Lasko annual report 2009 by Pivovarna Laško

P I VOVA R N A

LAŠKO

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A N N UA L

R E P O RT

P I V O VA R N A L A Š K O

ANNUAL REPORT

2009

A N N U A L

R E P O R T

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INTRODUCTION

1.1

Statement by the manager

1.2

Report of the Supervisory Board for the year 2009

1.3

Significant performance highlights of Pivovarna Laško Group

1.4

Performance highlights of Pivovarna Laško, d. d.

1.5

Vision, mission and strategic objectives

1.6

Presentation of Pivovarna Laško Group

1.7

Presentation of the parent company Pivovarna Laško, d. d.

1.8

An overview of the most significant events in 2009

BUSINESS REPORT

2.1

Corporate governance

2.2

Statement on corporate governance and compliance with the Code

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Report on subordination according to Article 545 of the Companies Act ZGD-1

2.4

Shareholders and the impact of economic and other trends on business

operations

2.5

Sale

2.6

Supply flows

2.7

Production

2.8

Investments

2.9

Performance analysis

2.10

Risk management

2.11

Marketing activities

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2.3

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2.12

Plans for 2010 and development strategy

2.13

Events after the fiscal year

101

2.14

Events preceding fiscal year 2009

103

SUSTAINABLE DEVELOPMENT

106

3.1

Employees

107

3.2

Communication

114

3.3

Responsible attitude towards the social environment

116

3.4

Environmental protection

117

FINANCIAL REPORT

122

4.1

Audited non-consolidated financial statements of Pivovarna Laško, d. d.

123

4.1.1

Statement of financial position

123

4.1.2

Profit And Loss Statement

125

4.1.3

Statement of other comprehensive income

126

4.1.4

Statement of changes in equity for 2009

127

4.1.5

Statement of changes in equity for 2008

128

4.1.6

Statement of cash flows

129

182

4.2

Audited consolidated financial statements of Pivovarna Laško Group

184

4.2.1

Consolidated statement of financial position

184

4.2.2

Consolidated Profit And Loss Statement

186

4.2.3

Consolidated statement of comprehensive income

187

4.2.4

Consolidated statement of changes in equity for 2009

188

4.2.5

Consolidated statement of changes in equity for 2008

189

4.2.6

Consolidated statement of cash flows

190

4.2.7

Explanatory notes to consolidated financial statements

191

4.2.8

Statement of the management

241

4.2.9

Independent auditor’s report

242

R E P O R T

180

Independent auditor’s report

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Statement of the management

4.1.10

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4.1.9

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130 130

L A Š K O

Covering the loss for the fiscal year Explanatory notes to non-consolidated financial statements

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4.1.7 4.1.8

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L A Š K O

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INTRODUCTION

1.1

S tat e m e n t by t h e m a n ag e r Dear shareholders, business partners and valued colleagues! A year of major changes is behind us. The company has been operating under tight market conditions, and there was a drop in consumption, but we have still managed to maintain the leading position in the market and pursue the strategic objectives that we set. Pivovarna Laško Group has managed to further enhance the market position of more than 30 leading brands in the market of beers, waters, juices and other soft drinks. We remain a leading company in most significant categories of beverages. Our goals also remain ambitious for the year 2010, particularly in both the field of beverage sales, and in optimum and efficient

and EUR 55.7 million of net cash flow (EBITDA). We have reduced the cost of goods, material and services by nearly EUR 40 million, but the operating profit is negative due to write-offs and high levels of financial expenditure. At the end of 2009 Pivovarna Laško Group employed 1,931 people.

PIVOVARNA LAŠKO GROUP ALSO ACTIVE IN THE FUTURE IN ENVIRONMENTAL

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In 2009 Pivovarna Laško Group sold 4.6 million hectolitres of beverages on both domestic and foreign markets, more than 21 percent of which went to export. This generated EUR 327 million of net sales revenue

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GOOD BUSINESS DESPITE THE ECONOMIC CRISIS

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brand management and financial reconstruction of the company.

PROJECTS In 2009 a lot of attention was focused on environmental policy and efficient use of materials and energy, and we have continued with our corporate social responsibility policy. Our company has actively supported the efforts of non-governmental organizations to change the Slovenian regulations on packaging waste in such a way that the system stimulates reusable packaging. We have also started with projects whose aim is to significantly reduce the environmental footprint of the company. Pivovarna Laško Group also continues

our tradition of active participation with the local communities in which our associated companies operate.

market. Further improvement of business results is expected in foreign markets. Pivovarna Laško Group will continue to disinvest in those areas that do not represent its core activity or strategic investments. In so doing, the company counts on close cooperation with the owners.

EVEN MORE SUCCESSFUL IN 2010 Despite the complex situation the company will be facing for the following few years, we firmly believe the company will grow stronger and more successful in the year 2010 also in terms of the company's profit and loss. A key role in restructuring the company will be played by you, the shareholders, who trust us and support us in implementing the company's strategy. Pivovarna Laško Group's mission is still to create brands with added value for our customers and shareholders. With responsible and environmentally friendly business dealings, our company strives to achieve excellent results in a better world.

Dušan Zorko, MSc. company manager

D . L A Š K O

beverages. We plan to increase the sale of beverages, which is quite a realistic goal in the slowly recovering

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In 2010 the company will intensify its work in the area of the company's financial reconstruction and at the same time strive for intense development of the company's core activity—that is, the production of

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WITH SALES INCREASE, ALSO FINANCIAL RECONSTRUCTION OF THE GROUP

1.2

Report of the Supervisory Board for the year 2009 The Supervisory Board of Pivovarna Laško, d. d. (hereinafter: Supervisory Board) hereby, in accordance

with Article 282 of the Companies Act (hereinafter: ZGD-1), submits a report to the general meeting of shareholders, with which it presents the one-year operation of the aforementioned Supervisory Board. The Supervisory Board shall carefully and diligently examine the report of the company's Management Board and the audit report, as well as the proposal of the Management Board with regard to covering the accumulated loss.

OPERATION OF THE SUPERVISORY BOARD In the year 2009 the Supervisory Board acted as consisting of Mr Boris Završnik, chairman of the Supervi-

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sory Board (until 23 April 2009), Mr Iztok Seničar, member (until 10 July 2009), Mr Simon Zdolšek, member (until 17 June 2009), and Mr Anton Turnšek, member—representatives of capital; and Mr Bojan Košak and Mr Andrej Kebe, vice chairman of the Supervisory Board—workers’ representatives. In place of the first three representatives of capital, whose terms of office either expired (Mr Simon Zdolšek) or terminated based on deeds of assignment (to Mr Boris Završnik due to business commitments abroad, to Mr Iztok Seničar due to business needs in the parent company), the general meeting of shareholders as at 31 August 2009 elected three new members for a four-year term of office—Mr Aleksander Svetelšek, Mr Marjan Mačkošek and Dr Vladimir Malenković—and as at 17 June 2010 for a new four-year term of office, Mr Anton Turnšek. The Supervisory Board on the day of 23 July 2009 elected Mr Anton Turnšek as the new chairman of the Supervisory Board for the period from 23 July 2009 until 16 June 2010. In the year 2010 the Supervisory Board met at eight regular meetings, which indicates increased activity, particularly after 18 June 2009, when a criminal investigation of individual transactions was implemented on the business premises of Pivovarna Laško, as well as Pivovarna Union and Radenska. Since then, the Supervisory Board, consisting of three members, met at four sessions, until all seats were filled at the general meeting of shareholders as at 31 August 2009. At the ninth session, which was held on 23 July 2009, the Supervisory Board, consisting of Mr Anton

Turnšek, Mr Bojan Košak and Mr Andrej Kebe, took note of the deed of assignment submitted by Mr Iztok Seničar and considered the appointment of the chairman of the Supervisory Board, as well as the change in the Management Board. As at 23 July 2009 until the expiry of the existing term of office (16 July 2010), the

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remaining three members of the Supervisory Board appointed Mr Turnšek as the chairman of the Supervisory Board; namely, the term of office of the previous chairman of the Supervisory Board, Mr Boris Završnik, expired as at 23 April 2009. In addition, the Supervisory Board requested that the company manager, Mr Boško Šrot, submit his deed of assignment. At this particular session the Supervisory Board received an irrevocable deed of assignment from the company manager, Mr Boško Šrot, and removed him from his managerial function effective as at 23 July 2009; the Supervisory Board concluded with Mr Šrot an agreement on early termination of the contractual relationship effective the very same day. As at 24 July 2009, the Supervisory Board of the company appointed Dušan Zorko, MSc., as manager of Pivovarna Laško, d. d., for a five-year term of office. The Supervisory Board has been monitoring the business operations of the company with due care and diligence at all times. Already at the fourth session in the year 2008, as at 20 June, the Supervisory Board requested from the Management Board explanations regarding the changes in equity in parent companies. At the aforementioned session, the Management Board submitted an extensive legal opinion with regard to this subject, which was drafted by the Institute for Economic and Corporate Governance IECG Maribor, and was prepared by Dr Borut Bratina and Dr Dušan Jovanovič and by Andreja Primec, MSc.. At the same time the Management Board briefed the Supervisory Board on another legal opinion under construction, which was submitted later at the fifth regular meeting as at 28 August 2008. This opinion was implemented by legal experts, Dr Miha Juhart and Dr Peter Grilc. At this particular session the Supervisory Board by extending the agenda once again requested the Management Board to submit a report on the alleged financing of the takeover of Pivovarna Laško, d. d., with the resources of Pivovarna Laško, d. d., and its affiliated companies. Based on the two legal opinions, a report on the financial transactions of the parent company in the years 2006, 2007 and 2008, and verbal assurances from the Management Board, the Supervisory Board concluded that the takeover of Pivovarna Laško, d. d., was not funded by Pivovarna Laško, d. d., or by its affiliated companies, and that there were no adverse dealings and business operations. Upon the acceptance of the annual report for the fiscal year 2008 at the eighth meeting of 23 April 2009,

the Supervisory Board became aware of a warning paragraph in an otherwise positive opinion of the auditor relating to loans to related parties whose repayment is dependant on cash flows generated by related parties and an agreement with creditor banks. The warning referred to loans made to the related companies Center Naložbe, d. d., and Infond Holding, d. d. The value of these loans as at 31 December 2008 was EUR 31.4 million; they were made by affiliated companies: Radenska, d. d., in the amount of EUR 13.5 million, Pivovarna Union, d. d., in the amount of EUR 11.5 million, and Fructal, d. d., in the amount of EUR 6.6 million. At 31 March 2009 the value of these loans already amounted to EUR 83.95 million. Based on this warning, the Supervisory Board began to acquire additional information. The Management Board kept affirming that all the loans made from the Pivovarna Laško Group would be paid and that no business was either conducted illegally or illegitimately, and that no adverse actions were caused by the Management Board of the company Pivovarna Laško, d. d.

d. d., which were in direct ownership via the company Atka-Prima, d. o. o., and Kolonel, d. o. o., and with that the potential conflict of interest, the Supervisory Board at its meeting of 23 July 2009 requested that the manager, Mr Boško Šrot, resign his post as the manager of the company Pivovarna Laško, d. d. At this meeting the Supervisory Board then received and accepted an irrevocable deed of assignment and removed Mr Šrot. Until then, the Supervisory Board had no facts upon which to decide his culpable dismissal. At the tenth meeting on 29 July 2009, the Supervisory Board adopted relevant conclusions on the convening of the general meeting of shareholders of Pivovarna Laško, d. d., which took place at 31 August 2009.

R E P O R T

pany Pivovarna Laško, d. d., Mr Boško Šrot, with the companies Center Naložbe, d. d., and Infond Holding,

A N N U A L

reprogram the loan to Infond Holding, d. d. Due to the proprietary integration of the manager of the com-

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At 3 June 2009, the Supervisory Board become aware of the possibility that loans by the companies Center Naložbe, d. d., and Infond Holding, d. d., would not be settled, when Nova Ljubljanska Banka, d. d., failed to

The Supervisory Board began by obtaining information from the new director, Mr Dušan Zorko, on the management of individual business dealings, with which the previous management had failed to acquaint him. The Supervisory Board at its 11th meeting, held on 10 August 2009, considered the financial situation of Pivovarna Laško, d. d., and the companies from Pivovarna Laško Group, and got acquainted with the results of the audit investigation initiated, which was conducted by order of the new management by the audit company Deloitte Revizija, d. o. o.

At the 12th meeting of 31 August 2009, the Supervisory Board with regard to the resulting financial situation, began to discuss the need to start procedures for financial restructuring with the objective to maintain

tion, and adopted two important conclusions: namely, that prior to key business decisions the management shall be obligated to obtain the consent of the Supervisory Board, and the management shall begin by preparing the project of financial restructuring and integration of the companies from Pivovarna Laško Group. Consideration of the possibilities of financial restructuring continued at the next Supervisory Board meetings held on 23 November 2009 and 15 December 2009 and also in 2010 (on 18 February and 30 March). At the 14th meeting held on 23 November 2009, the members of the Supervisory Board got acquainted with the report on evaluation of companies in Pivovarna Laško Group as at 30 June 2009, which was made by the company P&S Capital, d. o. o., Ljubljana. At this meeting, the Supervisory Board took note of the reports of dependence of subsidiaries as well as of Pivovarna Laško, d. d., with additional explanations by Pivovarna Laško, d. d. management or the manager of Pivovarna Laško, d. d., Mr Dušan Zorko. He explained to the members of the Supervisory Board that the subsidiaries were concluding transactions on the instructions of the former management of the controlling company within the framework of an actual multistage group of companies. The subsidiaries Pivovarna Union, d. d., Radenska, d. d., Fructal, d. d., and Delo, d. d., stated in their reports on dependences that their business transactions were concluded according to the instructions of the former management of Pivovarna Laško, d. d., Mr Boško Šrot. Pivovarna Laško, d. d., did not recognize business transactions from these reports. Pivovarna Laško, d. d., as the controlling company, had no financial gain from these business transactions, and these individual transactions were in the interest of the superiors at that time of the controlling companies. Pivovarna Laško, d. d., also concluded business transactions stated in the report on dependence, which it concluded based on the decisions of the former manager, Mr Boško Šrot, and in the interest of the superiors at that time and the controlling companies.

D . L A Š K O

held on 11 September 2009. At this meeting, the Supervisory Board noted the report of the audit company Deloitte on the investigation of the interim financial information, and from this the resulting financial situa-

P I V O V A R N A

To complete filling the Supervisory Board with newly elected members representing capital—Mr Aleksander Svetelšek, Mr Marjan Mačkošek and Dr Vladimir Malenković—the Supervisory Board's 13th meeting was

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the beverage industry.

The Supervisory Board will support any actions for damages against the former director of the company, Mr Boško Šrot, if it can be proven that detriment to the company occurred in individual transactions. It should be noted that at the 17th meeting, held on 30 March 2010, the Supervisory Board addressed and got acquainted with the Report on the findings of a special management review of individual transactions of Pivovarna Laško Group, d. d., which was prepared by the auditing company BDO Revizija, d. o. o., Ljubljana, and the Board will inform the general assembly of shareholders of the company about this report. The Supervisory Board has, based on the findings of the company management that other transactions were carried out, which were in content terms related to those addressed and were not included in the report by the special management review, recommended that the Management Board carry out a review of these individual transactions. Otherwise, members of the Supervisory Board received monthly reports on the business operations of

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Pivovarna Laško, d. d., on a regular monthly basis, and also reports on the business operations of Pivovarna Laško Group. The Supervisory Board of Pivovarna Laško, d. d., has regularly discussed the implementation of plans and ongoing operating results of the parent company, as well as of Pivovarna Laško Group, within the framework of information prepared by the Management Board of the company.

THE MOST IMPORTANT ASPECTS OF THE BUSINESS OPERATIONS OF PIVOVARNA LAŠKO, D. D., AND PIVOVARNA LAŠKO GROUP WERE THE FOLLOWING: • Regular business operations of the parent company Pivovarna Laško, d. d., as well as Pivovarna Laško Group for the fiscal year 2009 were successful despite the known general economic conditions, namely, the operational costs were substantially reduced.

•P ivovarna Laško generated EUR 99,662,537 of sales revenue, which is 8.11 percent less than the previous fiscal year. Profit from the operations of Pivovarna Laško, d. d. was EUR 16.9 million, which is 23.85 percent more than the previous fiscal year. The company indicated EUR 23.8 million EBITDA, which is 9.72 percent more than in the previous year.

•N et loss for the fiscal year, disclosed in the amount of EUR 44.9 million, is the result of weakening in-

vestments, debt write-offs, loans and guarantees given for loans in the total amount of EUR 18.2 million in Jadranska Pivovara – Split, d. d., due to the impairment from loans granted including the accrued interest to the companies Center Naložbe, d. d., and Infond Holding, d. d., in the total amount of EUR

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7.7 million; impairment of the investment in the affiliated company Delo, d. d., in the amount of EUR 28.3 million; impairment of the investment into the company Thermana, d. d., in the amount of EUR 5.3 million; and investment in the company Elektro Gorenjska in the amount of EUR 0.4 million. The company also disclosed financial expense from impairments from the guarantee granted in shares of Radenska (345,304 RARG) for loans taken by the then-parent company Center Naložbe, d. d., in the amount of EUR 3.6 million.

•T he Supervisory Board discussed and took note of possible scenarios for the financial restructuring of Pivovarna Laško, d. d., and Pivovarna Laško Group, presented by the Management Board.

• I n 2009 Pivovarna Laško, d. d., sold 1,011,539 hectolitres of drinks, of which 96.8 percent were beer, which is almost the same as the previous year. Of those sales Pivovarna Laško sold 21.1 percent on foreign markets, on which the share of export into the countries of the former Yugoslavia is decreasing; however, exports to the markets of Italy and Austria are increasing.

•P ivovarna Laško Group is disclosing in 2009 a consolidated loss of EUR 162.1 million. Gross impairments of the Group total EUR 199 million; taking into account the deferred tax assets, the net amount of the impairment totals EUR 165 million.

•P ivovarna Laško Group sold 4,552,891 hectolitres of beverages, which is 9.2 percent less than in 2008. The Group generated EUR 273.4 million in revenues from the sale of beverages, and generated EUR 327 million in net revenues with the company Delo, which is 9.17 percent less than in 2008.

•P ivovarna Laško Group generated EUR 5.2 million of consolidated operating loss. Impairments amount to EUR 165 million. The Group disclosed EUR 55.7 million EBITDA, which is 39.74 percent more than in the year before.

•P ivovarna Laško Group continues with synergistic activities in the fields of supply, sale, informatics, human resources and other business functions. Comparisons with similar companies on a global basis indicate that the operating results of the company Pivovarna Laško Group are approaching comparison with the most successful companies from the branch of beverages in the region and in Europe.

• I n 2009 Pivovarna Laško Group employed 1,931 workers, which is 7.61 workers fewer than in 2008.

WORK OF THE AUDIT COMMITTEE OF THE SUPERVISORY BOARD The Audit Committee was established on 2 March 2009 and first met at a meeting held on 23 April 2009. The president of the Commission was Mr Simon Zdolšek until the expiry of his term of office; other members of the Commission were Mr Bojan Košak and Mr Marko Koleša. The Supervisory Board appointed a new member only after the election of new supervisors, namely, Mr Marjan Mačkošek, who has also been acting as the chairman of the Audit Committee since 30 March 2010. The Commission also met at another meeting held on 29 March 2010, when it was acquainted with the unaudited unconsolidated and consolidated financial statements for the year 2009 and with the special audit report. The Audit Commission proposed that the Supervisory Board recommend to the Management Board a review of individual transactions which were in terms of content related to those considered in the special audit report, but the aforementioned audit

tion to the Supervisory Board to adopt appropriate decisions, with which it shall require the management of the company to adopt relevant measures for remedying the financial situation of the company. The Audit Commission made a proposal to the Supervisory Board to confirm the annual report of the company and Pivovarna Laško Group for the year 2009, as well as the auditor's report for the year 2009.

VERIFICATION OF THE ANNUAL REPORT OF THE MANAGEMENT BOARD FOR THE FISCAL YEAR 2009

R E P O R T

it, and also got acquainted with the additional explanations of the certified auditor. Based on these data the Audit Committee found that the company is threatened with insolvency, and that is why it made a proposi-

A N N U A L

the audited annual report of the parent company and Pivovarna Laško Group for the year 2009, examined

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failed to review them. On 21 April 2010 the Audit Commission got acquainted with the complete material of

The Supervisory Board, at its 18th meeting held on 23 April, discussed the audited annual report of the management for the fiscal year 2009, which was audited by the company Deloitte Revizija, d. o. o., Ljubljana. The audit relates to the parent company Pivovarna Laško, d. d., and Pivovarna Laško Group. In examination of the enclosed annual report for the year 2009, the Supervisory Board considered the following factors:

•T he negative operating result is mainly due to the impairment of investments and write-offs, which were based on individual transactions of the previous management of Pivovarna Laško, d. d.

red the management and operations of the company and checked its business performance on a regular basis; the Management Board has been reporting to the members of the Supervisory Board about the current operating results of the parent company and the Group on a regular monthly basis.

•T he audit company Deloitte Revizija, d. o. o., Ljubljana, issued on 31 March 2010 a positive opinion on the business operations of the company Pivovarna Laško, d. d. and Pivovarna Laško Group for the year 2009. When discussing the audit report, the Supervisory Board paid particular attention to the auditor's note on liquidity risk, when he states that the circumstances described suggest a relevant uncertainty for which there is a doubt about the company's ability to continue as a going concern. Therefore, the Supervisory Board at its meeting confirmed the starting points of the new business model and reorganization of the companies from Pivovarna Laško Group (contractual group of companies and organizational mode) and confirmed the starting points of the growth strategy of companies from Pivovarna Laško Group until 2014 (drinks segment), which was prepared and submitted by the company management as actions for the reconstruction of the company's financial situation. Based on the activities and factors and by the management's detailed verification of the submitted annual report for 2009, the Supervisory Board concluded the following:

•T hat the annual report of Pivovarna Laško, d. d., and Pivovarna Laško Group for 2009 is set transparently and clearly;

•T hat the annual report of Pivovarna Laško, d. d., and Pivovarna Laško Group for 2009 discloses a realistic and a fair view of assets, liabilities, the financial situation and the profit of Pivovarna Laško, d. d., and Pivovarna Laško Group.

D . L A Š K O

ronment, but are satisfactory due to cost reductions.

•T he Supervisory Board, in the context of the data prepared by the Management Board, regularly monito-

P I V O V A R N A

of the expected. The operating results represent the results of deteriorating economic trends in the envi-

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•B usiness operations of Pivovarna Laško, d. d., and Pivovarna Laško Group for 2009 are within the limits

•T he Supervisory Board has no objections to the annual report for the year 2009 submitted by the management, and that is why it has accepted it in the proposed text at its 18th regular meeting held on 23 April 2010.

COVERING THE ACCUMULATED LOSS The Supervisory Board agrees with the proposal made by the management that the net loss for the fiscal year 2009 in the amount of EUR 44.9 million be covered from the following components of equity: other profit reserves in the amount of EUR 6.2 million, statutory reserves in the amount of EUR 21.9 million and capital surplus in the amount of EUR 16.8 million.

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CONCLUSION The Supervisory Board of Pivovarna Laško, d. d., hereby notes that the management began to rehabilitate the company's operations in the second half of 2009. The management thus met the expectations of the Supervisory Board, and that is why the Supervisory Board:

• a t its regular meeting held on 23 April 2010 accepted in the proposed form the audited annual report for the fiscal year 2009, submitted to it by the company management;

• a greed with the management's proposal regarding covering the net loss; and •p roposed to the general meeting of shareholders that it, upon the adoption of the decision on covering the net loss, grants a discharge for operations in the year 2009 to the company management, and to the manager Dušan Zorko, MSc., who has been acting as the manager since 24 July 2009, as well as to the Supervisory Board of the company Pivovarna Laško, d. d., while not granting a discharge to the former management of the company, Mr Boško Šrot, who led the company until 23 July 2009.

Anton Turnšek

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Chairman of the Supervisory Board

P I V O V A R N A

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1.3

S i g n i f i c a n t p e r f o r m a n c e h i g h l i g h t s o f P i v o va r n a L a š k o Group SALES REVENUES AND OPERATING PROFIT INCLUDING DEPRECIATION (EBITDA)

450.0

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In EUR mil

330.1

327.0

EBITDA

225.0

112.5

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337.5

Net sales revenues

360.0

63.0

55.4

22.8

0 2007

2008

2009

In 2009 sales revenues decreased by 9.2 %, and the operating profit including depreciation (EBITDA) decreased by 58.9 %.

RETURN ON ASSETS (ROA) AND RETURN ON EQUITY (ROE)

25.0

15.8

Return on Equity (ROE)

20.3

Return on Assets (ROA)

9.9

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in %

6.7

-29.5 -10.1

-2.5 -3.5

-1.3

-11.7 -20.8 -30.0 2007

2008

2009

2008

2009

330,062,922

360,028,307

327,026,846

Net profit

61,290,469

3,855,582

-162,099,646

Net cash flow1

92,113,003

33,572,006

-134,099,464

EBIT

32,204,011

25,700,173

-5,229,918

EBITDA

63,026,545

55,416,597

22,770,264

Long-term assets

595,776,889

624,040,291

564,998,357

Short-term assets

200,614,291

187,235,021

116,797,789

Equity

322,929,993

295,977,383

162,594,380

Long-term liabilities

206,291,365

248,182,776

136,988,946

Short-term liabilities

267,169,822

267,115,153

382,212,820

2007

2008

2009

18.6 %

1.1 %

-49.6 %

A N N U A L

1Net profit including depreciation

INDICATORS

Net profit from sales revenues

9.8 %

7.1 %

-1.6 %

EBITDA share in sales revenues

19.1 %

15.4 %

7.0 %

Return on equity (ROE)2

20.3 %

-3.5 %

-29.5 %

Return on assets (ROA)3

9.9 %

-1.3 %

-10.1 %

Liabilities/equity

1.466

1.741

3.193

2Net profit/average state of equity in the period

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3Net profit/average state of assets in the period

NUMBER OF EMPLOYEES

Employees as at 31.12.

2007

2008

2009

1,734

1,620

1,462

*2,208

*2,090

*1,931

*Including the employees of the company Delo, d. d.

EXPORT SHARE IN THE TOTAL SALE OF PIVOVARNA LAŠKO GROUP BEVERAGES ( in hl )

2007

2008

2009

Total sale of beverages

5,070,584

5,017,664

4,552,891

Export

1,156,187

1,111,450

983,381

22.8

22.2

21.6

Share (in %)

D .

EBIT share in sales revenues

R E P O R T

Net sales revenues

2007

P I V O V A R N A

( in EUR )

2 0 0 9

IMPORTANT INFORMATION ON PIVOVARNA LAŠKO GROUP OPERATIONS

Plans for 2010 TOTAL SALE OF BEER, WATER, SOFT DRINKS AND OTHER ALCOHOLIC BEVERAGES AND PLANS FOR THE FORTHCOMING YEAR ONOSNOST SREDSTEV (ROA) IN LASTNIŠKEGA KAPITALA (ROE) 3,000,000

Juice, syrup Water

in hectolitres

Beer

1,500,000 Other alcohol

750,000

A N N U A L

R E P O R T

2 0 0 9

2,250,000

2008

( in hl )

2009

Plans 2010

2008

2009

Plans 2010

Juice, syrup

1,505,780

1,421,936

1,423,445

Water

1,273,569

1,146,434

1,183,525

Beer

2,229,024

1,975,579

1,952,050

9,291

8,942

7,875

5,017,664

4,552,891

4,566,895

( in % )

2008

2009

Plans 2010

Juice, syrup

30.0

31.2

Water

25.4

25.2

25.9

Beer

44.4

43.4

42.7

Other alcohol Total

P I V O V A R N A

L A Š K O

D .

Other alcohol Total

100.0

In the business year 2010, Pivovarna Laško Group expects a sale of 4,567 million hectolitres of all types of drinks, which is nearly equal to sales in 2009. Our plan was set optimistically, since we are planning an increased sale to foreign markets.

1.4

P e r f o r m a n c e h i g h l i g h t s o f P i v o va r n a L a š k o , d . d . SALES REVENUES AND OPERATING PROFIT INCLUDING DEPRECIATION (EBITDA)

Net sales revenues

130.0 108.6

108.5

EBITDA

99.7

23.8

21.5

R E P O R T

27.0

32.5

2 0 0 9

65.0

0 2007

2008

2009

In 2009 sales revenues compared to the previous year decreased by 8.1 %, while the operating profit including depreciation (EBITDA) increased by 10.8 %.

A N N U A L

in EUR mil.

97.5

RETURN ON ASSETS (ROA) AND RETURN ON EQUITY (ROE)

5.5

Return on Assets (ROA)

D .

-1.3

-12.0

-10.1

-18.0

L A Š K O

in %

-6.0

Return on Equity (ROE)

-29.5

D .

-3.5

-24.0 -30.0 2007

2008

2009 P I V O V A R N A

6.0

5.3

NET PROFIT AND MARKET CAPITALIZATION

Net profit in EUR mil.

-6.1

5.0 -5.0

-45.0

Market capitalization in the end of the period

600 420

400

-25.0

200

-45.0

2 0 0 9 R E P O R T

800

-15.0

237

A N N U A L

Net profit

759

-35.0

0 2007

2008

2009

IMPORTANT INFORMATION ON PIVOVARNA LAŠKO, D. D., OPERATIONS

( in EUR )

Net sales revenues

1,000 Market capitalisation in EUR mil.

12.1

15.0

2007

2008

2009

108,612,383

108,463,850

99,662,537

Net profit

12,148,067

-6,094,056

-44,973,818

Net cash flow1

20,662,314

2,532,032

-38,065,247

EBIT

18,523,348

12,867,447

16,898,111

EBITDA

26,156,699

29,510,000

27,948,962

231,336,521

175,571,742

129,302,643

D .

23,806,682 398,843,120

Long-term liabilities

115,099,334

161,706,940

58,652,057

D .

21,493,535 433,172,048

Equity Short-term liabilities

156,216,358

125,403,366

238,837,382

1Net profit including depreciation

P I V O V A R N A

Short-term assets

27,037,595 476,495,514

L A Š K O

Long-term assets

INDICATORS

2007

2008

2009

Net profit or loss from sales revenues

11.2 %

-5.6 %

-45.1 %

EBIT share in sales revenues

17.1 %

11.9 %

17.0 %

EBITDA share in sales revenues

24.9 %

19.8 %

23.9 %

Return on equity (ROE)2

5.3 %

-3.5 %

-29.5 %

Return on assets (ROA)3

5.5 %

-1.3 %

-10.1 %

Liabilities/equity

1.173

1.635

2.301

2Net profit/average state of equity in the period 3Net profit/average state of assets in the period

NUMBER OF EMPLOYEES

2007

2008

2009

Employees as at 31.12.

331

324

321

Average number of employees

337

328

324

2008

2009

1,066,145

1,046,292

978.833

182,579

172,935

213,198

17.1

16.5

21.8

2007

2008

2009

Pivovarna Laško

50.1

48.3

45.1

Pivovana Union

37.1

37.5

39.7

Beer sale Export Share (in %)

MARKET SHARE IN THE SALE OF BEER ON THE SLOVENIAN MARKET ( in % )

Imported beer Total

12.8

14.2

15.2

100.0

2007

2008

2009

8,747,652

1.39

-0.70

-5.14

R E P O R T

2007

A N N U A L

( in hl )

2 0 0 9

EXPORT SHARE IN THE TOTAL SALE OF BEER OF PIVOVARNA LAŠKO, D. D.

Net profit/loss per share ( EUR ) Dividend per share ( EUR ) Market value of share on 31.12. ( EUR )

1.00

86.77

47.98

Avg. price per share/net profit or loss per share

62.42

-68.54

-5.28

Bookkeeping value of share on 3.12. ( EUR )4

26.45

20.07

14.78

Avg. price per share/bookkeeping value of share Market capitalization in EUR ( 31.12 .)

27.15

3.28

2.39

1.84

759,033,764

419,712,343

237,498,752

4Equity on 31.12./total number of shares

P I V O V A R N A

Total number of issued shares

L A Š K O

D .

DATA ON PILR SHARE

1.5

Vi s i o n , m i s s i o n a n d s t r at e g i c o b j e c t i v e s VISION

To become the leader in the production and sale of beverages. To strengthen the reputation and awareness of individual recognized brands both on domestic as well as on foreign markets, thus increasing market shares in individual markets. MISSION

We create brands with added value for our customers and shareholders. With responsible and enviro-

A N N U A L

R E P O R T

2 0 0 9

nmentally friendly operation, our company aims to achieve excellent results in a better world. VALUES

Knowledge, entrepreneurship, partnership, responsibility and appreciation. It is on the basis of these values that we realize our objectives with well- conceived strategies in marketing and supply development, organization and human resources management, technological development, management of financial resources, and a positive attitude towards the wider society. STRATEGIC OBJECTIVES

Production and sale of innovative and trendy products, maintaining market positions of own brands on the domestic market, recovery and expansion to positions already achieved on foreign markets in the past. The planned cost efficiency will be achieved with professionally competent co-workers

Group of afilliates

Parent company

PIVOVARNA LAŠKO GROUP

PIVOVARNA LAŠKO

PRESENTATION

Production of beer,

Production of beer and

mineral, spring and natural

natural waters.

waters, soft drinks and

D .

syrups for making beverages,

D .

acting as a team and in accordance with the policies of Pivovarna Laško Group.

other alcoholic drinks,

newspaper and publishing

retail and wholesale services,

and services of other postal

and courier activities.

COMPOSITION

Pivovarna Laško, d. d.

Radenska, d. d., Radenci

with associated company

Pivovarna Union, d. d., Ljubljana

with associated companies

Jadranska Pivovara – Split, d. d.

Vital Mestinje, d. o. o.

Delo, d. d., Ljubljana

with associated companies

RA&LA, d. o. o., Sarajevo

Firma Del, d. o. o., Laško

P I V O V A R N A

L A Š K O

Pivovarna Laško, d. d.

Due to the financial insignificance of the companies RA&LA and Firma Del, they will not be dealt with in detail in further text.

P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

2 0 0 9

1.6

P r e s e n tat i o n o f P i v o va r n a L a š k o G r o u p Pivovarna Laško Group brings together producers of beer, mineral, spring and natural waters, soft drinks, spirits and other alcoholic beverages, and syrups for making beverages; it also includes newspaper and publishing businesses, as well as retail and wholesale services and services of other postal and courier activities. Parent companiy

A N N U A L

R E P O R T

2 0 0 9

• PIVOVARNA LAŠKO, d. d., Slovenia Subsidiary companies • RADENSKA, d. d., Radenci, Slovenia 93.801 % ownership • PIVOVARNA UNION, d. d., Ljubljana, Slovenia 97.889 % ownership • JADRANSKA PIVOVARA – Split, d. d., Croatia 99.106 % ownership • VITAL MESTINJE, d. o. o., Slovenia 96.92 % business share

• DELO, d. d., Ljubljana, Slovenia 100 % ownership – of which Pivovarna Laško 80.831 %, Radenska 19.166 % and

D .

100.00 % business share – of which Pivovarna Laško 69.23 %, Radenska 1.97 %,

P I V O V A R N A

L A Š K O

• RA&LA, d. o. o., Sarajevo, Bosnia and Herzegovina

D .

Firma Del 0.003 %

Pivovarna Union 11.48 % and Fructal 17.32 % • FIRMA DEL, d. o. o., Laško, Slovenia (before TALIS, d. o. o., Maribor) 100.00 % business share Due to the financial insignificance of the companies RA&LA and Firma Del, they will not be dealt with in detail in further text. Associated companies • BIRRA PEJA, d. d., Peć, Kosovo 39.55 % ownership • POSLOVNI SISTEM MERCATOR, d. d., Ljubljana, Slovenia 23.34 % ownership • THERMANA, d. d., Laško, Slovenia 22.571 % ownership

FRUCTAL, d. d. Ajdovščina Ownership: 93.02 %

MIRAL RADENSKA, d. o. o. Radenci Busin. share: 100 %

P I V O V A R N A

L A Š K O

FRUKTAL MAK, a. d. Skopje Ownership: 89.39 %

EUROFRUIT SARAJEVO, d. o. o. Sarajevo Busin. share: 100 %

D .

Ownership: 99.11 %

Ownership: 97.89 %

Ownership: 93.80 %

D .

JADRANSKA PIVOVARA - Split, d. d.

PIVOVARNA UNION, d. d. Ljubljana

RADENSKA, d. d., Radenci

FRUCTAL ZAGREB, d. o. o. Zagreb Busin. share: 100 %

Subsidiary company

Before: Talis, d. o. o., Maribor

Pivovarna Laško Busin. share in RA&LA 69.23 % Radenska Busin. share in RA&LA 1.97 % Pivovarna Union Busin. share in RA&LA 11.48 % Fructal Busin. share in RA&LA 17.32 %

Pivovarna Laško Ownership in Delo 80.831 % Radenska Ownership in Delo 19.166 % Firma Del Ownership in Delo 0.003 % Delo subsidiary company: IZBERI, d. o. o. Ljubljana Busin. share: 100 %

A N N U A L

R E P O R T

2 0 0 9

Delo subsidiary company: VEČER, d. d. Maribor Busin. share: 100 %

Busin. share: 100 %

Ownership: 100 %

Busin. share: 96.92 %

FIRMA DEL, d. o. o. Laško

RA&LA, d. o. o. Sarajevo

DELO, d. d. Ljubljana

VITAL, d. o. o. Mestinje

Subsidiary company

Parent company

PIVOVARNA LAŠKO, d. d.

on 31.12.2009

PIVOVARNA LAŠKO GROUP

1.7

P r e s e n tat i o n o f t h e p a r e n t c o m p a n y P i v o va r n a L a š k o , d . d .

1.7.1 COMPANY PROFILE PIVOVARNA LAŠKO, d. d., Trubarjeva 28, 3270 Laško was entered in the Register of Companies under No. 1/00171/00 at the District Court of Celje, Court order number SRG 95/00673, of September 1995.

A N N U A L

R E P O R T

2 0 0 9

Abbreviated company name: PIVOVARNA LAŠKO, d. d. Organization type: joint stock company Share capital: EUR 36,503,305 Number of shares issued: 8,747,652 no-par-value shares Share quotation: Ljubljanska Borza, d. d., stock exchange listing of regular shares Share label: PILR Registration number: 5049318 Tax number: 90355580 Activity code: 11.050 Type of business and principal activity: BEER

PRODUCTION

Director – one-member Management Board:

Boško Šrot, until 23 July 2009

Dušan Zorko, MSc., since 24 July 2009

P I V O V A R N A

L A Š K O

D .

Chairman of the Supervisory Board:

Boris Završnik, until 23 April 2009

Andrej Kebe (deputy chairman of the

Supervisory Board)

Anton Turnšek, since 23 July 2009

Transaction accounts: Account No. 1:

Banka Celje

06000-0001199122

Account No. 2:

Nova LB

02232-0020104463

Account No. 3:

Nova KBM

04515-0000909883

Telephone:

+386 3 734 80 00

Telefax:

+386 3 573 18 17

E-mail:

info@pivo-lasko.si

Website: http://www.pivo-lasko.si

1.8

An overview of the most significant events in 2009 1.8.1 MAJOR BUSINESS EVENTS IN PIVOVARNA LAŠKO, d. d. Cancellation of the general meeting of Pivovarna Laško, d. d. The Management Board of Pivovarna Laško, d. d., on the day of 29 May 2009, cancelled the regular general meeting of shareholders, which was scheduled to convene that day. However, some shareholders carried out a spontaneous general meeting of shareholders, as is apparent from the minutes of Notary Miro Bregar from Litija. Some shareholders then brought an action for the declaration of invalidity of the conclusions from that report. Pivovarna Laško, d. d., as the defendant recognized the claim of these shareholders.

general meeting for 31 August 2009.

Implementation of the general meeting of Pivovarna Laško, d. d., and challenge to the decisions adopted at this meeting Pivovarna Laško, d. d., on 31 August 2009 implemented the 15th regular general meeting of shareholders of Pivovarna Laško, d. d. The Pan-Slovenian Shareholders' Association (VZMD) brought an action against the decisions that were adopted at the aforementioned general meeting, the contents of which are available

R E P O R T

us general meeting were invalid and void. The Management Board of Pivovarna Laško, d. d., convened a new

A N N U A L

of two members of the Supervisory Board. The District Court of Celje has, after the opposition of Pivovarna Laško, d. d., denied the entry of these two members with an explanation that the decisions of the spontaneo-

2 0 0 9

The Pan-Slovenian Shareholders’ Association, based on the aforementioned minutes, proposed the entry

on the portal SEOnet, due to invalidity of these decisions. Pivovarna Laško, d. d., believes that the allegations in the action of VZMD are unfounded. The District Court of Celje has not yet decided on this matter.

Criminal investigation of Pivovarna Laško, d. d. A pre-trial criminal investigation was conducted on 30 September 2009 on the business premises of Pivovarna Laško, d. d., against several suspected natural persons and legal entities due to the suspicion of a

criminal act according to Article 244/II and I of the Penal Code with regard to articles 25 and 252/I, II, III of the Penal Code or Article 245 of the Penal Code KZ-1, all in relation to articles 4 and 25/VII of the Criminal

Changes in relevant interests in Pivovarna Laško, d. d. The affiliated company FIN-DO, d. o. o., which is 100 % owned by NLB, d. d., on 5 August 2009 acquired 1,713,685 shares of PILR, which represents 19.59 % of shares, and had, together with NLB, d. d., a 19.59 % share of the issuer's voting rights. On 10 August 2009, Gorenjska Banka, d. d., Kranj, acquired 542,448 shares of Pivovarna Laško, d. d., with the label PILR, which represents 6.20 % of voting rights of the issuer Pivovarna Laško, d. d. On 13 August 2009 Probanka, d. d., acquired 443,499 shares of Pivovarna Laško, d. d., with the label PILR, with which it became the owner of 594,628 shares total with the label PILR, which represents 6.80 % of shares and voting rights of the issuer Pivovarna Laško, d. d. On 20 August 2009 TCK, d. o. o., acquired 613,300 shares of Pivovarna Laško, d. d., with the label PILR, which represents 7.01 % of shares and voting rights of the issuer Pivovarna Laško, d. d. On 30 September 2009 the affiliated company FIN-DO, d. o. o., disposed of 1,713,685 shares of PILR, which represents a 19.90 % share of the issuer's voting rights. On the same day NLB, d. d., acquired 1,713,685 shares of PILR, which represents 19.90 % share of the issuer's voting rights. The above text clearly indicates that banks encashed the shares of Pivovarna Laško, d. d. (PILR), which the company Infond Holding, d. d., had insured for bank loans. Since 5 August 2009, Infond Holding, d. d., Maribor, is no longer the majority owner of Pivovarna Laško, d. d.

D .

affiliated company Plinfin, d. o. o., sold to Sportina, d. o. o., in 2007.

L A Š K O

sale of 378,327 ITBG shares, which Pivovarna Laško, d. d., with alienation of 100 % business share in the

P I V O V A R N A

all the required documents—that is, documentation with regard to the legal operations on the purchase and

D .

Liability and Legal Entities Act (ZOPOKD). Pivovarna Laško, d. d., handed over to the criminal investigators

Additional explanation regarding the change in ownership structure of Pivovarna Laško, d. d. Explanation regarding the indirect ownership of the former Management Board (term of office until 23 July 2009): the former director of Pivovarna Laško, d. d., Mr Boško Šrot, was together with his wife, Ms Anica Aužner Šrot, owner of the company Atka-Prima, d. o. o., Celje, which had a 100 % or majority share in the company Kolonel, d. d., Maribor. The latter was the majority owner of the company Center Naložbe, d. d., Maribor, which was the majority owner of the company Infond Holding, d. d., Maribor.

Report on subordination according to Article 545 of the Companies Act ZGD-1 Based on the decision of the director at that time, Mr Boško Šrot, and in the interest of the then-parent or controlling companies of Pivovarna Laško, d. d., Pivovarna Laško,

d. d., concluded some transactions

(identified to this day) which have incurred a disadvantage to Pivovarna Laško, d. d., or there is the potential

A N N U A L

R E P O R T

2 0 0 9

that such disadvantage shall occur in the future. The transactions are identified in the report on subordination according to Article 545 of the Companies Act on pages 40 to 42. Pivovarna Laško informed the company Atka-Prima, d. o. o., with a letter of 29 December 2009 that it incurred a disadvantage because it followed the instructions of the director of the company at that time, Mr Boško Šrot, who was a partner and the manager of the company Atka-Prima, d. o. o., at the same time, to enter into the transactions which are identified in the report on subordination in accordance with Article 545 of the Companies Act ZGD-1. Atka-Prima, d. o. o., responded with a letter of 2 February 2010, explaining that its investment in the company Kolonel, d. o. o., was only a financial investment and that it rejects the demands of Pivovarna Laško, d. d. Bearing in mind the bankruptcy of the company Infond Holding, d. d., and the compulsory settlement of Center Naložbe, d. d., Pivovarna Laško, d. d. intends to exercise the injury in relevant court proceedings once it has determined its scope.

1.8.2 IMPORTANT BUSINESS EVENTS IN PIVOVARNA LAŠKO GROUP

Criminal investigation in the companies of Pivovarna Laško Group A pre-trial criminal investigation was conducted on 18 June 2009 on the business premises of Pivovarna Laško Group (in Pivovarna Laško, d. d., in Pivovarna Union, d. d., and in Radenska, d. d.) against several suspected natural and legal persons (however, not against the aforementioned companies from Pivovarna

P I V O V A R N A

L A Š K O

D .

Laško Group) on suspicion of committing offences according to Article 244/III and I of the Penal Code, according to Article 235 of the aforementioned Penal Code with regard to articles 25 and 33 of the Penal Code and with regard to articles 4/I and 25/VII of the Criminal Liability of Legal Entities Act (ZOPOKD). Upon the request of criminal investigators, the managements of the companies handed over all required business documentation from 1 January 2006 onward. The investigation is part of the pre-trial proceedings.

Decisions of the Competition Protection Office (UVK) regarding ownership concentration over the company Mercator, d. d. With a decision of 2 June 2009, the Competition Protection Office of the Republic of Slovenia (hereinafter: UVK) stopped the process of assessing the compliance of ownership concentration with the rules of competition for the companies Infond Holding, d. d., Istrabenz, d. d., Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d., and Poslovni Sistem Mercator, d. d., which was introduced by its own motion of 2 June 2009. On the same day (2 June 2009) UVK issued a decision and decree, by which it introduced a procedure against the companies Infond Holding, d. d., and Poslovni Sistem Mercator, d. d., and found that the ownership concentration of these companies is subject to the provisions of the Prevention of the Restriction of Competition Act ZPOmK-1. Therefore it banned the company KDD from implementing the transfer of MELR share ownership, of which the owners are the companies Infond Holding, d. d., Pivovarna Laško, d. d., Pivovarna Union, d. d., and Radenska, d. d., without prior consent of UVK, until a decision is issued on compliance of ownership concentration of the companies Infond Holding, d. d., and Poslovni Sistem Mercator, d. d., with the rules of competition. With a decision of 9 September 2009, UVK stopped the procedure of assessing the compliance of ownership concentration of the companies Infond Holding, d. d., and Poslovni Sistem Mercator, d. d., which was introduced with a decision of 2 June 2009.

On 14 September 2009 the companies from Pivovarna Laško Group, which are Pivovarna Laško, d. d., Pivovarna Union, d. d., and Radenska, d. d., Radenci, received a notification from KDD Centralna Klirinška Depotna Družba, d. d., Ljubljana that KDD erased the ban of availability on the aforementioned companies based on the decision of UVK of 9 September 2009 in securities with the label MELR or Mercator shares, which was entered based on the decision of 2 June 2009.

Decision of the Competition Protection Office regarding the ownership concentration procedure over the company Večer, d. d. On 24 September 2009 the affiliated company, Delo, d. d., received a decision from UVK that the ownership concentration of the companies Delo, d. d., and ČZP Večer, d. d., which occurred with the acquisition of 151,608 shares of the company ČZP Večer with the label VEMG of ?? November 2008, is not in compli-

stop the procedure of assessing the compliance of the alleged ownership concentration of the companies Infond Holding, d. d., Pivovarna Laško, d. d., and Delo, d. d., over the company ČZP Večer, d. d.

Bankruptcy proceedings against Infond Holding, d. d., and Center Naložbe, d. d. On 19 October 2009, Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d., Fructal, d. d., and Delo, d. d., as petitioners submitted a petition at the District Court of Maribor for the initiation of bankrupt-

R E P O R T

Pivovarna Laško, d. d., received a decision of 23 September 2009 from UVK, with which UVK decided to

A N N U A L

aforementioned decision, finally dispose of 191,943 shares of ČZP Večer, d. d., with the label VEMG, which represents a 75 % equity share in the share capital of the company ČZP Večer, d. d. On 25 September 2009

2 0 0 9

ance with the competition rules and is therefore banned. Delo, d. d. shall, for the purposes of eliminating the effects of the prohibited ownership concentration, within the period of one year from the receipt of the

cy proceedings against the companies Center Naložbe, d. d., Maribor and Infond Holding, d. d., Maribor. Petitioners or creditors have submitted petitions against the aforementioned debtors for the initiation of bankruptcy proceedings at the court due to exercising and protecting their accounts receivable and and to ensure equitable repayment of creditors. The District Court of Maribor reached a decision on 28 December 2009 that a bankruptcy proceeding shall be introduced against the debtor, the company Infond Holding, finančna družba, d. d., Maribor.

Acquaintance with reports of affiliated companies in accordance with Article 545 of the Com-

ted companies state dealings concluded particularly with the companies Infond Holding, d. d., and Center Naložbe, d. d., according to the instructions within the framework of the actual group. These reports and additional explanations Pivovarna Laško, d. d., entirely disclosed in its announcement of business data for the period January–September 2009 on SEOnet on 24 November 2009. The aforementioned affiliated companies also drafted these reports on subordination in the first three months of the fiscal year and included them in the annual report. Pivovarna Laško, d. d., summarized these reports completely in the chapter titled »Disclosure on reports of affiliated companies according to Article 545 of the Companies Act ZGD-1«, on pages 42 to 51. At the end of the year 2009 Pivovarna Laško, d. d., received from its affiliated companies, Pivovarna Union, d. d., Radenska, d. d., Fructal, d. d., and Delo, d. d., memoranda with regard to compensations for disadvantages, in which the affiliated companies warned Pivovarna Laško, d. d., as the parent company to compensate for the disadvantage at the end of the fiscal year. Pivovarna Laško, d. d., responded to all the aforementioned affiliated companies that the instructions given by the former management board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the interest of the then-parent company Atka-Prima, d. o. o., which is why it rejected the demands of the affiliated companies and suggested that the affiliated companies the bring their requirements, based on the activities of the multi-level group, against the company Atka-Prima, d. o. o. The aforementioned affiliated companies stated in their annual reports that they will exercise the damages, once they have discovered their scope, in relevant court proceedings with regard to the bankruptcy of the company Infond Holding, d. d., and with regard to compulsory settlement of the company Center Naložbe, d. d.

D . L A Š K O

informed Pivovarna Laško, d. d., as the parent company, with their reports on subordination or relationships with the parent company according to Article 545 of the Companies Act ZGD-1. In these reports the affilia-

P I V O V A R N A

The affiliated companies Pivovarna Union, d. d., Radenska, d. d., Radenci, Delo, d. d., and Fructal, d. d.,

D .

panies Act ZGD-1

P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

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BUSINESS REPORT

2.1

C o r p o r at e g ov e r n a n c e The management principles of Pivovarna Laško, d. d., arise from applicable legal norms in the Republic of

Slovenia, internal acts of the company and established good practice. The management operates according to a two-tier system in which the company is managed by the Management Board while its operations are controlled by the Supervisory Board. The company organs as set by the Statute of Pivovarna Laško, d. d., are the General Meeting of Shareholders, Supervisory Board and the Management Board.

2.1.1 GENERAL MEETING OF SHAREHOLDERS According to the provisions of the Companies Act, the General Meeting of Shareholders represents the

voting rights at the General Meeting of Shareholders.

Participation at the General Meeting of Shareholders The right to participate and vote at the General Meeting of Shareholders is held by those shareholders who have been entered by a particular cut-off date (at least three days prior to the General Meeting of Shareholders) into the share register at the Central Securities Clearing Corporation, d. d., Ljubljana (KDD), and who personally, through a representative or a nominee, reported their participation not later than three days before the holding of the General Meeting of Shareholders.

R E P O R T

Shareholders. Pivovarna Laško, d. d., has no shares with limited voting rights. Treasury shares do not allow

A N N U A L

re fundamental and statutory decisions are adopted. One share represents one vote at a General Meeting of

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supreme organ of the company. It is where the will of the company’s shareholders is implemented and whe-

Members of the Management Board and of the Supervisory Board may attend the General Meeting of Shareholders also in the event they are not shareholders. Media representatives may also attend the General Meeting of Shareholders if they announce their presence to the Management Board of the company in written form not later than three days before the General Meeting of Shareholders is held.

Call and implementation of the General Meeting of Shareholders A General Meeting of Shareholders is convened when it is for the benefit of the company or when it is

Management Board of Pivovarna Laško, d. d., on the same day.

Decisions of the General Meeting of Shareholders At the 15. Regular General Meeting of Shareholders, the following important decisions were adopted, under point:

2.1.

The General Meeting of Shareholders shall be acquainted with the report of the company’s Supervisory Board upon verification and acceptance of the audited annual report for the fiscal year 2008.

2.2.

It shall be noted that on 31 December the net loss for fiscal year 2008 totals EUR 694,025 and consists of a net loss for the fiscal year 2008 in the amount of EUR 6,094,057 and of undistributed profits from previous years in the amount of EUR 4,400,032. Net loss for the fiscal year 2008 in the amount of EUR 4,400,032 shall be covered from undistributed profit from previous years, and in the amount of EUR 1,694,025 from other reserves from profit.

2.3.1.

The General Meeting of Shareholders did not grant a discharge to the Management Board for the fiscal year 2008.

2.3.2. The General Meeting of Shareholders did not grant a discharge to the members of the company’s Supervisory Board for the fiscal year 2008.

D . L A Š K O

The General Meeting was convened on 28 April and expected for 29 May 2009, but it was cancelled by the

P I V O V A R N A

Meeting of Shareholders is convened once a year. The General Meeting was in the year 2009 convened on 30 July and implemented on 31 August.

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necessary in accordance with the law and Statute of the company. In Pivovarna Laško, d. d., a regular General

In addition, the General Meeting of Shareholders also adopted the following decisions:

•D ecision on authorisation granted to the Management Board for acquiring treasury shares (page 59); •E lected members of the Supervisory Board (page 29); •A ppointed an auditor (page 38) and set gross amounts of attendance fees for the members of the Supervisory Board; and

•A ppointed a special auditor to check the management of particular transactions of the company (page 38). The General Meeting of the Shareholders is convened by the company's Management Board on its own initiative, upon request of the Supervisory Board or upon the request of shareholders having at least 5 % of the company's share capital. Shareholders may realize the rights from the shares directly at the General

A N N U A L

R E P O R T

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Meeting of Shareholders or through nominees. The General Meeting of Shareholders makes decisions with the majority of votes cast, unless otherwise provided by the law or by the Statute. With three-fourths majority the General Meeting of Shareholders decides particularly on the following matters:

•A mendment of the Statute, •R eduction of share capital (including conditional increase), •A pproved increase in share capital, •S tatus changes and termination of the company, •T he exclusion of shareholders' preferential rights in issuing new shares, •E lection and early call of Supervisory Board members, •O ther cases, where required by law or Statute. The General Meeting of Shareholders decides on granting a discharge to the Management and Supervisory Boards of the company at the same time as deciding on the use of distributable profit. By granting a discharge, the General Meeting of Shareholders confirms or approves the work of the Management and Su-

pervisory Boards in the fiscal year. The discussion on granting the discharge is connected to the discussion on using the distributable profit. If the General Meeting of Shareholders does not grant the discharge, this shall not be deemed that the Management Board received a vote of no confidence.

P I V O V A R N A

L A Š K O

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Before the General Meeting of Shareholders decides that the distributable profit is to be used for dividends, the dividend belongs to the shareholders who are entered as holders of shares in the central register of securities at the Central Securities Clearing Corporation (KDD), d. d., Ljubljana, at the cut-off date, which is set each particular time in the decision on using the distributable profit. A shareholder shall undertake to inform the company upon request on the eventual form of dividend transfer (data on the transaction account) as well as regarding the registration and the tax number. In the event the shareholder fails to do so, the dividend shall not be paid out to him in accordance with the provisions of the company Statute.

2.1.2 SUPERVISORY BOARD The main task of the Supervisory Board is to control and manage the company's business operations. The Supervisory Board selects and appoints a one-member Management Board. The composition of the Supervisory Board is determined by the company Statute. The Supervisory Board of Pivovarna Laško, d. d., includes six members; all members have the same rights and responsibilities unless otherwise set by the Statute. Four members of the Supervisory Board elected by the General Meeting of Shareholders are capital representatives, while the other two members of the Supervisory Board are the company's workers' representatives and are elected by the Works Council. The Supervisory Board is appointed by the General Meeting of Shareholders by a simple majority vote of the present shareholders, except the members of the Supervisory Board elected by the Works Council. Members of the Supervisory Board are elected for a period of four years and may be re-elected after the expiry of

their terms. The Supervisory Board elects the chairman and deputy chairman of the Supervisory Board from among its members. The chairman of the Supervisory Board convenes and chairs meetings of the Supervisory Board and is authorised to declare its will and announce decisions adopted by the Supervisory Board. The chairman of the Supervisory Board represents the company against the members of the Management Board and the Supervisory Board against the organs of the company, as well as third parties, unless otherwise agreed for a particular case. The chairman of the Supervisory Board is always a shareholders' representative. The Supervisory Board meeting is convened by the chairman on his own initiative, on the initiative of any member of the Supervisory Board, or on the initiative of the Management Board. The Supervisory Board takes decisions

as at 31 December 2008

Capital representatives:

Anton Turnšek, Chairman

Boris Završnik, Chairman

Aleksander Svetelšek

Anton Turnšek

Marjan Mačkošek

Iztok Seničar

Dr Vladimir Malenković

Simon Zdolšek

Employee representatives:

Andrej Kebe, Deputy Chairman

Bojan Košak

Changes in the Supervisory Board of Pivovarna Laško, d. d. The chairman of the Supervisory Board, Mr Boris Završnik, made a resignation statement dated 23 April 2009 for personal reasons, due to business obligations abroad. The four-year term of office expired for a member of the Supervisory Board, Mr Simon Zdolšek, on 17 June 2009. Due to business needs in the parent company, a member of the Supervisory Board of Pivovarna Laško, d. d., Mr Iztok Seničar, delivered a letter of resignation of 10 July 2009. At the meeting of 23 July 2009, the Supervisory Board elected Mr Anton Turnšek as chairman of the Supervisory Board until the expiry of his term of office, which is 16 June 2010. The General Meeting of Shareholders of Pivovarna Laško, d. d., on 31 August 2009 elected Mr Aleksander Svetelšek, Mr Marjan Mačkošek and Dr Vladimir Malenkovič as members of the Supervisory Board (capital representatives). The term of office for newly elected members of the Supervisory Board lasts four years and began to run on the day of their election at the General Meeting of Shareholders. On 31 August 2009, the General Meeting of Shareholders also elected as a member of the Supervisory Board Mr Anton Turnšek (capital representative), who will begin a four-year term of office as of 17 June 2010. New members of the Supervisory Board of Pivovarna Laško, d. d., were entered into the register of companies on 7 October 2009.

Appointment of Audit Committee in Pivovarna Laško, d. d. The Supervisory Board of Pivovarna Laško, d. d., appointed an Audit Committee at its meeting of 2 March

R E P O R T

as at 31 December 2009

A N N U A L

Composition of the Supervisory Board

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Composition of the Supervisory Board

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report for the General Meeting of Shareholders and deliver it to the Management Board. If Supervisory Board approves the annual report, then the annual report is adopted.

L A Š K O

tributable profit within a period of one month from the submission of the annual report, and draft a written

P I V O V A R N A

The Supervisory Board shall undertake to check the annual report and the proposition for using the dis-

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at meetings.

2009 in the following composition: Simon Zdolšek (chairman) and two members, Mr Bojan Košak and Mr Marko Koleša.

Composition of Audit Committee

as at 31 December 2009

as at 2 March 2009

Marjan Mačkošek, Chairman

Simon Zdolšek, Chairman

from 30 March 2010 on Bojan Košak

Bojan Košak

Marko Koleša

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R E P O R T

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Changes in Audit Committee of Pivovarna Laško, d. d. At the 14th regular meeting of 23 November 2009, the Supervisory Board appointed a new member of the Audit Committee, Mr Marjan Mačkošek, who is also the chairman of the Audit Committee, from 30 March 2010 on. Simon Zdolšek's term of office as the chairman of the Audit Committee expired with his term of office as a member of the Supervisory Board on 17 June 2009. The tasks of the Audit Committee are provided by Article 280 of the Companies Act ZGD-1; the main tasks are the following:

•m onitoring the process of financial reporting, statutory audits of annual and consolidated financial statements,

• r eviewing and monitoring independence of the auditor for the company's annual report, •p roposing to the Supervisory Board the appointment of a candidate for the auditor of the annual report, •m onitoring the integrity of financial information provided by the company, • a ssessing the annual report drawn up, including the development of a proposal for the Supervisory Board.

Changes in supervisory boards of affiliated companies 1. Radenska, d. d., Radenci

Ms Dragica Čepin, representative of capital, for a four-year term of office.

P I V O V A R N A

L A Š K O

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On the day of 13 October 2009, the General Meeting of Shareholders of Radenska, d. d., Radenci, recalled a member of the Supervisory Board, Mr Boško Šrot, and on the day of 14 October 2009 elected in his place

After finding that two members of the Supervisory Board, Mr Gorazd Šetina and Mr Pavel Teršek, made resignation statements on the day new members were appointed, the General Meeting of Shareholders on the day of 14 October 2009 elected two new members of the Supervisory Board, Ms Marjeta Zevnik and Ms Mirjan Hočevar, both representatives of capital, for four-year terms of office. The Works Council of Radenska, d. d., Radenci, elected as employee representatives on the Supervisory Board of Radenska, d. d., Radenci, Mr Dominik Omar and Mr Franko Lipičar for the term of office of four years, beginning on 9 November 2009. The term of office of two incumbent employee representatives on the Supervisory Board, Mr Branko Šafarič and Ms Tadeja Filipič Stojanovič, expired on the day of 8 November 2009. At its meeting on the day of 23 November 2009, the Supervisory Board of Radenska, d. d., Radenci, elected Ms Dragica Čepin, representative of capital, as chairman of the Supervisory Board.

2. Pivovarna Union, d. d., Ljubljana At the meeting on the day of 10 August 2009, the Supervisory Board of Pivovarna Laško, d. d., was informed of a change in the Supervisory Board in Pivovarna Union, d. d. In place of the incumbent chairman, Mr Boško Šrot, Mr Anton Turnšek was named the new chairman of the Supervisory Board of Pivovarna Union, d. d., from 7 August 2009 on. On the day of 13 October 2009, the General Meeting of Shareholders of Pivovarna Union, d. d., Ljubljana, recalled a member of the Supervisory Board, Mr Boško Šrot, and elected to his position Mr Janko Remic,

representative of capital, whose four-year term of office began on 2 January 2010.

3. Fructal, d. d., Ajdovščina The General Meeting of Shareholders of Fructal, d. d., Ajdovščina, based on findings that Mr Dušan Zorko had provided a letter of resignation, elected on the day of appointment at the General Meeting of Shareholders, as a new member of the Supervisory Board, Ms Terezija Peterko, representative of capital, for the term of office from 14 October 2009 to 30 June 2012.

4. Delo, d. d., Ljubljana On the day of 29 July 2009, the General Meeting of Shareholders of Delo, d. d., released or recalled the chairman of the Management Board of Delo, d. d., Ms Andrijana Starina Kosem, as of 29 July 2009. On the

management system. This means that from that date the company has a one-member Management Board (director) and a 5+ member Supervisory Board, and no more management board and executive directors. On the day of 8 October 2009 at the constituent meeting the Supervisory Board of Delo, d. d., elected Ms Marjeta Zevnik as chairman of the Supervisory Board and Mr Robert Šega as her deputy, both representatives of capital. Other members of the Supervisory Board of Delo, d. d., are Ms Dragica Čepin, representative of

R E P O R T

On the day of 5 October 2009, the company Delo, d. d. entered into the register of companies an amendment of Statute, based on which the company transferred from a one-tier system into a two-tier

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Board; she became the chairman of the Management Board of the company on 3 August 2009.

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same day the General Meeting of Shareholders elected Ms Marjeta Zevnik as a member of the Management

capital, and employee representatives Mr Branimir Piano and Ms Sonja Tominec. Members of the Supervisory Board are elected for the period of four years, and their terms of office began running on 5 October 2009.

5. Večer, d. d., Maribor At the General Meeting of Shareholders of the company of 11 November 2009, Mr Anton Balažič was elected as a new member of the Supervisory Board; he took office on the same day. Based on the acquaintance of

the General Meeting of Shareholders with a letter of resignation submitted by Ms Tamara Zajec Balažič, the General Meeting elected Mr Zvonko Murgelj as a new member of the Supervisory Board, who took up his

strategy, ensures proper handling with risks and risk management, acts with due care and diligence, and protects business secrets. The Management Board of the company consists of one member, who is the director of the company, Dušan Zorko, MSc., who was appointed as director in the year 2009 for a term of five years and may be renewed. The Management Board may grant procuration. The Management Board is appointed and released by the Supervisory Board. The Supervisory Board may dismiss the director early in accordance with the law.

Changes in the Management Board of Pivovarna Laško, d. d. At the meeting of the Supervisory Board of Pivovarna Laško, d. d. of 23 July 2009, the chairman of the Management Board, Mr Boško Šrot, before the expiration of his term of office submitted an irrevocable letter of resignation. Members of the Supervisory Board accepted his resignation and concluded with the director at that time, Mr Boško Šrot, agreement on early termination of the mandate. On the day of 24 July 2009, the Supervisory Board appointed as the company director Mr Dušan Zorko for a term of five years.

D . L A Š K O

The Management Board runs the company and adopts business decisions independently and at its own risk and represents the company against third parties without limitation, adopts the company's development

P I V O V A R N A

2.1.3 MANAGEMENT BOARD

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term of office on 11 November 2009.

Changes in management boards of affiliated companies 1. Radenska, d. d., Radenci On the day of 31 January 2009, the term of office of the director of Radenska, d. d., Mr Tomaž Blagotinšek, was prematurely terminated by mutual agreement, and on the same day procurement of a procurator, Ms Olga Smej, also terminated. On the day of 1 February 2009 the Supervisory Board of the company appointed as the new company director for a five-year term of office Mr Zvone Murgelj, and for procurator Ms Mojca Jazbinšek Volk. On 22 June 2009 the procurator, Ms Mojca Jazbinšek Volk, submitted her letter of resignation due to personal reasons, on which basis the Supervisory Board cancelled the procurement from that date.

2. Jadranska Pivovara – Split, d. d.

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R E P O R T

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On the day of 31 March 2009 the term of office of the director, Mr Marijan Kos, in Jadranska Pivovara – Split, d. d. was terminated by mututal agreement, and Mr Tomaž Udrih was appointed on the day of 1 April 2009 as the new director for a new term of office. On the day of 12 May 2009 the Supervisory Board appointed Mr Marko Sučić as the company procurator. On the day of 9 December 2009 the term of office of the company director, Mr. Tomaž Udrih, terminated. On the same day the procuration of Mr Marko Sučić was terminated based on a letter of resignation. At the regular meeting of the Supervisory Board of 9 December 2009, Mr Nenad Buljan was appointed as the new director for the term of office from 9 December 2009 to 30 June 2010.

3. Delo, d. d., Ljubljana At the constituent meeting of 8 October 2009, the Supervisory Board of the company Delo, d. d., appointed Mr Jurij Giacomelli as the new director of the company. The new director took over his position on 1 December 2009, and Ms Marjeta Zevnik, chairman of the Supervisory Board, performed the function of interim director until that date.

4. Firma Del, d. o. o., Laško On 29 July 2009 Mr Boško Šrot, director of the company Firma DEL, d. o. o., Laško, was recalled, and Mr

P I V O V A R N A

L A Š K O

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Dušan Zorko was appointed the company director on the same day.

Change in the Management Board of the affiliated company at the end of the fiscal year 1. Fructal, d. d., Ajdovščina On 31 March 2010, the chairman of the Management Board, Mr Anton Balažič, gave his letter of resignation, and on 1 April 2010 the Supervisory Board appointed Mr Drago Kavšek as the new chairman of the Management Board.

2.1.4 MANAGEMENT IN THE GROUP Pivovarna Laško Group consists of the parent company Pivovarna Laško, d. d., five afiliated companies in Slovenia and two affiliated companies abroad. All affiliated companies are in the majority owned by the parent company (more details on pages 20 and 21 of this report). Members of leadership and management of affiliated companies as at 31 December 2009:

Radenska, d. d., Radenci Manag. Board

Zvonko Murgelj

Superv. Board

Representatives of capital:

Employee representatives:

Dragica Čepin – Chairman

Franko Lipičar – Deputy Chairman

Marjeta Zevnik

Dominik Omar

Mirjam Hočevar

Miral, d. o. o., Radenci (affiliated company of Radenska, d. d., Radenci) Manag. Board

Zvonko Murgelj

Superv. Board

No Supervisory Board.

Pivovarna Union, d. d., Ljubljana Manag. Board

Dušan Zorko

Superv. Board

Representatives of capital:

Anton Turnšek – Chairman

Marjeta Zevnik – Deputy Chairman

Franc Rojnik

Terezija Peterka

Janko Remic,

from 2 January 2010 on

Manag.Board

Anton Balažič, until 31 March 2010

Drago Kavšek, from 1 April 2010 on Superv. Board

Representatives of capital:

Employee representatives:

Terezija Peterka – Chairman

Anton Medvešek

Mirjam Hočevar – Deputy Chairman

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Fructal, d. d., Ajdovščina(affiliated company of Pivovarna Union, d. d., Ljubljana)

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Employee representatives:

Jadranska Pivovarna - Split, d. d. Nenad Buljan

Superv. Board

Representatives of capital:

Employee representatives:

Anton Turnšek – Chairman

No representatives.

Boško Šrot – Deputy Chairman

Janko Remic

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Manag. Board

Superv. Board

No Supervisory Board.

L A Š K O

Zvonko Murgelj

Delo, d. d., Ljubljana Manag. Board

Jurij Giacomelli

Superv. Board

Representatives of capital:

Employee representatives:

Marjeta Zevnik – Chairman

Branimir Piano

Robert Šega – Deputy Chairman

Sonja Tominec

Dragica Čepin

Izberi, d. o. o., Ljubljana (affiliated company of Delo, d. d., Ljubljana) Manag. Board

Samo Čok

Superv. Board

Representatives of capital:

Employee representatives:

Jurij Giacomelli – Chairman

No representatives.

Dragica Čepin

Mojca Jazbinšek

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Manag. Board

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Vital Mestinje, d. o. o.

Večer, d. d., Maribor(affiliated company of Delo, d. d., Ljubljana) Manag. Board

Uroš Skuhala

Superv. Board

Representatives of capital:

Employee representatives:

Dušan Mohorko – Chairman

Borko de Corti – Deputy Chairman

Anton Balažič

Petrina Šebart Žižek

Zvonko Murgelj

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RA&LA, d. o. o., Sarajevo

P I V O V A R N A

L A Š K O

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Manag. Board

Marko Božiček, until 28 February 2010

Šerif Krajišnik, from 1 March 2010 on

Superv. Board

No Supervisory Board.

Firma Del, d. o. o., Laško Manag. Board

Dušan Zorko

Superv. Board

No Supervisory Board.

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2.2

S tat e m e n t o n c o r p o r at e g ov e r n a n c e a n d c o m p l i a n c e w i t h the Code 2.2.1 COMPLIANCE OF COMPANY MANAGEMENT WITH PROVISIONS OF THE CORPORATE GOVERNANCE CODE The Management and Supervisory Boards of Pivovarna Laško, d. d., hereby declare that the company respects the provisions of the Corporate Governance Code, which apply from 5 February 2007 (hereinafter: code), with a few discrepancies not intervening into the good practice of management and which are explained in the statement. The statement represents an integral part of the annual report for the

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year 2009 and is also available on the website of the company at www.pivo-lasko.si. The statement refers to the period of the fiscal year 2009, from 1 January until 31 December 2009. The new Corporate Governance Code of 8 December 2009 applies from 1 January 2010 (hereinafter: new Code). From 1 January 2010 onward the company has respected and is in compliance with the new Code, and any discrepancies from the new Code shall be explained by the company in the following statement. In 2009 the company announced a statement of compliance with the Code on 23 April 2009 and was referring to the period from 1 January to 31 December 2008. This Code is published in the Slovene and English languages on the website of Ljubljanska borza, d. d., www.ljse.si. The Management and Supervisory Boards in the continuation give the following explanations to discrepancies from particular provisions of the Code:

• provision 1.1.1.: the company operates in accordance with a basic goal, which is to maximize the company value, even though the Statute does not include this and other goals, such as quality implemen-

P I V O V A R N A

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tation of the core activities; • provision 2.3.3.: payment to the Management Board includes only the fixed part; a share of the fixed part of net earnings (25 %) is also intended to buy back shares from the treasury shares fund under the same conditions as for other employed shareholders of the company; shares obtained on such basis are not transferable during the term of office; the agreement, however, predicts a variable part of payments, but this has not been implemented so far;

• provisions 2.3.4. and 2.3.5.: the company does not anticipate any stock options and comparable financial instruments as a variable part of the revenues of the Management Board, namely, the company so far has not adopted a system for remuneration with options and other financial instruments;

•p rovision 2.4.2.: in the previous management or the company director a potential conflict of interest existed due to indirect ownership until the expiry of the term of office on 23 July 2009;

•p rovision 3.2.3: the employment relationship agreement with the management board of the company does not exhaustively list the culpable grounds for dismissal, since they are defined in the Companies Act ZGD-1;

•p rovision 3.4.7.: the company did not take out liability insurance for the members of the company’s Supervisory Board;

•p rovision 3.5.5.: company has not yet adopted more precise criteria for assessing the existence of conflicts of interest for the members of the Supervisory Board and handling operations related to them; however, it

does consider recommendations of the provisions of the Code;

• provision 3.6.1.: the Supervisory Board established a three-member Audit Committee in March 2009; it failed to adopt a decision for establishing any other committees when necessary competent professional services reported on meetings; • provision 4.3.: the Statute does not include a provision for which types of business operations the Management Board shall obtain consent from the Supervisory Board; after the decision of the Supervisory Board in September 2009, the Management Board shall undertake to obtain its consent for significant business operations; • provision 8.2.: the company does not publish public notices in English (shares are quoted on the

• provision 8.15.5.: the company has not adopted any particular internal act, in which it would prescribe rules on limitations and disclosures of trading with company shares and shares of affiliated companies; the company arranged a method of buying company shares with a decision of the Management and Supervisory Boards of the company saying that the shares are bought from the treasury shares fund normally twice a year according to the last three-month market (stock) price deducted by 30

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the Management Board decisions, which regulate the method of labelling and protecting such information;

A N N U A L

• provision 8.15.1.: the company protects business secrets and internal information in accordance with

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regulated market in standard quotation);

%, of which the company also informs other shareholders and investors, in accordance with the Decision regulating the information about significant holdings (Official Gazette of the Republic of Slovenia, No. 106/2007) and the Decision regulating the implementation of regulated information disclosure obligation (Official Gazette of the Republic of Slovenia, No. 106/2007); this decision is currently tabled.

2.2.2 MAIN CHARACTERISTICS OF INTERNAL CONTROL SYSTEMS AND

processes and risk management, which are related to financial reporting. The internal control system at the same time establishes mechanisms preventing irrational use of assets and cost effectiveness. The internal control system includes procedures to ensure that: • transactions are recorded on the basis of credible accounting documents, based on which transactions are recorded accurately and honestly and give a guarantee that the company honestly and fairly disposes of its assets, • transactions are recorded and financial statements made in accordance with the applicable legislation, • to prevent or detect in a timely manner possible unauthorised acquisition of, use and disposal of company assets, which would have a significant effect on financial statements. Internal control in the company is carried out by an accounting service, which comprises responsible bookkeeping and preparation of financial statements in accordance with applicable accounting, tax and other regulations. Adequacy of control operations within the framework of the information system is checked by authorized outside contractors on an annual basis.

D . L A Š K O

purpose of internal controls is to ensure accuracy, reliability, transparency and intervisibility in all

P I V O V A R N A

Pivovarna Laško, d. d., manages risks and implements internal control procedures at all levels. The

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RISK MANAGEMENT IN CONNECTION WITH THE FINANCIAL REPORTING PROCESS

Internal Audit The Audit Committee of the Supervisory Board was appointed on 2 March 2009 at the seventh meeting of the Supervisory Board of Pivovarna Laško, d. d. The Committee met on 23 April 2009, where it discussed the full annual report of Pivovarna Laško, d. d., and Pivovarna Laško Group for the year 2008, together with the audit report. In 2007 the term of office of the chairman of the Commission, Mr Simon Zdolšek, expired; due to problems related to convening the General Meeting of Shareholders and to the composition of the Supervisory Board, an alternate member was not appointed until the end of the fiscal year 2009. This

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is why the Audit Committee did not meet on more occasions in the year 2009. 2.2.3 EXTERNAL AUDIT Regular external audit For reasons of consolidation and harmonization in Pivovarna Laško Group, the general meetings of shareholders of Pivovarna Laško, d. d., Pivovarna Union, d. d., Ljubljana, Radenska, d. d., Radenci, Fructal, d. d., Ajdovščina, and Delo, d. d., Ljubljana, appointed the audit company Deloitte Revizija, d. o. o., Ljubljana, as an authorized auditor, which within the framework of auditing financial statements reports on its findings to the Management Board, Supervisory Board and to the Audit Committee of the Supervisory Board. Appointment of a special auditor for conducting checks of the company’s individual transactions The General Meeting of Shareholders appointed the audit company BDO EOS Revizija, d. o. o., družba za revidiranje, Ljubljana, as a special auditor, which shall conduct checks of particular transactions of

Pivovarna Laško Group. This special auditor shall conduct checks of particular tranactions of Pivovarna Laško Group within the last five years of the receipt of this decision, with a special emphasis on verifying management of:

P I V O V A R N A

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• t ransactions related to the purchase of shares of the company Thermana – Zdravilišče Laško, d. d., from Infond Holding, d. d., • t ransactions related to the purchase of shares of the company Infond Holding, d. d., by the affiliated company Fructal, d. d., • t ransactions related to the purchase of shares of the company Infond Holding, d. d., by Pivovarna Union, d. d., • t ransactions related to the purchase of shares of the company Premogovnik Velenje, d. d., by Radenska, d. d., and further related to the sale of these shares to the company Center Naložbe, d. d., • t ransactions related to granting loans approved by Pivovarna Laško, d. d., Radenska, d. d., and Pivovarna Union, d. d., • t ransactions related to the purchase or creation of buying and selling options for shares of Istrabenz, d. d. Report on the findings of the special audit On the day of 9 March 2010, Pivovarna Laško, d. d., received the Report on the findings of a special audit of the management of particular transactions of Pivovarna Laško Group (hereinafter: report), which was, based on the assembly decision of 31 August 2009, prepared by BDO Revizija, d. o. o., družba za revidiranje, Ljubljana. In accordance with Article 320 of the Companies Act ZGD-1, the Management

Board sent the report to the members of the Supervisory Board. The Supervisory Board discussed the aforementioned report and got acquainted with it at its 17th regular meeting on 30 March 2010. Based on the Management Board findings indicating that other transactions were also conducted, which were in terms of content related to those discussed and had not yet been included in the report by the special audit, it was recommended to the Management Board by the Supervisory Board to conduct a thorough check of these particular transactions. The Management and the Supervisory Boards shall inform the General Meeting of Shareholders about this report at an ordinary session of the General Meeting of Shareholders.

4. The Statute of the company does not include any provisions granting holders of securities any special controlling rights. 6. The Statute of the company does not include limitations of voting rights on particular shares or a particular number of votes. The Statute of the company binds the General Meeting of Shareholders to an application deadline not later than three days prior to the published date of convening the General Meeting of Shareholders; otherwise the shareholder may not attend the General

R E P O R T

nual report. Direct ownership of the Management Board and indirect ownership of the previous Management Board is disclosed on page 58 of the same report.

A N N U A L

3. Data on relevant direct ownership of the company’s securities are defined on page 55 of this an-

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2.2.4 DATA AFTER PARAGRAPH 6, ARTICLE 70 OF THE COMPANIES ACT ZGD-1

Meeting. 8. Data on appointment and replacement of members of management or control organs are defined on pages 28 to 31 of this annual report. 9. The company’s General Meeting of Shareholders, at the session of 31 August 2009, authorized the Management Board with a decision for the acquisition of treasury shares with the purpose of

maximizing the internal value of the company’s shares. The total share of thus acquired treasury shares shall, together with other treasury shares of the company, not exceed 10 % of the comshares is valid for 36 months from the receipt of the decision adopted by the General Meeting of

Data on operation of the General Meeting of Shareholders, key competences and a description of shareholders’ rights and the method of their declaration are included in the chapter Management on pages 27 to 28 of this annual report. 2.2.6 DATA ON MANAGEMENT AND SUPERVISORY BOARD Data on the composition and operation of the management and control organs and their commissions are included in the chapter Management, on pages 28 – 31 of this annual report. Laško, 31 March 2010 Dušan Zorko, MSc.

Anton Turnšek

directorof the company

chairman of the supervisory board

P I V O V A R N A

2.2.5 DATA ON OPERATION OF THE GENERAL MEETING OF SHAREHOLDERS

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Shareholders.

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pany’s share capital. Authorization of the Management Board for the acquisition of the treasury

2.3

R e p o r t o n s u b o r d i n at i o n ac c o r d i n g t o A r t i c l e 5 4 5 o f t h e Co m pa n i e s Act ZG D -1

2.3.1 REPORT ON SUBORDINATION OF THE PARENT COMPANY 1. Pivovarna Laško, d. d. Pivovarna Laško, d. d., has based on the decisions of the then-director, Mr Boško Šrot, as well as in the interest of the then-controlling or parent companies of Pivovarna Laško, d. d., concluded the following transactions (identified to this day), which incurred Pivovarna Laško, d. d., a disadvantage or there is a potential that such disadvantage shall occur in the future:

A N N U A L

R E P O R T

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1. Loan Agreement of 30 June 2009, based on which Pivovarna Laško, d. d., loaned to the company Infond Holding, d. d., the amount of EUR 1,700,000; the loan is due and has not been returned. The amount of matured and non-settled obligation as at 31 December 2009 totals EUR 1,766,960.74, of which EUR 1,700,000 is the principal, EUR 19,174.43 contractual interest and EUR 47,786.30 default interest. 2. Loan Agreements, based on which Pivovarna Laško, d. d., loaned the company Center Naložbe, d. d., the following amounts:

•L oan Agreement of 27 March 2009 for the amount of EUR 1,200,000; the loan is due and has not been returned. The amount of matured and non-settled obligations as at 31 December 2009 totals EUR 1,247,076.15, of which EUR 1,200,000 is the principal, EUR 17,191.23 contractual interest and EUR 29,884.92 EUR default interest.

•L oan Agreement of 11 May 2009 for the amount of EUR 700,000; the loan is due and has not been returned. The amount of matured and non-settled obligations as at 31 December 2009 totals EUR 729,181.35, of which EUR 700,000 is the principal, EUR 4,671.78 contractual interest and EUR 24,509.57 default interest.

•L oan Agreement of 1 June 2009 for the amount of EUR 1,000,000; the loan is due and has not been retur-

ned. The amount of matured and non-settled obligations as at 31 December 2009 totals EUR 1,038,093.17, of which EUR 1,000,000 is the principal, EUR 13,189.04 contractual interest and EUR 24,904.12 default interest.

•L oan Agreement of 12 June 2009 for the amount of EUR 3,000,000; the loan is due and has not been retur-

P I V O V A R N A

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ned. The amount of matured and non-settled obligations as at 31 December 2009 totals EUR 3,136,109.60, of which EUR 3,000,000 is the principal and EUR 136,109.60 default interest. 3. Pivovarna Laško, d. d., bought in 2008 from Infond Holding, d. d., 644,000 shares of the company Thermana, d. d., with the label ZDLR, at price of EUR 10.70 per share. The total purchase price was EUR 6,890,000. The estimated market value of the share ZDLR as at 31 December 2009 was EUR 2.47 per share, or the total market value of all 644,000 shares ZDLR totals EUR 1,590,680. The disadvantage of Pivovarna Laško, d. d., is disclosed in matured and non-settled liabilities of borrowers from points 1. and 2. of this report and reduction of the market value of the purchased shares of the company Thermana, d. d. (ZDLR). The disadvantage occurred with the onset of late payments by borrowers or due to the reduction in the market value of shares of the company Thermana, d. d., and has not been compensated to Pivovarna Laško, d. d., to date. 4. Pledge of 345,304 shares of Radenska, d. d., whose owner is Pivovarna Laško, d. d., for the insurance of a loan to the company Center Naložbe, d. d., in the amount of EUR 6,250,000, which the latter took at NKBM, d. d.; Pivovarna Laško, d. d., acts as a lienee. The carrying value of the pledged shares as at 31 December 2009 totals EUR 3,634,671. The company Center Naložbe, d. d., failed to return the loans to NKBM, d. d.; thus the sale of shares of Radenska, d. d., is likely to occur, for the purposes of repaying the debts to NKBM, d. d., with which a disadvantage or tort for Pivovarna Laško, d. d., will occur. 5. On the day of 23 November 2009 Pivovarna Laško, d. d., received a letter from Perutnina Ptuj,d. d., in which it states that it had been paying obligations based on credit agreements with the companies Infond Holding, d. d., and Center Naložbe, d. d., and based on the letter of comfort of 31 December 2008, which was signed by the former director of Pivovarna Laško, d. d., Mr Boško Šrot, on behalf of Pivovarna Laško,

d.d. As the companies ceased to repay the loan, Perutnina Ptuj, d. d., based on the letter of comfort, required payment from Pivovarna Laško, d. d., in the amount of approximately EUR 11 million. Pivovarna Laško, d. d., did not recognize the claim because it was not acquainted with the existence of the letter of comfort of 31 December 2008 and was also not aware of the circumstances and business relationships between legal entities. This is why Pivovarna Laško, d. d., believes that it cannot and is not obligated to fulfil these obligations. If, due to exercising the aforementioned claim, Perutnina Ptuj, d. d., brings an action against Pivovarna Laško, d. d., and court upholds the claim, this will result in a disadvantage or damage for Pivovarna Laško, d. d., in the amount of approximately EUR 11 million. Pivovarna Laško, d. d., has in the receivership proceeding against the debtor Center Naložbe, d. d., which is being conducted before the District Court in Maribor under reference number St 53/2010, reported a claim

shares of RARG. Pivovarna Laško, d. d., has in the bankruptcy proceedings against the debtor Infond Holding, d. d., which is being conducted before the District Court in Maribor under reference number St 912/2009, reported a claim in the total amount of EUR 1,892,319.26, of which EUR 1,719,174.41 is principal, EUR 45,781.85 default interest charged until 28 December 2009, EUR 3,283.00 expenses and EUR 124,080.00 principals from recourse based on the payments made to KPMG. In addition, Pivovarna Laško, d. d., reported a delimiter right to property of the debtor in bankruptcy, which includes:

R E P O R T

the pledge of 345,304 shares of RARG, and EUR 7,334,257.00 contingent claims from the pledge of 345,304

A N N U A L

tual interest, EUR 285,238.35 default interest charged until 17 February 2010, EUR 2,654.11 commission from

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in the total amount of EUR 13,370,737.52, of which EUR 5,900,000.00 is principal, EUR 35,052.06 contrac-

• 1 20,783 uncertified securities of the issuer Pivovarna Laško, d. d., with the label PILR and where Pivovarna Laško, d. d., has 10. order (on 10,522 shares PILR) or 11. order (on 110,261 shares PILR),

• 1 7,015 uncertified securities of the issuer Mercator, d. d., with the label MELR and where Pivovarna Laško, d. d., has 11. order,

• 1 8 uncertified securities of the issuer ČZP Večer, d. d., with the label VEMP and where Pivovarna Laško, d. d., has 4. order,

• 1 58,975 uncertified securities of the issuer Thermana, d. d., with the label ZDLR, where Pivovarna Laško,

The affiliated companies Pivovarna Union, d. d., Radenska, d. d., Radenci, and Delo, d. d., addressed to Pivovarna Laško, d. d., letters of 23 December 2009, and Fructal, d. d., of 22 December 2009, in which they warn they suffered a disadvantage due to transactions concluded based on the instructions provided by Pivovarna Laško, d. d., for closing the transactions that are the subject of this report, and inform Pivovarna Laško, d. d., that it is obligated to compensate such disadvantage at the end of the fiscal year, since consequences from Article 547 of the Companies Act ZGD-1 may occur. Pivovarna Laško, d. d., responded to the affiliated companies with letters of 29 December 2009, in which it stated its point of view that the instructions given by the former Management Board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the interest of Atka-Prima, d. o. o., and its owners, and proposed that the affiliated companies bring their requirements, based on the activities of the multi-level group, against the company AtkaPrima, d. o. o., Celje, Stanetova ulica 5. Pivovarna Laško, d. d., has also informed the company Atka-Prima, d. o. o., with a letter of 29 December 2009 that it incurred a disadvantage because it concluded the transactions that are the subject of this report according to instructions of the then-director of the company, Mr Boško Šrot, who was at the same time the partner and the manager of the company Atka-Prima, d. o. o. Atka-Prima, d. o. o., responded with a letter of 2 February 2010 explaining that its investment in the company Kolonel, d. o. o., was only a financial investment and that it rejects the demand of Pivovarna Laško, d. d.

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company. In these reports the affiliated companies state transactions concluded after instructions within the framework of the actual group.

L A Š K O

acquainted Pivovarna Laško, d. d., as the parent company with their reports on relationships with the parent

P I V O V A R N A

The affiliated companies Pivovarna Union, d. d., Radenska, d. d., Radenci, Delo, d. d., and Fructal, d. d.,

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d. d., has 5. order.

Bearing in mind the bankruptcy of the company Infond Holding, d. d., and the compulsory settlement of Center Naložbe, d. d., Pivovarna Laško, d. d., intends to exercise the injury in relevant court proceedings once it has determined its scope.

2.3.2 REPORT ON SUBORDINATION OF AFFILIATED COMPANIES The affiliated companies Pivovarna Union, d. d., Radenska, d. d., Radenci, Delo, d. d., and Fructal, d. d., acquainted Pivovarna Laško, d. d., as the parent company with their reports on relations with the parent company. In these reports the affiliated companies define transactions concluded based on the instructions within the framework of the actual group. Pivovarna Laško, d. d., is fully disclosing these reports as follows

A N N U A L

R E P O R T

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below:

1. Pivovarna Union, d. d., Ljubljana I. During the fiscal years 2008 and 2009, Pivovarna Union, d. d., as an affiliated company concluded the following legal transactions within the framework of the actual group based on the instructions of the former Management Board of the parent company Pivovarna Laško, d. d.: Center Naložbe, d. d., Loan Agreement 01/09 of 1 February 2009 for the amount of a loan of EUR 4,800,000; Center Naložbe, d. d., Loan Agreement CN-PU-2008-08 of 20 November 2008 for the amount of a loan of EUR 5,000,000; Center Naložbe, d. d., Loan Agreement CN-PU-2008-09 of 21 November 2008 for the amount of a loan of EUR 1,700,000;

Center Naložbe, d. d., Loan Agreement CN-PU-2009-01 of 8 January 2009 for the amount of a loan of EUR 1,600,000;

P I V O V A R N A

L A Š K O

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Center Naložbe, d. d., Loan Agreement CN-PU-2009-02 of 23 January 2009 for the amount of a loan of EUR 2,300,000; Center Naložbe, d. d., Loan Agreement CN-PU-2009-03 of 29 January 2009 for the amount of a loan of EUR 1,800,000; Center Naložbe, d. d., Loan Agreement CN-PU-2009-04 of 3 June 2009 for the amount of a loan of EUR 1,000,000; Infond Holding, d. d., Loan Agreement PU-IH-2009/1 of 8 January 2009 for the amount of a loan of EUR 15,000,000; Infond Holding, d. d., Loan Agreement PU-IH-2009/2 of 23 January 2009 for the amount of a loan of EUR 1,000,000; Infond Holding, d. d., Loan Agreement IH-PU of 10 February 2009 for the amount of a loan of EUR 10,000,000; Infond Holding, d. d., Loan Agreement IH-PU of 18 February 2009 for the amount of a loan of EUR 550,000; On 4 January 2008, purchase of 1,922,321 shares of the company Elektro Maribor, d. d. (EMAG) in the amount of EUR 20,184,371.

II. In transactions from point I. Pivovarna Union, d. d., particularly arranged the following payments and refunds: The principal owed by the borrower totals EUR 44,750,000.00. Contractual interest payments owed by the borrowers total EUR 476,263.14. The price of the share of Elektro Maribor, d. d., which Pivovarna Union, d. d., implemented as a buyer on 4 January 2008 from Infond Holding, d. d., as the seller, amounted to EUR 10.50 per share. III.

been explained in the Statement of Pivovarna Union, d. d., in accordance with Article 545 of the Companies Act ZGD-1 of 31 August 2009. III.2. The amounts of matured, non-settled obligations of borrowers towards Pivovarna Union, d. d., total, according to the particular Loan Agreement as at 31 December 2009, as follows:

R E P O R T

The disadvantage of Pivovarna Union, d. d., as an affiliated company results from the fact that the borrowers failed to complete their obligations at their maturity according to the loan agreements, as has already

A N N U A L

the loan.

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III.1. In transactions from point I. of this report, Pivovarna Union, d. d., with regard to the circumstances of the transactions, which were known to it at its conclusion, agreed to an adequate payment and refund of

Center Naložbe, d. d., Loan Agreement 01/09 of 1 February 2009. Matured non-settled obligations total EUR 4,931,726.74, of which EUR 4,800,000 is the principal, EUR 39,408.93 contractual interest and EUR 92,317.81 default interest. Center Naložbe, d. d., Loan Agreement CN-PU-2008-08 of 20 November 2008. Matured non-settled obli-

gations total EUR 5,176,006.15, of which EUR 5,000,000.00 is the principal, EUR 0.00 contractual interest

Center Naložbe, d. d., Loan Agreement CN-PU-2009-01 of 8 January 2009. Matured non-settled obligations total EUR 1,643,908.91, of which EUR 1,600,000.00 is the principal, EUR 13,136.31 contractual interest and EUR 30,772.60 default interest. Center Naložbe, d. d., Loan Agreement CN-PU-2009-02 of 23 January 2009. Matured non-settled obligations total EUR 2,363,119.06, of which EUR 2,300,000.00 is the principal, EUR 18,883.44 contractual interest and EUR 44,235.62 default interest. Center Naložbe, d. d., Loan Agreement CN-PU-2009-03 of 29 January 2009. Matured non-settled obligations total EUR 1,849,397.52, of which EUR 1,800,000.00 is the principal, EUR 14,778.35 contractual interest and EUR 34,619.17 default interest. Center Naložbe, d. d., Loan Agreement CN-PU-2009-04 of 3 June 2009. Matured non-settled obligations total EUR 1,027,443.06, of which EUR 1,000,000.00 is the principal, EUR 8,210.19 contractual interest and EUR 19,232.87 default interest. Infond Holding, d. d., Loan Agreement PU-IH-2009/1 of 8 January 2009. Matured non-settled obligations total EUR 15,616,438.34, of which EUR 15,000,000.00 is the principal, EUR 327,945.20 contractual interest and EUR 288,493.14 default interest. Infond Holding, d. d., Loan Agreement PU-IH-2009/2 of 23 January 2009. Matured non-settled obliga-

D . L A Š K O

and EUR 59,942.46 default interest.

P I V O V A R N A

Center Naložbe, d. d., Loan Agreement CN-PU-2008-09 of 21 November 2008. Matured non-settled obligations total EUR 1,759,942.46, of which EUR 1,700,000.00 is the principal, EUR 0.00 contractual interest

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and EUR 176,006.15 default interest.

tions total EUR 1,028,082.02, of which EUR 1,000,000.00 is the principal, EUR 12,166.08 the contractual interest and EUR 15,915.94 default interest. Infond Holding, d. d., Loan Agreement IH-PU of 10 February 2009. Matured non-settled obligations total EUR 10,392,161.65, of which EUR 10,000,000.00 is the principal, EUR 39,558.90 contractual interest and EUR 352,602.75 default interest. Infond Holding, d. d., Loan Agreement IH-PU of 18 February 2009. Matured non-settled obligations total EUR 571,568.89, of which EUR 550,000.00 is the principal, EUR 2,175.74 contractual interest and EUR 19,393.15 default interest.

A N N U A L

R E P O R T

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The acquisition of 1,922,321 shares of Elektro Maribor, d. d. (EMAG) in the amount of EUR 20,184,371 or at price EUR 10.50 per share. The estimated market value of EMAG shares as at 31 December 2009 equals EUR 3.7 per share or the total market value of all 1,922,321 EMAG shares amounts to EUR 7,112,587.70. III.3. The disadvantage of Pivovarna Union, d. d., shall be disclosed in matured and non-settled obligations of the borrowers from point I. of this report and in reduction of the market value of the purchased shares of Elektro Maribor, d. d. (EMAG). The disadvantage of Pivovarna Union, d. d., occurred with the event of late payment by borrowers or due to the reduction in the market value of the shares of Elektro Maribor, d. d., and has not been compensated to Pivovarna Union, d. d., to date. Pivovarna Union, d. d., has in the receivership proceeding against the debtor Center Naložbe, d. d., which is being conducted before the District Court in Maribor under reference number St 53/2010, reported a claim in the total amount of EUR 19,197,541.97, of which EUR 18,200,000.00 is principal, EUR 94,417.22 contractual interest and EUR 856,529.43 default interest, charged until 17 February 2010, and EUR 46,595.32 of expenses incurred by Pivovarna Union, d. d., in judicial protection procedures and claim actions towards

Center Naložbe, d. d., or debt recovery of Center Naložbe, d. d. Pivovarna Union, d. d., has in the bankruptcy proceedings against the debtor Infond Holding, d. d., which is being conducted before the District Court in Maribor under reference number St 912/2009, repor-

P I V O V A R N A

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ted a claim in the total amount of EUR 28,107,482.38, of which EUR 26,561,789.97 is the principal, EUR 369,679.84 contractual interest and EUR 926,833.15 default interest, charged until 28 December 2009, and EUR 249,179.42 of expenses incurred by Pivovarna Union, d. d., in judicial protection procedures and claim actions towards Infond Holding, d. d., or debt recovery of Infond Holding, d. d. In addition, Pivovarna Union, d. d., reported a delimiter right to property of the debtor in bankruptcy, which includes: • 120,783 uncertified securities of the issuer Pivovarna Laško, d. d., with the label PILR, and where Pivovarna Union, d. d., has 7th and 12th order (on 10,522 shares PILR) or 8th and 13th order (on 110,261 shares PILR), • 17,015 uncertified securities of the issuer Mercator, d. d., with the label MELR and where Pivovarna Union, d. d. has 8th or 13th order, • 18 uncertified securities of the issuer ČZP Večer, d. d., with the label VEMP, and where Pivovarna Union, d. d. has 1st order, • 158,975 uncertified securities of the issuer Thermana, d. d., with the label ZDLR and where Pivovarna Union, d. d., has 2nd order. The disadvantage of the company was not compensated to it at the end of the fiscal year. With a letter of 23 December 2009 the company warned the parent company Pivovarna Laško, d. d., that it had suffered a disadvantage due to transactions concluded based on the instructions provided by Pivovarna Laško, d. d., for closing the transactions which are subject of this report, and informed Pivovarna Laško, d. d., that it is obligated to compensate such disadvantage at the end of the fiscal year, since consequences from Article 547 of the Companies Act ZGD-1 may occur. The parent company, Pivovarna Laško, d. d., responded with a letter of 29 December 2009, in which it stated its point of view that the instructions given by the former Management Board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the

interest of Atka-Prima, d. o. o., and its owners and proposed to bring its demands, based on the activities of the multi-level group, against the company Atka-Prima, d. o. o, Celje, Stanetova ulica 5. On 15 October 2009, Pivovarna Union, d. d. addressed the District Court in Maribor with a proposal to commence bankruptcy proceedings against Infond Holding, d. d., and Center Naložbe, d. d. In the beginning the Court postponed the creditor's proposal for the commencement of bankruptcy proceedings against both companies to 18 January 2010 and later, with the decision of 28 December 2009, initiated insolvency proceedings over Infond Holding, d. d., and on 27 February 2010, introduced a compulsory settlement against Center Naložbe, d. d.

Bearing in mind the bankruptcy and the compulsory settlement, Pivovarna Union, d. d. intends to exercise the injury in relevant court proceedings once it determines its scope.

2. Radenska, d. d., Radenci I. In 2009 Radenska, d. d., Radenci, as an affiliated company concluded the following legal transactions

R E P O R T

Center Naložbe, d. d.

A N N U A L

12 March 2010, Pivovarna Union, d. d., reported a claim in the receivership proceeding against the company

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On 29 March 2010, Pivovarna Union, d. d. reported a claim in the bankruptcy proceedings against Infond Holding, finančna družba, d. d., in bankruptcy, and made a request to establish a Creditors' Committee. On

within the framework of the actual group according to the instructions of the former Management Board of the parent company Pivovarna Laško, d. d.: 1. Loan Agreement of 27 March 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 500,000; the loan was returned in full on 1 July 2009, 2. Loan Agreement of 6 April 2009 with the company Center Naložbe, d. d., Maribor, for the amount of

a short-term loan of EUR 400,000; the loan was returned in full on 1 July 2009, 3. Loan Agreement of 30 April 2009 with the company Center Naložbe, d. d., Maribor, for the amount of

short-term loan of EUR 1,500,000, 6. Loan Agreement of 30 May 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 1,700,000, 7. Loan Agreement of 4 June 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 5,000,000, 8. Loan Agreement of 12 June 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 2,000,000, 9. Loan Agreement of 1 February 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 5,700,000, 10. Loan Agreement of 1 June 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a short-term loan of EUR 6,600,000, 11. Loan Agreement of 10 February 2009 with the company Infond Holding, d. d., Maribor, for the amount of a short-term loan of EUR 10,000,000, and 12. Loan Agreement of 10 June 2009 with the company Infond Holding, d. d., Maribor, for the amount of a short-term loan of EUR 6,300,000.

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100,000; thus the remaining amount of the loan to be returned totals EUR 600,000, 5. Loan Agreement of 6 May 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a

P I V O V A R N A

short-term loan of EUR 700,000; the loan was returned partially on 1 July 2009 in the amount of EUR

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a short-term loan of EUR 1,000,000, 4. Loan Agreement of 5 May 2009 with the company Center Naložbe, d. d., Maribor, for the amount of a

II.

In transactions from point I. Radenska, d. d., Radenci, agreed particularly to the following payments and refunds: 1. The principal owed by the borrowers amounts to EUR 40,400,000.00. 2. Contractual interest owed by the borrowers amounts to EUR 454,832.55. III. 1. In transactions from point I. of this report, Radenska, d. d., Radenci, agreed to an adequate payment and repayment of the loan with regard to the circumstances of the transactions known to it at the time

A N N U A L

R E P O R T

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of its conclusion. 2. The disadvantage of Radenska, d. d., Radenci, as an affiliated company results from the fact that borrowers failed to fulfil their obligations at their maturity according to the loan agreements, as already explained in the Statement of Radenska, d. d., Radenci, according to Article 545 of the Companies Act ZGD-1 of 25 August 2009. 3. The amounts of matured, non-settled obligations of the borrower against Radenska, d. d., Radenci, according to a particular loan agreement total as follows as at 31 December 2009:

•T he amount of matured non-settled obligation totals EUR 42,072,668.17, from which EUR 40.400.000,00 the principal, EUR 454,832.55 contractual interest and EUR 1,217,835.62 default interest. 4. The disadvantage of Radenska, d. d., Radenci, is disclosed in matured and non-settled obligations of the borrowers from point I. of this report. The disadvantage of Radenska, d. d., Radenci, occurred with the event of late payment by borrowers and has not been compensated to Radenska, d. d., Radenci, to date.

IV. 1. Radenska, d.d., Radenci, has in the receivership proceeding against the debtor Center Naložbe, d. d., which is being conducted before the District Court in Maribor under reference number St 53/2010, reported a claim in the total amount of EUR 25,337,923.77, from which EUR 24,100,000.00 principals,

D .

EUR 218,984.25 contractual interest, EUR 1,007,457.53 default interest charged until 2 February 2010, and claim actions towards Center Naložbe, d. d., or debt recovery of Center Naložbe, d. d. 2. Radenska, d. d., Radenci, has in the bankruptcy proceedings against the debtor Infond Holding, d. d., which is being conducted before the District Court in Maribor under reference number St 912/2009,

P I V O V A R N A

L A Š K O

D .

and EUR 11,481.99 expenses incurred by Radenska, d. d., Radenci, in judicial protection procedures

reported a claim in the total amount of EUR 17,062,078.14, from which EUR 16,300,000.00 principals, EUR 236,308.86 contractual interest, EUR 474,263.01 default interest charged until 28 December 2009, and EUR 51,506.27 expenses incurred by Radenska, d. d., Radenci in judicial protection proceedings and claim actions towards Infond Holding, d. d., or debt recovery of Infond Holding, d. d. In addition, Radenska, d. d., Radenci, reported a delimiter right to property of the debtor in bankruptcy, which includes:

• 1 20,783 uncertified securities of the issuer Pivovarna Laško, d. d., with the label PILR where Radenska, d. d., has 5th order (on 10,522 shares PILR) or 6th order (on 110,261 shares PILR),

• 1 7,015 uncertified securities of the issuer Mercator, d. d., with the label MELR and where Radenska, d. d., has 6th order. V. 1. The company's disadvantage at the end of the fiscal year was not compensated. With a written letter of 23 December 2009 the company warned the parent company Pivovarna Laško, d. d., that it incurred a disadvantage due to transactions concluded based on the instructions provided by Pivovarna Laško, d. d., for concluding the transactions which are subject of this report, and informed Pivovarna Laško, d. d., that it shall undertake to compensate for this disadvantage at the end of the fiscal year; otherwise

consequences from Article 547 of the Companies Act ZGD-1 may occur. 2. The parent company, Pivovarna Laško, d. d., responded with a letter of 29 December 2009, in which it stated its point of view that the instructions given by the former Management Board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the interest of Atka-Prima, d. o. o., and its owners, and proposed to bring the demands, based on the activities of the multi-level group, against the company Atka-Prima, d. o. o., Celje, Stanetova ulica 5. VI. 1. On 15 October 2009, Radenska, d. d., addressed the District Court in Maribor with a petition to commence bankruptcy proceedings against Infond Holding, d. d., and Center Naložbe, d. d. In the begin-

2. On 29 March 2010, Radenska, d. d., reported a claim in bankruptcy proceedings against Infond Holding, finančna družba, d. d., in bankruptcy, and made a request to establish a Creditors' Committee. On 17 March 2010, Radenska, d. d., reported a claim in the receivership proceeding against the company Center Naložbe, d. d. 3. Bearing in mind the bankruptcy and the compulsory settlement, Radenska, d. d, intends to exercise the

R E P O R T

settlement against Center Naložbe, d. d.

A N N U A L

against both companies to 18 January 2010 and later, with a decision of 28 December 2009, initiated insolvency proceedings over Infond Holding, d. d., and on 27 February 2010, introduced a compulsory

2 0 0 9

ning the Court postponed the creditor's petition for the commencement of bankruptcy proceedings

injury in relevant court proceedings once it determines its scope.

3. Fructal, d. d., Ajdovščina I. During the fiscal years 2008 and 2009 Fructal, d. d., as an affiliated company concluded the following

legal transactions within the framework of the actual group based on the instructions of the former Manage-

4. Loan Agreement with the company Infond Holding, d. d., IH 2-08. 5. Loan Agreement with the company Infond Holding, d. d., of 7 November 2008. 6. Purchase of shares of the company Infond Holding, d. d., made based on the purchase agreement of 25 November 2008 and later purchases on the securities market until 31 March 2009. II. In transactions from point I. Fructal, d. d., agreed particularly to the following payments and refunds: 1. Total contractually agreed principal owed by the borrower Center Naložbe, d. d., as at 31 December 2009 amounts to EUR 6,200,000.00 and interest EUR 214,536.99. 2. Total contractually agreed principal owed by the borrower Infond Holding, d. d., as at 31 December 2008 amounts to EUR 3,200,000.00 and interest EUR 109,595.87. 3. The purchase value of shares of Infond Holding, d. d., which was in the period from 25 November 2008 to 31 March 2009, inclusive, carried out by Fructal, d. d., as the buyer amounted to EUR 5,588,365.90. III. 1. In transactions from point I. of this report, Fructal, d. d., agreed to an adequate payment and repayment of the loan with regard to the circumstances of the transactions known to it at the time of its conclusion.

D . L A Š K O

2. Loan Agreement with the company Center Naložbe, d. d., CN 3-09. 3. Loan Agreement with the company Infond Holding, d. d., IH 1-09.

P I V O V A R N A

1. Loan Agreement with the company Center Naložbe, d. d., CN 1-08.

D .

ment Board of the parent company Pivovarna Laško:

The disadvantage of the company Fructal, d. d., as an affiliated company results from the fact that borrowers failed to complete their obligations at their maturity according to loan agreements, as has already been explained in the Statement of Fructal, d. d., in accordance with Article 545 of the Companies Act ZGD-1, which was given in the semi-annual report for January–June 2009. 2. The amounts of matured, non-settled obligations of borrowers against Fructal, d. d., according to a particular loan agreement total as follows as at 31 December 2009:

• Amount of the matured, non-settled obligation according to the Loan Agreement number CN 1-2008 totals EUR 5,899,578.08, from which EUR 5,700,000.00 the principal and EUR 199,578.08 default interest.

• Amount of the matured, non-settled obligation according to the Loan Agreement number CN 3-2009

A N N U A L

R E P O R T

2 0 0 9

totals EUR 514,958.91, from which EUR 500,000.00 the principal, EUR 5,095.90 contractual interest and EUR 9,863.01 default interest.

• Amount of the matured, non-settled obligation according to the Loan Agreement number IH 1-2009 totals EUR 2,688,709.29, from which EUR 2,600,000.00 the principal, EUR 25,240.80 contractual interest and EUR 63,468.49 default interest.

• Amount of the matured, non-settled obligation according to the Loan Agreement number IH 2-2008 totals EUR 310,443.29, from which EUR 300,000.00 the principal, EUR 3,120.00 contractual interest and EUR 7,323.29 default interest.

• Amount of the matured, non-settled obligation according to the Loan Agreement of 7 November 2008 totals EUR 310,443.29, from which EUR 300,000.00 the principal, EUR 3,120.00 contractual interest and EUR 7,323.29 default interest.

• Purchase of 1,133,674 shares of Infond Holding, d. d., (label IFFR) in the total purchase value of EUR 5,588,365.90. The value of shares of Infond Holding, d. d., (label IFFR) was corrected to EUR 0 as at 31 December 2009.

3. The disadvantage of Fructal, d. d., is disclosed in matured and non-settled obligations of the borrowers from point I. of this report and in reduction of the market value of the purchased shares of Infond Holding, d. d. The disadvantage of Fructal, d. d., occurred with the event of late payment by borrowers or due to the reduction in the market value of the shares of Infond Holding, d. d., and has not been

being conducted before the District Court in Maribor under reference number St 53/2010, reported

P I V O V A R N A

L A Š K O

D .

compensated to Fructal, d. d., to date. Fructal, d. d., has in the receivership proceeding against the debtor Center Naložbe, d. d., which is a claim in the total amount of EUR 6,550,432.89, from which EUR 6,200,000.00 principals, EUR 5,424.67 contractual interest and EUR 345,008.22 default interest, charged until 17 February 2010. Fructal, d. d., has in the bankruptcy proceedings against the debtor Infond Holding, d. d., which is being conducted before the District Court in Maribor under reference number St 912/2009, reported a claim in the total amount of EUR 3,338,503.91, from which EUR 3,204,081.00 principals, EUR 28,360.80 contractual interest and EUR 106,062.11 default interest charged until 28 December 2009. In addition, Fructal, d. d., reported a delimiter right to property of the debtor in bankruptcy, which includes:

•120,783 uncertified securities of the issuer Pivovarna Laško, d. d., with the label PILR, where Fructal, d. d., has 6th and 9th order (on 10,522 shares PILR) or 7th and 10th order (on 110,261 shares PILR),

•17,015 uncertified securities of the issuer Mercator, d. d., with the label MELR and where Fructal, d. d.,

•18 uncertified securities of the issuer ČZP Večer, d. d., with the label VEMP and where Fructal, d. d.

•158,975 uncertified securities of the issuer Thermana, d. d., with the label ZDLR and where Fructal,

has 7th and 10th order, has 3rd order, d. d. has 4th order. The company's disadvantage at the end of the fiscal year was not compensated. With a written letter of 22 December 2009 the company warned the parent company Pivovarna Laško, d. d., that it had incurred a disadvantage due to transactions concluded based on the instructions provided by Pivovarna Laško, d. d., for concluding the transactions which are the subject of this report, and informed Pivovarna Laško, d. d., that

it shall undertake to compensate for this disadvantage at the end of the fiscal year; otherwise consequences from Article 547 of the Companies Act ZGD-1 may occur. The parent company, Pivovarna Laško, d. d., responded with a letter of 29 December 2009, in which it stated its point of view that the instructions given by the former Management Board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the interest of Atka-Prima, d. o. o., and its owners, and proposed to bring the demands, based on the activities of the multi-level group, against the company Atka-Prima, d. o. o., Celje, Stanetova ulica 5. On 15 October 2009, Fructal, d. d. addressed the District Court in Maribor with a petition to commence bankruptcy proceedings against Infond Holding, d. d., and Center Naložbe, d. d.

On 29 March 2010, Fructal, d. d., reported a claim in bankruptcy proceedings against Infond Holding, finančna družba, d. d., in bankruptcy, and made a request to establish a Creditors' Committee. On 12 March 2010, Fructal, d. d., reported a claim in the receivership proceeding against the company Center Naložbe, d. d. Bearing in mind the bankruptcy and the compulsory settlement, Fructal, d. d, intends to exercise the injury in relevant court proceedings once it determines its scope.

R E P O R T

against Center Naložbe, d. d.

A N N U A L

vency proceedings over Infond Holding, d. d., and on 27 February 2010 introduced a compulsory settlement

2 0 0 9

Initially the Court postponed the creditor's petition for the commencement of bankruptcy proceedings against both companies to 18 January 2010 and later, with a decision of 28 December 2009, initiated insol-

4. Delo, d. d., Ljubljana I. During the fiscal years 2005, 2008 and 2009 Delo, d. d., as an affiliated company concluded the following legal transactions within the framework of the actual group based on the instructions of the former Manage-

ment Board of the parent company Pivovarna Laško, d. d.:

value date 8 October 2009, closed on 1 May 2009 and transferred with compensation to new agreement. 3. Granted loan: Infond Holding, d. d., Loan Agreement of 6 April 2009 for the amount of EUR 1,000,000.00, value date 6 October 2010, closed on 1 May 2009 and transferred with compensation to new agreement. 4. Granted loan: Infond Holding, d. d., Loan Agreement of 1 May 2009 for the amount of EUR 6,500,000 (set off all three above agreements), value date 15 December 2009. 5. Granted loan: Center Naložbe, d. d., Loan Agreement of 28 May 2009 in the amount of EUR 500,000, value date 28 August 2009. 6. On 16 May 2005 the purchase of 51,180 shares of Večer, d. d. (VEMG) in the amount of EUR 2,776,414.62 and on 10 November 2008 the purchase of 151,608 shares of Večer, d.d. (VEMG) in the amount of EUR 15,122,898, in total 202,788 shares in the value of EUR 17,899,312.62. II. In transactions from point I. Delo, d. d. agreed particularly to the following payments and refunds per legal transactions: Under seq. No. 4: Contractually agreed interest owed by the borrower in the amount of EUR 86,832.87 and repayment of principal in the amount of EUR 6,500,000.

D . L A Š K O

and transferred with compensation to new agreement. 2. Granted loan: Infond Holding, d. d., Loan Agreement of 8 April 2009 for the amount of EUR 1,000,000,

P I V O V A R N A

2009 for the amount of a loan of EUR 4,500,000.00, value date 1 June 2009, closed on 1 May 2009

D .

1. Granted loan: Infond Holding, d. d., Loan Agreement of 30 January 2009, Annex No. 1 of 27 February

Under seq. No. 5: Contractually agreed interest owed by the borrower in the amount of EUR 3,825.73 EUR and repayment of principal in the amount of EUR 500,000. Under seq. No. 6: The price of a share of Večer, d. d., which was on 16 May 2005 implemented by Delo, d. d., as the buyer, from the seller Deželna Banka Slovenije, d. d., amounted to EUR 54.25; the price of a share of Večer, d. d., which was on 10 November 2008 implemented by Delo, d. d., as the buyer, from the company Fimes, d. o. o, amounted to EUR 99.75 EUR per share. III. III.1. In transactions from point I. of this report Delo, d. d., agreed to an adequate payment and repayment

A N N U A L

R E P O R T

2 0 0 9

of the loan with regard to the circumstances of the transactions known to it at the time of its conclusion. The disadvantage of the company Delo, d. d., as an affiliated company results from the fact that borrowers failed to complete their obligations at their maturity according to loan agreements, as has already been explained in the Statement of Delo, d. d., in accordance with Article 545 of the Companies Act ZGD-1 as at 26 August 2009. III.2. The amounts of matured, non-settled obligations of borrowers against Delo, d. d., according to a particular loan agreement amount as follows as at 31 December 2009: Under seq. No. 4: The amount of the matured non-settled obligation totals EUR 6,775,956.16, from which EUR 6,500,000.00 the principal, EUR 86,832.87 contractual interest and EUR 189,123.29 default interest. Under seq. No. 5: The amount of the matured non-settled obligation totals EUR 519,236.69, from which EUR 500,000.00 the principal, EUR 3,825.73 contractual interest and EUR 15,410.96 default interest.

Under seq. No. 6: The purchase of 202,788 shares of Večer, d. d., (label VEMG) in the total purchase value of EUR 17,899,312.62. Estimated market value of 202,788 shares of VEMG totals EUR 11,208,000 as at 31 December 2009.

P I V O V A R N A

L A Š K O

D .

III.3. The disadvantage of Delo, d. d., is disclosed in matured and non-settled obligations of the borrowers from point I. of this report and in reduction of the market value of the purchased shares of Večer, d. d. The disadvantage of Delo, d. d., occurred with the event of the late payment by borrowers or reduction in the market value of the shares of Večer, d. d., and has not been compensated to Delo, d. d., to date. Delo, d. d., has in the receivership proceeding against the debtor Center Naložbe, d. d., which is being conducted before the District Court in Maribor under reference number St 53/2010, reported a claim in the total amount of EUR 525,154.50, from which EUR 500,000.00 the principal, EUR 3,825.73 contractual interest and EUR 21,328.77 default interest, charged until 17 February 2010. Delo, d. d., has in the bankruptcy proceedings against the debtor Infond Holding, d. d., which is being conducted before the District Court in Maribor under reference number St 912/2009, reported a claim in the total amount of EUR 6,771,147.94, from which EUR 6,500,000.00 the principal, EUR 86,832.87 contractual interest and EUR 184,315.07 default interest, charged until 28 December 2009. In addition, Delo, d. d., reported a delimiter right to property of the debtor in bankruptcy, which includes:

• 1 20,783 uncertified securities of the issuer Pivovarna Laško, d. d., with the label PILR, where Delo, d. d. has 8th order (on 10,522 shares PILR) or 9th order (on 110,261 shares PILR),

• 1 7,015 uncertified securities of the issuer Mercator, d. d., with the label MELR and where Delo, d. d., has 9th order,

• 1 8 uncertified securities of the issuer ČZP Večer, d. d., with the label VEMP and where Delo, d. d., has 2nd order,

• 1 58,975 uncertified securities of the issuer Thermana, d. d., with the label ZDLR and where Delo, d. d., has 3rd order.

The company's disadvantage at the end of the fiscal year was not compensated. With a written letter of 23 December 2009 the company warned the parent company Pivovarna Laško, d. d., that it had incurred a disadvantage due to transactions concluded based on the instructions provided by Pivovarna Laško, d. d., for concluding the transactions which are subject of this report, and informed Pivovarna Laško, d. d., that it shall undertake to compensate for this disadvantage at the end of the fiscal year; otherwise consequences from Article 547 of the Companies Act ZGD-1 may occur. The parent company, Pivovarna Laško, d. d., responded with a letter of 29 December 2009, in which it stated its point of view that the instructions given by the former Management Board of Pivovarna Laško, d. d., were not in the economic interest of Pivovarna Laško, d. d., but in the interest of Atka-Prima, d. o. o., and its owners, and proposed to bring the demands, based on the activities of the multi-level group, against the company Atka-Prima, d. o. o., Celje, Stanetova ulica 5.

Bearing in mind the bankruptcy and the compulsory settlement, Delo, d. d, intends to exercise the injury in relevant court proceedings once it determines its scope.

R E P O R T A N N U A L

reported a claim in the receivership proceeding against the company Center Naložbe, d. d.

D .

ch 2010, Delo, d. d. reported a claim in bankruptcy proceedings against Infond Holding, finančna družba, d. d., in bankruptcy, and made a request to establish a Creditors' Committee. On 12 March 2010, Delo, d. d.,

D .

d. d., and on 27 February 2010, introduced a compulsory settlement against Center Naložbe, d. d. On 29 Mar-

L A Š K O

2010 and later, with a decision of 28 December 2009, initiated insolvency proceedings over Infond Holding,

P I V O V A R N A

creditor's petition for the commencement of bankruptcy proceedings against both companies to 18 January

2 0 0 9

On 15 October 2009, Delo, d. d., addressed the District Court in Maribor with a petition to commence bankruptcy proceedings against Infond Holding, d. d., and Center Naložbe, d. d. Initally the Court postponed the

2.4

S h a r e h o l d e r s a n d t h e i m pact o f eco n o m i c a n d ot h e r t r e n d s o n b u s i n e s s o p e r at i o n s Since 1995 Pivovarna Laško has been organized as a joint-stock company. At the end of fiscal year 2009 the company numbered 8,268 shareholders, which is 152 shareholders or 1.8 % less than at the end of 2008. In 2008 2,488 shareholders of Pivovarna Laško, d. d., accepted a takeover bid.

A N N U A L

R E P O R T

2 0 0 9

NUMBER OF SHAREHOLDERS

Delničarji na dan 31.12. Verižni indeks

2007

2008

2009

12,099

8,420

8,268

69.6

98.2

2.4.1 IMPACT OF ECONOMIC AND OTHER TRENDS ON BUSINESS OPERATIONS The general economic and financial crisis influenced the decline in living standards and lower purchasing power of the population. Among other impacts, the business operations of the parent company Pivovarna Laško,

d. d., and its

affiliated company Pivovarna Union, d. d., Ljubljana in 2009 were strongly influenced also by a government fiscal measure, which increased the excise duty on beer as at 1 March 2009. Due to this particular government measure, beer increased on the market and became less competitive compared with other alcoholic

beverages, particularly with wine, which is not burdened by the excise duty on alcoholic beverages.

2.4.2 CAPITAL OWNERSHIP STRUCTURE

D .

gistered and issued in uncertificated form, with the labels PILR and PILH. On 31 December 2009 8,611,481

P I V O V A R N A

L A Š K O

8,747,652 no-par-value shares without nominal value, all of which are fully paid. All shares are ordinary, re-

D .

As at 31 December 2009 the share capital of the company totals EUR 36,503,305 and is divided into

shares with the label PILR and 136,171 shares with the label PILH were entered into the Central Register of KDD (Securities Clearing Corporation, d. d., Ljubljana).

CAPITAL OWNERSHIP STRUCTURE OF PIVOVARNA LAŠKO, D. D., AS AT 31 DECEMBER 2009

P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

2 0 0 9

CAPITAL OWNERSHIP STRUCTURE OF PIVOVARNA LAŠKO, D. D., AS AT 31 DECEMBER 2008

7.3 % Infond holding, d.d.

13.5 %

Kapitalska družba, d.d. Skagen kon-tiki verd papir fond

53.0 %

8.5 %

NFD1 delniški IS, d.d. Ostale pravne osebe

2 0 0 9

5.1 %

Fizične osebe

5.5 %

Tujci

A N N U A L

R E P O R T

7.1 %

( in % )

2007

2008

Legal entities

66.9

79.2

79.1

Individual shareholders

20.0

13.5

13.7

Foreigners Total

P I V O V A R N A

L A Š K O

D .

2009

13.1

7.3

7.2

100.0

Majority shareholders On 31 December 2009 the 10 largest shareholders possessed in total 5,908,316 shares or 67.5 % of the total share capital, which is 16.3 % less than on 31 December 2008.

in %

place

NLB, d. d.

1,713,685

19.590

Kapitalska Družba, d. d.

617,488

7.059

TCK, d. d.

613,300

7.011

Probanka, d. d.

594,628

6.798

GB, d. d., Kranj

542,448

6.201

Skagen Kon-tiki Verdipapirfond

499,286

5.708

NFD1 Delniški Investicijski Sklad, d. d.

446,465

5.104

Publikum Fin, d. o. o.

343,053

3.922

Abanka, d. d.

285,463

3.263

252,500

2.886

10.

Total - top ten largest shareholders

Banka Celje, d. d.

5,908,316

67.542

Other minor shareholders

2,839,336

32.458

Total - all shareholders

8,747,652

100.000

Number of shares

in %

place

4,633,736

52.971

617,488

7.059

R E P O R T

Number of shares

A N N U A L

(31.12.2009)

2 0 0 9

TEN LARGEST SHAREHOLDERS OF PIVOVARNA LAŠKO, D. D., END OF THE YEAR

486,634

5.563

445,642

5.094

CPM, d. d.

219,657

2.511

D.S.U., d. o. o.

165,680

1.894

Probanka, d. d.

151,129

1.728

Uravnoteženi Vzajemni Sklad Infond Global

125,812

1.438

Electa, d. o. o. Ljubljana

113,870

1.302

98,801

1.129

10.

Total - top ten largest shareholders

7,058,449

80.690

Other minor shareholders

1,689,203

19.310

Total - all shareholders

8,747,652

100.000

Vzajemni Sklad Probanka Globalni Naložbe

The equity ownership structure of the company drastically changed in 2009, since banks dominate as owners. Firstly, Infond Holding, d. d., replaced NLB, d. d., as the largest owner, which owns a 19.59 % share of Pivovarna Laško, d. d. This bank is followed by Kapitalska Družba, d. d., which owns 7.06 % of shares and remains with the same share as at the end of 2008 on second place, as well as TCK, d. o. o., which owns 7.01 % of shares and was not among the top 10 largest shares in the previous year. The largest shareholders of the company also include Probanka, d. d. , which increased its share from 1.7 % to 6.8 % in the year 2009. Probanka is followed by GB, d. d., Kranj, with a 6.2 % share, which was also not among the 10 largest shareholders; Skagen Kon-tiki Verdipapirfond and NFD 1 Delniški Investicijski Sklad (equity investment fund) have almost the same ownership share as the year before. On 31 December 2009, other companies owned less than 4 % of PILR shares.

D .

Skagen Kon-tiki Verdipapirfond NFD 1 Delniški Investicijski Sklad, d. d.

D .

Kapitalska družba, d. d.

L A Š K O

Infond Holding, d. d.

P I V O V A R N A

(31.12.2008)

Capital ownership structure of affiliated companies LARGEST SHAREHOLDERS OF RADENSKA, D. D., RADENCI

(31.12.2009)

Pivovarna Laško, d. d.

2 0 0 9 R E P O R T A N N U A L

in %

place

4,748,053

93.801

Lesnina LGM, d. o. o. Ljubljana

22,062

0.436

Radenska, d. d. Radenci

13,194

0.261

6,042

0.119

Kozelj Bojan GBD, d. d.

4,077

0.081

Vrankar Anton

1,500

0.030

4 F, d. o. o.

1,260

0.025

Camlek Marija

1,164

0.023

Petrič Stane

900

0.018

Lesnina, d. d.

890

0.018

10.

4,799,142

94.810

262.714

5.190

5,061,856

100.000

Number of shares

in %

place

4,685,477

92.564

Total - Top ten largest shareholders Other minor shareholders Total - All shareholders

(31.12.2008)

Pivovarna Laško, d. d.

26,799

0.529

22,062

0.436

Potočnik Marko

15,442

0.305

Radenska, d. d. Radenci

13,194

0.261

Pohištvo, d. d. Ljubljana

12,273

0.242

Plevnik Božidar

7,181

0.142

Kozelj Bojan

6,042

0.119

GBD, d. d.

4,077

0.081

1,500

0.030

10.

4,794,047

94.709

267,809

5.291

5,061,856

100.000

P I V O V A R N A

L A Š K O

D .

MP BPH, d. d. Ljubljana Lesnina LGM, d. o. o. Ljubljana

D .

Number of shares

Vrankar Anton Total - Top ten largest shareholders Other minor shareholders Total - All shareholders

LARGEST SHAREHOLDERS OF PIVOVARNA UNION, D. D., LJUBLJANA Number of shares

in %

place

441,589

97.889

May Alexander

3,652

0.810

Skandij, d. o. o

384

0.085

GBD, d. d.

109

0.024

Energoplan, d. d.

100

0.022

Pintar Nina

0.022

0.019

Pivovarna Union, d. d.

0.015

Laknar Frančiška

0.009

10.

446,169

98.904

1.096

Other minor shareholders Total - All shareholders

(31.12.2008)

100.000

Number of shares

in %

place

440,089

97.556

May Alexander

3,652

0.810

MP BPH, d. d.

886

0.196

Skandij, d. o. o

384

0.085

DBS, d. d.

345

0.076

Hram Holding, d. d.

200

0.044

Pintar Nina

100

0.022

Energoplan, d. d.

100

0.022

Srakar Drago

0.019

Pivovarna Union, d. d.

0.015

10.

445,911

98.847

5,203

1.153

451,114

100.000

Total - Top ten largest shareholders Other minor shareholders Total - All shareholders

D .

Pivovarna Laško, d. d.

4,945 451,114

OWNERSHIP STRUCTURE IN JADRANSKA PIVOVARA – SPLIT, D. D. (31.12.2009)

Number of shares

in %

Pivovarna Laško, d. d.

3,255,152

99.106

Other minor shareholders

29,365

0.894

Total - All shareholders

3,284,517

100.000

The ownership share of Pivovarna Laško, d. d., and other minority shareholders in Jadranska Pivovara, d. d., Split, remains on 31 December 2009 the same as at the end of 2008. The total number of shareholders is 81.

R E P O R T

Total - Top ten largest shareholders

A N N U A L

Skvarča Frančišek

2 0 0 9

100

Srakar Drago

L A Š K O

Pivovarna Laško, d. d.

P I V O V A R N A

(31.12.2009)

BUSINESS SHARES IN THE COMPANY VITAL MESTINJE, D. O. O. (31.12.2009)

in %

Pivovarna Laško, d. d.

96.920

Other partners

3.080

Total all partners

100.000

The business share of Pivovarna Laško, d. d., and other partners in the company Vital Mestinje, d. o. o.,

A N N U A L

R E P O R T

2 0 0 9

remains on 31 December 2009 the same compared to the previous year.

EQUITY SHARES IN THE COMPANY DELO, D. D., LJUBLJANA (31.12.2009)

Number of shares

in %

Pivovarna Laško, d. d.

539,516

80.831

Radenska, d. d. Radenci

127,928

19.166

Firma Del, d. o. o. Laško

0.003

667,464

100.000

Total - All shareholders

The equity share of Pivovarna Laško, d. d., and other companies in Delo, d. d., Ljubljana remains on 31 December 2009 unchanged compared to 31 December 2008.

THE BALANCE OF SHARES AND SHARE OF THE MANAGEMENT BOARD AND INDIVIDUAL MEMBERS OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO, D. D., IN THE SHARE

( shareholder )

Membership

Number of shares

Participation %

P I V O V A R N A

L A Š K O

D .

CAPITAL AS AT 31 DECEMBER 2009

Dušan Zorko

Management

450

0.0051

Andrej Kebe

Supervisory Board

9,393

0.1074

Anton Turnšek

Supervisory Board

9,773

0.1117

Bojan Košak

Supervisory Board

17,785

0.2033

37,401

0.4275

Total

Other members of the Supervisory Board were not holders of shares of Pivovarna Laško, d. d., on that day.

Indirect ownership of the former Management Board The director of Pivovarna Laško, d. d., Mr Boško Šrot, was, together with his wife, co-owner of the company Atka-Prima, d. o. o., Celje, which initially had 100 %, and then 70 % share in the company Kolonel, d. d., Maribor. The latter was the majority owner of the company Center Naložbe, d. d., Maribor, in the amount of 78 %, and the latter was the owner of a 71 % share of the company Infond Holding, d. d., Maribor. The term of office of the former director of Pivovarna Laško, d. d., Mr Boško Šrot, expired on 23 July 2009. In August 2009 banks seized shares of Pivovarna Laško, d. d., from Infond Holding, d. d., Maribor, so at the end of the year 2009 Infond Holding, d. d., was the holder of only 120,783 PILR shares or had a 1.38 % share in Pivovarna Laško, d. d.

Authorised and conditional capital In 2009 the General Meeting of Shareholders did not conclude a conditional increase of the share capital or authorised capital.

Power to Management Board for obtaining treasury shares On 31 August 2009 the General Meeting of Shareholders empowered the Management Board of Pivovarna Laško, d. d., to purchase treasury shares for purchase, which shall not be higher than the price of the share which is valid on the securities market, with the intention of maximising the intrinsic value of the company shares. The total number of shares obtained for the purpose described in the previous paragraph shall not, toge-

The Management Board shall not acquire treasury shares for the sole purpose of trading. If the Management Board of the company discovers that it no longer needs the shares obtained for the aforementioned purpose, it may dispose of them with consent from the Supervisory Board of the company.

2.4.3 SHARES Shares of Pivovarna Laško, d. d., with the label PILR are quoted on the securities market of Ljubljanska

R E P O R T

31 August 2009 on.

A N N U A L

Board for the purchase of treasury shares is valid for 36 months from the receipt of this decision, that is from

2 0 0 9

ther with other company shares, exceed 10 % of the company's share capital. The power of the Management

Borza, d. d., Ljubljana from 1 February 2000 onward as ordinary shares. As at 31 December 2009 the share capital of the company totals EUR 36,503,305 and it is divided into 8,747,652 no-par-value shares without nominal value. As at 12 March 2009 29,509 shares of Pivovarna Laško, d. d., were deleted from the Central Register at KDD and were swapped for the same amount of ordinary no-par-value shares with the label PILR. After the

implemented entry there are in total 8,611,481 ordinary no-par-value shares with the label PILR and 136,171

In 2009 Pivovarna Laško, d. d., failed to obtain treasury shares but disposed or sold 4,499 treasury shares in the total amount of EUR 141,987 to employees. On 31 December 2009 the company had in its portfolio 755 lots of disposed treasury shares, which totals 0.0086 % of all shares, and the affiliated companies have the following number of shares in their possession: Radenska, d. d., 21,195 lots (0.2423 %), Pivovarna Union, d. d., 9,584 lots (0.1096 %) and Fructal, d. d., 13,087 lots (0.1496 %) of PILR shares. The revised book value per share of PILR as at 31 December 2009 according to IFRS totals EUR 14.78. At the end of 2009 the marker value per share totalled EUR 27.15, which exceeds the book value by 83.7 %. Each share gives the owner the right to vote at the annual General Meeting of Shareholders and to participate in profits. In recent years the company paid out nearly half of the annual net profits through dividends, while the rest of the profits went to investments and reserves. The Management Board of the company supports the long-term dividend policy outlined in the coming years; however, it depends on the reorganization of the financial situation or on the financial restructuring of the company.

D . L A Š K O

ficiary, the share swaps from the label PILH to PILR and begins quoting on the securities market.

P I V O V A R N A

The company has had since the process of ownership transformation shares with the label PILH, which are reserved for denationalization beneficiaries. If a decision is issued in favour of a denationalization bene-

D .

shares with the label PILH recorded in the Central Register at KDD.

AVERAGE MARKET VALUE OF PILR SHARE IN 2009

100 80 60 40 20

A N N U A L

R E P O R T

2 0 0 9

( in EUR )

jan

feb

Jan.

Feb.

mar

apr

Mar.

maj

April

jun

May

June

jul

avg

July

sep

Aug.

okt

Sept.

nov

Oct.

dec

Nov.

Dec.

46.55 48.84 44.75 43.90 41.70 40.27 34.52 30.53 29.30 27.88 26.23 25.58

BOOKKEEPING VALUE OF PILR SHARE AS AT 31 DECEMBER FOR THE PERIOD FROM 2000–2009

40 30

D .

*2009

2001

2002

2003

2004

*2005

*2006

*2007

*2008

*2009

19.68

22.12

23.07

22.82

20.11

21.93

26.45

20.90

14.78

*2008

*2007

*2005

*2006

2004

18.09

2003

2001

2000

( in EUR ) 2000

2002

P I V O V A R N A

L A Š K O

* under IFRS, for all years from 2000 to 2006 inclusive the conversion rate is EUR 1 = SIT 239.640

In 2005 the bookkeeping value of the share changed from EUR 24.44 to EUR 20.11 due to the transfer on IFRS.

2.4.4 FINANCIAL CALENDAR FOR 2010 GENERAL MEETING OF SHAREHOLDERS Expected in July 2010. ENTITLEMENT TO DIVIDEND In the event the General Meeting of Shareholders decides on payment of dividend, then those holdersof shares are entitled to it who are entered in the share register by the third day after the meeting. PAYMENT OF DIVIDENDS

Deadline for publication is two months after the fiscal year or last day in February. Consolidated financial statements Deadline for publication is three months after the fiscal year or last day in March.

R E P O R T

Non-consolidated financial statements

A N N U A L

NON-AUDITED ANNUAL FINANCIAL STATEMENTS

2 0 0 9

Not later than 60 days after the adopted decision on payment rendered.

AUDITED NON-CONSOLIDATED AND CONSOLIDATED ANNUAL FINANCIAL STATEMENTS The company shall submit an audited annual non-consolidated and consolidated report and shall publish it immediately when possible, however, not later than within 30 days after the receipt of the audit report.

Deadline for publication of the audited non-consolidated and consolidated report is four months

or by 31 August. OTHER INTERIM REPORTING The company must also report on business operations for the first three or first nine months of the fiscal year. Deadline for publication is two months (31 May or 30 September) after the relevant accounting period (three-month or nine-month accounting period).

P I V O V A R N A

The company shall submit a semi-annual report as soon as possible. Deadline for publication of the summary of the semi-annual report is two months after the completed semi-annual accounting period

L A Ĺ K O

D .

SEMI-ANNUAL REPORT

D .

after the fiscal year or by 30 April.

2.5 Sale

In 2009 the total quantity sales of Pivovarna LaĹĄko, d. d., were with regard to 2008 6.4 % lower in beer sales, while the company reported a fall of 26.8 % in sales of water. While we increased the sales of beer in Kosovo, Macedonia, Montenegro and on convertible markets, the company recorded lower sales of beer in Slovenia, Serbia, Bosnia and Herzegovina and Croatia.

SALES OF BEER AND WATER

Beer sales Water sales

in hectolitres

1,125,000

750,000

375,000

A N N U A L

R E P O R T

2 0 0 9

1,500,000

0 2007

2008

2009

( in % )

2007

2008

2009

Beer sales

95.8

95.9

96.8

Water sales Total

4.2

4.1

3.2

100.0

of beer increased by 1 percentage point and the sale of water decreased by 1 percentage point.

SALES OF BEER ON DOMESTIC AND FOREIGN MARKETS

900,000

Domestic market Foreign market

675,000 in hectolitres

P I V O V A R N A

L A Ĺ K O

D .

The ratio between the sales of beer and water in 2009 remains almost the same as previous years; the sale

450,000

225,000

0 2007

2008

2009

( in % )

2007

2008

2009

Domestic market

82.9

83.5

78.2

Foreign market Total

17.1

16.5

21.8

100.0

2.5.1 SLOVENIAN MARKET In 2009 the total consumption of beer of all providers (both domestic and foreign) totalled 1,712,000

volume of investment by foreign competition in HORECO (Heineken, Tuborg, Veltins). The market share of commercial brands of imported beer is increasing in trade. On 1 January 2009 Pivovarna Laško, d. d., transferred to the information system SAP, which supports the complete business operations of the company. The call centre, which is located in Ljubljana, accepts all retail orders for the complete selling assortment of Pivovarna Laško Group, while wholesale orders are still placed separately per individual companies.

R E P O R T

2009 the import of beer increased by 2 % and now has a 15.2 % market share. We detect an increased

A N N U A L

facing the pressure of competitive beer in lower, medium and higher price ranges from imports. In

2 0 0 9

hectolitres. With regard to 2008 consumption decreased by 5 %. The Slovenian beer market is still

Changes in selling assortment: • On 1 June 2009 the company launched a new product on the market, Bandidos Cuba Libre, in two packaging forms (case of bottles 24 x 1 and flat of six-packs 4 x 6), • On 1 June 2009 the company reduced the percentage of alcohol in draft beer from 4.9 % to 4.5 % (beer in barrels),

• On 1 December 2009 the company launched a new product, the dark beer Eliksir with 7.6 % alcohol content in two packaging forms (case of bottles 24 x 1 and flat of six-packs 4 x 6),

mark). The following changes were introduced in the field of pricing policy: • From 1 January 2009 on, the company changed the method of calculating the contractual rebate based on gross (price with excise duty) and net (price exclusive of excise duty). At the same time the company reduced the rebate scale for all buyers, and consequently reduced prices on the pricelist by 11 % in sales of beer and by 7.5 % in sales of water. These changes were made in such a way that the purchase prices for buyers remained almost unchanged. These changes harmonized the amounts of rebates on the account and the method of calculating them in all members of Pivovarna Laško Group, • From 1 March 2009 the state increased the excise duty for beer from EUR 6.86 /hl – 1 % of alcohol level to EUR 9.00/hl – 1 % of alcohol level; this resulted in an increase of prices for buyers and then retail prices for the final consumer, • From 1 June 2009 the company raised prices of particular trademarks of beer by 5 % (Laško Zlatorog, Laško Club, Laško Dark, Laško Light). The quantitative market share for Pivovarna Laško beer in 2009 totals 45.1 %, for Pivovarna Union (including their own trademarks) 39.7 % and imported beer 15.2 %. With regard to the previous year, the market share of imported beer increased by 1 percentage point.

D . L A Š K O

• The company eliminated Bandidos Light Lemon from its line of products (abolition of the trade

P I V O V A R N A

• The company eliminated the four-pack of Bandidos Power cans from its line of products,

D .

• The company eliminated the four-pack of Bandidos Ice cans from its line of products,

MARKET SHARE TRENDS OF TWO LARGEST SLOVENIAN BREWERIES ( in % )

2007

2008

2009

Pivovarna Laško

50.1

48.3

45.1

Pivovarna Union

37.1

37.5

39.7

From the total sales of Pivovarna Laško beer on the Slovenian market, which totalled 765.634 hl, the year 2009 recorded the sale of 539,478 hl of beer (70.5 %) via wholesale (central storage facility), which represents which represents a 24.1 % decrease with regard to 2008.

SALES ON SLOVENIAN MARKET, VIA WHOLESALERS AND DISTRIBUTION CENTRES

600,000

Wholesalers Distribution centers

500,000 in hectolitres

A N N U A L

R E P O R T

2 0 0 9

a 5.6 % decrease with regard to 2008, and 226,156 hl of beer (29.5 %) via retail sale (distribution centres),

400,000

300,000

200,000 2007

2008

2009

( in % )

2007

2008

2009

Wholesalers

60.5

65.9

70.5

Distribution centers

39.5

34.1

29.5

100.0

P I V O V A R N A

L A Š K O

D .

Total

As in all previous years, in 2009 our company managed the pricing policy well; namely, most of the company payments are insured with bank guarantees and other forms of insurance. The sale of Oda water in 2009 was with regard to 2008 lower by 26.8 % and totalled 32,706 hl. The majority of this water is sold on the domestic market; only 0.1 % is generated from export. The decline of the sales quantity is related to the adopted strategy of Pivovarna Laško Group for the trade group of water, where no investments in the market were expected for the trademark Oda. The penetration of extremely cost-effective waters from import and aggressive pricing competition of waters with the trademarks Dana and Costella is even more present on the market for waters compared to the market for beers.

2.5.2 FOREIGN MARKETS In 2009 exports increased by 23.3 %, mainly due to excellent sales of the beer Ceres on the Italian market. The company also recorded the growth of sales in the markets of Kosovo, Macedonia and on convertible markets. Analysed sales also include the sale of Laško beer from Jadranska Pivovarna in Bosnia and Herze-

govina and in Montenegro. There is a decline in sales on the markets of Bosnia and Herzegovina (BiH), Serbia, Montenegro and Croatia. The reasons for such decline are the following:

• c ustoms 16 % (BiH), • c ontinuation of price support implementation (BiH), • c ustoms 21 % (Serbia), •d ecline in consumers' purchasing power, • i lliquidity and lack of financial discipline on the side of larger buyers of our importers mainly devoting

• b reweries owned by foreign multi-national companies invest extremely high amounts in marketing communications (breweries are among the strongest advertisers),

• i n addition to investing in the media, these breweries also invest enormous resources in sale promotion through advertising material, branding points of sale, sponsoring events, etc.,

•p ropaganda in terms of »buy local and help local industry« is still strongly present in Croatia, BiH, Serbia and in Montenegro.

R E P O R T

• i nterests of caterers in the sale of local beer,

A N N U A L

Serbia and Montenegro),

• s elling prices of beer made by local breweries are significantly lower than the prices of our beer,

2 0 0 9

money from selling beer for investments, and who wish to pay for the beer with compensations (BiH,

Croatia In 2009 sales in Croatia (only from Pivovarna Laško) totalled 61,284 hl of beer, which represents a decline in sales by 3.5 % compared to 2008. From 1 January 2009, Jadranska Pivovara, d. d., Split, ceased production of Zlatorog beer, which was

transferred to Pivovarna Laško; thus the complete range of beers from Laško intended for sale in Croatia was manufactured in Laško. In addition, Jadranska Pivovara ceased producing the trademark for the retail

The total sale of beers of all breweries on the Croatian market was 7 % less in 2009 than in 2008.

BiH, Serbia, Montenegro, Kosovo, Macedonia In 2009, on the market of Bosnia and Herzegovina our company continued with the sale promotion of draft beer and Zlatorog beer in a return package from the brewery Jadranska Pivovara. No customs is required for the beer manufactured in Jadranska Pivovara. On this market we still have 16 % customs for merchandise from Slovenia. The sale of draft beer was on index 82, and the total sale on index 66. The decline in sales is mostly a reflection of a drastic reduction in the marketing budget and a drop in purchasing power. RA&LA in Sarajevo (a joint venture of Pivovarna Laško Group members) was reorganized in terms of a merger of the promotion team: before, promoters were separated into a part promoting the sale of beer and a part promoting the sale of soft drinks, while in 2009 the promoters integrated into one team that promotes the sale of all products of Pivovarna Laško Group members. Synergies among members of the Group were achieved mainly in supplying the trade sector. Laško and Fructal have the same supplier for Mercator, Tuš and Interex, and Union joined us at Petrol. We also tried to achieve synergies in investing into catering facilities, where in the event of larger investments (awnings, cooling racks, machines for filling beverages, sunshades) we have been calling on buyers to

L A Š K O

2009 Orvas Plus, d.o.o., Zagreb, became the exclusive importer for the Croatian market.

P I V O V A R N A

In April 2009 Jadranska Pivovara stopped imports of Laško beers for the Croatian market. From 1 May

D .

chain Konzum.

include key products of all Pivovarna Laško Group members into their sales offer. Our presence on the markets of Serbia and Montenegro is increasingly limited only to catering, since inputs for entering large retail chains are too high with regard to the desired amount of sale. On the Serbian market our company still has a 21 % customs fee on merchandise from Slovenia. The sales decline in Montenegro is, however, the result of an extremely poor holiday season and payment uncertainty in this country. The Macedonian market remains a growing market for the sale of Laško beer. We are present both in retail trade, as well as in the catering industry. Despite the great distance and strong competition, our company is

A N N U A L

R E P O R T

2 0 0 9

achieving good results with increased marketing input and the active participation of our importer. On the Kosovo market, the sale of Laško beer in 2009 stabilized and increased by 23 % with regard to 2008. In Kosovo, after the attainment of independence, a national note in the context of »buy local« has been very present.

Other foreign markets The sale of products of Pivovarna Laško on the sales market of the European Union (EU) and other foreign markets was higher by 139 % in 2009 with regard to 2008. The total sales on the markets of the EU and other markets in 2008 amounted 101,506 hl. The sales of beer in Italy, our largest sales market in the EU, increased by 171 % in 2009. Increased sales are associated with the expansion of points of sale in the segment of trade and with the successful realization of the project of easement filling Ceres Top Pilsner beer. In 2009, the sales of Pivovarna Laško brand marks on the Italian market reached a level of 35,904 hl, which is 28 % larger by quantity than sales in 2008. The

sales of Ceres Top Pilsner beer in 2009 were at the level of 45,053 hl. In 2009 the sales of beer on the Austrian market recorded 30 % growth with regard to the previous year. Sales growth was achieved by including a new distributor on this market and by more intensive sales of beer

P I V O V A R N A

L A Š K O

D .

in barrels. The growth of beer sales in the Hungarian market was achieved with entry into the retail chains Cora and Tesco. The sales of beer in other countries—Canada, Germany, United States, Switzerland, Australia, Albania, Malta, Sweden, Czech Republic, Slovakia, Romania and Belgium—were larger than the previous year.

2.6

S u p p ly f low s In 2009 the situation in the supply market completely changed again. After a very bad market supply with all basic materials in 2009, a surplus of these materials appeared once again in 2009. After the fall of beer consumption throughout the globe, after a very good agricultural harvest in much of Europe, the prices of all basic materials for beer production were significantly reduced. After a fall in oil prices and other stock market materials, the prices of the majority of intermediate goods decreased, as evidenced by the reduction of costs of materials in the company's business operations. The global economic crisis and also developments in Pivovarna Laško, d. d., in 2009 adversely affected su-

relationship with suppliers, the majority of which have been our partners for many years now, our company has been achieving normal supply without too much difficulty; however, an honest dialogue and continuous contact with them remains an important factor. Our company continues with the joint work of the purchasing departments in the Pivovarna Laško Group, which has turned out well already in previous years and has great synergy effects.

R E P O R T

fact that suppliers require particular instruments as collateral and set permitted debt limits. Due to a good

A N N U A L

uncertainty regarding the future has affected suppliers' requests. For the first time our company faced the

2 0 0 9

ppliers' confidence. Deteriorating liquidity indicated in delays in the payment of obligations and consequent

The comparative advantages that we, as a reputable and a trustworthy company, emphasized in previous years were nullified due to events in Pivovarna Laško, d. d., that were known to the general public. Good and correct relations among members, a joint and uniform appearance, and continuous communication with suppliers represent a path our company intends to continue. With these procedures and with the gradual improvement of the general economic situation, our company will, with a longer period of time, regain suppliers' trust, which is still good in spite of everything.

When operating in the area of maintaining a human-friendly environment, a lot of energy will be invested

part of our operation.

D . L A Š K O

als, as well as the collection and recycling of those materials. Raising environmental awareness is an integral

P I V O V A R N A

means particularly experimenting with different types of packaging, in which we take over different materi-

D .

in applying ecologically suitable materials that maintain the natural environment, which in supply processes

2.7 Production

Despite the year of recession and liquidity problems, the company in 2009 has managed to successfully produce and fill up the wide range of our products, and at the same time has introduced several innovations, which confirmed the developmental orientation and innovation of Pivovarna Laško, d. d. Even greater attention was paid to quality standards: we obtained HACCP certificate and participated together with the purchasing department in selecting the best raw materials for the production of beer. Time and time again we are pleased to find that the quality standards of Pivovarna Laško exceed the norms and standards of suppliers, who supply products or render services also to the world-famous companies in our branch. Special importance was given to the traceability of our product in the complete chain, since this is the only

A N N U A L

R E P O R T

2 0 0 9

way our company is able to provide superior quality for our final consumers. Prior to the summer season, we also implemented a differentiation between Laško Zlatorog draft beer and bottled beer, so that the alcohol level of the draft beer was reduced from 4.9 to 4.5 alcohol by volume. The main reason for this change was a desire to increase the draft beer drinkability, where the company successfully ensured that no discrepancies in the final product quality occurred. Particular attention was also paid to the problem of consumers being affected by headache; together with recognized analytical laboratories, we came to the conclusion that the constituents of the various types of beer of Pivovarna Laško are below the limits that could cause any kind of physiological problems in end users. Together we came to the conclusion that the main reason for this might only be too much beer consumed, or the physiological or physical condition of an individual. In 2009 we improved the inventory turnover of spare parts in maintenance and raw materials in the production of beer, as well as the consumption of chemicals for washing the manufacturing equipment. We systematically began with surveillance and management of energy resources and with introducing the principle of the company's sustainable development. Despite the wear on product lines for return packaging, we continued the project of renewing return pac-

kaging, which will be realized together with the renewal of the filling line ST2. Parallelism would certainly bring us a number of synergystic effects in the area of managing filling lines, and consuming water and

P I V O V A R N A

L A Š K O

D .

energy, and at the same time enable a breakthrough with innovative packaging also on adjacent markets. In addition to planning the renewal of the production equipment, together with the human resources department we started with the systematic rejuvenation of operational personnel in the field of filling, where in recent years a lack of quality professional and expert workers, particularly in the area of managing and maintaining the filling lines, has been noted. Nevertheless, in addition to numerous activities in the areas of ecology in 2009, the company managed to obtain an environmental permit, which is the basis for regular and smooth functioning of Pivovarna Laško in the next 10 years. As in previous years, a lot of work and efforts were also invested in activities of coordination among companies at the level of Pivovarna Laško Group. This was, with the exception of reducing costs, certainly well reflected from the operational point of view and in the operating results of individual companies within the Group.

2.7.1 BEER PRODUCTION In 2009 the company produced 1,070,369 hl of wort of malt for beer and 2,269 hl of non-hop wort of malt for the licensed product Vitamalt G Power. There were on the whole no problems in technology, but fluctuations in the quality of the German supplier's malt appeared. Throughout the entire year optimizations to reduce the production waste were carried out, and the waste was lower than the previous year. We tested a two-component medium Crosspure of BASF manufacturer, which will in the future replace

diatomaceous earth and the stabilization medium PVPP. Since the material is renewable, it would also leave no waste disposal problem of diatomaceous earth at the landfill. The medium and the technology are quite new, which is why this technology will not be adopted for now. Manufacturers are facing quite a few efforts in order to optimize the process and the material. In any case, the concept is very interesting and will save the problem of the waste diatomaceous earth in the future. Last year we thoroughly tested the equipment and improved the technology for apple wine (cider), which is a completely natural fermented beverage without additives and preservatives. We also developed and optimized a technology for producing the licensed beverage Vitamalt G Power

clear additive together with the base supplier, which causes no sediment elimination. Prior to the season we began rafting beer in barrels with a lower alcohol content (4.5 %) under the brand name Laško Točeno Zlatorog. At the jubilee, 185th anniversary of the establishment of Pivovarna Laško, we made the strong beer Eliksir for sale at the end of the year.

R E P O R T

turned out organoleptically inappropriate due to fruit content elimination, and thus we developed a new,

A N N U A L

In May we began with the production of beer with additives—Bandidos Cuba Libre. The first quantities

2 0 0 9

(license partner is Royal Unibrew from Denmark).

In addition, activities for implementation of a new flavour from the Bandidos line of products were also carried out. Since the company's initial plan is the renewal of the whole image of the Bandidos line, the new flavour is currently not topical. In July 2009 a task was concluded with IHP (Slovenian Institute for Hop Research and Brewing) Žalec, »Study determining the factors that influence the stability of beer flavour« and »Monitoring the flavour and

identifying the disturbing constituents in it«.

Both certificates are valid for the period of one year. For the purposes of HACCP standards, quite a few investments are to be made, e.g. window protection (screen against insects), special lighting to protect the premises of the bottling production, storage facilities and changing rooms. Also in 2009 the company devoted considerable time to educating catering school students on the topic of raising the culture of pouring and drinking beer. In addition, we also implemented a practical training on pouring beer for the personnel of Savinja Hotel. If the company wishes to increase the level of handling of the draft beer and give beer the position it deserves, then such training methods will have to be expanded to as many bars and taprooms as possible in the future. At the beginning of the year we successfully completed the computerization project of the central storage facility for finished products. With this introduction the company achieved an automated collection of goods from production, product management in manipulation units according to SSCC number, and perfect traceability of the product to the first buyer and back to raw materials, as well as more efficient work of employees in the storage facility, and higher efficiency of available storage sites.

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on was carried out by the international certification body Bureau Veritas, having a branch office in Ljubljana.

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from the former Yugoslavia. At the same time, the company certified the area of water resources. Certificati-

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During the second half of the year, intensive activities and preparations were carried out for obtaining the HACCP Certificate for the production and filling of beverages requested by importers of some republics

2.7.2 MAINTENANCE AND ENERGY ENGINEERING Preventive maintenance in 2009 was conducted in accordance with plans, which were harmonized and confirmed by the production and technical departments. The intensity of remaining maintenance works was based on current error elimination, which occurred on machines and technological devices. Due to a lack of professional personnel for the implementation of preventive maintenance works, the company hired a number of external experts who carried out work in various areas of technological equipment. With the availability of energy installations, the company was fully adequate to meet needs, which are one of the links in the technological process, namely, within the framework of standards for these purposes. At the same time, in the area of energy engineering with surveillance of the emissions developed as a result of converting energies, we strived to decrease the units as much as possible and were in the process of checking

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measurements within the legally prescribed limits. With regard to particular sets of technological equipment, maintenance works were carried out according to the following order:

•p erformance reviews on all facilities for raw material support, • i mplementation of repair works of a welding furnace with a capacity of 1,100 hl and of a welding furnace with a capacity of 660 hl,

• i mplementation of planned preventive check-ups on technology fittings both in production as well as in the beer-filling centre,

• i mplementation of preventive works on the separator, filter device and device for separating beer from leaven,

• i mplementation of regular maintenance works on filling lines for filling bottles, filling lines for filling cans, and the filling line for filling barrels. On the energy supply of steam production, a statutory inspection was carried out on steam boilers EMO K1 and K2, with all necessary preparations for internal checks and strength checks. In addition, statutory

wall checks of other pressure vessels were also carried out, both on energy plants as well as on technological equipment plants, together with selected approved contractors. In the cooling system and CO2 production, inspections and replacement of vital parts were carried out for

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the purposes of ensuring smooth operation. In addition, we also carried out all necessary maintenance works on electricity installations, on voltage transformation units and on electromotors. For water supply needs, various rehabilitation works were carried out in terms of building water reservoir alterations, as well as construction works on water wells with the objective to enlarge the capacities of intake points.

2.7.3 QUALITY CONTROL For almost 185 years Pivovarna Laško has been welding beer in accordance with the highest quality standards. The traditional high quality is based on a combination of using the best natural raw materials, applying the best available technologies and hiring reliable, highly qualified skilled welding workers. As a result, our beer, which pleases consumers, is a traditional high quality beer. The quality control department, with a carefully prescribed plan of sampling raw materials, intermediate products and finished products of every single manufactured batch of products, takes care of preserving our tradition of quality. This continuous attention provides a high quality standard at each stage of the production process. Highly trained employees carry out three types of analyses in all stages: microbiological, chemical and sensory analysis. Monitoring the quality of beer also takes place after the products leave the company. We test product durability and packaging, and ensure that products always reach the final consumer in the same high quality irrespective of whether beer is filled into returnable or non-returnable bottles, cans or barrels. Participation with beer cooler services in terms of controlling the adequacy of cleaning, microbiological control and testing new mediums for maintenance of beer coolers has been carried out on the market throughout the whole year. All this contributes to the quality of draft beer. In 2009 the company continued with inter-laboratory comparisons in the European comparable schemes BAPS and QWAS in the field of chemistry and microbiology. In 2010 the field of comparing the beer and

water analysis will be expanded to malt; namely, we believe that inter-laboratory analyses additionally contribute their share of credibility. Close cooperation with external institutions such as the Slovenian Institute for Hop Research and Brewery, the Institutes of Public Health of Maribor and Celje, and others, continues. In addition, we can also mention good cooperation with the quality control departments of other member companies of Pivovarna Laško Group. In 2009 we unfortunately failed to realize the acquisition of a gas chromatogram, which would enable an even more professional approach to solving and forecasting qualityand development-related issues. Cooperation with suppliers is continuous. We are aware of the magnitude of the impact of using the highest quality raw materials and packaging materials on the finished products and on customer satisfaction. Monitoring raw materials and intermediate goods is continuous and is also conducted upon the supplier's approval; regardless, the analyses are communicated to our company by the supplier at each delivery.

Primary and secondary packaging of the majority of suppliers was adequate, and there were no significant discrepancies. We made a complaint regarding labels, cans, cardboards and foil packages, but in the total quality of used materials these did not represent any major problems. We have also successfully undergone numerous tests of packaging materials and mediums. In 2010 we plan to continue testing new packaging materials, particularly in the direction of reducing the weight of packaging in cardboards, foil packages and plastic bottles, with the aim of introducing modern and new materials, reducing environmental impact and

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one shipment, which was not clean concerning its sort and was thus not acquired.

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fat. Hop, which was acquired as the harvest of 2009, largely met our quality standards, with the exception of

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In basic beer ingredients we had a major problem, especially with German malt; Austrian and Czech malt were of a consistent quality. In the case of maize meal, we only occasionally observed an increased level of

optimizing cost. In 2010 we will also devote particular attention to evaluating suppliers and comparing quality standards in the entire Pivovarna Laško Group. The year 2009 was marked by the economic crisis; however, our quality standards represent continuity,

which remained the same despite cost optimization. We certified the HACCP system, both for production as well as for water resources of the Laško water distribution system. Quality control was actively included

The process of quality control in 2009 remained the same or even of higher quality than the year before. Innovations and modifications also appeared at the launch of new products into the production programme. This refers to two products, Bandidos Cuba Libre in our already existing line of Bandidos, and the malt energy drink Vitamalt G Power, representing an additional and even for us conceptually new product of easement filling for the Danish company Ceres. Bandidos Light Lemon left the Bandidos line of products due to poor sales, and the same is expected for Bandidos Power in 2010. New ideas for an additional member of the Bandidos family are already in the pipeline.

In redeveloping the external appearance of our beer programme, preparation and changes in the field of declarations of primary and secondary packaging were quite time consuming. The redevelopment process has been successfully completed, and we are very pleased with the enviable added value brought by the new packaging. Continuous improvements in the phase of product development, ensuring and monitoring quality are never complete in the desire of achieving a more complete system of managing and preventing errors and maintaining the excellent quality of the existing and new products of our brewery.

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viability of this system connection and of the business system SAP.

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on the quality control process. Even more attention was paid to exercising TQM and consideration of the

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introduction of quality controls, such as ISO, NFS, IFS or others. The information system SAP also touched

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in the optimization process. The question which so far remains open is whether and when to approach the

2.8 Investments

With the moratorium at the end of 2008, all investments initiated in this year (12 projects) in production, ecology, energy engineering, infrastructure and water distribution systems, whose conclusion was scheduled for 2009, were stopped. For 2009 the plan of investment was approved only for absolutely necessary activities in production, in order to supply markets through contractual obligations and due to the marketing-related planned renovation of corporate identity or packaging design of the complete line of Bandidos products. These were the planned

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projects Cider, Ceres and Bandidos ST3 Renewal, with a total financial value of EUR 1,300,000.00. Because of tightening economic conditions in the course of the year 2009, project activities were also reduced to a minimum in such way that in financial terms, in 2009, only 10 % of the planned investment value, or EUR 130,000.00, was realized.

2.8.1. INVESTMENTS IN PRODUCTION Cider project Despite the successfully completed first stage of retrofitting the existing fermentors in the basement area for automated production of cider already in 2008, the project was stopped for the aforementioned reasons, and its follow-up is planned for the year 2011.

Ceres project For the purposes of expanding the range of products, or packaging different bottles and upgrading accom-

panying forms of packaging, or refining the existing filling lines with format parts, the installation of a new packaging machine is necessary, with which it will be possible to round out our offer of new end products and packaging.

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and financial assets, activities began to be implemented in such way that the project is to be successfully

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tractual obligations. In the second half of the year, on the basis of already prepared project documentation

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Because of financial limitations, this project was also stopped in the first half of 2009 despite the con-

completed in April 2010, as which time the financial constructs expected with the investment plan for the year 2010 will be successfully completed.

Renewal of ST3 Since the filling equipment necessary for the renewal of the brand line Bandidos is strongly related to the equipment necessary for the Ceres project, the company in 2009 already implemented all the activities of preparing technical documentation, new bottle samples and other packaging material not related to financial inputs. Follow-up and conclusion of the project is expected in 2010, where this project is included in the investment plan of Ceres.

2.8.2. INVESTMENTS IN OTHER PROJECT ACTIVITIES Despite the moratorium on project activities commenced in 2008, we managed, without any substantial investment and financial inputs and with rational financial assets for maintenance, to maintain minimum activities for these projects. Thus, in 2009, despite financial difficulties, we successfully carried out the investment activities listed below, which represent the basis for continued investment in the years 2010 and 2011.

Completion of the line with new equipment—ST2 A conceptual design was made and project documentation implemented with the optimal range of machines and devices for the completed filling line, in addition to the documentation of construction and energy infrastructure of the existing facility. We obtained bids for the equipment, which need to be defined only in terms of time and value in the course of project follow-up. To a large extent, we also carried out the renewal of technological installations and of peripheral equipment in the field of the filling line ST2, which represents a good basis for successful implementation of completing the line ST2 with new equipment in the years 2010 and 2011.

for energy management in Pivovarna Laško, GemaLogic, with a detailed inventory, which confirmed all the energy savings estimated at an annual level of 10–15 %. This is the basis for the installation of necessary instrumentation and software, which will provide for these savings or rational energy consumption after the completion of planned project implementation in the years 2010 and 2011.

Renewal of the boiler room

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of 2010 in cooperation with a foreign energy expert group related to the introduction of information systems

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In the area of energy-generating products representing the highest proportion of costs—natural gas/biogas, electricity, water/wastewater, steam, air, CO2, etc.—a pre-investment study was made in the second half

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Energy management—software and equipment

By the end of 2009 we managed to prepare the complete technical documentation, including bids obtained and selection of contractors for renewing the control system Saacke – Se@vis and automation of the boiler room with all corresponding peripheral equipment. Thus it will be possible to install the equipment and let it run until May 2010, when full capacity is required for an undisturbed production process, and in connection with the energy management system, optimum energy consumption and reliability of operation is provided for.

Filling plant South and displacement of caustic tank

the lorry roundabouts will significantly improve the logistics of accepting the empty and dispatching the full packaging, the road safety threat on the local road along the filling plant will be eliminated, and the flood risk of the entire south plateau of the filling plant will be substantially improved.

Waste diatomaceous earth treatment Despite the lack of financial resources, intensive activities were carried out in the environmental field throughout the whole year 2009. In participation with the Pulp and Paper Institute Ljubljana, ZAG Ljubljana and Komunala Laško, in the middle of 2009 we managed to obtain Slovenian Technical Approval (STS) and thus successfully completed the project of preparing a stabilized mixture of waste kieselgur and wood ash. With this we managed to eliminate the problem of complex and expensive deposit of production waste, and at the same time obtained useful construction material that can be marketed. After two years of preparing applications, updating the project documentation and harmonizing all our product procedures with the IPPC directive, we managed to obtain the environmental permit (OVD) at the beginning of 2009. Due to environmental requirements of the directive, this permit dictates the termination of the production process of drying of waste brewer's yeast; therefore, throughout the year, we have in cooperation with Institute of Chemistry Ljubljana and Biotechnical Faculty been intensively conducting activities of brewery yeast degradation in a pilot reactor, with the intent of applying the degradation directly to the anaerobic UASB reactor of our pre-cleaning plant.

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struction works were carried out up to half capacity in 2009 and will be fully completed in April 2010, when

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implemented so that in November 2009 a building permit was obtained for this particular project. Con-

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With minimum financial expense, a complete project and technical/administrative documentation was

The procedure is not technically and technologically developed, and thus research will continue into 2010, when we plan to begin with the introduction of brewery yeast into our reactor and with that the associated

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reverse acquisition of biogas as a substitute for natural gas in the boiler room.

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2.9

P e r f o r m a n c e a n a ly s i s The joint stock company Pivovarna Laško successfully combines the majority of Slovenian beverage producers into Pivovarna Laško Group, which is complemented also by Jadranska Pivovara – Split, d. d., and by the newspaper and publishing company Delo, d. d., Ljubljana. In fiscal year 2009 Pivovarna Laško Group failed to obtain any major strategic partner in the area of South Eastern Europe. At the end of 2008 we signed an agreement for supplying the Italian market with Danish company Royal Unibrew AS for filling beer of the brand name Ceres. Ceres' sales share in 2009 already approached 5 %, and with additional operations for 2010 successful cooperation is forecast also for the co-

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ming years; we may only hope that in the future this shall mean a continuity in the business strategy of the Group's development. All companies in Slovenia which are in terms of capital integrated into Pivovarna Laško Group (Pivovarna Laško, Pivovarna Union, Radenska, Fructal and Vital) in 2009 continued and implemented their efforts for optimum cooperation on supply and sales area. The results of such cooperation were reflected in supplying raw materials, packaging, intermediate goods and other materials under favourable supply conditions and terms, as well as price conditions. In such connections synergystic effects are visible only after a longer period of time. In the sales area synergystic effects in 2009 are reflected particularly in the sale of products through our own distribution network, called Horeca. In this segment of business policy, the company expects even more favourable operating results of the whole Group in the future. All the companies in Pivovarna Laško Group in the beverage production segment in 2009 had worse dealings than in the previous year. Jadranska Pivovara – Split stands out in a negative way; in 2009 it operated

at a loss and further deteriorated the total result of the Group with its own results. As a result of this, our company plans to cease the production of beer in this company and to search for an alternative solution: possible lease or disposal.

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Union as well as on the markets of South Eastern Europe. On all these markets we shall continue upgrading

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will continue mainly in the direction of acquiring new sales markets both on the markets of the European

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In 2010 the business strategy of the parent company Pivovarna Laško, d. d., and of Pivovarna Laško Group

the marketing approach for awareness of all products of already established brands and shall continue to strive towards achieving more favourable supply conditions.

2.9.1 BUSINESS OPERATIONS OF THE GROUP Pivovarna Laško Group (hereinafter: Group) in 2009 sold in total 4.553 million hl of all types of beverages, which is 9.2 % less than in 2008.

2008 sales

Index 09/08

1,975,579

2,229,024

88.6

Mineral water

598,668

618,709

96.8

Spring and natural waters

226,878

276,109

82.2

Flavored water

320,888

378,751

84.7

Fruit juices, nectars

368,608

403,643

91.3

Other non-alcoholic

989,040

1,034,618

95.6

64,288

65,894

97.6

8,942

9,291

96.2

4,552,891

5,016,039

90.8

Syrups* Other alcoholic Total

*Sales in syrups in 2008 compared with the data in the annual report for 2008 is less by 1,625 hl

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Beer

2009 sales

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( in hl )

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SALE OF ALL DRINKS OF PIVOVARNA LAŠKO GROUP

(Radenska, d. d.), to display in hectolitres the syrup container and not the beverage that is prepared from the syrup.

The reason for lower sales in 2009 was lower consumption of beverages than one year before. We assess that such trends in beverage consumption are mainly resulting from the crisis caused by the financial crisis that had such strong influence on the living standard of inhabitants. Besides all this, we concluded that in

2009 weather conditions for the consumption of soft drinks were not among the most favourable ones, particularly during the summer months. At the same time the emergence of new retail chains (Lidl, Hofer) D .

on the Slovenian market increses competition in the segment of beverages.

200

Sales per employee Pivovarna Lasko Group

EUR thousand

185

149.5

172.3

169.4

2007

2008

2009

170

155

140

Sales per employee in the Group in 2009 compared to 2008 decreased by 1.7 %.

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SALES PER EMPLOYEE

OPERATING EXPENSES IN NET SALES REVENUES

120.0 Operating expenses in the net revenue from sales of Pivovarna Lasko Group

in %

112.5

105.0

93.1

96.6

104.6

2007

2008

2009

97.5

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90.0

Operating expenses in net sales revenues in 2009 increased by 8.3 % compared to 2008.

Plans For 2010 Pivovarna Laško Group plans to sell 4,566,595 hl of all beverages on the domestic and foreign markets, which is 0.3 % more than we managed to sell in 2009. Our plan was set optimistically mainly due to our planned increased sale to foreign markets.

2.9.2 OPERATIONS OF THE PARENT COMPANY

Fiscal year 2009 will in the history of Pivovarna Laško, d. d., be recorded as a transitional period. In this year we changed the company's Management Board due to non-transparent management of operations; that had an indirect negative effect on our operating results, which failed to match those of the previous year in

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either physical or in financial indicators. The impairments of financial investments implemented will in the coming period slightly slow down, but not disable, our planned developmental process. We do not expect these events would influence the deterioration of employees' social security. We are able to compete with the increasing globalization both on domestic and foreign markets only by integrating related companies. Accordingly, we have adjusted the business and development strategy of the parent company and of the Group, and that is why today we are able to appear competitively on the market— namely, we have been able to adjust to newly developed market conditions in a timely way. In recent years and in 2009 all the efforts of our employees were focused on improving product quality, which was enabled by using the most advanced technological equipment for the production and filling process, and particularly by using quality raw materials, including water. We are aware that only product quality will help us to maintain our loyal consumers of all products of Pivovarna Laško, for which we shall strive in 2010.

2008

2009

1,113,075

1,090,949

1,011,539

Chain index Beer sales

980

927

1,066,145

1,046,281

978,833

Chain index

981

936

46,930

44,657

32,706

Chain index

952

732

Alcohol/other sales

Chain index

Water sales

In fiscal year 2009, Pivovarna Laško, d. d., in the field of:

• BEER sold 978,833 hl, which is 6.4 % less than in 2008, • NATURAL DRINKING WATER sold 32,706 hl, which is 26.8 % less than in 2008.

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Total sales

2007

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( in hl )

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SALES OF BEER AND WATER

The loss of beer sales on the markets of South Eastern Europe is the reason our achieved quantity results are equal to or less than the level from the previous year. The drop in quantitative sales of water is related to the strategy Pivovarna Laško Group has adopted for the product group of water, where for the Oda trademark no investments in the market were provided for.

Pivovarna Laško, d. d., contiunues to be the leading producer of beer in Slovenia with 45.1 % market

sales revenues, which is 8.1 % less than in 2008. In the structure of sales revenues, the majority is constituted by revenues generated on the domestic market, which represent 90.8 %. Lower operating expenses, particularly service charges and lower material costs, have contributed to the fact that the company shows a positive operating profit in the amount of EUR 16.89 million, which increased by 31.3 % compared to the previous year. Financial revenues decreased by 51.7 % compared to 2008 and were EUR 4,090,990, mainly because of decreased income from dividends received from companies in Pivovarna Laško Group. Financial expenses, particularly from impairments and write-offs of financial statements and repayment of interest in the total amount of EUR 73.65 million, are the main reason why profit in 2009 was negative, in the amount of EUR 44.97 million.

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In 2009, Pivovarna Laško, d. d. generated, with the sale of products and services, EUR 99.66 million of net

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Financial indicators

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share.

Sales per employee

400

Sales per employee Pivovarna Lasko d.d.

EUR thousand

375

350

322.3

330.7

307.6

2007

2008

2009

325

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300

Sales per employee in Pivovarna Laško, d. d., decreased by 7.0 % in 2009 compared to 2008. Operating expenses in net sales revenues

120

Operating expenses in the net revenue from sales of Pivovarna Lasko, d.d.

110

100

86.9

91.5

85.4

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80 2008

2009

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2007

Operating expenses in net sales revenues in 2009 decreased by 6.7 % compared to 2008. Financial ratios of Pivovarna Laško, d. d. I. Profitability ratios

( in % )

2007

2008

2009

EBITDA margin

25.6

19.8

23.9

Operating margin

17.1

11.9

17.0

Net margin

11.2

5.6

45.1

Return on equity (ROE)

5.3

-3.5

-29.5

Return on total assets (ROA)

5.5

-1.3

-10.1

Days to pay customers

Operating cycle

Days of net cash flow

1.42

1.06

1.01

322

331

308

337

328

324

2007

2008

2009

Immediate solvency ratio

0.11

0.03

0.01

Current ratio

0.20

0.24

0.12

Capital in total assets

0.46

0.38

0.30

Financial commitments in capital

1.05

1.62

2.22

Net financial liabilities to equity

1.05

1.60

2.21

Financial liabilities/EBITDA

8.75

13.26

12.04

Capital in fixed assets

0.48

0.40

0.32

Long-term resources in fixed assets

0.79

0.78

0.47

36.90

0.82

0.28

Net proceeds from the sale of invested capital Revenue per employee (in tEUR) Labour costs per employee (in tEUR) Average number of employees

III. Indicators of financial position

Interest coverage

Plans For the fiscal year 2010, Pivovarna Laško, d. d., plans to sell 1,030,000 hl of beer, which is 5.2 % more than was sold in 2009, and at the same time we plan to sell bottled natural water in quantities of 35,000 hl, which is 7.0 % more than sales in the previous year. At the realization of planned beverage quantity sales, we plan to generate EUR 111 million of net sales revenues in 2010, which is 1.3 % more than in 2009. At the same time, we also plan for our operating efficiency ratio and for EBITDA in sales revenues to reach the values of 1.200 and 0.228 in fiscal year 2010.

Conclusion The concluded fiscal year 2009 has not been as successful as the last few years, but we note that the company's business policy is focused in the right direction and provides for successful development also in the future. Pivovarna Laško, d. d., has in the past normally been ranked among the best performing companies of the food processing industry in Slovenia. We can expect the company will continue with good operating results even in the future, despite tougher economic conditions and the financial crisis. According to the equipment of the entire production and filling process and the quality of all products, the company can be compared with the most successful breweries in Europe. Pivovarna Laško, d. d., would like to continue to maintain the achieved level of excellence and the leading position in its industry in Slovenia. The project of integrating the Slovenian beverage industry and continuously searching for new possibilities to utilize synergies will continue to be the basic strategy of the company's

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Days of stock turnover

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2009

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2008

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2007

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II. Activity indicators

business policy. Only united can the company successfully compete with foreign corporations both on the Slovenian as well as on the foreign market. Further development of the company will largely depend on the realization of the aforementioned project; however, the company will also seek to focus into capital links with other beverage producers, particularly in the area of South Eastern Europe. In the past, Pivovarna Laško, d. d., has repeatedly demonstrated that knowledge and desire are key factors which help to counter any problems accompanying less favourable operating conditions from year to year. The company plans to be even more successful in the future, especially with the better use of synergystic effects of the group of companies in the area of joint marketing of brands on foreign markets.

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Pivovarna Laško, d. d., will continue to provide top quality products to its loyal customers and company owners—shareholders—to ensure successful development and long-term stability of investment funds, as well as satisfactory return on invested capital.

2.9.3 BUSINESS OPERATIONS OF AFFILIATED COMPANIES RADENSKA, D. D., RADENCI About Radenska, d. d., Radenci Development of the company Radenska began in 1869, when Dr Karel Henn, landowner, filled up the first bottles with mineral water. More than 50 years later (in 1923), mineral water gained a reputation as healing water, and since 1936 it has been using the symbol of three red hearts. The brand name Radenska Tri Srca is one of the oldest in Slovenia.

The core business of Radenska is bottling and marketing natural mineral and spring waters and non-alcoholic beverages. On the Slovenian market, the company's desire is to, under the brand name Radenska, remain the lea-

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In the export area, the company strives to remain the maintain its position as the leading Slovenian exporter

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beverages to maintain its development as an active and competitive company with a significant market share.

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ding filling company of natural mineral waters, and in the area of bottled drinking waters and non-alcoholic

of natural mineral waters under the brand name Radenska, and as an active filling company and/or seller of those specific products of Radenska which are, with regard to their quality, particularly interesting for the market on the territory of the former republics of Yugoslavia and Central Europe. Radenska, d. d., Radenci, is an affiliated company of the parent company Pivovarna Laško, d. d. The ownership share of the parent company represents 93.80 % of the capital. Radenska, d. d., Radenci, also has ownership shares in other companies and is the owner or partner in the following companies: Radenska, d. o. o., Beograd (100 % ownership) and Radenska, d. o. o., Zagreb (100 % ownership)—these companies are not active; and Miral, d. o. o. (100 % ownership), RA&LA, d. o. o., Sarajevo (1.97 % ownership) and Odem GIZ Slopak, d. o. o. (9.74 % ownership).

Basic characteristics of business dealings in 2009 In 2009 Radenska, d. d., in all sales areas sold 103,847 million litres of beverages, which is 7.4 % less than in 2008, and 9.2 % less than expected. A loss slightly higher than planned was recorded in litres of waters (9.9 %), and a slightly lower (6.3 %) in the non-alcoholic beverage programme. Sales on the Slovenian market in litres represents 78.3 % in the structure and has grown by 1 % compared to 2008. With its increased activities in key accounts, the company managed, against competition on the do-

mestic market, in particular categories to maintain or even increase market shares in Slovenia. The highest decline was recorded on the markets of the former Yugoslavia, which was 15.9 % or 1.27 million litres less than in 2008. This particular area recorded a drop in the structure of total sales from 7.1 % to 6.5 %, if we compare physical realization in litres. On the Croatian market the negative effects are caused by a decline in purchasing power, administrative barriers and the reluctance of Croatian customers towards Slovenian products. The company was not particularly competitive on other markets of the former Yugoslavia (Bosnia and Herzegovina, Macedonia, Serbia) due to high import duties; in addition to the above, the drop in sales can also be attributed to relatively low inputs in these markets. In EU countries, the company in 2009 sold 13.86 million litres or 9.6 % less of our mineral waters and other non-alcoholic beverages than in 2008. The majority of the sales loss is constituted

IMPORTANT INFORMATION ON THE BUSINESS OPERATIONS OF RADENSKA, D. D., RADENCI ( in EUR )

2007

2008

2009

Net sales revenues

33,140,228

31,891,846

30,234,647

Net profit

25,367,571

4,872,959

-36,833,222

Net cash flow1

28,823,611

8,009,730

-33,509,004

EBIT

16,060,511

18,523,348

12,867,447

EBITDA

19,516,551

21,660,119

16,191,665

Long-term assets

87,902,004

75,513,964

73,358,307

Short-term assets

70,419,483

75,842,171

38,292,338

130,418,518

121,157,626

83,758,794

Long-term liabilities

3,383,379

768.824

8,565,555

Short-term liabilities

21,394,727

24,272,539

16,411,946

ďżź In 2009 Radenska, d. d., generated EUR 30.7 million in operating revenues and EUR 29.3 million in operating expenses and achieved a profit in the amount of EUR 1.4 million. Without revaluation expenses due to impairment of investment property, the profit of the company could have achieved the amount of EUR 2.4 million. The company realized EUR 3.2 million in financial income and, due to impairment of financial investments, EUR 49.7 million in financial expenses. Net profit or loss for the year thus totals EUR -36.8 million.

Employees Labour costs in the share of all operating costs and expenses are systematically being reduced. The planned labour costs for 2010 total EUR 5.2 million. Their planned share in net sales revenues is 16.2 %, and the share reached in 2009 totalled 21.8 %. Bearing in mind the long-term objectives set, the company has been reducing the actual number of employees since 2002, and we plan to continue this in 2010. At the end of 2010 (31 December 2010), the company plans to employ 208 people. The company plans a reduction by 12 employees; at the end of 2009 (31 December 2009) we employed

P I V O V A R N A

1Net profit including depreciation

L A Ĺ K O

D .

Equity

R E P O R T

reason for this drop is the United States.

A N N U A L

2009 share in the structure of total sales amounts to 1.8 %, while in 2008 this share was equal to 1.9 %. The

D .

slightly decreased in 2009 (from 13.7 % in 2008 to 13.4 % in 2009). In the field of overseas countries, the

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by trademarks which we cancelled. The structure of sales share in EU countries in the total sales of Radenska

220 people. In 2009 the number of employees was reduced by 20, and there 240 people employed at the beginning of 2009 (1 January 2009).

Conclusion The current market environment, in connection with known trends, affected our bravely set fundamental objectives for business operations in 2010. We expect the process having further synergystic effects to continue within the Pivovarna Laško Group.

UNION GROUP

A N N U A L

R E P O R T

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Presentation of the Group Union Group, which was established in 2001 when Pivovarna Union, d. d., took over Fructal, d. d., in addition to parent company Pivovarna Union, d. d., also incorporates the following companies: Fructal, d. d., Ajdovščina; Fruktal Mak, a. d., Skopje; and associated company Birra Peja, Sh. a. from Kosovo. In the beginning of February 2005 Pivovarna Laško, d. d., became the majority owner by purchasing an additional 41.3 % of Pivovarna Union, d. d., shares, with which the aforementioned Pivovarna Union, d. d., became a part of Pivovarna Laško Group, which integrates producers of beer, mineral, natural and spring waters, nonalcoholic beverages, spirits and other alcoholic beverages, as well as newspaper and publishing activity, and also retail and wholesale activities. The vision of Union Group is to use its own trademarks to maintain a high level of awareness and at the same time customer loyalty, both in Slovenia as well as on adjacent markets outside the Slovenian borders. At the same time the company strives to become a leading regional producer with its own strong distribution network system. We are socially responsible companies with a high level of ecological awareness. Further-

more, we will continue implementing development and innovative programmes, which makes us initiators of changes and new trend creators in the market. Our mission is to ensure high quality beverages satisfying the needs of the most demanding customers,

D .

thout preservatives, the company takes into account the most demanding food and technological standards.

P I V O V A R N A

L A Š K O

the production of beer as well as in the production of non-alcoholic beverages, which are manufactured wi-

D .

which follow global trends and at the same time develop and discover new segments and trends. Both in

We create a neat working environment for all employees, which stimulates their professional and personal development. The strategic objectives of Union Group include production and sale of innovative and trendy products, maintenance of the market positions of our own brand names on the domestic market, and recovery and expansion of previously achieved positions on nearby markets. We intend to achieve the planned cost effectiveness with professional colleagues acting as teams and in accordance with the culture of Union Group. Pivovarna Union, d. d., is the parent company of Union Group. In addition to Pivovarna Union, the following companies are included: Fructal, d. d., and Fruktal Mak, a. d., whose basic activity represents the production of juices and beverages, as well as the associated company Birra Peja, Sh. a., a beer producer. Pivovarna Union, d. d., is 93.02 % owner of the company Fructal, d. d., which is 89.4 % owner of the company Fruktal Mak, a. d. Pivovarna Union, d. d., has a 40 % ownership share in the company Birra Peja, Sh. a.

Basic characteristics of business dealings in 2009 In 2009 Union Group sold on Slovenian and on export markets in total 2,280,456 hl of all beverages, of which 71.3 % in Slovenia and 28.7 % in export. In comparison to 2008 quantity sales decreased by 6 %, and the Group was 7 % behind the planned results. Sales of beer in Slovenia remained at the level of the previous year, while the sale on export markets decreased. Sale of non-alcoholic beverages was lower both on domestic

as well as on export markets. The reasons for the somewhat worse quantity performance indicators should also be sought in the general economic situation created by the recession; nor was the production of beverages able to avoid it. On the Slovenian market, particularly in the second half of 2009, the consequences of the global economic crisis were also felt in Union Group. According to the data of a Canadian study, the consumption of nonalcoholic beverages decreased by almost 4 percentage points. The largest drop in consumption was recorded in fruit drinks, ice teas and energy drinks. This was reflected also in the sales of non-alcoholic beverages and

reductions. The situation was similar on export markets. Operating conditions (the economic and political situation) on export markets, that is on the markets of South Eastern Europe, remain unstable. The main problems in 2009 were represented by reduced liquidity in buyers and currency depreciation (Serbian dinar). An additional problem on these markets was a negative attitude towards Slovenian producers due to unresolved

R E P O R T

demarks as far as prices are concerned, which is resulting in the creation of additional pressure for price

A N N U A L

In the segment of trade, the company faces increasing competition by the brand name of a lower-price range of beer and by expansion of discount stores—namely, they compete with established and quality tra-

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water of Union Group, which decreased by 7 % compared to the previous year.

political issues, as well as: • High customs in these markets and their delayed reduction; • Sales prices of local producers are lower compared to the prices of our products; • Constant decline in the purchasing power of consumers; • Development of retail chains, which require all major credits and give priority to their own trademarks;

• Based on the Stability Pact for South Eastern Europe, local producers of beer and non-alcoholic beverages enjoy preferential status and represent strong competition for our products;

• High marketing investments of competition. Union Group generated EUR 162 million in operating revenues, from which EUR 159.5 million in net sales revenues, which is 4.2 % less than in 2008. Operating expenses in the amount of EUR 147.8 million are 6.8 % lower than in 2008. Costs of raw materials, supplies, energy, water and packaging decreased by 9.4 %; namely, the prices of basic raw materials and supplies, compared to the same period last year, when they were at very high levels, decreased. Costs of services decreased by 16.8 %. The total reductions in costs of services were mainly influenced by reductions in transportation costs and advertisements. Labour costs increased by 3.3 %, and costs of write-offs by 0.9 %. From its basic activity Union Group achieved good results, because it realized EUR 14.2 million in operating profit with strict cost management and with an improved structure of sale, which is 21.5 % more than in 2008.

D . L A Š K O

into arrears;

P I V O V A R N A

allocate funds generated from selling drinks for their own investments and thus allow payments to fall

D .

• Illiquidity and lack of financial discipline on the side of our importers' major customers, who largely

Important information on the business operations of Union Group ( in EUR )

A N N U A L

R E P O R T

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Net sales revenues

2007

2008

2009

159,854,725

166,461,402

159,454,109

Net profit

21,188,603

5,820,587

-51,645,016

Net cash flow1

35,283,470

18,822,852

-39,120,762

EBIT

16,704,062

11,711,222

14,224,570

EBITDA

30,798,929

24,713,487

26,748,824

Long-term assets

250,976,303

213,911,437

212,779,353

Short-term assets

98,546,681

106,176,607

60,099,441

Equity

194,112,167

132,477,907

78,424,313

Long - term liabilities

75,570,490

55,829,068

60,400,381

Short - term liabilities

79,840,327

131,781,069

134,054,100

1Net profit including depreciation

Financial expenses had a particularly burdening effect on the business operations of Union Group in 2009. The Group suffered loss in the amount of EUR 51.6 million, mainly due to loan write-offs and investment impairment in 2009. In addition, the Group is also heavily in debt; however, the major part of liabilities to banks are covered by financial investments. Despite this, Union Group is, alongside the support it receives from banks, capable of paying interest, investing for the current needs of basic activity and partly repaying instalments of long-term loans even without disinvestment of financial investment.

Employees At the end of 2009 Union Group employed 819 people, which is 4.2 % less than a year before. In recent years the company has significantly reduced the number of employees due to rationalization of work proces-

D .

restrictive employment policy, the long-term strategy of the Group includes recruiting appropriately skilled

P I V O V A R N A

L A Š K O

reallocates work and in particular cases also provides incentives to personnel for overtime work. Despite the

D .

ses and costs, which was implemented with so-called »soft methods«, while at the same time the company

and high quality personnel and enabling its employees to obtain regular additional training.

Conclusion The objectives of Union Group are based mainly on development, technology, knowledge and quality, with which the company ensures the production and sale of quality types of beverages. We plan to sell 2,324 million hl of beverages in Union Group in 2010. The expected operating profit totals EUR 17.5 million and net profit EUR 10 million.

VITAL MESTINJE, D. O. O. About Vital Mestinje, d. o. o. Vital Mestinje is a company of non-alcoholic beverages focused on two main activities: production and bottling of non-alcoholic beverages, nectars, fruit syrups and carbonated beverages under its own trademark FRUPI, and production and bottling of beverages for retail trademarks of local and foreign traders. The basic activity of the company is the production of non-alcoholic beverages and juices. In the future, our company will further focus on development of new products, because competition in this branch is so strong that it is necessary to monitor consumer needs and therefore to update the techno-

logy. At the same time, we will follow the filling strategy of trade brand names for Slovenian and for foreign traders. Our company has ample production capacities and is therefore still searching for users of those, because we are able to offer bottling of all types of non-alcoholic beverages. The company is capital-related to Pivovarna LaĹĄko, d. d., which was, as at 31 December 2009, 96.92 % owner of Vital Mestinje.

Basic characteristics of business dealings in 2009 Physical sale: 149,449 hl (EUR 4,924,483) in 2009 and 160,980 hl (EUR 5,609,200) in 2008. In 2009

Net profit Net cash flow1 EBIT

2009

5,150,452

5,773,931

5,135,479

45,565

53,250

47,569

498,579

463,146

424,865

54,424

89,753

48,000

507,438

499,649

425,296

Long-term assets

2,488,358

2,215,201

2,066,005

Short-term assets

2,262,130

2,593,015

2,271,181

Equity

3,338,637

3,391,887

3,439,456

Long - term liabilities

274,830

163,592

97,629

Short - term liabilities

1,137,021

1,252,737

800,101

EBITDA

1Net profit including depreciation

ďżź Vital Mestinje successfully completed the fiscal year 2009; it generated EUR 5,135,479 in net sales revenues. Here the company finds that index of net sales revenues is only 88.9 compared to the previous year. In the structure of sales revenues 96.3 % falls on revenues on the domestic market and 3.7 % on revenues on foreign markets. In addition, operating revenues totalling EUR 5,046,907 also decreased by 11.4 % compared to the previous year. Lower sales are the reason why production was also slightly decreased compared to the previous year. The cost of depreciation is EUR 377,296 and is decreased by 8 % from the previous year. The company generated EUR 48,000 of operating profit, which is 46.5 % less than in 2008. Financial revenues decreased by 28 % compared to 2008. Financial expenses were reduced by 91 %; thus the company generated EUR 5,996 positive outcome of funding. Net profit totals EUR 47,569 and was decreased by 11 % compared to 2008.

Employees Employment policy: the company currently employs 38 workers and also plans to recruit new people. Furthermore, when retirements occur in the future, work will be redistributed among the existing workers. However, the number of employees is at a minimum, and that is why already a longer sick leave could repre-

R E P O R T

2008

A N N U A L

Net sales revenues

2007

D .

( in EUR )

D .

Important information on the business operations of Vital Mestinje, d. o. o.

L A Ĺ K O

sales in the company.

P I V O V A R N A

rection from the sales programme FRUPI into trade brand names, which already represent 80 % of the total

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the company recorded a 7.2 % quantity drop and a 12.2 % financial sales fall. The latter is the result of redi-

sent a problem. On 31 December 2009 the company employed 38 people.

Conclusion Business operations in 2009 were quite satisfactory, bearing in mind the economic conditions and reduced consumption, which began to signify immediately after the first half of the year. Sales were slightly reduced with regard to the previous year, but the company was behind the plan by only 3 %, which is quite a satisfactory result. Our strategy in the future will continue to be based on acquiring new trade brand names, and in the FRUPI programme a lot of our attention will be devoted to sale of syrups and beverages in cardboard and pure-

A N N U A L

R E P O R T

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pack packaging. At the same time, the company will strive to obtain another new customer outside Slovenia, because it needs to fill the available capacities as much as possible.

DELO, D. D., LJUBLJANA About Delo, d. d., Ljubljana Delo, d. d., has been one of the leading and most influential companies on the Slovenian media market and an important designer of public opinion for half a century already. The early work of the company Delo dates back to 1955, when a newspaper and publishing company was established, Slovenski Poročevalec, which was the precursor to today's company. The first copy of Delo newspaper was issued on 1 May 1955. Delo, d. d., publishes two leading Slovenian daily newspapers, Delo and Slovenske Novice, the only Sunday newspaper, Nedelo, the specialized magazine Grafičar and four regular newspaper supplements. In addition, Delo has one of the most commonly visited web sites, www.delo.si, which is enhanced with video content.

The basic mission of the company is to provide the public with the broadest possible range of media content. As a credible and a relevant source of information, Delo strives to remain the opinion leader in as many areas as possible and to be trusted by people. Thus, Delo implements its basic mission with responsibility

D .

Delo is to maintain its position as the leading media house using its products and services on the market to

P I V O V A R N A

L A Š K O

and educate and at same time to provide relaxation and entertainment. The main objective of the company

D .

and enables people to better understand the world because is using its content to communicate, interpret

meet needs throughout a wide range of media content. One of the most important competitive advantages of the company Delo is certainly its employees. Delo combines most distinguished journalists, photographers, printing masters, marketers and other experts. It has one of the best organized distribution networks. Delo keeps pace with technological development, which ensures that it satisfies the latest marketing conditions. The company's modern printing centre provides for high quality colour printing of all newspapers and supplements, as well as printing editions for foreign contracting parties. In the second half of 2009, the company introduced an integrated editorial regim with a new spatial arrangement and uniform working environment, stimulating communication among employees and particularly integration with the online Delo, and enabling new developmental steps for the newspaper and society. In the desire to maximize business efficiency, Delo has organized its own distribution networks within an independent company, Izberi, d. o. o., which in addition to better surveillance of delivery channels and greater efficiency of the entire business system, also provides for additional developmental possibilities. Delo is 100 % owner of the company Izberi, d. o. o., Ljubljana, which has been doing business since 1 January 2009, and 79.25 % owner of the company Večer, d. d., Maribor. Delo actively manages the company Izberi, d. o. o., while is only in a business relationship with Večer, d. d., arising from the printing of particular

supplements to the Večer edition. Such situation is the result of limiting the voting rights in accordance with Article 44 of the Prevention of the Restriction of Competition Act.

Basic characteristics of business dealings in 2009 The economic crisis in 2009 also affected the business operations of the company Delo, d. d. For the first time in the 20 years of the company history, circulation of Slovenske Novice recorded a decline. Despite the negative trend of newspaper sales, Delo maintained its market position. The newspapers Delo and Slovenske Novice together recorded 59 % market share, and Slovenske Novice continued to be the daily newspaper with the highest paid circulation. Dealing with the crisis in the economy was largely reflected in advertising. Not only were companies reducing their advertising budgets, but the structure of the advertising »pie« in the Slovenian market was radically changed. There was a real struggle among print media for each individual

In 2009 the company Delo impaired the value of loans granted to the companies Infond Holding, d. d., and Center Naložbe, d. d. On the basis of evaluation carried out by a certified appraiser, the company Delo implemented an impairment of the investment value in the company ČZP Večer, d. d. The total value of both impairments disclosed in financial expenses was EUR 13.7 million. The result of the negative outcome from

A N N U A L

Decreased sales revenues were largely attributed to the lower revenue from advertising. With savings measures related to costs and expenses, the company Delo partially offset the revenue loss.

R E P O R T

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advertiser.

financing was that the total operating profit of the company was negative.

Important information on the business operations of Delo, d. d., Ljubljana

59,573,285

60,499,049

53,756,136

Net profit

1,809,248

4,616,531

-11,522,245

Net cash flow1

4,933,776

7,276,014

-8,675,049

EBIT

1,648,457

6,008,137

427,326

EBITDA Long - term assets Short - term assets Equity

4,772,985

8,667,620

3,274,522

28,269,165

41,553,901

25,398,404

7,722,209

11,914,568

19,178,594

24,300,047

27,980,341

15,665,385

Long - term liabilities

350,000

4,041,689

Short - term liabilities

7,241,907

21,721,364

20,231,698

1Net profit including depreciation

Employees The company has a high educational structure, which is reflected in its activity and the complexity of its working processes. In accordance with the strategy of management and development of human potential, the company supports the education of employees for the purposes of obtaining appropriate education. At the end of 2009, 468 people were employed in the company Delo, d. d., and Izberi, d. o. o., which is 2 people less than at the end of the 2008.

Conclusion Priority tasks of the company management will in the future be focused on searching for new growth and the development of ability for it. This is particularly about seeing through transformation processes for both

D .

2009

D .

2008

L A Š K O

Net sales revenues

2007

P I V O V A R N A

( in EUR )

key projects—the daily newspapers Delo and Slovenske Novice—as well as forming relevant organizational abilities (competences) so the company will be able to handle these tasks. This demands greater internal connection and integration of all employees. The process of forming a strategic business plan, which is expected for the first half of 2010, is aimed at harmonizing business objectives. The planned processes of transformation (redesign) of both newspapers, as well as magazine supplements, and promotional development of Internet (electronic) issues for all key brand names arise from it. The development of organizational and accountability structures, the establishment of new motivational schemes, and additional education and training are the expected next steps after identifying the strategic business plan. In addition to the above, another priority task in 2010 is implementing the decision of the Competition

A N N U A L

R E P O R T

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Protection Office of the Republic of Slovenia, which imposed on Delo to dispose the major part of its invest-

P I V O V A R N A

L A Š K O

D .

ment in ČZP Večer, d. d., within the period of one year. In January 2010 a call for public bids for the sale of investment in ČZP Večer, d. d., was announced. The process of sale will continue in the second stage with bidders who expressed an interest in the first stage to participate in the process of sale.

2.10 Risk management

In their business operations Pivovarna Laško, d. d., and Pivovarna Laško Group are exposed to various business and financial risks, which are in most cases efficiently managed with an active and comprehensive approach.

2.10.1 MANAGING BUSINESS RISKS OF PIVOVARNA LAŠKO, D. D. The activity of beverage production is exposed to the seasonal nature of consumption. This way business

these countries, which could deteriorate marketing conditions on these markets.

• I ntellectual property or trademarks are exposed to certain risks in appearing on the market of another producer, and that is why all our trademarks are protected at Office for Intellectual Property Protection.

•R eliability of suppliers and contractors is moderately exposed, and for the purposes of preventing business interuptions in this particular segment, the company utilizes input control of the raw materials' quality and of intermediate goods. Normally, the company has two or more suppliers for the supply of the same type of goods.

R E P O R T

the European Union, business risks in this sales area are also exposed to possible unilateral measures of

A N N U A L

•T aking into account that the company achieves almost 15 % of its physical realization on markets outside

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risks are also related to weather conditions during the seasonal summer period.

•A vailability of production capacities is party exposed to business risks, mainly due to possible machinery breakdown. In order to avoid these production disturbances, the company ensures the smooth operation of production facilities with regular annual planned maintenance and preventive ongoing maintenance works.

• Environmental protection—the business environment is exposed to business risks due to wastewater generated in the production process. The company has reduced this risk to a minimum by activating a

wastewater treatment plant. Regular monitoring of adverse impacts on the environment has an additional impact on environmental protection.

D . L A Š K O

bility of prompt elimination of the consequences.

P I V O V A R N A

company has reached a level which enables the timely detection of an event and consequently the possi-

D .

•P rotection of property—by implementing a protection plan regarding threats or managing property, the

A N N U A L

R E P O R T

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BUSINESS RISKS Risk description

Control mode

Exposure

Sale

loss of market sales

perform analysis,

moderate

market research and

marketing communication

Intellectual

risks associated with the

monitoring patent situation

property

patent situation and the rule

of patent disputes

Reliability

risk of non-competitive

implementation of the

of suppliers

or disrupted supplies

control input

Availability of

risk of disruption

routine annual preventive

production capacity

of production capacity

maintenance

Protecting the

risk of emergency-life

regularly conduct preventive

environment

environmental

activities

impact

Protecting property

risk of theft

systematic risk assessment

of property

and implementing measures

moderate

and contractors

in accordance with

security plan

2.10.2

low

moderate

MANAGING FINANCIAL RISKS OF PIVOVARNA LAŠKO, D. D.

P I V O V A R N A

L A Š K O

D .

Prompt and thorough monitoring and evaluation of financial risks is necessary for the purposes of ensuring the long-term stable business operation of the company. In 2009 the company again followed the objective of attaining operational stability and reducing the exposure to particular risks to an optimal level. Particularly significant among financial risks are credit risk, interest rate risk, currency risk and liquidity risk. Exposure to particular types of financial risks and measures for protection against them is implemented in the company and evaluated based on the impacts on cash flows.

•C redit risks include all those risks affecting the decline of the company's economic benefit due to insolvency of the company's business partners (buyers) and failure to meet their contractual obligations. To this end, the company supervises and monitors financial claims of its customers, both wholesalers and buyers in retail sale. In most cases we close deals with known and verified business partners whose reliability and credit rating is monitored on an ongoing basis. Our accounts receivable are insured with traditional instruments for claim insurance, such as: bill, bank guarantee and mortgage. The company currently monitors claims per business partners and per their maturity, and contributes to improving the payment discipline of its buyers by prompt collection, charging interest on late payments, writing reminders, and with judicial recovery of debts due. Credit risks are managed and represent a moderate rate of exposure for the company.

• I nterest rate risk represents the possibility of changing the amount of the reference interest rate on the financial market, mainly due to long-term loans already taken in EUR, linked to a variable interest rate (EURIBOR), which has been demonstrating a downward trend since 2009, which has positive effects on indebtedness under variable terms. We evaluate that the company's exposure to interest rate risks is still moderate and manageable.

•C urrency risk is not a subject of the company's exposure in 2009 because both on the export side as well as on the import side, the company operates in EUR. Furthermore, the structure of the company's foreign sources of funding entirely consists of loans in the common currency of the European Monetary Union.

•L iquidity risk: The Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act,

must always have sufficient long-term financial resources at its disposal with regard to the volume and type of business it carries out. The company shall undertake to provide for an adequate ratio between short-term liabilities and current assets. Taking into account the last day of 2009, the company discloses an excess of current liabilities over current assets, which means the existence of significant liquidity risk. In order to avoid insolvency the company manages liquidity risk, and forms and implements a regular liquidity management policy, which includes planning the expected cash outflows and sufficient cash inflows for them, bearing in mind the normal course of business operations and possible positions

R E P O R T

In addition, the company needs to monitor and ensure capital adequacy, which means that the company

A N N U A L

financial risks is liquidity risk, which means the risk of loss due to short-term and long-term insolvency.

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among other things, governs the financial operations of legal entities. Particularly significant among

of liquidity crises. The company is quite successful in managing liquidity risk through suitable credit lines for the short-term regulation of cash flows in the form of revolving credits and the allowable limit of the transaction account. In addition, the company further assesses that it will be possible to arrange renewals of the existing short-term funding resources or gain new resources of higher quality at maturity of the existing short-term loans at banks on the financial market. Also, all loans taken at banks are adequately insured with long-term business assets of the company, and for this reason repayment of

loans by selling long-term business assets of the company is possible in the event of a possible unfavourable situation on the financial market and upon request from banks for the repayment of loans at their

manages the risk of long-term solvency in the same way. We believe that the exposure to liquidity risk is quite high with regard to the situation on the financial market, as well as in the entire economic space. The financial risks of Pivovarna Laško, d. d., are described in the financial part of the annual report on pages 171 and 172, in explanation number 28.

D . L A Š K O

with financial inflows either from operations or from using short-term funding sources. The company

P I V O V A R N A

the framework of the Group on the short run. All larger financial outflows are pre-planned and covered

D .

maturity. The company also utilizes allocations of surpluses and shortages of financial resources within

FINANCIAL RISKS

Risk description

Control mode

Exposure

Credit

risk of insolvency

determine credit ratings of

moderate

risk

of business

customers, capping buyers,

partners

using the appropriate

A N N U A L

R E P O R T

2 0 0 9

insurance instrument

Interest

revision of the

use of derivative financial

rate risk

reference interest rates

instruments –

in financial markets

interest shielding

Currency risk

possibility of adverse

business connections to the

exchange rate movements

national currency,

currency harmonization of

import and export transactions

Liquidity

inability of companies

provision of adequate credit

risk

to meet business

lines in financial markets,

and financial liabilities

proper financial

planning

moderate

low

high

2.10.3. MANAGING FINANCIAL RISKS OF PIVOVARNA LAŠKO GROUP Business operations expose Pivovarna Laško Group to the following risks: credit risk, interest rate risk, currency risk, liquidity risk and so on. The entire activity of managing risks in the Group is focused on the

D .

level; this is, namely, subject to the financial departments. Together with the global financial crisis of the

P I V O V A R N A

L A Š K O

performance of the Group. No particular working body is engaged in managing financial risks at the Group

D .

unpredictability of financial markets and tries to minimize the potential negative effects of the financial

last year, the stability of Group's operations became exposed to higher risks. As a result, the Group devotes considerably more attention and carries out more activities to manage these risks.

•C redit risks include all those risks affecting the decline of the Group's economic benefit due to insolvency of our business partners (buyers) and failure to meet their contractual obligations. To this end, we supervise and monitor the financial claims of our customers, both wholesalers and buyers in retail sale. In most cases we close deals with known and verified business partners whose reliability and credit rating is monitored on an ongoing basis. Our accounts receivable are insured with traditional instruments for claim insurance, such as: bill, bank guarantee and mortgage. In addition, we also use the method of high debt limit of a particular buyer with regard to the sales agreement. Credit risks are also monitored by insuring a proportion of claims on foreign markets at the company Prva Kreditna Zavarovalnica, d. d. (SID), Ljubljana. We currently monitor claims per business partners and per their maturity and contribute to improving the payment discipline of our buyers by prompt collection, charging interest on late payments, writing reminders, and by judicial recovery of debts due. In those buyers where insurance cannot be provided for certainty, the Group closes deals based on advance payments. Credit risks are managed and represent a moderate rate of exposure for the Group.

• I nterest rate risks represent the possibility of changing the amount of the interest rate on the financial market, mainly due to taking out long-term loans linked to a variable interest rate (EURIBOR). In longterm loans already taken, the Group has already partly eliminated the exposure to changes in interest rates in previous years by applying a financial instrument in the form of interest rate protection. We

evaluate that the Group's exposure to interest rate risks is still moderate and manageable.

•C urrency risk was negligible in the business operations of the Group in 2009 because the structure of Group's business operations was mainly linked to EUR both in supply and sales, as well as in the financial segment. We believe the currency risk is quite low in other currencies due to the insignificance of these business operations.

•L iquidity risk arises from the possibility of a deficit of available financial resources and consequently the Group's inability to settle its liabilities within the agreed periods—both current operating liabilities as well as financial liabilities. The liquidity risk of Pivovarna Laško Group is with regard to the situation on the financial market as well as in the entire economic space quite high, but on the other hand it is quite manageable based on the activities carried out by the companies of the Group in this regard. The Group

loans taken out. Due to the trend of reducing the reference interest rate on the financial market of the European Union, commercial banks are increasingly using the pricing of capital in forms of fixed interest rates. Despite this, the Group still has open credit lines in form of revolving credits and allowable limits on transaction accounts. In addition, the Group also applies allocating surpluses and deficits of financial assets within the framework of the Group on the short run. All larger financial outflows are pre-planned and covered with financial inflows either from operations or from short-term funding sources. The Group manages the risk of long-term solvency the same way. We believe that the exposure to liquidity risk is

R E P O R T

cash flows. In the last year the borrowing conditions deteriorated due to required larger guarantees for

A N N U A L

ring cash inflows, and manages liquidity risk through relevant credit lines for short-term regulation of

2 0 0 9

consistently carries out a policy of regular liquidity management, which includes planning and monito-

quite high with regard to the situation on the financial market, as well as in the entire economic space. The financial risks of Pivovarna Laško Group are in described in the financial part of this annual report on pages 232, 233 and 234 in explanation number 30.

P I V O V A R N A

L A Š K O

D .

2.11

Marketing activities In 2009 marketing continued and reinforced the set guidelines from 2008, when a new product image of the line Laško beer was set. In 2009 it was awarded with the title TRUSTED BRAND, which is granted every year based on research among consumers on trusted trade marks. The Bandidos family of mixed beverages with beer was completed in 2009 with the new flavour Bandidos Cuba Libre. At the end of the year a new winter beer, Eliksir, was launched on the market. A strong beer with 16 % fruit extract and 7.6 alcohol by volume, this beer belongs among beers that experts know under the name “BOCK”. Eliksir is a beer of amber, red-brown colour with a pleasant, gentle, malt smell. A variety of

A N N U A L

R E P O R T

2 0 0 9

tastes is typical for this beer, from chocolate flavour and fruit flavour to an aromatic bitter taste, and when poured correctly in a glass it generates creamy foam. Bock beers are light or dark beers, of high volumes of alcohol and extracts. These beers are typical for their malt taste, low but aromatic bitterness, and a strong alcoholic character. They have creamy foam and a low carbonization level (CO2).

2.11.1 CHANGE IN THE PRODUCT ARCHITECTURE AND IMAGE OF THE LAŠKO TRADE MARK In 2007, based on the results of numerous studies, we outlined a developmental path for our main product line, Laško beer. In addition to a traditionalist, non-modern visual image, the trademark Laško at its highest level faced a problem with the hierarchy of specific sub-brands, which were divided into two classes: the Laško beer Zlatorog and Laško, which included the products Club, Temno and Lahko. Such structure

was not optimal from a marketing communication point of view, and in addition, research also indicated a decline in the awareness of Zlatorog, which consumers from a verbal point of view replaced with a word Laško due to the ten-year-old communication of Laško beer, while visualizing »green label«.

D .

•T he new architecture was the following:

P I V O V A R N A

L A Š K O

The trademark Zlatorog was thus switched to Laško Zlatorog.

D .

Changes in architecture

•L aško Zlatorog •L aško Club •L aško Dark (rename from Laško Temno) •L aško Light (replacement for Laško Lahko) Particular elements in the architecture:

•D ue to the multi-level nature of elements (Laško beer/Laško/Club, Temno, Lahko) the logo Laško beer in word and image was removed,

•D ue to emphasizing tradition, the year 1825 and the image of a goat were kept, where we distinguish between the product mark and the corporate mark.

Change in the packaging image and price positioning New designs and materials of the primary packaging (labels and cans) secondarily followed the desired pricing positions of particular products from the Laško line. Laško Zlatorog is a representative of the middle class; Laško Club, Dark and Light are, however, classified into specialized beers and represent the premium segment of our offer. Packaging has been adjusted accordingly. Innovations in packaging in 2008:

• I ntroduction of green long-neck bottles (a switch from brown ones) for all products in returnable and non-returnable bottles, except for BZ Bandidos, which remains in a white bottle,

•L aško Zlatorog—bottle: use of a neck and chest paper metallic label, cancellation of chest label, •L aško Club, Dark and Light—0.33 l non-returnable green bottle; use of neck paper metallic label and adhesive transparent check label (»no-label look« [NLL]), 0.5 l 1/24 can Laško Light.

•E xport Pils—bottling into green long-neck bottle, redesign of labels on the bottle (cancellation of retro label) and cans, introduction of packaging 6/1 cans (six-packs). Innovations in packaging in 2009:

•B andidos—introduction of the new flavour Bandidos Cuba Libre in the existing 0.33 l non-returnable twist-off bottle,

of the trademark Laško (different typography, different appearance of the goat); in this way the company provides the trademark its autonomy, while due to the significant resemblance of branding, it still affects its positioning and awareness and partly also the trademark Export Pils. The new corporate image is of course also the signature of quality for the remaining trademarks of the company.

R E P O R T

Concurrent with the change of the product architecture and the image of the trademark, Laško Pivovarna Laško also changed its corporate image. The new corporate image is this time distinguished from the image

A N N U A L

2.11.2 CHANGE IN THE COMPANY'S CORPORATE IMAGE

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•E liksir—winter beer with 7.6 % alcohol by volume in 0.33 l non-returnable green bottle.

2.11.3 MARKET RESEARCH In addition to obtaining information from Internet sources, we also used external sources. For external research, the company used 1 % of funds intended for marketing activities. The results of the external research are in addition to internal information of vital significance, particularly in this rapidly changing environment. Information obtained this way is used to monitor marketing trends in both sales and com-

munication.

was realized. The structure of expenditure was the following:

• Slovenia

85 %

• Export

15 %

Slovenia In 2009 we continued with activities to inform the market of changes in our image at www.lasko.eu, which was also supplemented with our renewed corporate website www.pivo-lasko.si. During the spring and autumn period, the focus of activities was directed into sales promotion, particularly in the distribution channel Horeca via sales events and parties. We organized a promotion at the Lent festival in Maribor in June and participated in activities related to numerous VIP events (Zlata Lisica [Golden Fox], Planica, etc.), as well as in the promotional equipment of event space at various sales events. In June, at the introduction of the new flavour Bandidos Cuba Libre, we prepared a communication activity, which included media: TV, print and Internet. In addition, we also carried out the 45th entertainment

L A Š K O

% of the total planned sales revenues generated from the sale of products of Pivovarna Laško in 2009; this

P I V O V A R N A

For market communication on domestic and foreign markets in 2009, the company planned to spend 8

D .

2.11.4 MARKET COMMUNICATION

event Pivo-cvetje. In the field of sponsorship we acted in the strategic directions from previous years. The major part of sponsorship funds was intended for corporate sponsorship. In December, within the framework of New Year's greetings and announcement of the 185th anniversary of Pivovarna LaĹĄko, we prepared the communication campaign Eliksir, which included advertising on TV, in print and on the Internet. In the image of the New Year's campaign we also arranged giving presents to business partners.

A N N U A L

R E P O R T

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Foreign markets

P I V O V A R N A

L A Ĺ K O

D .

On foreign markets, the majority of communication activities were intended to communicating the new image, as in Slovenia. Both in ATL (TV, print) and BTL (sales promotion) communications, adapted communication solutions and promotional advertising material were used.

2.12

P l a n s f o r 2 0 1 0 a n d d e v e l o p m e n t s t r at e g y Pivovarna Laško Group's desire is to remain the leading producer of beer and mineral and spring waters in Slovenia with a dominant market share, and a competitive producer with a more visible market share in the field of non-alcoholic beverages. With an emphasis on high quality and product awareness, the Group plans to be successful also on foreign markets, particularly on the markets of South Eastern Europe, in the area of selling beer, water and nonalcoholic beverages; we also aim to be comparable with European competition as far as business efficiency and return on equity are concerned.

1,952,050

1,975,579

98.8

Mineral water

613,009

598,668

102.4

Spring and natural waters

227,396

226,878

100.2

Flavoured water

343,120

320,888

106.9

Fruit juices, nectars

360,374

368,608

97.8

Other non-alcoholic

1,003,582

989,040

101.5

59,489

64,288

92.5

7,875

8,942

88.1

4,566,895

4,552,891

100.3

Syrups Other alcoholic Total

R E P O R T

Beer

index 10/09

A N N U A L

( in hl ) Plan 2010 Sales 2009

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2010 plan and 2009 sales of Pivovarna Laško Group – by group of products

index 10/09

1,065,000

1,011,539

105.3

Pivovarna Union

1,470,950

1,457,477

100.9

Jadranska Pivovara

72,239

Radenska Radenci

1,023,006

1,038,466

98.5

Fructal Ajdovščina

728,677

709,585

102.7

Fruktal MAK Skopje

124,637

113,591

109.7

154,625

149,994

103.1

4,566,895

4,552,891

100.3

Vital Mestinje Total

We shall continue with our development strategy, which is focused mainly on further reputation building of particular recognised trademarks both on domestic and foreign markets, and will thus strive for increasing market shares on particular markets. At the same time we plan to continue with activities in reducing our burden on the environment, particularly in the area of wastewater and packaging waste. Particular attention in this strategy will be devoted to the water protection area—that is, water as a vital resource of the whole Pivovarna Laško Group. In any event, we will not neglect efforts towards a more rational use of other energy-generating products such as electricity and gas.

P I V O V A R N A

Pivovarna Laško

L A Š K O

D .

( in hl ) Plan 2010 Sales 2009

D .

– by individual companies

Quantity and structure diagram of beverage sales plan in 2010 for the Group

Beer

2,500,000

Mineral water

in hectolitres

2,000,000

Spring and natural waters

1,500,000

Flavored water

1,000,000

Fruitjuice, nectars Other non-alcoholic

A N N U A L

R E P O R T

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500,000

100

Syrups

Other alcoholic

Plans 2010

( in hl )

Plans 2010

in %

Beer

1,952,050

42.7

Mineral water

613,009

13.4

Spring and natural waters

227,396

5.0

Flavoured water

343,120

7.5

Fruit juices, nectars

360,374

7.9

Other non-alcoholic

1,003,582

22.0

59,489

1.3

Syrups Other alcoholic

7,875

0.2

4,566,895

100.0

Consolidated profit plan of the Group for 2010

P I V O V A R N A

L A Š K O

D .

Total

( in euros, except headcount )

Plans 2010

Total income

388,007,366

Total expenditure

361,915,833

Depreciation

25,013,049

Total profit

26,091,533

Taxes

3,573,318

Net profit

22,518,215

Net cash flow1

47,531,264

EBIT

41,874,518

EBITDA Average number of hours per employee 1Net profit including depreciation

66,887,567

2,051

2.13

Events after the fiscal year Termination of the decision procedure on the proposal for the initiation of bankruptcy proceedings against the company Center Naložbe, d. d. With a decision of 18 January 2010, the District Court in Maribor decided to terminate the decision procedure on the petition of creditor companies—Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d., Delo, d. d., and Fructal, d. d.—for the intitation of a bankruptcy proceeding against the debtor Center Naložbe, d. d., until the end of the receivership against Center Naložbe, d. d. The decision-making procedure on the petition of the creditor companies for the initiation of bankruptcy proceedings against Center Naložbe,

nated by agreement. Mr Šerif Krajišnik was appointed as the new manager of the company for a four-year term of office, with the commencement of the term on 1 March 2010.

Report on findings of the special audit On 9 March 2010 Pivovarna Laško, d. d., adopted the »Report on findings of a special audit of managing particular busines dealings of the Pivovarna Laško Group« (hereinafter: report), which was prepared on the basis of the assembly decision of 31 August 2009 by BDO Revizija, d. o. o., družba za revidiranje, Ljubljana.

R E P O R T

On 28 February 2010 the term of office of the former director of the company, Mr Marko Božiček, termi-

A N N U A L

Appointment of a new manager in the affiliated company RA & LA, d. o. o., Sarajevo

2 0 0 9

d. d, was terminated until the completion of the receivership procedure against Center Naložbe, d. d.

In accordance with provision 320 of the Companies Act ZGD-1, the Management Board of the company sent the report to all members of the Supervisory Board. The Supervisory Board addressed the report and discussed it at the 17th general meeting of shareholders of 30 March 2010. Based on the findings of the Management Board that other transactions were carried out which were content-related to those addressed, and which the special audit failed to include in its report, the

101

Supervisory Board recommended to the Management Board to also carry out an inspection of these particular transactions. The Management and Supervisory Boards shall inform the assembly about this report at the

On 11 March 2010 Pivovarna Laško, d. d., adopted a decision of the High Commercial Court in Celje, by which the mentioned court annulled the decision made by the register court. It concerns a register matter of the petitioner Pan-Slovenian Shareholders' Association, in which the register court dismissed the petitioner's suggestion to enter two new members of the Supervisory Board, who were appointed at a socalled »spontaneous« or »staircase« assembly. The High Commercial Court in its explanatory note clarified that the register court in a non-contentious procedure cannot decide on the content in the event a lawsuit is already pending on the same subject matter, and should thus terminate the procedure until the decision of the pending lawsuit. We must add that the District Court in Celje has already reached a decision in this lawsuit, saying that the decisions of the so-called »spontaneous« or »staircase« assembly are null. The decision is not final.

L A Š K O

P I V O V A R N A

Decision of the High Commercial Court in Celje on the annulment of the decision made by the

D .

regular general meeting of the company.

In July 2009 the Supreme Court of the Republic of Slovenia it its audit report ruled that the beneficiary, Mr Rudolf Höhn-Šarič, has been deemed a Yugoslav and Slovenian citizen since 28 August 1945. The question of nationality represented a preveious question in this procedure. Based on the decision of the Supreme Court on the recognition of the beneficiary's nationality, the competent administrative unit at the end of February 2010 submitted three preliminary submissions of the beneficiary or his commissioner, which describe in more detail the scope of the claim for the return of the nationalized property. Documentation is not yet complete. In the current procedure Radenska, d. d., Radenci, as a person liable in March 2010 submitted to the competent administrative unit a request for the delivery of other documents and an application for extension of time until the identification of stipulations from the preliminary submissions.

A N N U A L

R E P O R T

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Information about the current state in Jadranska Pivovara – Split, d. d. On 11 March 2010 the Commercial Court in Split, due to the insurance of a non-monetary claim of the petitioner Shareholders' Association of Jadranska Pivovara – Split, d.d., issued a temporary injunction, with which it forbid Jadranska Pivovara – Split, d. d., to dispose or in any other way dispose of the rights arising from the ownership on the property and shares of the company. Any disposition opposed to the temporary injunction is without legal effect. Jadranska Pivovara – Split, d. d., lodged an appeal gainst the temporary injunction because it believes that the aforementioned temporary injunction was issued as unfounded. The competent court has not yet made a decision about the appeal. In Jadranska Pivovara – Split, d. d., a gradual production stoppage began on 1 April 2010 due to rationalization, because the management of the company failed to conclude an agreement with potential buyers for the purchase of assets of Jadranska Pivovara. It is expected that Jadranska Pivovara will continue with bottling of the beer Kaltenberg by the end of May, which is to be produced at Pivovarna Laško, d. d. Pivovarna Laško and Jadranska Pivovara will provide the financial resources for the settlement of accounts payable, banks and

102

those employed at Jadranska Pivovara. Pivovarna Laško will continue with an active search for a buyer of the assets of Jadranska Pivovara.

Change in the Management Board of the afiliated company Fructal, d. d., Ajdovščina D .

new chairman of the Management Board.

P I V O V A R N A

L A Š K O

of resignation of 31 March 2010, and on 1 April 2010 the Supervisory Board appointed Mr Drago Kavšek the

D .

The chairman of the Management Board of Fructal, d. d., Ajdovščina, Mr Anton Balažič, submitted a letter

Transactions with related partied of Pivovarna Laško Group As at 31 March 2010 Pivovarna Laško, d. d., discloses liability to companies in Pivovarna Laško Group arising from short-term loans received in the amount of EUR 39,900,000, from which EUR 8,200,000 to Pivovarna Union, d. d., Ljubljana, and EUR 31,700,000 EUR to Radenska, d. d., Radenci.

Sale of shares of Večer, d. d., Maribor The sale of investment in shares of Večer, d.d., Maribor, was initiated in January 2010. A thorough business and legal inspection of the company Večer, d. d. was conducted and a public tender prepared, which was publicly announced in March 2010.

2.14

Events preceding the fiscal year 2009 1825 Historical beginnings of Pivovarna Laško. A producer and seller of honey and ginger-bread producer, Mr Franz Geyer, in the former Valvasor Špital arranges a crafts brewery, which building still stands today.

1838 The brewery is bought by Mr Heinrich August Uhlich. He exports beer to India and Egypt.

1867

The brewery is purchased by an extremely nationally oriented brewer from Žalec, Mr Simon Kukec. As an innovation he welds light and dark thermal beer, in addition to the beers Ležak and Porter, which is later renamed Temno Laško beer. The trademark Laško Pivo was becoming increasingly recognized in his times, and under this trademark beer was also sold in Egypt and Budapest.

1924

R E P O R T

1889

A N N U A L

Spodnje Štajersko.

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Along foothills of Sv. Krištof and Šmihel, Mr Anton Larisch placed the largest brewery at that time on

The brewery welds its last beer. The brewery union of Ljubljana secretly purchases the majority of its shares and cancels the production. Closure of the brewery affects the people of Laško not only materially; initiatives to re-open the brewery make innkeepers excited.

1929 Representatives of innkeepers' co-operatives decide to build an innkeepers' shareholders' brewery in La-

103

ško.

of the beer.

1944 During bombing of the railway bridge, the brewery was also hit and demolished. After World War II production in the brewery began again already in 1946 and was officially stopped in 1947. Since World War II Pivovarna Laško has constituted a single company the entire time. Particularly after 1960 the company has recorded an extraordinary development in sales: from 60,000 hl to 1,300,000 hl.

1990 After harmonization with the provisions of the Companies Act, the organization of the socially owned company is entered into the court register as court decision Srg 23/90 of 31 May 1990.

1991 In accordance with the provisions of the Companies Act, it is transformed into a joint stock company in mixed ownership. On 30 September 1991 the share and the social capital were assessed and division of shares conducted.

D . L A Š K O

the beer so much that German occupiers allow maintenance of the trademark Laško beer due to the quality

P I V O V A R N A

After many complications and severe opposition by the competition, they open the shareholders' brewery Pivovarna Laško and present the new Laško beer under the trademark Zlatorog. Drinkers of the beer liked

D .

1938

1995 At the first general meeting of shareholders of 20 April 1995, Pivovarna Laško is submitted to ownership transformation into a joint stock company with known owners. The company was entered into the court register with decision Srg 673/95 of 8 September 1995. The company becomes a joint stock company with more than 15,000 shareholders.

2000 Capital connections with Radenska, d. d., Radenci, Jadranska Pivovara, d. d., Split, and Vital, d. d., Mestinje, represent one of the most significant turning points in the company history. A new business strategy

A N N U A L

R E P O R T

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for development begins.

2002 The company succeeds with a public takeover bid of Pivovarna Union, d. d., Ljubljana. It obtains 47.86 percentage points of all its shares.

2003 Continuation of capital investments. The company gains a 24.98 % share in Delo, d. d., Ljubljana. Thus the company becomes its largest owner.

2004 In December the company obtains an additional 27,011 shares (5.98 percent of property) of the joint stock company Union Ljubljana. Pivovarna Laško, d. d., becomes a 53.85 % owner of all shares of Union.

2005

104

In February the company buys from Interbrew Central European Holding B. V., Netherlands, the entire ownership share, which is 186,400 shares of the issuer Pivovarna Union, d. d., Ljubljana. Pivovarna Laško thus becomes the majority, 95.17 % owner of the company Union. In May the Competition Protection Office issues a consent to the reported concentration of the companies Pivovarna Laško, d. d., and Pivovarna Union,

D .

na, from Slovenska Odškodninska Družba, d. d., Ljubljana, to Pivovarno Laško, d. d. After the aforementi-

P I V O V A R N A

2006

L A Š K O

D .

d. d.

Transfer of entry of 106,950 newly issued shares of the company Poslovna Sistem Mercator, d. d., Ljubljaoned transfer of entry, the joint stock company Pivovarna Laško ownes 317,498 shares MELR or 8.34 % of Mercator.

2007 Takeover bid for the buyout of the shares of Delo, newspaper and publishing company d. d., Ljubljana. Transferees of Pivovarna Laško, d. d., Radenska, d. d., and Talis, d. o. o., have in total 628,044 shares, which is a 94.09 % share of the target company.

2008 A takeover bid for the purchase of shares of Pivovarna Laško, d. d. was published in February. Transferees of Infond Holding, d. d., Maribor, Cestno Podjetje Maribor, d. d., Fidina, d. d., Ljubljana, and Koto, d. d., Ljubljana, in total acqire 4,818,151 shares, which is a 55.08 % share of all shares of the target group. Transferees offer EUR 88.00 per 1 share PILR, and 2,488 shareholders of Pivovarna Laško, d. d., accept the takeover bid. As at 31 December 2008 Infond Holding, d. d., is the majority owner of the company Pivovarna Laško, d. d., with a 52.97 % share.

P I V O V A R N A

L A Š K O

D .

105

A N N U A L

R E P O R T

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P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

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S U S TA I N A B L E D E V E L O P M E N T

106

3.1 Employees

Employees are one of the cornerstones of the company's good management, because we contribute to good quality and also to consumer satisfaction with our products, and with our knowledge, efforts and competence. Since we are very aware that employee satisfaction and business performance are inextricably linked, we successfully ensure a healthy and safe working environment and good participation among employees, which will be of great significance also in the future, because this is the way to produce greater loyalty from employees to the company and to cultivate the aforementioned qualities in workers. Employee satisfaction and commitment was maintained in different ways: we organized meetings for employees at the end of the year and a meeting of a 50-year jubilee; and we honored workers who retired in

In addition to the above, in 2009 we also took care for our former employees, since there was a meeting organized at the beginning of the year for workers who retired in the previous year, and we also organized a trip for employees and a New Year’s meeting. Our objective for the future remains employment rationalization and growth of employees' educational level.

R E P O R T

dental services, with a possibility for sports engagement in leasehold or rented sports facilities and similar.

A N N U A L

enabling employees to use holiday facilities, with payment of additional pension insurance, and co-financing

2 0 0 9

the last year, where memorial gifts were accepted. Other efforts included sending cards at personal events,

3.1.1 EMPLOYMENT CONDITIONS AND TRENDS The year 2009 was completed with 321 employees, which represents 0.9 % less than in 2008, when 324 people were employed on the last day of the year. Part-time work is carried out by 10 people, of whom there are 8 disabled people; 2 persons are enjoying parent leave for half time, which in total represents just over

107

3 % of all employees. On average there were 324 people employed in Pivovarna Laško, d. d., in 2009.

In the previous year the company hired 13 workers, from which there were 8 redeployments from Pivovarna Laško Group, namely, as at 1 April 2009 we took over administrators, stock keepers and commissioners from Pivovarna Union, Radenska and Fructal, which were carrying out work until then in the distribution centre in Maribor. We concluded an employment agreement for a fixed period of time with two newly employed workers; in one case it was about replacing a worker, while others have concluded an employment agreement for an indefinite period of time. In 2009 we terminated 16 employment agreements, or 16 employees left the company. On 1 April 2009, due to reorganization, we sent those employees who were carrying out their work in the distribution centre Ljubljana, branch office Izola, to Pivovarna Union—two administrators, one stockkeeper and one commissioner. In addition to the above, the health situation of two employees was such that they obtained the right to disability retirement; there were seven workers released due to regular termination of employment relationship for business reasons, and with one worker we concluded a mutually agreed termination of the employment relationship. An agreement concluded for a fixed period of time expired for two employees, and no new conclusions of employment relationships took place. In accordance with the gradual reorganization of the company's organizational structure, on 1 January 2008 marketing became a primary function of the chairman of the Management Board, which is indicated as an increase of employees in the management of the company and decrease in the commercial sector in

D . L A Š K O

distribution centres, because the majority of these workers are located at these posts.

P I V O V A R N A

was 7. The reason for such a high increase in contract workers is the change in work organization at our

D .

We increased the number of our contract labour force, because at the end of December 2009 the company had 17 workers recruited by the agency for providing workers, and such number on the same day in 2008

the years 2008 and 2009 compared to 2007; however, there were no significant changes in any of these sectors in recent years.

Employees per sector as at 31 December

2 0 0 9

Year 2009

in %

Management of the company

5.1

6.5

6.6

7.0

7.1

6.9

Commercial sector

R E P O R T

Year 2008 in %

Business secretariat and informatics Production and technical sector

A N N U A L

Year 2007 in %

Sector of business economics

22.1

21.3

22.1

188

56.8

181

55.8

176

54.8

5.7

5.9

5.6

Sector of human resources and legal protection Total

3.3

3.4

4.0

331

100.0

324

100.0

321

100.0

3.1.2 AGE STRUCTURE There were no significant changes in the age structure of employees of Pivovarna Laško compared to the previous year. We once again find that the average age of employees reached the highest average age of the last months, because in the last year it rose to 44.7 years or 44 years, 4 months and 10 days, and increased by 7.5 months compared to the previous year. Almost three quarters of all employees are older than 40 years, and only 2.5 % percent of all employees fall in the class up to 30 years.

108

We must also add that pension reform is still in the stage of a transitional period, which for women means a gradual prolongation of the required years of service and age for fulfilling minimum conditions of retirement; this is one cause of the average age growth of employees in the company.

D .

Total

in %

Age from 26 to 30 years

2.5

Age from 31 to 35 years

10.0

Age from 36 to 40 years

15.9

Age from 41 to 45 years

100

31.1

Age from 46 to 50 years

22.4

Age from 51 to 55 years

15.9

Age from 56 to 60 years

1.6

P I V O V A R N A

L A Š K O

D .

Employees per age group as at 31 December 2009

Age above 60 years Total

0.6

115

206

321

100.0

Age tree as at 31 December 2009

Total: 321 employed, average age is of our employees is 44 years, 4 months, 10 days.

Men: 206 employees or 64.2 %, average age is 44 let, 8 months, 27 days.

12 11 10

10 10 9

10 9

7 6

3 2

2 1

31 32 33 34 35 36 37 38 39 1

3 4

61 62 63 64 65

1 2

51 52 53 54 55 56 57 58 59

1 2

41 42 43 44 45 46 47 48 49

3 4

4 5

6 7

2 0 0 9

26 27 28 29

8 9 11

Women: 115 employees or 35,8 %, average age is 43 let, 8 months, 2 days.

R E P O R T

age

Composition of employees by gender as at 31 December ( in % )

2007

2008

2009

Women

35.6

35.5

35.8

Men

64.4

64.5

64.2

Total

100.0

A N N U A L

in years

109 The employment relationship between men and women has in recent years not changed significantly and

employees continues to improve from year to year, which is the result of employee training as well as a rational personnel policy—recruitment of new, highly educated staff and additional formal training of employees. In addition to education, with the purpose of obtaining formal education, employees have been gaining knowledge from different areas by attending seminars, courses and fairs, for example knowledge in quality of products, commercial business, technical sciences, modern information technology, accounting and financial operations. In addition to that, there were also statutory trainings and examinations. The total number of participants in different trainings was 136, which represents 42 % of all gainfully employed in the company. In total, there were 2,273 hours of training conducted, which means that each participant is trained on average 16.7 hours. In addition to employees, contract and hired workers have also been attending professional training programmes. And all people gained knowledge of that which is necessary for carrying out tasks and duties at their positions of employment. The needs for training and their realization were left to particular sectors. In February 2009 an advanced course in the German language was completed, which was conducted in two parts, beginning in 2008. In the second half of 2009, 45 employees visited the fair »Drinktec« in Germany, where they obtained information on innovations in the area of production, bottling and distribution of beverages, and made contacts with business partners, including manufacturers of technological equipment and spare parts. Bearing in mind that on 1 January 2009 the company switched to the new business informa-

P I V O V A R N A

In Pivovarna Laško we are well aware that growth of our employees' educational level is one of the conditions for the development of efficiency and quality of the company. This is why the educational structure of

L A Š K O

D .

3.1.3 EMPLOYEE TRAINING

D .

remains approximately at two thirds in favour of men.

tion system SAP, for which training of the majority of personnel took place in 2008, an additional training took place internally through the company's information technology administrator. Since occupational safety and health at work represent a fundamental principle, in 2009 we organized a course and examination on safety at work and fire protection for 106 participants. A seminar for internal auditors of the HACCP system was attended by 26 employees, which is with regard to our activity also a statutory obligation. In addition to obtaining functional knowledge by attending courses and seminars, where employees are trained especially for implementing their work, we provide our employees with support in obtaining a higher educational level by financing fees and the possibility of using training leave. With the objective of obtaining a higher level of education, 20 persons attended training programmes in 2009, of which 12 employees su-

A N N U A L

R E P O R T

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ccessfully completed training, 11 at higher professional study and 1 at specialist training. In three particular cases the agreement for training on the job was terminated, and in accordance with provisions of agreements the costs of tuition fees returned. Currently, there are eight active agreements: two for higher professional trainings, one for specialist training and five for master's studies. Information indicates that the majority of employees are focused on the area of commercial business, chemical technology and informatics. In the previous year there were no newly concluded agreements on training on the job. Company objectives are still focused into providing opportunities for training of employees for the purpose of obtaining a higher level of education, focused particularly on the acquisition of technical knowledge.

3.1.4 EDUCATIONAL STRUCTURE Compared to the previous year, the educational structure did not change significantly. The majority of employees, that is 46 %, still have IV. or V. educational level; this is followed by the proportion of unskilled personnel, which is gradually decreasing from year to year, while the proportion of employees who have

110

completed VI., VII. and VIII. levels of education is increasing. The increase in proportion of employees with higher educational levels is the result of newly employed, highly qualified personnel and the completion of

P I V O V A R N A

L A Ĺ K O

D .

training on the job of people already employed in the company.

Ednacional structure of employees in Pivovarna LaĹĄko as at December 31st

Master

Year 2007 share in %

Year 2008 share in %

Year 2009 share in %

0.6

0.9

1.6

University

13.9

14.5

14.0

Associate

9.1

10.2

12.8

High school

23.3

22.5

19.3

Skilled

26.0

25.9

26.8

Semiskilled

9.6

9.0

Unskilled

17.5

16.4

16.5

331

100.0

324

100.0

321

100.0

Total

The technological equipment of the company is forcing us into a need for higher educational levels, to which particular attention shall continue to be paid in the future. This may be achieved especially with the rational recruitment of new workers, since for the existing personnel, in the case of non-skilled workers this refers to older people who no longer show any interest in training on the job.

3.1.5 RETIREMENTS In the past two years no-one retired with qualified personal full retirement. Only two workers retired in 2009, whose medical condition was such that they qualified for the conditions for disability retirement. The reason why the company has no workers who would go into retirement with the qualifying years of service and age is the implementation of an action plan for reducing the number of employees. However, it was necessary both to comply with the age condition and to have sufficient pensional service in order to qualify to obtain the right for a retirement pension in 2009. Women could retire at the age of 56 years and 4 months, having completed their pensional service of 37 years, and men at 58 years and at least

3.1.6 EMPLOYMENT OF DISABLED The current regulation provides the requested level or quota of disabled employees, compared to the total number of employees applying for our line of work, which is 6 %. In the event an employer employs a larger number of disabled persons, he is exceeding the quota and is therefore entitled to a reward; in the event the

R E P O R T

be completed in 2014.

A N N U A L

The transitional period, which is gradually prolonging the age and the pensional service for women, will

2 0 0 9

40 years of pensional service.

employer fails to reach the quota, he must pay a contribution to the fund for Promotion of Employment of Persons with Disabilities. At the end of the year the company employed 26 persons with the status of disabled person, which represents 8.1 % of the total number of employees. In accordance with the Vocational Rehabilitation and Employment of Disabled Persons Act, providing a minimum proportion of employment of 20 disabled persons for

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our line of work, we are surpassing the quota by 6 persons.

Eight disabled persons carry out their work part-time—the majority working half time and one working a six-hour day—and all of them have set working restrictions or restrictions regarding their medical condition.

3.1.7 VOLUNTARY SUPPLEMENTARY PENSION INSURANCE The pension plan includes 99 % of all employees having concluded employment agreements of indefinite duration. Since 2007, when the company switched from a net to a gross way of raising funds, there were no significant changes and modifications in the area of voluntary supplementary pension insurance. In accordance with the Personal Income Tax Act, the maximum amount recognized as a tax deduction of the voluntary supplementary pension insurance is valorized at the annual level. Premium valorization is usually carried out at the beginning of the year, in January. We remain one of the rare employers who are taking care in this way for the long-term social security of our employees.

3.1.8 AGENCY WORKERS, STUDENT WORK As in previous years, in 2009 the company also resolved the substitution of labour force during summer holidays and annual leaves, as well as the increased volume of work due to the seasonal nature of the com-

D . L A Š K O

are able to continue their work at positions of employment which are adjusted to their capabilities for work.

P I V O V A R N A

sability. In addition to preventive and curative care for their health, we also make sure that disabled persons

D .

The company applies preventive measures to prevent the emergence of new restrictions arising from di-

pany, by employing agency workers and students. The greatest need for more people for employment in 2009 was caused by the revised method of work on the shipment of products in business units. In 2009, upon introduction of the new information system, we also changed the method of shipping products; namely, we introduced order picking, which represents work that was, prior to the change, carried out by transport operators, but now the order picking is carried out by our workers. So far, we have employed a hired labour force only during seasonal months, but the new methods dictate the need for employment throughout all months of the year, and that is why there were six people hired per distribution centre in Celje and in Maribor, and two in the distribution centre Ljubljana at the end of 2009. These workers were mediated via the employment agency Adecco, with which the company concludes annual agreements on the employment of workers. In addition to commission agents and stockkeepers at the business units, Adecco also referred two

A N N U A L

R E P O R T

2 0 0 9

operators for the call centre, two auxiliary water supply maintainers for the working unit Vodovod and one trainee in the kitchen. On average, the company utilized 16 hired workers per month, the most and for the longest duration being commission agents and stockkeepers of finished products at business units. As already mentioned, students help us during the season. In the same way, the company replaced the work of former seasonal workers in the bottling plant. Prior to the commencement of work, six part-time students carried out a medical exam and examination for managing a forklift, and then carried out work as a forklift driver in the bottling plant throughout the entire season. Also the work of a seasonal worker in the production plant was replaced by a student in the previous year. It has happened on more than one occasion that the work quality of certain students exceeds the level of some employees in the company. In addition, in the previous year our company also received a large number of applications for carrying out holiday workâ&#x20AC;&#x201D;in total in received 180 different applications. From the received applications, 113 were resolved favourably with hired applicants; among the refused ones, certain applicants failed to meet the con-

112

ditions of employment or their applications arrived late. The minimum condition for employing a student is considered having completed the first year of secondary school.

P I V O V A R N A

L A Ĺ K O

D .

3.1.9 WAGES AND SALARIES In 2009 the average gross salary in Pivovarna LaĹĄko, d. d., totalled EUR 2,052, which is 9.7 % more than the previous year. The net average salary increased by 9.8 % compared to 2008 and totalled EUR 1,282. During the year the company discontinued a long-term practice, where employees got to choose between receiving the entire salary in cash or receiving part of it in cash and the other part in shares, with a proportion of 10 % shares and 90 % in cash. The reason for discontinuation was mainly the indeterminate legal base for this form of payment. We expect this matter to be resolved in 2010, and the company will be able to continue the interrupted long-term practice in the future as well.

3.1.10 WORKING HOURS Work time analysis indicates that the multi-annual downward trend of possible stock of working time in 2010 slightly levelled, and the company will no longer reduce this indicator in the future on account of employment. In 2009, we find that the efficiency of working time is almost the same as one year ago and totals 80 %. We further note that during the analysed period the number of hours of public holidays and absences due to maternity leave decreased, while on the other hand we record an increase of sick leaves. Particular attention wil be paid to this issue in the coming period. In 2009, there were on average 19 employees absent due to sick leave, which is 2.6 employees more than in 2008.

In the future the company needs to pay a great deal of attention to particular movements of working hours in such way that the movement trends will be positive.

3.1.11 SAFETY AND HEALTH AT WORK In 2009, based on positive legislation Pivovarna Laško, d. d., carried out the following activities:

• s afety inspection of working equipment was performed regularly, in accordance with instructions on safe work. Authorized firms carried out such inspection on working equipment for which the three-year period for examination expired, in the following plants: malt-house, welding furnace I. and welding

natural and living environment (noise impact on the environment),

• i nspection of hand-held fire extinguishers and inspection of hydrants, including measurements, • t raining of employees whose validity of the examination for safety at work expired after two years. In the current year 108 trainings were realized with examinations. Trainings were carried out also for all newly employed workers and students,

•p eriodic medical examinations of employees took place in the Health Centre in Laško and Health Centre

R E P O R T

the distribution centres in Maribor and Celje. In addition, measurement was also implemented in the

A N N U A L

carried out in Savinja Hotel,

•m easurements of microclimatic conditions (summer and winter) on working places were carried out in

2 0 0 9

furnace II., basements, engine room, boiler room and bottling plant C. Equipment inspection was also

in Celje. The total number of examinations carried out was 64. We took into account the implemented examinations or findings and recommendations of the occupational health specialist doctor when we allocated workers to their working places. In the further process two workers were addressed and evacuated with assessment I. (unable to work),

• a ll employees were provided with appropriate working safety protection equipment, in accordance with the risk assessment.

113

In 2009, the company recorded seven injuries at work and one outside work (on the way from work). Due

distribution centre in Ljubljana, and the third in the distribution centre in Maribor. Decisions for elimination were issued for the deficiencies discovered during the inspection. Deficiencies were eliminated and the Labour Inspectorate was informed regarding this elimination.

L A Š K O

pational safety measures. The first inspection was carried out in Pivovarna Laško, d. d., the second in the

P I V O V A R N A

Three inspections were carried out by the Slovenian Labour Inspection regarding implementation of occu-

D .

to injuries at work, there were 72 days lost this year.

3.2

C o m m u n i c at i o n Nowadays, companies cannot operate being isolated, but only in close connection with the environment.

Pivovarna Laško builds mutual communication between the company and its internal and external environment, which is the environment represented by the various publics affecting its business operation.

3.2.1 COMMUNICATING WITH INVESTORS In accordance with the law, Pivovarna Laško provides investors and potential investors with sufficient, accurate and timely information. The latter refers to the business performance of the company in the past and to the company's development strategy in the future, of course within the framework of our disclosure

A N N U A L

R E P O R T

2 0 0 9

policy. Pivovarna Laško, the shares of which quote on the Ljubljana Stock Exchange, is according to the law obliged to publish prescribed information on the website of the aforementioned Ljubljana Stock Exchange (seonet.ljse.si), and also to publish this information on the website of the company. The set of activities with investors and potential investors includes regular general meetings of shareholders, convening press conferences alongside reporting on interim and annual operating results, individual meetings of representatives of the company with representatives of investment companies, and announcement of interim and annual reports in print media and on the company's web sites.

3.2.2 COMMUNICATING WITH MEDIA Via press releases, the company regularly informs the media of the activities of the company, its business operations, plans and strategic guidelines. Relations with the media are based on correct participation,

114

prompt response and valid standards of public relations.

3.2.3 COMMUNICATING WITH BUYERS

P I V O V A R N A

L A Š K O

D .

A call centre has been at our buyers' disposal from 1 January 2009. Ten operators are available at the tollfree telephone number 080 1825, who accept customer orders for all products of Pivovarna Laško Group. The company introduced this project mainly to create simpler and more user friendly business operations. The call centre, which is located in the distribution centre, takes orders for all distribution channels (trade, catering and institutions).

3.2.4 COMMUNICATING WITH EMPLOYEES Motivated and happy employees and healthy mutual relations represent the key to successful business operations. In Pivovarna Laško employees are promptly informed with relevant information and memos for the public. At the lowest frequency points in the company, bulletin boards are available and generally expanded, and the indispensable Internet is generally used as a tool for communication. As the second communication tool we can mention internal websites—the intranet of Pivovarna Laško and of Pivovarna Laško Group, which were initially established due to a need to disseminate total documentation from the project groups, which consisted of members from different departments, and from different companies within the group. Use of the new tool has increased alongside the increased needs for mutual communication between different organizational departments and mixed project teams, and it is a great place for applying particular regulations, acts and other documentation of the company. All this has contributed to greater business performance of our business operations. The house magazine of Pivovarna Laško (Laški Pivar) was introduced once again in 2009. It was intended both for employees in Pivovarna Laško and colleagues from Pivovarna Laško Group. In addition to the above, it is also received by retirees of Pivovarna Laško, media representatives and other relevant members of the public.

P I V O V A R N A

L A Š K O

D .

115

A N N U A L

R E P O R T

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3.3

R e s p o n s i b l e at t i t u d e t o t h e s o c i a l e n v i r o n m e n t Throughout the history of our investments, particularly in the last 20 years, the company has disclosed a substantial proportion of inputs into construction and renewal of the local infrastructure, which indicates the awareness of the company on integration into the local environment, the meaning of life, and the meaning of socially responsible behaviour. The products of Pivovarna Laško reflect tradition and the highest standards of quality. As a responsible company, Pivovarna has made sure that the production processes with waste emissions minimize the impact on the environment, and they are conducted in accordance with very strict European environmental stan-

A N N U A L

R E P O R T

2 0 0 9

dards. Wastewater emissions are drawn in their own wastewater treatment plant.

P I V O V A R N A

L A Š K O

D .

116

Pivovarna Laško is famous for its inclination to sports; according to the size of its share combined with the companies in the Group, it is, namely, the biggest sponsor of Slovenian sport. Here, Pivovarna Laško as well as the Group are active in the field of sponsoring the culture and development of local communities, as well as health and welfare. Our awareness of social responsibility is also reflected by donations intended in the majority to humanitarian projects, non-profit activities, and to supporting the development of smaller clubs and associations from the local environment.

3.4

E n v i r o n m e n ta l p r o t e c t i o n Inhabitants with their activities are increasingly influencing the complete image of our planet; as a result, negative global changes of our living environment occur, such as: climate change, shrinkage of green spaces, reduction of the drinking water supply, ozone depletion, rising CO2 levels in the atmosphere, acidification of sea water and the like. In Pivovarna Laško we are well aware that a responsible comprehensive approach to managing the environment and company energy efficiency will be necessary to reduce the impact of our technological processes on our environment. To promote sustainable development of the company, environmental management represents an integral

materials and energy, and reducing emissions and waste,

• i n development and investment activities our company uses the method of preventing negative impacts on the environment from the initial phase,

•p roduction and products are planned in such a way as to minimize the negative impacts on the environment,

• b y educating and training we are raising the environmental awareness of employees by acting responsibly in our regular work,

•w e plan and carry out activities for efficient environmental management on a regular basis,

R E P O R T

•w e introduce the best available technology in our technological procedures for providing efficient use of

A N N U A L

•w e measure and monitor impacts on the environment we cause by carrying out our activity,

2 0 0 9

part of company management, which has set the following environmental objectives:

•w e encourage and promote environmental awareness in our suppliers, outsourcers and other business partners. In Pivovarna Laško we made a decisive step in applying renewable energy resources with concrete multiannual improvements in the operation of the anaerobic wastewater treatment plant. Biogas generated from

117

wastewater represents a significant share of the energy-generating product in the boiler room.

3.4.1 IPPC – ENVIRONMENTAL PERMIT The most important confirmation of our diligent management, in accordance with the environmental legislation, is certainly the acquisition of an environmental IPPC permit for the production plant Pivovarna Laško, d. d. The aforementioned environmental permit was issued to the company by ARSO on 26 February 2009 for a period of 10 years, and an application has to be submitted for the extension of the permit after the expiry of such 10-year period. In accordance with the environmental permit in 2009, the company implemented noise measurements in the living environment, as well as monitoring wastewater and all emissions release of substances into the atmosphere. All measured values correspond to the norms according to the environmental regulations and provisions.

3.4.2 ECOLOGY IN BEER PRODUCTION In Pivovarna Laško, d. d., we have improved the parameters of technological wastewater and operation of the anaerobic wastewater treatment plant in such way that biogas from our own wastewater treatment plant replaces an already noticeable proportion of our natural gas consumption.

D . L A Š K O

funds for ecological investments.

P I V O V A R N A

state institutions in the form of introducing »green tax reform«, which would provide for targeted return of

D .

Production companies continue to invest funds into the ecologically most advanced technologies and deduct duties for environmental nuisance, and at the same time they expect a response from the responsible

Detergent consumption in the production of beer represents a significant share of pollution in technological wastewater. By applying technological measures, the company reduced the detergent consumption and replaced most of it with biologically more degradable detergents; in so doing we reduced the impact on our living environment. By applying rational measures, the company has reduced the consumption of fresh water in the complete area of production and bottling of beer. Due to the decreased quantity of beer sold, the specific consumption of water still slightly increased, to 6.27 hl per 1 hl of beer sold.

800

1,000 600

800 600

400

400 200

200 0

0 2007

118

2008

(in hl)

P I V O V A R N A

L A Ĺ K O

D .

Water consumption per 1 hl of sold beer

Water consumption in thousand m3

1,200

Beer sales in thousand hl

A N N U A L

R E P O R T

2 0 0 9

Water consumption from 2007 to 2009

Beer sales Water sales

2009

2007

2008

2009

5.9678

5.8462

6.2666

By applying a strict approach this year, the company has further improved the system of separate collection of solid waste on two ecological islands in the company. We have been separately collecting more than 15 types of waste and have in this way reduced the quantity of directly deposited municipal waste by 25 % in 2009. Due to company's efforts to reduce the emissions of substances into the atmosphere, we continued intensive research on degradation of fresh brewer's yeast as our by-product. The Chemical Institute of Ljubljana and Biotechnical Faculty are conducting tests on possibilities to apply fresh yeast to devices for the production of biogas, which is in terms of ecology a much more acceptable possibility than the current energy-consuming drying of yeast. For 2010 we plan to discontinue the production of dry brewer's yeast and to transmit our substratum partly in commercial biogas plants, and also to begin with practical testing of degradation at our own anaerobic wastewater treatment plant. A remaking of our wastewater treatment plant is the final objective of this multi-annual project, which could greatly improve the ecological and energy efficiency of the company. We will reduce the quantities of emissions of substances into the atmosphere, reduce the consumption of steam for drying the yeast, and at the same time produce biogas from fresh yeast, which will replace a part of the consumption of natural gas as the primary energy-generating product for the production of heat.

3.4.3 WASTE DIATOMACEOUS EARTH In beer filtration, at the end of the process and filter cleaning, a waste filter cake (diatomaceous earth) is generated, which represents a mixture of filtration agents and organic suspended particles, which are separated from the beer during the filtration process.

Together with the Pulp and Paper Institute and Municipal Company of Laško, we successfully completed a project to obtain Slovenian Technical Approval for the material which is obtained by mixing waste diatomaceous earth and wood ash. The material is generated from two waste materials and is practically applicable in construction, consolidation and preparation of roads or as a sealing layer for closing municipal landfills. This way the company utilized an innovative approach to solve the problem of waste, since a new useful material is obtained from two waste substances.

3.4.4 CLEANING TECHNOLOGICAL EQUIPMENT IN THE PRODUCTION OF BEER At the beginning of the year, a change of particular cleaning agents was conducted throughout the entire production; the new agents are ecologically more acceptable, meaning they have a higher level of biological

zero additives (sequesters, durfactants) and in this way reduced concentrations of strongly burdening agents in waste technological waters. By replacing the agents, we also achieved an important reduction in the total expense of supplying detergents, in addition to a greater ecological effect.

3.4.5 WATER RESOURCES Works on the water distribution system were in the previous year also conducted, mainly according to the plan that we set, and there were no major deviations from the plan. Throughout the year we provided suffi-

R E P O R T

burden the ecosystem in watercourses. We have selected particularly those agents containing fewer or even

A N N U A L

phosphoric acid, which has a negative impact on operation of the wastewater treatment plant and severely

2 0 0 9

degradability. More attention was paid to areas where it is not strictly necessary to use agents containing

cient quantities of drinking water, both in the Laško water distribution system as well as in the surrounding water distribution systems. Due to quite favourable hydrological conditions, no water transports were necessary, with the exception of the Šentrupert system. Also in the last year we replaced a lot of conduit sections which were in poor condition. On these water distribution systems we carried out health surveillance of drinking water adequacy in

119

accordance with the Rules on drinking water and other legislation. The company also has an implemented system, HACCP, for water distribution systems, where a plan for monitoring drinking water from water the company that the most significant objective in the activity of drinking water supply comprises providing

facilities. Regular clearing and maintenance of the water distribution facilities is carried out preventively according to the prepared HACCP plans, and we keep relevant records regarding this matter. In addition to regular maintenance, the following major investment maintenance works were carried out in the previous year:

•R econstruction of the Globočaj drainage reservoirs supplying the water distribution system Trije Studenci; in addition to all reservoirs, the environment of these reservoirs was also cleaned. After the reconstruction, these reservoirs have an efficacy of 1.5 l/s. This substantially increased the reliability of the operation of the water distribution system,

•P articipation with the Municipality of Laško on the construction of the water supply distribution network Vrh nad Laškim-Tevče-Reka. Approximately 180 new users will be connected to this water distribution system,

• Participation with Municipality of Laško on the construction of the water distribution system Trnovo. Approximately 40 new users will be connected to this water distribution system, • A renewal of the pipeline in Spodnja Rečica was conducted and 30 water connections replaced, •C hange of the Štenge–Huda Jama pipeline, in length of 1,500 m, • I nstallation of a pipeline and placement of a new hydrant in Trobni Dol, •W e carried out reconstructions of pipelines in the settlements Podšmihel, Pristava, Strmca, Brezno and Polana,

• We began replacing the entire pipeline in Šmohor.

P I V O V A R N A

Within the framework of preventive measures for providing health adequacy of the drinking water, we carry out regular tours of water distribution facilities and have also established remote control of specific

L A Š K O

D .

health adequacy of the drinking water for all users.

D .

supply to the connection of the user to the drinking water supply is defined, because we are well aware in

3.4.6 MAINTENANCE AND ENERGY ENGINEERING The energy devices and equipment the company has at its disposal have entirely met the needs which constitute one of the links in the technological process, namely, within the framework of norms for these purposes. At the same time, in the area of energy engineering, by monitoring and surveillance of generated emissions as a result of energy conversion, we strove to achieve the minimum number of units or, together with the checked measurements, to fall within the framework of units as they are statutorily set.

3.4.7 WASTEWATER TREATMENT PLANT Also in 2009, under optimum conditions the company continued operating the anaerobic wastewater

A N N U A L

R E P O R T

2 0 0 9

treatment plant of Pivovarna Laško. Inflow and outflow monitoring by the Institute of Public Health Maribor from the wastewater treatment plant is carried out on a regular basis, which indicates a high degree of purification—as much as 88 % average efficiency of degradation of KPK in technological wastewater. The total annual quantity of wastewater from the brewery was 399,758 m3, which was 17,258 m3 less than last year. In the operation of the wastewater treatment plant, biogas is also generated from the wastewater, which contains minute concentrations of unwanted impurities (sulphur, carbon dioxide) after chemical treatment. At the annual level 544,000 m3 of biogas is generated, which is partly used for heating wastewater at the wastewater treatment plant; most of it is used as an alternative source of heat in the boiler room for the production of steam. This year the company compensated 300,000 m3 (8 % of consumption) of natural gas with biogas as a renewable source of energy.

3.4.8 REVIEW OF INVESTMENT AND EXPENSES IN ECOLOGY Review of investments in ecology

120

( in EUR )

Investments in water resources Water resource Lurd D .

Water supply maintenance

P I V O V A R N A

L A Š K O

Indemnities water supply

D .

Water resources water supply – Rudnik

2007

2008

2009

684,068

630,001

593,786

37,801

762

23,593

654

1,000

1,125

645,613

604,646

592,661

Water

50,165

54,614

62,446

Water reimbursements

35,312

32,805

Water concession

14,853

19,302

29,641

Wastewater

526,224

930,251

641.785

Wastewater treatment plant

455,723

879,835

641,785

69,001

48,916

Environmental duty – wastewater Indemnity to fishing club

1,500

Waste – environmental duty

254,975

161,988

417,813

Expenses for environmental protection - waste packaging

224,080

136,341

394,366

8,983

8,393

9,336

Environmental duty for waste packaging Environmental duty for electrical and electronic equipment - abroad Easte diatomaceous earth treatment Total

21,872

17,205

14,074

1,515,432

1,776,854

1,715,830

*We already covered the environmental duty in the amount of 22,469 EUR with advance payments in 2008.

In bad economic times an integrated, efficient and rational approach to ecological solutions will mean an additional competitive advantage for the company in managing production, ecology and energy engineering.

With the objective to reach a high standard of ecological operation, the company adopts innovative approaches and works with all employees. Competent professional workers from the field of production and energy attend external trainings (seminars, conferences and trades) several times a year, which represents an important source of new information to raise the process efficiency and achieve better ecological performance of the company. Knowledge is then, throughout the year, transferred to all employees, because in the company we strive to establish an efficient system of environmental management with high environmental awareness, training and practical processes

A N N U A L

R E P O R T

2 0 0 9

implementation for all employees.

P I V O V A R N A

L A Ĺ K O

D .

121

P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

2 0 0 9

FINANCIAL REPORT

122

4.1

A u d i t e d f i n a n c i a l s tat e m e n t s o f P i v o va r n a L a š k o , d . d . , f o r t h e f i s c a l y e a r 2 0 0 9, by I F R S

4.1.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D. AS AT 31.12.2009 ( in EUR )

Expl. note

2009

2008

Non-current assets

1,141,449

Property, plant and equipment

57,099,819

62,769,267

Investment properties

5,063,768

5,356,236

Non-current investments in subsidiaries

4.A

263,323,570

295,906,766

Investments in associated companies

4.B

1,594,000

Available for-sale financial assets

4.C

55,840,789

61,563,643

Long-term loans

30,307

46,754

Long-term operating receivables

670,316

785,228

Long-term deferred tax receivables

13,355,542

5,602,705

Current assets Non-current assets held for sale

29,506,918

1,083,307

11,123,139

9,772,082

Short-term operating receivables

10.A

15,051,078

14,543,104

Short-term receivables for overpaid income tax

10.B

818,322

Short-term loans

561,213

3,200,000

Cash in banks, cheques and cash in hand

129,283

90,103

Deferred costs and accrued revenues

942

3,082

Total current assets

27,948,962

29,510,000

TOTAL ASSETS

426,792,082

462,682,048

123

P I V O V A R N A

L A Š K O

D .

Inventories

27,948,020

R E P O R T

1,865,009

A N N U A L

433,172,048

D .

398,843,120

Intangible fixed assets

2 0 0 9

ASSETS

4.1.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D. AS AT 31.12.2009 (continuation)

A N N U A L

R E P O R T

2 0 0 9

( in EUR )

Expl. note

2009

2008

EQUITY

129,302,643

175,571,742

Majority capital

129,302,643

175,571,742

Share capital

36,503,305

Capital reserves

85,561,447

102,377,721

Profit reserves

4,841,293

34,551,368

Revaluation surplus

2,396,598

Net profit and loss

LIABILITIES

297,489,439

287,110,306

4,388,271

1,443,562

Non-current employee liabilities

15.A

1,456,443

1,377,905

Non-current reservations

15.B

2,931,828

65,657

Non-current reservations

Non-current liabilities Non-current financial liabilities Non-current operating liabilities Non-current deferred tax liabilities Current liabilities

54,263,786

160,263,378

16.A

54,263,786

160,263,378

16.B

232,451,652

124,778,033

Current operating liabilities

17.A

17,248,664

15,553,639

Current financial liabilities

17.C

215,202,988

109,224,394

6,385,730

625,333

Total current liabilities

238,837,382

125,403,366

TOTAL LIABILITIES TO ASSET RESOURCES

426,792,082

462,682,048

Accrued costs and deferred revenues

P I V O V A R N A

L A Š K O

D .

124

3,833,373 (1,694,025)

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivovarna Laško, d. d.

4.1.2 PROFIT AND LOSS STATEMENT OF PIVOVARNA LAŠKO, D. D., FOR THE PERIOD 1 JANUARY–31 DECEMBER 2009 ( in EUR )

Expl. note

2009

2008

Net sales revenues

99,662,537

108,463,850

Changes in inventories of products and work in progress

1,337,663

12,574

Other operating revenues

961,266

Costs of goods, material and services

(63,040,020)

(78,831,896)

Employee benefit expenses

(10,666,177)

(9,929,922)

and tangible fixed assets

(6,908,571)

(8,626,088)

Non-current reservations

(261,542)

(144,882)

Write-downs of value

(2,549,990)

(385,309)

Other operating revenues

(1,637,055)

(1,316,037)

OPERATING PROFIT

16,898,111

12,867,447

3,625,157

Financial revenues

4,090,990

Financial expenditures

(73,650,021)

(30,110,355)

(52,660,920)

(8,775,369)

PROFIT BEFORE TAXATION

8,467,539

R E P O R T A N N U A L

2 0 0 9

Amortization and depreciation of intangible

Tax NET PROFIT/LOSS OF ACCOUNTING PERIOD

7,687,102

(44,973,818)

2,681,313 (6,094,056)

Net profit/loss per share

(5.1412)

(0.6967)

Adjusted net profit/loss per share

(5.1412)

(0.6967)

125

D . L A Š K O P I V O V A R N A

varna Laško, d. d.

D .

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivo-

4.1.3 STATEMENT OF OTHER COMPREHENSIVE INCOME OF PIVOVARNA LAŠKO, D. D. FOR THE PERIOD 1 JANUARY–31 DECEMBER 2009 ( in EUR )

Expl. note

Net profit/loss of accounting period OTHER COMPREHENSIVE INCOME

2 0 0 9 R E P O R T A N N U A L D . D . L A Š K O

(44,973,818)

(6,094,056)

(1,502,509)

(56,106,476)

Profit/loss from property revaluation

5,462,555

Deferred taxes from revaluation

65,734

10,128,784

OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE PROFIT

(1,436,775)

(40,515,137)

(46,410,593)

(46,609,193)

Total comprehensive income per share

(5.3055)

(5.3282)

Diluted total comprehensive income per share

(5.3055)

(5.3282)

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivovarna Laško, d. d.

P I V O V A R N A

2008

Financial assets for sale

126

2009

36,503,305

102,377,721

25,606,794

246,617

(246,617)

8,944,574

34,551,368

(1,694,025)

Net Profit from previous years

Net profit

3,833,373

Revaluation surplus

Total Transactions with owners

- -

141,494 141,494

- -

- 141,494

141,494 -

- -

141,494

Revaluation surplus of financial investments

Related taxes with items comprehensive income

Total Changes in comprehensive income in year 2009

- - - -

(44,973,818)

(1,436,775)

65,734

(1,502,509)

Creating reserves for own shares

Drawing reserves for own shares

Total Changes in capital

85,561,447

(16,816,274)

3,650,331

(21,956,463)

- (6,201,081)

- - 84,625 84,625 (20,498)

- 1,190,962 (226,119) 964,843 1,211,460

P I V O V A R N A

L A Š K O

D .

A N N U A L

2 0 0 9

4,841,293

(29,851,569)

(226,119)

226,119

(28,157,544)

(1,694,025)

R E P O R T

(8,944,574)

(84,625)

(964,843)

(1,694,025)

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivovarna Laško, d. d.

36,503,305

Cover current loss

31 December 2009

Cover losses by the assembly

1,694,025

2,396,598

44,973,818

Changes in capital

Net profit of the year

129,302,643

(226,119)

226,119

(46,410,593)

65,734

(1,502,509)

(44,973,818)

141,494

175,571,742

TOTAL CAPITAL

Changes in comprehensive income

Disposal of own shares

Transactions with owners

1 January 2009

Share Capital Legal Reserves for Treasury Other profit Total profit ( in EUR ) capital reserves reserves treasury shares shares reserves reserves

4.1.4 STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO, D. D., FOR THE PERIOD 1.1.–31.12.2009

127

L A Š K O

D .

A N N U A L

R E P O R T

2 0 0 9

- -

- (72,320)

(72,320)

686,514

(758,834)

(8,742,384)

Related taxes with items comprehensive income

(6,094,057)

(40,515,137)

10,128,784

(56,106,476)

5,462,555

Drawing reserves for own shares

Total Changes in capital

102,377,721

25,606,794

246,617

72,320

(246,617)

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivovarna Laško, d. d.

36,503,305

Cover losses of current year

31 December 2008

Distribution of the rest net profit

8,944,574

(413,201)

34,551,368

(340,881)

7,748,035

(4,400,032)

12,148,067

(1,694,025)

(7,748,035)

4,400,032

(12,148,067)

3,833,373

Changes in capital

income in year 2008

Revaluation surplus of financial investments

Total Changes in comprehensive

equipment and intangible fixed assets

Revaluation surplus of property, plant,

Net profit of the year

Changes in comprehensive income

686,514

(758,834)

44,348,510

Payment dividends

12,148,067

Total Transactions with owners

994,349

34,964,569

9,357,775

(174,297)

174,297

Disposal of own shares

25,606,794

Increase of own shares

102,377,721

36,503,305

175,571,742

(340,881)

(46,609,194)

10,128,784

(56,106,476)

5,462,555

(6,094,057)

(8,814,704)

(8,742,384)

686,514

(758,834)

231,336,521

Net profit from Net Revaluation TOTAL previous years profit surplus CAPITAL

Transactions with owners

1 January 2008

Share Capital Legal Reserves for Treasury Other profit Total profit ( in EUR ) capital reserves reserves treasury shares shares reserves reserves

4.1.5 STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO, D. D., FOR THE PERIOD 1.1.–31.12.2008

P I V O V A R N A

128

4.1.6 CASH FLOW STATEMENT OF PIVOVARNA LAŠKO, D. D., FOR THE PERIOD 1 JANUARY–31 DECEMBER 2009 ( in EUR )

Expl. note

2009

2008

CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations

22,263,060

18,469,130

Net cash generated from operating activities

22,263,060

18,469,130

Purchase of intangible assets Purchase/sale of available for-sale financial assets

4.B

(3,060,468)

(797,477)

(19,784,995)

(910,220)

(849,611)

4.C,11

(11,426,792)

(2,332,071)

Interest received

332,487

223,475

Dividends

3,758,503

8,236,604

Net cash generated/used in investing activities

(12,103,967)

(14,506,598)

R E P O R T

Purchase of property, plant and equipment

A N N U A L

Cash payments for financial assets on associated company

2 0 0 9

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES Interest paid

Purchase of treasury shares

(12,549,810) 141,492

(15,220,507) (413,202)

Proceeds from borrowings

16,17

25,205,202

110,040,183

Repayments of borrowings

16,17

(22,916,797)

(89,705,462)

Dividends paid to company's shareholders

Net cash used/generated in financing activities

- (10,119,913)

(8,742,384)

129

(4,041,372)

39,180

(78,840)

Cash and cash equivalents at the beginning of year

90,103

168,943

Cash and cash equivalents at the end of year

129,283

90,103

The explanations and policies of pages 130 to 179 are an integral part of the Financial Statement of Pivovarna Laško, d. d.

L A Š K O

CASH AND CASH EQUIVALENTS

P I V O V A R N A

NET DECREASE/INCREASE IN

D .

4.1.7 COVERING THE LOSS FOR THE FISCAL YEAR Net loss for the fiscal year 2009 amounts to EUR 44,973,818. ( in EUR )

2009

2008

Net loss of accounting period

(44,973,818)

Accumulated profit from previous years

(6,094,057)

4,400,032

Remaining net loss:

A N N U A L

R E P O R T

2 0 0 9

Accumulated profit from previous years to cover net loss

4,400,032

Accumulated profit to cover net loss

6,201,081

Regulatory reserves to cover net loss

21,956,463

Capital reserves to cover net loss

16,816,274

BALANCE SHEET LOSS 31 December

(1,694,025)

The management proposes to the Supervisory Board and the General Meeting of Shareholders to cover the net loss of 2009 in the amount of EUR 44,973,818 from profit reserves, statutory reserves and from capital surplus.

4.1.8 EXPLANATORY NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS

130

GENERAL INFORMATION Pivovarna Laško, d. d., is a public limited company, inscribed at the District Court in Celje under the

D .

of beer, malt and water, and it also performs retail and wholesale trade.

P I V O V A R N A

L A Š K O

is obligated to have an annual audit. The main activity of the company is production and distribution

D .

number Srg 95/00673 under No. reg. contribution 1/00171/00. It is classified as a large company and

Pivovarna Laško, d. d. is the parent company of Pivovarna Laško Group with its headquarters in Slovenia: Trubarjeva ulica 28, 3270 Laško, Slovenia. Ordinary shares of the company are listed on the Ljubljana Stock Exchange under the PILR label. Share capital of the company is worth EUR 36,503,304.96, which represents 8,747,652 freely transferrable nominal shares. There are no limitations on paying out dividends and other capital payments.

ACCOUNTING POLICIES In the year 2009 the same accounting policies were applied as in preceding years. The financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, which include the standards and interpretations issued by the IASB and SIC. The consolidated financial statements have been compiled in compliance with the International Financial Reporting Standards (IFRS). The main accounting policies used in the preparation of these consolidated financial statements are indicated in the continuation:

a) Standards and interpretations effective in the current period The following amendments to the existing standards issued by the International Accounting Standards

Board and interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period:

• I FRS 8 »Operating Segments«, adopted by the EU on 21.11.2007, subject to annual periods beginning on or after 1.1.2009.

• I FRS 1 »First-Time Adoption of IFRS« and IAS 27 »Consolidated and Separate Financial Statements« – cost of investment in a subsidiary, jointly controlled entity or associate, adopted by the EU on 23.1.2009 (effective for annual periods beginning on or after 1.1.2009).

• I FRS 4 »Insurance Contracts« and IFRS 7 »Financial Instruments: Disclosures« – improving disclosure on financial instruments adopted by the EU on 27.11.2009 (subject to annual periods beginning on or after 1.1.2009).

• I AS 39 »Financial Instruments: Recognition and Measurement« and IFRS 7 »Financial Instruments: Disclosures« – reclassification of financial assets adopted by the EU on 9.9.2009 (effective on or after 1.7.2008).

• I AS 1 (revised) »Presentation of Financial Statements« – a revised presentation, adopted by the EU on 17.12.2009 (effective for annual periods beginning on or after 1.1.2009).

• I AS 23 (revised) »Borrowing Costs«, adopted by the EU on 10.12.2008 (effective for annual periods beginning on or after 1.1.2009). From that date, the necessary expenses for interest on loans are earmarked

R E P O R T

(effective for annual periods beginning on or after 1.1.2009).

A N N U A L

table financial instruments and obligations arising upon liquidation adopted by the EU on 21.1.2009

2 0 0 9

• I AS 32 »Financial Instruments: Presentation« and IAS 1 »Presentation of Financial Statements« – put-

for compulsory capitalized fixed assets.

• I FRS 2 »Share Based Payment« – required conditions and cancellations adopted by the EU on 16.12.2008 (effective for annual periods beginning on or after 1.1.2009).

• I FRIC 9 »Reassessment to Embedded Derivates« and IAS 39 »Financial Instruments: Recognition and Measurement« – embedded derivates adopted by the EU on 30.11.2009 (effective for annual periods ending on or after 1.1.2009).

131

• I FRIC 11 »IFRS 2 – Group and Treasury Share Transactions«, adopted by the EU on 1.6.2007 (effective for annual periods beginning on or after 1.3.2008).

The adoption of these amendments to the existing standards and interpretations has not led to any changes in the company's accounting policies.

b) Standards and interpretations issued by IASB by not yet adopted by the EU At the date of authorization by the EU of these financial statements, the following standards, revisions and interpretations were in issue but not yet effective: • IFRS 1 (revised) »First-time Adoption of IFRS«, adopted by the EU on 25.11.2009 (effective for annual periods beginning on or after 1.1.2010). • IFRS 3 (revised) »Business Combinations«, adopted by the EU on 25.11.2009 (effective for annual periods beginning on or after 1.1.2010). • IAS 27 »Consolidated and Separate Financial Statements«, adopted by the EU on 3.6.2009 (effective for annual periods beginning on or after 1.7.2009). • IAS 32 »Financial Instruments: Presentation« – accounting for a rights issue, adopted by the EU on 23.12.2009 (effective for annual periods beginning on or after 1.1.2011). • IAS 39 »Financial Instruments: Recognition and Measurement« – eligible hedged items, adopted by the EU on 15.9.2009 (effective for annual periods beginning on or after 1.7.2009). • IFRIC 12 »Service Concession Arrangements«, adopted by the EU on 25.3.2009 (effective for an-

D . L A Š K O

teraction«, adopted by the EU on 16.12.2008 (effective for annual periods beginning on or after 1.1.2009).

P I V O V A R N A

beginning on or after 1.3.2009).

• I FRIC 14 »IAS 19 – The Limit on Defined Benefit Assets, Minimum Funding Requirements and Their In-

D .

• I FRS 13 »Customer Loyalty Programmes«, adopted by the EU on 16.12.2008 (effective for annual periods

nual periods beginning on or after 30.3.2009). • IFRIC 15 »Agreements for the Construction of Real Estates«, adopted by the EU on 22.7.2009 (effective for annual periods beginning on or after 1.1.2010). • IFRIC 16 »Hedges of a Net Investment in a Foreign Operation«, adopted by the EU on 4.6.2009 (effective for annual periods beginning on or after 1.7.2009). • IFRIC 17 »Distributions of Non-Cash Assets to Owners«, adopted by the EU on 26.11.2009 (effective for annual periods beginning on or after 1.11.2009). • IFRIC 18 »Transfers of Assets from Customers«, adopted by the EU on 27.11.2009 (effective for annual periods beginning on or after 1.11.2009).

A N N U A L

R E P O R T

2 0 0 9

The company decided not to apply these standards, amendments and interpretations before their effective dates. The Group anticipates that the adoption of these standards and amendments to the existing standards and interpretations will have no material impact on the financial statement of the company in the period of initial application.

c) Standards and interpretations issued by IASB but not yet adopted by the EU At the date of authorization by the EU of these financial statements, the following standards, revisions and interpretations were in issue but not yet effective:

• I FRS 9 »Financial Instruments« (effective for annual periods beginning on or after 1.1.2013). • I FRS 24 »Related Parties Disclosures« – simplifying disclosure requirements for companies related to the government, and explaining the definition of related parties (subject to annual periods beginning on or after 1.1.2011).

• I FRS 1 »First-time Adoption of International Financial Reporting Standards« – additional exemptions for users who use IFRS for the first time (subject to annual periods beginning on 1.1.2010 or later).

132

• I FRS 2 »Share Based Payment« – the money paid for a payment transaction for shares in the group (subject to annual periods beginning on 1.1.2010 or later).

• I FRIC 14 »IAS 19 – The Limit on Defined Benefit Assets, Minimum Funding Requirements and Their Interaction« (effective for annual periods beginning on or after 1.1.2011). 1.7.2010 or later).

P I V O V A R N A

L A Š K O

D .

• I FRIC 19 »Removal of the Obligation to Equity Instruments« (effective for annual periods beginning on

1. Acknowledgement of Revenues Revenues are acknowledged on the basis of sale of products, services and goods and acceptance of these goods by the buyers (without VAT and excise duty), anticipated receivables, rebates and discounts. Revenues from sale are acknowledged when the important risks and benefits of the ownership of the goods are transferred from the salesperson to the buyer. Other realized revenues are acknowledged on the following basis:

•R evenues from interest – they are acknowledged when they are created, unless there is doubt of extraction, when the amount is written-off for a supplementary value. Revenues from interest are then acknowledged on the basis of the interest rate, which serves for discounting any future money flow.

•R evenues from dividend – when the right of the company to receive payment from dividend is created. 2. Investments into Affiliated Companies An affiliated group company is a company where the controlling company has the controlling capital share or controlling influence due to any other reason and which enters the group for which joint financial statements are prepared.

An investment into an affiliated company is valued on the original historical purchase price. Revenues from profit sharing are acknowledged as revenue from financing, when they are paid or when the General Meeting approves a preposition on profit sharing and payment of the divided. The investments are weakened when the supplementary values of the investment are smaller than its accounting value. Loss due to the weakening is acknowledged immediately in the profit and loss statement.

3. Investments in Associated Companies Associated companies are companies in which the company has between 20 % and 50 % of the voting rights, and where it has a significant impact on business, but they are not controlled. Investments in asso-

cost, the difference is recognized as a financial expense and demonstrable impact on the level of income.

4. Reporting Currency a) Functional and presentional currency Figures presented in the financial statements of the company are nominated in euros (EUR), which is, at the same time, also the functional and presentational currency of the company.

R E P O R T

authorized by the business appraisers. In the event that the estimated value of the investments is lower than

A N N U A L

indicate the need to weaken. To this end, valuations are carried out of investments in associated companies

2 0 0 9

ciated companies are valued at cost, but must be reviewed each year, and may not exist if the circumstances

b) Transactions and situations Foreign exchange operations are calculated into the presentational currency based on the rate valid on the day of the operations. Profits and losses resulting from these operations and from conversion of assets and liabilities denominated in a foreign currency are acknowledged in the profit and loss statement.

133

Exchange differences resulting from notes and other monetary financial means acknowledged at their fair value are included in the profit and losses from transactions with foreign currencies. Exchange differences

5. Non-Tangible Assets Non-tangible assets include investments into obtained patents, licenses, trademarks, good name, and nontangible assets in development, computer software and other nontangible assets (MRS 38). A non-tangible asset is acknowledged as exclusive if there is a probability that future economic benefits will come to the company and if the purchase price can be measured with certainty. Pivovarna Laško, d. d. uses a purchasing value model (IFRS 38.74.); this is why the nontangible assets are acknowledged by their purchasing prices, which is reduced by the sum of the accumulated depreciation and loss due to the weakening.

a) Patents, trademarks and licences Expenses for purchasing patents, trademarks and licenses are capitalized and depreciated with the use of a linear depreciation method during its »life span« (depreciation period). In case the life span cannot be determined, it is not depreciated but an attempt at weakening is carried out annually. When there is a need to re-valuate, the value of non-tangible fixed assets need to be evaluated and written off in the amount of their supplementary value.

D . L A Š K O

in the surplus from re-valuation, which is the main part of the reserves.

P I V O V A R N A

of its fair value. Exchange differences for for-sale available securities are acknowledged directly in the capital

D .

with non-monetary figures, like shares in possession for trading, are shown as part of an increase or decrease

b) Other non-tangible assets When computer software is not a component part of the computer hardware, it is treated as a non-tangible asset. Other non-tangible assets are acknowledged according to their purchasing price, which is lowered by the accumulated depreciation and loss due to weakening. Other non-tangible fixed assets have a life span of 10 years.

6. Tangible Fixed Assets Tangible fixed assets include property, equipment and small tools. Immovable property was valued in 2008 according to the revaluation model, unlike in the preceding years in which the cost model was applied. Equipment and small tools are valued according to the cost model, decreased by depreciation and impair-

A N N U A L

R E P O R T

2 0 0 9

ment. Depreciation is accounted for on the basis of a linear method. Expected functional life span for individual groups of funds is as follows: Real Estate

20–40 years

Manufacturing devices and machines

4–10 years

Computer equipment

2–4 years

Vehicles

4–8 years

Other equipment

3–7 years

Land is not depreciated since it is believed to have an unlimited life span. Assets which are being attained are not depreciated either, until they are available for use. Since the accounting value is higher than the estimated supplemental value, assets need to be re-valuated for the estimated supplemental values (weakened) – MRS 36.

134

Revenues and losses resulting from alienation of land, buildings and equipment are determined according to their accounting value and have an influence on revenue and loss from operations. Reusable containers (barrels, bottles and crates) are acknowledged with other tangible fixed assets with a three- or four-year life span.

D .

acknowledged as an individual asset, which is only acceptable when it is expected that all future economic

P I V O V A R N A

L A Š K O

along with creation expenses. Any subsequent expenses are included into the accounting value or they are

D .

The costs of financial liabilities for financing investments into tangible fixed assets are acknowledged

benefits connected to this item are considered in the Group and that the expenses of this item can be measured correctly. The accounting value of spare parts is not particularly acknowledged. Costs for all other repairs and maintenance are acknowledged in the profit and loss statement for the period in which they appeared.

7. Investment Property Investment property is real estate (land and buildings—or parts of buildings—or both), which are owned by the company or under financial leasing for the purpose of attaining rent or enlargement of the property value. Investment property is not used for production or sales of goods or services or for administrative purposes or for regular operations. Land or buildings are determined as investment property, when they have been mediated for enlargement of a long-term investment value or given into operating lease and are not intended to be sold in the immediate future. Investment property is acknowledged as asset only when there is a possibility that future economic gains will be flowing into the company and the acquisition price can be measured correctly. To measure investment property, the company transferred in 2008 from the cost model to the fair value model. Investment property is decreased by the accumulated depreciation according to the straight-line method, whereby taking into account the useful life of individual investment property and accumulated impairment losses.

8. Financial Assets The company classifies its investments into the following categories: financial assets at their fair value through profit and loss; loans and receivables; financial investment liable for forfeiture; and available-for-sale financial assets. The classification depends on the asset for which the investment was acquired.

a) Financial assets at their fair value through profit and loss This category is divided into two subcategories: financial assets intended for trade, and financial assets determined by their fair value through the profit and loss when acknowledged. The investments acquired with the purpose of creating profits from short-term (less than one year) price fluctuations are classified as intended for trade and belong to short-term assets. These assets are measured through their fair value, and

b) Loans and receivables Loans and receivables are uncollateralized financial assets with fixed or determined payments, which are not listed on the operating market. They are included into short-term assets, unless they are due more than 12 months after the date of the balance sheet. In this case they are classified as longterm assets. Loans and receivables are acknowledged with operating and other receivables according to their payment value with consideration of the effective interest rate.

R E P O R T

any investment which would fit into this category.

A N N U A L

and loss statement for the period in which they were created. In 2009 and 2008 the company did not have

2 0 0 9

the realized/unrealized profits and losses resulting from changes of the fair value are included in the profit

c) Own financial investments liable for forfeiture Investments with fixed forfeiture, which the management intends to keep until forfeiture, are classified as own investments liable for forfeiture and are included among the long-term assets. The company did not have any investments which would fit into this category.

135

d) Available-for-sale financial assets Available-for-sale financial assets are outstanding financial assets which have either been classified into

wledged directly in the capital. The company assesses if there is an objective proof that the value of the financial assets or groups of financial assets have been weakened for every dated balance sheet. In the case of available-for-sale financial assets, the typically or lengthy lowering of the fair value under the purchase price is considered an indicator for weakening of the shares. If there is indeed such a proof for available-for-sale financial assets, then the accumulated lossâ&#x20AC;&#x201D;measured as the difference between the purchase price and current fair value, minus the loss due to the weakening of the financial assets acknowledged in the profit and loss statementâ&#x20AC;&#x201D;is removed from the capital and is acknowledged in the profit and loss statement. Removal of the weakening acknowledged in the profit and loss statement for a capital instrument cannot be annulled.

9. Weakening of non-financial assets Assets which have an unlimited life span and are not depreciated are tested for weakening annually. Assets which are depreciated are checked for weakening every time events or circumstances point to weakened assets. Loss due to weakening is acknowledged in the amount by which the accounting value exceeds its supplemental value. The supplemental value is the one that has the higher fair value, which is lowered for costs of sale and user value. Assets are divided into the smallest units that can define flow of assets and are independent from other units (money-creating units), for the purpose of determining the weakening. The value of a good name is determined annually according to the need for weakening.

D . L A Ĺ K O

correctly. If the assets are measured according to their fair value, the re-valuation of the fair value is ackno-

P I V O V A R N A

cording to their fair value or according to the purchase value, if the purchase values could not be determined

D .

this category or have not been classified to any category at all. The assets in this category are measured ac-

10. Non-short-term assets for sale Non-short-term assets (alienation group) for sale are those non-short-term assets for which the accounting value is determined to be settled mostly by sale within the next 12 months and not with further use. The mentioned assets are valued according to the lower of the accounting or the fair value, reduced by costs of sales.

11. Stock The stock is kept according to which value is lowerâ&#x20AC;&#x201D;the purchase of returned stock, with the use of the average price method. The value of finished goods and current production includes all manufacturing costs, which include costs of the manufacturing material, manufacturing labour costs, depreciation, services and other manufacturing costs. Net returned value is assessed according to the sales price during regular opera-

A N N U A L

R E P O R T

2 0 0 9

tions, lowered by the costs of finishing and sales.

12. Operating receivables Operating receivables are acknowledged at the beginning according to their fair value, and afterwards they are measured according to the payment value with the valid interest rate method, lowered by the weakening. Weakening of the operating receivables is formed when the company expects that it will not be able to claim the whole amount of the receivables due. The height of the weakening represents the differences between the accounting values and current value of (expected) assessed future cash flows, discounted according to the current interest rate. The amount of the weakening is acknowledged in the profit and loss statement.

13. Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents include cash in the register, deposits which can be accessed at banks and investments into the instruments of monetary market, without overdrawing the bank accounts. Overdrafts of the account ba-

136

lance are included among short-term financial liabilities in the balance sheet.

14. Provisions Provisions are acknowledged when the company shows a legal obligation as a result of past events for whipossible. Provisions cannot be formed in order to cover any future losses from operations.

P I V O V A R N A

L A Ĺ K O

D .

ch there is a large possibility that it will have to settle this liability, and a reliable assessment of this liability is

15. Provisions for severance pay and jubilee awards Net liabilities of the company connected with the long-term benefits due to years in service, with the exception of pension schemes, are the sum of incomes which the employees receive for their work in the current and past years. These liabilities are calculated with the anticipated importance of a unit's method and are discounted to current value.

16. Deferred taxes The deferred tax is acknowledged as a whole, with the considered liability method based on temporary differences between the tax based on assets and liabilities and the acknowledged tax amount in the financial statements. Deferred tax is calculated with the use of the tax rate (and legislation) which is statutory and is valid on the date of the balance statement and is expected to be used when the claim for the deferred tax is realized or when the liability of the deferred tax is settled. Claim for the deferred tax is acknowledged if there is a possibility that the profit will be available in the future, from which temporary differences can be used. Liabilities for deferred tax are acknowledged when assets are re-valuated. In the balance statement the claim and the liability for deferred tax are acknowledged in the offset amount. In 2009, the tax rate is 21 %, and from 2010 onwards 20 %.

17. Operating liabilities Operating liabilities are supplier loans for purchased goods and purchased services and liabilities towards employees, the state, the owners and others. The liabilities are acknowledged in the accounting books, if there is a possibility that their settlements will cause lowering of the factors which enable business benefits and the settling amount can be reliably measured. At the beginning a liability is acknowledged according to its fair value; afterwards it is measured according to its payment price with the use of the current interest rate method.

18. Financial liabilities Financial liabilities are acknowledged at the start according to their fair value, without any transaction

19. Share capital Ordinary shares are classified in the capital. Transaction costs directly connected with issuing of new shares which are not connected to a company takeover are shown as lowering of the capital. Any surplus of the fair value of the received payment above the accounting value, if the issued new shares are acknowledged as paid capital surplus. (Ed.: ?? Not a complete sentence.)

R E P O R T

statement for the period of the entire financial liability.

A N N U A L

the current interest rate value. Any difference between the revenues is acknowledged in the profit and loss

2 0 0 9

costs. In the following periods the financial liabilities are measured according to the payment value with

20. Own shares If the company has gained new own shares in the fiscal year (PILR), then the paid amount, including the transaction costs without tax, is deducted from the whole capital as own shares (treasury shares) until the shares are withdrawn, re-issued or sold. The company must form provisions for own shares in the same amount in the balance statement for this fiscal year. Provisions for own shares are released when the own shares are alienated or withdrawn for the benefit of the source for which they were formed. If the company

137

sells or re-issues its own shares later, then all received payment without the transaction costs and connected tax effect are included into the equality capital. Also, upon selling, the difference between the sales and acco-

Until they have been approved by the Shareholders' General Meeting, the anticipated dividends are treated as revenue retained.

22. Reporting in segments Operating segments produce/perform products or services which are different from the products and services of other segments as far as the risks and benefits are concerned. Regional (geographical) segments ensure products or services within a certain economic environment which is subject to risks and benefits different from risks and benefits in other economic environments.

P I V O V A R N A

21. Dividends

L A Ĺ K O

D .

Own shares are to be used for the purposes arising from Article 247 of the Companies Act.

D .

unting value of own shares shall be recouped directly within the capital and shall not affect the profit or loss.

MANAGING THE COMPANY'S FINANCIAL RISKS Managing the financial risks of Pivovarna Laško, d. d., such as credit risk, interest rate risks, currency risks and liquidity risks, represents an integral part of this report. It is described in more detail on pages 92 and 93 of this annual report. In the financial part of the report, this matter is described in more detail on pages 171 and 172, in explanatory note number 28.

EXPLANATIONS WITH NON-CONSOLIDATED FINANCIAL STATEMENTS

A N N U A L

R E P O R T

2 0 0 9

1. Intangible assets

Year 2009 ( in EUR )

Licenses and other IFAs

IFA in acquisition

Total

COST OF PURCHASE 1 January 2009 Direct gains Transfer from investments in progress Retraining Disposals 31 December 2009

974,536

418,618

1,393,154

159,786

7,175 1,805,801 (608) 2,786,904

(7,175) - - 571,229

1,805,801 (608) 3,358,133

ACCUMULATED VALUE ADJUSTMENT

138

1 January 2009 Depreciation on the year Retraining Disposals

186,660

1,055,367

(608)

CURRENT COST 1 January 2009

P I V O V A R N A

D .

1,493,124

L A Š K O

31 December 2009

251,705

31 December 2009

251,705

(608) 1,493,124

1,293,780

571,229

1,865,009

722,831

418,618

1,141,449

The company does not have any pledged intangible assets on 31.12.2009.

Year 2008 ( in EUR )

Licenses and other IFAs

IFA in acquisition

Total

COST OF PURCHASE 1 January 2008 Direct gains

543,543

849,611

Transfer from investments in progress

430,993

(430,993)

31 December 2008

974,536

418,618

1,393,154

184,846

66,859

251,705

722,831

418,618

1,141,449

358,697

R E P O R T

31 December 2008 1 January 2008

A N N U A L

CURRENT COST

139

D .

31 December 2008

L A Ĺ K O

Depreciation on the year

P I V O V A R N A

1 January 2008

2 0 0 9

ACCUMULATED VALUE ADJUSTMENT

L A Ĺ K O

D .

(326,332) 105,546,319

222,605

(3,636,025)

299,826

108,659,913

Production plant and machinery

24,819,092

(775,851)

796,895

889,681

23,908,367

Other plant and equipment

A N N U A L

R E P O R T

9,703,542

(144,018)

831,541

(389,706)

9,405,725

Small inventory

2 0 0 9

996,272 - (3,107)

Retraining

Transfer on investment property

Disposals

31 December 2009

95,092,736

(3,537,210)

3,279,050

95,350,896

18,443,904

(668,458)

1,545,721

1,278,487

16,288,154

6,361,951

(144,017)

3,200

(389,704)

1,177,073

5,715,399

685,861

(1,879,162)

206,614

2,195,559

162,850

Capital assets in acquisition

8,047,057

8,582,208

31 December 2009

1 January 2009

29,404,653

28,196,539 13,309,017

10,453,583

7,620,213

6,375,188

3,690,326

3,341,591

162,850

685,861

CURRENT COST

5,742,738

987,301

Depreciation on the year

3,762,272

1 January 2009

ACCUMULATED VALUE ADJUSTMENT

33,939,277

(563,272)

8,047,057

Disposals

31 December 2009

1,098,684 -

33,166,925

28,121

Retraining

Transfer from investments in progress

8,582,208

Direct gains

1 January 2009

COST OF PURCHASE

Year 2009 ( in EUR ) Properties Buildings

2. TANGIBLE FIXED ASSETS

P I V O V A R N A

140 62,769,267

57,099,819

125,641,329

(815,582)

3,200

(1,384,921)

6,721,911

121,116,721

182,741,148

(1,809,473)

(1,830,752)

2,495,385

183,885,988

Total

Capital assets in acquisition

(20,926,817)

13,207,226

40,886,516

8,582,208

33,166,925

(78,195)

716,643

3,436,854

4,506,906

21,955,276 - 3,298,019 - (1,344,928) 23,908,367

106,693,257 - 3,469,120 - (1,502,464) 108,659,913

9,405,725

(3,042,700)

3,194,301

9,254,123

31 December 2008

L A Ĺ K O

4,506,906

1 January 2008

P I V O V A R N A

8,582,208

31 December 2008

CURRENT COST

Transfer on investment property

Depreciation on the year

Disposals

1 January 2008

ACCUMULATED VALUE ADJUSTMENT

D .

12,762,894

29,404,653

3,762,272

(25,672,728)

1,311,378

28,123,622

7,620,213 6,098,390

13,309,017 14,057,434

A N N U A L

16,288,154

95,350,896

R E P O R T

2 0 0 9

1,573,429

3,690,325

5,715,399

(3,042,700)

- (1,313,869)

1,745,137

4,170,086 (1,455,013)

1,077,405

15,856,886

92,635,823

7,680,694

31 December 2008

Disposals

Transfer on investment property

Transfer from investments in progress

Direct gains

1 January 2008

7,231,720

162,850

(23,411,218)

16,342,348

7,231,720

COST OF PURCHASE

Year 2008 Production plant Other plant and Small ( in EUR ) Properties Buildings and machinery equipment inventory

141

46,230,773

62,769,267

121,116,721

(5,811,582)

(25,672,728)

8,304,006

144,297,025

183,885,987

(5,968,286)

(20,210,174)

19,536,649

190,527,798

Total

Disposals of tangible fixed assets are represented by the sale and write-offs of tangible fixed assets. The company did not lease any fixed assets. Since 2008, the company has used its own model of real-estate valuation. Equipment and small tools are valuated in accordance with the purchase value model less depreciation and impairments. The company pledged its tangible fixed assets to insure long-term loans which on 31.12.2009 totalled EUR 37,959,611. The carrying value of the property is EUR 29,164,333 and the book value of pledged equipment is EUR 8,795,278.

A N N U A L

R E P O R T

2 0 0 9

3. Investment property Year 2009 ( in EUR ) Properties Buildings

Investment property in acquisition

Total

COST OF PURCHASE 1 January 2009 Retraining 31 December 2009

578,460 - 578,460

5,766,302

6,344,762

(1,086,497)

4,679,805

5,258,265

ACCUMULATED VALUE ADJUSTMENT

142

1 January 2009

988,526

Depreciation

194,497

Retraining

(988,526)

31 December 2009

194,497

P I V O V A R N A

L A Ĺ K O

D .

CURRENT COST 31 December 2009

578,460

4,485,308

5,063,768

1 January 2009

578,460

4,777,776

5,356,236

Year 2008 ( in EUR ) Properties Buildings

Investment property in acquisition

Total

COST OF PURCHASE 1 January 2008

407,328

12,520,305

Increase in value

Transfer from investments in progress

430,942

Revaluations Disposals 31 December 2008

171,132 - 578,460

12,927,633

430,942

(430,942)

(7,145,959) (38,986) 5,766,302

- -

(6,974,827) (38,986) 6,344,762

8,785,413

Depreciation

255,223

Disposals

(38,986)

Revaluations

(8,013,124)

31 December 2008

988,526

CURRENT COST 31 December 2008

578,460

4,777,776

5,356,236

1 January 2008

407,328

3,734,892

4,142,220

R E P O R T

1 January 2008

A N N U A L

ACCUMULATED VALUE ADJUSTMENT

2 0 0 9

In 2009, the company generated EUR 210,537 of revenue and EUR 321,369 of expenditure from investment property. This investment property also includes property which is not used for carrying out basic activity and which is let by the company. The sports arena Tri Lilije and catering buildings Hotel Hum and

143

Hotel Savinja, as well as Grad Tabor are all registered as investment property.

D . L A Ĺ K O P I V O V A R N A

loans from banks.

D .

Investment property in the amount of EUR 5,780,573 is pledged for insurance of long-term and short-term

4. Long-term financial investments 4. A. Long-term financial investments in subsidiary companies ( in EUR )

Share in capital

2009

2008

SHARES IN COMPANIES OF THE GROUP In Slovenia:

A N N U A L

R E P O R T

2 0 0 9

Pivovarna Union, d. d. Ljubljana

97.889 %

169,265,873

169,010,813

Vital Mestinje, d, o. o.

96.920 %

1,457,761

Radenska, d. d. Radenci

93.801 %

50,018,983

49,147,920

80.831 %

42,413,117

70,689,436

Firma Del, d. o. o. Laško

Delo, d. d. Ljubljana

100.000 %

7,428

Radenska, d. o. o. Zagreb

100.000 %

Radenska, d. o. o. Beograd

100.000 %

Izberi, d. o. o. Ljubljana

100.000 %

263,163,162

290,313,358

Abroad: Jadranska Pivovara – Split, d, d,

99.106 %

5,433,000

RA&LA, d. o. o. Sarajevo

69.230 %

160,408

Eurofruit Sarajevo, d. o. o.

100.000 %

160,408

5,593,408

P I V O V A R N A

L A Š K O

D .

144

Total

263,323,570

295,906,766

Value of total

Net profit/ loss

production of beverages

Stranje 7/a, 3241 Podplat

Slovenia

96.920 %

3,439,455

production of beer and beverages

Boračeva 37, 9252 Radenci

Slovenia

93.801 %

83,758,782

beer production

Trubarjeva 28, 3270 Laško

Slovenia

100.000 %

51,723

wholesale

RA&LA, d. o. o.

Sarajevo

Vranjički put 14, Vranjic, 21210 Solin BiH

Croatia 100.000 %

99.106 %

176,138

4,542,877

newspaper- publishing activity

Delo, d. d.

P I V O V A R N A

L A Š K O

D .

A N N U A L

R E P O R T

Slovenia

2 0 0 9

22.571 %

27,208,503

establishments

Zdraviliška cesta 6, 3270 Laško

hotels and other

22,642,956

Thermana, d. d. Laško

100.000 %

76,770,526

Slovenia

Dunajska 5, 1509 Ljubljana

97.889 %

activity of spa,

Slovenia

Pivovarniška ul, 2, 1000 Ljubljana

Information on associated compani

production of beer and beverages

Union Group

beer production

Jadranska Pivovara – Split, d. d.

Firma Del, d. o. o.

Radenska, d. d.

Vital Mestinje, d. o. o.

(2,050,327)

(11,177,020)

(51,375,314)

4,393

(7,243,840)

1,273

(36,833,235)

47,571

( in EUR )

Percent participation

of year 2009

company

State of the

Seat of the

company

equity ( in EUR )

Activity of the

company

Company name

Information on subsidiary companies

145

According to IAS 27 the company valuates long-term financial investments into affiliated companies by cost model. On 31.12.2009, valuations were performed again by the accredited business appraiser for the purposes of determining impairments. The following companies were valuated; Delo, d. d., including investment in Večer, Pivovarna Union, d. d., Fructal, d. d. and Radenska, d. d. The estimated value of Pivovarna Union, d. d., and its affiliated company Fructal, d. d., as well as the company Radenska, d. d., exceeds the book value of the investment value disclosed in the accounts of Pivovarna Laško, d. d., and that is why no need for impairment exists. The estimated value of investment into Union Group totals EUR 242,760.000 or EUR 549.70 per share and in the company Radenska, d. d., EUR 100,860,000 or EUR 21.24 per share. Based on the appraisal, it was determined that the fair value of the long-term financial investment in the

A N N U A L

R E P O R T

2 0 0 9

company Delo, d. d., totals EUR 42,413,118 or EUR 78.61 per share, which is EUR 28,279,707 less than its value disclosed in accounts before that. Arising from this, the company disclosed financial expenses in the amount of EUR 28,279,707. Long-term financial investments into affiliated companies created in 2009 additional purchases in the amount of EUR 1,126,123. Pivovarna Laško, d. d., increased its investment into the affiliated company Pivovarna Union, d. d., in the amount of EUR 255,060 (0.329 %), Radenska, d. d., in the amount of EUR 871,063 (1.241 %) and Delo, d. d., in the amount of EUR 3,387. Long-term financial investment into the company Jadranska Pivovara – Split, d. d., was in 2009 completely impaired, in the amount of EUR 5,433,000. At the end of the previous year the management of Pivovarna Laško adopted a decision to sell the company or its property (assets). Potential buyers were interested solely in the purchase of property (assets), but the prices they were willing to pay for the property of Jadranska Pivovara were too low and failed to meet the fair value of the land. Finally, the management of Pivovarna Laško decided that in the event it cannot find a suitable buyer, it will terminate production and transfer it to Laško, and maintain the company or restructure it. Covering the losses of Jadranska Pivovara in the past has

146

increasingly burdened the business results of the parent company, and that is why such measure is urgent from the rationalization point of view. Due to the financial insignificance of the companies Firma Del, d. o. o., Laško, and RA&LA, d. o. o., Sarajevo, they will not be dealt with in detail in further text. All other companies are consolidated with the method

P I V O V A R N A

L A Š K O

D .

of full consolidation.

VALUATIONS OF SUBSIDIARY COMPANIES a) Valuation of the company Pivovarna Union, d. d., Ljubljana Valuation was carried out by an accredited business appraiser registered with the Slovenian Institute of Auditors. The valuation was based on the method of the current value of expected cash flows. The subject of the valuation was the majority ownership share of the company (97.889 %), enabling the majority owner to impact the process of adopting decisions on bodies of the company management as well as to impact the formulation of strategy and business decisions (on investments, borrowing and so on). At the same time the majority owner may also squeeze out the existing minority owners. The appraiser conducted the work on the basis of financial statements of the company Pivovarna Union, d. d. When using this method, one first assesses the current value of free cash flows without repayments of interest and the principal value of loans (total equity value), and then adds on the value of the subsidiary company Fructal plus the value of excess financial investments and unnecessary property. From this figure, all financial liabilities and calculated premiums and discounts were deducted. A separate valuation was conducted for the investments in Fructal Group and a 12.3 % share in Poslovni Sistem Mercator. Two methods were used for the valuation of these investments: the method of the current value of expected free cash flows without including debt, and the method of the capitalization of normalized free cash flow without including debt. For the valuation we used the required rate of return on total capital (WACC), which is 7.8 %. At the same time, a method of market comparisons was used as a control method when valuating companies (Pivovarna Union, Fructal and Mercator). On the basis of valuation methods used, the fair market value

of 97.89 % share in Pivovarna Union amounts to EUR 242,760,000 or EUR 549.7 per share, with a possible range from EUR 460 to EUR 640 per share, which is 42.86 % more than the value of the investment presented in the books of account of Pivovarna Laško, d. d.

b) Valuation of the company Radenska, d. d., Radenci Valuation was carried out by an accredited business appraiser registered with the Slovenian Institute of Auditors. The valuation was based on the method of the current value of expected cash flows. The appraiser conducted the work on the basis of the financial statements of the company Radenska, d. d. When using this method, one first assesses the current value of free cash flows without repayments of interest and the principal value of loans (total equity value), which is then deducted by all financial liabilities of the company,

Mercator. Two methods were used for the valuation of these investments: the method of the current value of expected free cash flows without including debt, and the method of the capitalization of normalized free cash flow without including debt. For the valuation we used the required rate of return on total capital (WACC) in the amount of 7.45 %. At the same time, a method of market comparisons was used as a control method when valuating companies (Radenska, Delo and Mercator). On the basis of valuation methods used, the fair market value of a 93.8 % share (by taking into account treasury shares) in the company Radenska amounts to EUR 100,860,000

R E P O R T

conducted for the investments in a 19.2 % share in the company Delo and 2.6 % share in Poslovni Sistem

A N N U A L

way is then increased by excess financial investments and unnecessary property. A separate valuation was

2 0 0 9

and on the value thus obtained premiums and discounts are taken into account. The value obtained in this

or EUR 21.24 per share, which is 101.6 % more than the value of the investment presented in the books of account of Pivovarna Laško, d. d.

c) Valuation of the company Delo, d. d., Ljubljana The valuation, which was carried out by an accredited business appraiser registered with the Slovenian Institute of Auditors, was based on various valuation methods: the method of the current value of expected

147

free cash flows, and the method of comparable transactions based on the multipliers MVIC/Sales and MVIC/ EBITDA.

The following method was used for the valuation of the company: the method of the current value of expected free cash flows without including debt. The valuation is based on the financial statements of Delo, d. d. On this basis, one first assesses the current value of free cash flows without the repayments of interest and the principal value of loans. Following that, the obtained value is deducted by all financial liabilities of the company, and the value obtained in this way is corrected for possible potential liabilities, premiums and discounts, and is increased by the value of surplus funds and excess financial investments. The valuation took into account the business plan of the company Delo, d. d., for 2010 and company potential based on findings from activity analysis, the company and financial data for comparable companies in Slovenia and in the EU. Controlling premium was not taken into account, as the valuation was already based on future yields of the majority owner. For the valuation we used the required rate of return on total capital (WACC) in the amount of 9.7 %. Valuation is based on the assumption that potential investors are mainly strategic investors, which is why a 5 % discount for lack of liquidity was also taken into account. Here, the market share of the company in the market (leading newspaper agency) as well as strategic and political position of the company were also taken into account. On the basis of the methods described above, the evaluated value (100 %) of the company Delo, d. d. equals EUR 52,472,000 or EUR 78.61 per share. Fair value of the long-term financial investment in the company Delo, d. d., which is in 80.83 % ownership of Pivovarna Laško, d. d., totals EUR 42,413,118, which is EUR 28,279,707 less than the value previously presented in the books of account. Reducing the value of these investments is recorded as a weakening and impacts the operating profit of the company through financial expenses.

D . L A Š K O

equals the sum of all future benefits which it brings to its owner.

P I V O V A R N A

of expected free cash flows, in accordance with a general financial assumption that the company's value

D .

The appraiser started work from the assumption that the company's market value equals the current value

d) Valuation of the company Jadranska Pivovara – Split, d. d. Due to the poor financial situation and rationalization, the management of the company Pivovarna Laško, d. d., decided to discontinue production in Jadranska Pivovara and transfer the production to Laško, and to sell the investment or the production plant to the lowest bidder. There is no interest in buying the company, and that is why Pivovarna Laško, d. d., continues with an intensive search for a buyer for the sale of the production plant. No valuation of the investment in the affiliated company Jadranska Pivovara – Split, d. d., was implemented in 2009; there was, however, a valuation made on movable and immovable property of the aforementioned company. Based on the valuation, the fair value of the property totals EUR 10,867,782, the fair value

A N N U A L

R E P O R T

2 0 0 9

of equipment EUR 5,214,130 and its liquidation value EUR 4,481,300. Taking into account indebtedness, Jadranska Pivovara – Split, d. d., has negative capital, and for this reason Pivovarna Laško, d. d., in debit of financial expenses, carried out an impairment of the mentioned investment in the total amount of EUR 5,433,000.

4. B. Long-term financial investments in associated companies

( in EUR )

Share in capital

2009

2008

SHARES IN ASSOCIATED COMPANIES Thermana, d. d. Laško

22.571 %

1,594,000

Total

148

On 31.12.2008 Pivovarna Laško, d. d., owned 358,978 shares of Thermana, d. d., in the amount of EUR 3,837,454, which represented a 13.794 % ownership share in the aforementioned company. In 2009 it obtained an additional 286,025 shares of Thermana, d. d., from Infond Holding, d. d., Maribor, in the amount

D .

accredited business appraiser. Estimated valuation totals EUR 1,594,000 and is EUR 5,303,921 lower than its

P I V O V A R N A

L A Š K O

associated company of Pivovarna Laško, d. d. On 31.12.2009 an investment valuation was carried out by an

D .

of EUR 3,060,468 and with that became its 22.57 % owner; the company Thermana, d. d., thus became an

acquisition value, which is why in 2009 the company disclosed impairment in debit of financial expenses. In 2009 Thermana, d. d., operated at a loss in the amount of EUR 2,050,327.

Valuation of the company Thermana, d. d., Laško Valuation was carried out by an accredited business appraiser registered with the Slovenian Institute of Auditors. The valuation was based on the method of the current value of expected cash flows. The subject of valuation was the minority stake of the company (22.571 %), which does not enable the minority owner to impact the decisions adopted at the management bodies of the company, nor the formulation of strategy and business decisions (on investments, borrowing and so on) and implementation of status changes. The appraiser started work from the assumption that the company's market value equals the current value of expected free cash flows, in accordance with a general financial assumption that the company's value equals the sum of all future benefits which it brings to its owner. For the valuation we used the required rate of return on total capital (WACC) in the amount of 9.0 %. During the valuation, the method of the current value of expected free cash flows without including debt was used, where audited financial accounts of the company for 2009 served as a starting point. The current value of free cash flows without the repayments of interest and the principal value of loans is calculated on this basis. Following that, the obtained value is deducted by all financial liabilities of the company, and the value obtained in this way is corrected for possible potential liabilities, premiums and discounts, and is increased by the value of surplus funds and excess financial investments.

The valuation took into account the business plan of the company Thermana, d. d., for 2010 and company potential based on findings from activity analysis, the company and financial data for comparable companies in Slovenia and in the EU. Business plans are therefore accurate forecasts of future business. Baring in mind the amount of the ownership share and the fact that the majority of owners, including Pivovarna Laško, are interested in sale, the valuation took into account the discount for minority owner in the amount of 5 %. It was estimated that potential investors are mainly strategic investors, for this reason during the valuation of the minority package of shares, a discount for lack of marketability in the amount of 10 % was taken into account based on the analysis of the characteristic of the company's share not quoted on the stock exchange. During the course of these activities, the appraiser also took into account that the majority of owners are not strategic and that most of them are also interested in selling the aforementioned investment

EUR 1,594,000, which is EUR 5,303,921 less than the value previously presented in the books of account. Based on the valuation in 2009, Pivovarna Laško, d. d., disclosed impairment of the financial investment in its books of account in the amount of EUR 5,303,921.

( in EUR )

A N N U A L

4. C. Available-for-sale long-term financial assets

2009

2008

6,948,760

11,169,105

Other investments in shares at the fair value

48,892,029

50,394,538

Total

55,840,789

61,563,643

2009

2008

Other investments in shares at the cost of purchase

R E P O R T

equals EUR 7,062,342 or EUR 2.5 per share, and the value of the investment of Pivovarna Laško, d. d., equals

2 0 0 9

due to their liquidity issues. On the basis of the valuation, the company's fair value (100 % ownership share)

149

61,563,643

124,613,112

Changes in the year: Transfer to long-term financial investment in associated companies Gains Revaluation

(3,837,454)

3,830,333

(1,885,400)

(56,108,360)

(10,771,442)

Transfer from current investments Sales Balance as at 31 December

55,840,789

61,563,643

The value of available-for-sale long-term financial assets fell by EUR 1,885,400 compared to the previous year. The revaluation is mainly related to the new investment in Poslovni Sistem Mercator, d. d., Ljubljana; namely, the value of the aforementioned investment decreased by EUR 1,558,915 due to the fall in the share price on the Ljubljana Stock Exchange. The revaluation effect for investments classified among availablefor-sale assets and valued at fair value method (MELR) influenced the decrease in revaluation surplus and deferred tax liabilities. These types of investments are about minor and short-term price fluctuations below the acquisition price and above it. This fluctuation does not necessarily reflect the business transactions of a

L A Š K O

Balance as at 1 January

D .

P I V O V A R N A

( in EUR )

D .

Movement of available-for-sale assets

particular company, but is often a reflection of comprehensive economic conditions and related liquidity of a particular financial market. As at 31.12.2009 the company owns 317,498 shares MELR (8.43 %), which is EUR 48,631,169 taking into account the fair market value of EUR 153.17 as at 31.12.2009. The fair value of the aforementioned investment was on 31.12.2009 EUR 2,347,012 lower than the original acquisition value, which equalled EUR 50,977,838 or EUR 160.56 per share. The major investments valuated by the cost model include investment in shares of Probanka, d. d., Maribor, in the amount of EUR 5,217,752, investment in shares of Elektro Gorenjska, d. d., in the amount of EUR 974,333 and in shares of the company Ceste Mostovi Celje in the amount of EUR 238,355. On the last day of 2009 a checking of weakening signs was conducted for all available-for-sale assets. On

A N N U A L

R E P O R T

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this basis the company disclosed impairment of the investment in the company Elektro Gorenjska, d. d., in the amount of EUR 382,398. This investment is about a long-term decline in value. Impairment of the investment in Elektro Gorenjska had a direct impact on the operating profit through financial expenses.

5. Long-term loans

( in EUR )

2009

2008

Other long-term loans

30,307

46,754

Total

30,307

46,754

Long-terms loans refer to long-term housing loans granted by the company to its employees for the pur-

150

poses of solving their housing-related issues.

6. Long-term operating receivables 2008

Long-term receivables to others

670,316

785,228

Total

670,316

785,228

P I V O V A R N A

L A Ĺ K O

D .

2009

D .

( in EUR )

Long-term operating receivables refer to the production equipment for the Bandidos brand, which was given on financial lease to a business partner from Belarus.

7. Long-term receivables for deferred tax Long-term receivables and liabilities for deferred tax are calculated on the basis of temporary differences with consideration of liability method with consideration of a 20 % tax rate. ( in EUR )

2009

2008

Long-term receivables for deferred tax

14,482,886

6,718,667

Long-term liabilities for deferred tax

(1,127,344)

(1,115,962)

Net long-term receivables for deferred tax

13,355,542

5,602,705

On 31.12.2009, the company has net long-term deferred tax receivables amounting to EUR 13,555,542,

Movement of long-term receivables for deferred tax ( in EUR )

2009

2008

Begining of the year – claims for deferred tax

6,718,667

3,879,734

Changes in the profit and loss statement

7,687,102

2,681,313

Changes in the balance sheet Total

( in EUR )

Liabilities to employees

77,117

157,620

14,482,886

6,718,667

151

Fair value (financial assets)

Other

A N N U A L

R E P O R T

which is EUR 7,752,837 over the previous year.

2 0 0 9

Total

3,377,174

110,573

3,879,734

Change in the profit and loss statement Change in the balance sheet 31 December 2008

D .

6,914

779,088

1,895,311

2,681,313

157,620

398,901

4,313,882

2,005,884

6,718,667

Change in the profit and loss statement Change in the balance sheet

(8,880) -

9,336,428 77,117

(1,640,446) -

7,687,102 77,117

31 December 2009

390,021

13,727,427

365,438

14,482,886

Increase in long-term receivables for the deferred tax equals EUR 9,437,253 and refers to establishment of receivables arising from impairments in the amounts of EUR 9,413,546 and EUR 23,707 on long-term provisions. From impairment of receivables, investments, loans and guarantees granted to the affiliated company Jadranska Pivovara – Split, d. d., the long-term receivable for the deferred tax increased by EUR 3,634,800, and from the impairment of investment into the affiliated company Delo, d. d., by EUR 2,827,971, investments in the associated company Thermana, d. d., by EUR 530,392 and investment in the company Elektro Gorenjska, d. d., by EUR 76,480. Long-term receivables for deferred tax also increased from impairment of granted loans and corresponding interest to the company Infond Holding, d. d., in the amount of EUR 343,388 and to the company Center Naložbe, d. d., in the amount of EUR 1,195,867, as well as from

L A Š K O

391,987

P I V O V A R N A

1 January 2008

D .

RECEIVABLES FOR DEFERRED TAX

granted guarantees for loans taken by the company Center NaloĹžbe in the amount of EUR 727,530. Part of the increase in the amount of EUR 77,117 refers to revaluation of the investment in shares of Poslovni Sistem Mercator (MELR) to a lower fair value. Reduction in the amount of EUR 1,673,034 mainly refers to covering tax loss in the amount of EUR 1,640,446. Long-term deferred tax liabilities refer to the conversion of long-term financial assets for sale and real estates to fair value, which is reflected in revaluation surplus. The tax rate used is 20 %.

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8. Non-short-term assets for sale ( in EUR )

2008

R E P O R T A N N U A L

2009

Properties for sale

1,083,307

Total

1,083,307

Among non-short-term assets available for sale, the value of the real estate (office and warehouse building with the belonging land in Ljubljana) which the company intends to dispose of within the year was presented. The value of the property was disclosed at purchase value reflecting fair value.

9. Stock

152

( in EUR )

Unfinished production D .

Merchandise

D .

Products Total

L A Ĺ K O

2008

6,914,834

6,737,375

Material and raw material

P I V O V A R N A

2009

791,506

771,099

3,124,663

1,807,418

292,136

456,190

11,123,139

9,772,082

Bearing in mind the previous year, the value of inventories increased by EUR 1,351,057 or by 3.8 %. In particular, the value of finished products increased. There were no pledged inventories and no value adjustments on 31 December 2008. The book value does not exceed the net realizable value of inventories.

Inventory surpluses and deficits ( in EUR )

2009

2008

Inventory surpluses Inventory deficits

32,524

164,953

(26,576)

(77,481)

No substantial deficits or surpluses were established during the regular annual inventory.

10. A. Short-term operating receivables ( in EUR )

2009

2008

Short-term trade operating receivables: on the domestic market

15,117,584

10,158,466

on foreign markets

4,024,214

3,823,539

Less value adjustment

(4,835,059)

(2,599,720)

Total

14,306,739

11,382,285 717,427

Advances

137,949

3,138,051

Less value adjustment

(91,310)

(694,659)

15,051,078

14,543,104

Total

On 31.12.2009, the company presented EUR 15,051,078 of short-term operating receivables, which is EUR 507,974 more than last year. As payment deadlines extended, this mostly resulted in an increase in shortterm operating receivables to domestic buyers, namely to EUR 4,959,118.

R E P O R T

697,700

A N N U A L

Short-term oparating receivables on others

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The disclosed value of short-term operating and other receivables reflects fair value.

Corrected values of short-term operating receivables

( in EUR )

2009

2008

153

(358,712)

(62,599)

(803,827)

Final write-down of receivables Decrease in value correction in the year

2,502,489

501,891

Balance as at 31 December

4,835,059

2,599,720

The corrected value of operating receivables increased due to the impairment of receivables to the company Jadranska Pivovara â&#x20AC;&#x201C; Split, d. d., in the amount of EUR 2,383,773 and defendant receivables in the amount of EUR 118,716, while it decreased for the write-down of receivables in the amount of EUR 62,599 and for recovered defendant receivables in the amount of EUR 204,551.

D .

3,260,368

(204,551)

L A Ĺ K O

2,599,720

Recovered receivables written-down

P I V O V A R N A

Balance as at 1 January

D .

Maturity of the receivables towards buyers ( in EUR )

2009

2008

unmatured

12,265,405

up to 30 days from 30 to 60 days from 60 to 90 days above 90 days

A N N U A L

R E P O R T

2 0 0 9

Balance as at 31 December

8,210,691

1,888,743

894,742

141,897

669,467

66,037

872,943

4,779,716

3,334,162

19,141,798

13,982,005

Receivables towards buyers totalling EUR 1,105,000 are insured with received guarantees. On 31.12.2009, the matured trade receivables of the company amounted to EUR 6,000,000.

10. B. Short-term receivables for overpaid tax on revenue of legal persons ( in EUR )

2009

2008

Receivables for overpaid corporate income tax

818,322

Total

818,322

In the tax return for 2008 the company disclosed a tax loss in the amount of EUR 9,476,557, which is

154

why in 2009 the company did not pay any prepayment of tax on corporate income. In 2009 the company decreased its tax loss by EUR 8,007,700 but is still disclosing an uncovered tax loss in the amount of EUR 1,468,856; for this reason the company will not pay any prepayment of tax on corporate income also in 2010.

P I V O V A R N A

L A Ĺ K O

D .

11. Short-term loans ( in EUR )

2009

2008

Short-term loans

13,310,475

Less value adjustment Total

3,250,402

(12,749,262)

(50,402)

561,213

3,200,000

Movement of short-term loans ( in EUR )

Debt position 112009

New loans in year 2009

Repayments in year 2009

Depreciation Debt position in year 2009 31122009

2,600,000

5,149,262

2,600,000

5,149,262

7,600,000

600,000

111,213

150,000

561,213

3,200,000

12,860,475

2,750,000

12,749,262

561,213

Short-term loans to related persons Short-term loans to other related persons Short-term loans to other unrelated persons Total

Short-term loans granted increased in 2009 for loans granted to the company Infond Holding, d. d., in the amount of EUR 1,700,000, to the company Center Naložbe, d. d. in the amount of EUR 5,900,000 and to the company Jadranska Pivovara – Split, d. d., in the amount of EUR 5,149,262, and decreased by repayment of the loan by the company Delo, d. d., in the amount of EUR 2,600,000 and repayment of others in the amount of EUR 39,174. The company believes that due to insolvency and introduction of bankruptcy proceeding or receivership in the companies Infond Holding, d. d., and Center Naložbe, d. d., it is very likely that it will not recover the loans granted, which is why it established the value adjustment for the total value of loans granted. Also due to the poor financial situation of the company Jadranska Pivovara – Split, d. d., it established a value adjustment for the complete loan granted in the amount of EUR 5,149,262, because it is

reflects fair value.

12. Cash in bank, cheques and cash in hand ( in EUR )

2009

2008

R E P O R T

The average interest rate for short-term loans in 2008 was 5.91 %. The presented value of short-term loans

A N N U A L

On 31 December 2009 the company discloses a loan granted to handball club in the amount of EUR 550,000 and others in the amount of EUR 11,213.

2 0 0 9

very likely that the loan will never be recovered.

Cash in banks

47,967

10,841

Cash in hand and received cheques

23,555

2,900

Monetary resources in foreign currency

57,761

76,349

129,283

90,103

2009

2008

Deferred cost and accrued revenues

942

3,082

Total

942

3,082

Cash items in the process of collection Total

155

14. Capital Capital of Pivovarna Laško, d. d. is represented by called-up capital, capital reserves, profit reserves, transferred profit or loss, surplus from re-valuation of financial investments classified in the sale group and previously undistributed revenue, and the losses from the fiscal year which have not been settled yet. The share capital appears as registered capital (capital with shares or capital share). It is divided into called-up share capital and non-called-up share capital. Non-called-up share capital is a deduction of the share capital. Called-up capital of the company Pivovarna Laško, d. d. is determined in the company's statute, and it adds up to EUR 36,503,304.96. It is divided into 8,747,652 freely transferable nominal shares. Every share gives its owner the right to vote at the annual shareholder's meeting and to participate in profit sharing. The nominal value of the called-up capital is EUR 36,503,304.96.

L A Š K O P I V O V A R N A

( in EUR )

D .

13. Active accrual

On the last day of 2009 capital reserves equalled EUR 85,561,447 and have, based on the suggestion of the management, decreased in 2009 due to covering the current loss in the amount of EUR 16,816,274. Capital reserves in the amount of EUR 102,377,721 were formed from the paid premium account alongside two capital increases from shareholder payments, which exceeded the nominal value of the paid share in the amount of EUR 79,231,564, and the general re-valued correction of the capital, which resulted from maintaining the real value of the capital in the amount of EUR 23,146,157. Among the provisions, statutory reserves in the amount of EUR 3,650,331 have been acknowledged, provisions for own shares in the amount of EUR 1,211,460 and own share as deductions in the amount of EUR 20,498. Upon the suggestion from the Management Board, the company used for the purposes of covering

A N N U A L

R E P O R T

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the current loss in 2009 statutory reserves in the amount of EUR 21,956,463 and other profit reserves in the amount of EUR 6,201,082. In 2009, provisions for own shares increased due to acquisitions of own shares, which in addition to the parent company were purchased also by affiliated companies. In 2009 Pivovarna Laško, d. d., failed to obtain own shares but disposed them or sold to employees 4,499 own shares in the amount of EUR 141,987. On 31.12.2009 Pivovarna Laško, d. d., owns 755 lots; Radenska, d. d., 21,195 lots; Pivovarna Union, d. d., 9,584 lots; and Fructal, d. d., 13,087 lots of PILR shares. Own shares were converted on 31.12.2009 to the quoted price, which was equal to EUR 27.15. The decline in the share value affected the capital reduction in financial accounts of particular companies, and Pivovarna Laško, d. d., as the parent company formed provisions for own shares for the total value of shares owned by the companies of Pivovarna Laško Group. Provisions for own shares increased EUR 1,190,962 and decreased by EUR 226,119 in debit of other profit reserves. Other profit reserves further decreased by the difference between the book and the sales value of sold own shares in the amount of EUR 84,625 and by covering the loss brought forward in the amount of EUR 1,694,025,

156

and based on the decision of the General Meeting and based on the suggestion of the Management Board also for covering the loss of the year 2009 for EUR 6,201,082. In 2009, Pivovarna Laško Group obtained 40,788 lots of own shares in the amount of EUR 1,756,778 and disposed of 6,276 lots of own shares in the amount of EUR 588,409.

D .

their fair value. Long-term and short-term financial investments of the company are evaluated according to

P I V O V A R N A

L A Š K O

The surplus from revaluation was formed from the effects of revaluation on financial assets for sale to

D .

Statutory reserves are used exclusively for covering losses.

their fair value and are classified as investments for sale. Fair value of revenues and losses of these investments is reflected directly in the share capital in the surplus from the revaluation. In 2009, due to share price reductions, the company reduced the revaluation surplus from conversion of MELR shares to their fair value by EUR 1,481,799 and increased the re-valuation surplus from conversion of other long-term financial investments by EUR 45,024. No property valuation was carried out in 2009, and that is why the revaluation surplus arising from this did not change.

Change in the revaluation surplus from revaluation of available-for-sale financial assets: ( in EUR )

2009

2008

Revaluation on fair value Liabilities from deferred tax Total

(1,502,509) 65,734 (1,436,775)

(56,106,476) 11,221,295 (44,885,181)

Ownership structure on 31 December 2009 is as follows: Shareholder Number of stocks

Participation in % 19.590 %

Kapitalska Družba, d. d.

617,488

7.059 %

TCK, d. d.

613,300

7.011 %

Probanka, d. d.

594,628

6.798 %

GB, d. d. Kranj

542,448

6.201 %

Skagen Kon-tiki Verdipapirfond

499,286

5.708 %

NFD 1 Delniški Investicijski Sklad, d. d.

446,465

5.104 %

Publikum Fin, d. o. o.

343,053

3.922 %

Abanka, d. d.

285,463

3.263 %

Banka Celje, d. d.

252,500

2.886 %

Other small shareholders

2,839,336

32.458 %

Total

8,747,652

100.000 %

Bookkeeping value of share of Pivovarna Laško, d. d., on 31.12.2009 amounted to EUR 14.78 in accordance with IFRS; market value per share at the end of 2009 amounted to EUR 27.15, which exceeds the book value

R E P O R T

1,713,685

A N N U A L

NLB, d. d.

2 0 0 9

by 83.7 %.

P I V O V A R N A

L A Š K O

D .

157

15. Provisions and long-term passive accrual 15. A. Provisions for severance pay and long-service awards ( in EUR )

2009

2008

Long-term liabilities to employees

1,456,443

1,377,905

Total

1,456,443

1,377,905

A N N U A L

R E P O R T

2 0 0 9

Provisions are formed for assessed liabilities for severance pay and long-service awards, such as long service of the employees on the dated balance sheet discounted to the current value. The provision has been formed for expected payments.

15. B. Long-term passive accruals ( in EUR )

2009

2008

Reservations

2,931,828

65,657

Total

2,931,828

65,657

Long-term passive accruals pertain to the guarantee granted to Jadranska Pivovara â&#x20AC;&#x201C; Split, d. d., for loans it took from banks, namely, for the long-term portion of loans in the amount of EUR 2,839,598. A portion

158

of long-term passive accruals in the amount of EUR 92,229, however, pertains to disabled people above the quota, which can be used only for the purposes from Article 61 of ZZRZI (investments into operating fixed assets which are linked with work for the disabled, improvement of working conditions for the disabled,

Movement of provisions and long-term passive accruals

P I V O V A R N A

L A Ĺ K O

D .

keeping and creating new job openings for the disabled, etc.).

( in EUR)

Benefits at retirement

Tenure awards Other

Total

1 January 2009

1,064,523

313,382

65,657

1,443,562

2,866,170

3,127,711

Increase

257,231

4,310

Decrease

(175,922)

(7,081)

31 December 2009

1,145,832

310,611

- 2,931,827

(183,003) 4,388,270

Provisions for severance pay and long-service awards, compared to 2008, reduced for actual retirements in the amount of EUR 175,922 and increased due to a change in the employee structure and particularly due to new employments in the amount of EUR 257,231.

16. Long-term liabilities 16. A. Long-term financial liabilities ( in EUR )

2009

2008

(105,998,718)

(6,040,789)

54,263,786

160,263,378

Interests for long-term loans in 2009 were on average 3.43 %. The acknowledged value of long-term financial liabilities reflects its fair value.

Maturity of long-term loans ( in EUR )

2009

2008

Maturity from 4 to 6 years

8,299,304

7,697,264

Maturity from 2 to 4 years

18,441,258

35,826,545

Maturity from 1 to 2 years

27,523,224

116,739,567

Short-term part of long-term financial liabilities

105,998,718

6,040,791

Total

160,262,504

166,304,167

In 2008, Pivovarna LaĹĄko, d. d. has not taken out new long-term loans. In 2010, we will repay EUR

2 0 0 9

Total

166,304,167

R E P O R T

Transfer to short-term financial liabilities

160,262,504

A N N U A L

Long-term loans obtained from banks

159

105,998,718 of long-term bank loans, EUR 27,523,224 in 2011, EUR 18,441,258 in 2012, EUR 6,655,152 in 2013

was insured with a mortgage of EUR 11,279,938. The value of unpaid debts insured by shares, mortgage and pledged real estates on 31 December equals EUR 54,263,786.

16. B. Long-term liabilities for deferred tax

( in EUR )

2009

2008

Long-term deferred tax liabilities

(1,127,344)

(1,115,962)

Total

(1,127,344)

(1,115,962)

Long-term deferred tax liabilities of EUR 1,127,344 decrease the deferred tax receivable. Long-term liabilities for deferred tax have not changed significantly compared to the previous year.

D . L A Ĺ K O

The book value of these shares on 31 December 2009 amounted to EUR 115,321,463. A part of long-term debts

P I V O V A R N A

In order to insure long-term debts, the company pledged 257,603 shares of Pivovarna Union, d. d., or 57.1 % of all shares, and 108,242 shares of Poslovni Sistem Mercator, d. d., or 2.9 % of all shares of the company.

D .

and EUR 1,644,152 in 2014.

Forming long-term liabilities for deferred tax ( in EUR )

Fair value (properties, buildings)

Fair value (financial assets)

Total

LIABILITIES FOR DEFERRED TAX 1 January 2008

2 0 0 9 R E P O R T

11,087,128 (9,971,166)

1,092,511

31 December 2008

1,092,511

23,451

1,115,962

11,382

1,092,511

34,833

1,127,344

Change in the balance sheet

A N N U A L

11,087,128 (11,063,677)

Change in the balance sheet

31 December 2009

Long-term liabilities for deferred tax pertain to property revaluation, which was carried out in 2008 in the amount of EUR 1,092,511, and to revaluation of available-for-sale financial assets to their fair value in the amount of EUR 34,833.

17. Short-term liabilities 17. A. Short-term operating liabilities ( in EUR )

160

2009

2008

Short-term liabilities to companies in the Group as suppliers

4,822,061

3,269,101

Short-term liabilities to other suppliers

6,646,439

8,089,629

1,219,303

672,660

to the state

3,726,686

2,881,717

465,892

328,562

Short-term liabilities for advances Total

P I V O V A R N A

D .

to employees

L A Ĺ K O

D .

Short-term oparating liabilities to others:

Other short-term liabilities

368,283

311,970

17,248,664

15,553,639

Among short-term operating liabilities, the biggest share goes to liabilities to suppliers in the amount of EUR 11,468,500, which have not significantly changed compared to the previous year and which represent 66.5 % of all short-term operating liabilities. This item is followed by liabilities to the State in the amount of EUR 3,726,686 arising from VAT, excise duties, contributions and taxes arising from salaries accounted for in 2009 and paid out in 2010. Compared to the previous year, liabilities to employees, which total EUR 1,219,303, increased due to the accounted Christmas bonus, which was not paid out in 2008.

17. B. Short-term liabilities for tax payment On 31.12.2009 as well as on the last day of 2008, the company does not disclose any liability to corporate income tax. In 2008 the company disclosed a tax loss in the amount of EUR 9,476,557, which is how the company had no basis for the calculation of corporate income tax. In 2009 the company reduced the tax loss by EUR 8,202,231; however, it is still disclosing an uncovered tax loss in the amount of EUR 1,468,856, which is why it also does not disclose a basis or liability for corporate income tax for the year 2009.

17. C. Short-term financial liabilities ( in EUR )

2009

2008

1,654,675

2,309,403

Short-term loans obtained from the companies in the Group

26,400,000

21,442,985

Short-term loans obtained from banks

80,398,453

78,929,470

751,142

501,747

215,202,988

109,224,394

Other short-term financial liabilities Total

The value of short-term financial liabilities, equalling on the last day of 2009 to EUR 215,202,988, increased by EUR 105,978,594 compared to the previous fiscal year. The increase pertains particularly to the short-term portion of long-term loans.

Movement of short-term loans Debt position New loans Repayments ( in EUR ) 1.1.2009 in year 2009 in year 2009

Short term part of long-term loans

Debt position 31.1.2009

Banks

84,978,571

11,935,539

16,515,657

105,998,718

186,397,171

Other lenders

21,442,985

13,202,450

8,200,000

26,445,435

106,421,556

25,137,989

24,715,657

105,998,718

212,842,606

Total

In 2009 the company paid off EUR 16,515,657 of bank loans and took out EUR 11,935,539 of new loans

2 0 0 9

Short-term financial liabilities for interest from loans

6,040,789

R E P O R T

105,998,718

A N N U A L

Short-term part of long-term financial liabilities

161

at these banks. The company took out a short-term loan in the amount of EUR 10,200,000 at the affiliated company Radenska, d. d., and paid off a loan in the amount of EUR 6,400,000, and also took a loan in the

from Firma Del, d. o. o., in the amount of EUR 2,450. In associated companies the short-term indebtedness in 2009 increased by EUR 5,002,450. In 2009, the average interest rate for short-term loans from banks totalled 5.39 %, and for granted shortterm loans from companies in Pivovarna Laško Group 5.7 %. The declared value of short-term financial liabilities reflects fair value. In order to insure short-term debts, the company pledged 539,516 shares (80.83 %) of Delo, d. d., 3,739,803 shares (73.88 %) of Radenska, d. d., 182,692 shares (40.50 %) of Pivovarna Union, d. d., 209,256 shares (5.56 %) of Poslovni Sistem Mercator, d. d., 213,115 shares (6.27 %) of Probanka, d. d., Maribor, 270,648 shares (1.56 %) of Elektro Gorenjska, d. d., and 645,003 shares (22.57 %) of Thermana, d. d., Laško. The book value of these shares on 31 December 2009 amounted to EUR 191,676,219. One part of short-term debts was insured with a mortgage and another part by pledging real estates. The book value of pledged movable and immovable property on 31 December 2009 amounted to EUR 31,743,440. In addition, short-term liabilities are also insured with receivables, whose value on 31 December amounts to EUR 6,000,000, and by pledging the property of the company Fructal, d. d., the book value of which on 31 December 2009 amounted to EUR 10,306,713. The value of unpaid debts insured by shares, mortgage and pledged real estates on 31 December 2009 equals EUR 183,589,785. Short-term loans taken at banks in the amount of EUR 2,807,386 are not subject to insurance, while short-term loans in the amount of EUR 26,445,435, which the company hired at its affiliated companies, are insured with bills.

D . L A Š K O

amount of EUR 300,000. It increased short-term loans with capitalization of interest to the loan obtained

P I V O V A R N A

500,000. In addition to the above, the company also paid off a loan to the company Fructal, d. d., in the

D .

amount of EUR 3,000,000 at the affiliated company Union, d. d., and paid off a loan in the amount of EUR

18. Passive accruals ( in EUR )

2009

2008

Accrued costs and deferred revenues

6,385,730

625,333

Total

6,385,730

625,333

Passive accruals have grown scientifically, mainly due to recognition of liabilities arising from the guarantee granted for the loan which the affiliated company Jadranska Pivovara – Split, d. d., took at banks and was

A N N U A L

R E P O R T

2 0 0 9

unable to repay it on its own due to its poor financial situation, as well as due to the pledge of shares of the company Radenska, d. d., for the loan hired by the company Center Naložbe, d. d. The value of the guarantee for the loan of Jadranska Pivovara – Split, d. d., amounted to EUR 5,110,524; however, only the short-term portion of the guarantee for the loan, which is due in 2010, was disclosed on passive accruals in the amount of EUR 2,270,926, while the long-term portion of the guarantee was disclosed in long-term passive accruals. In 2009 the former management of the company, pledged, for a loan in the amount of EUR 6,250,000, which was taken at Nova Kreditna Banka Maribor by the then-parent company Center Naložbe, d. d., 345,304 shares of Radenska, d. d., which represents 6.8 % ownership share in the aforementioned company. The book value of pledged shares disclosed in the accounts of the company Pivovarna Laško, d. d., on 31 December 2009 amounted to EUR 3,637,650. For this particular value the company increased financial expenses and disclosed short-term passive accruals. Since Center Naložbe, d. d., failed to settle the hired loan at its maturity, the borrower Nova Kreditna Banka Maribor, d. d., on 1 January 2010 addressed an invitation to the company Pivovarna Laško, d. d., to pay off the loan including the interest in the amount of EUR 6,480,497

162

on its behalf; otherwise the bank will be forced to exercise its receivable and collect it by selling the pledged shares. Among passive accruals, the company discloses also liability to employees for non-used hours worked and non-paid annual leaves. This value has not significally changed compared to the previous fiscal year.

P I V O V A R N A

L A Š K O

D .

19. Analysis of revenues from sales and expenses 19. A. Analysis of revenues from sales according to main products ( in EUR )

2009

2008

Beer Other beverages (water)

79,877,888

83,420,281

914,096

1,192,200

17,449,257

20,666,293

Sales revenues of merchandise and materials

554,161

1,606,262

Other

867,135

1,578,814

99,662,537

108,463,850

Sales revenues of merchandise – Horeca channel

Total

Sales revenues decreased by 9.1 % compared to the previous year. Revenues arising from the sale of products and services decreased by EUR 5,548,929 on the domestic market, while on the foreign markets they increased by EUR 27,819. In addition, revenues arising from the sale of merchandise in the Horeca channel also decreased by EUR 3,509,954. From sales revenues, the portion of revenues arising from the sale of beer amounts to 80.2 % and was slightly increased in comparison to the year 2008, when it amounted 76.9 %. The portion of revenues arising from the sale of water amounted to 0.9 % and slightly decreased compared to the previous year. In addition, the share of revenues arising from the sale of merchandise also decreased, which totalled 18 % in 2009 and 20.5 % in 2008.

19. B. Analysis of revenues according to countries ( in EUR )

2009

2008

Sale revenues in Slovenia Sale revenues on foreign markets Total

90,447,006

99,505,889

9,215,531

8,957,961

99,662,537

108,463,850

Sales revenues on the domestic market decreased by EUR 9,058,883 compared to the previous year, while on the other hand they increased on the foreign market by the amount of EUR 257,570. Sales revenues from

( in EUR )

2009

2008

Expenses of merchandise sold – Horeca channel

17,759,586

20,563,780

Expenses of materials and merchandise sold

27,186,764

31,746,498

Expenses of services

18,093,670

26,521,618

Depreciation

6,908,571

8,626,088

Expenses of salaries

7,708,443

7,100,131

Benefits on payments for social security

1,364,976

1,374,818

Other labor costs

1,592,758

1,454,973

37,482

80,526

2,512,508

304,783

261,542

144,882

Revaluation of operating expenses at fixed assets Revaluation of operating expenses at reverse assets Costs of reservations Other operating expenses

1,637,055

1,316,037

85,063,355

99,234,134

163

by EUR 4,559,734 or by 14.4 %; and the cost value of merchandise sold by EUR 2,804,194 or by 13.6 %; and depreciation by EUR 1,717,517 or by 19.9 %. In particular, revaluated operating expenses in current assets increased, in the amount of EUR 2,207,725, and they pertain to the corrected values of operating receivables. In 2009 the company formed a correction in the value of receivables toward the company Jadranska Pivovara – Split, d. d., in the amount of EUR 2,383,773 and to other buyers in the amount of EUR 128,735.

P I V O V A R N A

Operating expenditures have decreased by EUR 14,170,779 or by 14.3 % compared to the previous year. The greatest reduction was recorded in the costs of services, by EUR 8,427,948 or by 31.8 %; the costs of material

L A Š K O

D .

Total

A N N U A L

19. C. Analysis of costs according to categories

R E P O R T

2 0 0 9

foreign markets were generated mostly on the markets of the former Yugoslavia.

19. D. Costs according to functional groups Year 2009 ( in EUR )

Production expenses of sold Expenses of products and goods selling

Cost of general activities

Total

Expenses of merchandise sold – Horeca channel

17,759,586

26,519,506

482,203

185,055

27,186,764

Expenses of services

2,191,579

11,921,257

3,980,834

18,093,670

Depreciation

5,452,840

492,160

963,571

6,908,571

Expenses of salaries

4,809,299

2,559,887

3,296,991

10,666,177

3,608

33,853

37,482

10,020

2,502,488

2,512,508

110,135

50,425

100,982

261,542

Expenses of materials

A N N U A L

R E P O R T

2 0 0 9

and merchandise sold

Revaluation of operating expenses at fixed assets Revaluation of operating expenses at reverse assets Costs of reservations Other expenses Total

464,432

123,004

1,049,619

1,637,055

39,547,812

33,402,150

12,113,393

85,063,355

In 2009 the production costs decreased by EUR 4,699,435, the costs of sale by EUR 6,034,271 and costs of general activities by EUR 3,565,808.

164

The costs of the audit which was implemented by the audit company Deloitte Revizija, d. o. o., amounted to EUR 49,900 for the year 2009. In 2009, at the replacement of the management in Pivovarna Laško, d. d., the aforementioned audit company also carried out a review of the consolidated financial accounts of Pivovarna Laško Group on 30 June 2009. The contractual value of the mentioned works amounted to EUR

P I V O V A R N A

L A Š K O

D .

68,670. Year 2008 ( in EUR )

Production expenses of sold Expenses of products and goods selling

Cost of general activities

Total

Expenses of merchandise sold – Horeca channel

20,563,780

29,485,092

1,910,893

350,512

31,746,497

Expenses of services

2,842,867

13,706,272

9,972,479

26,521,618

Depreciation

6,795,052

649,568

1,181,468

8,626,088

Expenses of salaries

4,707,334

2,120,391

3,102,199

9,929,924

47,578

14,105

18,843

80,526

302,919

1,864

304,783

50,709

36,221

57,953

144,882

Expenses of materials and merchandise sold

Revaluation of operating expenses at fixed assets Revaluation of operating expenses at reverse assets Costs of reservations Other expenses Total

318,615

132,272

865,149

1,316,036

44,247,247

39,436,421

15,550,467

99,234,134

20. Net financial expenses ( in EUR )

2009

2008

Financial revenues without currency differences

4,090,281

8,466,923

Financal revenues on the basis of profit shares

3,758,503

8,236,604

330,872

230,319

906

Financial revenues from loans given Financial revenues from accounts receivable

Financial expenditures without currency differences

(73,647,810)

(30,103,230)

and write-offs of investments

(61,100,211)

(15,608,816)

Financial expenditures from financial liabilities

(12,547,599)

(14,494,414)

(1,502)

(6,509)

Negative currency differences

(2,211)

(7,125)

Positive currency differences

709

616

Net financial expenditures

(69,559,031)

(21,642,816)

R E P O R T

Currency differences from financing

A N N U A L

2 0 0 9

Financial expenditures from impairment

Net financial expenses total EUR 69,559,031 and increased by EUR 47,916,215 compared to the previous year. In 2009, Pivovarna Laško, d. d., disclosed financial expenses in the amount of EUR 61,100,211 due to poor financial investments, loans granted and guarantees given. The company recognized, among financial expenses, the impairment of an investment into the affiliated

165

company Jadranska Pivovara – Split, d. d., in the amount of EUR 5,433,000, a loan granted to the aforementioned company in the amount of EUR 5,149,262, and a guarantee for loans which the company hired in the

and to the company Center Naložbe, d. d., in the amount of EUR 5,979,335. Based on valuations carried out by an accredited business appraiser, the company impaired an investment into the affiliated company Delo, d. d., in the amount of EUR 28,279,707, investment in the company Thermana, d. d., in the amount of EUR 5,303,921, and investment in shares of the company Elektra Gorenjska, d. d., in the amount of EUR 382,398. Similarly as financial expenditure arising from impairment, the company also disclosed the guarantee granted by Pivovarna Laško, d. d., for the loan hired in 2009 by that the then-parent company Center Naložbe, d. d. The guarantee was given in the form of insurance with shares of Radenska, d. d. For insurance purposes 345,304 shares of Radenska were used, the value of which totals EUR 3,637,650 in the business accounts of Pivovarna Laško, d. d., and represents a 6.8 % ownership share in the affiliated company Radenska, d. d. Financial expenses arising from interest are, alongside almost the same indebtedness, lower by EUR 1,946,815 than in the previous year, which is the result of lower interest rates for long-term loans.

L A Š K O

including interest on late payments to the company Infond Holding, d. d., in the amount of EUR 1,716,939

P I V O V A R N A

At the same time, the company disclosed financial expenses for formed adjustments for granted loans,

D .

amount of EUR 5,110,524.

21. Corporate income tax ( in EUR )

2009

2008

Deferred tax

(7,687,102)

(2,681,313)

Total

(7,687,102)

(2,681,313)

( in EUR )

2009

2008

A N N U A L

R E P O R T

2 0 0 9

Profit and loss before taxation

(52,660,920)

(8,775,370)

Tax paid according to the valid tax rate: (11,058,793)

(1,930,581)

Correction of revenue to granted revenues tax level

Revenue tax, calculated according to 21 % or 22 % tax rate

(3,712,102)

(8,252,303)

Non-recognized revenue by tax

65,142,293

16,429,848

Tax base I Changes to the tax base Tax base II Tax reliefs Covering tax loss Tax base III Tax loss Tax

8,769,271

(597,825)

91,874

(8,878,732)

8,861,145

(9,476,557)

(658,914)

(8,202,231)

- (1,274,326) -

(9,476,557) -

166 In 2009, despite the negative profit, the company disclosed on its tax return a revenue surplus above the recognized tax expense in the amount of EUR 8,861,145, which it covered by tax relief in the amount of D .

culated from the uncovered tax loss according to the 20 % rate in the amount of EUR 254,865, which will be

P I V O V A R N A

L A Ĺ K O

company discloses an uncovered tax loss in the amount of EUR 1,274,326. Receivable for deferred tax is cal-

D .

EUR 658,914 and a tax loss brought forward in the amount of EUR 8,202,231. On the last day of 2009 the

offset in the following years from taxable income. The authorities can check the operations of a business and require the payment of additional tax as a result, along with past interest or penalties which have to do with the revenue tax or other taxes and contributions, anytime within five years of when the tax is levied. The company management does not know of any circumstances which could represent significant liabilities that would result in this.

P I V O V A R N A

L A Š K O

D .

167

A N N U A L

R E P O R T

2 0 0 9

22. Exchange rate differences Exchange rate differences from operations and financing considered in the profit and loss statement are as follows: ( in EUR )

2009

2008

A N N U A L

R E P O R T

2 0 0 9

Currency differences – of operating

(169)

Currency differences – in financing

(1,502)

(6,509)

Total

(1,502)

(6,678)

2009

2008

23. Cash flow from operations ( in EUR )

Operating profit of the period

16,898,109

12,867,445

Adjustments for: Depreciation of property, plant and equipment Depreciation of intangible fixed assets

168

Explanatory notes

2.3

6,721,910

8,559,229

186,660

66,859

Write-offs of fixed assets

2,526,368

Net movement in reservations

(782,269)

Currency differences from loans

169

9,434,938

7,967,081

123,093

Changes of reverse capital Inventories and non-current assets for sale Operating and other receivables

(1,351,057)

(452,328)

6.10

(1,956,373)

(3,695,518)

17.18

(762,557)

(4,069,987)

(2,365,396)

Cash made from operations

22,263,060

18,469,130

P I V O V A R N A

L A Š K O

D .

1,782,450

D .

Operating and other liabilities

8.9

24. Reporting in segments 24. A. Business segments Year 2009 ( in EUR )

Beer

Other beverages

Other

Total

914,096

18,870,553

99,662,537

Net sales revenues

79,877,888

914,096

18,870,553

99,662,537

Operating profit and loss

18,430,682

(781,365)

(751,207)

16,898,110

Financial revenues/expenditures (net)

(69,559,030)

Profit and loss before tax

(52,660,920)

Tax

7,687,102

Profit and loss of accounting period

(44,973,818)

Assets by segments

414,524,723

4,137,331

8,130,028

426,792,082

Liabilities by segments

297,489,439

2,554,785

6,704,585

151,746

246,737

7,103,068

Investments

R E P O R T

79,877,888

A N N U A L

Net sales revenues by segments Revenues among segments

2 0 0 9

Expenses without cash

Revenues among segments Net sales revenues Operating profit and loss

beverages

Other

Total

83,420,281

1,192,200

23,851,369

108,463,850

83,420,281

1,192,200

23,851,369

108,463,850

4,456,647

12,867,445

Financial revenues/expenditures (net)

9,175,445

(764,647)

Profit and loss before tax

12,867,445

Tax

Profit and loss of accounting period Assets by segments

461,406,839

Liabilities by segments

287,110,306 8,973,913 7,238,854

341,822

Investments

12,867,445

462,682,048

287,110,306

8,218,046

17,191,959

1,045,412

8,626,088

1,275,209

Expenses without cash flow as consequence

Sales in geographical sections are described in note 24. B.

D .

Net sales revenues by segments

Beer

D .

( in EUR )

169

Other

L A Ĺ K O

Year 2008

P I V O V A R N A

flow as consequence

24. B. Geographical segments ( in EUR )

2009

2008

Slovenia

90,447,007

99,505,889

Foreign markets

9,215,530

8,957,961

Total

99,662,537

108,463,850

Slovenia

423,944,495

455,939,057

Foreign markets

1,253,587

6,742,991

Investments in associated companies

1,594,000

Total

426,792,082

462,682,048

2,554,785

17,095,816

Net sales revenue

A N N U A L

R E P O R T

2 0 0 9

Assets

Investments Slovenia Foreign markets

96,143

Total

2,554,785

17,191,959

2009

2008

25. Profit/loss per share ( in EUR )

170

Profit/loss majority owners

(44,973,818)

(6,094,056)

8,746,897

8,742,953

Weighted number of Net profit per share

(5.14)

(0.70)

Adjusted net profit per share

(5.14)

(0.70)

P I V O V A R N A

L A Ĺ K O

D .

issued ordinary shares

Net revenue per share is calculated with the distribution of net revenue which belongs to the shareholders, with the weighted average number of shares which are on the market during the year, with the exception of the average number of own shares.

26. Comprehensive income per share ( in EUR )

2009

2008

Comprehensive income majority owners

(46,410,593)

(46,609,193)

Weighted number of issued ordinary shares

8,746,897

8,742,953

Comprehensive income per share

(5.31)

(5.33)

Adjusted comprehensive income per share

(5.31)

(5.33)

27. Dividend per share In 2008, the payment of dividends amounted to EUR 8,742,384 or EUR 1 per share. In 2009, the company has not paid dividends.

28. Financial risks 28. A. Credit risk Receivables towards buyers do not represent a significant risk for the company, since it mostly operates with known and reliable buyers, its receivables are insured with the usual insurance instruments, and it has certain limits of allowed debt for an individual buyer, based on the sales contract. It is evident from explanation 9A that the loan risk is negligible.

interest rate above a certain level. During the second half of 2008, as a result of the emerging economic crisis, the referential interest rate began to significantly decrease. The decline also continued in 2009, and that is why the company from the aforementioned financial instrument realized negative effects below the bottom line due to the decline in the referential interest rate. The derivative was, on the last day of the year, calculated at fair value and disclosed among other financial liabilities, and the revaluation effect was recognized as financial expenditure.

Amount of ( in EUR ) interest

Average interest Difference rate in % in interest

Interest Change in fin. rate Decrease in expenditures protection interest interest

171

Actual financial expenditures with respect to interest

12,547,599

4.24

R E P O R T

rate collar, the company has protected a part of its financial liabilities from possible growth of the referential

A N N U A L

The company has been able to partly dismiss this risk in previous years with the use of realization of a financial instrument in the form of an interest rate shield for its acquired long-term loans. With the interest

2 0 0 9

28. B. Interest rate risk

12,547,599

Expenditures in the event of -

15,506,938 2,959,339 D .

2,959,339

Expenditures in the event of interest rate decrease by 1 %

9,588,260

3.24 (2,959,339) 300,000

9,888,260 (2,659,339)

Expenditures in the event of interest rate increase by 1,5 % 16,986,608

5.74 4,439,009

- 16,986,608 4,439,009

Expenditures in the event of interest rate decrease by 1,5 %

8,108,590

2.74 (4,439,009) 450,000

8,558,590 (3,989,009)

In the event the interest rate is increased by 1 %, the expenses would rise in the amount of EUR 2,959,339, and with 1.5 % by EUR 4,439,009. If the interest rate would decrease by 1 % or 1.5 %, then the expenses would decrease by EUR 2,659,339 or EUR 3,989,009, if the protection of the interest rate is considered a part of the financial liabilities.

28. C. Currency risk Currency risk has been negligible with the company's operations in the year 2009, since the structure of the operations with countries abroad is connected to the euro.

D .

5.24

L A Ĺ K O

15,506,938

P I V O V A R N A

interest rate increase by 1 %

28. D. Liquidity risk On the last day of 2009 the company had an excess of current liabilities over current assets in the amount of EUR 204,503,632. The management of the company evaluates that the company will be able to settle its current liabilities only upon agreement with banks (the latter act in the role of creditors as well as in the role of important company owners) on refinancing of the existing short-term loans or on the sale of the company's long-term assets. The aforementioned could also be settled by the company with sufficient increase of its sustainable resources. So far, no such arrangement with banks nor increase in sustainable resources of the company has taken place.

A N N U A L

R E P O R T

2 0 0 9

28. E. Cash flow risk

172

Cash flow risk is reflected in the fair value of assets risk. The risk can be controlled with the realized financial instruments. The company did not insure its fair value risks in 2009; that is why the risk which is seen in the table below is possible.

( in EUR )

Fair value as at 31/12/2009

Difference – influence on the value of N-CI

Difference – influence on the revaluation surplus

Difference – influence on liability for deferred tax

Balance as at 31 December 2009 48,631,169

Increase in price by 10 %

53,494,286

4,863,117

3,890,494

972,623

Decrease in price by 10 %

43,768,052

(4,863,117)

(3,890,494)

(972,623)

Increase in price by 5 %

51,062,727

2,431,558

1,945,247

486,312

Decrease in price by 5 %

46,199,611

(2,431,558)

(1,945,247)

(486,312)

The calculation of risks pertains to a long-term financial investment into Mercator Poslovni Sistem, which D .

value, occurs, it is reflected in the increase or decrease of the surplus from revaluation directly in the capital

P I V O V A R N A

L A Š K O

value. If an increase or decrease of financial investments' value, which is estimated according to their fair

D .

represent 99.6 % of the value of financial assets intended for sale, which are evaluated according to their fair

and, at the same time, with the liability for the deferred tax.

29. Conditional liabilities The previous management of the company Pivovarna Laško, d. d., in the year which was completed on 31.12.2008, issued a patronage statement addressed to the company Perutnina Ptuj, d. d., with which Pivovarna Laško, d. d., guarantees Perutnina Ptuj, d. d., for the fulfilment of liabilities in the amount of EUR 20 million with corresponding interest. Conditional liabilities of Pivovarna Laško, d. d., were, in the annual report for the year completed on 31.12.2008, not disclosed in accordance with IFRS. On 20.11.2009 Perutnina Ptuj, d. d., addressed a request to Pivovarna Laško for the return of EUR 11,600,120. The mentioned amount refers to granted loans, which were approved based on the signed patronage statement of Perutnina Ptuj, d. d., to the companies Center Naložbe, d. d., and Infond Holding, d. d. Pivovarna Laško, d. d., is examining the request together with its legal experts and is striving to determine how likely it is that it will have to return the required amount. Several legal opinions have been obtained to this end. Based on the obtained legal opinions, the management of the company estimates that there is no obligation for Pivovarna Laško, d. d., arising from this to pay the requested amount, which is why the company has not disclosed liability for the requested amount in its financial accounts. Conditional liabilities refer to guarantees in the amount of EUR 20,707,552. Guarantees in the amount of EUR 19,957,552 are guarantees granted to affiliated companies for hired loans at banks, and guarantees

in the amount of EUR 750,000 to other non-related parties. The affiliated company Radenska, d. d., was granted a guarantee in the amount of EUR 8,000,000, and the affiliated company Pivovarna Union, d. d., was granted a guarantee in the amount of EUR 5,000,000, and to affiliated company Fructal, d. d., in the amount of EUR 6,957,552. Among other conditional liabilities, we shall particularly mention the potential liability for the payment of corporate income tax after the implemented tax inspection audit of corporate income tax in the year 2007. In 2009 a tax inspection audit was held in Pivovarna Laško, d. d., on the corporate income tax for the year 2007, and a minute was issued on 5.1.2010, in which the tax authority complains of irregularities resulting in an increase of the tax base for the corporate income tax return. According to the interpretation of the tax

from option contracts, which were on the day the transaction was carried out lower than the market prices. On 3.2.2010 the company submitted to the Special Tax Office their comments on the minutes, in which the company refuses the reproaching irregularities as unfounded. Based on the submitted comments, the tax authority expanded the tax procedure and has not yet provided its response.

A N N U A L

30. Business combinations

R E P O R T

EUR 215,690. The potential increase of revenues refers to the sale of shares of Istrabenz (ITBG) at prices

2 0 0 9

authority, revenues for the year 2007 should be increased by EUR 25,055,540, and expenses decrease by

There were no business combinations in 2009.

31. Receipts of the management and the employees according to individual contracts The company is managed by the Management and Supervisory Boards, whose earnings are represented in the tables below: 2009

2008

Fixed part of receipts

191,373

192,000

Variable part (incentive)

16,580

37,934

Benefits

152,000

Total

359,953

229,934

L A Š K O

Variable part (incentive) Benefits

Total

P I V O V A R N A

173

( in EUR )

Fixed part of receipts

MANAGEMENT BOARD Boško Šrot Dušan Zorko Total

100,382

16,580

152,000

268,962

90,991

191,373

16,580

152,000

359,953

The management has one member. Mr Boško Šrot was director of the company until 23 July 2009. On 23 July 2009 the Supervisory Board accepted his letter of resignation and appointed to his position Dušan Zorko, MSc, for the period of five years. Mr Dušan Zorko began his five-year term of office on 24 July 2009. On the basis of individual contracts, 11 employees received a salary in 2009. Upon replacing the company director, some other changes were made to particular management and administrative people. Earnings received by employees in 2009, based on their individual contracts, are indicated in the below table:

D .

MANAGEMENT BOARD

( in EUR )

2009

2008

Fixed part of receipts

889,048

632,406

Variable part (incentive)

30,393

158,538

INDIVIDUAL CONTRACTS

Benefits

159,508

Total

1,078,949

790,944

In 2009 members of the Supervisory Board of Pivovarna Laško, d. d., received attendance fees in the total amount of EUR 22,740, in accordance with Article 30 of the Statute and the decision of the last General

A N N U A L

R E P O R T

2 0 0 9

Meeting. 2009

2008

SUPERVISORY BOARD Anton Turnšek

4,793

9,675

Boris Završnik

4,388

16,239

Iztok Seničar

1,937

9,717

Aleksander Svetelšek

362

Marjan Mačkošek

990

Vladimir Malenković

1,096

Bojan Košak

4,158

9,600

Andrej Kebe

4,158

9,600

Simon Zdolšek

858

9,744

Mirko Kaluža

3,551

Mirjana Dimc Perko

3,551

Marko Jugovič

3,551

Total

22,740

75,228

2009

2008

627,158

831,987

P I V O V A R N A

L A Š K O

D .

174

( in EUR )

32. Operations with related parties 32. A. Sales to related companies ( in EUR )

Radenska, d. d. Radenci Vital Mestinje, d. o. o.

1,094

3,991

Skupina Union

11,938,913

8,551,565

Delo, d. d. Ljubljana

4,985

Jadranska Pivovara – Split, d. d.

661,109

3,955,617

Total

13,228,274

13,348,145

31. B. Purchases from related companies ( in EUR )

2009

2008

2,435,374

2,926,114

Radenska, d. d. Radenci Vital Mestinje, d. o. o.

423,704

555,690

Skupina Union

19,898,396

22,516,384

Delo, d. d. Ljubljana

30,365

15,636

Jadranska Pivovara – Split, d. d.

1,157,000

1,639,288

249,846

255,893

Total

24,194,685

27,909,005

Receivables and liabilities from sale/purchasing from associated companies ( in EUR )

2009

2008

Radenska, d. d. Radenci

51,992

117,473

Vital Mestinje, d. o. o.

137

Skupina Union

1,940,742

839,515

Delo, d. d. Ljubljana

4,985

Jadranska Pivovara – Split, d. d.

2,373,753

2,300,706

Value adjustments of claims to Jadranska Pivovara – Split, d. d.

(2,373,753)

Total

1,992,783

3,262,816

379,807

349,052

A N N U A L

The sales and purchases are shown in gross value with charged VAT. The purchases at subsidiaries refer to the purchase of merchandise in the Horeca channel

R E P O R T

2 0 0 9

RA&LA, d. o. o. Sarajevo

Receivables from operating to subsidary companies

175

Vital Mestinje, d. o. o.

26,395

80,865

Skupina Union

4,350,385

2,816,919

Delo, d. d. Ljubljana

2,100

4,985

Jadranska Pivovara – Split, d. d.

58,953

22,264

RA&LA, d. o. o. Sarajevo

4,421

Total

4,822,061

3,274,085

In 2009 the company, for receivables against the affiliated company Jadranska Pivovara – Split, d. d., in the amount of EUR 2,373,753, completely corrected the value of the receivable.

32. C. Loans obtained from related companies ( in EUR )

2009

2008

Radenska, d. d. Radenci

20,400,000

16,600,000

Skupina Union

6,000,000

4,800,000

Firma Del, d. o. o. Laško

42,985

Total

26,442,985

21,442,985

L A Š K O

Radenska, d. d. Radenci

P I V O V A R N A

Liabilities from operating to subsidary companies

D .

32. D. Loans given to related companies ( in EUR )

2009

2008

Jadranska Pivovara – Split, d. d. (long-term loan)

5,149,262

Delo, d. d. Ljubljana (short-term loan)

2,600,000

Companies of the Group -

Value adjustments of given loans to Jadranska Pivovara – Split, d.d Total companies of the Group

(5,149,262)

2,600,000

Infond Holding, d. d. Maribor

1,699,613

Center Naložbe, d. d. Maribor

5,900,000

Value adjustments of given loans

(7,599,613)

A N N U A L

R E P O R T

2 0 0 9

Other related companies

Total other related companies

Total

2,600,000

In 2009 the company approved short-term loans to Jadranska Pivovara – Split, d. d., for EUR 5,149,262 for severance pay and for the settlement of liabilities to the bank, for which the company had signed a guarantee statement in the past. The company formed a value correction and recognized financial expenses for the total value of granted loans to the aforementioned company due to its poor financial situation. In 2009, Pivovarna Laško, d. d., granted to the companies Infond Holding, d. d., and Center Naložbe, d. d.,

176

which were during the period of loan approval its parent companies, loans in the amount of EUR 7,600,000, which have not been returned at their maturity. Therefore the company evaluates that due to insolvency and introduction of bankruptcy proceedings or receivership in the companies Infond Holding, d. d., and Center Naložbe, d. d., it is very likely that the loans will not be returned, which is why the company formed a value

P I V O V A R N A

L A Š K O

D .

correction for the total amount of granted loans.

Financial revenues ( in EUR )

2009

2008

Radenska, d. d. Radenci

2,795,925

Skupina Union

3,054,296

Delo, d. d. Ljubljana

59.906

674.395

Jadranska Pivovara – Split, d. d.

107.474

189.284

Total companies of the Group

167.380

6,713,900

Infond Holding, d. d. Maribor

17.326

Center Naložbe, d. d. Maribor

114.103

Total other related companies

131.429

Total

298.809

6,713,900

Companies of the Group

Other related companies

Financial expenses ( in EUR )

2009

2008

Companies of the Group Radenska, d. d. Radenci

1,035,693

71,277

Skupina Union

383,434

203,420

Jadranska Pivovara – Split, d. d.

15,800,431

14,126,598

Total companies of the Group

17,219,558

14,401,295

Infond Holding, d. d. Maribor

1,716,939

Center Naložbe, d. d. Maribor

5,979,335

24,915,832

14,401,295

2009

2008

Jadranska Pivovara – Split, d. d. (for bank loans)

5,110,524

8,000,000

Fructal, d. d. Ajdovščina (RARG 662,624 – for bank loans)

6,957,552

Radenska, d. d. Radenci (for bank loans)

8,000,000

Pivovarna Union, d. d. Ljubljana (for bank loans)

5,000,000

Total

25,068,076

8,000,000

Guarantees given to associated companies ( in EUR )

R E P O R T

7,696,274

Total

A N N U A L

Total other related companies

2 0 0 9

Other related companies

Companies of the Group

(5,110,524)

Total companies of the Group

19,957,552

8,000,000

Center Naložbe, d. d. Maribor (RARG 345,304 for bank loans)

3,625,692

Value adjustments of guarantee

(3,625,692)

D .

Value adjustments of guarantee in Jadranska Pivovara – Split, d.d.

On 31.12.2009 the company completely disposed in debit of financial expenses the granted guarantee to the affiliated company Jadranska Pivovara – Split, d. d., for granted bank loans in the amount of EUR 5,110,524 and disclosed it as a short-term or long-term provision. In addition, the company will also dispose of the granted guarantee to the company Center Naložbe, d. d., in the amount of EUR 3,625,692.

33. Events after the balance sheet had been prepared Termination of the procedure on decision on the petition for initiation of the bankruptcy proceeding against the company Center Naložbe, d. d. The District Court in Maribor decided with a decree of 18 January 2010 to terminate the procedure of deciding on the petition of the creditor companies Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d., Delo, d. d., and Fructal, d. d., for the initiation of bankruptcy proceedings against the debtor Center Naložbe, d. d., until the completion of the receivership against Center Naložbe, d. d. The procedure on deciding on the petition of credit companies for the initiation of bankruptcy proceedings against the company

P I V O V A R N A

L A Š K O

D .

Other related companies

Total other related companies

177

Center Naložbe, d. d., is thus terminated until the completion of the receivership against the company Center Naložbe, d. d.

Appointing new dirctor in the affiliated company RA & LA, d. o. o., Sarajevo On 28.2.2010, the term of the company's director, Mr Marko Božiček, ended by mutual agreement. Mr Šerif Krajišnik was appointed as the new compay director for a term of four years, with the beginning of the term of office on 1.3.2010.

A N N U A L

R E P O R T

2 0 0 9

Report on findings of special audit On 9.3.2010, Pivovarna Laško, d. d., received the »Report on findings of the special audit of the management of particular operations of Pivovarna Laško Group« (hereinafter: report), which was, on the basis of the general meeting decision of 31.8.2009, prepared by BDO Revizija, d. o. o., družba za revidiranje, Ljubljana. In accordance with Article 320 of the Companies Act ZGD-1, the company management sent the report to all members of the Supervisory Board. The Supervisory Board addressed the report and got acquainted with its content at the 17th regular meeting on 30.3.2010. Based on the Management Board findings indicating that other transactions were also conducted which were in terms of content related to those discussed and were not yet included in the report by the special audit, it was recommended to the Management Board by the Supervisory Board to conduct a thorough check of these particular transactions. The Management and the Supervisory Boards shall inform the General Meeting of Shareholders with this report at an ordinary session of the General Meeting of Shareholders.

178

Decision of the High Commercial Court in Celje on the annulment of the decision made by the register court

D .

the petitioner PanSlovenian Shareholders' Association, in which the register court dismissed the petitioner's

P I V O V A R N A

L A Š K O

which the mentioned court annulled the decision made by the register court. It concerns a register matter of

D .

On 11 March 2010, Pivovarna Laško, d. d., adopted a decision of the High Commercial Court in Celje, by

suggestion for entering two new members of the Supervisory Board, who were appointed at a so-called »spontaneous« or »staircase« assembly. The High Commercial Court in its explanatory note clarified that the register court in a non-contentious procedure cannot decide on the content in the event a lawsuit is already pending in the same subject matter, and should thus terminate the procedure until the decision of the pending lawsuit. We must add that the District Court in Celje has already reached a decision in this lawsuit saying that the decisions of a so-called »spontaneous« or »staircase« assembly are null. The decision is not final.

Denationalization claims in Radenska, d. d., Radenci In 1993, denationalization beneficiary Mr Rudolf Höhn-Šarič, Baltimore, United States, submitted an application for denationalization of nationalized property. The application submitted refers to return of the ownership share in the then-company and subordinated return into ownership and possession of properties and payment of compensation. In nature this represents the majority of lands and facilities within the spa resort in Radenci and part of lands and facilities on the site of the current bottling plant in Boračeva. In July 2009 the Supreme Court of the Republic of Slovenia in its audit report ruled that the beneficiary, Mr Rudolf Höhn-Šarič, has been deemed a Yugoslav and Slovenian citizen since 28 August 1945. The question of nationality represented a previous question in this procedure. Based on the decision of the Supreme

Court on recognition of the beneficiary's nationality, the competent administrative unit at the end of February 2010 submitted three preliminary submissions of the beneficiary or his commissioner, which describe in more detail the scope of the claim for the return of the nationalized property. Documentation is not yet complete. In the current procedure Radenska, d. d., Radenci, as a person liable in March 2010 submitted to the competent administrative unit a request for the delivery of other documents and an application for extension of time until the identification of stipulations from the preliminary submission.

Information about the current state in Jadranska Pivovara – Split, d. d. On 11 March 2010 the Commercial Court in Split, due to insurance of a non-monetary claim of the petitio-

is without legal effect. Jadranska Pivovara – Split, d. d., lodged an appeal against the temporary injunction because it believes that the aforementioned temporary injunction was issued as unfounded. The competent court has not yet made a decision about the appeal. In Jadranska Pivovara – Split, d. d., a gradual production stoppage began on 1 April 2010 due to rationalization because the management of the company failed to conclude an agreement with potential buyers for the purchase of assets of Jadranska Pivovara. It is expected that Jadranska Pivovara will continue with bottling

R E P O R T

ownership of the property and shares of the company. Any disposition opposed to the temporary injunction

A N N U A L

it forbade Jadranska Pivovara – Split, d. d., to dispose or in any other way dispose of the rights arising from

2 0 0 9

ner Shareholders' Association of Jadranska Pivovara – Split, d. d., issued a temporary injunction, with which

of Kaltenberg beer by the end of May, which is to be produced at Pivovarna Laško, d. d. Pivovarna Laško and Jadranska Pivovara will provide financial resources for the settlement of accounts payable, banks and those employed at Jadranska Pivovara. Pivovarna Laško will continue with an active search for a buyer of the assets of Jadranska Pivovara.

Change in the Management Board of the affiliated company Fructal, d. d., Ajdovščina

179

The chairman of the Management Board of Fructal, d. d., Ajdovščina, Mr Anton Balažič, submitted a letter

As at 31 March 2010 Pivovarna Laško, d. d., discloses a liability to companies in Pivovarna Laško Group arising from short-term loans received in the amount of EUR 39,900,000, from which EUR 8,200,000 to Pivovarna Union, d. d., Ljubljana, and EUR 31,700,000 to Radenska, d. d., Radenci.

Sale of shares of Večer, d. d., Maribor The sale of investment in shares of Večer, d. d., Maribor, was initiated in January 2010. A thorough business and legal inspection of the company Večer, d. d. was conducted and a public tender prepared, which was publicly announced in March 2010.

P I V O V A R N A

Transactions with related parties of Pivovarna Laško Group

L A Š K O

D .

the new chairman of the Management Board.

D .

of resignation of 31 March 2010, and on 1 April 2010 the Supervisory Board appointed Mr Drago Kavšek as

4.1.9 STATEMENT OF THE MANAGEMENT The Board of Managers is responsible for preparation of the annual report of Pivovarna Laško Company and non-consolidated financial statements in a way that reflects a fair state of property and financial statements prepared according to the International Financial Reporting Standards (IFRS) and the Statute of the company, and complying with relevant laws and regulations of Slovenian legislation for 2009. The Board of Managers confirms the financial statements and the explanatory notes in accordance with the guidelines of the company Pivovarna Laško for the year ended at 31 December 2009 and declares:

• t hat non-consolidated financial statements were prepared assuming that the Company will be able to

A N N U A L

R E P O R T

2 0 0 9

continue business in future,

• t hat accepted accounting policies have been used consistently and the changes in accounting policies were disclosed,

• t hat the assessments of the value of each item in the financial statements were prepared fairly and deliberately and in accordance with the principles of prudence and good management,

• t hose financial statements were prepared in accordance with the legislation in force and the Slovenian Financial Reporting Standards. The Management Board is responsible for the implementation of measures which provide maintenance of the value of property of the company and for the prevention and detection of fraud and other irregularities.

180

D .

Management Board – Director

P I V O V A R N A

L A Š K O

Pivovarna Laško, d. d.

D .

Laško, 31 March 2010

Dušan Zorko, MSc.

P I V O V A R N A

L A Š K O

D .

181

A N N U A L

R E P O R T

2 0 0 9

P I V O V A R N A

L A Š K O

D .

182 A N N U A L

R E P O R T

2 0 0 9

P I V O V A R N A

L A Š K O

D .

183

A N N U A L

R E P O R T

2 0 0 9

4.2

Au d i t e d c o n s o l i dat e d f i n a n c i a l s tat e m e n t s o f L a š ko G r o u p f o r t h e y e a r 2 0 0 9, by I F R S

P i v o va r n a

4.2.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO GROUP AS AT 31.12.2009 ( in EUR )

Expl. note

2009

2008

A N N U A L

R E P O R T

2 0 0 9

ASSETS Non-current assets

564,998,357

624,040,291

Intangible fixed assets

133,038,904

167,063,603

Property, plant and equipment

226,947,462

236,903,804

Investment properties

7,398,396

13,510,515

Non-current investments in subsidiaries

4.A

258,918

267,640

Available-for-sale financial assets

4.C

30,829,924

197,281,029

Investments in associated companies

4.B

138,836,076

4,804,454

Investments in possession until maturity

4.D

12,500

Long-term loans

6,603,695

2,548,463

Long-term operating receivables

744,239

1,648,283

Long-term deferred tax receivables

20,340,743

Current assets Non-current assets held for sale Inventories

184

116,256,468

186,379,103

12,874,507

1,666,506

37,987,391

42,308,377

Short-term operating receivables

10.A

49,764,422

56,303,249

Short-term receivables for overpaid income tax

10.B

2,338,805

6,854,113

11,086,139

77,042,121

1,213,547

13,630

991,657

2,191,107

D .

Derivatives Deferred costs and accrued revenues

541,321

855,918

Total current assets

116,797,789

187,235,021

P I V O V A R N A

L A Š K O

12.B

Cash in banks, cheques and cash in hand D .

Short-term loans

TOTAL ASSETS

681,796,146

811,275,312

4.2.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO GROUP AS AT 31.12.2009 (continuation) ( in EUR )

Expl. note

2009

2008

EQUITY

162,594,380

295,977,383

9,977,067

16,756,301

152,617,313

279,221,082

Share capital

36,503,305

Capital reserves

78,908,924

102,377,721

Profit reserves

3,650,330

44,405,596

Revaluation surplus

33,554,754

2,030,621

Net profit and loss from previous years

92,268,710

Net profit and loss

1,635,129

LIABILITIES Non-current reservations

519,201,766

515,297,929

9,716,064

9,054,082

Non-current employee liabilities

17.A

6,325,573

6,324,696

Non-current reservations

17.B

3,390,491

2,729,386

R E P O R T

Majority capital

A N N U A L

Minority capital

2 0 0 9

221,011,550

Non-current operating liabilities

18.B

11,476

111,108

18,006,036

Non-current deferred tax liabilities

Current liabilities

373,324,159

261,434,012

Current operating liabilities

19.A

44,823,086

53,175,242

Current tax payment liabilities

19.B

1,651,622

1,019,224

Current financial liabilities

19.C

326,849,451

207,239,546

8,888,661

5,681,141

Total current liabilities

382,212,820

267,115,153

Accrued costs and deferred revenues

TOTAL LIABILITIES TO ASSET RESOURCES

681,796,146

811,275,312

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

185

D .

239,128,694

127,261,406

D .

127,272,882

18.A

L A Š K O

Non-current financial liabilities

P I V O V A R N A

Non-current liabilities

4.2.2. CONSOLIDATED PROFIT AND LOSS STATEMENT OF PIVOVARNA LAŠKO GROUP FOR THE PERIOD 1.1.–31.12.2009 ( in EUR )

Expl. note

2009

2008

A N N U A L

R E P O R T

2 0 0 9

Net sales revenues

327,026,846

360,028,307

Changes in inventories of products and work in progress

1,316,584

10,781

Capitalized own products and their services

35,818

62,364

Other operating revenues

8,428,658

13,322,327

Costs of goods, material and services

(200,785,891)

(240,428,436)

Employee benefit expenses

(64,471,310)

(62,097,162)

of intangible and tangible fixed assets

(28,000,182)

(29,716,424)

Non-current reservations

(1,085,846)

(144.882)

Write-downs of value

(39,862,267)

(8,729,244)

Other operating revenues

(7,832,328)

(6,607,458)

(5,229,918)

25,700,173

Amortization and depreciation

OPERATING PROFIT

Financial revenues

Financial expenditures

(210,561,567)

(36,302,694)

Share of loss/profit in associated companies

10,271,857

1,259,654

(199,897,092)

2,568,961

PROFIT BEFORE TAXATION

5,622,536

11,911,828

186

Deferred tax

40,576,837

5,353,311

Tax

(2,779,391)

(4,066,690)

(162,099,646)

NET PROFIT/LOSS OF ACCOUNTING PERIOD

3,855,582

215.824

(156,950,499)

3,639,758

Profit/loss per majority owner's share

P I V O V A R N A

L A Š K O

D .

(5,149,147)

Majority owner's share of the net profit D .

Minority owner's share of the net profit

Net profit/loss per share

(17.9420)

0.4161

Adjusted net profit/loss per share

(17.9420)

0.4161

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

4.2.3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME OF PIVOVARNA LAŠKO GROUP FOR THE PERIOD 1.1.–31.12.2009 ( in EUR )

2009

2008

Net profit/loss of accounting period

(162,099,646)

3,855,582

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE PROFIT

(130,458,690)

(2,735,646)

Other comprehensive profit

31,640,956

(6,591,228)

Minority owner's share

116,823

(2,621,646)

Majority owner's share

31,524,133

(3,969,582)

Total comprehensive profit

(130,458,690)

(2,735,646)

Minority owner's share

(5,032,324)

(2,405,822)

Majority owner's share

(125,426,366)

(329,824)

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

2 0 0 9

(6,591,228)

R E P O R T

31,640,956

992.395

A N N U A L

OTHER COMPREHENSIVE INCOME

11,977,223

187

D .

(1,946,192)

D .

Deferred taxes from revaluation

(19,560,846)

L A Š K O

Profit/loss from property revaluation

33,587,148

P I V O V A R N A

Financial assets for sale

L A Š K O

D .

A N N U A L

2 0 0 9

Total majority owner's capital

Minority capital

TOTAL CAPITAL

36,503,305

78,908,924

3,650,330

1,363,200

(1,363,200)

3,650,330

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

31 December 2009

33,554,754

152,617,313

9,977,067

Changes in capital Distribution of net profit according to managerial decisions - (23,468,797) (21,956,464) - - (17,614,513) (39,570,977) (93,910,725) 156,950,499 - - - Cover loss - - - - - - - 1,635,129 (1,635,129) - - - Creation of reserves for own shares - - - 1,190,962 - (964,843) 226,119 146,260 - - 372,379 - Drawing reserves for own shares - - - (336,954) - - (336,954) - - - (336,954) - Other - - - - 131,955 (219,446) (87,491) (139,374) - - (226,865) - Total Changes in capital - (23,468,797) (21,956,464) 854,008 131,955 (18,798,802) (39,769,303) (92,268,710) 155,315,370 - (191,440) -

162,594,380

372,379 (336,954) (226,865) (191,440)

1 January 2009 36,503,305 102,377,721 25,606,794 509,192 (509,192) 18,798,802 44,405,596 92,268,710 1,635,129 2,030,621 279,221,082 16,756,301 295,977,383 Transactions with owners Increase of treasury shares - - - - (1,175,347) - (1,175,347) - - - (1,175,347) - (1,175,347) Disposal of own shares - - - - 189,384 - 189,384 - - - 189,384 - 189,384 Payment of dividends - - - - - - - - - - - (145,374) (145,374) Increases/decreases of capital components - - - - - - - - - - - (370,917) (370,917) Other changes - - - - - - - - - - - (1,230,619) (1,230,619) Total Transactions with owners - - - - (985,963) - (985,963) - - - (985,963) (1,746,910) (2,732,873) Changes in comprehensive income Net profit for the year - - - - - - - - (156,950,499) - (156,950,499) (5,149,147) (162,099,646) Revaluation surplus of financial investments - - - - - - - - - 33,441,120 33,441,120 146,028 33,587,148 Related taxes with items of comprehensive income - - - - - - - - - (1,916,987) (1,916,987) (29,205) (1,946,192) Total Changes in comprehensive income - - - - - - - - (156,950,499) 31,524,133 (125,426,366) (5,032,324) (130,458,690)

Net profit from Net Revaluation previous years profit surplus

R E P O R T

Share Capital Legal Reserves for Treasury Other profit Total profit ( in EUR ) capital reserves reserves treasury shares shares reserves reserves

4.2.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO GROUP FOR THE PERIOD 1.1.– 31.12.2009

P I V O V A R N A

188

Net profit from Net Revaluation previous years profit surplus

102,377,721

25,606,794

509,192

(509,192)

18,798,802

44,405,596

P I V O V A R N A

L A Š K O

D .

A N N U A L

1,635,129

2 0 0 9

92,268,710

R E P O R T

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

36,503,305

2,030,621

279,221,082

16,756,301

203,730 (198,882) 4,848

Changes in capital Distribution of net profit - - - - - - - 48,284,962 (48,284,962) - - - Distribution of net profit according to managerial decisions - - - - - 2,229,674 2,229,674 (341,627) (1,888,047) - - - Creation of reserves for own shares - - - 203,730 - - 203,730 - - - 203,730 - Drawing reserves for own shares - - - - 286,739 (413,201) (126,462) 44,162 (116,582) - (198,882) - Total Changes in capital - - - 203,730 286,739 1,816,473 2,306,942 47,987,497 (50,289,591) - 4,848 -

31 December 2008

3,855,582 (566,153) (19,560,846) 992,395 (15,279,022)

295,977,383

(854,324) 363,855 (9,071,332) (2,116,635) (11,678,436)

1 January 2008 36,503,305 102,377,721 25,606,794 305,462 (305,462) 20,526,623 46,133,417 61,949,899 48,284,962 6,000,203 301,249,507 21,680,486 Transactions with owners Increase of treasury shares - - - - (854,324) - (854,324) - - - (854,324) - Disposal of own shares - - - - 363,855 - 363,855 - - - 363,855 - Payment of dividends - - - - - - - (8,742,384) - - (8,742,384) (328,948) Other increases/decreases - - - - - - - 72,780 - - 72,780 (2,189,415) Total Transactions with owners - - - - (490,469) - (490,469) (8,669,604) - - (9,160,073) (2,518,363) Changes in comprehensive income Net profit for the year - - - - - - - - 3,639,758 - 3,639,758 215,824 Revaluation surplus of property, plant and equipment - - - - - (3,544,294) (3,544,294) (8,999,082) - 11,703,904 (839,472) 273,319 Revaluation surplus of financial investments - - - - - - - - - (16,665,881) (16,665,881) (2,894,965) Related taxes with items of comprehensive income - - - - - - - - - 992,395 992,395 - Total Changes in comprehensive income - - - - - (3,544,294) (3,544,294) (8,999,082) 3,639,758 (3,969,582) (12,873,200) (2,405,822)

322,929,993

Total majority owner's Minority TOTAL capital capital CAPITAL

Share Capital Legal Reserves for Treasury Other profit Total profit ( in EUR ) capital reserves reserves treasury shares shares reserves reserves

4.2.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO GROUP FOR THE PERIOD 1.1.–31.12.2008

189

4.2.6 CONSOLIDATED STATEMENT OF CASH FLOWS OF PIVOVARNA LAŠKO GROUP FOR THE PERIOD 1.1.–31.12.2009 ( in EUR )

Expl. note

2009

2008

CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations

Income tax paid

60,689,273

56,665,974

(2,478,505)

(13,069,652)

Net cash generated from operating activities

58,210,768

43,596,322

A N N U A L

R E P O R T

2 0 0 9

CASH FLOWS FROM INVESTING ACTIVITIES Cash payments for financial assets on associated company Purchase of property, plant and equipment

4.C

(3,837,454)

(3,544,800)

(11,663,967)

(59,365,842)

Profits/losses in disposals and purchase of property, plant and equipment Purchase of intangible assets Purchase/sale of available-for-sale financial assets

193.774

(1,929,325)

4.B,11

(48,577,164)

2,105,749 (2,755,332) 563.521

Interest received

4,648,146

5,257,457

Dividends

7,914,024

Net cash generated/used in investing activities

(61,165,990)

(49,825,223)

190

CASH FLOWS FROM FINANCING ACTIVITIES Interest paid

(22,972,652)

(26,367,303)

Purchase of treasury shares

(985,963)

(50,706) (2,602,616)

258,537,166

1,270,684,221

Repayments of borrowings

18,19

(232,677,404)

(1,226,267,121)

Dividends paid to companys shareholders

(145,374)

(9,071,332)

P I V O V A R N A

L A Š K O

18,19

D .

Proceeds from borrowings D .

Decrease of capital

Net cash used/generated in financing activities

1,755,773

6,325,143

NET DECREASE/INCREASE IN CASH AND CASH EQUIVALENTS

(1,199,449)

96,242

Cash and cash equivalents at the beginning of the year

2,191,107

2,094,865

Cash and cash equivalents at the end of the year

991,658

2,191,107

The explanatory notes and policies on pages 191 to 240 are an integral part of the financial statements of Pivovarna Laško Group.

4.2.7 EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GENERAL INFORMATION The main activities of the Pivovarna Laško Group (the Group) are: production of beer, mineral and spring waters, soft drinks and syrups for the production of beverages, distilled spirits, wholesale service and newspaper publishing activity. Pivovarna Laško, d. d., is the parent company of Pivovarna Laško Group with headquarters in Slovenia: Trubarjeva ulica 28, 3270 Laško. The Group's ordinary shares are quoted on the Ljubljana Stock Exchange under the designation PILR. The

The consolidated financial statements were approved on 31 March 2010 by the company's Management Board.

ACCOUNTING POLICIES 1. Base for the preparation of the report In the year 2009 the same accounting policies were applied as in the preceding years.

R E P O R T

The Group operates on the basis of the unlimited business operation assumption.

A N N U A L

no-par-value shares. No limitations on the payment of dividends and other equity payments exist.

2 0 0 9

Group's share capital totals EUR 36,503,304.96 representing 8,747,652 ordinary freely negotiable registered

The financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, which include the standards and interpretations issued by the IASB and SIC. The consolidated financial statements have been compiled in compliance with the International Financial Reporting Standards (IFRS). The main accounting policies used in the preparation of these consolidated financial statements are indicated in the continuation:

191

a) Standards and interpretations effective in the current period

• I FRS 8 »Operating Segments«, adopted by the EU on 21.11.2007, subject to annual periods beginning on or after 1.1.2009.

• I FRS 1 »First-Time Adoption of IFRS« and IAS 27 »Consolidated and Separate Financial Statements« – cost of investment in a subsidiary, jointly-controlled entity or associate, adopted by the EU on 23.1.2009 (effective for annual periods beginning on or after 1.1.2009).

• I FRS 4 »Insurance Contracts« and IFRS 7 »Financial instruments: disclosures« – improving disclosure on financial instruments adopted by the EU on 27.11.2009 (subject to annual periods beginning on or after 1.1.2009).

• I AS 32 »Financial Instruments: Presentation« and IAS 1 »Presentation of Financial Statements« – puttable financial instruments and obligations arising from liquidation adopted by the EU on 21.1.2009 (subject to annual periods beginning on or after 1.1.2009).

• I AS 1 (revised) »Presentation of Financial Statements« – a revised presentation adopted by the EU on 17.12.2009 (subject to annual periods beginning on or after 1.1.2009).

• I AS 23 (revised) »Borrowing Costs«, adopted by the EU on 10.12.2008 (subject to annual periods beginning on or after 1.1.2009). From that date, the necessary expenses for interest on loans are earmarked for compulsory capitalized fixed assets.

• I FRS 2 »Share Based Payment« – required conditions and cancellations, adopted by the EU on 16.12.2008

D . L A Š K O

effective for the current period:

P I V O V A R N A

Board and interpretations issued by the International Financial Reporting Interpretations Committee are

D .

The following amendments to the existing standards issued by the International Accounting Standards

(subject to annual periods beginning on or after 1.1.2009).

• I FRIC 9 »Reassessment to Embedded Derivatives« and IAS 39 »Financial Instruments: Recognition and Measurement« – embedded derivatives adopted by the EU on 30.11.2009 (effective for annual periods ending on or after 1.1.2009).

• I FRIC 11 »IFRS 2 – Group and Treasury Share Transactions«, adopted by the EU on 1.6.2007 (effective for annual periods beginning on or after 1.3.2008).

• I FRS 13 »Customer Loyalty Programmes«, adopted by the EU on 16.12.2008 (effective for annual periods beginning on or after 1.1.2009).

• I FRIC 14 »IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their

A N N U A L

R E P O R T

2 0 0 9

Interaction«, adopted by the EU on 16.12.2008 (subject to annual periods beginning on or after 1.1.2009). The adoption of these amendments to the existing standards and interpretations has not led to any changes in the company's accounting policies.

b) Standards and interpretations issued by IASB not yet adopted by the EU At the date of authorization by the EU of these financial statements, the following standards, revisions and interpretations were in issue but not yet effective:

• I FRS 1 (revised) »First-Time Adoption of IFRS«, adopted by the EU on 25.11.2009 (effective for annual periods beginning on or after 1.1.2010).

• I FRS 3 (revised) »Business Combinations«, adopted by the EU on 25.11.2009 (effective for annual periods beginning on or after 1.1.2010).

• I AS 27 »Consolidated and Separate Financial Statements«, adopted by the EU on 3.6.2009 (effective for annual periods beginning on or after 1.7.2009).

• I AS 32 »Financial Instruments: Presentation« – accounting for a rights issue, adopted by the EU on

192

23.12.2009 (effective for annual periods beginning on or after 1.1.2011).

• I AS 39 »Financial Instruments: Recognition and Measurement« – eligible hedged items, adopted by the EU on 15.9.2009 (effective for annual periods beginning on or after 1.7.2009).

• I FRIC 12 »Service Concession Arrangements«, adopted by the EU on 25.3.2009 (effective for annual

P I V O V A R N A

L A Š K O

D .

periods beginning on or after 30.3.2009).

• I FRIC 15 »Agreements for the Construction of Real Estate«, adopted by the EU on 22.7.2009 (effective for annual periods beginning on or after 1.1.2010).

• I FRIC 16 »Hedges of a Net Investment in a Foreign Operation«, adopted by the EU on 4.6.2009 (effective for annual periods beginning on or after 1.7.2009).

• I FRIC 17 »Distributions of Non-Cash Assets to Owners«, adopted by the EU on 26.11.2009 (effective for annual periods beginning on or after 1.11.2009).

• I FRIC 18 »Transfers of Assets from Customers«, adopted by the EU on 27.11.2009 (effective for transfer of assets from customers received on or after 1.11.2009). The Group anticipates that the adoption of these standards, amendments to the existing standards and interpretations will have no material impact on the financial statements of the company in the period of initial application.

c) Standards and interpretations issued by the IASB not yet adopted by the EU At the date of authorization by the EU of these financial statements, the following standards, revisions and interpretations were in issue but not yet effective:

• I FRS 9 »Financial Instruments« (effective for annual periods beginning on or after 1.1.2013). • I FRS 24 »Related Party Disclosures« – simplifying disclosure requirements for companies related to the government, and explaining the definition of related parties (subject to annual periods beginning on or after 1.1.2011).

• I FRS 1 »First-Time Adoption of International Financial Reporting Standards« – additional exemptions

for users who use IFRS for the first time (subject to annual periods beginning on 1.1.2010 or later).

• I FRS 2 »Share Based Payment« – the money paid for a payment transaction for shares in the group (subject to annual periods beginning on 1.1.2010 or later).

• I FRIC 14 »MRS 19 – The Limit on Defined Benefit Assets, Minimum Funding Requirements and Their Interaction« (effective for annual periods beginning on or after 1.1.2011).

• I FRIC 19 »Removal of the Obligation to Equity Instruments« (effective for annual periods beginning on 1.7.2010 or later).

2. Consolidation Subsidiary companies in which the Group's indirect or direct equity is larger than half of voting rights or

among the Group's companies are eliminated for the purpose of consolidation. Impairment of long-term investment in Delo, d. d., was also eliminated and its reduction to the fair value is reflected in consolidation as impairment of trademarks and goodwill, which was generated at the acquisition of the aforementioned company. Impairment of the long-term investment in Jadranska Pivovara, d. d., was also eliminated, and dividends received from affiliated companies. For the purpose of the provision of consistent and correct data for the needs of the Group's consolidation and financial reporting, accounting policies needed to be harmonized with the controlling company's policies.

R E P O R T

when the Group has no controlling interest in them anymore. All transactions and receivables and liabilities

A N N U A L

statements from the day when the Group took over their controlling interest, and their consolidation ends

2 0 0 9

can in any other way influence operation are considered consolidated. They are consolidated in the Group's

At the accounting of takeovers, the Group uses the purchase method. The cost of purchase of a takeover is assessed as the fair value of assets and capital instruments given and assumed liabilities on the day of transaction, together with the expenses directly attributable to the takeover. Assumed assets, liabilities and conditional liabilities attaching to a takeover are initially recorded at the fair value on the day of the takeover, irrespective of the size of the minority interest. A surplus of the purchase price over the fair value of the Group's interest in net assets of an acquired undertaking is recorded as positive goodwill. If the purchase

193

price is lower than the fair value of the acquired undertaking's net assets, the difference is recognized directly in the profit and loss statement. D .

The Group treats transactions with minority holders the same as transactions with external partners. Pro-

The interrelated group of companies in which the company Pivovarna Laško, d. d., holds its financial investments is composed of the following companies: Activity of the Percent Company name company State participation

Value of total equity in EUR

Net profit/loss of year 2009 in EUR

SUBSIDARy COMPANIES Vital Mestinje, d. o. o.

production of beverages Slovenija 96.920 %

3,439,455

Radenska, d. d. Radenci

production of beverages Slovenija 93.801 % 83,758,782 (36,833,235)

Firma Del, d. o. o. Laško

beer production Slovenija 100.000 %

Jadranska Pivovara – Split, d. d.

beer production

Hrvaška 99.106 %

4,542,877

wholesale

BiH 100.000 %

176,138

RA&LA, d. o. o. Sarajevo Group Union Ljubljana Delo, d. d. Ljubljana

50,450

47,571 1,732 (7,243,840) 4,393

production of beer and beverages Slovenija 97.889 % 76,770,526 (51,375,314) newspaper- publishing activity Slovenija 100.000 % 22,642,956 (11,177,020)

P I V O V A R N A

3. Composition of affiliates

L A Š K O

D .

fits and losses of minority holders are disclosed in the Group's profit and loss statement.

Pivovarna Laško, d. d., Trubarjeva 28, Laško, draws up the consolidated annual report for the parent company and for subsidiaries in Pivovarna Laško Group. Due to their material irrelevance, the companies Firma Del, d. o. o. and RA&LA, d. o. o. from Sarajevo shall not be consolidated. The consolidated annual report of Pivovarna Laško Group is available at its headquarters.

4. Recognition of revenues Revenues are recognized on the basis of the sale of products, services and merchandise, and their acquisition by customers (without VAT and excise duty), expected complaints, rebates and discounts, and elimi-

A N N U A L

R E P O R T

2 0 0 9

nation of sale within the Group. Sales revenues are recognized when significant risks and benefits of goods ownership are transferred from the seller to the customer. Group revenues are a sum of the revenue of individual companies included in the Group. Revenues obtained within the group of companies are excluded from group revenues. Other realized revenues are recognized on the following bases:

• I nterest receivable – is recognized when it appears, except if doubt of the recovery exists when the sum is charged against a replacement value. From then on, interest receivable is recognized on the basis of an interest rate serving for discounting of future cash flows.

•R evenues from dividends – when the Group receives the right to obtain payments from dividends. 5. Investment in associated companies Investments in associated companies are accounted for on the basis of the equity method. Associated companies are those companies in which the Group holds between 20 % and 50 % of voting power, and significantly influences their business operation but does not control it.

194

In compliance with IAS 28, an investment in an associated company is accounted for at the equity method from the date when it becomes an associated company. Under the equity method, the investment is initially recorded at cost and the carrying amount is subsequently increased or decreased in order for the investee's

D .

of the company in which the investor has a significant influence decreases the carrying value of the invest-

P I V O V A R N A

L A Š K O

the date of the performed investment, to be recognized. The sum obtained from the net profit distribution

D .

share of the profit or loss of the company, in which the investor has an important influence arising after

ment. Calculations of the carrying value might also be required if the investor's proportional equity share of another company changes, but such changes are not included in the profit and loss statement. Such changes include also those which are a consequence of the revaluation of the property, plant and equipment and investments, exchange differences and calculation of differences as a consequence of business combinations. At the acquisition of an investment, each difference between the expense of an investment and the investor's share in the net fair value of identifiable assets, debts and contingent liabilities of an associated company is accounted for in compliance with IFRS 3 – Business Combinations. Positive goodwill related to an associated company is included in the investment's carrying value. But amortization of this positive goodwill is not allowed, and it is thus not included in the establishment of the investor's share of the profits or losses of the associated company. <?>Every surplus of the investor's share in the net fair value of identifiable assets, debts and contingent liabilities of an associated company above the expenses of an investment is excluded from the carrying value of the investment, and instead it is included as revenue in the establishment of the investor's share of profits and losses of an associated company for the period when the investment was obtained.

Activity of the Percent Company name company State participation

Value of total equity in EUR

Net profit/loss of year 2009 in EUR

ASSOCIATED COMPANY hotels and other establishments

Slovenia 22.571 % 22,208,503

(2,050,327)

Group Mercator Lj.

trade company

Slovenia 23.340 % 805,390,000

21,119,000

Birra Peja, d. d. Peć

production of beer and beverages

Kosovo 39.550 % 11,804,368

(343,430)

On 31.12.2009 the Group disclosed, among its long-term financial investments in associated companies, an investment in the capital of the company Birra Peja, d.d., Peć, Kosovo, Poslovni Sistem Mercator Group Ljubljana and the company Thermana, d. d., Laško. The share in the ownership of associated company Birra Peja, d. d., Peć, Kosovo, which on the last day of 2009 amounted to 39.55 %, did not change during 2009. In 2009 the Group increased its investment in the company Thermana, d. d, from a 13.794 % share to a 22.571 % share of the aforementioned company. On the last day of 2009 Pivovarna Laško Group owned 23.34 % of shares of Poslovni Sistem Mercator (MELR). In 2009 Pivovarna Laško Group regained the voting rights taken in 2008. The investment was in 2008 valued according to the equity method and at the end of the year revaluated to fair market value based

2 0 0 9

Thermana, d. d. Laško

R E P O R T

activity of spa,

A N N U A L

on the rate of shares on the Ljubljana Stock Exchange. In 2009, according to IFRS and the equity revaluation method, Pivovarna Laško Group recognized in its account participation in the profits of Poslovni Sistem Mercator for 2008 and 2009 and also considered the impact of all other changes in equity of the aforementioned company for both years and also carried out an impairment to the stock price of 31.12.2009.

6. Reporting currency

195

a) Functional and presentation currency

functional and presentation currency of the controlling company (Pivovarna Laško, d. d.).

b) Transactions and balances Foreign currency transactions are converted into the presentation currency on the basis of the exchange rate valid on the day of the transaction. Profits and losses which arise during these transactions and the conversion of cash assets and liabilities denominated in a foreign currency are recognized in the profit and loss statement. Currency differences arising from debt securities and other monetary financial assets recognized at fair value are included in the profits and losses at transactions with foreign currencies. Currency differences of non-monetary items, such as shares in possession for trading, are disclosed as a part of the increase or decrease in the fair value. Currency differences at securities available for sale are included in the revaluation reserves on equity.

c) Companies in the Group Profit and loss statements and cash flow statements of subsidiary companies abroad are converted into the reporting currency of the controlling company on the basis of the average foreign currency rate, and balance sheets are converted into the reporting currency with the use of the exchange rate valid at 31 December. If a company abroad is sold, the currency differences realized at the sale are recognized in the profit or loss statement as a part of the profit/loss of the sale.

D . L A Š K O

the so-called »functional currency«). Consolidated financial statements are disclosed in euros, which is the

P I V O V A R N A

the currency of the primary environment—the country in which an individual company operates (this is

D .

The items disclosed in the financial statements of individual companies of the Group are nominated in

7. Intangible assets a) Positive goodwill Positive goodwill represents a surplus in the cost of an acquired company over the fair value of the net asset share of the acquired company on the day of the acquisition. Positive goodwill occurred at the acquisition of subsidiary companies is recognized in the intangible fixed assets. Positive goodwill is checked, tested for impairments and measured at the initial value decreased by cumulated impairments on an annual basis. Profits or losses at the sale of a company include the current value of positive goodwill referring to the company sold. Additional appraisal or test of the impairment of goodwill was carried out on 31.12.2009. This appraisal, which was carried out by an accredited business appraiser, indicates that a need for impairment of

A N N U A L

R E P O R T

2 0 0 9

the goodwill of the company Delo, d. d., exists in the amount of EUR 5,915,596.

b) Patents, trademarks and licences Expenditures for the purchase of patents, trademarks and licenses are capitalized and amortized with a linear amortization method during their Âťlife spanÂŤ (amortization period). If life span cannot be determined, they are not amortized: instead, only an impairment test is performed on annual basis. If a need for revaluation is noticed, the value of intangible fixed assets must be estimated, and they must be written off from their recoverable amount. Life span is undeterminable for trademarks, and this is why an impairment test was performed. Based on the assessment carried out by an accredited business appraiser on 31.12.2009, an impairment of trademarks of the company Delo, d. d., was carried out, in the amount of EUR 29,577,978. The life span of other intangible fixed assets is from 3 to 10 years.

196

8. Financial assets The Group classifies its investments into the following categories: financial assets at fair value through profit and loss, loans and receivables, investments in possession until maturity, and available-for-sale finan-

P I V O V A R N A

L A Ĺ K O

D .

cial assets. The classification depends on the purpose for which an investment was obtained.

a) Financial assets at fair value through profit and loss This category is divided in two subcategories: financial assets intended for trade, and assets determined at the fair value through profit or loss at their recognition. Investments obtained with the purpose to create profit from short-term (less than one year) fluctuations in the price are classified as trade-intended and fall into the short-term assets. These assets are measured at the fair value, while realized/unrealized profits and losses arising from changes in the fair value are included in the profit and loss statement in the period when they arose. In 2009 the Group had no investments within this category.

b) Loans and receivables Loans and receivables are derivatives with fixed or determinable payments which are not listed on an operating market. They are included in the short-term assets, except for maturities longer than 12 months after the balance sheet date. In this case, they are classified in the long-term assets. On the balance sheet, loans and receivables are disclosed among the operating and other receivables at the amortized cost with consideration of the effective interest rate.

c) Financial investments in possession until falling due Investments with fixed maturity, which the company management intends to keep until their maturity, are classified as investments in possession until falling due and are included in the long-term assets.

d) Available-for-sale financial assets Available-for-sale financial assets are those derivatives which are marked as available for sale or are not classified in any of the remaining categories. They are also valued at the fair value if it can be established. In the event the investment is subject to trade on the securities market, then the fair value is deemed as the market price. Fair value of a particular investment may also be valuated. Valuations are carried out by accredited business appraisers, who are registered at the Slovenian Institute of Auditors. In 2009, accredited business appraisers valuated the investment in the company Elektro Maribor, d. d. The effects of revaluations increase or decrease the equity value (surplus) of the revaluation, but the effects of impairment of financial assets increase financial costs.

Derivatives are those instruments which are used for protection against exposure to financial risks. They are used as a tool to protect against a change in the fair value or cash flow of a risk-exposed protected item. As a subject of trade, it represents an independent financial instrument exposed to risk. Initially, they are recognized at cost and are subsequently revalued to the fair value. Profit or loss from the revalued derivative for the protection of the fair value against risk is recognized in the profit and loss. Revaluation of a financial instrument which is used for cash flow protection is recognized directly in the equity

A N N U A L

9. Derivatives

R E P O R T

2 0 0 9

Those financial assets, the fair value of which cannot be established, are valued at cost.

when the protection is successful, while the unsuccessful part of the profit or loss from the instrument for the protection against risk is recognized in the profit and loss statement. The Group uses derivatives for protection against the exposure to currency and interest rate risks, and for cash flow protection against risk. Integrated derivatives must be separated from a host contract and accounted for as a derivative only if the economic features and risks of the integrated derivative are not closely

197

connected with the economic features and risks of the host contract, if a special instrument with the same provisions as the integrated derivatives is enough for the determination of the derivative, and if a complex D .

instrument is measured at the fair value through the profit and loss statement.

and small tools are valued according to the cost model, decreased by depreciation and impairment. Depreciation is accounted for on the basis of a linear method. Expected functional life spans for individual groups of funds are as follows:

Property Production plants and machines

20–40 years 4–10 years

Computer equipment

2–4 years

Motor vehicles

4–8 years

Other equipment

3–7 years

Land is not depreciated, since it is believed to have an unlimited life span. Assets which are being attained are not depreciated either, until they are available for use. Where the carrying value of an asset is higher than the estimated recoverable amount, the asset is revalued to the estimated recoverable amount. Recoverable value of the asset is the larger of the following: its fair value decreased by sale expenses, or its value in use. Profits and losses occurred at the disposal of property and equipment are established on the basis of their

P I V O V A R N A

Tangible assets include property, equipment and small tools. Immovable property was valued in 2008 according to the revaluation model, unlike in preceding years in which the cost model was applied. Equipment

L A Š K O

D .

10. Tangible assets

carrying value, and they influence the operating profit and loss. Reusable containers (barrels, bottles and crates) are disclosed among property, plant and equipment with the consideration of their life span of three or four years.

11. Investment property Investment property is property (plots of land and buildings—or parts of buildings—or both) in the Group's possession or financial lease with the purpose to obtain rents or increase the value of an asset. Investment property is not used for the production and sale of goods or services or for administrative purposes for ordinary operation.

A N N U A L

R E P O R T

2 0 0 9

A piece of land and building brokered for the increase of the long-term investment's value or given for operating leasing and not for sale in the near future, is determined as an investment property. An investment property is recognized as an asset only if it is probable those future economic benefits will flow into the company and if the cost can be reliably measured. To measure investment property the Group transferred in 2008 from the cost model to the fair value model. On 31.12.2008 the value of investment property was adjusted to fair value based on an appraisal carried out by accredited appraisers. The investment property has been, from taking into account the cost value, decreased by accumulated amortization according to the straight-line depreciation method, considering the useful life of a particular investment property. Bearing in mind the modified valuation policy on the fair value model, the revaluation effects (impairments and strengthenings) are reflected in the profit and loss account.

12. Impairment of non-financial resources Resources which have an unlimited life period and are not amortized are annually tested for impairment.

198

Resources which are amortized are checked for impairment whenever events or circumstances point to the resource being impaired. A loss due to impairment is recognized in the amount for which the carrying value of the resource exceeds its replacement value. Replacement value is higher than the fair value of the asset less sales costs and value in use.

D .

is estimated annually according to the impairment needs.

P I V O V A R N A

L A Š K O

cash flows independent from other units (money-creating units) can be determined. Positive goodwill value

D .

For the purposes of the impairment establishment, resources are distributed in smaller units for which

13. Non-current assets for sale Non-current assets for sale (group for disposal) are those non-current assets, the carrying value of which is expected with reason to be settled predominantly by means of sale within the following 12 months and not by means of subsequent use. Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. In 2009, the Group classified investment in the company Večer, d. d., Maribor, among non-current assets for sale due to its intended sale.

14. Inventories Inventories are accounted for at the lower of the cost and the realizable value by using the average price method. The value of finished products and production in course includes the total production costs, which include the production material costs, work production costs, depreciations, services and other production costs. The net realizable value is estimated on the basis of the selling price in ordinary operation less the costs of finishing and sale.

15. Operating receivables Operating receivables are initially recognized at their fair value and subsequently measured at their amortized cost by using the valid interest method less the impairment. Operating receivables impairment is formed when the Group expects not to be able to recover the entire sum of the amounts due. The amount of impairment represents the difference between the carrying value and the current value of the (expected) estimated future cash flows, discounted at the valid interest rate. The sum of impairment is recognized in the profit and loss statement.

16. Cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents comprise the cash in hand, bank

Reservations are recognized when the Group presents a legal liability as the result of past events for which there is a sizable possibility that the Group will have to settle this liability, and the liability can be reliably assessed. Reservations must not be formed to be used as a cover for future operating losses.

18. Reservations for severance pay and long-service awards The net liability of the Group as regards long-term benefits with respect to the years of service, excluding

R E P O R T

17. Reservations

A N N U A L

Bank account limits are included among financial liabilities in the balance sheet.

2 0 0 9

sight deposits and investments in money market instruments without exceeding the bank account limits.

pension schemes, is the sum of earnings which the employees should get as replacement for their service in the current and present periods. The liability is charged with use of the method of the expected importance of units and is discounted on the current value.

19. Deferred taxes A deferred tax is disclosed as a whole with the consideration of the liabilities method on the basis of the

199

temporary differences among the tax based on the assets and liabilities and the disclosed sums of the tax in consolidated financial statements. Deferred tax is accounted for at the acquisitions with respect to the initial

deferred tax liability settled. A deferred tax receivable is recognized if there is a probability that, in the future, tax profit will be available, from which it will be possible to use temporary differences. Deferred tax is disclosed on the basis of temporary differences arising from investments in subsidiary companies, except when time balance of the closure of temporary differences is under the Group's control and there is a probability that temporary differences will not be cancelled in the near future.

20. Operating liabilities Operating liabilities supply credits for purchased goods or purchased services and liabilities toward employees, the state, owners and others. They also include accrued costs and deferred revenues. Liabilities are recognized in the accounting ledgers if there is a probability that their settlement will give rise to a decrease in the factors enabling economic benefits, and the settlement sum can be reliably assessed. Initially they are recognized at their fair value, and are subsequently assessed at their amortized cost with the use of the valid interest rate method.

D . L A Ĺ K O

on the day of the balance sheet and is expected to be used when a deferred tax receivable will be realized or

P I V O V A R N A

Deferred tax is calculated with the use of the tax rate (and legislation) which is defined by the law and valid

D .

recognition of assets and liabilities which have no influence either on the operating profit, tax profit or loss.

21. Financial liabilities Financial liabilities are recognized at the fair value at their occurrence, excluding the transaction expenses arisen during this. Within the following periods, financial liabilities are assessed at their amortized value with the use of the valid interest rate method. Each difference between the receipts (without the transaction expenses) and liabilities is recognized in the profit and loss statement in the period of the entire financial liability.

22. Share capital Ordinary shares are classified in equity. Transaction expenses directly linked with the issue of new shares, which are not related to the company acquisition, are disclosed as a decrease in capital. Any surplus of the

A N N U A L

R E P O R T

2 0 0 9

received paid sum's fair value over the carrying value of the issued new shares is recognized as a paid equity surplus.

23. Treasury shares If the parent company or its subsidiary companies buy equity in the parent company, the paid sum including the transaction expenses excluding tax is subtracted from the entire equity as own shares (treasury shares) all until these shares are withdrawn, reissued or sold. If treasury shares are later on sold or reissued, all received payments excluding transaction expenses and related tax effects are included in equity.

24. Dividends Until being approved at the shareholder's meeting, the envisaged dividends are dealt with as deferred profits.

25. Segment reporting

200

Operating segments produce/perform products or services which are different from the products and services of other segments by their risks and benefits. Regional (geographical) segments guarantee products or services within a specific economic environment which is prone to risks and benefits which differ from

P I V O V A R N A

L A Ĺ K O

D .

risks and benefits in other economic environments.

26. Tax policy The tax statements of Pivovarna LaĹĄko, d. d., and companies of the Pivovarna LaĹĄko Group in Slovenia are drawn up in compliance with the International Financial Reporting Standards as adopted by the EU and the Corporate Income Tax Act. The corporate income tax level in the year 2009 is 21 %. The company's tax base is the profit as the surplus of revenue over expenses, where the basic criteria for recognition or inclusion in a tax statement are still the revenues and expenses as shown in the income statement, defined pursuant to the legislation or accounting standards. The tax base is decreased for recognized tax relief and for covering a loss brought forward.

27. Assessment of value of individual items On the basis of assessments of the management, appraisers, actuaries and other experts, in the year 2008 or 2009 the following assets and liabilities were assessed: immovable property, investment property, financial assets and reservations. Due to these assessments, there is some uncertainty regarding the attainment of specific assumptions used at valuation.

MANAGING FINANCIAL RISKS OF THE GROUP Management of the financial risks of Pivovarna LaĹĄko Group, such as credit risk, interest rate risks, currency risks and liquidity risks, represents an integral part of this report. It is described in more detail on pages 94 and 95 of this annual report. In the financial part of the report, this matter is described in more

A N N U A L

R E P O R T

2 0 0 9

detail on pages 232,233 and 234, in explanatory note number 30.

P I V O V A R N A

L A Ĺ K O

D .

201

L A Ĺ K O

D .

A N N U A L

R E P O R T

2 0 0 9

IFA in acquisition

- 28,938,487

9,409,880

(479,833)

1,805,801

1,006,383

7,077,529

(22,914)

7,100,443

234,083

2,105,152

(1,006,383)

1,770,964

1,340,571

5,716,283

(604,890)

1,055,367

106,229

159,035

532,528

4,468,014

(20,446)

4,488,460

126,928

18,031

108,897

108.897

98,194,513

128,131,780

31 December 2009

31 December 2008

34,854,083

28,938,487

2,611,983

3,693,597

125,186

107,155

1,340,571

2,105,152

CURRENT COST

513,270

Disposals

31 December 2009

Transfer from property, plant and equipment

51,327

307,962

Revaluations

Direct gains

Depreciation on the year

153,981

1 January 2009

Currency differences

153.981

Elimination of Fr. Zg. from consolidation

31 December 2008

ACCUMULATED VALUE ADJUSTMENT

98,707,783

Disposals

31 December 2009

(5,915,596)

(29,577,978)

Transfer from property, plant and equipment

Impairment

Transfer from investments in progress

34,854,083

Direct gains

128,285,761

Currency differences

1 January 2009

128,285,761

Elimination of Fr. Zg. from consolidation

31 December 2008

COST OF PURCHASE

Year 2009 Positive Licenses and Property ( in EUR ) Trademarks goodwill other IFAs rights

1. Intangible assets

EXPLANATORY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

P I V O V A R N A

202 167,063,603

133,038,904

6,356,481

(604,890)

1,055,367

414,191

210,362

550,559

4,730,892

(20,446)

4,751,338

139,395,385

(479,833)

1,805,801

(35,493,574)

1,770,964

171,792,027

(22,914)

171,814,941

Total

IFA in acquisition

Transfer from investments in progress

Revaluations

Disposals

6,050,354 - 6,050,354 1,026,958 (180,318) 811,711 (142,903) (19,469) 7,546,333

34,854,083 - 34,854,083 - - - - - 34,854,083

234,083

180,318

53,765

108,897

52,126

3,006

53,765

L A Ĺ K O

D .

127,772,491

1 January 2008

P I V O V A R N A

127,772,491

31 December 2008

D .

1,915,489

34,854,083

A N N U A L

2,974,226

34,854,083

R E P O R T

2 0 0 9

125,186

369,580

1,337,617

164,911,643

167,063,603

4,681,004

(19,416)

511,776

4,188,630

171,744,607

1,337,617 -

(19,469)

(142,903)

(103,269)

2,909,975

169,100,273

Total

(914,980)

1,883,017

369,580

CURRENT COST

(19,416) 4,572,107

- -

Disposals

31 December 2008

14 (52,126)

Transfer from/to

508,770

Revaluations

4,134,865

Depreciation on the year

1 January 2008

ACCUMULATED VALUE ADJUSTMENT

127,772,491

Retraining

31 December 2008

127,772,491

Direct gains

1 January 2008

Currency differences

31 December 2007

COST OF PURCHASE

Year 2008 Positive Licenses and Property ( in EUR ) Trademarks goodwill other IFAs rights

203

All intangible assets are measured according to the cost model. The brand names and goodwill items represent the largest value amongst long-term intangible fixed assets; the value of each is every year assessed and the possible need for impairment determined. As at 31 December 2009, a verification of fair value for goodwill was performed by an accredited appraiser, who is registered at the Slovenian Institute of Auditors. The basis for verifying the need for impairment of brand names and goodwill was the assessment of the value of Union Group and Delo, d. d. The method of the current value of expected free cash flows was applied in assessing the value. On the basis of the valuation, in 2009 the Group disclosed an impairment of the brand names of the company Delo, d. d. Ljubljana in the amount of EUR 29,577,978 and impairment of goodwill in the amount

A N N U A L

R E P O R T

2 0 0 9

of EUR 5,915,596. The value of brand names of the company Delo, d. d., as at 31.12.2009 amounted to EUR

P I V O V A R N A

L A Ĺ K O

D .

204

29,534,022, and the value of brand names of Union Group EUR 68,660,491. The Group from the acquisition of Union Group discloses goodwill in the amount of EUR 25,413,597, and from the acquisition of the company Delo, d. d., EUR 3,524,890.

Production plant and machinery

Other plant and Small equipment inventory

Transfer to investment properties

Revaluations

Retraining

1,098,684

P I V O V A R N A

L A Ĺ K O

D .

166,845,146

(457,134)

52,785,951

(575,337)

31 December 2009

Disposals

2,738,234

1,765,827

(2,738,234)

1,633,590

(196,381)

Transfer to â&#x20AC;Ś

Elimination of impairment

83,329

Impairment

9,006,503

5,176,552

1,482,841

156,883,040

(16,813,550)

(44,705)

6,229

173,735,066

Revaluations

Transfer from investments in progress

Retraining

Direct gains

43,729,583

Elimination of Fr. Zg. from consolidation

1 January 2009

4,597

43,724,986

Transfer to intangible fixed assets

Currency differences

31 December 2008

24,604 - (7,883,336) 54,131,632

- 3,687,112 - (6,704,824) 402,888,484

A N N U A L

137,390 (4,457,580)

889,681 1,262,332

1,470,757

568,349 4,500,869

62,687,784

404,473,003 (3,636,025)

- 473,679

(607,145)

- -

R E P O R T

2 0 0 9

22,207,872

(1,411,943)

1,803,933

1,360,688

(389,706)

223,705

20,621,195

2,174 (119,408)

17,725

20,621,195

62,938,484

(1,460,710)

405,915,988

COST OF PURCHASE

Year 2009 ( in EUR ) Properties Buildings

2. TANGIBLE FIXED ASSETS

205

3,103,025

(20,011,583)

203,354

11,568,271

11,342,983

11,342,974

Capital assets in acquisition

701,962,110

(17,032,574)

1,803,933

7,111,133

(4,457,580)

24,338

1,295,361

(1,834,012)

15,313,923

699,737,588

473,679

(16,813,550)

(44,705)

(607,145)

(1,580,118)

30,734

718,278,693

Total

L A Š K O

D .

Production plant and machinery

R E P O R T

2 0 0 9

Other plant and Small equipment inventory

A N N U A L

996,272

(181,058) - (48,449)

Acquisition

Depreciation on the year

Retraining

Revaluations

Transfer to …

Disposals

31 December 2009

349,783,946

(6,361,207)

(3,537,210)

16,085,667

374

343,596,322

(1,460,710)

8,507

345,048,525

41,414,562

(7,622,770)

133,375

1,545,641

3,399,319

43,958,997

473,679

(696,638)

(119,408)

1,266

44,300,098

14,716,513

(1,320,817)

1,807,133

(389,704)

2,980,790

11,639,111

2,249

2,204

2,196

Capital assets in acquisition

43,729,583

Transfer to investment properties

1 January 2009

4,597

52,785,951

Elimination of Fr, Zg, from consolidation

Currency differences

31 December 2009

93,336,386

(17,679)

5,287

97,747,768

60,876,681

9,219

53,104,538

18,728,787

(544)

908

12,717,070

8,982,084

7,491,359

11,340,779

3,100,776

CURRENT COST

69,097,378

4,783,959

63,546,654

(16,812,221)

(27,026)

1 January 2009

Transfer to investment properties

Elimination of Fr. Zg. from consolidation

942

Correction from year 2008

Revaluations

Currency differences

80,384,959

Retraining

31 December 2008

ACCUMULATED VALUE ADJUSTMENT

Year 2009 ( in EUR ) Properties Buildings

2. TANGIBLE FIXED ASSETS (continuation)

P I V O V A R N A

206 236,994,300

(17,679)

(544)

20,011

226,947,462

475,014,648

(15,353,243)

1,807,133

(47,683)

(1,385,001)

27,249,780

374

462,743,288

473,679

(16,812,221)

(27,026)

(696,638)

(1,580,118)

10,723

481,374,889

Total

Capital assets in acquisition

173,667,639

(2,905)

(415,780)

(1,765,827)

(14,011,948)

13,588,715

317,636

175,957,748

(200) 57,522,122

(2,715) 411,418,568

20,623,460

(9)

(6,616,841)

(168,131)

500 (3,809,398)

- -

- (24,604)

- (3,687,112) -

213,500 5,549,697

- 4,037,246

- 14,019,440

(9,364,272)

3,534,412

921,487

739,904

18,110,832

56,397,091

409,713,323

Retraining

Depreciation on the year

Acquisition

Revaluations

Transfer to …

Disposals

Currency differences

31 December 2008

80,341,600

1,971

(29,720)

(18,814,377)

4,738,875

94,444,851

- (168,131) (6,247,137) (8)

8,992 - 500 (3,694,676) 169 43,532,891

21,685 - - (9,040,607) 2,209 345,859,097

(132,876)

11,641,301

118,795

2,405,486

- 3,960,799

15,665,172

43,257,107

17,843,859

337,031,951

8,919,263

(843,638)

843,638

11,340,534

(1,950)

(44,259,053)

(843,638)

47,525,912

L A Š K O

31,988,230

31 December 2007

P I V O V A R N A

43,706,369

31 December 2008

D .

81,512,897

93,326,039

13,139,984

72,681,372

A N N U A L

13,989,231

65,559,471

R E P O R T

2 0 0 9

2,445,660

8,982,159

8,075,625

11,340,534

CURRENT COST

31 December 2007

ACCUMULATED VALUE ADJUSTMENT

43,706,369

(4,050)

31 December 2008

Currency differences

(88,862)

Transfer to …

Disposals

6,380,687

(1,633,590)

Revaluations

Impairment

7,063,954

Retraining

Transfer from investments in progress

31,988,230

Direct acquisition

31 December 2007

COST OF PURCHASE

Production Other Year 2008 plant and plant and Small ( in EUR ) Properties Buildings machinery equipment inventory

207

209,843,768

236,903,804

481,374,889

4,341

(19,012,140)

(167,631)

(18,814,377)

149,472

28,949,019

(976,514)

491,242,719

718,278,693

(9,879)

(20,297,103)

(167,631)

(7,111,133)

(7,631,261)

(630,138)

53,039,351

701,086,487

Total

Disposals of tangible fixed assets are represented by the sale and write-offs of tangible fixed assets. The Group did not lease any fixed assets. From 2008 on, the company has applied the revaluation model for the purposes of valuating real estates, while equipment and small tools are valuated according to the cost model. The company pledged its tangible fixed assets to insure short-term and long-term loans, the current value of which totalled EUR 78,626,110 on 31.12.2009. The book value of the pledged property totalled EUR 66,046,695, and the book value of pledged equipment EUR 12,579,415. Due to poor business results and as a consequence of the poor financial standing, an appraisal was performed for the company Jadranska Pivovara – Split, d. d., as at 31 December 2008. On the basis of the appraisal

A N N U A L

R E P O R T

2 0 0 9

the fair value of real estate totalled EUR 10,867,782, the fair value of equipment was EUR 5,214,130 and its liquidation value was EUR 4,481,300. An appraisal of the entire company was performed in 2008, including the company's liabilities. Based on this appraisal Pivovarna Laško Group disclosed an impairment of tangible fixed assets in the amount of EUR 7,111,133. Because on 31.12.2009 the appraisal of tangible fixed assets was performed on different assumptions, the Group eliminated a part of the impairments and increased other operating revenues in the amount of EUR 2,653,553.

3. Investment property

Year 2009 ( in EUR ) Properties Buildings

208

Investment property in acquisition

COST OF PURCHASE 31 December 2008 Revaluation Currency differences

6,161,601

11,625,984

17,787,585

(1,310,126)

(1,359,492)

(2,669,618)

44,705

10,311,197

15,162,672

Revaluation

L A Š K O

D .

- 4,851,475

D .

1 January 2009

P I V O V A R N A

Total

Retraining

(14,244) -

(1,049,966)

(1,064,210)

(1,068,930)

Decrease in value

(3,678,321)

(1,248,988)

(4,927,309)

31 December 2009

1,158,910

6,943,313

8,102,223

ACCUMULATED VALUE ADJUSTMENT 31 December 2008

4,294,637

Revaluation

(2,669,506)

Currency differences

27,026

1 January 2009

1,652,157

Depreciation

223,183

Retraining

(988,526)

Decrease in value adjustment

(182,987)

31 December 2009

703,827

CURRENT COST 31 December 2009

1,158,910

6,239,486

7,398,396

1 January 2009

4,851,475

8,659,040

13,510,515

Year 2008 ( in EUR ) Properties Buildings

Investment property in acquisition

Total

COST OF PURCHASE Increase in value

4,391,760

Transfer from investments in progress

430,942

Revaluation Decrease in value 31 December 2008

20,619,993

430,942

4,822,702

(430,942)

171,132

(7,145,959)

(6,974,827)

(662,718)

578,460

17,226,690

17,805,150

12,199,701

ACCUMULATED VALUE ADJUSTMENT 31 December 2007

Depreciation

518,108

Disposals

(410,050)

Revaluation

(8,013,124)

31 December 2008

4,294,635

CURRENT COST 31 December 2008

578,460

12,932,055

13,510,515

1 January 2008

407,328

8,012,964

8,420,292

2 0 0 9

20,212,665

R E P O R T

407,328

A N N U A L

31 December 2007

In 2009, the Group generated EUR 338,233 of revenue and EUR 1,385,579 of expenses from investment property. Revenues were generated from rents, while expenses refer to charged depreciation and impairments. Affiliated company Radenska, d. d., disclosed an impairment of the business building in Radenci in

209

the amount of EUR 1,064,210, based on the appraisal performed by an accredited appraiser.

at Radenska, d. d., the administrative building in Radenci and business buildings in BoraÄ?evo, Petanjci and Sarajevo. Fructal, d. d., is among property investments disclosing its business premises located in Zagreb. To measure investment property, the Group transferred in 2008 from the cost model to the fair value model. The investment properties have been, taking into account the cost value, decreasing by accumulated amortization according to the straight-line depreciation method, considering the useful life of a particular investment property. In order to ensure long-term and short-term loans, the Group pledged investment properties in the amount of EUR 5,780,573.

D . L A Ĺ K O

real estate property investments: Sports Hall Tri Lilije, Hotel Hum, Hotel Savinja and Restaurant Grad Tabor;

P I V O V A R N A

performing primary activities but is leased by the Group. The following real estate property is recorded as

D .

Real estate property investments include real estate property which is recorded as property not used for

4. A. Long-term investments in subsidiary companies ( in EUR )

Share in capital

2009

2008

SHARES IN COMPANIES OF THE GROUP

A N N U A L

R E P O R T

2 0 0 9

In Slovenia: Firma Del, d. o. o. Laško

100 %

7,427

7,428

Radenska, d. o. o. Zagreb

100 %

4,907

Radenska, d. o. o. Beograd

100 %

250

Izberi, d. o. o. Ljubljana

100 %

8,722

12,584

21,307

232,241

232,240

Abroad: RA&LA, d. o. o. Sarajevo

100 %

Eurofruit Sarajevo, d. o. o.

100 %

14,093

246,334

246,333

Total

258,918

267,640

The long-term investments in subsidiary companies are valued according to the cost model. The financial statements of the subsidiaries represented in the above table are not included in the consolidation due to their material insignificance.

4. B. Long-term financial investments in associated companies ( in EUR )

Share in capital

2009

2008

Thermana, d. d. Laško

22.570 %

1,594,000

Poslovni Sistem Mercator, d. d. Ljubljana

24.340 %

134,612,076

Birra Peja, d. d. Peć, Kosovo

39.550 %

2,630,000

4,804,454

Total

138,836,076

4,804,454

P I V O V A R N A

L A Š K O

D .

210

On 31.12.2009 the Group owns 878,841 shares or 23.34 % of Poslovni Sistem Mercator, d. d., Ljubljana (Pivovarna Laško, d. d., 8.43 %, Pivovarna Union, d. d., 12.33 % and Radenska, d. d., 2.57 %), 645,003 shares or 22.57 % of Thermana, d. d., Laško, and 700 shares (39.55 %) of the company Birra Peja, Peć, Kosovo. On 31.12.2009 Pivovarna Laško Group owned 23.34 % of shares of the company Poslovni Sistem Mercator, d. d., which is the reason the investment is classified among long-term financial investments in associated companies and is, in accordance with the IFRS, valued by the equity method. In 2009 Pivovarna Laško Group regained the voting rights taken in 2008. In 2008 the investment was valued according to the cost method and was at the end of the year revaluated to the fair market value based on the rate of shares on the Ljubljana Stock Exchange. In 2009, Pivovarna Laško Group, in accordance with IFRS and the equity valuation method, in its financial statements recognized participation in profits of Poslovni Sistem Mercator for the years 2008 and 2009 and at the same time took into account the influence of all other changes in equity of the aforementioned company. Arising from the participation in profits of Mercator Group, decreased by dividends paid out, the Group disclosed financial revenues in the amount of EUR 6,772,772, and increased its revaluation surplus in the amount of EUR 22,665,474 based on other modifications in the capital of Mercator Group. Due to revaluation of the investment MELR to the stock market value, it recognized financial expenses in the amount of EUR 41,083,074. From this amount, EUR 33,753,356 refers to impairment of investment, and EUR 7,329,719 to elimination of a negative capital surplus arising from previous revaluations

to the fair value. On 31.12.2008 Pivovarna Laško Group owned 358,978 shares of the company Thermana, d. d., in the amount of EUR 3,837,454, which represented a 13.794 % ownership share in the aforementioned company. In 2009, the Group obtained from Infond Holding, d. d., Maribor, also 286,025 shares of Thermana, d. d., in the amount of EUR 3,060,468, with which it became its 22.57 % owner, and the company Thermana, d. d., became an associated company of Pivovarna Laško, d. d. On 31.12.2009 an accredited business appraiser performed an investment appraisal. The estimated value totals EUR 1,594,000, which is EUR 5,303,921 lower than its purchase value. In 2009, Thermana, d. d., operated at a loss in the amount of EUR 2,050,327, which is why, according to the rules of valuation by cost method, the Group as a financial expenditure disclosed participation in the loss in the amount of EUR 455,700, in contrast to the valuated fair value of investment in

343,430, and the capital value as at 31.12.2009 amounted to EUR 11,804,368. In accordance with the rules of the cost method, the Group disclosed participation in the loss in 2009, in the amount of EUR 135,826. On 31.12.2009 an accredited business appraiser performed an investment appraisal. The estimated value of the

A N N U A L

investment totals EUR 2,630,000, which is why the Group disclosed an impairment of investment in the

R E P O R T

The company Birra Peja, a. d., Peć, is an associated company of Pivovarna Union, d. d., which is the owner of a 39.55 % share in it. In 2009 the aforementioned company generated a loss in the amount of EUR

2 0 0 9

the amount of EUR 4,848,221, where it disclosed an impairment in debit of financial expenses.

amount of EUR 2,038,627.

4. C. Available-for-sale financial resources ( in EUR )

2009

2008

Other investments in shares at the cost of purchase

12,261,500

17,581,517

Other investments in shares at the fair value

18,568,424

179,699,512

Total

30,829,924

197,281,029

211

Maribor in the amount of EUR 7,112,588, an investment in 1,771 shares of the company Telekom Slovenija, d. d., in the amount of EUR 238,483 and other investments of smaller amounts. According to the purchase value, the Group records 213,115 shares of Probanka, d. d., Maribor (6.3 %) in the amount of EUR 5,217,752; 193,237 shares of Premogovnik Velenje in the amount of EUR 4,000,000; 270,648 shares of Elektro Gorenjske, d. d., (1.6 %) in the amount of EUR 974,333; and other investments of smaller amounts.

P I V O V A R N A

According to the fair value, the Group is disclosing an investment in 424,016 shares of Zavarovalnica Triglav, d. d., in the amount of EUR 10,770,006, an investment in 1,922,321 shares of the company Elektro

L A Š K O

D .

is reflected directly in owner's equity.

D .

For those investments for which the fair value can be reliably measured, the fair value of profit and losses

Movement of available-for-sale financial assets ( in EUR )

2009

2008

197,281,029

37,894,802

Balance as at 1 January Changes in the year: Transfer to N-CI in associated companies (MELR) + Thermana, d. d.

A N N U A L

R E P O R T

2 0 0 9

Gains

(142,764,639)

170,977,504

4,030,884

45,607,253

Revaluation

(8,707,648)

(46,329,084)

Transfer to non-current assets for sale

(18,998,291)

Transfer from current investments

Sale Balance as at 31 December

(11,411) 30,829,924

2,892,341 (13,761,787) 197,281,029

In 2009 the Group acquired EUR 4,030,884 and disposed of EUR 11,411 of available-for-sale financial assets. Due to dispossession of voting rights, the Group reallocated from its available-for-sale long-term financial investments in associated companies an investment into shares of Poslovni Sistem Mercator (MELR) in the amount of EUR 138,927,185, which is equal to the amount of the fair value of the aforementioned company on the last day of 2008. In addition, the Group also reallocated an investment into shares of the company Thermana, d. d., in the amount of EUR 3,837,454 among investments into associated companies. And in addition to the above, the Group reallocated an investment into Večer in the amount of EUR 18,998,291 among non-current available-for-sale assets. Due to the decision of the Competition Protection Office, the

212

company Delo must sell 75 % of the investment in the company Večer within the period of one year due to a discrepant concentration of the companies Delo, d. d., and Večer, d. d., with the rules of competition. Due to the reduction in fair value, the Group revaluated the available-for-sale financial assets to new lower

P I V O V A R N A

L A Š K O

D .

values in the amount of EUR 8,707,648.

Impairments of investments in shares valued at fair value a) Impairment of investment in Elektro Maribor, d. d. In 2008, Pivovarna Union, d. d., bought a 5.74 % share in the amount of EUR 20,184,371 from Infond Holding. On the basis of a valuation performed by an accredited business appraiser, an impairment of EUR 4,805,803 was carried out in 2008. A repeat valuation of the investment was performed on 31.12.2009, made by an accredited business appraiser registered with the Slovenian Institute of Auditors. Based on the assessment, the value of the investment totals EUR 7,112,588 or EUR 3.7 per share. In 2009, the Group disclosed impairment among financial expenses in the amount of EUR 8,265,980. The assessor has assessed the market value of the investment using the following methods:

•V aluation methods based on market comparisons of similar companies, the shares of which are subject to public sale on the securities market (methods of comparable companies listed on the stock exchange), or companies which were (as recently as possible) sold or merged with other companies (comparable transaction methods);

•E volution of the value of shares analysis of companies on the grey market. In the calculation of the final value of the share of Elektro Maribor, the appraiser considered equally the assessment of values based on all three methods used (comparable companies, comparable transactions and

evolution of the share on the grey market). In the calculation of the final value, a weighted average of 33.3 % per method was applied. In countries with developed capital markets, valuation methods are most commonly used to assess the value of companies which are based on market comparisons of similar companies, the shares of which are subject to public sale on the securities market (methods of comparable companies listed on the stock exchange), or companies (as recently as possible) sold or merged with other companies (comparable transaction methods). Market value of ownership capital of these companies is thus (more or less) known. From the standard valuation methods point of view, the company Elektro Maribor can be classified among companies of which ownership shares are not traded freely on the securities market (»closely held companies«). Despite this, shares of the aforementioned company are traded on the so-called »grey market«. The grey

market is relatively low compared to organized markets, which consequently makes it difficult to obtain information on the evolution of the value of a particular share. In the event of valuation of shares of the company Elektro Maribor, the appraisers obtained information on the evolution of the value of a share on 31.12.2009 or within a suitable length of time based on inquiries made in larger investment and stock exchange companies in Slovenia, which are active and suitably informed of events and developments on the securities market. This way they checked the current prices of active demand for shares of the company in question.

R E P O R T

in most cases also lower volume of transactions. Information of both customers and salesmen on the grey

A N N U A L

of a stock exchange. Typical for the grey market is lower transparency and traceability level, and consequently

2 0 0 9

market represents trading with shares outside organized frameworks of trading with securities in the form

The Group has pledged all shares of EMAG for the purpose of insuring short-term loans.

4. D. Financial investment in possession until maturity

2009

2008

Investments in possession until maturity

12,500

Total

12,500

( in EUR )

2009

2008

5,870,650

2,500,000

213

D .

( in EUR )

Long-term loans to associated companies Other long-term loans

733,045

48,463

Total

6,603,695

2,548,463

Among its long-term loans, the Group discloses a loan of Pivovarna Union, d. d., to the company Birra Peja, a.d., Peć, in the amount of EUR 5,870,650. The loan is insured by bills of exchange and a pledge of property and falls due in 2014.The interest rate is in the range between 6-month EURIBOR + 0.9 % and 6-month EURIBOR +3.8 %. The other long-term loans refer especially to long-term housing loans by employees. The interest rate is on average the 6-month EURIBOR + 1 %.

P I V O V A R N A

L A Š K O

D .

5. Long-term loans

6. Long-term operating receivables ( in EUR )

2009

2008

Long-term receivables to others

744,239

1,648,283

Total

744,239

1,648,283

7. Long-term receivables for deferred taxes

A N N U A L

R E P O R T

2 0 0 9

Long term deferred tax assets have been calculated based on the temporary differences by taking into consideration the liability method and the tax rate which will be valid in the year when the deferred tax assets and liabilities are realized. The tax rate for the income tax assessment of legal entities will be reduced from 21 % in 2009 to 20 % from 2010 onwards.

( in EUR ) Reservations

Liabilities to employees

Fair value (financial assets) Other

Total

RECEIVABLES FOR DEFFERED TAX 1 January 2008

187,535

1,432,744

3,377,174

226,821

5,224,274

2,816,117

2,522,806

5,291,417

Change in the profit and loss statement Change in the balance sheet 31 December 2008

214

7,853

(55,359)

1,502,736

195,388

1,377,385

7,696,027

2,749,627

12,018,427

36,317,740

(1,582,676)

34,584,238

Change in the profit and loss statement Change in the balance sheet

(72,852)

117,414

1,304,533

(2,119,741) 41,894,026

- 1,166,951

(2,119,741) 44,482,924

D .

31 December 2009

(77,974)

L A Š K O P I V O V A R N A

Long-term deferred tax assets as at 31.12.2009 are shown as a deferred tax asset under the heading »financial investments« in the amount of EUR 41,858,026; liabilities to employees for severance pay, jubilees and

30,152,142, is not shown under the amount of long-term deferred tax assets because the subsidiary does not

unused holiday time in the amount of EUR 1,304,533; and the remainder in the amount of EUR 1,284,365. The asset from the tax loss of the subsidiary Jadranska Pivovara – Split, d. d., which amounted to EUR expect any taxable profit in the future. Under tax loss, the deferred tax asset would amount to EUR 6,030,428 after taking into consideration the 20 % tax rate.

8. Non-current assets for sale ( in EUR )

2009

2008

Properties for sale

12,874,507

1,666,506

Total

12,874,507

1,666,506

In the value of available-for-sale properties, the Group discloses an investment in ČZP Večer, d. d., in the amount of EUR 11,208,000, as properties the Group plans to sell within the period of one year.

The company Delo, d. d., owns a 79.243 % share of the company ČZP Večer, d. d. The company Delo, d. d., due to a provision under Article 44 of the Prevention of Restriction of Competition Act, has a share that exceeds 19.9 % but does not have voting rights, and that is why financial accounts have not been prepared. The value of the investment in Večer is EUR 11,208,000 and is based on the market value assessment prepared by an accredited business appraiser registered at the Slovenian Institute of Auditors. On the basis of valuation, the investment was impaired by EUR 7,682,000 in 2009. The impairment is disclosed in reduction of capital surplus from revaluation in the amount of EUR 792,549 and in deferred taxes in the amount of EUR 198,138, as well as financial expenses from impairment in the amount of EUR 6,691,313. Deferred taxes were formed in the amount of EUR 669,131. The assessment of the market value of ownership capital was acquired through the method of the current

of the company are deducted. The value obtained this way is adjusted for possible potential liabilities, premiums and discounts, and increased by the value of surplus assets and financial investments. The methods of comparable companies and comparable transactions were also used. Due to numerous restrictions in their use, these two methods were applied only as control methods. The value was calculated in the value range between EUR 9,547,000, which is the current value of pessimistically assessed free cash flows, and EUR 12,870,000, which is the current value of optimistically assessed expected free cash flows.

R E P O R T

value) and then, due to the objective of valuating ownership capital of the company, all financial liabilities

A N N U A L

rent value of free cash flows without the repayments of interest and the principal value of loans (total equity

2 0 0 9

value of expected free cash flows without including debt. When using this method, one first assesses the cur-

On 23.9.2009, the Competition Protection Office issued a decision, by which it decided:

• t hat the concentration of companies Delo, d. d., and Večer, d. d., is not in compliance with the rules of competition and shall therefore be prohibited. It was produced by acquiring 151,608 shares of the company Večer, d. d.,

• f or elimination of effects of the performed prohibited concentration, the company Delo must finally dis-

215

pose of 191,943 shares of the company Večer, d. d., which is a 75 % capital portion in the share capital, so that after the completed disposal it will no longer have explicit or joint control over the company Večer,

• t he measure of sale shall be carried out by Delo, d. d., within the period of one year from the receipt of the decision,

• f rom the receipt of the decision until the measure of sale the company, Delo, d. d., shall inform the Competition Protection Office in written form of all meetings and negotiations with potential customers of 191,930 shares of the company Večer, d. d. For the purposes of implementing the decision of the Competition Protection Office, the company Delo, d. d., began with procedures to sell the shares. On the general meeting of 6.1.2010, the Supervisory Board appointed an expert commission for the preparation of professional starting points for the sale of the share in the company Večer, d. d. External consultants performed an economic and legal review of the company Večer, d. d. A call for public bid for the acquisition of at least 191,943 shares (75 %) of the company Večer, d. d., was published in the local and foreign media. The deadline for the submission of a document which would indicate an interest in business cooperation expired on 29.3.2010. The Group's activities are subject to a regular report to the Competition Protection Office. Shares of the company Večer, d. d., were pledged at banks when hiring a loan for their acquisition.

D . L A Š K O

Office,

P I V O V A R N A

• f or the disposal of shares of the company Večer, d. d., the company Delo shall obtain consent from the

D .

d. d.,

9. Inventories ( in EUR )

2009

2008

21,851,699

26,709,400

A N N U A L

R E P O R T

2 0 0 9

Material and raw material Unfinished production

4,670,334

4,672,101

Products

10,968,816

9,708,344

Merchandise

496,542

1,218,532

Total

37,987,391

42,308,377

In comparison to the previous year, the Group decreased stock by 10.2 %. No bigger deficits or surpluses were established after the regular annual inventory. A stock value adjustment was formed in the amount of EUR 348,803 in 2009. As at 31 December 2008 no inventory was mortgaged.

10. A. Short-term operating receivables ( in EUR )

2008

Short-term trade operating receivables: on the domestic market

41,309,633

47,381,349

on foreign markets

15,653,684

10,644,545

Less value adjustment

(12,015,127)

(10,024,807)

44,948,190

48,001,087

Short-term operating receivables on others

5,678,861

4,341,469

Advances

1,440,389

4,773,435

Total

Less value adjustment

(2,303,018)

Total

49,764,422

(812,742) 56,303,249

P I V O V A R N A

L A Ĺ K O

D .

216

2009

At 31.12.2009, the Group disclosed EUR 49,764,422 of short-term operating receivables, which is 11.6 % less than in the past year. The disclosed value of all short-term operating receivables and other receivables reflects the fair value.

Value adjustment of short-term operating receivables ( in EUR )

2009

2008

Balance as at 1 January Recovered receivables written-down Final write-down of receivables Decrease in value correction in the year Increase adjustment from sued Decrease in value correction in the year Revaluation Transfer of interests Balance as at 31 December

10,024,807

11,249,619

(313,481)

(832,525)

(3,276,399)

(1,020,228)

4,765,742 544,198

770,089 -

(178,451)

(153,277)

447,941

11,089

770

12,015,127

10,024,807

2008

34,157,631

33,438,804

up to 30 days

6,960,617

8,748,363

from 30 to 60 days

3,089,329

2,333,720

unmatured

from 60 to 90 days

1,025,185

1,520,382

above 90 days

11,730,555

11,984,625

Balance as at 31 December

56,963,317

58,025,894

At 31.12.2009, the matured short-term operating receivables of the Group amounted to EUR 22,805,686. For the short-term operating receivables in amount of EUR 12,015,127 the adjustment has been formed, but for the difference in the amount of EUR 10,793,559 the adjustment has not been formed. Operating receivables from customers in the amount of EUR 5,738,039 are insured by received guarantees, and the group has a part of these operating receivables in foreign markets in the amount of EUR 4,822,127 insured by Prva Kreditna Zavarovalnica (SID), d. d., Ljubljana.

R E P O R T

2009

A N N U A L

( in EUR )

2 0 0 9

Maturity of trade receivables

10. B. Short-term receivables for overpaid corporate income tax ( in EUR )

2009

2008

Receivables for overpaid corporate income tax

2,338,805

6,854,113

Total

2,338,805

6,854,113

217

11. Short-term loans ( in EUR )

2009

2008

Short-term part of long-term loans given Short-term deposits Short-term loans Less value adjustment Total

1,163,519

2,834

5,982,140

14,741,477

96,720,084

62,352,724

(92,779,604) 11,086,139

(54,914) 77,042,121

On 31.12.2009 the Group had EUR 11,086,139 in short-term loans granted. In 2009 the Group granted EUR 101,869,346 of short-term loans, from which to companies which were at the time of the approval its parent companies, in total EUR 93,050,000; namely: to the company Infond Holding, d. d., EUR 54,250,000 and to the company Center NaloĹžbe, d. d., EUR 38,800,000. Center NaloĹžbe, d. d., in 2009 returned to Radenska, d. d., EUR 1,000,000. Due to its insolvency status and introduction of insolvency proceedings and receivership, the Group formed a value adjustment of loans and disclosed finan-

P I V O V A R N A

L A Ĺ K O

and paid a comparatively high income tax amount for legal entities due to their good operating results.

D .

calculated based on the liabilities in 2008 when the companies Radenska, d. d., and Delo, d. d., calculated

D .

Short-term receivables for excess income tax paid by legal entities is referred to as overpaid tax, which was

cial expenses for the complete value of loans granted to both related companies. Among others, the Group also formed a value adjustment for the loan granted to a non-related party in the amount of EUR 729,604. The interest rate for short-term deposits ranges from 0.5 % to 2.9 %, and for short-term granted loans between 4.8 % and 4.95 % nominal or 6-month EURIBOR +1.6 % to +2.8 %. The value of short-term loans is expressed as fair value.

12. A. Short-term financial investments Movement of short-term financial investments

A N N U A L

R E P O R T

2 0 0 9

( in EUR )

2009

2008

28,085,175

Balance as at 1 January

Changes in the year: Sale

(28,085,175)

Balance as at 31 December

2009

2008

Derivatives

1,213,547

13,630

Total

1,213,547

13,630

In 2009 the Group had no short-term financial investments.

12. B. Derivatives ( in EUR )

218

D .

Based on the assessment, its fair value amounts to EUR 1,213,547; the Group thus disclosed an impairment

P I V O V A R N A

L A Ĺ K O

Sh. a., in the amount of EUR 4,248,400. The derivative was assessed by an accredited business appraiser.

D .

In 2009, the Group concluded an option contract for the acquisition of shares of the company Birra Peja,

of the mentioned instrument in the amount of EUR 3,036,114.

13. Cash in banks, cheques and cash in hand ( in EUR )

2009

2008

Cash in banks

809,445

1,832,098

Cash in hand and received cheques

32,550

136,732

Monetary resources in foreign currency

75,539

129,532

Cash items in the process of collection

74,123

92,745

991,657

2,191,107

2009

2008

Deferred cost and accrued revenues

541,321

855,918

Total

541,321

855,918

Total

14. Deferred cost and accrued revenues ( in EUR )

Deferred cost and accrued revenues refer to short-term deferred costs and expenses and to short-term accrued income.

15. Majority owner's capital The Group's capital is composed of called-up capital, capital reserves, reserves from profit, retained profit or loss from previous years, revaluation surplus from financial investments classified in the group for-sale, and profit not yet distributed in advance or a business year loss not yet settled. Share capital appears as shareholder capital (capital with share or capital contributions). It is divided into

voting right at the annual general shareholder's meeting and participation in the profits. Capital reserves as at 31.12.2009 amount to EUR 78,908,924 and have, in 2009, decreased by EUR 23,468,797 to cover current losses. In the past years capital reserves have been formed from the paid-up capital surplus generated at two formed capital increases by shareholders and their payments, which exceeded the nominal value of paid shares and the general revaluation correction of capital. The value of paid-up

R E P O R T

ded up into 8,747,652 transferable ordinary shares with no par value issued. Each share gives the owner a

A N N U A L

The Group's called capital is defined in the company's Statute and amounts to EUR 36,503,305. It is divi-

2 0 0 9

called-up capital and uncalled capital. Uncalled capital is a deductible item of share capital.

capital surplus amounted to EUR 79,231,564, and the value of the general revaluation correction of capital EUR 23,146,157. Reserves include legal reserves in the amount of EUR 3,650,330, reserves for own shares in the amount of EUR 1,363,200, own shares as deductible items in the amount of EUR 1,363,200, and other revenue reserves. Legal reserves can be used to cover losses and capital increases. In 2009, for the purposes of covering the

219

current loss the Group spent legal reserves in the amount of EUR 21,956,464. Own shares include PILR shares (44,621 lots) in the amount of EUR 1,211,460, PULG shares (69 lots) in the amount of EUR 15,080,

In 2009, the Group spent all other revenue reserves to cover the current loss in the amount of EUR 17,614,513, to constitute reserves for own shares of EUR 964,843 and for the revaluation of shares to a lower fair value of EUR 219,446. The net profit for the year from previous years decreased by covering the current loss in the amount of EUR 93,910,725 and increased by the net profit in 2008 in the amount of EUR 1,635,129 and by the elimination of reserves for own shares in the amount of EUR 146,129, and decreased by revaluation of own shares in the amount of EUR 139,374. The revaluation surplus has increased, by the revaluation effect, the value of available-for-sale financial assets, to a new fair value in the amount of EUR 10,775,646. The biggest portion of revaluation refers to MELR shares and to the change of the method of valuating the aforementioned investment. The revaluation surplus increase in the amount of EUR 22,665,474 refers to direct changes in the equity of Mercator Group for the years 2008 and 2009, which also results from the cost method valuation of this investment. In 2009, the Group formed receivables or liabilities for deferred tax in the amount of EUR 1,916,987 from financial investment revaluation, which at the same time decreases the revaluation surplus.

D . L A Ĺ K O

disposed of 6,276 lots of own shares in the amount of EUR 588,409.

P I V O V A R N A

EUR 10,028. In 2009, the Group acquired 40,788 lots of own shares in the amount of EUR 1,756,778 and

D .

RARG shares (13,194 lots) in the amount of EUR 126,632 and FRAG shares (1,646 lots) in the amount of

The capital ownership structure at 31.12.2009 is as follows: Shareholder

Number of stocks

Participation in %

1,713,685

19.590 %

Kapitalska Družba, d.d.

617,488

7.059 %

TCK, d. d.

613,300

7.011 %

Probanka, d. d.

594,628

6.798 %

GB, d. d. Kranj

542,448

6.201 %

Skagen Kon-tiki Verdipapirfond

499,286

5.708 %

NFD 1 Delniški Investicijski Sklad, d. d.

446,465

5.104 %

Publikum Fin, d. o. o.

343,053

3.922 %

Abanka, d. d.

285,463

3.263 %

A N N U A L

R E P O R T

2 0 0 9

NLB, d. d.

Banka Celje, d. d.

252,500

2.886 %

Other small shareholders

2,839,336

32.458 %

Total

8,747,652

100.000 %

16. Capital of minority owners The capital of minority owners as at 31 December 2009 amounted to EUR 9,977,067 and is lower by EUR 6,890,404 than in 2008. In 2009, minority capital decreased by a recorded loss in the amount of EUR 5,149,147, for the payment of dividends in the amount of EUR 145,374 and due to the sale of shares to the majority owner in the amount of EUR 1,712,706. An increase by EUR 116,823 refers to revaluation of financial

220

assets to fair value.

17. Reservations and long-term accrued costs and deferred revenues

P I V O V A R N A

L A Š K O

D .

17. A. Long-term liabilities to employees ( in EUR )

2009

2008

Long-term liabilities to employees

6,325,573

6,324,696

Total

6,325,573

6,324,696

Reservations for evaluated liabilities for paying severance pays and jubilee awards were made on the date of the balance sheet and discounted to the current value. They are based on actuarial calculations. Individual companies in the Group have made the calculation of reservations for estimated pensions and jubilee awards by themselves on the basis of the calculation and the method used by an accredited actuary in the previous years. The collective agreement lays down that, apart from their regular salaries, all employees except the management are entitled to severance pay when retiring. The severance pay amounts to a maximum of two average gross salaries in the Republic of Slovenia in the past three months or to two salaries of the employee, whichever is higher. Jubilee awards are paid to employees with regard to their total period of employment, amounting to 50 % or 75 % or 100 % of the average net salary of the company in the past three months for 10, 20 or 30 years of work respectively. The chosen discount rate is 5.4 %.

17. B. Reservations ( in EUR )

2009

2008

Reservations

3,390,491

2,729,386

Total

3,390,491

2,729,386

Long-term reservations refer to pending actions in affiliated companies and are formed based on bar opinions and estimates.

Tenure awards Other

Total

1 January 2009 Increase Decrease â&#x20AC;&#x201C; drawing Decrease â&#x20AC;&#x201C; elimination 31 December 2009

5,259,369

1,065,327

2,729,386

9,054,082 1,736,767

656,227

131,972

948,568

(551,420)

(126,972)

(215,514)

(103,021) 5,261,155

(5,909) 1,064,418

(71,949) 3,390,491

(893,906) (180,879)

R E P O R T

Benefits at retirement

A N N U A L

( in EUR )

2 0 0 9

Movement of reservations and long-term accrued costs and deferred revenues

9,716,064

In 2009, the Group additionally constituted long-term reservations for severance pay and long-service awards in the amount of EUR 788,199; they drew these from or disposed of them in the amount of EUR 787,322. Other reservations in 2009 increased by EUR 661,105.

221

D .

18. Long-term liabilities

2009

2008

Long-term loans obtained from banks

267,156,576

239,565,293

Total

267,156,576

239,565,293

Transfer to short-term financial liabilities

(139,895,170)

(18,553,743)

Total

127,261,406

221,011,550

2009

2008

Maturity of long-term financial liabilities ( in EUR )

Maturity above 6 years

Maturity from 4 to 6 years

8,561,596

10,018,718

Maturity from 2 to 4 years

53,797,560

75,038,988

Maturity from 1 to 2 years

64,902,313

135,953,844

Short-term part of long-term financial liabilities

139,895,175

18,553,743

Total

267,156,644

239,565,293

P I V O V A R N A

( in EUR )

L A Ĺ K O

D .

18. A. Long-term financial liabilities

The interest rate for the Group's long-term loans fluctuated on average between 3.43 % and 3.64 % in 2009 or 6-month EURIBOR + 1.5 % to 4 %.

Movement of long-term loans Debt position New loans ( in EUR ) 112009 in year 2009

Banks Other lenders

51,222,864

53,166

221,011,550

51,222,864

Short-term part of long term loans

Debt position 31122009

5,500,000 10,551,257 139,868,585

127,261,406

5,500,000 10,604,423 139,868,585

53,166

127,261,406

A N N U A L

R E P O R T

2 0 0 9

Total

220,958,384

Changes in short-term Repayments loans in year 2009

In 2009 the Group took out EUR 51,222,864 of new long-term loans and acquired from short-term loans EUR 5,500,000 of long-term loans. The Group paid off EUR 10,604,423 of existing loans. In 2010 the Group expects to pay off EUR 139,895,170 of long-term loans. Long-term financial liabilities of the Group are insured by a mortgage of securities, real estate property and movable property. In order to ensure long-term loans, the Group pledged 257,603 shares of Pivovarna Union, d. d., or 57.1 % of all shares, 572,632 shares of Poslovni Sistem Mercator, d. d., or 15.2 % of all shares of the aforementioned company and 284,000 shares of the company Fructal, d. d., or 11.3 % of all shares. The book value of the pledged shares as at 31.12.2009 amounts to EUR 188,768,330. A part of the long-term debts are insured by a mortgage in the amount of EUR 48,162,303. The value of all unpaid insured long-term debts, with shares, a mortgage and pledged movable property and receivables of insured long-term debts as

222

at 31 December 2008 amounts to EUR 125,698,906; the loan in the amount of EUR 1,562,500 is not insured. The value of long-term financial liabilities is expressed as fair value.

P I V O V A R N A

L A Ĺ K O

D .

18. B. Long-term operating liabilities

( in EUR )

2009

2008

Other long-term operating liabilities

11,476

111,108

Total

11,476

111,108

18. C. Long-term liabilities for deferred tax Long-term deferred tax liabilities have been calculated based on the temporary differences by taking into consideration the liability method and the tax rate which will be valid in the year when the deferred tax assets and liabilities are realized. The tax rate for the income tax assessment of legal entities shall be reduced from 21 % in 2009 to 20 % from 2010 onwards.

( in EUR )

Fair value (properties, buildings)

Fair value (financial assets)

Fair value (trademarks) Other

Total

LIABILITIES FOR DEFERRED TAX 1 January 2008

2,709,392

30,446,835

1,034,365

(11,063,677)

Change in the balance sheet

520,471

(19,310,508)

31 December 2008

4,264,228

25,554,498

141,600

58,852,325

Change in the profit and loss statement

72,650

(8,512) (10,037,824)

25,554,498

133,088

(18,790,037) 30,024,464

Change in the profit and (5,915,596) (20,442)

Change in the balance sheet

1,237

109,120

31 December 2009

4,208,904

181,770

19,638,902

(41) 112,605

(5,992,599) 110,316 24,142,181

The long-term deferred tax liability as at 31 December 2009 amounts to EUR 24,142,181 and refers to the value of the established surplus from revaluating the available-for-sale financial assets in the amount of EUR 18,770, the revaluation of brand names in the Union Group in the amount of EUR 13,732,098, the revaluation of brand names in the company Delo, d. d., in the amount of EUR 5,906,804 and the revaluation of the Group's real estate property in the amount of EUR 4,208,904.

2 0 0 9

R E P O R T

(56,561)

A N N U A L

loss statement

19. Short-term liabilities 19. A. Short-term operating liabilities 2008

1,228,415

35,022,948

26,917,991

Short-term operating liabilities to others: to employees to the state

5,176,881

3,988,770

8,328,506

8,863,532

617,804

1,545,952

Short-term liabilities for advances Other short-term liabilities Total

2,553,489

3,754,040

44,823,086

53,175,242

In comparison to 2008, short-term operating liabilities decreased by 18.8 %. The value of short-term operating liabilities is expressed as fair value.

19. B. Short-term liabilities for tax payment ( in EUR )

2009

2008

Short-term liabilities for tax payment

1,651,622

1,019,224

Total

1,651,622

1,019,224

D .

Short-term liabilities to other suppliers

L A Ĺ K O

Short-term liabilities to companies in the Group as suppliers

223

D .

2009

P I V O V A R N A

( in EUR )

19. C. Short-term financial liabilities ( in EUR )

2009

2008

139,868,585

18,553,743

Short-term financial liabilities for interest from loans

2,945,214

2,355,251

Short-term loans obtained from companies in the Group

2,045,977

176,956,656

178,225,970

5,033,019

8,104,582

326,849,451

207,239,546

Short-term part of long-term financial liabilities

Short-term loans obtained from banks Other short-term financial liabilities

A N N U A L

R E P O R T

2 0 0 9

Total

In comparison to the previous year, short-term financial liabilities increased by EUR 119,609,905 or by 57.7 %. In 2008, the average interest rate for short-term loans fluctuated between 4.03 % and 5.39 % or 6-month EURIBOR +1.375 % to 5.6 % on an annual level, or 3-month EURIBOR +3 %. In order to insure short-term loans, the Group pledged 603,480 shares (90.4 %) of Delo, d. d., 4,402,427 shares (73.88 %) of Radenska, d. d., 182,692 shares (40.50 %) of Pivovarna Union, d. d., 223,743 shares (5.94 %) of Poslovni Sistem Mercator, d. d., 213,115 shares (6.27 %) of Probanka, d. d., Maribor, 270,648 shares (1.65 %) of Elektro Gorenjska, 645,003 shares (22.57 %) of Thermana, d. d., Laško, 1,921,921 shares of Elektro Maribor, 1,271 shares of Telekom Slovenija and 216,359 shares of Zavarovalnica Triglav. The book value of the pledged shares as 31 December 2009 amounts to EUR 219,171,246. A part of the short-term debts are insu-

224

red by a mortgage and a part with the pledge of property. The book value of pledged real estate and movable property as at 31 December 2009 amounts to EUR 43,722,191. In addition, short-term loans are also insured with receivables, the value of which is on 31.12.2009 EUR 19,520,000. The value of all unpaid debts, insured by shares, mortgages, pledged real estate and receivables of insured short-term debts as at 31 December 2009

P I V O V A R N A

L A Š K O

D .

amounts to EUR 323,417,065. Short-term loans at banks in the amount of EUR 3,432,386 are not ensured. The value of short-term operating liabilities is expressed as fair value.

20. Accrued costs and deferred revenues

( in EUR )

2009

2008

Accrued costs and deferred revenues

8,888,662

5,681,141

Total

8,888,662

5,681,141

Accrued costs and deferred revenues refer in the short term to costs accounted in advance for unused leaves of employees and severance payments for redundant workers, and to the guarantee granted by Pivovarna Laško, d. d., to the bank for insurance of loans of the company Center Naložbe in the amount of EUR 3,637,650.

21. Analysis of sales revenues and costs 21. A. Analysis of sales revenues by main products ( in EUR )

2009

2008

252,285,574

299,298,191

Sale revenues of products and services on foreign markets

47,015,590

50,128,727

Sale revenues of materials and merchandise sold in Slovenia

25,177,112

10,076,087

2,548,570

525,302

Sale revenues of products and services in Slovenia

R E P O R T A N N U A L

Sales revenues in 2009 compared to the previous year decreased by EUR 33,001,461 or by 9.2 %.

225

D .

360,028,307

D .

327,026,846

L A Ĺ K O

Total

P I V O V A R N A

merchandise sold on foreign markets

2 0 0 9

Sale revenues of materials and

21. B. Analysis of sales revenues by countries ( in EUR )

Sale revenues in Slovenia Sale revenues on foreign markets Total

2009

2008

277,462,685

309,374,278

49,564,161

50,654,029

327,026,846

360,028,307

Sales revenues from foreign markets were generated mostly in the markets of the

A N N U A L

R E P O R T

2 0 0 9

former Yugoslavia.

21. C. Other operating revenues Other operating revenues amount to EUR 8,428,658. A portion of other operating revenues in the amount of EUR 3,640,777 refers to impairment of long-term assets of the company Jadranska Pivovara â&#x20AC;&#x201C; Split, d. d. Other operating revenues include revenues from the sale of fixed assets, collected receivables for which a value correction of receivables was formed in the previous years, revenues for the elimination of long-term reservations and subsidies received.

21. D. Analysis of expenses by categories ( in EUR )

2009

2008

Expenses of materials and merchandise sold

226

126,255,327

145,209,346

Expenses of services

74,530,564

95,219,090

Depreciation

28,000,182

29,716,424

Expenses of salaries

44,566,288

44,799,783 8,009,695

12,266,871

9,287,684

Revaluation of operating expenses at fixed assets

36,883,116

7,602,711

Revaluation of operating expenses at reverse assets

2,979,151

1,126,533

Costs of reservations

1,085,846

144,882

Other operating expenses

7,832,328

6,607,458

342,037,824

347,723,606

P I V O V A R N A

L A Ĺ K O

D .

7,638,151

Other labor costs D .

Benefits on payments for social security

Total

Operating expenses are, without impairment of brand names and goodwill of the company Delo, d. d., in the amount of EUR 35,493,574; compared to the previous year, they decreased by EUR 41,179,356. Particularly decreased were the cost of supplies, raw material and merchandise in the amount of EUR 18,954,019, and costs of services by EUR 20,688,526. The largest decrease among the costs of services is disclosed in marketing costs.

21. E. Expenses by functional groups Year 2009 ( in EUR )

Production expenses of sold Expenses of products and goods selling

Cost of general activities

Total

Expenses of materials and merchandise sold

112,228,473

10,826,574

3,200,280

126,255,327

Expenses of services

21,140,387

42,562,360

10,827,817

74,530,564

Depreciation

22,391,098

2,729,421

2,879,663

28,000,182

Expenses of salaries

40,863,933

8,834,470

14,772,907

64,471,310

93,129

780,870

36,009,117

36,883,116

1,886,356

1,092,795

2,979,151

460,135

50,425

575,286

1,085,846

Revaluation of operating

Other expenses Total

Year 2008 ( in EUR )

3,517,986

434,958

3,879,384

7,832,328

200,695,141

68,105,434

73,237,249

342,037,824

Production expenses of sold Expenses of products and goods selling

Cost of general activities

Total

A N N U A L

expenses at reverse assets Costs of reservations

R E P O R T

expenses at fixed assets

2 0 0 9

Revaluation of operating

Expenses of materials and merchandise sold

140,808,515

3,162,671

1,237,249

145,208,435

Expenses of services

20,442,773

58,431,788

16,345,253

95,219,814

Depreciation

23,569,402

3,677,435

2,469,771

29,716,608

Expenses of salaries

38,722,131

8,921,667

13,940,791

61,584,589

4,932,591

385,279

2,284,841

7,602,711

130,443

671,525

324,565

1,126,533

227

Costs of reservations Other expenses Total

50,709

36,221

57,953

144,882

2,535,133

1,900,420

2,684,481

7,120,034

231,191,697

77,187,005

39,344,904

347,723,606

D .

expenses at reverse assets

L A Ĺ K O

Revaluation of operating

P I V O V A R N A

expenses at fixed assets

D .

Revaluation of operating

22. Net financial expenditures ( in EUR )

2009

2008

5,572,492

11,888,812

Financal revenues on the basis of profit shares

321,820

4,812,221

Financial revenues from loans given

5,088,402

4,953,275

Financial revenues from accounts receivable

162,270

281,166

Financial revenues from sale of securities

1,842,150

Financial revenues without currency differences

A N N U A L

R E P O R T

2 0 0 9

Financial expenditures without currency differences

(210,387,002)

(36,217,844)

Financial expenditures from impairment and write-offs of investments (187,453,091)

(11,710,984)

Financial expenditures from financial liabilities

(22,529,632)

(24,063,221)

Financial expenditures from operating liabilities

(404,279)

(443,639)

Currency differences from financing

11,305

(61,834)

Negative currency differences

(38,739)

(84,850)

Positive currency differences Net financial expenditures

50,044 (204,803,205)

23,016 (24,390,866)

Net financial expenditures for 2009 amount to EUR 204,939,031 and have significantly increased compared to the previous year, particularly due to impairments of granted loans, long-term financial investments and granted guarantees.

228

Arising from impairments of granted loans with participating interest to the companies Infond Holding, d. d., and Center Naložbe, d. d., the Group disclosed financial expenses in the amount of EUR 111,189,949. Other impairments refer to impairments of investments in shares of the following companies: Infond Holding, d. d., in the amount of EUR 5,588,366, Elektro Maribor in the amount of EUR 8,265,980, Večer, d. d.,

D .

of the accredited business appraiser, the Group recognized impairment of an option into acquisition of an

P I V O V A R N A

L A Š K O

of EUR 2,174,454 and Elektro Gorenjska, d. d., in the amount of EUR 382,398. Based on the assessment

D .

in the amount of EUR 6,691,313, Thermana, d. d., in the amount of EUR 5,303,921, Birra Peja in the amount

additional share in the associated company Birra Peja in the amount of EUR 3,036,114. Another financial expenditure from impairment disclosed is a granted guarantee in shares of Radenska (345,304 shares) for loans which were obtained by the parent company during the acquisition time, Center Naložbe, d. d., in the amount of EUR 3,637,650. Financial expenses in the amount of EUR 41,083,074, however, refer to revaluation of a MELR investment to stock market value.

23. Share of (loss)/profit in associated companies ( in EUR )

2009

2008

Share of loss/profit in associated company

10,136,031

1,259,654

Total

10,136,031

1,259,654

The share of profits of the subsidiaries refers to participation in the profits of Poslovni Sistem Mercator, d. d., in the amount of EUR 10,727,557, to a share in the losses of Thermana, d. d., in the amount of EUR 455,700, and a share in the losses of Birra Peja, d. d., in the amount of EUR 135,827.

24. Income tax ( in EUR )

2009

2008

Current tax

2,779,391

4,066,690

Deferred tax

(40,576,837)

(5,353,311)

Total

(37,797,446)

(1,286,621)

( in EUR )

2009

2008

16,532,924

(36,656,634)

3,637,243

(4,944,623)

(10,040,940)

Tax paid according to valid tax rate: Revenue tax, calculated according to 21 % or 22 % tax rate Correction of revenue to granted revenue tax level Non-recognized revenue by tax

204,549,892

22,892,426

Tax base I

24,261,896

29,384,410

Changes to the tax base

(918,586)

(9,597,951)

Tax base II

23,343,310

19,786,459

Tax reliefs

(1,905,883)

(1,301,504)

Tax base III

21,437,427

18,484,955

Tax

2,779,391

4,066,690

Deferred taxes which affect profit or loss are shown in the table of movement of long-term receivables for

R E P O R T

(175,343,373)

A N N U A L

Profit and loss before taxation

2 0 0 9

229

deferred tax (note 7) and long-term liabilities (note 18. C).

• relief for research and development, • relief for voluntary supplementary pension insurance, • relief for the employment of disabled persons, and • relief for donations. The authorities can audit the operation of the company, within which additional liabilities of tax payment, interest on arrears or penalties with regard to the income tax or other taxes and contributions can occur at any time within five years after the year in which tax should be levied. The company management is not familiar with any circumstances which could present important liabilities with respect thereof.

D . L A Š K O

Tax relief refers to:

P I V O V A R N A

fundamental tax level of the home country as follows:

D .

The Group's income tax differs from the theoretical sum of the tax which would occur at the use of the

25. Cash flow from operating activities ( in EUR )

2009

2008

Operating profit of the period

(5,229,918)

25,700,175

27,538,653

29,204,648

Adjustments for: Depreciation of property, plant and equipment Depreciation of intangible fixed assets

460,450

511,776

Write-offs of fixed assets

36,883,116

7,102,278

Write-offs of short-term assets

2,979,151

A N N U A L

R E P O R T

2 0 0 9

Net movement in reservations

(661,982)

Payment share in the profits in associated companies

4,929,175

Currency differences from loans

72,128,563

(466,697) (61,834) 36,290,171

Changes of reverse capital Inventories and non-current assets for sale

(8,334,290)

Operating and other receivables

10,374,438

Operating and other liabilities

(8,249,520)

6,857,537

(6,209,372)

(5,324,372)

Cash made from operation

60,689,273

56,665,974

Newspaper publishing activity Other

Total

(761,544) (11,420,365)

26. Reporting by segments

230

26. A. Business segments

D .

by segments 150,804,759

P I V O V A R N A

L A Š K O

Net sales revenues

D .

Year 2009 Other ( in EUR ) Beer beverages

Revenues among segments

112,316,232

53,686,373

36,873,654

353,681,018

2,870,698

3,615,648

25,480

20,142,346

26,654,172

Net sales revenues 147,934,061

108,700,584

53,660,893

16,731,308

327,026,846

Operating profit and loss 22,705,007

5,332,510

477,987

(33,745,422)

(5,229,918)

Financial revenues/ expenditures (net)

(204,803,205)

Profits/losses in associated companies

6,317,072

Profit and loss before tax

(203,716,051)

Tax

37,797,446

Profit and loss of accounting period

(165,918,605)

Assets by segments

392,964,881

154,003,298

80,254,884

54,573,083

681,796,146

Liabilities by segments

365,606,315

70,058,403

33,562,043

40,258,942

509,485,703

9,714,243

3,711,223

3,699,845

885,904

18,011,215

13,171,304

8,998,774

2,876,080

781,462

25,827,620

Investments Expenses without cash flow as a consequence

Year 2008 Other ( in EUR ) Beer beverages

Newspaper publishing activity Other

Total

Net sales revenues by segments 166,826,167

122,918,891

60,499,049

42,537,904

392,782,011

Revenues among segments 15,203,171

15,633,605

33,379

1,883,549

32,753,704

Net sales revenues 151,622,996

107,285,286

60,465,670

40,654,355

360,028,307

5,594,886

5,897,816

8,930,553

25,700,173

Operating profit and loss

5,276,918

Financial revenues/ expenditures (net)

(24,390,866)

2,568,961

Tax

1,286,621

Profit and loss of accounting period Assets by segments 287,434,727

182,826,038

Trademarks 27,737,252 Positive goodwill 10,165,440

3,855,582

62,169,893 128,236,509

660,667,167

40,923,239

59,112,000

127,772,491

15,248,156

9,440,486

34,854,082

Liabilities by segments 374,192,692

90,297,969

26,748,507

36,077,189

527,316,357

Investments 29,719,868

10,577,875

1,507,528

9,582,685

51,387,956

10,227,995

2,687,626

1,742,286

29,716,424

R E P O R T

1,259,654

A N N U A L

associated companies Profit and loss before tax

2 0 0 9

Profits/losses in

Expenses without cash flow as a consequence 15,058,517

231

Sale by geographical segments is disclosed in explanatory note 26. B.

2009

2008

277,462,686

309,374,278

Net sales revenue Slovenia Foreign market

49,564,160

50,654,029

Total

327,026,846

360,028,307

384,467,058

579,405,685

Foreign market

36,360,012

64,438,600

Investments in associated companies

138,836,076

4,804,454

Trademarks (Slovenia)

93,194,513

127,772,491

Positive goodwill (Slovenia)

29,938,487

34,854,082

Total

682,796,146

811,275,312

Slovenia

16,697,344

49,064,996

Foreign market

1,313,871

2,322,960

Total

18,011,215

51,387,956

Assets Slovenia

Investments

Sales revenues from foreign markets were generated mostly on the markets of the former Yugoslavia; assets on foreign markets refers explicitly to assets in the countries of the former Yugoslavia.

L A Ĺ K O

D .

P I V O V A R N A

( in EUR )

D .

26. B. Geographical segments

27. Profit per share The net profit per share is calculated with the distribution of net profit belonging to shareholders, with the weighted average number of shares on the market during the year, where the average number of treasury shares is excluded. ( in EUR )

2009

2008

Profit (loss) of majority owners

A N N U A L

R E P O R T

2 0 0 9

Weighted number of ordinary shares issued

232

(156,950,499) 8,703,031

3,639,758 8,742,953

Net profit per share

(18.03)

0.42

Adjusted net profit per share

(18.03)

0.42

28. Comprehensive income per share ( in EUR )

2009

2008

Comprehensive income of majority owners Weighted number of ordinary shares issued

(125,426,366) 8,703,031

(329.824) 8,742,953

Net comprehensive income per share

(14.41)

(0.04)

Adjusted net comprehensive income per share

(14.41)

(0.04)

29. Dividends per share In 2008, the payment of dividends of the parent company Pivovarna LaĹĄko, d. d., amounted to EUR 8,742,384 or EUR 1 per share. Only the affiliated company Radenska, d. d., made payments of dividends in

P I V O V A R N A

L A Ĺ K O

D .

2009. The minority owners of Radenska, d. d., received a dividend in the amount of EUR 145,374.

30. Financial risks 30. A. Credit risk Trade receivables do not present any sizable risk to the Group, as it predominantly works with known and verified customers, has its receivables insured with the usual insurance instruments, and at the same time limits on the allowed debt for an individual customer with respect to the contract of sale are determined. From the explanatory note, it is evident that the credit risk is insignificant.

30. B. Interest rate risk The Company has been able to partly dismiss this risk in previous years with the use of realization of a financial instrument in the form of an interest rate shield for its acquired long-term loans. With the interest rate collar, the Company has protected a part of its financial liabilities from possible growth of the referential interest rate above a certain level. During the second half of 2008, as a result of the emerging economic crisis, the referential interest rate began to significantly decrease. The decline continued in 2009 as well, and that is why the company from the aforementioned financial instrument realized negative effects below the bottom line due to the decline in the referential interest rate. The derivative was, on the last day of the year, calculated at fair value and disclosed among other financial liabilities, and the revaluation effect was recognized as financial expenditure.

Amount of ( in EUR ) interest

Average interest Difference rate in % in interest

Interest Change in fin. rate Decrease in expenditures protection interest interest

Actual financial expenditures with respect to interest 22,560,618

3.98

- 22,560,618

Expenditures in the event of interest rate increase by 1 %

28,229,115

4.98

5,668,497

(1,032,000)

27,197,115 4,636,497

Expenditures in the event of interest rate decrease by 1 %

16,892,121

2.98 (5,668,497)

16,892,121 (5,668,497)

Expenditures in the event of 8,502,745 (1,620,000) 29,443,363 6,882,745

Expenditures in the event of interest rate decrease by 1.5 %

14,057,873

2.48

(8,502,745)

14,057,873 (8,502,745)

In the event the interest rate is increased by 1 %, the expenses would rise in the amount of EUR 4,397,781, and with 1.5 % by EUR 8,502,745, if protection of the interest rate is considered a part of the financial liabilities. If the interest rate would decrease by 1 % or 1.5 %, then the expenses would decrease by EUR 5,368,497

2 0 0 9

5.48

R E P O R T

31,063,363

A N N U A L

interest rate increase by 1.5 %

or EUR 8,052,745.

30. C. Currency risk The currency risk at the operation of the Group in 2009 was negligible, as the structure of transactions with foreign countries was predominantly linked to the euro.

233

in the role of important Group owners) on refinancing of the existing short-term loans or on the sale of the Group's long-term assets. The aforementioned could also be settled by the Group with sufficient increase of its sustainable resources. So far, no such arrangement with banks, nor increases in sustainable resources of the Group has taken place.

30. E. Cash flow risk Cash flow risk is reflected in the fair value of assets risk. The risk can be managed with derivative financial instruments. In 2009, the Company did not insure the financial assets fair value risk, which has brought into existence the risk determined in the following chart.

D . L A Ĺ K O

settle its current liabilities only upon agreement with banks (the latter act in the role of creditors as well as

P I V O V A R N A

On the last day of 2009 the Group had an excess of current liabilities over current assets in the amount of EUR 257,067,691. The management of the parent company estimates that the Group will be able to

D .

30. D. Liquidity risk

( in EUR )

Fair value as at 12/31/2009

Difference – influence on the value of N-CI

Difference – Difference – influence on the influence on liability revaluation surplus for deferred tax

31 December 2009

134,612,076

Increase in price by 10 %

148,073,284

13,461,208

10,768,966

2,692,242

Decrease in price by 10 %

121,150,868

(13,461,208)

(10,768,966)

(2,692,242)

Increase in price by 5 %

141,342,680

6,730,604

5,384,483

1,346,121

Decrease in price by 5 %

127,881,472

(6,730,604)

(5,384,483)

(1,346,121)

A N N U A L

R E P O R T

2 0 0 9

Balance as at -

In the event of an increase or decrease in the value of investments valued at the fair value, it is reflected in the increase or decrease of the surplus directly in the capital and at the same time in the liability for the deferred tax. Investments valued at the cost of purchase and investments in associated companies valued in compliance with the equity method rules are not included in the risk calculation.

31. Contingent liabilities The previous management of the parent company Pivovarna Laško, d. d., in the year which was completed on 31.12.2008, issued a patronage statement addressed to the company Perutnina Ptuj, d. d., with which Pivovarna Laško, d. d., guarantees Perutnina Ptuj, d. d., for the fulfilment of liabilities in the amount of EUR 20 million with corresponding interest. Conditional liabilities of Pivovarna Laško, d. d., were, in the annual report for the year completed on 31.12.2008, not disclosed in accordance with IFRS. On 20.11.2009 Perutnina Ptuj, d. d., addressed a request to Pivovarna Laško for the return of EUR 11,600,120. The mentioned amount

234

refers to granted loans, which were approved based on the signed patronage statement of Perutnina Ptuj, d. d., to the companies Center Naložbe, d. d., and Infond Holding, d. d. Pivovarna Laško Group is examining the request together with its legal experts and is striving to determine how likely it is that it will have to return the required amount. Several legal opinions have been obtained to this end. Based on the obtained legal opi-

D .

amount in its financial accounts.

P I V O V A R N A

L A Š K O

from this to pay the requested amount, which is why the Group has not disclosed liability for the requested

D .

nions, the management of the Group evaluates that there is no obligation for Pivovarna Laško Group arising

Contingent liabilities also refer to granted guarantees in the amount of EUR 4,630,251. Among other conditional liabilities, we shall particularly mention the potential liability for the payment of corporate income tax after the implemented tax inspection audit of corporate income tax in the year 2007. In 2009 a tax inspection audit was held in Pivovarna Laško, d. d., on the corporate income tax for the year 2007, and a minute was issued on 5.1.2010, in which the tax authority complains of irregularities resulting in an increase of the tax base for the corporate income tax return. According to the understanding of the tax authority, revenues for the year 2007 should be increased by EUR 25,055,540, and expenses decreased by EUR 215,690. The potential increase of revenues refers to the sale of shares of Istrabenz (ITBG) at prices from option contracts, which were on the day the transaction was carried out lower than the market prices. On 3.2.2010 the company submitted to the Special Tax Office their comments on the minutes, in which the company refuses the reproaching irregularities as unfounded. Based on the submitted comments, the tax authority expanded the tax procedure and has not yet provided its response.

32. Business combinations In 2009 there were no business combinations.

33. Receipts of the management and employees accofding to individual contract The parent company Pivovarna Laško, d. d., is managed by the Management and Supervisory Boards, whose earnings are represented in the tables below: Fixed part Variable part ( in EUR ) of receipts (incentive)

Other revenues (incentive) Benefits

Total

MANAGEMENT Pivovarna Laško, d. d. -

90,991

16,580

152,000

359,953

Pivovarna Union, d, d, Ljubljana Dušan Zorko

121,115

5,000

126,115

Total

121,115

5,000

126,115

Group Fructal Anton Balažič Ales Škraba

132,000

10,491

142,491

45,308

Emilija Mitevska

16,795

Ilija Vidoevski

16,795

210,898

10,491

221,389

Total

235

Radenska, d. d. Radenci Tomaž Blagotinšek

16,075

604

Zvonko Murgelj

46,200

9,363

Mojca Jazbinšek Volk Olga Smej Total

66,000

82,679

819

47,019

9,363

9,000

108,000

117,044

80,638

1,467

174,000

256,105

Group Delo Jurij Giacomelli

12,000

12,006

Marjeta Zevnik

8,871

Mojca Jazbinšek Volk

85,288

8,288

93,576

Darijan Košir

88,830

3,133

91,963

Peter Puhan

93,789

6,554

100,343

Samo Čok

91,947

8,133

100,080

380,725

26,114

406,839

Total

Vital Mestinje, d. o. o. Zvonko Murgelj

82,070

Total

82,070

Jadranska Pivovara – Split, d. d. Marijan Kos

41,290

3,482

44,772

Total

41,290

3,482

44,772

Total

1,108,109

5,000

58,134

326,000

R E P O R T

90,991 191,373

2 0 0 9

268,962

A N N U A L

152,000

1,497,243

D .

16,580

D .

L A Š K O

Dušan Zorko Total

100,382

P I V O V A R N A

Boško Šrot

( in EUR )

2009

2008

Fixed part of receipts

5,662,498

3,617,526

Other revenues

283,230

280,547

Variable part (incentive)

172,422

17,775

Benefits

1,757,173

75,863

Total

7,875,323

3,991,711

INDIVIDUAL CONTRACTS

A N N U A L

R E P O R T

2 0 0 9

The receipts of employees based on individual contracts also disclose receipts of the Management Bo-

P I V O V A R N A

L A Š K O

D .

236

ard member of Jadranska Pivovara – Split, d. d., Mr Tomaž Udrih, who has been, based on his individual contract, receiving earnings in the parent company Pivovarna Laško, d. d., and these were, based on the agreement on business cooperation, further invoiced to Jadranska Pivovara, d. d. Mr Tomaž Udrih acted as director of Jadranska Pivovara – Split, d. d., until 1 April 2009, and from 1 April to 9 December 2009 as the company's procurator. In 2009, Mr Udrih received EUR 83,053 of gross earnings, EUR 4,004 of benefits and EUR 51,508 of severance pay.

( in EUR )

2009

SUPERVISORY BOARD Anton Turnšek

10,468

Boris Završnik

4,388

Iztok Seničar

1,937 990

Vladimir Malenković

1,096

Bojan Košak

4,158

9,661

Dušan Zorko

11,884

Branimir Piano

22,926

Marjeta Zevnik

12,850

Mirjam Hočevar

8,660

Robert Šega

1,482

Dragica Čepin

2,847

Sonja Tominec

1,297

Franko Lipičar

1,192

Omar Dominik

1,192

Pavel Teršek

2 0 0 9

Boško Šrot

9,852

Jože Sadar

2,456

Gorazd Šetina

2,520

Tadeja Filipič Stojanovič

2,520

Branko Šafarič

2,520

Anton Medvešek

4,143

Vilijam Iztok Počkaj

894

Jure Jež

671

Lilijana Ipavec

894

Franc Rojnik

5,020

Terezija Peterka

6,724

Total

R E P O R T

Lah Rebeka

4,158 19,919

A N N U A L

Andrijana Starina Kosem

160,603

237

D .

Andrej Kebe

858

D .

Simon Zdolšek

L A Š K O

Marjan Mačkošek

362

P I V O V A R N A

Aleksander Svetelšek

34. Transactions with related companies Loans to related parties

( in EUR )

Debt position 1.1.2009

New loans in year 2009

Repayments in year 2009

Depreciation Debt position in year 2009 31.12.2009

Other related persons

A N N U A L

R E P O R T

2 0 0 9

Infond Holding, d. d.

600.000

53,650,000

54,250,000

Center Naložbe, d. d.

30,800,000 30,900,000 6,800,000

54,900,000

Net sales revenues

31,400,000 84,550,000 6,800,000

109,150,000

Interest on loans to related parties ( in EUR )

Accrued State interest 1.1.2009

Interest interest in year 2009

Impairment payments in year 2009

interest State interest in year 2009 31.12.2009

Other related persons Infond Holding, d. d.

2,633

2,239,599

1,015,413

1,226,819

Center Naložbe, d. d.

113,091

1,706,252

1,006,213

813,130

Net sales revenues

115,724

3,945,851

2,021,626

2,039,949

238 35. Events after the balance sheet date

dings against the company Center Naložbe, d. d.

P I V O V A R N A

L A Š K O

D .

Termination of the procedure on deciding on the petition for initiation of bankruptcy procee-

The District Court in Maribor decided with a decree of 18 January 2010 to terminate the procedure of deciding on the petition of the creditor companies Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d., Delo, d. d., and Fructal, d. d., for the initiation of bankruptcy proceedings against the debtor, Center Naložbe, d. d., until the completion of the receivership against Center Naložbe, d. d. The procedure on deciding on the petition of credit companies for the initiation of bankruptcy proceedings against the company Center Naložbe, d. d., is thus terminated until the completion of the receivership against the company Center Naložbe, d. d.

Appointing new director in affiliated company RA & LA, d. o. o., Sarajevo On 28.2.2010, the term of the company's director, Mr Marko Božiček, ended in mutual agreement. Mr Šerif Krajišnik was appointed as the new compay director for a term of four years, with the beginning of the term of office on 1.3.2010.

Report on findings of special audit On 9.3.2010, Pivovarna Laško, received a Report on findings of the special audit on the management of particular operations of Pivovarna Laško Group (hereinafter: report), which was, on the basis of the general meeting decision of 31.8.2009, prepared by BDO Revizija, d. o. o., družba za revidiranje, Ljubljana. In

accordance with Article 320 of the Companies Act ZGD-1, the company management sent the report to all members of the Supervisory Board. The Supervisory Board addressed the report and got acquainted with its content at the 17th regular meeting on 30.3.2010. Based on the Management Board findings indicating that other transactions were also conducted, which were in terms of content related to the discussed and yet were not included in the report by the special audit, it was recommended to the Management Board by the Supervisory Board to conduct a thorough check of these particular transactions. The Management and Supervisory Boards shall inform the General Meeting of Shareholders with this report at an ordinary session of the General Meeting of Shareholders.

matter of the petitioner PanSlovenian Shareholders' Association, in which the register court dismissed the petitioner's suggestion for entering two new members of the Supervisory Board, who were appointed at the so-called »spontaneous« or »staircase« assembly. The High Commercial Court in its explanatory note clarified that the register court in a non-contentious procedure cannot decide on the content in the event a lawsuit is already pending in the same subject matter, and should thus terminate the procedure until the

R E P O R T

On 11 March 2010, Pivovarna Laško, d. d., adopted a decision of the High Commercial Court in Celje, with which the aforementioned court annulled the decision made by the register court. It concerns a register

A N N U A L

2 0 0 9

Decision of the High Commercial Court in Celje on the annulment of the decision made by the

decision of the pending lawsuit. We must add that the District Court in Celje has already reached a decision in this lawsuit, saying that the decisions of the so-called »spontaneous« or »staircase« assembly are null. The decision is not final.

Denationalization claims in Radenska, d. d., Radenci

239

In 1993, denationalization beneficiary Mr Rudolf Höhn-Šarič, Baltimore, United States, submitted an application for denationalization of nationalized property. The application submitted refers to return of the

In July 2009 the Supreme Court of the Republic of Slovenia it its audit report ruled that the beneficiary, Mr Rudolf Höhn-Šarič, has been deemed a Yugoslav and Slovenian citizen since 28 August 1945. The question of nationality represented a previous question in this procedure. Based on the decision of the Supreme Court on the recognition of the beneficiary's nationality, the competent administrative unit at the end of February 2010 submitted three preliminary submissions of the beneficiary or his commissioner, which describe in more detail the scope of the claim for the return of the nationalized property. Documentation is not yet complete. In the current procedure Radenska, d. d., Radenci as a person liable in March 2010 submitted to the competent administrative unit a request for the delivery of other documents and an application for an extension of time until the identification of stipulations from the preliminary submission.

Information about the current state in Jadranska Pivovara – Split, d. d. On 11 March 2010 the Commercial Court in Split, due to insurance of a non-monetary claim of the petitioner Shareholders' Association of Jadranska Pivovara – Split, d. d., issued a temporary injunction, with which it forbade Jadranska Pivovara – Split, d. d., to dispose or in any other way dispose of the rights arising from ownership of the property and shares of the company. Any disposition opposed to the temporary injunction is without legal effect. Jadranska Pivovara – Split, d. d., lodged an appeal gainst the temporary injunction because it believes that the aforementioned temporary injunction was issued as unfounded. The competent court has not yet made a decision about the appeal.

D . L A Š K O

resort in Radenci and part of the lands and facilities on the site of the current bottling plant in Boračeva.

P I V O V A R N A

and payment of compensation. In nature this represents the majority of lands and facilities within the spa

D .

ownership share in the then-company and subordinated return into ownership and possession of properties

In Jadranska Pivovara – Split, d. d., a gradual production stoppage began on 1 April 2010 due to rationalization, because the management of the company failed to conclude an agreement with potential buyers for the purchase of assets of Jadranska Pivovara. It is expected that Jadranska Pivovara will continue with bottling of Kaltenberg beer until the end of May, which is to be produced at Pivovarna Laško, d. d. Pivovarna Laško and Jadranska Pivovara will provide financial resources for settlement of accounts payable, banks and those employed at Jadranska Pivovara. Pivovarna Laško will continue with an active search for a buyer of the assets of Jadranska Pivovara.

Change in the Management Board of affiliated company Fructal, d. d., Ajdovščina

A N N U A L

R E P O R T

2 0 0 9

The chairman of the Management Board of Fructal, d. d., Ajdovščina, Mr Anton Balažič, submitted a letter of resignation of 31 March 2010, and on 1 April 2010 the Supervisory Board appointed Mr Drago Kavšek as the new chairman of the Management Board.

Transactions with related parties of Pivovarna Laško Group As at 31 March 2010, Pivovarna Laško, d. d., discloses a liability to companies in Pivovarna Laško Group arising from short-term loans received in the amount of EUR 39,900,000, from which EUR 8,200,000 to Pivovarna Union, d. d., Ljubljana, and EUR 31,700,000 to Radenska, d. d., Radenci.

Sale of shares of Večer, d. d., Maribor The sale of investment in shares of Večer, d. d., Maribor, was initiated in January 2010. A thorough business and legal inspection of the company Večer, d. d. was conducted and a public tender prepared, which was

P I V O V A R N A

L A Š K O

D .

240

publicly announced in March 2010.

4.2.8 STATEMENT OF THE MANAGEMENT The Board of Managers is responsible for preparation of the annual report of Pivovarna Laško Group and consolidated financial statements in a way which reflects a fair state of property and financial statements prepared according to the International Financial Reporting Standards (IFRS) and the Statue of the company, and complying with relevant laws and regulations of Slovenian legislation for 2009. The Board of Managers confirms the financial statements and the explanatory notes are in accordance with the guidelines of the company Pivovarna Laško for the year ended at 31 December 2009 and declares:

were disclosed,

• t hat the assessments of the value of each item in the financial statements were prepared fairly and deliberately and in accordance with the principles of prudence and good management,

• t hose consolidated financial statements were prepared in accordance with the legislation in force and

R E P O R T

• t hat accepted accounting policies have been used consistently and the changes in accounting policies

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business in the future,

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• t hat consolidated financial statements were prepared assuming that the Group will be able to continue

International Financial Reporting Standards. The Management Board is responsible for the implementation of measures which provide maintenance of the value of property of the company and for the prevention and detection of fraud and other irregularities.

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Dušan Zorko, MSc.

D . L A Š K O

Management Board – Director

P I V O V A R N A

Pivovarna Laško, d. d.

D .

Laško, 31 March 2010

P I V O V A R N A

L A Š K O

D .

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R E P O R T

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P I V O V A R N A

L A Š K O

D .

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A N N U A L

R E P O R T

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C O L O P H O N Publisher: Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško Design: atelje.Balant Text: Pivovarna Laško, d. d. Translating: Gormat, d. o. o., Domžale Editing: Amidas, d. o. o., Ljubljana Print: Tiskarna Formatisk, d. o. o., Ljubljana Edition: 100 July 2010