of the Companies Act (ZGD-1); shares offered for sale to company or associate company employees. (4.56 % of all issued shares). At 31 December 2009, the Group reported ownership in 9.326 shares designated CETG (4.66 % of all issued shares). The shares are recognised at cost as a deductible item in equity.

Establishing profit for appropriation in EUR

Item

A.

NET PROFIT FOR THE BUSINESS YEAR

B.

NET LOSS FOR THE BUSINESS YEAR

C.

PROFIT OR LOSS FROM PREVIOUS PERIODS INCL. ADJUSTMENTS OTHER CHANGES

Č.

REDUCTION IN CAPITAL RESERVES

D.

REDUCTION IN RESERVES FROM PROFIT

E.

INCREASE IN RESERVES FROM PROFIT

1. Increase in legal reserves

F.

2. Increase in statutory reserves 3. Increase in reserves for treasury shares and own business shares PROFIT FOR APPROPRIATION

G.

ACCUMULATED LOSS

2009

2008

109.986

86.299

-59.865

306.284

-269.964

-97.084

320.547 -100.703

-26.001

-100.703

-26.001 269.498

In 2009, the Company, in order to ensure uniform accounting policies for the Group, corrected errors from previous periods. The adjustments in the Group were recognised as adjustment for previous periods.

According to International Accounting standards, correction of an error is not included in the profit or loss in the period in which error was discovered.

22. Basic earnings per share Net earnings per share are calculated by dividing basic net earnings per share by the weighted average number of shares as denominator. Diluted earnings per share are identical, as the Group holds no preferential or convertible shares. in EUR

2009

2008

Basic earnings in EUR

109.986

75.233

Weighted average number of ordinary shares

190.674

199.799

0,58

0,38

Basic and diluted earnings per share in EUR

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

23. Borrowings

127

Borrowing is comprised of long- and short-term borrowings, including the current portion of long-term borrowings.

Long-term borrowings in EUR Breakdown per type Bank loans

2009

2008

7.559.636

8.769.779

Short-term borrowings in EUR Breakdown per type

2009

2008

Current portion of long-term bank loans repayable within 1 year

2.496.377

5.474.767

Short-term bank loans

1.780.772

1.900.321

Other short-term loans

350.000

1.240.000

4.627.149

8.615.088

Total Repayment of borrowings

in EUR Breakdown per type

Total repayment 2009

Interest 2009

Principal 2009

Short-term loans up to 1 year

11.035.143

290.449

10.744.694

Long-term loans 1 to 5 years

2.756.276

322.404

2.433.872

Long-term loans with maturity longer than 5 years

1.313.043

1.313.043

Total

15.104.462

612.853

14.491.609

Breakdown per type

Total repayment 2008

Interest 2008

Principal 2008

Short-term loans up to 1 year

4.832.603

149.603

4.683.000

Long-term loans 1 to 5 years

3.874.449

899.038

2.975.411

1.048.641

8.971.454

Long-term loans with maturity longer than 5 years Total

1.313.043 10.020.095

1.313.043

FINANCIAL REPORT

128

Cetis, d. d.

Annual Report 2 0 0 9

24. Non-current operating liabilities in EUR Breakdown per type

2009

2008

Non-current operating liabilities based on prepayments Long-term operating liabilities arising from finance lease contracts

5.379

26.432

Total

5.379

26.432

25. Provisions in EUR Breakdown per type

2009

2008

64.089

70.764

Provisions for legal actions

8.350

28.736

Provisions for other costs

4.289

23.122

Provisions for anniversary bonuses

253.572

246.456

Provisions for retirement bonuses

595.523

700.888

Total

925.823

1.069.966

Provisions for warranties

Movements in provisions in EUR 31 December 2009

31 December 2008

Made

Provisions for warranties

70.764

41.422

48.098

Provisions for legal actions

28.736

20.386

8.350

Provisions for other costs Provisions for anniversary bonuses Provisions for retirement bonuses Total

23.122

8.407

27.239

4.289

246.456

26.088

18.053

920

253.572

700.888

1.286

106.651

1.069.966

77.202

124.703

Breakdown per type

Used

Reversed

64.089

595.523 96.642

925.823

The Group reviewed the provisions made, taking account of changes and decreased total provisions for the purpose of long-term deferred expenses and provisions for long-term accrued costs.

Provisions are made on the basis of contracts, legal bases, and expert opinions.

Retirement and anniversary bonus provision On the basis of a calculation for each employee, using the projected unit method and prepared by a certified actuary, the provisions for retirement bonuses and anniversary bonuses were reduced by EUR 98.249.

Cetis, d. d.

Annual Report 2 0 0 9

FINANCIAL REPORT

26. Operating and other liabilities

129 in EUR

Breakdown per type Short-term trade payables

2009

2008

6.706.272

5.626.725

Current operating liabilities based on prepayments

603.114

314.000

Short-term payables to employees

565.061

611.370

Payables to state and other institutions

384.471

347.088

Other short-term payables Total

490.605

297.648

8.749.523

7.196.831

The bases are the original documents that define an event in terms of time and substance.

27. Off-balance sheet record in EUR Breakdown per type

2009

2008

Mortgages

8.716.858

14.000.550

Other bank guarantees, liens granted and shares

3.074.899

7.498.191

Tax loss

2.309.387

1.547.473

79.244

49.244

Investment and other reliefs Other

76.725

76.725

Total

14.257.113

23.172.183

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Consolidated cash flow statemen disclosures

130

The Cash Flow Statement was prepared under the indirect method, using data from the Balance Sheet as at 31 December 2009 and the Balance Sheet as at 31 December 2008, and data from the 2009 Income Statement, as well as the additional data required for the adjustment of inflows and outflows and for an adequate breakdown of major items.

28. Financial instruments - risk management Risk exposure and management Currency risk in the Group with regard to the Euro was almost entirely excluded. Almost all foreign transactions outside the EMU were made in EUR. Some future transactions are linked to USD, but the sales prices and changes thereof are linked to the USD/EUR ratio, set in the contracts (currency clause).

The Group is aware of the importance attributed to the regular monitoring and management of financial risks to which the Company is exposed to in markets, and views it as a relevant precondition for successful operations and achieving strategic goals. In 2009, interest rate risk was predominant (high interest rates for new debt). The analysis of these risks resulted in an estimate that interest rate risk was higher due to the new short-term borrowings of the Company or guarantees issued. The Group expects these risks to increase in the future as a result of the operations of the parent company and its subsidiaries.

All the Group’s long-term debts are denominated in euros. Interest rates are based on market principles governing the price of money in the European and local banking market. Interest rate risks have not been hedged thus far, as the Company assesses that interest rate fixations offered are still above variable rates, or that long-term changes in interest rates will allow more favourable finance costs during the whole borrowing period.

Interest rate risk increased due to the total amount of loans and interest rate change. The interest rate level was assessed to be acceptable for all long-term loans taken, with its contractually agreed variability, and taking into account their maturity, especially if downward trends are favourable. The Group’s exposure to interest rate risk is estimated to be high.

Property risks and related risks in 2009 were systematically and analytically assigned to insurance companies.

Liquidity risk is low in the Group in the short term as a result of efficient asset management, adequate credit lines for regulating cash flow, satisfactory financial flexibility, and, still, access to the necessary financial resources, whereby the Group takes into account the circumstances in the financial environment and financial markets.

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Financial instruments – credit risk The highest credit risk exposure at the reporting date was as follows: Book value in EUR Available-for-sale financial assets

2009

2008

12.228.994

13.442.599

Financial assets at fair value Loans Current and non-current trade receivables Cash and cash equivalents Total

203.814

1.407.995

7.094.215

6.616.581

322.686

1.041.656

19.849.709

22.508.831

The highest credit risk exposure for borrowings at the reporting date by geographical region Book value

in EUR Domestic

2009

2008

203.814

839.795

203.814

1.407.995

Other European countries Other regions – outside EU

568.200

Total Credit risk exposure

Book value 2009

2008

Receivables

7.094.215

6.616.581

Total

7.094.215

6.616.581

in EUR

Impairment losses Operating receivables at the reporting date:

in EUR Non-past-due

Gross

Impairment

Gross

Impairment

2009

2009

2008

2008

6.337.307

5.289.150

Past due 0-30 days

322.734

759.400

Past due 31-120 days

298.295

7.264

441.800

15.020

Past due 121-365 days

356.382

414.763

242.400

151.050

4.010

More than one year

1.002.050

800.526

1.166.011

1.112.100

Total

8.316.768

1.222.553

7.898.761

1.282.180

131

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Movements in value adjustments due to impairment of trade receivables in the period: v EUR Balance at 1 January New value adjustments Written-off value adjustments Paid written-off value adjustments Balance at 31 December 132

2009

2008

1.283.668

1.514.810

144.051

74.910

-163.419

-55.019

-49.714

-251.033

1.214.586

1.283.668

Currency risk Currency risk exposure was based on nominal amounts EUR

HRK

USD

GBP

CHF

RSD

31 December 2009 Trade receivables Trade payables

6.348.800

10.748.460

5.839.902

-5.993.562

-9.245.802

-100.913

-11.135

-116.087

-4.586.508

Secured bank loans

-653.001

Balance Sheet gross exposure

-297.763

1.502.658

-100.913

-11.135

-116.087

1.253.394

EUR

HRK

USD

GBP

CHF

RSD

DKK

31 December 2008 Trade receivables Trade payables Secured bank loans Balance Sheet gross exposure

5.112.000

8.990.935

-3.977.743

-4.449.971

-13.086 1.121.171

-4.763

4.540.964

-4.763

3.247.282 -32.582

-891.945

-32.582

-977

2.355.337

-977

Sensitivity analysis A 10 per cent increase in the value of the euro against the HRK, USD, GBP, CHF, RSD and DKK at 31 December would result in a decrease in equity and profit or loss by EUR 5.273. This analysis assumes that all other variables, interest rates in particular, remain unchanged.

Interest rate risk At the reporting date, loan contracts concluded by the Group were with both fixed and variable interest rates.

Book value

in EUR Instruments with fixed interest rate Financial assets Financial liabilities Difference

2009

2008

202.584

2.279.080

-2.246.451

-3.171.172

-2.043.867

-892.092

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

Book value

2009

in EUR

Instruments with variable interest rate

2008

Financial assets Financial liabilities

-9.940.334

-14.214.799

Difference

-9.940.334

-14.214.799

Payment risk 133

Liabilities including estimated interest payments with regard to contractual maturity

31 December 2009 Secured bank loans Other loans Accounts payable and other liabilities TOTAL 3-month EURIBOR 31 December 2009 6-month EURIBOR 31 December 2009

31 December 2008 Secured bank loans Other loans Accounts payable and other liabilities TOTAL 3-month EURIBOR 31 December 2008 6-month EURIBOR 31 December 2008

Book value

Contractual cash flow

Up to 6 months

6 to 12 months

1 to 2 years

2 to 5 years

in EUR Over 5 years

10.668.539

-11.059.604

-2.589.972

-1.881.126

-3.418.990

-3.169.515

1.518.246

-1.580.448

-350.869

-1.229.579

8.749.523

-8.749.523

-8.749.523

20.936.307

-21.389.574

-11.690.364

-3.110.705

-3.418.990

-3.169.515

Book value

Contractual cash flow

Up to 6 months

6 to 12 months

1 to 2 years

2 to 5 years

13.086.043

-14.360.540

-4.276.000

-1.827.061

-3.569.240

-4.688.239

2.399.571

-2.551.000

-351.000

-2.200.000

7.011.636

-7.011.636

-7.011.636

22.497.250

-23.923.176

-11.638.636

-4.027.061

-3.569.240

-4.688.239

0,707 0,993

4,684 4,707

in EUR Over 5 years

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Sensitivity analysis of fair value for instruments with fixed interest rate A change in interest rates by one percentage point on the reporting date would result in an increase or decrease of the equity by EUR 912.

Sensitivity analysis of cash flow for instruments with a variable interest rate A change in interest rates by one percentage point at the reporting date would result in an increase (decrease) of the equity and profit or loss by EUR 10.552.

29. Fair value 134

Overview of fair value and book value of assets and liabilities

Investments available for sale Loans

Book value 31 December 2009

Fair value 31 December 2009

Book value 31 December 2008

in EUR Fair value 31 December 2008

11.099.910

11.099.910

13.442.599

13.442.599

58.301

58.301

333.995

333.995

Non-current operating receivables

7.094.215

7.094.215

6.616.581

6.616.581

145.513

145.513

1.073.867

1.073.867

263.642

263.642

1.041.656

1.041.656

Long-term borrowings

7.559.673

7.559.673

-8.769.779

-8.769.779

Short-term borrowings

4.627.149

4.627.149

-8.615.088

-8.615.088

Operating and other liabilities

8.749.523

8.749.523

-7.196.831

-7.196.831

39.597.926

39.597.926

-2.073.000

-2.073.000

Operating and other receivables Current investments at fair value through profit or loss Short-term loans Cash and cash equivalents

Total

Available-for-sale investments are measured at fair value and depend on recognition of the investment at the rate applicable on 31 December 2009.

Loans and borrowings are measured at amortised cost calculated using the method of effective interest rate that does not differ from the contractual interest rate. Accordingly, the contractual interest rate is used in calculation.

In terms of trade and other receivables, fair value impairment is taken into account for the purpose of claim recovery. Receivables are not discounted, due to their short-term nature.

The same applies to trade and other payables that are not discounted owing to their short-term nature.

Testing financial investments in terms of possible impairment The Group performed no impairment of financial investments. Upon acquiring an investment in mutual funds and other investment companies, the Group classifies them among long-term investments if the intention is to own such investment for more than one year. If such investment is listed on the stock exchange, it is entered in the books at fair value; if the investment is not listed, it is valued at cost. When an investment in mutual funds and other investment companies is valued at cost, it is tested five years from the date of acquisition in order to determine if the investment should be impaired.

Such investment is usually impaired if the purchase value in a period of five successive years exceeds the realisable value on the balance sheet cut-off date. When valued at fair value through capital, it is checked five years from the date of acquisition for the probability that such investment needs to be impaired. An

Cetis, d. d.

FINANCIAL REPORT

Annual Report 2 0 0 9

investment is usually impaired when its fair value in five successive years is continuously lower than the investment purchase value. Impairment is performed in compliance with IAS 39.

For all other financial investments valued at fair value through capital, verification of possible impairment was performed on the Balance Sheet date, comparing the percentage of decrease in the fair value of a financial investment in the period from the date of its recognition up to the Balance Sheet cut-off date, as well as relative change in the Slovenian Share Index (SBI 20). The amount of investment revaluation that would have to be performed after checking for possible impairment is insignificant.

30. Related-party transactions Relationships between related companies 135

Transactions between the Group and related parties are based on contracts of sale, whereby market prices of products and services were used.

Other disclosures Disclosures of remuneration of key management personnel per group: members of the Management and Supervisory Board. Total remuneration received by groups of persons for the performance of functions or duties in the financial year: - Management EUR 298.496; - Supervisory Board EUR 21.093.

Gross management members’ remuneration in EUR Name and surname of Management member Management

Simona Potočnik

Variable part of remuneration

Participation in profit

Stock option and other remunerations

Other remuneration of Management member

Fixed part of remuneration* 280.956

Total

280.956

111.853

111.853

Matej Polutnik

74.374

74.374

Roman Žnidarič

84.667

84.667

Milan Maksić

10.062

10.062

* receipts on the basis of salary, holiday bonus and anniversary bonus Gross management member remuneration- continued

Name and surname of management member

Reimbursement of costs

Other remuneration (insurance premiums)

in EUR

Other remuneration (commissions)

Other additional remuneration

Total

17.347

193

Simona Potočnik

6.671

193

Matej Polutnik

5.781

5.781

Roman Žnidarič

3.751

3.751

Milan Maksić

1.144

1.144

17.540

6.864

FINANCIAL REPORT

Cetis, d. d.

Annual Report 2 0 0 9

Gross remunerations of Supervisory Board members in EUR Name and surname of Supervisory Board member

Other remuneration of Management members

Total

Fixed part of remuneration*

Reimbursement of costs

20.169

924

21.093

Borut Bizaj

1.963

184

2.147

Bernard Gregl

2.325

2.325

Franc Ješovnik

2.992

222

3.214

Marko Melik

2.928

2.928

Dušan Mikuš**

4.723

296

5.019

Ljubo Peče**

5.237

222

5.459

Total

136

Participation in profit

Stock option and other remunerations

Variable part of remuneration

*Remuneration from meeting fees. **Includes remuneration from Supervisory Board commissions.

Events after the balance-sheet date No important events occurred after the Balance Sheet date.

Issued by : Cetis, d. d.

Edited by: Tamara Belšak, Juno, new times communication Design by: Cetis, d. d.

Photos by: Cetis archive Printed by: Cetis, d. d.

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