Business & Investment Slovenia 2012

An Insight into the Economy & Industry

2012

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Step Forward

I

n 2012, we optimisticly expect to see the turning point in economic development in Slovenia. Not so much in terms of basic economic indicators, they are more less connected to the inertia effect of the general economic slowdown and financial problems in Europe, but moreso, in the way we tackle the consequences of the crisis and define new development solutions for the future. At least we can conclude that on the basis of statements from the most prominent and influential members of our societypoliticians, economists, businessmen. If nothing else, it has become very clear that we have simply run out of funding for the current irrational organisational structure and corporate governance of the country. Of course, it is a shame that we did not want to recognise the obvious instability of the economic system over time. If that were the case, we would now be dealing with more substantive issues for the future, instead of crisis management. But, as the old Slovenian saying says, ‘everything is good for something’.

Recent years have taught us many things. First, we must never stop seeking new opportunities, new challenges and our own solutions to crucial development problems. After entering the European Union, we went into ‘neutral gear’ and blindly believed in the development power and stability of almighty Europe to somehow solve all our problems. Obviously we were wrong.

Second, in the current global situation, it is very important that we, as a country, are flexible at all levels of the State apparatus to adapt to changes in both international and domestic situations; inside companies to respond quickly to problems, to seek new markets,

Tilen Majnardi, M. Sc. Editor-in-chief

to continuously develop new ideas, products and services and not just follow but instead create international trends; as individuals that we break existing patterns of behavior - of rejecting everything that is new, different, unknown. Third, respect the opinion of others and seeking good compromises will be the key to success, compromise in the relationships with neighboring countries, compromise in international and domestic politics and last but not least in everyday life, in the neighborhood and inside family relationships.

If at least some of this is transferred into practice, we need not fear the future. The year 2012 will be difficult no matter what but unlike in previous years, it is important that we define clear and reachable goals that will motivate people to adapt and look ahead optimistically.The first item on the agenda is, of course, short term stabilisation of public finances to lay the foundation for a new development cycle. The new government’s goal to immediately cut the budget by EUR 800m is certainly optimistic. The second step will be long term neutralisation of the negative effects of an aging population, a real and substantive pension reform should be adopted in the second half of the year and in parallel, the reform of the health system. If furthermore, the government will be able to start a few strategic, national development projects in infrastructure and logistics, where we can efficiently integrate available foreign capital and if managers plan the future development of their companies with more vision, openness and boldness, then 2012 can be the long awaited step forward. Better late than never!

Brane Krajnik CEO, The Slovenia Times

3

Hard Work Ahead I

am glad to have the opportunity to outline the objectives and plans of the new Government and the Ministry of Economic Development and Technology - and my own - at very beginning of my term in this publication, which combines investment and other business potentials of Slovenian companies, both in the state and the private sector, for creating a favourable and competitive business environment. I believe the latter being essential, especially in these hard times, when the need to encourage investments, amid the austerity policies, in the economic development is of outmost importance. Exiting from the economic and financial crisis should outline concrete proposals, which would immediately stimulate economic activities thus emphasising the stabilization of the public finances in order to balance urgent austerity and job creation. The latter will be dealt with first as the budget rebalance is prepared.

The economy can also count on stimulative measures such as reducing labour tax, investment incentives, co-financing projects with state and EU funds, ... . Special emphasis is put on the social security tax (‘cap’) being among the first key proposals. The lack of the social cap and Slovenia’s economic competitiveness and subsequent worsening of its trade performance, which attract quality foreign investments creating jobs in industries with higher added value, enable the transfer of new technologies and integration of Slovenian companies in the supply network of international companies. Of course, it is not just the social cap itself that is 4

important. By granting incentives, through direct contacts with potential investors, offering information and consultancy services to foreign investors, promoting and marketing Slovenia as a location for foreign direct investments and performing other tasks, we will contribute to the strengthening of Slovenia’s competitiveness thus attracting more foreign direct investments. The introduction of the social ¨cap¨ should also be accompanied by the change in individual income tax rate.

I will try to resume the role of a coordinator among ministries, which areas of work have a direct impact on the economy, and work hand in hand with businessmen. I am sure that the desired positive results can only be achieved in intense cooperation with businessmen. Consequently, I met with the economic representatives, Management Board of Chamber of Commerce and Industry in Slovenia, the Management Board of Chamber of Craft in Slovenia, on my first business day after the handover at the Ministry. The following day was spent with the Management Board of the Managers’ Association of Slovenia. The preliminary discussions made it clear that the readiness for constructive cooperation is wide and the key action proposals are already well constructed.

In addition to the financial incentives, the government can achieve a lot by implementing the proposals, which do not additionally weigh heavily on the burdened budget but represent significant savings cuts for many companies in terms of time, organisation and finance. Reduction of the administrative burden of the economy

will therefore be one of the top priorities contributing greatly to a better and more attractive business environment in Slovenia.

As agreed, promotion of the internationalisation of the Slovenian economy is undeniably among the significant incentives for improving the business environment. The asset diversification to foreign markets, especially new non-traditional ones, is welcome in the time of recession. But one must not overlook the nearby markets – for example Hungary.

I am pleased to hear that the export in 2011 exceeded 2008.

The fact is that export presents a drive of the economic growth in Slovenia. However, there are still a lot of opportunities in the further internationalization of the Slovenian economy, especially for small and micro companies, such as for example the “Go International” programme, organised by the Chamber of Commerce.

The international economic diplomacy will need to be more efficient to further help strengthen the presence of the Slovenian economy on the foreign markets in the future.

European, as well as Slovenian economy, is largely driven by small and medium-sized companies. Precisely these companies, due to their size, do not always have sufficient resources, knowledge and experience to adequately prepare for their eventual foreign market entry modes. Preparing and stimulating Slovenian companies for international business is therefore an important part of the Ministry of Economic Development and Technology. It is also defined in the Programme of the Government for the Promotion

of the internationalisation of Slovenian companies 2012-2014.

Activities for promoting the internationalisation of Slovenian companies are recognized as useful in companies themselves. They particularly highlight the usefulness of promotion in trade fairs for investments, foreign markets researches, training for entry/ expansion of operations to foreign markets and the availability of updated information through web portal promotion.

In order to encourage Slovenian companies to enter and/or expand their operations to foreign markets, we shall continue with numerous activities with means available and provided by the Ministry of Economic Development and Technology: information and business supporting activities, analysis of market opportunities and consultancy, promotional activities and training for international trade. I am confident that these planned actions shall make Slovenia a friendlier investment environment for domestic and foreign companies already operating in Slovenia. Moreover, the key elements planned should persuade other foreign investors to invest in Slovenia.

Personally, I will strive to provide excellent service at the Ministry.

Hopefully, we will achieve the goals planned working hand-in-hand.

Radovan Žerjav, M. Sc Minister of Economic Development and Technology 5

INTRODUCTION

Branko Žibret, Partner A.T. Kearney

New Growth Through a Clear FDI Strategy Just five years ago, the global economy and international investment flows reached unprecedented levels. Riding the wave of strong economic performance across the globe, in 2007 foreign direct investment reached an all-time high of USD 2.1 trillion. Today, we are more than aware that the situation has rapidly deteriorated, in 2008 investment inflows dropped almost 20% to USD 1.7 trillion, in 2009 inflows dropped even further to USD 1.1 trillion.

Global FDI picture

However, it is important to recognize that 2010 was a year of a slight 5% growth in foreign direct investment (FDI) flows.

Global businesses improved profits, rationalised corporate structures, increased efficiency. Although there are some positive signals, business remains cautious. According to UNCTAD in its optimistic scenario, the 2007 peak can be reached again in 2013. A.T. Kearney findings1 indicate that near-term FDI is still far from recovery. Only half of FDI budgets are back to pre-crisis levels, 21% of global executives interviewed do not think their FDI budget will reach the pre-crisis level until 2014. More than half of these executives think that the crisis has fundamentally changed global economic conditions. Business needs to adjust quickly to the new reality.

Strengthening liquidity and use of enhanced strategic planning tools are becoming two of the most important levers for enhancing the strategic decision making process in where and how to navigate FDI flows in these uncertain and turbulent times. Already, at the peak of 2007, changes could be seen in the global FDI landscape and it is not surprising, considering the impact of the global economic crisis, that emerging economies are the main recipients of FDI inflows.

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China, India and Brazil are the top three FDI destinations followed by the USA, Germany and South-East Asian economies. The US, historically the largest recipient of FDI inflows, fell two spots and is suffering, as is Europe, from poor investor morale. Germany, at fifth place, is the largest European recipient followed by the UK at eighth place and by two emerging economies, Russia and Turkey, at twelfth and thirteenth respectively. In 2010, emerging economies for the first time, received more FDI inflows than developed economies.

This change is aligned with the overall shift in economic power from north to south east. The outlook also reflects the shift toward emerging economies, more than one quarter of respondents are increasing investment in emerging markets.

Slovenia - lack of economies of scale and strategic FDI focus

General perception is that Slovenia has never been a popular FDI destination and FDI data somehow confirms it. Since Slovenia has been an independent State, FDI inflow has exceeded USD 1bn on only three occasions. The reasons for low FDI inflow are 1

2012 A.T. Kearney FDI Confidence Index

INTRODUCTION

Global FDI inflows

Source: UNCTAD and A.T. Kearney

predominantly rooted in the size of the economy and the fact that FDI has never been a focus of Slovenian economic development.

The size of the economy is a challenge, we know that the most important lever for FDI decisions is the size of the consumer market and therefore, the strategy for FDI is even more important.

in USD trillion 2

Slovenia as a successful FDI creator in the automotive industry and pharmaceutical sector 1

0

2005-2007 (average)

2007

2008

2009

2010

Future Slovene FDI strategy: knowledge based and internationally oriented As already stated, Slovenia cannot attract FDI inflows based on the size of its domestic consumption but it can on its innovation skill and export capabilities. Therefore a precise FDI strategy and support measures are needed. Slovenia must analyse its competencies and develop Centres of Excellence, R&D clusters and development projects. Furthermore, the value creation concept should be developed and presented to potential foreign investors.

The strategic goals should be to create jobs with high added value, export to the western markets and the southern hemisphere and to develop talent. These goals can only be reached by focusing on building a knowledge based economy (part of the global trend of digitalisation, life sciences, nanotechnology and sustainability) and leveraging Slovenia’s regional position in the international supply chain.

Inflow of FDI in Slovenia

Source: UNCTAD and A.T. Kearney

It would be too easy and unfair to say that Slovenia has not been successful in the internationalisation of its economy and therefore that could be the starting point in developing a FDI strategy. In analysing two sectors, the automotive and pharmaceutical, we can see Slovenia is a suitable partner for making international business. Thirteen of the largest Slovene companies, operating as automotive producers or suppliers, generated almost USD 5bn revenue in 2010, the majority from exports. These companies employ more than 22,000 employees. This pool includes members of large international groups: Revoz – Renault, Goodyear Dunlop Sava Tires, Hella Saturnus, Johnson Controls and also Slovenian international groups such as Adria Mobil, Hidria, Kolektor, Iskra Avtoelektrika, Cimos, Talum, Impol, TCG Unitech, Plama Pur. The pharmaceutical sector tells a similar story. Three of the largest production driven players generated more than USD 2bn in 2010, again the majority was export driven revenue. Combined, they employ more than 11,000 people. The sector is represented by Lek, a member of the large international Novartis/Sandoz group, Krka, a Slovenian international group which for the last 10 year has generated more than 5% annual growth in revenue, making Krka one of the best performing, publicly traded companies globally.

Both sectors indicate how Slovenia should deal with international investment – in both sectors we recognize: a balance between investment inflow and outflow; the performance of the companies is not dependent on domestic consumption but on exports and last but not least, both sectors are highly competitive with strong development, innovation and consequently high added value.

Success is based on the right combination of international business and highly skilled Slovene employees.

Foreign banking institutions

in USD billion 2 LEK 1.5

1

0.5

0

-0.5

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

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INTRODUCTION

Contents 14 Slovenes with a Global Footprint 16 Overview of the Economy

Automotive Industry

Finance

54 Ludvik Kumar, Kolektor Group

18 Overview 20 NLB Group 22 Matej Tomažin, KD Funds

Foreign Direct Investment 24 Overview 26 BSH Hišni aparati

Innovation 28 Overview 30 Silent Revolutions/ Contemporary Slovenian Design 34 Giulio Bonazzi, Aquafil 36 Saša Bavec, Knauf Insulation

Education 38 Overview 40 Prof. Maja Makovec Brenčič, University of Ljubljana, Faculty of Economics 42 Mojca Hergouth Koletič, Mint International House 44 Prof. Danica Purg, IEDC-Bled School of Management Information & Communication

50 Overview 52 Hella Saturnus Slovenija 56 Miloš Dežnak, Akrapovič 58 Goodyear Dunlop Sava Tires

Transport & Logistics 60 Overview 62 Gregor Veselko, Luka Koper

Energy 64 Overview 66 Vladimir Kercan, Turboinštitut 68 Robert Golob, GEN-I 70 Blaž Košorok, Termoelektrarna Toplarna Ljubljana

Wood Industry 72 Overview

Real Estate & Construction 74 Overview 76 Zoran Madon, Tridana 78 Franci Pliberšek, MIK Celje

Retail 80 Overview 82 BTC City Ljubljana

Technology

Food and Drinks

46 Overview

84 Overview

48 Simon Kaluža, SAP Slovenia & SAP Adriatic 10

Investor’s Week 2012 17 – 21 September 2012 featuring

»From Rhetoric to Implementation«

international platform for doing business in south eastern and central europe

www.fdi.si The FDI (Foreign Direct Investment) Summit Slovenia 2012 is an executive-level business conference devoted to the investment environment and opportunities in Slovenia.

Being a business networking event, it is an outstanding opportunity to make new contacts with the leading business people in the region, top government officials, existing international investors in Slovenia and those interested in entering the Slovenian market and develop business in the wider region.

INTRODUCTION

Healthcare & Pharmaceuticals 86 Overview 88 Danica Zorin Mijošek, Kozmetika Afrodita

Tourism 90 Overview 92 Kempinski Palace Portorož 94 Postojnska Jama 96 Slovenian Convention Bureau 98 Jerneja Kamnikar, Vivo Catering

Culture 100 Suzana Žilič Fišer, ECOC

Business & Media Services 102 Marko Kolbl, Europlakat Group 104 Romana Logar, AJPES 106 Miroslav Pikovnik, Unija računovodska hiša 108 Useful information

Publisher: The Slovenia Times Domus, d.o.o.

Trg MDB 12 1000 Ljubljana, Slovenia T: +386 (0)1 520 50 85 info@sloveniatimes.com www.sloveniatimes.com Editor: Tilen Majnardi, M. Sc. Contributors: Maja Dragović, Jaka Terpinc, Claire Reed, Tine Kračun, Simon Demšar, Mark Koghee, Miran Varga, Polona Cimerman, Blanka Markovič Kocen, Louise Chatwood Design & Layout: Maja Kaplan Printed by Kočevski tisk Price: EUR 25

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INTRODUCTION

Slovenes with a Peter Florjančič Peter Florjančič is the holder of more than 400 patents, including a plastic slide holder and a perfume atomizer. Florjančič is not just an inventor but also a cosmopolitan man of diverse experience with an unusually vivid life. His biography quotes: “I’ve had five citizenships, 43 cars and the longest passport. The profession of inventor forced me to spend 25 years in hotels, four years in cars, three years on trains, a year and a half on aeroplanes and a year on board ships.”

He returned to Slovenia in 2002. Despite his advanced age (born in 1919), he is still active; his inventions still win awards and attract investors. At the IENA 2006 Trade Fair in Nuremberg, his water fitness device won the first prize among 1,500 inventions.

Lučka Kajfež Bogataj

The climatology Professor holds more than a few scientific titles and awards. As a member of the Geneva based, Intergovernmental Panel on Climate Change which has been honoured with a Nobel Prize, she is the only Slovene having won this, although shared, prize. This year, the European Institute for Gender Equality put her amongst the 12 most inspiring European women, although it is her contribution that actually counts. Lučka Kajfež Bogataj is one of the most influential global authorities behind the motion for reducing the effects of climate change. As such, she calls for immediate and more radical measures.

Ivo Boscarol Igor Akrapovič

During his motorcycle racing career, Igor Akrapovič realised there was a distinct lack of high-quality exhaust systems on the market and decided to take matters into his own hands. In 1990 he began the production of superior exhaust systems, later developing into a globally recognizable brand. Nearly all of the exhausts produced in Ivančna Gorica are exported to be fitted on the world’s most prestigious motorcycle models. The scorpion logo can be found competing at challenges such as the Moto GP, Superbike, Supersport, Enduro and Rally Raid.

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The company name is Pipistrel, which is Latin for bat.

Ivo Boscarol and his light aircraft business are well-known all around the world. Boscarol founded the first privatelyowned aviation company in the former Yugoslavia in 1987. His innovative and perfectly engineered creations have won him a number of accolades in aviation and also a series of titles and awards in entrepreneurship. The most recent is the CAFE/NASA/Google Green Flight Challenge for energy-efficient aircraft, for Pipistrel’s four-seater electric plane, the Taurus G4.

INTRODUCTION

Global Footprint Tomaž Pandur

Martin Strel

Some see him as an attention seeker, others as a brave adventurer. All would agree that his lifestyle is even more unusual than his accomplishments. Strel is a marathon swimmer, who has swum the Danube, Yangtse, Amazon and Mississippi rivers. While he proudly promotes his country, he is convinced that the country does not return him the same degree of attention, although he doesn’t seem to care too much about that. After all, he is a man of global fame, with many celebrity friends and an award-winning documentary about his adventures.

Pandur earned the title of Slovenian theatre’s ‘Enfant terrible’ through the impressive and glamorous stage pieces he has been presenting for nearly 25 years. His great homeland debut was the 1989 play, Scheherezade. Innovation as well as an unprecedented production scale represented a pioneering act in Slovenian theatre, inevitably leading to all sorts of controversy.

International appearances and coproductions have earned him global recognition, while his performances have been seen nearly all over the world. His ongoing creations include a number of plays and star actors. From classical adaptations like Hamlet or War and Peace to more contemporary themes, Tomaž Pandur is a global trademark for a theatrical experience.

Davo Karničar Slavoj Žižek

Žižek is a philosopher blending the traditions of Hegelianism, Marxism and Lacanian psychoanalysis. His interpretations feature many references to popular culture, particularly film, which has also contributed to his huge popular appeal and gained him the title, the ‘Elvis of Philosophy’. Controversial and provocative, Žižek never fails to attract his audience, be it university students or street protesters. Following a number of books and articles, he is currently introducing his second film titled ‘A Pervert’s Guide to Ideology’.

An alpine skier who reached beyond the limits of alpine skiing to find the ultimate challenge in climbing peaks and descending on skis. His accomplishments make him a unique athlete in this thrilling sport. In 2000, Karničar was the first person in the world to ski down the summit of Mount Everest. Moreover, he was the first person to accomplish this on all ‘seven summits’. The list of conquered peaks is quite extensive, but for those who know a bit about them, it is worth mentioning that Davo Karničar has also skied the north-east face of the Eiger, the east face of the Matterhorn and Mont Blanc.

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ECONOMY

No Time to Waste In the past year, Slovenia’s faltering economy witnessed a number of challenges, leaving prospects for 2012 modest, if not gloomy. Growth in 2011 was down; Slovenian government bonds were lingering around the alarming seven percent mark in the last couple of months of 2011; and the country saw its sovereign debt rating downgraded month after month at the end of 2011 and beginning of 2012. The newly elected government however, is wasting no time taking action.

S

lovenia’s economy contracted by an annual rate of 0.1 percent (seasonally and working days adjusted) in the third quarter of 2011 and shrunk 0.2 percent from the previous quarter.

The Finance Ministry blamed the contraction on the European debt crisis and its impact on exports. Also responsible, it says, is the prolonged credit crunch which is causing a more pronounced slowdown in Slovenia than elsewhere in the EU. The blame for the credit crunch itself ? That lies, the Ministry argues, with the demand for higher capital adequacy of banks.

Lending activity has deteriorated considerably since the announcement of the new capital adequacy requirements in July 2010.

Slow growth Despite the drop – which comes after five consecutive quarters of growth – Slovenia’s economy grew by 0.5 percent overall in 2011.

The Organisation for Economic Cooperation and Development (OECD) expects Slovenia’s GDP growth to slow to a mere 0.3 percent in 2012, before ticking up to 1.8 percent in 2013.

The Institute of Macroeconomic Analysis and Development (IMAD) GDP growth expectations are similar: 0.2 percent in 2012 and 2 percent in 2013. Although growth might be modest and is lower than projected early in 2011, at least the economy is not expected to contract.

The slowing growth will be a result of reduced export growth, which will also impact investment growth according to the IMAD report. After 7.3 percent growth last year, exports are expected to rise only 2.9 percent in 2012, while gross investment in capital assets will stay flat after decreasing a little more than 10 percent.

Such developments will have a negative impact on the labour market and household spending. The registered unemployment rate 16

will rise from 11.8 percent in 2011 to 12.8 percent over the next two years. The number of unemployed will rise in construction, manufacturing, retail and transport, while employment will rise in the service sector.

The projected 2 percent growth in GDP in 2013, will be powered by demand from the domestic market and export demand. After four years of decline, household spending will pick up again on the back of higher business investment and realisation of construction projects which were delayed due to the crisis, the report concludes.

IMAD warns, however, that these projections depend on the global situation, which could further deteriorate.

Rising bond yields The credit rating agencies reacted to the economic situation in Slovenia by downgrading its credit ratings continuously in the last few months of 2011 and in January 2012: Moody’s re-rated Slovenia three times in four months. In September, the Agency downgraded Slovenian bonds from Aa2 to Aa3, reducing them to A1 in December and to A2 in January 2012. Moody’s said the need for a capital injection in Slovenia’s largest bank, NLB, would burden the State budget and the Agency expressed fear over growth prospects. The Agency said the downgrades were also brought about by the increased risk “posed by the sustained deterioration in government funding conditions due to the euro area sovereign debt crisis”. Moody’s also listed among the reasons for the downgrades, the unstable political situation and increased risk regarding the funding of the budget because of the eurozone sovereign debt crisis.

However, the political instability settled at the beginning of 2012 when the new government was formed and approved at the beginning of February.

ECONOMY

the debt of the private sector, adding that company owners are the ones responsible for solving these problems. Escalating debt problems increase the number of insolvency procedures, said the Ministry, adding that the companies’ need for fresh capital is not news.

With regard to the high growth in unit labour costs, the Ministry said pay policies and improved efficiency will be the decisive factors.

The government intends to approach the issue by encouraging the competitive position of the Slovenian economy.

Regaining trust

Inflation

Source: Eurostat

Under observation

1.5 1.2

Source: Eurostat

Real GDP

Photo: BOBO

Nevertheless, due to the lack of tangible action by the previous government in combating the crisis, Slovenia is among 12 European Union countries that will have to undergo an in-depth macroeconomic review for the European Commission to determine whether there are macroeconomic imbalances and whether they are harmful. The monitoring is a part of the EU’s Macroeconomic Imbalances Procedure. Among the reasons for the monitoring in Slovenia, the Commission listed “fast accumulation of internal imbalances with high growth in unit labour costs, private sector credit and house prices.”

The Finance Ministry said in a response to the Commission’s decision, that Slovenia was aware of the problems stemming from

The government has also taken concrete action to restore the trust of international financial markets and reverse the avalanche of negative outlooks for the economy. The National Assembly unanimously passed a fiscal austerity bill just before Christmas 2011, to keep social benefits, pensions and public sector pay frozen at 2010 levels in the first half of 2012, securing EUR 65m in immediate savings.

To further curb public spending, Slovenia’s new government has cut the number of Ministries from 15 to 11 and the Prime Minister, Janez Janša, announced in February 2012 cutbacks in staff and costs in the public sector, so that public employees will share the burden with the workers in the private sector.

Most importantly, the government announced EUR 800m worth of cuts in public expenditure for 2012. In an interview Janša gave to RTV Slovenija, he believes the State should withdraw from most companies and only keep controlling stakes in strategically important financial and infrastructure companies. This is a promising strategy for investors and one that will surely fill the government’s empty purse.

In the same interview, Janša said the coalition was discussing the possibility of finding a new Chairman for State-owned NLB bank, seeking international applicants. This is encouraging news as it shows the government commitment to moving away from appointing managers in State-owned companies based on political interest rather than managerial skill.

The government also plans to speed up the implementation of major investment projects such as the construction of TEŠ 6 and search for strategic partners for major infrastructure investments.

Janša also expressed hope that the opportunity to build a logistics holding with Deutsche Bahn has not been irrevocably lost.

So, 2011 may not have encouraged much hope and optimism for the Slovenian economy. However, the new government are rolling up their sleeves and tackling the problems head on, leaving the prospects for 2012 better than they were in 2011.

6 5

0.9 4

0.6

3

0.3 0

2

-0.6 -0.9

2009

2010

2011*

2012*

2013*

*Forecast

-0.3 1 0

2007

2008

2009

2010

2011

17

FINANCE

Searching for Strategic Partners Slovenia has been one of the worst hit by the Eurozone crisis and its biggest banks, primarily NLB and NKBM controlling around 40 percent of the market, have struggled to recover with substantial non-performing loans and low return on equity. For a small country, Slovenia’s banking sector has the potential to punch above its weight, but first it needs to solve its crisis related problems. In addition to their own problems, the Slovenian banking sector is under constant downgrade threat from the credit rating agencies, partly because of the reduction in the country rating adding, often unjustified, additional pressure on an otherwise stable banking system.

Writedowns, rising losses

Banking performance indicators in % 10

2008 2009 2010 2011

8 6

Source: Bank of Slovenia

Non-performing loans remain the main reason for the substantial loss of NLB, an increase forced the bank into ever higher writedowns and provisions of nearly EUR 467m for the core bank and EUR 520m for the Group.The Group posted EUR 417m in net interest revenue and EUR 219.4m in net non-interest revenue. Total assets of the Group stood at EUR 16.4bn at the end of 2011, down from

2 0 -2 -4 -6 -8 -10

18

ROA

ROE

Operating Expenses/ Assets

Not Interest Margin*

*on average interest-bearing assets

4

EUR 17.9bn in 2010, according to unaudited results.The figures were unveiled in mid February 2012 by outgoing NLB Chairman, Božo Jašovič, who said a positive signal was that profit before impairments stood at EUR 189m for the bank and EUR 253m for the Group. Despite positive prospects, the bank needs fresh capital.

The second largest bank in Slovenia and the other State owned bank, NKBM, remained profitable throughout the crisis – net profit in 2010 was EUR 9.4m representing a 4.1 percent return on equity (ROE). The bank however registered a EUR 4.4m net loss for the first nine months of 2011. Its share price has also been faltering, from EUR 10 per share in April to just over EUR 3 in December 2011.

Urgent recapitalisation, the private sector is once again in the game

The European Banking Authority recently assessed that NLB needs at least EUR 320m by the end of June 2012 but Jašovič said the figure is now at least EUR 400m, pushing the bank over the required Tier 1 capital threshold. Jašovič said there is interest in the recapitalisation from international institutions, including Belgian bank KBC the second largest shareholder, but in such a short time, the project can only be completed with partners who know the bank. Among them are definitely the State (the largest shareholder), KBC, the European Bank of Reconstruction and Development (EBRD) and the International Finance Corporation (IFC). If the potential partners do not reach agreement, the bank has several contingency plans, including a public share offering and further divestment. However, the potential role of the State in the recapitalisation of the bank has changed with the new government, who has stated it will do everything it can to ensure that NLB is recapitalised without direct funds from the budget.

FINANCE

Source: Bank of Slovenia

Growth in bank assets year-on-year,in % 40 35

credits to non banks

30 25 20 15 10

total assets

5 0 -5 -10 -15

securities

2008

2009

2010

2011

On a positive note

Photo: BOBO

In order to increase its capital adequacy, NLB adopted a new strategy in 2012 committing the bank to focussing on its core activities, which it classifies as banking within the countries of the former Yugoslavia and therefore will divest the now, non-core businesses. Many of NLB Group’s 50 subsidiaries are banks outside this area and leasing and factoring companies. NLB also obtained a three year insured loan for EUR 250m in the auction staged by the European Central Bank (ECB) in Frankfurt, Germany in December 2011. The fresh funds will be used to maintain the bank’s investment portfolio and replace funding from international financial markets that will no longer be available in 2012.

Although Slovenia’s two leading banks are somewhat struggling to overcome the crisis, other banks are managing to keep their head above water. Slovenia’s fifth largest bank, SKB Banka, owned by Société Générale, posted a record profit of EUR 27m in 2010 and followed this with an increase in half yearly, pre-tax profit of 22.7 percent in 2011. Slovenia’s predominantly regional bank, Banka Celje, is the sixth largest bank, with assets of EUR 2.6bn at the end of 2010 and a market share of 5 percent. The bank has remained profitable throughout the crisis but has seen profitability fall in each of the past three years, with EUR 4.5m net profit in 2010, down from EUR 20.8m in 2007. It posted EUR 2.8m net profit for the first half of 2011.

So what can be expected in 2012? Slovenia’s Central Bank, Banka Slovenije, is optimistic. The stress tests carried out on Slovenian banks in 2011 show five different capital adequacy scenarios standing at between 9.9 percent and 11.1 percent and in terms of core capital, the adequacy would range from 7.1 percent to 8.6 percent. Maybe there is light at the end of the tunnel.

Better management The Governor of the Bank of Slovenia, Marko Kranjec, has urged the government to improve the poor management of State banks, with NLB and NKBM both ending 2011 with a loss. Kranjec said in January 2012, that overall bank losses are likely to increase further in 2012 due to an increase in non-performing loans.“For the State banks, the problems are conflict between the Supervisory Boards and Management teams. The lack of cooperation is very unhealthy”. The State controls 51 percent of NKBM and has 55 percent in NLB, in which Belgian banking and insurance group, KBC, owns 25 percent. Considering the plans presented by the new Slovenian government, particularly by the new Finance Minister, Janez Šušteršič, who strongly supports a lesser role of the State in bank ownership, we can expect that the call from the Bank of Slovenia will be heard and realised.

19

FINANCE

NLB Group

Financial Leader in South East Europe As 2011 ends, NLB Group successfully maintains its position as the leading Slovenian banking financial group, offering universal banking and financial services, in local and foreign markets.

With its 49 members in 14 markets, NLB Group is a stable partner offering numerous combinations of financial services for all types of businesses.

The Group prides itself on its ability to support its clients and create relationships based on trust, high quality service, strong business development, intelligent cost efficient solutions and risk management.

What used to be just a vision a few years ago, has now become a reality and promises even more in the future.

Active and strategic role in financial markets

By expanding its offer of indirect banking services and adapting to the needs of local markets, NLB Group embarked upon a demanding task but perceived it as a stimulating business challenge.

With 49 members in 14 markets, NLB Group is a stable partner offering numerous combinations of financial services for all types of businesses. NLB are proud to be able to support their clients in a variety of circumstances; with tailored financial packages and supporting their clients in numerous markets. Their greatest wish is to build a partnership with clients, a relationship based on trust, high quality service and strong business development, intelligent cost efficient solutions and risk management.

NLB is a financial institution with a tradition of ensuring their customers always come first. They direct their work and aim for customer satisfaction. They are convinced that NLB Group with 11 banks, 9 leasing companies, 9 companies for 20

international trade financing (factoring, forfeiting, export financing), 4 insurance companies, an asset management company and 15 other companies is a complete and timetested, traditional, trustworthy partner to help clients realise their business vision, both at home and abroad. With 1,700 correspondent relationships in 130 countries, NLB Group is the largest Slovenian international financial group.

COMPANY NOTES NLB Group in Slovenia Headquarters Nova Ljubljanska banka d.d.

Trg republike 2 1520 Ljubljana, Slovenia T: + 386 (0)1 476 39 00 info@nlb.si www.nlb.si www.nlbgroup.si

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

The bank in Slovenia

Life tends to surprise us with new and new challenges every day. However, it’s easier to face them, if we have a solid, reliable, and expert financial institution at our side.

NLB Group is the biggest Slovenian international financial institution, which uses experiences, knowledge, awareness of local their way towards business and personal accomplishments.

Banking, leasing, commercial finances, insurance

www.nlbgroup.eu

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

FINANCE

Matej Tomažin, Member of the Management Board, KD Skladi (KD Funds – Management Company LLC)

Diversify your Assets, a Positive Year Lies Ahead!

It is advisable not to keep all savings in one place, which means not to only invest in real estate or save only in the bank, but be prudent and diversify. KD Skladi, a part of KD Group, invests the money of its investors worldwide. With 18 mutual funds, it offers investors a full range of options.

According to Matej Tomažin, Member of the Management Board of KD Skladi, entering the market with short-term goals is not appropriate this year. However, it should be a positive rather than negative, year ahead.

What are the core activities of KD Group and what is their importance?

KD Group is one of the oldest, privately-owned financial groups in Slovenia, a public company whose shares are listed on the stock exchange and whose activities are divided into several key divisions: mutual funds, banking and insurance. Within insurance there are two insurance companies, KD Življenje, covering life insurance and Adriatic Slovenica for property insurance. The

banking division is represented by KD Banka and the mutual funds division, KD Skladi. Companies within the latter division are also located abroad. Regarding importance, each area is important in its own right, although in the context of revenue and number of employees it is, of course, insurance. The emphasis on this segment is somewhat stronger, whilst everything else is so we have a complete offer for our clients as part of our integrated financial services concept.

KD Galileo and Markets

If we limit ourselves to mutual funds, what is the total asset value of your investors?

The value of their assets is adjusted daily due to stock market fluctuations. If, for example; we began 2011 at EUR 430m, the current value of the assets of our investors is around EUR 350m, mainly due to stock market fluctuations and the slightly more adverse conditions that we have witnessed. An increasing number of people are faced with the basic problems of how to get through the month and therefore cash in their savings held in mutual funds.

Generally, we see many of our investors deciding to use their savings because their life situation is forcing them to do so.

(Cumulative return since inception: 1.1.1992-30.12.2011) Note: Total return with net dividends reinvested. MSCI EM no dividend information available before 1999

3,550

KD Galileo

3,250

Berkshire Hathaway (Warren Buffet)

2,950

MSCI Emerging Markets

2,650

MSCI World

2,350 2,050 1,750 1,450 1,150 850 550 250 -50

1992

2012

KD Galileo’s returns have exceeded comparative indices from developed and emerging markets and the return on the shares of Berkshire Hathaway, managed by arguably the world’s most famous investor, Warren Buffett.

22

Where do you invest the money of your investors?

We invest worldwide. We have 18 mutual funds covering the full range of options, from non-risk products, such as a cash fund, to risky products such as certain regionally focused funds. In other words, this means that we cover both this region and other areas, such as America, Asia, Russia, etc.

For what sort of savings are funds best suited?

Mutual funds are a logical step for investors, especially small ones, to gain exposure to stock markets. A mutual fund itself is

FINANCE

Monthly EUR 100 payments to KD Galileo (Return since inception. Income reinvested: 1.1.1992- 30.12.2011) Note: for the full period including 3% entry fee and payment on the first working day of the month

140,000 124,423 €

120,000 100,000 80,000 60,000 Return

52,996 €

40,000 20,000

23,280 € Cumulative payments

0 1992

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a basket of securities that is invested according to the policy for which the fund was established, i.e. the investment policy. Mutual funds possess a number of priorities or positive attributes. An investor can simply save with a savings account for a specific purpose, for long-term savings for the fulfilment of certain plans such as pensions, major purchases, etc. or they can merely opt to diversify their assets. It is advisable not to keep one’s savings in one place, meaning that we should not make investments only in real estate or keep money only in the banks we should diversify our savings.

Given the difficult economic situation, which markets are currently the most promising?

In the medium term we expect a lot from markets that are evolving faster than developed markets, emerging markets such as BRIC – the group of countries recording much faster economic growth than developed countries. We expect consumers in these markets to support development and therefore the companies that do business there and we expect the profits realised in these areas to be reflected in the prices of shares and indirectly, in the prices of mutual funds.

In the medium term we are definitely betting on markets that are developing rapidly.

The Balkan region has been considerably affected by the crisis.

What are the investment opportunities in this region?

There are numerous investment opportunities because the valuations of individual companies are very interesting due to the lack of liquidity. It is true that this story is not short-term because this situation may persist for some time. We noticed that the crisis, which has lessened somewhat in foreign markets in the past few years, is not letting up in this region. Consequently, this means that concrete positive changes should be expected once liquidity has returned to these markets, although some companies will not survive and caution will be warranted.

KD Funds will begin 2012 with a ‘round’ anniversary as the first Slovenian fund, KD Galileo, will be celebrating 20 years in operation.

The advisability of long-term investment in KD Galileo has been proven by the results achieved by its first investors. They can see that despite the crisis of the past few years, with only the value of KD Galileo having dropped, they have more money in their accounts

2002

2004

2006

2008

2010

2012

than they would have in the bank. Since its inception, the fund has earned the trust of its first investors by achieving an average annual return of 13.6 percent over the past 20 years, which is historically above average even by global standards, despite the financial crisis.

What are your plans and expectations for 2012?

We expect a somewhat more stable environment. In the first and second quarters the stock exchange may still be trying to get a grip on itself, but we are optimistic about the future. We believe that once the crisis has ended, we will emerge from it somewhat stronger, mainly because today we are investing in advertisements, in contacts with investors. This should provide us with a good foothold for the future.

What advice would you give investors this year?

Entering the market with short-term objectives is not appropriate because the situation is extremely volatile. At the moment, investors are particularly wary of the overly slow response of European governments to the crisis and there are doubts as to what 2012 will bring. Predictions of a recession on the one hand and relatively good figures regarding the operations of some companies on the other, indicate that results will be mixed, although they will be more positive than negative. Our theory put forward to investors is that 2012 will be positive.

The Simplified Prospectus of Subfund KD Galileo, fleksibilna struktura naložb (KD Galileo, flexible asset structure), the Umbrella Fund Prospectus Including the Management Rules, and the annual and semi-annual reports of the Umbrella Fund are available free of charge at the Management Company’s headquarters and subscription offices. The electronic versions and the list of subscription offices can be consulted at the website www.kd-skladi.si. The investor has the right to request these documents.

COMPANY NOTES KD Skladi, družba za upravljanje, d. o. o.

(KD Funds – Management Company LLC) Dunajska cesta 63 1000 Ljubljana, Slovenia T: +386 (0)1 582 67 80 kd-skladi@kd-group.si www.kd-skladi.si

23

FOREIGN DIRECT INVESTMENT

Turning the Corner It looks the same, smells the same and tastes the same but there is something different about Slovene brand, Fructal. The beverage went into Serbian hands in 2011 when competitor, Nectar bought the beverage company for EUR 35m. The takeover was one of the most striking foreign investments in Slovenia for the year, sending a positive signal to other investors from abroad. However, there are also some negative signs – twice in 2011, Croatia’s Agrokor failed to buy the majority shares in Slovenia’s retailer Mercator due to strong political opposition, food manufacturers and the Management Board of Mercator itself.

A

fter a decline in foreign direct investment (FDI) in 2009, 2010 saw an upward trend which it is hoped continued in 2011. There are some positive signs but confirmation will not come for a while yet – official FDI statistics for 2011 are not expected before autumn 2012. Whatever the figures show, entrepreneurs, economists and diplomats remain concerned that Slovenia is lagging when it comes to FDI. The common refrain, oft-repeated, is that the country needs to be more open to foreign investment. Biljana Weber, Head of Microsoft Slovenia, warned in May 2011 that foreign investment in the country was at “an extremely low level”. Five months later, her opinion has not changed: “Unfortunately, there were no substantial steps in attracting FDI this year.”

Good examples

Weber is not entirely downbeat. “It is encouraging to see increased openness to FDI among all stakeholders and increased awareness that effective measures to encourage FDI are now really necessary” she said, adding that she sees progress when it comes to public opinion.

“Even the Slovenian public, which has been relatively adverse to FDI, is more accepting of the need for such investment to ensure sufficient economic growth in the future. This awareness represents a good foundation for moving forward.”

The Ministry of the Economy and the Public Agency for Entrepreneurship and Foreign Investments ( JAPTI) both argue that they are making an effort to build on that foundation. “Together with JAPTI, we are pursuing an active policy for promoting and attracting FDI,” says Suzana Zagorc from the Ministry. Lidija Vinkovič of JAPTI also asserts that the Agency “has significantly and positively influenced the growth of FDI in Slovenia with its promotional activities, service for investors and with financial incentives.”

Boost for grants JAPTI used the EUR 8m allocated for its FDI cost-sharing scheme in 2011 sooner than expected. With this amount, the Agency was able to support 17 projects from foreign investors. “All together, these projects had an investment value of EUR 44.6m and they will create 673 new jobs,” says Vinkovič. In 2012, the Agency wants to boost the scheme to EUR 14m, a substantial increase from both 2011 and 2010 when there was EUR 6m available for grants.

JAPTI only supports investments valued under EUR 50m. Larger investors are handled by the Ministry of the Economy, such as the 24

FOREIGN DIRECT INVESTMENT

to improve its flow of foreign direct investment next year, but this is not as obvious as it may seem,” Plestenjak says. “Proactive promotion of Slovenia as a country suitable for investment is needed in Europe and global markets. Given the harsh economic conditions, we will increase promotional activities for the public tenders promoting foreign direct investments. In 2012, we will also continue and further strengthen, the positive experience in the direct marketing of Foreign Direct Investment – so-called lead generation.”

“It will be crucial to provide quality information, advice and other services for foreign investors during all investment stages – from the collection of relevant information in the pre-investment stage, to assistance during the investment phase where the possibility of obtaining financial incentives for investment projects plays an important role.”

“Special attention will also be given to the post-investment stage – the so-called aftercare phase – as many foreign-owned enterprises decide to upgrade their activities in Slovenia. The projects are implemented quickly if there is regular contact with existing clients.”

Photo: A. Slavinec

In the pipeline

A panel at the FDI Summit by The Slovenia Times and JAPTI

EUR 45.5m incentive granted to Novo mesto-based, Revoz in 2011.

The car maker, a subsidiary of the French giant, Renault, will use the grant for the innovative Edison project that will result in the production of new generations of the Twingo, Daimler Smart and electric cars. The entire value of the investment is estimated at EUR 326m and as many as 162 new jobs will be created.

Despite such a positive attitude the, yet another, failed attempt to sell Slovenia’s retailer Mercator to a foreign investor, once again damaged Slovenia’s reputation as a location for potential investors from abroad. The public and political outcry against the sale of Slovenia’s ‘best neghbour’ to its Croatian competitor, Agrokor certainly left some wondering if Slovenia will ever completely open up to foreign capital. Nevertheless, there are other major foreign investments in the pipeline, keeping hopes alive. There are ongoing negotiations with two investors who submitted binding bids for a minority share and capital increase in sporting goods manufacturer, Elan. For the sale of paper manufacturer and graphic company Aero, investors submitted non-binding bids and they are to perform due diligence. The sale of Fotona, a leading developer of laser systems, is at the same stage.

It is expected that in March 2012, a public tender will begin for the sale of Adria Airways – if the sale goes ahead, it will very likely represent a new foreign investment and perhaps a sign that FDI could be moving forward in Slovenia.

High technology

Countries with the largest number of FDI in Slovenia

Innovation, growth and employment are also key words at Julon.

With facilities in Ajdovščina and Ljubljana, this company – owned

by Italian Aquafil – recycles waste into synthetic fibres. The EUR 3.6m grant received in 2010 helped Julon to continue its progress and be one of the FDI success stories in Slovenia, winning a FDI award in 2011.

Zagorc says the country will continue its efforts to attract investors in high-tech sectors: “They are an important factor in increasing competitiveness and productivity and they contribute to the transfer of knowledge and technology, efficient resource allocation, balanced regional development and the inclusion of Slovenian enterprises in the supply networks of transnational enterprises,” she argues.

Vinkovič adds that there has been an interesting change in the type of FDI investment now seen in Slovenia. “We have seen a shift from investments predominantly in manufacturing to investments in research and development projects. Today they account for 33 percent of all FDI projects.”

in % Source: Ministry of Economy

50

40

30

20

10

High expectations JAPTI’s Chief Executive, Igor Plestenjak, is positive about the future of FDI in Slovenia. “Based on global trends, Slovenia hopes

0

Austria

Switzerland

France

Netherlands

25

FOREIGN DIRECT INVESTMENT

BSH Hišni aparati

Eternally Innovative BSH Hišni aparati is one of Slovenia’s most successful companies and one of the largest foreign investors in the country. Ever since 1993 when a factory in the small town of Nazarje was taken over by BSH Group, it has been a business success story, defying the difficult times of the global economic crisis with its thoughtful investment and innovation.

B

SH Group is the largest manufacturer of home appliances in Europe and one of the leading companies in its sector in the world, uniting over 70 companies in more than 46 countries and employing approximately 43,000 people. Its story in Nazarje, Slovenia began with 466 employees, manufacturing 900,000 home appliances, focusing on motor-driven products such as hand mixers and meat slicers. Due to its historically, successful operation enabling today’s development and production programme, BSH Hišni aparati now employs more than 1,200 people and have expanded production to other appliances used for the preparation of food and drinks and is also home to the BSH Group competence centre for the development of small, motor-driven appliances and automatic coffee machines.

Continuous investment BSH Hišni aparati is responsible for the Adriatic-East region, which aside from Slovenia includes Croatia, Serbia, Kosovo, Montenegro, Macedonia, Bosnia and Herzegovina, Albania and Bulgaria. The sales, marketing and servicing departments are located in Ljubljana, with sales branches in Zagreb, Belgrade and Sofia.

Production in 2011 reached nearly 7 million appliances of Bosch, Siemens and Gaggenau brands, the majority of which were sold in foreign markets.

The company can boast about its continuous growth. In 2010 it generated EUR 271m in revenue, up 12% from the previous year and 5% above target. At the end of the 2011 financial year, production had increased 4% in comparison to 2010 and 15% in terms of value. The success, based on long-term, sustainable development and persisting with the strategy of sales enlargement and value-formoney principle marketing, allowed the company to expand and invest, despite the recession. Most of the investments were made into production, research & development and the recruitment of new employees, particularly experts in technology and development.

Also in 2011, the Slovenian government recognised the company’s effort of previous years and acknowledged its future potential, by signing an agreement with BSH Group and its Slovenian subsidiary, which will guarantee the company a subsidy of approximately 26

The new board of directors: Boštjan Gorjup (CFO), Peter Eisermann (CTO) and Gerald Schmidt (CEO) Siemens EQ 7 Coffee Machine - developed and produced in Slovenia

FOREIGN DIRECT INVESTMENT

President Dr Danilo Türk at the inauguration of a new high grade production line for coffee-makers

Apart from being the largest employer in the local community, BSH Hišni aparati also supports athletes, cultural workers and other individuals who are important for the further development of the local community. The company has received many awards and accolades for its business excellence, environmental awareness and innovation.

New management

EUR 8 m for its more than EUR 26 m investment project due for completion in 2014.

Innovation and sustainable development

One of the most important investments by BSH Hišni aparati is a new range of fully automatic coffee machines, stick mixers and hand mixers, all with a focus on a higher added value, which will greatly strengthen the position of BSH Hišni aparati within the BSH Group as the development and production centre for both groups – small motor-driven food-preparation appliances and fully automatic coffee machines.

At the end of 2011, BSH Hišni aparati installed a new high grade production line for coffee-makers with which the company will increase its coffee machine production by 30%. The new production line, opened by the Slovenian President Dr Danilo Türk, also created new jobs, which is just one example of the broad impact the company has had on Slovenia. BSH Hišni aparati’s constant orientation toward innovation, the growth of the company and the future higher range product manufacturing go hand in hand, not only in providing opportunities for the employment of technical experts and other profiles, but also for improving the prospect of cooperation with different R&D institutions. BSH Hišni aparati has developed an innovative model of ’dual-education’, offering and combining valuable practical knowledge and expertise with theoretical knowledge from institutions, from which the company and also the Slovenian education system, benefit.

The photo above left shows the two new Members of the Management Board of BSH Hišni aparati. At the end of October 2011 Rudolf Klötscher, after nearly four years and Andreas Liebl after five years of managing the company, commenced new positions in BSH Group. The new members, Gerald Schmidt as CEO and Peter Eisermann as CTO, will continue the great work of their predecessors, together with Boštjan Gorjup, CFO and a permanent member of the management team.

Full speed ahead In the next few years the company will restructure its production and support services to reflect its focus on the development and production of appliances with higher added value, especially advanced small home appliances and appliances for coffee and hot drinks preparation which will give work to the experts in the development department. Due to its intensive expansion, BSH Hišni aparati will invest in new premises for its professional services and logistics and also in new appliances and equipment. Over the next three years, a total of EUR 30 m will be invested in equipment for new home appliances, particularly in the field of coffee drinks and food preparation appliances, thus further positively impacting the Slovenian economy and playing an important part in strengthening it.

COMPANY NOTES BSH Hišni aparati, d.o.o.

Savinjska cesta 30 3331 Nazarje, Slovenia T: +386 (0)3 839 82 22 F: +386 (0)3 839 82 00 Sales and Marketing Litostrojska 48, 1000 Ljubljana www.bsh-group.si

27

INNOVATION

Design is an Investment In today’s competitive world, even the best is often not good enough. In order to leave an impression, products should be innovative, efficient and also look good. Contrary to some populist beliefs, many Slovene companies do all of this. In fact, the Dutch Ambassador to Slovenia, H.E. Johannes Douma, recently said that “Slovenia could be named a Red Dot country,” referring to the prestigious design award.

S

ome of the success stories are officially recognized as hidden champions (see The Slovenia Times, December 2011), but there is a whole range of quiet achievers, highly respected in international markets and well-known among people ‘in the know’. Trimo, for example, provided high-performance cladding for the new McLaren Formula 1 Production Centre, which was designed by another global leader in architectural design, Foster & Partners.

“While the research sphere is relatively well supported by the Slovenian State, policymakers do not provide enough support for the commercialisation of ideas. For start-ups particularly, I believe that the lack of either venture capital or State subsidies for bringing innovations to the market, is hindering the emergence and growth of successful high-tech companies that Slovenian engineers and researchers are no doubt capable of supporting,” says Gregor Veble, Head of Research at Pipistrel. Trimo’s Miloš Ebner, believes that the design environment is quite well developed with a number of successful designers: “The Silent Revolutions exhibition, for example, which enjoyed great success in London and Eindhoven last autumn and brought together the crème de la crème of Slovene design and innovation, is just one confirmation. However, they are rather isolated examples, Slovene companies in general are still

28

not sufficiently aware of the importance of industrial design and development. Gorenje admit that the environment for innovation in Slovenia is improving and they hope that the trend continues as it helps stabilise the economy and create new jobs.

The most outstanding innovation stories “At Trimo, innovation and industrial design are at the core of our strategy. Through the development of innovative products, we try to distinguish ourselves from the competition and thus gain a competitive advantage,” says Miloš Ebner, Head of Strategic Innovation. Trimo is a regular customer of patent offices and bring new innovations to market on a regular basis. It has received a number of national and international awards. Their most recent achievements include the modular façade QbissOne, ArtMe Façade design that enables a designer to complement façade cladding with a preferred design and QbissAir, a thin, highly thermal and

INNOVATION

sound insulated façade system, set to change the future of modern construction.

Pipistrel, a light aircraft manufacturer, is another company where innovation runs in their blood. Winning the NASA Green Flight Challenge in 2011 and the UKTI Award for Innovation at the European Business Awards in 2010 were just two additional recognitions of their work. “By constantly innovating, we are able to stay a step ahead of the competition and to open previously nonexistent market niches, such as electrical aircraft. The company’s R&D expenditure represents about 20 percent of total turnover and is equivalent to the net income - essentially all profits are channelled back into R&D. About 30 percent of the almost 70 strong Pipistrel workforce, are devoted to R&D activities, working from basic and applied research, computer-aided design and manufacturing, rapid prototyping to tool design,” says Gregor Veble. Pipistrel’s short-term goals for 2012 are finishing the Alpha trainer aircraft, intended primarily for flight schools and the prototype of the Panthera, a highly efficient four seater cruise aircraft that will take Pipistrel from the manufacturer of light sporting aircraft to a fully certified aircraft production organisation and will most likely provide the majority of company income in the future.

At Krka, the Slovenian pharmaceutical company with annual sales exceeding EUR 1bn, they believe that innovation should be part of the company culture. “Innovation is vital for any company aiming to improve its competitive position. Around 10 percent of sales revenue is spent on R&D and over 500 experts are involved in R&D activities. One of their responsibilities is to constantly adapt the products to the requirements of the markets in over 70 countries. It requires a lot of interdisciplinary approaches and internationalisation,” says Krka’s PR office. Every year, the company develops several new products based on their own patented solutions.

Introducing new products and technology plays a significant role in the competitive position but constant growth in sales and other business indicators are empirical proof of the good work that Krka is doing.

Seaway, a sail and powerboat development and production company, maintains its position as a leading innovator. Not many people thought about hybrid boats just three years ago, today Greenline is one of the best known brands and the Greenline 33 Hybrid represents the largest hybrid fleet in the world with over 220 units, sold in 28 countries. Being honoured with 17 International Boat of the Year, Design and Environmental Awards makes it, arguably, the most awarded boat in history. The Greenline hybrid is different due to its ability to sail with no noise or exhaust fumes, low fuel consumption and comfort, resulting in environmentally responsible boating. The hybrid technology used is a parallel hybrid (diesel/electric) propulsion system, coupled to a Lithium battery bank and a photovoltaic solar array on the cabin roof. Seemingly Trimo’s modular kindergarten

boosted by the success of the hybrid philosophy and in order to take advantage of their expertise in carbon fibre technology, Seaway has recently extended their activities into two new areas – renewable energy sources and construction. They are designing the world’s largest wind energy blade with a total length of over 80 metres and they have finished installing a carbon extension overhang for a newly built house in Switzerland.

Cosylab is one of the silent powers. It is the world leader in the most sophisticated and challenging computer-based control systems for nuclear accelerators and the like at large physics institutions and partner corporations such as Siemens, Varian, Thales, Astrium (EADS) and National Instruments. Their projects include 30 of the world’s largest and most well-known, such as the Atacama Large Millimetre Array (ALMA) radio telescope and the international thermonuclear fusion experiment – ITER. Cosylab is a spin-off from the Jožef Stefan Institute, Slovenia’s largest research institute.

Employing 23 researchers, including four PhDs, Cosylab’s R&D potential is demonstrated by their close involvement in cuttingedge R&D projects for their customers, such as CERN’s next generation, high accuracy, hard real-time timing system (The White Rabbit project).

Gorenje is a pioneer in the introduction of industrial design into everyday products. Working in the mature industry of household appliances, where supply exceeds demand and where price competition from countries with lower labour cost is intense.

To hold their market position, Gorenje are aware they need to use a less conventional approach, such as continuous research and appealing design. Spending around 2 percent of annual revenue for R&D activities, Gorenje sees it primarily as an investment in the future. In addition to Slovenia, their development teams are based in Holland, Sweden and Czech Republic. Among its latest achievements are a new generation of washing machines, tumble dryers and the iChef oven with a touch module. Aside from increased sales, these products enhance Gorenje’s overall reputation.

On average, Gorenje introduces two new generations of appliances each year, triggering both technology and design innovation, such as new functions, improved energy efficiency and other characteristics, new materials and control and design solutions. Last but not least, there are thousands of incremental improvements provided by the workers, within the internal Sparks project. According to Gorenje management, their key ability is predicting what will be hot in five years and working on it today.

29

INNOVATION

Exhibition

Silent Revolutions/ Contemporary Slovenian Design Organisor of the Exhibition: Museum of Architecture and Design, Curator: Maja Vardjan Coordinators: Ministry of Culture, Ministry of Foreign Affairs, Ministry of the Economy, Public Agency for Entrepreneurship and Foreign Investments, Office of Communications

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he travelling exhibition, Silent Revolutions, which presents contemporary Slovenian design to an international audience, provided an excellent opportunity to analyse the development of Slovenian design over the first two decades of this young European State’s existence. The specific character of Slovenian design was captured in the title of the exhibition, Silent Revolutions, which presents Slovenia as a country with an exceptional history of design

Efekt shovel, design: Rinz Pavlinec & Pavlinec; Tehnos, 2008, photo: Marko Pavlinec

but which has not yet established itself as an internationally important location in terms of design. This ‘silence’ was one of the motives giving rise to the concept of the project, which engages a wide range of more recent products in a dialogue with historic, iconic buildings.

Another aspect of this ‘revolution’ highlights the fact that a few of the selected products, with ground-breaking innovation, set new standards on a global scale.

Gwig lighting fixture, design: Asobi; Intra lighting, 2006, photo: Dragan Arrigler

Wall-mounted coatrack, design: Toni Kancilja, photo: David Comba

30

INNOVATION

Chair Rex, design: Niko Kralj, Stol Kamnik, 1952, photo: Janez Kališnik

Innovation is an indisputable criteria that, in addition to functionality, sustainability, visibility, ergonomics, aesthetics, etc., needs to be taken into consideration when evaluating products.

However, a broader view of the situation may be grasped based not only on the excellence of an individual product but also from its position and impact in the broader context of design in Slovenia.

This context changed immensely following the declaration of independence in 1991 and the consequent leap into a new system of free market economics. This text therefore does not represent only products and individual designers and studios but also customers, manufacturers and businesses that played a key role in the realisation of projects. Critical evaluation requires a temporal distance and the testing of products over time, the selection therefore focuses on diverse specific cases reflecting the period when they were created – from products made by large industries to items emerging from the hands of the designers themselves. However, despite the diversity of approach, Slovenian design is a complex story consisting of distinct chapters.

One of the chapters clearly involves large enterprises from the former state that were successful in restructuring themselves during the period of transition and are now doing well in international markets. The appliance manufacturer, Gorenje, continues to enhance the reputation of its brand by ceaselessly investing in new products designed by both its own studio and international design stars.

Elan and Alpina are also names that connect the past and present of Slovenian industry. Elan’s innovations such as WaveFlex and Amphibio technology and Alpina’s Racing Elite cross-country ski boots, constitute exceptional design achievements by international standards.

Key companies that have flourished in the new State include Trimo and Riko, manufacturers that have introduced the concept of design and the possibility of individual choice into prefabricated building components.

Alpina Racing Elite CL in CS, design: Jure Miklavc, Jan Jagodič and Robert Križnar; Alpina, 2008, photo: Dragan Arrigler

Black Cherry Lamp, design: Nika Zupanc; La Femme et la Maison Nika Zupanc, 2010, photo: Dragan Arrigler

Kawasaki ZX10 Evolution exhaust system, design: Igor Akrapovič and team; Akrapovič, 2008, photo: Akrapovič, d.d.

Bags and Jewelllery, design: Lara Bohinc; Lara Bohinc, 2007, photo: Jon Compson

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Kiosk K67, design: Saša J. Maechtig, Imgrad, 1966, photo: Saša J. Mächtig

The transition period was also the period of professionalising design studios. Interdisciplinary studios such as Gigodesign, Gorenje Design Studio and Studio Miklavc, to mention a few, have positioned themselves as service companies providing customers not only with design solutions but also with advice on how to design, develop and position their brands.

In taking stock of Slovenian design over the past twenty years it is impossible to overlook the remarkable innovations requiring quite specific skills and pushing the boundaries of the design profession. Dedicated individuals such as the mechanical engineer and audiophile Franc Kuzma, the former professional motorcycle

rider, Igor Akrapovič and the economist and pilot, Ivo Boscarol, create superior products by international standards by combining filigree techniques and demanding industries. The Kuzma turntables and arms, the Akrapovič exhaust systems and the Pipistrel ultralight motorised aircraft were born from the personal passion of their makers, who soon developed reputable and successful businesses.

One of the phenomena of Slovenian design are also independent designers with their expressive personal stories and commentary on the established world of rational design. Designers who wonder and have doubts about and manipulate the meaning of everyday objects, rarely find compatible counterparts and are primarily oriented abroad, often developing their own “designer-to-consumer” business model. The charismatic designers Nika Zupanc, Lara Bohinc and Leonora Jakovljevič have been successful on the international scene for many years now.

A completely different but equally strong conceptual approach can be found in Rok Oblak’s folk cookers, whose open design has made their widespread use possible in Third World countries.

Sadly, many Slovenian traditional crafts are disappearing, but some designers are returning to traditional knowledge and reviving it with fresh, contemporary experience. The glass designer, Tanja Pak and the architect and chair designer, Janez Suhadolc, are committed to ancient materials such as glass and wood, create modern products by applying traditional techniques. Just as Suhadolc builds on the local tradition of making furniture from wood, Pak’s comes from the glass-making tradition, which has maintained its position against the background of the collapse of the wood industry. Even the downfall of the fashion industry has not stopped the creative potential of clothing and textile designers that have sought their own individual concepts. The Oloop collective, explaining 3D objects that promote active use, is one example.

Sitty foldable seat, design: Gigodesign, 2009, photo: Dragan Arrigler

Shoes Criatura, design: Leonora Jakovljević; Leonora Mark – Ave Femina, 2005, photo: Luka Dekleva

Siti armchair, design: Arne Vehovar; Zilio A & C Sas, 2004, photo: Matevž Paternoster

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Phone Eta 80, design: Davorin Savnik, Iskra, 1979, photo: Technical Museum of Slovenia

In addition to its large industrial systems, Slovenia also has newer, smaller companies that are most often personified by the charismatic figures of their owners. These enlightened entrepreneurs, often acting as creative directors, seek specific niches and in cooperation with select designers, produce attractive brands such as Vertigo Bird and Intra lighting. Even Seaway has grown from a small design studio run by the Jakopin brothers into an internationally recognised company specialising in boats. Their big hit is the Greenline 33 hybrid boat.

Slovenia’s design scene has also been enriched by ordinary, simple products that, at first glance, do not seem to be anything out of the ordinary. Their design aesthetic and use are well known and etched into collective memory but still radiate an atmosphere that sets them apart from the deluge of the generic. Arne Vehovar’s Siti armchair, Toni Kancilja’s hanger, Rok Kuhar and Katjuša Kranjc’s chair series and last but not least, the super lightweight Efekt shovel encapsulate the quiet power of ordinary, everyday artefacts.

The chapters that have crystallised in this survey of products, designers and companies, indicate that there is no such thing as typical ‘Slovenian design’, but there is a typical Slovenian context in which design represents the sum of the fragments and an expression of different situations that reflect the diversity of the modern

world. However, this rich context includes individual creators, from designers to companies, mostly left to their own devices and to finding their own path to fame given that (for now!) Slovenia has not formulated or adopted strategic policies relating to design and creative industries. Therefore, will contemporary Slovenian design continue its somewhat subdued, steady progress marked by small but exceptional individual achievements within Europe’s large context or will it be able to open a new, ground-breaking chapter with determination and courage and above all, with the strategic and long-term support of the State?

Microphones, design: Marko Turk, EAL, 1956–1997, photo: Jaka Babnik

Speedwave 14, WaveFlex 14, SLX FIS WaveFlex Plate skis, design: Gigodesign and Elan; Elan, 2007–2011, photo: AV Studio

Stabi XL turntable, design Franc Kuzma for Kuzma, photo Marko Tušek

Qbiss One with ArtMe moduar façade, design: Trimo, Faculty of Mechanical Engineering and Gorenje Design Studio; Trimo, 2009, Photo: Miran Kambič

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Giulio Bonazzi, Chief Executive, Aquafil

Econyl: A New Idea in Sustainability In mid 2011, Julon, a Ljubljana-based company owned by by Italian synthetic fibre manufacturer Aquafil, started production of Econyl following a EUR 17m investment by the parent. According to the President and Chief Executive of Aquafil, Dr Giulio Bonazzi, it means Slovenia is now producing the ‘product of the future’.

Why Julon?

Acquafil has owned Julon since 1995 and in 2009 we decided to modernise the plant and make it the facility for producing Econyl,the polyamide 6 product produced from recycled materials.

Carpet yarn is one of Aquafil’s main businesses, Econyl is the raw material we use in the manufacture of carpets and other textiles.

We produce thousands of different types of yarn from the polymer.

What were the objectives in launching Econyl?

Respect for the environment, sustainability and the protection of natural resources are the major objectives, that we and our customers, can achieve with the launch of Econyl.

Econyl has opened up a new idea of sustainability. Although Aquafil has always been an environmentally conscious organisation and although we are obliged to be ecological, it has become part of our culture. We also understand that this makes us more competitive, so 34

INNOVATION

we try to develop infrastructure and technology that is as respectful as possible to the surrounding environment.

The launch of Econyl textiles on the market is supported by our carefully focussed strategy aimed at creating, in concert with textile manufacturers and end brands that believe in the principles of environmental sustainability, garments produced through a virtuous, and closely controlled production process.

The Econyl project, due to the innovative technology developed within the Group, offers Aquafil the advantage of size and the robustness necessary to meet the needs of the great fashion and sports brands, increasingly seeking to satisfy rigorous environmental policies and offer consumers sustainable products.

Fish nets and carpets are the main materials that are recycled.

Where do you obtain the waste for recycling?

Scandinavia is good because they are starting some programmes to force fish farms and fishermen to collect nets at the end of their life instead of throwing them away. The government is starting to introduce and even force this issue. Canada is another good area.

In British Columbia, there are a lot of fishermen and the most common way to dispose of the nets is to leave them in the forest.

We are now working with them to see if we can take them out and bring them here.

As for carpets, the USA is interesting because, in certain States, it is already forbidden to dispose of certain carpets in landfill, they are forced to take them back to the retailer or directly to the carpet producers who then start the separation into different components.

Europe is lagging behind, there is no legislation in Europe forcing people to collect these products. It would be advisable if Europe started forcing people to collect these things.

How cost effective is the production of Econyl?

The recycling process, in order to be really sustainable, must be profitable. In terms of emissions and energy consumption, this process is fully competitive with the process of producing the same raw material from non-renewable sources or from oil. To implement the sustainability of our Econyl plant we are planning to power it with renewable energy, our dream is to have solar energy or wind energy in Slovenia.

Econyl is currently produced only in Slovenia. Do you have plans to introduce it elsewhere?

Our dream is to have another plant in the USA which is logistically, the ideal location. It was possible to realise this project in Slovenia Econyl´s unique features mean it is very popular because the production process is 100% recyclable and all waste material is returned back to the basic product

The production of Econyl involves recycling waste into a compound called caprolactam, a monomer and the base for the manufacturing of plastic polyamide 6, which is then spun into yarn and used for carpets and fabrics. The product uses 100% post consumer, pure waste material at the end of its life cycle and often disposed of in landfill, incinerated or abandoned in the sea or on the beach. The waste is sourced globally, shipped, sorted and then processed, without any solvents or dangerous materials, back to its original monomer state. It is then properly purified. The great benefit of the process is that, unlike plastic bottles, there is no degradation, the polymer is taken back to its initial state and therefore can be recycled forever.

because we had the space and the infrastructure, otherwise the EUR 20m investment would have had to be more than doubled.

Why do you think this is the technology of the future?

To overcome this crisis, the world has to change. A good example is construction, today you need to consider energy consumption and possibly even energy production, natural ventilation, etc. Also when it comes to cars, these days people are buying hybrid or electrical cars. It is the same for us. We need to innovate and bring something to the market that is more respectful of the environment, possibly in a closed loop – not taking anything from the earth and not leaving anything in the earth at the end of the cycle. This is why we believe this is the future. If you see a product in the shops which is of the same quality, except that it is recycled, I am sure you would buy the recycled one. Raw materials are becoming so rare that it is not good to drill for oil, it is better to recycle.

What are your future plans in Slovenia?

It is essential for us to be successful in Slovenia and keep investing in modern technology, quality and so forth. With Econyl, this was the centre where we invested most of the money. Not only in Econyl, but also in improving and enlarging the rest of the production. We are still investing and we think we will increase the number of employees, we hope the business environment will remain positive for us.

COMPANY NOTES Julon d.d. - Aquafil company LetaliĹĄka cesta 15 1000 Ljubljana, Slovenia T: +386 (0)1 584 22 00 info.julon@gruppobonazzi.com www.aquafil.com

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Saša Bavec, President of the Board, Knauf Insulation

Innovation is the Greatest Asset Knauf Insulation, which has been around for 50 years, continues to grow and is planning new projects amid the economic crisis. Experience in the manufacture and use of insulating materials made of mineral wool for various purposes – from construction to energy to industry to shipbuilding – is being upgraded through the manufacture of new-generation glass wool with biobased binders. Today, the company employs over 400 people and produces more than 100,000 tonnes of mineral wool insulation.

Knauf Insulation is regarded as one of the most dynamic companies in Slovenia. What are your latest results?

Our company operated successfully in 2010, we increased our revenue by more than 7% compared to 2009. This favourable trend of revenue growth continued in 2011. Data indicates that we exceeded our plan for the year 2011. The fact is our global method of operation gives us access to new technologies, a broader product mix and the possibility of linking to the international environment.

What position do the Slovenian based operations of Knauf Insulation hold within the corporation?

We operate within a system that is comprised of over 30 factories manufacturing insulating materials worldwide. The work system is such that, even the factories themselves are forced to compete with each other, thus boosting their own development. Consequently good practice is transferred quickly and systematically. We all try to do our best in order to be assessed by our owners as having investment potential and the State may also play an important role through tax legislation, subsidies and speedy procedure. Given that last year we managed to acquire a major mineral wool development centre in Škofja Loka, including a central laboratory, it is clear the owners trust us.

What is the education structure of your company? How do you find the right staff ? Are there enough adequately educated experts in Slovenia and what is your HR policy?

One of the key elements of competitiveness and a precondition for sustained growth of a company is educated, trained and motivated employees. In Slovenia we are faced with high labour costs, which is of particular concern for foreign owners. Nevertheless, we hired about 60 new employees in 2011, most of them at the new global centre for the development of new mineral wool products and technologies for manufacturing them. At the end of 2010, about 41% of our staff were unskilled workers and 17% had two years of post-secondary and higher education. In 2011, we mainly hired the latter, so currently, 26% of our employees have two year post36

secondary or higher education. The company encourages employees to acquire additional informal and formal education and it supports the creation of projects that enable employees to obtain the highest professional qualifications (PhD, MSc).

How is the global financial and economic crisis affecting your industry?

The global economic crisis has greatly affected the construction industry. The situation in Slovenia, where construction is still sinking, is particularly worrisome unlike in some other European markets where significant growth and recovery has already been felt.

The crisis is also felt in other industries although, we still manage to grow thanks to innovative products and a novel approach.

What is your vision and strategy for the company’s development in coming years?

We have ambitious goals related to upgrading of the production capacity that will enable us to manufacture new products with higher added value. The development projects that are in the pipeline will enable us to expand into completely new areas in coming years, which will reduce our dependence on the construction industry.

Additionally, products with higher added value tolerate higher transport costs more easily which will help increase exports to non-European markets.

COMPANY NOTES Knauf Insulation d.o.o., Škofja Loka Trata 32 4220 Škofja Loka, Slovenia T: +386 (0)4 511 40 00 post.slovenia@knaufinsulation.com www.knaufinsulation.si

EDUCATION

The Best and the Worst of Times

In many ways, 2011 was a highly successful year for the Slovenian education sector. IEDC-Bled School of Management celebrated its twentieth-fifth anniversary. A new higher education programme and innovation strategy was adopted. A redeveloped primary school syllabus was launched based on considerable research as to the best ways to educate youngsters. Yet the past twelve months have also seen student protests; real worries over funding; and increasing concern about the standard of literacy. It all equates to a highly unsettled state of affairs in the Slovenian education sector; a situation which looks set to continue into 2012.

I

n February 1986 a new education institution was founded in Slovenia. IEDC-Centre Brdo was, to put it mildly, a novelty.

This ‘International Executive Development Centre’ was the first management school in Central and Eastern Europe and was an incongruous phenomenon – an education institution devoted to business, yet located in the Communist Federation of Yugoslavia.

Twenty-five years later and IEDC-Bled School of Management – as it is now known – has moved from education novelty to established player. The celebrations of its silver anniversary are ongoing this year and have reflected the esteem in which the institution is now held. The main event, an October international conference entitled ‘Creating the Future’, attracted more than 450 business and political leaders, professors, alumni and other friends of the school. It was opened by Slovenian President, Dr Danilo Türk, who a couple of months later awarded IEDC-Bled the Golden Order for Services. The Order, Slovenia’s highest decoration for service, was presented for the school’s ‘pioneering work in the field of business education and for its contribution to putting forward higher business standards.’

Managing a good year Little wonder that the school’s Dean and President, Professor Danica Purg, describes 2011 as ‘a great year’ for her institution.

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She says the anniversary is far from the only reason to regard the twelve months just passed as highly positive: “At the beginning of the year we launched executive PhD studies and welcomed two new generations of those studying for executive MBA’s; during the summer we hosted young or potential managers from all over the world in our international summer schools; we strengthened our collaboration with corporate partners from various countries; organised a number of high-level international conferences and played a leading role in an extensive international research project.”

IEDC’s celebrations and success are undoubtedly one of the bright spots of the year for Slovenia’s education sector. But there have been other positive developments too. Take the situation at the University of Maribor which is preparing to play a central role in its home town’s position as the European Capital of Culture 2012. The university will run 32 projects, connecting six partner towns and bringing together the arts and sciences. International conferences will be organised at the institution and its library will run a range of projects, including showcasing manuscripts of regional importance. It is estimated that the university will invest between EUR 350,000 and EUR 400,000 in its European Capital of Culture programme.

It’s all about the money However, look at where that money comes from and one of the major worries in Slovenia’s education sector is highlighted.

The university was expecting to receive funds from a multitude of government ministries, given that the projects relate to a number of areas, among them education, science and technology. But the only guaranteed funds are from the Ministry of Culture.

So, as in many areas of Slovenian life, worries over money, quality and reputation are threatening to overshadow the positive developments of 2011. Yes, the national higher education programme – adopted this year – increased budget funding for higher education from 1.2 percent of gross domestic product (GDP) to two percent until at least 2020. Yes, Education Minister, Igor Lukšič can boast that funds for higher education increased by 22 percent during the outgoing government’s term. But none of

Photo: BOBO

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this stopped several hundred activists from staging a sit-in at the Ljubljana Faculty of Arts in November, demanding better quality education, expressing concern about the possible introduction of tuition fees and highlighting worrying changes in the professorstudent ratio at the University of Ljubljana (from 1:18 in 1990 to 1:52 in 2008).

A paradox It’s likely that, in part, this changing ratio can be explained by the explosion in the numbers of Slovenians staying in education.

According to data released by the Statistics Office in November, 50 percent of 19 to 23 year olds in Slovenia, are students. Two decades ago, that figure stood at 20 percent. So the country finds itself facing the same problem as many of its fellow members of the European Union – a massive demand for quality, higher education at a time when funds are in scarce supply.

In some areas quality is already a concern. The sit-ins highlighted worries over higher education, but compulsory education is cause for unease too. An Organisation for Economic Cooperation and Development (OECD) report published at the end of 2010, shows that Slovenian secondary school students lag behind the OECD average in reading skills. The results undoubtedly contributed to the overhaul of the primary school syllabus for the academic year that started in September 2011. In all subjects there is now a greater focus on reading literacy.

Of course, it now falls to a new government to decide whether to keep that focus and indeed, how much focus should be given to education generally. While those in the sector are grateful that the political doubt, which characterised much of 2011, is over – “uncertainty always affects in a bad way,” says IEDC-Bled’s Purg, “and in this case one could feel some delays and ineffective management

in some educational projects and endeavours” – there is worry over how the new administration will approach the sector.

“Education is strategically important for the development of the country,” argues Purg. “I believe that the new government should continue with the projects that have already been launched and not invent something new.”

The Professor offers a conclusion which probably most people involved in Slovenia’s education – from teachers to parents to students – would agree. “Most importantly,” she says, “the whole system should become more efficient and improve the quality of proceedings.” Consider this the wish of the Slovenian education sector for 2012. We will know in 12 months whether it was granted.

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EDUCATION

Prof. Maja Makovec Brenčič, University of Ljubljana, Faculty of Economics

Economic Science Faces New Challenges The Faculty of Economics in Ljubljana is one of the most influential academic organisations in the region. The teaching staff includes the most prominent Slovenian and foreign economists and experts. The Faculty’s teachers, graduate and undergraduate students are making a vital contribution to the economic and political development of society: the teachers as Ministers in various government departments and members of the highest bodies of the government administration and of Supervisory Boards of major Slovenian companies. Its graduates hold key positions in Slovenian and international companies, they are the CEO’s and Chairmen of the largest and fastest growing Slovenian companies.

How has the global economic crisis impacted the functioning of an institution such as the Faculty of Economics? Has there been any kind of ‘correction’ in traditional economic theories?

Are the limitations of current economic science or its practical effects coming to light, at least in some areas?

The Faculty of Economics is continuously adjusting the content of its subjects and programmes to the situation on the ground, incorporating its own research and scientific results into the subjects and programmes. Just as the entire world and society are changing and developing, so is science. Economic and business science is particularly vulnerable when it comes to the effectiveness and efficiency of its functioning, from its classical and neoclassical to its more or less liberal concepts and especially with regard to translating the concepts into macro and micro-economic decision-making policies. In that sense, the financial and economic crisis has given rise to reflections on existing economic models and policies, not only in Slovenia but also globally.

Slovenia’s economic science has been through numerous practical experiences in recent decades, including the country’s controlled transition to a market economy. We implemented our own concept of transition and are now faced with deviations of these processes as specific characteristics of the general euro crisis and the global crisis. How can the Faculty of Economics capitalise on these experiences in a broader regional or even European context?

One of the key elements of the strategy of the Faculty of Economics is to transfer knowledge to the local, regional and international environments. The Faculty’s high-quality international research, international publication of research results, good study programmes and consultancy, enable its already well-established involvement in numerous projects, which are creating a basis for decision making.

For example, in 2011 we conducted six research programmes centring on the elements of development of the Slovenian and European economic area - competitiveness, innovation, the impact of management, new development strategies, etc.; five core projects and 14 projects co-financed by the EU. We participated in the Seventh Framework Programme, Tempus, COST, Interreg, the Erasmus Network of projects, EUREKA and others. There are eight currently active regional projects, predominately relating to the markets of the former Yugoslavia. The results of these projects are continuously disseminated amongst the Slovenian and foreign public.

How extensive is the co-operation of the Faculty of Economics with other regional and European universities?

What is the volume of work of visiting professors and what is the share of this ‘outside’ knowledge in relation to other comparable universities around the world?

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International cooperation is one of the action priorities both in terms of study courses and in terms of research. The Faculty is one of the most internationally involved members of the University of Ljubljana, which is also associated with the acquisition and maintenance of international accreditations such as EQUIS, AACSB and TEDQUAL. In this academic year we are implementing 14 programmes in English (from undergraduate to doctorate courses), whilst in 2011 our study programme hosted 81 foreign teachers and 450 students were involved in a student exchange, including 186 Slovenian students who went abroad. We currently have 156 active agreements with international partners throughout the world, an increasing number of whom are AACSB and/or EQUIS accredited. We are an international school in which the study courses incorporate a great deal of content comparable to that of competing schools around the world, but we do not disregard the specific features of the Slovenian economy either.

There has been a sort of undervaluation of economic knowledge in the public in recent years, especially amongst laymen and politicians; there is a general consensus that we have too many economists but too few engineers, etc. Do you agree? Why would someone enrol in the programmes of the Faculty of Economics in Ljubljana at this time?

Students need high-quality, current economic and business knowledge. It forms the foundation and structure of all business activities, regardless of the industry of operation. That is why we must not underestimate the importance and impact of the knowledge produced by business and economic science. On the contrary, it is because of the very dynamic of change, that we must embrace it even more quickly as it impacts the effectiveness and

efficiency of business operations. The Faculty therefore focuses on the development of MBA programmes and programme content that is increasingly interdisciplinary in nature, analytically and methodologically useful and also skill-oriented.

Regarding the functioning of the Slovenian State in recent years, we cannot help feeling that economists are not cooperating (or do not wish to co-operate) too much with the executive bodies of the Slovenian State and the voice of economists is simply not entering the strategies of the political elite enough. That is probably why the resolution of the current economic troubles is ineffective. How can this situation be changed?

I see this primarily as a challenge for decision makers and as an indication of how much the opinions of professionals are truly taken into account. I think that we, in the economics profession have after a long time, come to have very similar views on what steps we need to take at the macro and micro levels for the Slovenian economy to begin recording adequate growth as part of the EU. COMPANY NOTES University of Ljubljana Faculty of Economics Kardeljeva ploĹĄÄ?ad 17 1000 Ljubljana, Slovenia T: +386 (0)1 589 24 00 info@ef.uni-lj.si www.ef.uni-lj.si

FACULT Y OF ECONOMICS

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EDUCATION

Mojca Hergouth Koletič, Director of Mint International House

Excellence - We Aim for Nothing Less Mint International House Ljubljana is a language school where nothing is left to chance. An institution of tradition and a firmly established reputation, both a result of the constant search for novelties and sensitive adaptation to the rising needs of the time, is run by Mojca Hergouth Koletič who has been its creative driving force from the very beginning. We talked to her about the story of success, which Mint IH most definitely is – for more than just one reason.

Your school has been part of the respected IHWO (International House World Organisation) network since 2006. How has this membership affected it?

In my opinion, it is very important to combine the best of local and foreign knowledge. In Slovenia we have vast knowledge, but sometimes we close ourselves to the world. However, foreigners too have knowledge, it is just different. Connecting both perspectives is extremely positive and it makes your team stronger. Hence the International House (IH) title we acquired has been a major plus for us. IH is an international synonym for quality and a pioneer in excellent teacher programmes. After we were chosen by the IH inspection, our quality rocketed. Schools in the IHWO network are required to employ teachers who have passed a special teacher training course, the Cambridge CELTA. This is an intensive qualitative programme based on practice. Our faculties lack this practical dimension and as teaching is a skill, not a science, I believe it is vital to have it. CELTA truly leaves a lasting mark on a teacher’s work in the classroom and drastically raises the overall quality of teaching.

What other changes has the IH title brought your school?

Each of the 150 schools in the IH network respect certain universal standards and this is a prerequisite for being a part of this global ‘family’. Apart from the obligatory CELTA certificate for teachers, membership demands that schools establish transparent and fair working conditions for them which is vital for creating a good 42

team. In our field this can be a great challenge due to the specific timetable each teacher has, but we have managed to create a positive environment with a sense of belonging to the team and the school.

We established a mentor system, teachers’ work is monitored and observed, we employ an education manager, organise workshops and attend conferences, so being a teacher in an IH school can be the beginning of a very successful career, as one has a chance to develop.

The title also enabled us to become the only University of Cambridge Teacher Training Centre in Slovenia and offer a new product to the market – in summer we organise CELTA seminars and more than half of the attendees are foreigners.

So Mint IH is also a promoter of Slovenia?

It has definitely put Slovenia on the Cambridge ESOL ‘map’ which did not exist previously. People from anywhere around the world can now see Slovenia on the list of countries where they can attend this internationally known and acclaimed course. Also, we are an authorised centre for Cambridge ESOL exams which is a great contribution to our offer. Moreover, during the celebrations of the 20th anniversary of Slovenia’s independence, we sponsored the largest photography competition ‘Picture Slovenia’ which toured Valencia and Mexico City in June and promoted our country. Some other IH schools will host the exhibition in 2012. This proves that a language school can go beyond its standard activities and be successful in numerous other fields too.

EDUCATION

However, fundamentally you are occupied with language courses and translation and recently, also with business skills courses and management training. What exactly is this?

We sensed a need for an upgrade of foreign language knowledge in the business environment and started organising courses in emotional intelligence, leadership, organisation, team management, cross-cultural training etc. What we offer is not a language course, even though the training is in English. As Slovenia’s market is small, it has to act globally in foreign environments. By taking one of these courses you can kill two birds with one stone – develop the necessary skills and language competence, plus make a positive change in the team. In my opinion this is what every firm needs, especially in these difficult times. We collaborate with a British company, POD and recently one of the most renowned coaches in the field, John Farrer, held two extremely successful workshops in Ljubljana, emphasizing the importance of inner strength, emotional intelligence and everything else essential for good communication in the contemporary global economy. One needs to be aware of the fact that the loyalty of customers and partners does not last forever and that the future lies in businesses which operate in a personal, trust-based way. This takes a lot of time and engagement, but can be achieved.

How have you dealt with the crisis?

For sure it has not affected us beneficially, but it has been a generator of new opportunities. Ten years ago when the crisis in our sector had already begun, we developed a video-conference enabling us to normally execute language courses in companies outside Ljubljana, but at the same time reduce the travel expense they had in addition to regular tuition fees. This encouraged our creativity, to establish a unique system of long-distance teaching which has been functioning very well. People say it is like having face-to-face lessons, just the medium is different. Furthermore, the statistics show that students concentrate better, they cover programmes with 20% fewer lessons which is another plus in the current crisis, saving-up scheme and companies are very much interested in it. Mint IH is the only school in the IHWO network which provides a service like this making us very recognisable.

How do you cope with demands in the translation sector?

We opened our translation sector in 2002 and our starting point was finding an answer to the question of how to be effective and provide quality at the same. Price pressure was already immense back then, but we did not want to compromise the quality of our service. Thus, we invested in translation software - TRADOS. This is a huge server which memorises data, so for our long-term clients this means they pay less for the translation of their texts, they are charged only for the new parts of their revised documents. This also retains the quality of translation which usually needs to be done as quickly as possible.

Mint IH is also engaged in many socially responsible projects.

Just recently we organised a charity bake sale at a school as part of our action day, an idea which we implemented from an IH conference and we raised over EUR 300 for an animal shelter!

Every year we sponsor some promising students in their final year of study to take a CELTA course, also we send one or two of our teachers to a Red Cross holiday camp where children can practice their English, get free tutorials and also take Cambridge children exams. Last year we organised an official ceremony where the UK Ambassador to Slovenia, H. E. Andrew Page, presented the diplomas. This was a big thing for the children who came from deprived families, one could easily notice it. Instead of donating finances, we prefer giving knowledge, especially to children as I strongly believe that good knowledge, honesty and hard work are still a key to success.

COMPANY NOTES Mint International House, d.o.o.

Vilharjeva 21 1000 Ljubljana, Slovenia T: +386 (0)1 300 43 00 info@mint.si, www.mint.si

Mint International House in action

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EDUCATION

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

Creative Environment for Creative Leadership The IEDC-Bled School of Management is one of the most prominent international management development institutions in Europe. It is an international centre of excellence, an important business meeting point and a creative environment where leaders and potential leaders come to learn and to reflect. IEDC is the most innovative international business school in CEE with excellent ties to the business community in the region.

How has the global economic crisis impacted the operation of IEDC-Bled? Have you perhaps changed or adapted your training programmes on the basis of new insights?

It would be strange if the global economic crisis passed the doors of IEDC, an international institution dealing with management and leadership issues. We define our mission as developing leaders for a better world and therefore we have carefully analysed the causes of the global economic crisis and the role of leadership in it. One of the conclusions, not only by us, has been that the economic crisis is also and probably especially, a crisis of leadership. Already over more than 15 years, we integrate topics such as business ethics, codes of conduct for corporate governance and in the last five years, also topics such as responsible and sustainable leadership. We are frontrunners in these fields and we are using every opportunity to promote these topics in international meetings of management and leadership associations.

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EDUCATION

Slovenia has been through numerous practical experiences in recent decades; we have implemented our own gradual concept of transition from a planned to a market economy and are now facing deviations in these processes. How can IEDC make use of this in a broader regional or even European context?

IEDC operates in an international environment, with special interest for economies in transition. The Slovene case is an interesting one in evaluating what happens if, in your terms, ‘the controlled transition to the market economy’ is influenced by nationalistic sentiment and concern about too much influence of foreign investors. I doubt whether you can call this an ‘own concept’. The process of integration into the EU can be considered a positive act of leadership and IEDC has engaged its experts in seminars for candidate countries.

How extensive is your cooperation with ‘graduates’ in the alumni club? Are they involved in the work and programme of IEDC or are social gatherings their only form of contact?

We engage alumni in our management and leadership programmes as many of them are successful entrepreneurs and leaders. We also organise special lectures and programmes for alumni. We are even more successful with these actions than with social events.

In recent years, the knowledge of economics and management has been somewhat undervalued by the public and conventional wisdom has been that we have too many economists and too few engineers. Do you agree? Why would someone enrol in IEDC programmes at this time?

As I said before, the economic crisis is also and particularly, a leadership crisis so I do not think you can speak of ‘underestimation’ in the fields of economics and leadership. In my opinion the public slowly gets a real picture of the actual performance of financial institutions and experts and political and business leaders. People start to understand that in this global crisis, politics created the conditions of over-crediting, financial experts maximised the opportunities, mostly for their own interest, consumers made use of the opportunities offered. From the last group we can say that often they did not understand the consequences of their behaviour. The same cannot be said of politicians and financial experts and leaders of financial institutions. If you talk about too few engineers, you certainly do not mean financial engineers. It is a problem of many countries that too few people decide for a technical education with the consequence of a decreasing level of technical innovation. At IEDC you don’t become an economist, but you get knowledge of management which is much broader than the economy. Almost half of the participants in our programmes are engineers and we devote a large part of the programme to stimulating creativity and innovative skills, in subjects such as arts and leadership and sustainability and leadership; reason enough to study at IEDC. Slovenian economic experts have not co-operated very much with the executive bodies of the Slovenian State in recent times. The voice of economists is simply not making itself heard in the strategies of the political elite and that is probably why the resolution of burning economic problems is ineffective. How can this practice be changed?

As I pointed out before, IEDC deals with leadership issues, not only with economic ones. However, one of the important issues in leadership is to act from a holistic view, integrating views, knowledge and experience in reaching strategic goals. I agree with your suggestion that leaders in science, business and politics could establish a much more fruitful cooperation. However, this goes much further than cooperation between politicians and economists.

A purely practical question: has the crisis affected the funding of your programmes, what has been your response and where do you see new opportunities?

The crisis caused a reduction in the number of participants in certain, mostly longer, programmes. Our answer is to improve marketing, not compromise on quality and to look for unexplored opportunities. We have extended our market and succeeded in finding new corporate partners, especially from Western Europe and Turkey.

COMPANY NOTES IEDC - Bled School of Management Prešernova cesta 33 4260 Bled, Slovenia T: +386 (0)4 579 25 00 F: +386 (0)4 579 25 01 www.iedc.si

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Information & COMMUNICATION Technology

Only Reinvention Will Help If something does not work you fix it. Better still, uncover the reason it broke in the first place and address it. It would be harsh to say that the Slovenian IT sector is broken, but to describe it as weakened would be an accurate assessment. IT budgets have been significantly reduced in recent years and there seems to be little good news around the corner. Maybe it is time to reinvent the business itself.

M

arket intelligence firm, IDC Adriatics is already crunching the numbers. Their prediction is that total IT spending in Slovenia in 2011 will eventually amount to around EUR 670m. Yes, this is slightly better than 2010 – by about two percent – and yes, this corresponds to global trends in IT markets worldwide. The problem is that the IT business continues to struggle instead of being one of the key generators of progress.

With the economy being distressed one would think that companies would eventually turn to technology to try to get more value out of the business. Some are doing this. But they are primarily using IT solutions to reduce running costs instead of investing in new solutions and new business models and the general consensus is that cost cutting alone is not enough. Instead, people and companies need to seek innovation and development that add value to their creations.

When looking at the bigger picture, the Slovenian IT sector is still in the so called infrastructure phase. Hardware and software sales are still a very important part of IT, while services continue to grow at a relatively slow pace compared to developed IT environments and countries.

It is not all bad, though. The fact that more than half of the Slovenian ICT market value is generated by telecom services places the country in a good position to make the most of cloud computing. Working ‘in the cloud’ is becoming increasingly common and popular. It means that companies do not need to purchase equipment and run programmes and analysis on them; instead they can simply rent the needed capacity and pay for usage.

Some small Slovenian companies meanwhile, have found a profitable niche in computer and mobile games and applications.

They already know that there is a global market and that one good product can make them rich and fuel their development even further.

No projects, no headway In general though, 2011 will be remembered as having a lack of new IT projects and companies breaking into smaller entities. At least the public sector managed to get something done. DURS, the Slovenian tax office, implemented a new system which – once it 46

is up and running – will enable a ‘360-view’ of taxpayers. This way the government should lose much less money through ineffective and/or unjustified transfers.

The other big story of the year was in the telecommunication segment. Telekom Slovenije and its daughter company, Mobitel, are now back under one roof and identifying synergies. The company is now the country’s biggest phone operator, employing 2,765 people.

In future years it hopes to strengthen the number of business clients.

The numbers Hardware and software vendors are increasingly focusing on small and medium companies as their major clients. Such companies are more likely to need new or fresh implementations of customer relationship management solutions and mobile solutions. 2011’s biggest losers were businesses selling hardware, mainly server equipment and printers (the latter fared a bit better due to an increase in managed print services). It seems likely they have another

Information & COMMUNICATION TECHNOLOGY

Telekom’s control centre.

tough year ahead as companies stick with their equipment for as long as it works – not least because there is no fresh money for upgrades. Unsurprisingly, investment in IT equipment was small this year as the trend of limited and stricter investment policies continued. Even big companies cut their IT spending, with most of the budget simply going on IT staff salaries. What is left over is usually used for small improvements such as process optimisation, some business analytics and adding functionality to enterprise resource planning systems.

Clouds as growth generators It is clear that IT firms must fight the decline on the demand side and shift their focus to the solutions that are selling well. It is becoming obvious that cloud computing will have the biggest impact on the field, at least in the short term. It seems likely that there is a lot of money to be made in this area. Outsourcing and

integration service providers are already doing well and this trend is expected to continue.

The predication that 2010 would see the end of the IT recession were mistaken. 2011 was still a struggle. Faced with multiple budget cuts, both the corporate and public sectors are still delaying IT spending. Some technology providers will not survive.

“IT solution providers find it hard to do business when the playing field keeps changing,” explains Darja Jama of IDC Adriatics.

“Flexibility of companies is playing a key role in this respect and as it is not very likely that all companies can change in time, we believe that the future will bring additional consolidation in this sector, mainly through mergers and acquisitions.”

But maybe there is light at the end of the tunnel. It is worth noting that at the 2012 CeBIT fair – the biggest IT event in Europe – there will be a dozen exhibitors from Slovenia. This represents a big increase on previous years and perhaps the hope that 2012 will bring better days for the sector.

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Information & COMMUNICATION Technology

Simon Kaluža, Managing Director, SAP Slovenia and SAP Adriatic

Quality Information Empowers People and Organizations As a market leader in enterprise application software, SAP helps companies, of all sizes and in all industries, to run better. We met with Simon Kaluža, Managing Director of SAP Slovenia and SAP South East Europe, who told us how companies can stay ahead of the competition. He is most proud of his team of co-workers as SAP Slovenia managed to turn the economic downturn into new business opportunities, consequently the company is doing extremely well.

2011 was a tough year for many enterprises, how did SAP perform in terms of business results?

SAP as a corporation had its share of ups and downs in 2011 but ended the year on a high note. Even though the final results are not yet public, it can be said that for the first three quarters, the corporation produced some stunning results, making 2011 the best year in the company’s history. Most notable was a shift toward solutions which were not SAP’s focus in the past, but are now making a strong business impact for the company. SAP has taken on board mobility solutions, cloud computing, in-memory computing and combined everything with advanced business intelligence. We put these advanced technologies in our business strategy and made them work – not only for us but mainly for our customers. They are the ones who see the real benefits from technology. Market analysts are often the ones to admit that SAP is a market leader in many business and technology segments.

The company, which serves 176,000 customers worldwide, simply understands how business runs these days. In order to be successful, one must have the right information, at the right time, to support the best business decisions. We offer companies just that – the technology that serves quality information in real time.

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How about the Adriatic region – how did South Eastern Europe fare in terms of the business climate and business in general?

Last year we launched SAP Adriatic with great success. We listened to our customers. There are numerous companies that see the Balkan markets as a very attractive place to make business.

They expressed their wish to be supported regionally in these countries. SAP made this happen with several partners who have regional organisations.

The forming of SAP Adriatic also meant that the new entity had its critical knowledge capital under one roof. Local offices were limited in the number of staff, therefore becoming ‘generalists’ rather than specialists. With SAP Adriatic, we made sure that the knowledge and experience could be easily transferred into best practice across the region. Specialisation of technical and sales staff made this possible.

The growth in the Adriatic region was double-digit. The region has significantly grown in terms of sales and importance in SAP CEE. In 2011, SAP Adriatic signed more than 15 new customers in the region, from both the public and private sectors.

Information & COMMUNICATION Technology

In 2012, SAP Adriatic will become SAP South East Europe and you will be the Managing Director of the new business entity. What are the reasons for this change? What will be the main goals of the new organisation?

As the Adriatic grew in size and importance, SAP realised we could expand our business strategies and best practice to some new countries, namely Bulgaria and Romania - so we did. The Adriatic name did not fit accurately with the new organisation so we changed it to SAP South East Europe.

SAP SEE will continue to work on what we call ‘line of business’ solutions. Now, many companies in south and eastern Europe have implemented some sort of classic ERP solutions that help them manage and run their business. Now it is time for more advanced solutions which will help companies run even better and extract more business value from their data and sources. Great achievements can be made by implementing state-of-the-art software, such as advanced CRM, HR and business intelligence solutions.

The corporation was also very active in terms of buying and merging different companies. What is the big picture behind these acquisitions?

The business world needs solutions that enable quality decision making. We achieved this with some additions to our portfolio of business solutions. Four years ago we bought the company, Business Objects and entered the waters of business intelligence. Last year we acquired Sybase, a world leader in mobile business platforms. To top it all off, we developed our own in-memory computing technology (SAP HANA) that can process immense quantities of data in an extremely short time. All solutions put together enabled us to make a quantum leap in decision making, they provide quality information based on real time data – not yesterday’s data and this is not just marketing; our customers are seeing the extreme increases in terms of data processing. SAP HANA enables real-time business. We have implemented it in the CEE region already and we are talking to some of our biggest customers in the SEE region.

Even in this time of economic downturn SAP managed to get some big contracts. Which projects are you most proud of ?

We truly have a lot of projects in the pipeline. This just shows that companies trust our vision, solutions and expertise. In the past year, an enormous amount of work has gone into the renewal of the Slovenian Tax Office solutions. This has been one of the biggest IT projects in the country’s history. I can also mention the implementation or upgrade of major IT systems for companies of Ljubljana Holding. Among our biggest achievements in 2011 was also the implementation of a business system for the city of Belgrade.

But the SEE region is often looked at as lagging the developed Westerners. Can you change this?

This is a very rough generalisation. We know that there are companies in this region that, business and technology wise, can be on par or even surpass the best the West has to offer. But it is true that in the SEE region, the use of business software is only starting to get the credit it deserves. The time when implementation of business systems took years are a thing of the past. SAP has helped alot in this case.

We developed the so-called rapid deployment solutions. Today we offer numerous pre-defined business solutions for different industries and branches that can be set up and running in weeks.

What is your recipe for success then?

It is quite simple actually. We listen to our customers’ needs and wishes and make them a reality. In the past, SAP was perceived as a company offering so called ‘must have’ solutions, some IT and business building blocks. Today, we also feature the ‘nice to have’ solutions in our portfolio and these are equally important. The most successful solutions are those enabling companies to create more value and quickly. Agility and constant optimisation are features that separate the best companies from the good ones.

We understand how modern companies do business. We embrace the role of trusted advisors, not software salesmen. Success does not depend only on business software alone, implementation, processes and goals are equally important. We are successful because we function as one unit, as one SAP. There is this winning mentality inside our team – when a project goes live, everybody is involved and people show a strong commitment to getting the results for our customers and us.

SAP has always been perceived as a big and expensive system for enterprises. Today you say everyone can use SAP business software. What has changed?

SAP has adapted its business software to various business scenarios and practices. Today we have also very successful implementations of SAP software in companies with only five employees. Our SAP Business All-In-One solution makes this possible. We also have many certified partners that offer our business software as a hosted solution, making it even more affordable for small tomedium sized companies. Our customers see real value for their money; the return on investment is really short in the case of SAP Business All-InOne. Companies also understand that SAP has a clear vision and strategy for business software development and is considered as ‘future-proof ’among many enterprises.

Can you comment on the condition of your competitors in the country and region?

We face tough competition across the globe and that is, in fact, very welcome. We respect every competitor and we wish for strong competitors as this keeps us in shape, constantly trying to do better.

SAP has come up with a lot of innovation in recent years.

Which of them has had the biggest business impact?

I believe that would be mobility. The world has not just gone global, it has become mobile. Business follows the ‘go mobile’ trend very fast, today our customers reach more than 5.2 billion mobile subscribers across the globe. Even when we look at how business people work these days – they want access to data and information whenever and wherever. As the quantity of data increases exponentially, this becomes quite a challenge. SAP specialises in solutions that help businesses extract value and information from loads of unstructured data.

What are your predictions for 2012? How will you approach the business environment, filled with uncertainty?

Our mission is quite straightforward. We will try to ignore negative signals from the market. We have laid a path in the past that has been very successful and I see no reason why this trend would change in 2012. Our plan is to be even more active in the SEE region; we will invest heavily in our team of experts, be there for our customers and help them achieve competitive advantages. In terms of solutions, the focus will be on business intelligence, inmemory computing and mobility.

COMPANY NOTES SAP d.o.o.

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

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AUTOMOTIVE INDUSTRY

Going Strong It seems there is no stopping Slovenia’s automotive industry: most of the companies are generating profit with favourable forecasts for the future. The key to their success seems to lie in a focus on innovation.

T

he massive role the automotive sector plays in Slovenia is self-evident: 213 companies generating EUR 3.4bn in revenue in 2010, representing one tenth of the country’s gross domestic product. In 2011, the sector also registered good financial results.

Take car parts maker, Cimos group. The company generated a net profit of EUR 4.1m for the first six months of 2011, which was 32 times more than for the same period last year. Sales revenue reached EUR 232.1m, a 14.4 percent increase on 2010. It’s a similar story at car electronics maker, Iskra Avtoelektrika, which recorded sales growth in the first six months of 2011. Turnover stood at almost EUR 100m for the core company and EUR 128.5m for the group, with profit of EUR 2m and EUR 3.5m respectively. To add another example, Hella Saturnus Slovenija – the German-owned maker of vehicle lights – generated revenue of EUR 250m with EUR 21m in profit for the year to May 2011.

Slovenia’s automotive companies together account for 21 percent of the country’s total exports and notably, 80 percent of total production is exported. When the Director of the Automotive Cluster of Slovenia, Dušan Bušen gives a list of some of the sector’s clients, it reads like a ‘who’s who’ of the automotive industry: Audi, BMW, Citroen, Daimler, DAAF, Deutz, Ford, GM, Iveco, Jaguar, John Deere, MAN, Nissan, Opel, Peugeot, Renault, Saab, Škoda, Toyota, VW, Volvo and system suppliers: BNP, Remy, Continental, Johnson Controls, Perkins, Bosch, Brose, Magna, TRW, Valeo, Grammer, Faurecia, Denso, Aisin.

Significant employees With 14,600 employees, the sector is also one of Slovenia’s biggest employers. The number of highly qualified people working directly and indirectly for car and truck manufacturers totals 147,000.

Some 7,500 students are enrolled in undergraduate courses in mechanical, electrical and electronics engineering. The number of students in secondary schools for automotive and related industries is nearly 7,000.

“It is the quality of the industrious and creative Slovenian people that ensures high professional and technical standards, process and financial controls, management systems and customer satisfaction” 50

the Public Agency of the Republic of Slovenia for Entrepreneurship and Foreign Investment states on its website. “Knowledge of foreign languages and strong interpersonal skills are an asset in an industry where only the best get to supply original equipment manufacturers.”

Innovation is key What else is the secret to the automotive industry’s success?

According to Dušan Bušen, President of the Automotive Cluster of Slovenia, dedication to innovation has been important.

“On average, Slovenia’s automotive companies invest five percent of their turnover in development and 12 percent in new technologies,” Bušen says. “That means we have been able to seize the opportunities offered by development trends in the automotive industry, including hybridisation and making vehicle technology electric so as to radically reduce the use of engines.”

Hella Saturnus Slovenija is just one company seriously investing in research. Since June 2008, it has spent more than EUR 85m on development projects in Slovenia and in January 2012 it will open its third competence centre in the country, focusing on developing single function lamps such as those used for licence plates, indicators and so on.

Hidria is another example of a Slovenian-based automotive firm dedicated to research. A global leader in the supply and development

AUTOMOTIVE INDUSTRY

Key products • Seats and seat components • Components and materials for interior furnishing • Car body parts • Components for braking systems • Mechanical and electric/electronic components for engines • Exterior equipment and body lighting equipment • Exhaust systems • Engine and gearbox components • Steering system components • Drive components • Other systems and components • Manufacturing spot welding equipment • Tooling for the automotive industry • Research, testing and other development activities

You have no idea how many parts of your car are actually Slovenemade.

of the a variety of automotive subsystems and components, the company has built its third research and development facility in Slovenia. Located in Spodnja Idrija, it is worth EUR 7.4m and was co-financed by the European Regional Development Fund. Part of the technology park IN PRIME, Hidria’s new facility, focuses on efficient use of alternative energy sources and development of solutions for hybrid and electric vehicles.

Iskra Avtoelektrika also attributes its good financial results to its focus on development projects and investments aimed at securing further growth of the company. Chief Executive, Edvin Sever has pledged that the company will continue with the same strategy in the future.

Other manufacturers are also aware of the impact innovation has on their business as they try to create added value. In TPV Novo mesto, engineers have developed an innovative seat with a self-adapting headrest; Unior develops and manufactures hardware and various forgings; while Cimos and LTH Ulitkitry are out to beat the competition in the field of casting of various components.

Recognition The sector’s innovation, as well as the crucial role it plays in the economy, is also evident from the number of awards garnered by

companies in the field. In 2011, the prestigious Golden Gazelle award for the fastest growing companies went to KLS Ljubno, a medium-sized manufacturing firm. The firm specialises in starter ring gears and mass rings for flywheels for the automotive industry, a niche in which it has a 40 percent market share in Europe and 12 percent globally. The company posted a net profit of EUR 1.2m on sales of EUR 24.8m last year, both figures marginally higher than the year before.

Similarly, one of the FDI awards for 2011 was given to Goodyear Dunlop Sava Tyres. The Slovenian based tyre manufacturing company is a hub for the markets of Central, Eastern and South Eastern Europe and the jury described them as a role model in financial management. In 2010, they increased revenue and profit, both of which were well above the Slovenian average. Additionally, the company invested EUR 11m in technology development.

Future outlook Positive development in the sector look set to continue in 2012. According to Bušen, ACS plans to “enhance activities in joint development projects, intensify work in the area of internationalisation and new markets developed over recent years.”

“Particular attention will be devoted to celebrating ACS’s 10th anniversary in March and to an inter company meeting. Another key focus will be the JAMA-CLEPA exhibition in September 2012, which aims to create new business opportunities for Japanese car manufacturers and European suppliers as well as enhance existing ones.”

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AUTOMOTIVE INDUSTRY

Hella Saturnus Slovenija

A Step Ahead of the Competition Hella Saturnus Slovenija has been one of the most successful companies in the country for a long time, standing firm in the face of adversity given the difficult times of the financial crisis. The company, with a clear vision, excellent management and quality workforce has a fresh mind and is open to innovation, despite its venerable age of 90 years.

A

key player in the automotive industry today and part of the international manufacturing chain Hella Group, it started in 1921 as a small-scale workshop producing tin boxes. It was in 1948, amidst the automotive revolution, that the firm found its way to the field for which it is now known – the making of car lights. In the 1960’s and 70’s, the company started developing and manufacturing products for major European automotive brands such as Renault, Simca, Citroen, Peugeot and Volkswagen. In 1997 the company was taken over by German company Hella, who became the sole owner of the Slovenian company in 2004. The rest is history!

“These 90 years have been 90 years of engineering passion and hightech production”, stated the company’s Managing Director, Christof Droste, during the company’s celebrations last year.

Ongoing success With a 12 percent global market share of auxiliary lamps and a 2.4 percent share in the automotive headlamps market, Hella Saturnus

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Slovenija is now one of the largest Slovenian exporters with 91 percent of production going abroad. Employing approximately 1,900 people and creating additional engineering jobs from January 2012, the firm is building a new global competence centre in Slovenia.

The country is already home to two competence centres – for fog and auxiliary lights and for Hella sports car projects. The third is

AUTOMOTIVE INDUSTRY

focused on single function lamps such as those used for licence plates and indicators. The new competence centre will concentrate know-how and resources for one-function lamps at one location and “bring many advantages which will be experienced by our customers”. Aside from the established knowledge and experience of the company’s ‘Time-to-Market’ expertise and the availability of well-educated engineers, one of the reasons the Slovenian firm was rewarded with the competence centre was due to its remarkable results of the last few years. According to Droste, “Looking at the first six months of 2011, in percentage terms we were the most profitable Hella lighting company in Europe”.

The revenue of Hella Saturnus Slovenija has more than doubled over the past three years – from EUR 134.6m in 2008 to EUR 272m in 2011, whilst profit increased to EUR 18m in 2011. “There are several reasons for this growth. Firstly, it is based on the good job of previous years plus we convinced our customers and our parent company that we are in the right location which is why we got the new projects. Secondly, the small car business increased during the crisis, hence the growth in quantity. However success takes the whole team, we improved our processes significantly to enable us to use our resources more efficiently and every member of staff took an ambitious approach that made everything possible” says Droste who became the first foreign manager to be named as Slovenia’s ‘Manager of the Year’ in 2011, as recognised by the Managers Association of Slovenia.

Innovation is a must Droste’s philosophy is simple and straightforward-to be the best in class, “we want to lead with innovative products, processes and services and therefore stay an extremely competitive location in the Hella network”. Since 2008, Hella Saturnus Slovenija has invested EUR 85m in research and development and the company plans to invest another EUR 60m in the next five years. According to Droste, this includes investment in three pillars: “In the new headlamp and auxiliary lamp projects, in new know-how and in new technology for lacquering the inner side of headlamp lenses”.

For Hella Saturnus Slovenija, innovation means exactly that – real innovation. “We have to be different from others” asserts Droste. “We need to have vision and be different in products, processes and in services - that is innovation”. Merely having an innovative product is not enough to be ahead of the competition. “You need to react to customer wishes and complaints”. The company’s investment into new lens lacquering technology is just that, it significantly improves the products. Another focus is new developments in LED technology which is where the future is. “The demand is increasing really fast and this is the only field in automotive lighting where there is a lack of development capacity. Here is another opportunity” believes Droste.

Christof Droste, Managing Director

The future also brings other challenges in the business; one of them being to take care of the environment. “Resources are not endless and we have to focus on recycling materials” explains Droste. “Apart from that we wish to stay at the same speed and keep the company fresh which are not easy things to do”. Judging from its past results, Hella Saturnus Slovenija has nothing to fear in the coming years.

Stop discussing and start working The crisis has put increasing price pressure on all automotive companies, including Hella Saturnus Slovenija. Droste recognises that in this situation one should not reduce speed but do quite the opposite: “We can never relax and rely on old innovation. We need to be a step ahead of our competitors. The tougher the crisis, the faster the competitors react; it’s a question of speed. The best thing is not to complain about how hard the situation is but to simply deal with it”. As the global economic situation peaks, the company expects consolidation in 2012. “Last year’s results, both revenue and profit, are above expectation. Having steep growth as we’ve had is tricky as one can easily fail and make a loss. The next few months are going to be different and at the moment a realistic expectation is to finish three percent to five percent over budget” says Droste.

COMPANY NOTES Hellla Saturnus Slovenija d.o.o.

Letališka cesta 17 1001 Ljubljana, Slovenia T: +386 (0)1 520 33 33 info@saturnus.hella.com www.hella-saturnus.com

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AUTOMOTIVE INDUSTRY

Ludvik Kumar, Executive Director for Research, Kolektor Group

Global Champion of the Automotive Industry Kolektor Group boasts a tradition of highly specialised industrial production. On its path over half a century, Kolektor has evolved into a global company, with its head office in Slovenia and a widespread network of companies and subsidiaries across Europe, the US and Asia. The Kolektor Group produces top quality components and systems and is globally one of the leading suppliers to producers of automotive systems – including starters, fuel pumps, actuators, HVAC and EC systems, ABS. Last year you received the Puh award, the most prestigious award in Slovenia, bestowed by the Ministry of Higher Education, Science and Technology devoted to invention and the introduction into production. How did you create the environment for designing and implementing a graphite commutator for fuel pumps? How does it differ from those that never create such innovations?

Ever since I can remember, innovation has been one of the core values of Kolektor. The company constantly monitors the development of new technology by its competitors whilst developing our own original technologies. In addition to products, we have developed our own production equipment, which for commutator’s is specialised and not available on the market. This has enabled us to continuously improve the production process and in particular, to keep this knowledge in-house. Good special production equipment, with a lot of effort and deployed with an external supplier, can also be quickly competitive. All the necessary knowledge, unfortunately, cannot be kept in-house. Cooperation

with academic institutions, institutes and faculties is therefore urgently needed. A great deal can still be achieved in this area if the parameters for effective cooperation can be established. We are not making enough effort to ensure ‘win-win’ situations. Attention should be focused on results rather than particular benefits. In this instance, together with my colleagues, Prof. Miran Mozetič and Dr. Uroš Celbar from the Jožef Stefan Institute, we received the Puh award as we were able to go beyond that. This resulted in an original technology giving us a competitive advantage in the market. I hope this example will encourage another team at Kolektor to engage in similar cooperation.

Can you tell us how, in practice, the development of the graphite commutator has impacted the development and operation of Kolektor?

Kolektor possesses a number of original technologies for the production of both copper and graphite commutators. Graphite commutators are a very narrow segment used exclusively in fuel pumps for cars. Copper commutators will not last the lifetime of a bio-fuel car due to the high level of oxygen. Due to the high quality graphite material supplied to us by our development partner and a stable construction, the combination of our graphite commutator and our partner’s brushes proved a winning combination. Last year we produced 31 million pump commutators, just under 38 million are planned for 2012. If you know how many automobiles are manufactured in the world annually, you will see that six out of ten cars use our commutator.

How much of the global market do you control in this segment?

We sell graphite commutators to all fuel pump manufacturers with the exception of the Japanese. Of the total quantity produced, more than half is sold in the European market, a fifth in North and South America and the rest in the Far East. In addition to the positive financial effect of such large scale production, this programme has also had a positive effect on our confidence. It proves that, thanks to our smart pricing policy and superior production based on local knowledge, we are at the top in this market niche globally.

How do you see the economics of cooperation with professional research institutions? How can the utilisation

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AUTOMOTIVE INDUSTRY

important. It was only after a few years of work that I first heard of mechatronics, which combines various technical fields. Today it is a valid technical field. A mechatronics engineer is easily on par with an electrical engineer, mechanical engineer, chemical engineer, etc. They are also quite effective in suitably composed teams. A similar connection is required between industry and science. We currently don’t know how to establish values and criteria for this area, although they are certainly needed. Anyone working in industry today finds it difficult to follow scientific advances due to the pressures of deadlines and cost-effectiveness. Scientists who waste time dealing with industrial problems that fail to achieve the complexity encountered in the scientific sphere also publish fewer original scientific articles, attend fewer conferences and do not advance according to their criteria. Serious and in-depth thinking is required to overcome this gap.

Do you have any idea how to overcome the gap between industry and science?

A possible solution would be to split the funds earmarked by the State for scientific activity in half and reallocate them to the economy. Funds should be used for financing projects that would transfer scientific achievements into Slovenian industry. In other words, a considerable portion of scientific activity should be financed by the economy, which would also direct research based on needs. I think that neither science nor the economy is prepared for something like this at the moment. A clear strategy must be formulated which would ultimately lead to the achievement of desired goals.

of theoretical knowledge, which is not lacking in Slovenia, be increased considering that its economic realisation has not reached an appropriate level?

This topic is frequently discussed, unfortunately not in good faith.

There are two opposing poles: industry on the one hand, where capital rules and knowledge, on the other, where other criteria are more important. The situation often reminds me of the situation during my University studies when we were classified as electrical engineers, mechanical engineers, etc. Everyone tried to resolve their problems within their own area. The department where I studied electrical engineering also included the subjects of hydraulics and pneumatics, which pertain more to mechanical engineering. Out of approximately 20 students, only two of us regularly attended those classes. Interdisciplinary work was not regarded as particularly

What do you expect from the new government for the economy, sector strategies and promotion of innovation and new technologies?

I do not expect much. We depend and must rely on our own capabilities above all. The options available to the government are limited and we can only expect it to endeavour to reverse the negative trends we are currently experiencing. Payment discipline must be improved first. Today’s situation is not permissible. It is literally stifling small companies of which so much is expected.

Another priority is to increase overall efficiency in all areas. The school system must be made more efficient. The solution does not merely lie in prolonging the length of service. While this does effectively decrease the outflow for pensions, creativity considerably declines with age. If we increase the length of service by the amount of time until the first employment, we will have achieved nothing.

The manner of co-financing development projects must also be made more efficient. I feel too much money is being spent on the preparation of tenders and tender applications, reporting, etc.

Money obtained for co-financing often has the status of ‘donated’ money and is not invested as carefully as that obtained through loans. Banks should serve their purpose and the State should seek a way of encouraging innovativeness and development through the tax policy and not only through co-financing. There are too many people working only to make more work for others, not only in Slovenia, but also elsewhere. Therapy is urgently required and the more it is postponed, the more painful it will be.

COMPANY NOTES Kolektor Group d.o.o Vojkova 10 5280 Idrija, Slovenia Tel: +386 (0)5 375 01 00 kolektor@kolektor.com www.kolektor.com

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AUTOMOTIVE INDUSTRY

Miloš Dežnak, CEO, Akrapovič

‘Sound’ Performance

Akrapovič is probably Slovenia’s most ‘heard’ company globally, at least in the field of motorsport it makes a lot of noise. The manufacturer of top-quality exhaust systems for motorcycles, sports cars and maker of carbon parts is about to show the world what can be done with modern technology, knowledge and dedication. Miloš Dežnak, the company’s CEO, is convinced the sky is not the limit as Akrapovič slowly but surely paves a path to space.

Akrapovič is one of the largest exporters in Slovenia, your export figures exceed 99 percent of products sold. How was your business abroad in 2011?

You are right. Almost all our products are sold abroad, domestic sales accounted for only 0.5 percent in 2011. We were quite satisfied with last year’s sales, we achieved 14 percent growth year on year.

Most of our exhaust solutions for motorcycles are sold in Europe, whereas the automotive business is almost equally split among the three biggest regions, with the United States, Asia and Europe each bringing a third of total sales.

Faced with a global market recession, which product segments still offer growth? Are you still expanding into new territories?

We are always looking for new business opportunities and territories.

Our high-end products for the automotive industry are a fairly new market segment; we see this as a true growth platform. I must add that our motorcycle business, which is our core business, is also growing strongly. Brazil, in particular, is becoming a huge market and we will definitely meet the sales figures for the European markets in the future. There are also many markets in Asia where we want to sell, South Korea and Vietnam are big emerging markets for our exhaust systems.

You moved into the automotive business recently, is this business segment very different to the motorcycle market?

There are some differences. We made sure that we transferred our motorcycle exhaust knowledge into the automotive field.

Automotive exhaust systems are a tad more demanding, they are large and quite complex systems. Otherwise there isn’t any difference in our approach, we use the best possible materials and technology.

In aftermarket automotive solutions, our titanium technology has no competition. We have actually created a new market segment with it and now we must educate customers about what our advanced solutions can do for their vehicles.

Akrapovič exhaust systems are considered to be some of the best in the world. What is needed to be better than the rest?

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The company was born on a race track, in an environment where compromise does not have a place. We understand that for winners, only the best is good enough - over sixty world champions who have used our products will tell you that. It is a mixture of knowledge and technology. When people visit our factory they are surprised about the level of commitment and passion that goes into our products.

Even in the development stage we aim high - very high. We strive to be the best and I believe we are doing a very good job of that.

How important is design in exhaust solutions?

Our ambition is to always make the perfect product. Design is a large part of it. As it is about sound, especially for exhaust systems, it is about what our customers want. Designers are part of the development team. We pride ourselves when we make products that our competition cannot copy, let alone manufacture.

How does Akrapovič fuel its innovation and development?

Our research and development department is very systematic about new solutions and innovation. We have linked the developers with on-track testers and production so that knowledge and real world experience are quickly transferred within the company. By offering race support to our partners, we quickly learn what works and what doesn’t and we adjust rapidly to demands. Quick feedback between all personnel involved in product development puts us in a unique position for rapid production. The time it takes from idea to finished product is amongst the shortest in the industry. This product can be tested on a race track the next day. That is what sets us apart from the competition.

The aftermarket division needs more specific organisation of research and development. Here, our experts use new technology to improve existing solutions and create new ones. Their goal is to make better products and/or more economical products.

There are other people and companies that are very important for our development. We work closely with suppliers of titanium all over the world, trying to get the best materials for our foundry. We are constantly looking for brilliant people – researchers, developers – we have student programmes with many universities.

You seem to be pushing technology limits ever further. Do you have any plans to use your superior technology in other areas, especially outside the motoring field?

Today, titanium is most often used in the aviation industry. We are determined to be a large part of that also. There are numerous other industries where titanium is the material of choice, for example medicine and sport. In the Far East, they use titanium parts in

systems for the desalination of sea water. The applications for titanium are truly numerous; we haven’t seen the limit yet.

Have you looked beyond titanium though? What will you do next? What materials will you use?

Titanium is one of the most reliable materials in the industry, although we believe we can apply our knowledge to other materials. We have a plant that is working exclusively on carbon fibre. These materials are up to eight times lighter than steel and can withstand extreme mechanical loads and they offer great product design possibilities. We are already capable of manufacturing carbon or composite products for all kinds of different functions and/or shapes.

What will be the focus of Akrapovič in 2012?

We started advanced strategic planning years ago, therefore we know exactly what will we do in the following years. Akrapovič will stick with its core values. We are and will continue to be a leader in the aftermarket for exhaust solutions – for motorcycles and performance cars. We will broaden our global market approach and improve our time to market, which has always been a competitive advantage of the company.

Can you talk about future goals? What is on the drawing board, where will the company be in 5 or 10 years?

We want to be the most innovative producer of titanium solutions globally. Today, we may be perceived as a humble company producing exhaust systems, but we are knocking on the door of the aviation industry. The truth is Akrapovič is one of the very few companies in the world that can cast titanium. We have stabilised the investment casting process, it is currently at an industrial stage and we are looking for new applications and new businesses.

I believe the company will double turnover in the next five years; we will be managing even more complex technology and entering new markets. Our plans are well defined. In 10 years – a lot can happen in a decade. You will hear others say that the sky is the limit. Well, Akrapovič wants to go to space. That is our aim.

COMPANY NOTES Akrapovič d.d.

Malo Hudo 8a 1295 Ivančna Gorica, Slovenia info@akrapovic.si www.akrapovic.com

Jorge Lorenzo

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AUTOMOTIVE INDUSTRY

Goodyear Dunlop Sava Tires

Full Speed Ahead Goodyear Dunlop Sava Tires is one of the most successful and respected Slovenian companies.

Being also one of the most complex Goodyear factories in Europe, it is an important player in the global Goodyear Corporation, assisted by its strong reputation and consistently outstanding results

O

ne of the world’s leading tyre manufacturers, Goodyear, operates 54 factories in four geographic regions: North America; Latin America; Europe, Middle East and Africa (EMEA) and Asia Pacific. They have been present in Slovenia since 1998 and the company, based in Kranj, immediately embarked on its journey of success. Formerly known as Sava Tires, the company changed its name to Goodyear Dunlop Sava Tires in July 2011. “There were a couple of reasons for changing it, one was to ensure the Goodyear Dunlop organisation in Europe was harmonised when it came to naming. The second reason was that our previous company name did not reflect reality, with the name Sava Tires many people did not realise that were are a company with a complete portfolio of premium, value and budget brands as we produce for the Goodyear, Dunlop, Fulda, Sava and Debica trademarks. There was an issue of company recognition: we wanted to reinforce that element in the minds of end users, associates and customers” explains Managing Director, Thierry Villard.

The company employs more than 1,400 people and since 2006, Goodyear Dunlop Sava Tires has been part of Goodyear Dunlop Central and South Eastern Europe (CSEE). “Slovenia is the home base for a complex mosaic of 13 countries, united in the CSEE organisation” says Villard. Goodyear moved the CSEE’s headquarters to Kranj in 2010. “In terms of Europe, Middle East and Africa, we are one of the top contributors in Europe. Our part of the world still enjoys business growth,” emphasises Villard.

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AUTOMOTIVE INDUSTRY

Outstanding results

This is obvious from the 2010 business results, the company increased productivity with the number of manufactured tyres reaching 7.12 million, nearly 1.5 million more than the previous year. Goodyear Dunlop Sava Tires also increased sales by 25% and earnings by more than 28%; net sales were almost EUR 374m, the majority of which was generated in the markets of the European Union. Although the results for 2011 will not be released before spring, company officials state that all their goals were achieved for the year.

Long-term investment With a focus on its long-term business strategy, Goodyear has invested more than EUR 170 million into Goodyear Dunlop Sava Tires over the 13 years it has been present in Slovenia and according to Villard, this has paid off: “We have practically doubled our productivity in that time and we are now producing more high quality tyres than before.” The investments have also significantly changed the products that are produced by the Slovenian company – in the past it manufactured small tyres for small cars of the more budget brands. Now we have moved to high performance and ultra high performance tyres and truck tyres. Other positive effects of the investment are improved safety at work and environmental friendliness: “We stopped using solvents in tyre production and through the management of waste, we have reduced it by 85% since 1998. Moreover, we have decreased the rate of work accidents by more than 90%,” asserts Villard.

Care for the community Goodyear Dunlop Sava Tires has always been dedicated to its communities. The company traditionally supports local firefighters and ambulances, equipping their vehicles with tyres. Every year, the company organises a meeting with its neighbours – the people living in the vicinity of the factory. Beginning in 2010,

the company organised a campaign ‘Pozor(!)ni za okolje’ – which united 23 partners and more than 6,000 high school students to care for the environment. There is also a focus on road safety: Goodyear is concerned about safety for all, not only drivers but also other participants on the road. Apart from innovative technology, Goodyear is seeking new/innovative ways to engage the public in the road safety topic. One such project is ‘Safety for Children’, which has been running for the past three years, the company has distributed over 45,000 safety vests to schools and kindergartens across Slovenia. In 2011, the scope of the project was broadened to incorporate the ‘Goodyear Safety Ambassador’ project whereby Goodyear’s business partners were invited to take an active role as ambassadors for improving road safety. In 2011, the company also donated 13 Goodyear speed monitors to Slovene municipalities.

2012 will be marked by tyre labelling One of the projects that will impact the entire tyre industry in the European Union in 2012 and beyond, including Goodyear Dunlop Sava Tires, is the introduction of tyre labels. As of November, every new tyre must have a label stating its rating based on three criteria: rolling resistance, wet grip and noise. This will enable consumers to make more informed choices, to take safety, economic and environmental efficiency into account. Goodyear Dunlop is now focusing on educating its patners and key stakeholders about the regulation via various media channels.

COMPANY NOTES Goodyear Dunlop Sava Tires d.o.o. Škofjeloška 6 4000 Kranj, Slovenia T: +386 (0)4 207 70 00 public_relations@goodyear.com www.sava-tires.si

Apart from innovative technology, Goodyear is seeking new and innovative ways to engage the public in the road safety topic. One such project is ‘Safety for Children’, which has been running for the past three years, the company has distributed over 45,000 safety vests to schools and kindergartens across Slovenia. In 2011, the scope of the project was broadened to incorporate the ‘Goodyear Safety Ambassador’ when the company donated 13 Goodyear speed monitors to Slovene municipalities.

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TRANSPORT & LOGISTICS

Strengthening the Weakest Links In 2011, more containers than ever were loaded on to and unloaded from ships at the Port of Koper. But such success has been far from a common theme in Slovenia’s logistics sector over the past twelve months. Adria Airways, Slovenia Railways, and shipping company, Intereuropa all experienced real problems. It seems that strengthening the weak links in the chain will be the challenge for the Slovenian logistics sector in 2012.

T

he potential Slovenia has in the logistics sector is well established. On the motorways there are trucks from all over Europe and beyond, international routes Corridor Five and Corridor Ten cross each other in Ljubljana and Slovenia’s position is right at the centre of Europe. Yet, capitalising on this potential is proving to be a long and slow process. Some steps were taken in 2011 but more will be needed in 2012.

A growing seaport The news from port operator, Luka Koper has mainly been positive. The firm tripled its net profit to EUR 3.1m in the first nine months of 2011. The revenue from throughput of general cargo and containers went up by a whopping 42 per cent year-on-year.

In the first nine months of 2011, Luka Koper’s revenue amounted to EUR 105.8m; 15 percent higher than for the same period last year and eight percent more than forecast.

Slovenia’s sole seaport is the biggest container terminal in the northern Adriatic and it’s Luka Koper’s ambition to grow further.

In 2011, a five year plan was presented to increase cargo throughput to 21.4 million tonnes. To reach this goal, a long-awaited zoning plan for the port is ready for execution after government approval.

It would see the port’s surface area grow from 280 to 404 hectares.

Luka Koper sees the zoning plan as the basis for development of the seaport for the next 40 years.

60

More hectares will not automatically lead to more throughput however. The real challenge lies outside the port, namely in the infrastructure that must carry the cargo to and from the port.

That means that the construction of the long-anticipated second railway track between Divača and Koper, is crucial for the further development of the port. Work is set to start in 2012.

The X factor. The Peračica Viaduct was the final link completing the Slovenian motorway cross.

The railways represent a bottleneck and the greatest construction challenge of Slovenian infrastructure.

The 27 kilometres of new track will increase the transport capacity from 14 million tonnes to 41 million tonnes. “The purpose of the project is to provide a modern railway connection,” says Eldina Knez of the Ministry of Transport. “That is of strategic importance for the development of the railway infrastructure in the country and is one of the priority projects of European Ten network.’’ [Corridor Ten is the international route linking Lyon with the Ukrainian border.]

Getting back on track It is hoped that the new track will also help troubled rail operator Slovenian Railways. The company appointed new management in 2011, Igor Blejec, the twelfth Chief Executive in twenty years and in November 2011, a new four member Management Board was appointed.

In the new year there will be a big change at the firm: it will become a holding with three companies (infrastructure, passenger transport and cargo). The hope is that the new structure will help the company climb out of the red.

For a while it had looked as though there would be even more dramatic changes to the company this year. Plans to form a national logistics holding containing Slovenian Railways, Luka Koper and logistics company, Intereuropa were cancelled in 2011. The plan was much debated in 2010 and Patrick Vlačič, the Minister of Transport in the 2008-2011 government, was a strong supporter.

But the objections of the companies sent the suggestion into the bin.

Meanwhile, Slovenia Railways busied itself with reaching its goal for 2011: to breakeven. A tricky task considering that the first half year results showed a EUR 5.6m net loss. Nonetheless, the company exceeded expectations in cargo transport in the first half of 2011. The earnings before interest and tax in cargo were EUR 6.3m (8.3 percent) above plan. Nine million tonnes were transported. The main problem for the company remain passenger transport. In the first half of 2011, eight million people travelled on Slovenia’s trains – 4.5 percent less than planned.

Slovenian Railways wasn’t the only logistics company to fail to climb out of the red this year. Despite revenue that exceeded expectations, Koper based logistics group, Intereuropa made a net loss of EUR 4.4m in the first nine months of 2011. At the presentation of these results, the firm announced it was shutting down its road transport branch – a subsidiary which had been making losses for years.

Photo: BOBO

Photo: BOBO

TRANSPORT & LOGISTICS

Koper port can handle more, hoping for expanded mainland connections.

In the air

Loss making, management changes and challenges – all three happened in Slovenian flag carrier, Adria Airways. At the end of 2011, the airline got new management and a new Supervisory Board. After a year and half of single-tier management, two-tier management returned to the airline.

Adria Airways survived twelve months of crisis. The airline got a financial injection from the state of EUR 50m which enabled its planes to stay in the air. Following substantial personnel reduction in 2010, five routes were scrapped in 2011. Despite this, the flag carrier expects a loss of EUR 11m in 2011. The company strives to be back in the black in 2013. In 2012, the State Fund, PDP. expects to start a public tender for the sale of a 75 percent share in the airline.

An interesting development for Adria Airways in 2012 will be a new partnership. In June 2011, Air India signed a deal with Aerodrom Ljubljana and Adria Airways to use Ljubjana’s Joze Pucnik airport as a stop-over for flights to North America. This will result in Adria Airways gaining direct access to the Indian market and the United States. The Slovenian flag carrier should also benefit from extra passengers on its existing routes.

With the arrival of Air India, airport operator Aerodrom Ljubljana expects to become an important hub in South East Europe. At the end of the year, the company expected to exceed the plan for 2011 in revenues and net profit. It was mainly foreign carriers and cargo transport that contributed to the good results. For the airport, 2012 promises to be a year of highlights. The construction of a second terminal is set to start as well as a cargo apron.

The airport of Maribor is in a whole different situation. Operator Aerodrom Maribor is part of the bankruptcy estate of the Prevent Group. On 10 January 2012 the airport operator will be publicly auctioned in Slovenj Gradec. The starting price will be EUR 675,000. Several foreign companies are said to be interested.

National programmes The government has been promoting Slovenia as a logistics hub for some time. Although the plans of the new administration aren’t yet known, the expectation is that it will remain one of country’s goals. According to Knez from the Ministry of Transport: “For sure the development programmes will be the basis for the future development of infrastructure. The national railway programme is in the final stage of the public hearing and we are preparing a national programme for the roads. For the first time this programme is for all state roads and not just the motorways.”

So whether it’s for road, sea or air, the plans are there. Now the players in the logistics sector must keep moving.

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Gregor Veselko, President of the Management Board, Luka Koper

Preparing for Strategic Expansion Luka Koper is one of the most important Slovenian companies and a logistics entry point for Central Europe.

Through business excellence they are successfully battling the challenges of the economic crisis. A planned investment in a third pier and the strategic investment in a second track on the railway line connecting to the Central European hinterland, will be the next step in the development of the company and a strategic investment of national importance.

How does Luka Koper feel about the economic instability in the European Union which will apparently continue in 2012?

Despite the rather precarious situation, we are satisfied with the results achieved in 2011. In fact, we exceeded the record level achieved in 2008 with over 16 million tonnes of total throughput.

The economic growth forecasts for 2012 are modest and they are frequently changing, so in 2012 we expect moderate growth in all product groups.

Despite low economic growth in Slovenia and the ominous forecast of a possible new recession in 2012, Luka Koper achieved some record results in 2011 in the volume of cargo handled; which was also reflected in increased revenue and improved business results We can be satisfied with our financial results although our net result includes the write down of certain financial investments. Operating profit is very encouraging, as is generated cash flow.

What is the final structure of throughput based on cargo destinations and in which markets do you plan the greatest growth in future years?

Austria surpassed Slovenia for the first time in 2011 in throughput and with a 33% share, currently represents one of Luka Koper’s most important markets. Austria is followed by Slovenia, Hungary, Italy, Slovakia, Czech Republic and southern Germany or Bavaria.

In addition to increasing quantities for those countries, we also plan to gain market share from other, particularly northern European, ports. In 2010 we were once again deemed to be the most important port for Austria which, until a few years 62

ago, was held by Rotterdam and indications are that this trend should continue.

Luka Koper is the largest port in the Northern Adriatic for containers and automobiles. What are your plans for these segments in coming years, will you maintain the structure?

Containers and automobiles are classified as strategic cargo and so the greatest share of investment is focused toward these two segments. The share of containers is growing in the overall structure and at 32%, it follows grain and bulk cargo. Despite the nature of automobile cargo and the fact that it accounts for a mere 5% of total tonnage, it is definitely the cargo of the future given our capacity and its profitability. We generally expect a relative decline in the quantity of grain and bulk cargo in favour of other segments in the next period.

Regarding the development of Luka Koper, we cannot of course avoid the issue of the investment in a third pier given its high public and political profile. What is the latest envisaged time schedule for this project with regard to the adoption of the National Spatial Plan? It seems that key political players in Slovenia strongly support it, but the activities implemented to date have not been commensurate with the ‘in principle’ support given to the project?

The third pier is included in the National Spatial Plan which has been adopted. It is definitely a strategic State project and will not be feasible without political will. Additionally, its construction is linked to the rest of the hinterland infrastructure.

TRANSPORT & LOGISTICS

Is investing in a third pier reasonable prior to the construction of the second rail track or will the construction of a third pier be hampered by the dynamics of the construction of the second track?

Both investments are connected. One without the other probably does not make sense. Currently around 60% of all goods entering and leaving from the port travel by rail. In terms of increasing capacity and throughput, a second rail track is urgently needed.

What is the total estimated value of the investment in the third pier and what will be the increase in traffic volume and service quality resulting from this investment?

We are currently preparing an economic feasibility study that will show where and how to effectively organise container handling, not only for the third pier but also at existing locations. Such a large, single investment represents a risk and so we are now thinking of gradually building capacity, initially on the first pier and then on the third pier. A financial assessment for the third pier is difficult to make prior to the conclusion of the study but it will certainly be a difficult project worth several hundred million euros.

The Northern Adriatic is slowly but persistently gaining recognition.

The region represents an excellent entry point for goods from the Middle and Far East, mostly due to the lower transit times and cost. It is essential to attract a critical quantity of goods in this part of Europe. This would enable both shipping and logistic companies to exploit the positive effects of the economies of scale. At the same time, it will be necessary to invest in increasing capacity and this is where the plans of the Northern Adriatic ports become ambitious.

I think we are on the right track.

How will you structure the financing of this project? Have you contacted any strategic partners or are you planning to be the sole investor?

Luka Koper will not be able to implement such a demanding financial project on its own and the project will therefore involve a strategic partner. Recently we visited quite a few potential foreign investors from Europe and Asia who are willing to participate.

However we will have to resolve the question of concessionary relationships with the State and of course, the problem of the second rail track.

What are the physical limitations to the expansion of the Port of Koper based on the land available and the increasing environmental burden? How will you focus development toward both qualitative and quantitative growth?

The National Spatial Plan adopted in June 2011 envisages the expansion of the port and related activities from the current 280 hectares to 404 hectares. This represents adequate spatial potential that will enable long-term development. Strategically, container and automobile cargo represent the most important cargo, but this does not mean we will neglect other types of cargo. The goal is to increase traffic while taking into consideration the optimal structure of goods based on market potential and capacity. In so doing, we should not forget of course the environmental dimension.

We are recognised as one of the cleanest ports in Europe as proven by various international recognitions and awards and certificates obtained. In the recently adopted five-year strategic plan, we clearly indicate that sustainable development is a strategic orientation of Luka Koper.

How will Croatia’s accession to the European Union affect Luka Koper’s development? Is it important to, at least, make strategic investments until the time of Croatia’s entry in 2013?

The Port of Rijeka is developing and definitely represents a certain level of competition that we take very seriously. Croatia’s accession to the EU will certainly remove many obstacles, facilitating its access to European markets but, as in our case, they too will have to invest in port infrastructure and in particular improve the rail connection with the hinterland.

What is the degree of cooperation amongst the largest ports in the Northern Adriatic? Are there certain hidden reserves that will increase the logistics competitiveness of the entire region?

COMPANY NOTES Luka Koper, d.d.

Vojkovo nabrežje 38, 6501 Koper, Slovenia T: +386 (0)5 665 61 00 portkoper@luka-kp.si www.luka-kp.si

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ENERGY

Feeling Energised 2011 was another inconclusive year for the energy sector, with many questions remaining unanswered and some lingering problems still unresolved. However, 2012 looks set to shift the trend, with the new coalition government taking concrete steps toward short and long term development of the sector.

The national energy programme

TEŠ 6 gets a government guarantee

2011 was marked by further delays and questions around the creation of a new National Energy Programme (NEP) to 2030. The new government is poised to provide clarity on the subject and adopt the NEP as early as 2012. The agreement of the coalition parties that now form the government includes some of the following commitments with regard to the NEP: • invest in renewable sources of electricity: utilise the potential of the lower and middle Sava river, the Mura river, biomass, solar and wind energy • invest in energy efficiency: install energy systems and heat recovery insulation (facades, windows) on all public buildings • continue investing in the construction of the sixth generator at the Šoštanj coal-fired plant, TEŠ 6, following a cost review and consideration of project consequences.

• investigate the possibility of building a second nuclear power plant at Krško (NEK 2) with combined energy production for larger towns within a100km radius of NEK 2.

• finalise transmission lines within Slovenia (Krško Beričevo) and construct transmission lines with Italy and Hungary

In February 2012, parliament backed a much needed bill providing a EUR 440m loan guarantee for the construction of the sixth generator at the Šoštanj coal-fired plant, TEŠ. The bill

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Production

2008

2009

2010

Domestic lignite (1000 t)

4032

3918

4011

Domestic brown coal (1000 t)

489

511

419

Natural gas (mio Sm3)

3

3

7

Source: ESURS

Balance of solid, liquid and gas fuels supply in Slovenia

ENERGY

was rejected in 2011, putting the whole project in jeopardy. The construction site of the thermal power plant was taken over in February 2012 by the French multinational company, Alstom, the main supplier of the technology for the plant, with the European Investment Bank (EIB) providing a EUR 550m loan for the project.

The total cost of the project is estimated at EUR 1.3 billion.

The government loan guarantee, requested by the EIB, is conditional. To obtain the guarantee, the investor must commit to reducing costs; TEŠ and the mines must sign a long term contract, with a price cap, for the supply of lignite; the project must be completed within the scheduled timeframe; the investor must provide the conditions for the project to achieve profitability in line with the energy policy; and CO2 emissions must be limited in accordance with the investment programme.

The final condition is linked to the overall effort to reduce CO2 emissions which increased 5.9 percent in 2010 , the highest growth to date. In 2010, the thermal power plant Trbovlje generated more than 591,000 tonnes of CO2 emissions in the production of 550 GWh of electricity and in 2011 it reached around 720,000 emission tonnes of CO2. TE-TOL’s CO2 emissions in 2011 were approximately the same as for 2010, around 756,354 tonnes.

In the fight against climate change and reducing CO2 emissions, the previous government presented a draft strategy for the transition of Slovenia to a low-carbon society by 2050 and it is expected to be passed by the parliament during 2012.

Nuclear energy presents great opportunities

Outlining the National Energy Programme, the coalition government also showed its determination to investigate the most viable options for the construction of the second nuclear power plant at Krško (NEK2). The possible addition is widely regarded as of utmost importance in the further economic development of Slovenia. With the construction of NEK2, there are also possibilities for inclusion in the supply chain of AP1000 nuclear power - an advanced 1154 MW nuclear power plant that uses the forces of nature and simplicity of design to enhance plant safety and operations and reduce construction costs.

The estimates for building NEK 2 range between EUR 2,500 and EUR 3,000 per kW of installed power. Moreover, NEK 2 will produce 1000 - 1600 MW; a fuel cycle of 24 months; outage would last 20 days; its lifespan would be 60 years with the possibility of extending it a further 20 years and most importantly, it would recycle and reuse the used fuel. Additionally, there are a number of potential foreign suppliers who are possible partners, including Westinghouse, Areva and Mitsubishi.

TEŠ 6

The Russian job The fate of the South Stream pipeline in Slovenia is also expected to be determined in 2012. According to Plinovodi, a Slovenian company which signed an agreement with Russia’s Gazprom to establish a joint company for the South Stream project, “the project is going through the final and most important decision making phase, our Russian partners are completing a consolidated (total) feasibility study and it is understood they will take concrete decisions on the further development of the project”. The media has, however, citied unofficial information that Slovenia will indeed be among those countries through which the South Stream pipeline will run.

The new government has promised to provide swift and necessary assistance once the pipeline route is finalised.

Gas made positive headlines in other areas also. According to British company, Ascent Resources, in the area between Petišovci in Slovenia and Lovászi in Hungary, there are 11.7 billion cubic metres of natural gas. The project is a joint venture between Slovenian Geoenergo and British Ascent Resources.

The beginning of 2012 has indicated that it will be a year of action in the energy sector. The new government is paving the way for concrete strategies, providing business opportunities not only for Slovenian but also international companies.

Photo: BOBO

Nuclear power plant Krško

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ENERGY

Vladimir Kercan, PhD, Director, Turboinštitut

Hydroenergy - the Star of the 21st Century The Turboinštitut was established in 1948 tasked with ensuring the development of hydraulic machines for the former Yugoslav state. Thanks to the development of our own hydraulic machines, as the heart of hydroelectric power plants, Slovenia is one of the few countries in the world that has fully mastered the technology, design, development, equipment manufacturing, management and water power utilisation. Today, Turboinštitut is one of the world’s leading independent institutions engaged in the development of hydraulic machinery and in modelling and testing turbines for hydroelectric power plants. Its Director, Dr Vladimir Kercan, presents its history and activities.

What services do you offer?

The Turboinštitut is primarily involved in developing and testing turbine models for large hydroelectric power plants. We have a laboratory with four, state-of-the-art test rigs, where we can test all types of turbines. This means that we use a computer to simulate the flow inside a hydraulic machine. Even though we make use of a supercomputer and the best simulation methods, simulation results are still a mere approximation of reality. In order to demonstrate that a model has the promised characteristics, it is still important to conduct tests on the actual model at an accurate, reliable and internationally tested station.

What is your core competence for remaining a leader in this area?

Our key competence is our constant investment in development.

On the one hand it includes constant improvements in model development methods and on the other, the upgrading of technologies for designing models and test stations and improvements in methods, accuracy and reliability. Due to the development of flow simulation methods, a strategic decision was made in 2008 to buy a supercomputer as the basis for development.

This is the largest supercomputer in the region and one of the largest supercomputers used today in the development of hydraulic machines worldwide.

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What has this investment enabled you to do and how much did it cost?

The value of the supercomputer, with all the associated equipment, is a little over EUR 2m. Since we acquired it, we have been talking to our customers and partners differently and also positioning and networking ourselves differently. Even on an international scale, numerous new possibilities are opening up for us. The supercomputer has enabled us to achieve better development results, in particular, to arrive at them much faster.

Francis turbine model on the high pressure test rig

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Who can use this computer?

Only specific, very limited groups trained to use complex flow simulation programs can work on the supercomputer, which we use solely for flow simulation.

Who are your partners?

In terms of development and state-of-the-art experiments, we can say that we have three key partners – a Chinese, a Russian and an American manufacturer of large water turbines - which is rare in Slovenia. We also cooperate with Indian and of course, Slovenian manufacturers, but with the latter unfortunately, much less than we used to.

What are your key markets and how successful are you in penetrating the BRIC markets and other non-traditional Slovenian export markets (South America, Africa) where demand for services from your area is still growing?

The Slovenian market accounts for perhaps only one or two percent of our turnover. Asia is still our main area of operation, particularly in the supply of equipment for hydroelectric power plants, regardless of the awakening of South America and Africa. We are by far most active in Asia, from Taiwan, China, Russia and India to Iran; in Europe, we operate in the Balkans, our traditional market and in Italy, Turkey and Norway; in Africa, we operate in Rwanda, Uganda and Kenya and in South America in Chile.

You keep making a point of the fact that you do not operate in Slovenia. Why not?

Nothing is being built in Slovenia, even though 50 percent of the country’s water power potential is untapped. For years we have been involved in negotiations to build the lower Sava and Kozjak chain.

You should ask someone else why this is so. There is also serious potential for the construction of small hydroelectric power plants, but the extremely complicated procedure for obtaining permits poses a very serious obstacle. However, I must add that Slovenia has 458 small hydroelectric power plants, which is quite a lot for such a small area.

What have been your most important projects in the last five years?

We are just finalising two very important projects. One is in Taiwan where Turboinštitut was responsible for the entire documentation and supply of equipment for two power plants of 20 MW each.

The other project, a very complex one which we will finalise this summer, involves designing, supplying equipment for, installing and commissioning of five hydroelectric power plants in Turkey with a combined power of 55 MW. The two projects are worth around EUR 30m in total. Other major projects include the previously mentioned purchase of the supercomputer, the complete refurbishment of our test rigs where alot has been happening over the past five years and the tripling of our production capacity for the manufacture of small turbines.

Today, Slovenia is one of the few countries in the world that has fully mastered water power technology. What is your view on that?

I don’t know for how much longer... Slovenia is certainly the smallest country in the world to have mastered this technology. I am convinced that water power is a development opportunity, sort of a ‘new deal’ for Slovenia, but all players in the water power industry need to join forces and offer a complex project to the market.

How can the effective utilisation of water power contribute to the competitiveness of the Slovenian economy?

Water power is our natural resource. It is really fortunate that it is renewable, clean and as such, holds great potential. If we had nothing but coal we would face much greater difficulties. You cannot

CFD simulation of streamlines in the double suction pump

expect much more from wind and solar power for the time being.

The difference between the use of water power in Slovenia and in another country, is that we can utilise this natural resource with our own potential and knowledge and multiply the energy producing effect, whilst some other countries must import the knowledge and product in order to obtain energy. For us therefore, water power is a development opportunity with export potential.

Regardless of all the negative effects of hydroelectric power plants, they are still absolutely manageable compared to all the negative consequences of thermal and nuclear power plants. As a proponent of water power, I am not saying that they do not have adverse effects.

However we, the people who live here, must realise what is the least threat. There is no need to build large hydroelectric power plants as is done in some countries; the times of enormous hydroelectric power plants, with huge and often unpredictable effects on the environment and social structure, are over. We must use the potential that we have for numerous small dams, whose effects are much smaller.

The creation of reservoirs has another important consequence – it facilitates water management. Water, as a natural resource, is becoming by far the most important source for humankind. Water should not be allowed to drain into the sea by the quickest route - that water is no longer available for us. Water collection and small hydroelectric power plants are therefore the future mainstay of water management.

Hydroelectric power plants are the shining stars of the 21st century!

Hydroelectric power is currently unmatched amongst renewable energy technologies.

Is it true that you also indirectly sell electricity?

Not yet, but we will. Turboinštitut has placed strategic emphasis on the construction of hydroelectric power plants. We are currently working on three projects. In Serbia we expect to build the first two power plants by the end of this year and in Macedonia five small power plants, hopefully by mid next year. There is also a project in Bosnia where we are designing and will be building nine power plants. We expect to complete the project in two and a half years.

These and similar projects in the future will be realised with a strategic partner from Slovenia or abroad.

COMPANY NOTES Turboinštitut d.d.

Rovšnikova ulica 7 1210 Ljubljana Šentvid, Slovenia Tel: +386 1 582 01 82 info@turboinstitut.si www.turboinstitut.si

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ENERGY

Robert Golob, PhD, President of the Management Board, GEN-I

Photo: Žiga Koritnik

Always First!

Which markets do you operate in today?

GEN -I is now present in 17 markets stretching from Germany in the north to Turkey in the south, Romania in the east and Italy in the west.

Which of these markets are the most profitable for you?

It varies from year to year. We try to stay ahead of the competition in every market, attempt to be the first to recognise opportunities. So far, no market has ever been the most profitable in two consecutive years. I would venture to say that we have always been the first to make the most of market opportunities, which does not go unnoticed by the competition but of course, by then we have already moved to the next market...

Can you describe your business activities? How do you sell electricity?

We are basically involved in two core activities: trading, which is our key activity carried on in all markets; and sales. We are present in four markets in terms of sales to end customers: Slovenia - the most developed segment, Italy, Austria and Croatia. We have deliberately moved from the centre outward which has proved to be a smart decision, especially as it has put us back in first place. No other player in the region sells energy to end customers in more than one market, we are the only one. The situation is considerably more international with regard to trading, where revenue represents 80 percent of our turnover and where we have been present across the entire area of Central and South Eastern Europe for a long time. Add to this the countries to the south and east. Just last year we added Turkey after identifying a market opportunity there.

How do you manage risk?

Risk management is central to our success - the margins that can be realised in this business are much lower or very low, compared to turnover. This means that any deal, if mismanaged or lost completely, would destroy the margin from 50 additional deals. From this 68

The second largest electricity provider in Slovenia swears by its philosophy of ‘being first’. It does not take deals that are not safe and its key driver of growth is people, says the President of the Management Board of GEN -I, Robert Golob, PhD, who advocates only safe growth. perspective, it is extremely important not to take deals that are unsafe. We decide whether to go ahead with a deal on the basis of numerous parameters, but the safety of a deal always comes before the profitability. We therefore only enter into deals that allow for maximum protection. On the one hand, this means continuously monitoring the ‘credit risk’ or solvency of our partners and on the other, clear in-house control mechanisms in place for our traders to close these deals.

Do you also attribute your growth, essentially from establishment, to risk management?

Growth itself is not an issue and it is even relatively simple in the trade sector if, of course, you have the knowledge. It is more a question of how much capacity is allocated to growth.

The key problem is how to ensure the growth is manageable, to enable ‘safe’ growth. We have always had a constructive, internal conflict in the company as to how to stop our traders from growing at the expense of business performance and exposure to risky operations. We maintain this balance between these two factors at all times.

So, to sum it up, what are the key factors for growth?

Always people! People, who must be clearly aware of their duties and be sufficiently motivated and in my opinion we have such people in our company - with the work organised to enable them to do their best. Above all, their tasks must be clearly delineated.

We have to know who is responsible for growth and who has the right to restrict that responsibility should some action be too risky.

Once the tasks are clearly delineated, we can move forward.

In 2006 the Slovenian government decided that it was reasonable to increase competition in the electricity market.

How did you respond to that initiative?

Promptly! Again we were the first to do so, forging a type of partnership with the State that has not been repeated. We readily grabbed the opportunity when the Government wanted to establish

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a new competitor in the electricity market in Slovenia and we are now the second largest provider in Slovenia. I would go so far as to say that today we are the ones who dictate market development. All the others and I’m talking about national distributors, are basically just following in our footsteps. I believe that this Government decision was very useful for Slovenian customers in terms of market development.

What is your turnover in Slovenia and abroad? Could you comment on that?

In 2011 we generated EUR 1bn in sales revenue at the group level, one-fifth in Slovenia and four-fifths in other countries. Compared with the previous year, we nearly doubled our profit, reaching EUR 14m. The EUR 200m that we generated in Slovenia accounts for about 25 percent of the Slovenian market and represents a reasonable market share for us, it also exceeds the production capacity available to our partner GEN Energija, so last year we had to - as we will also have to do this year - purchase or import into Slovenia some of the electricity needed to cover the consumption of our Slovenian customers. We must not forget that GEN-I is also responsible for backup energy in case the Krško nuclear power plant breaks down. If we are therefore to provide the alternate energy during system failure within an hour, we must have an extremely developed sales network. We are not limited to classic supply and sales, we have business partners with whom we work in both areas.

We can sell them electricity when they need it and we can buy it from them when they have a surpluss.

How many customers have you acquired with your ‘Poceni elektrika’ brand amongst small businesses and households?

We were also very successful in that area in 2011. We had to make some investment, but we more than doubled the number of clients,

which at the end of 2011 numbered almost 40,000, exceeding our growth plans.

What, in your opinion, will determine Slovenia’s energy future?

It depends on the timeframe we are looking at. Over the next 20 years it will remain more or less the same as today, which means that our energy dependence will continue to increase. We depend on imports of oil, petroleum products and natural gas and as for electricity, our energy future will depend on the ability of the politicians to come up with a clever compromise between nuclear energy and other energy sources. In the long term, it will make sense to significantly increase renewable sources, which are initially relatively expensive but almost free later on.

What advice would you give Slovenian entrepreneurs?

Carry out key business activities where you can be the best. Only if you are the best will you have more opportunities than others in a recession. That is exactly what GEN-I did and the crisis does not represent a challenge for us, but an opportunity. A large number of companies in Slovenia have exploited the crisis in this manner.

COMPANY NOTES GEN-I, trgovanje in prodaja električne energije, d.o.o.

Vrbina 17 8270 Krško, Slovenia info@gen-i.si www.gen-i.si

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ENERGY

Blaž Košorok, Director, Termoelektrarna Toplarna Ljubljana

Keeping Homes Warm and the City Green Ljubljana’s thermal power station is oriented toward sustainable, environmentally friendly technology and they mean it! In four years, they intend to introduce natural gas as their third power source. Recycling waste into energy is also one of their ambitions. Blaž Korošok, who has been successfully leading the company for seven years, presents his views and vision.

T

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

The first strategic project for reducing the negative influence on the environment is now in its third year - the introduction of a renewable energy source. In 2009 they produced 31GWh of green electricity and 90 GWh of heating energy from wood chips, equating to eight percent of gross TE-TOL production.

With approximately 64,000 tons of wood chips they effectively reduced coal consumption by 36,000 tons. Wood energy has helped them reduce CO2 emissions by a good 10 percent and SO2 by 40 percent, NOx by five and ash and slag by 11 percent. This is an important improvement in Slovenia fulfilling international requirements to increase the use of renewable energy sources. An

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important contributor at the national level and of key development potential for TE-TOL, is the introduction of natural gas. By 2015 the company plans to substitute nearly half of the coal it currently uses - average yearly coal consumption is 400,000 tonnes. The planned combined gas and steam turbine will produce the same amount of heating energy and at the same time facilitate a two-fold increase in electricity production. Furthermore, this will considerably reduce CO2, NOx, SO2 and dust emissions. The investment value of gas infrastructure is an estimated EUR 130m. The financing will be provided by the European Investment Bank, bank loans, TE-TOL’s own resources and a strategic partner.

The sustainable philosophy and social responsibility of TE-TOL is reflected through the unique product they launched on the internet. Their mobile portal enables the tracking of actual power and heat production with pollution indicators - on a smartphone.

This project did not go unnoticed by the users, nor with independent experts who recognized it with the World Summit Award for best practice in the world for environmental information.

While both energy demands and environmental criteria are getting ever tougher, you have announced the next giant leap - the introduction of natural gas as a fuel in 2015. Your vision probably goes beyond that. Nevertheless, you have made it clear that the energy business is a long term.

Indeed! The decisions made today will impact the situation in 30 or 40 years in the same manner, we are still using the systems set up in 1964 and 1984. With certain upgrades they keep running without problems, responding to all the actual environmental criteria.

Slovenia cannot afford to be at a standstill in this area. Certain decisions should have already been made and implemented.

Unfortunately, things get stuck at higher levels, where nobody asks the companies how to deal with development strategies. Our strategy is set for 20 years ahead. We know how to approach it taking into account the situation at our location. The vision is

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based on our estimate of Ljubljana’s heat and energy needs in the decades to come.

The project ‘Waste to Energy’ seems interesting in this regard.

How far is it developed?

The facility for using waste for energy, a heating plant using waste - whatever you name it - is something we could put into action along with smart segregation of garbage and refuse delivered fuel (RDF). Our idea, which puts us in the role of consultant, is that Ljubljana as a capital city should get one such modern energy setup.

This project is also hitting obstacles at the administrative level, as the Environment Ministry is struggling to complete a spatial plan.

The project has been initiated, but at this stage the plan cannot progress in spite of us having already invested our own resources in the development: we cannot handle the spatial planning and the legislation ourselves.

Are there any particular examples you are looking at?

Vienna and Munich are nice references. They have modern infrastructure, combining production and distribution of heat energy along with waste treatment.

It is surprising that you are using Indonesian coal despite the active coalmines in Slovenia. Why? Environmental protection. We use so called ‘eco-coal’ - if a fossil fuel deserves this adjective. The coal from Indonesia is extremely low in sulphur and has high combustion value. This is the reason we no longer encounter high pollution, especially on cold winter days.

This unique coal is letting us achieve a much better environmental result compared to domestic coal.

The future however envisages natural gas as the main fuel…

Along with the entire European Union, we are attempting increased penetration of natural gas in order to replace coal. This would contribute to the environmental situation, with less greenhouse gasses, less carbon oxides etc.

Is 2015 still your target, have you chosen a distributor?

2015 - yes. We are holding intense negotiations with distributors, checking the technical documentation of both domestic and international bidders. We plan to remove block two and replace it with the natural gas installation. The overall heat production

will remain the same, while electricity output will increase. As for providers, we are currently considering General Electic and Siemens turbines.

The pioneering mobile application, displaying pollution output, is a great tool. What is its greatest value?

A facility such as ours represents a major pollutant in the eyes of the average citizen. I do not claim that a conglomerate such as ours makes little pollution, but it is not so dramatic. This technology lets anyone follow the current emissions and compare the pollution by sources.

What is the pollution level of Ljubljana compared to similar cities?

Ljubljana is specific for its basin. Also, we tend to overlook that traffic is actually the main pollutant. It creates half of the entire pollution in addition to individual heating units and industry. We contribute overall, but to a lesser extent.

Energetika Ljubljana is your major shareholder, second to the share held by the State which will be sold. What would be the optimal situation ownership-wise?

We want a financially stable partner - not just an owner, a partner for synergies. Energetika seems the right choice.

What was the effect of the recession on your business?

The recession had an interesting effect in 2008 when energy prices dropped so dramatically for the first time in history. Thereafter, energy prices did not increase much - what did increase was the price of fuel, eco-coal in particular. These scissors are dangerously closing which, I think, is a reason for concern.

COMPANY NOTES Termoelektrarna Toplarna Ljubljana, d. o. o.

Toplarniška 19 1000 Ljubljana, Slovenia T: +386 (0)1 587 52 00 info@te-tol.si www.te-tol.si, m.te-tol.si

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WOOD INDUSTRY

Reviving a Faltering Sector

While heavily forested Slovenia should be a paradise for carpenters and furniture makers, the reality of the wood-processing sector is quite different.

Once hailed as one of the country’s most important industries, wood processing has steadily declined over the last 25 years, shedding 20,000 jobs during that period. However, plans to revive the sector promise to change its faltering fortunes, at least in the long term.

S

lovenia is one of the most forested countries in Europe, forests represent 58.5 percent of the total territory and wood has always been an important product. Approximately four million cubic metres of timber are produced each year from 1,186,104 hectares of forest. In addition, the forest cover has expanded from 35 percent to almost 60 percent in a matter of decades. Finally, wood processing is considered the only Slovenian economic sector and product chain that has sufficient quantities of raw materials; is geographically dispersed; has technologically well equipped manufacturing facilities and a highly diversified

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market for products. The companies that operate within the sector are diverse, producing almost every kind of product ranging from semi-finished, construction fixtures and fittings, to a wide spectrum of furniture.

Reasons for the decline The natural potential and talent are clearly there, yet the sector that employed 37,000 people in the late 1980’s, has been reduced to a workforce of 14,000 in 2010. The reasons for the decline are

WOOD INDUSTRY

Slovenian forests in figures Forest area

1.186.104 ha

Forestation

58.5%

Photo: BOBO

Growing stock

many, with some experts saying that too little money and energy is invested in the development and competitiveness of the sector and others arguing that the legislation is too rigid and unfriendly in terms of competitiveness. Most experts will, however, agree that the biggest reason for the decline is the divided, fragmented and insufficiently connected wood production chain.

“Foreign retailers entering the furniture sale segment of course bring their own suppliers. When local furniture production remains without contact to buyers in Slovenia, its market shrinks,” Dejan Židan, the former Minister of Agriculture, Food and Forestry, said on the subject.

Turning the table Attempts to improve the situation have been undertaken by the government and companies operating in the sector. In 2002, the Slovenian Wood Industry Cluster was established by woodprocessing companies, which today numbers 24 companies with approximately 9,000 employees and five supporting institutions.

The annual turnover of companies belonging to the cluster is worth EUR 500m, of which, 54 percent is from exports mostly to the European Union and USA. Today, the cluster represents about a third of the Slovenian wood-processing sector, one of the biggest in the country, as well as the most important research and education institutions for the wood sector.

In spring 2011, the cluster organised a conference where a strategy to revive the sector was being discussed. Attendees concluded that the general economic environment needs to be improved and an active State policy for wood is needed, while the production chain should also be optimised. There were also suggestions that wood should be recognised as a material of national importance and the wood-processing industry as a sector of strategic value.

The government itself has introduced several measures to help restore the chain from wood harvesting to timber products. One of the measures included a call for technology project applications, and three wood industry clusters were awarded EUR 25m.

327.458.525 m (276.08 m3/ha)

Annual increment

7.985.256 m (6.74 m3/ha)

Possible cut

5.126.609 m3

Total annual cut

3.74.191 m3

Coniferous trees

1.853.772 m3

Deciduous trees

1.520.419 m3

Realised cut represents 70% of possible cut.

Length of forest roads

12,624 km

Length of forest borders

cca

115,000 km

Source: Slovenian Forest Service

Priorities A priority is, however, given to the certification of forests and the entire chain. “This is no longer just an advantage, but a condition to export to many countries,” Židan said last year.

At the moment, the State-owned forests in Slovenia are certified, but these only represent 26 percent of forested land, one of the lowest shares in Europe. Big, privately owned woods are also certified. The problem of privately owned woods is that they are becoming increasingly fragmented as the number of forest owners is increasing. According to the latest data, there are already 314,000 (with co-owners 489,000) forest owners in Slovenia. The Slovenia Forest Service says that the major fragmentation of forest property, the number of forest owners and co-owners, presents a serious obstacle for professional work in private forests, for optimal timber production and utilisation of forest potential.

Ljubljana city authorities, which plan to purchase all the forests in its area deemed to be of special importance, identified 1,444 out of 4,722 hectares of such forests. However, buying these forests will not be easy, with a preliminary analysis showing that private owners are not keen to sell. “Our estimate is that we need at least 10 years to buy one third of the necessary acreage,” the spokesperson of the Ljubljana city authority said.

The plans are firmly being laid out to restore the sector’s former glory. However, the process might take a while as the global economy is going through a dangerous crisis with no end in sight. For Slovenia’s wood processing sector, there are concerns that in 2012 it will be further affected by the collapse of the construction industry.

But those in the industry are planning for the long term and 2012 is not deemed the ‘be all and end all’ for the sector.

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REAL ESTATE & CONSTRUCTION

Early Signs of a Recovery In 2012, in the construction sector, we hope to see the end of the consolidation of the sector that has shrunken dramatically over the last two years. In 2011, almost every news item about the construction sector in Slovenia sounded like a distress signal. SCT, the flagship of the sector and regional leader, went bankrupt halfway through the year; the value of the industry almost halved and thousands of construction workers lost their jobs. An additional problem was that the large companies endangered the existence of small subcontractors, who were subsequently caught up in the liquidity problems.

O

n a small, secluded section of Mestni Square a construction worker pours concrete from a circling concrete-mixer into his wheel barrow. The work, taking place in the heart of Ljubljana almost opposite the capital’s town hall, is like a small exhibition of the construction trade.

It implies that there might just be some life left in the sector after all.

The concrete pouring in Mestni Square is courtesy of the Slovenian subsidiary of Austrian construction giant, Strabag. During the past twelve months, native construction firms have almost been wiped out or marginalised thanks to their heavy debt load. Strabag filled the gap, with the logo of the builder from Austria popping up at many building sites in the country over the past 12 months.

Nevertheless, at the end of 2011 and the beginning of 2012, there are some positive signs, suggesting that some smal land more flexible Slovenian companies have adapted to the new situation.

We are also witnessing regular assistance for the remaining pillar of Slovenian construction, Primorje from Ajdovščina.

Sunken flagship After a tough 2010, the hope had been that Slovenia’s construction sector would start its recovery in 2011. It was not to be. The first half of the year was dominated by the decline of Slovenija Ceste Tehnike (SCT). It was a dramatic and startling fall from grace. Back in the days of Yugoslavia, SCT employed over 11,000 people. After Slovenia gained independence twenty years ago, SCT was the biggest construction company in the country, employing 3,000 workers.

SCT’s troubles began as early as 2008. A shrinking order book pushed the company deeper into already considerable debt. Debt restructuring failed and in May 2011, the Ljubljana District Court launched receivership proceedings. At the end, only 760 employees were left at the ‘once mighty’ SCT. 74

Wave of layoffs

With the flagship sunk, the worry was that many more companies and workers would be affected. It was a fear that became reality.In November, Maribor-based builder, Konstruktor, went bankrupt, leaving 250 workers – who hadn’t been paid for months – jobless.

Primorje, the only construction giant left in Slovenia, had to lay off 178 workers in the same month, after the dismissal of 400 workers in September. The workers made redundant had not received any wages from August to November. The firm is currently on a six month loan moratorium which is due to end in the spring.

In early December a daughter company of Primorje, Gradis Ljubljana, filed for receivership. “Gradis Ljubljana, like the other construction companies in Slovenia, has found itself in a desperate situation because of the economic crisis,” Primorje declared.

Assessing the damage The storm that has run through the construction sector since the end of 2008 has caused significant damage to the wider economy. In 2008, the sector’s share in Slovenia’s gross domestic product (GDP) was seven percent. In 2011 that share had dropped to 4.3 percent and there are fears it will fall further still. Almost 4,000 people lost their jobs in the construction sector, in 2011 alone. Since the beginning of the crisis in 2008, over 24,000 construction workers have been made redundant, with more still expected. In December 2011, the Central Bank reported that over a third of all defaults at Slovenian banks were from construction companies.

Yet there are many who believe there is a way forward for the sector. Economist, Matej Lahovnik of the University of Ljubljana, agrees that the collapsing construction sector has had ‘a considerable impact’ on the economy. But he points out that “the share of the construction sector in GDP before the crisis was around seven

REAL ESTATE & CONSTRUCTION

percent which was too high compared to some other developed economies where it is between three to four percent.”

Winners in the future Lahovnik says he is not that worried about the future of the industry: “Of course there is a future for construction companies.

The situation in the construction sector was not sustainable. One should consider that many big companies went into bankruptcy due to bad and non-transparent corporate governance. The survivors will be the winners in the future market.”

Rasto Ovin from the University of Maribor is similarly confident.

He expects that the ‘considerable technology’ in the construction sector will get another owner: “The gap will be, for sure, filled by some companies who will be confident at the right time and also by some foreign service providers.”

Recovery is unlikely to be imminent, however. Lahovnik says he does not expect significant growth in the construction sector in 2012: “because the most important infrastructure projects are not ready to start before the end of 2012. In the real estate sector prices should decline. Slovenia is probably the only EU member where the prices in the real estate sector have not yet declined.”

Overvalued real estate Indeed, the real estate market has been stuck since the crisis of 2008. A significant price drop in property is desperately needed but has not yet happened. It was only in the third quarter of 2011 that the price of real estate declined a little. Newly built flats and family houses in the country were 4.2 percent cheaper than in the second quarter. But at the end of 2011 new flats were, on average,

Important role of strategic infrastructure investments

But even the revival of the real estate market probably will not be enough to pull the construction sector out of the muck. The construction of a new railway between Divača and Koper and a new motorway between the Koroška region and Bela Krajina, are two of the multi-million euro projects that could really help the sector. In December 2011, the troubled Primorje was reported to have landed a deal for a land a melioration system in Uzbekistan.

The company also claims to be working on hauling in new business valued at more than EUR 200m. It might just be the first sign that things are getting better in the construction sector.

Construction: factors limiting building activity % of enterprises 80 70 insufficient demand

60

Source: SORS, Bank of Slovenia

Photo: BOBO

still five percent more expensive than in 2009. In the third quarter of 2011, 180 new flats were sold. In every quarter of 2010 around 320 new flats were being sold.

What little price drop there has been is not enough to set the market on fire again. “The real estate market is still overvalued,” reports Lahovnik. “The prices in the real estate sector are still enormous in spite of the crisis. The balloon has not burst. Slovenia has the highest ratio between average real estate prices per square metre and the average income per household of all EU member states. The prices in Ljubljana are comparable with those in Vienna or Munich. However, GDP per capita in Slovenia and the average income per employee is significantly smaller. Therefore, there is no demand at the current real estate prices in Ljubljana. If the current prices decline by at least 30 to 40 percent, then demand will meet supply.”

The effect the stagnant real estate market has on the construction sector becomes evident when looking at the building permit statistics. The number of requested permits has declined steadily since the second quarter of 2008. In the third quarter of 2011, there were 646 building permits issued for residential buildings; in the second quarter 771 permits were issued. Both are considerably lower than the 1,166 building permits that were issued in the second quarter of 2008.

The crisis has hit the market for business properties also but not as hard as the housing market. The number of building permits for non-residential buildings in Slovenia was 300 in the second quarter of 2008. In the same quarter of 2011, 227 permits were issued.

50

40

high financial costs

30 access to bank loans

20 2009

2010

2011

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REAL ESTATE & CONSTRUCTION

Zoran Madon, Director, Metropola

Situla: An Oasis of Tranquility in the City Centre The construction of the Situla business and residential complex, began in 2010 with the basic idea of creating a compact, multi-purpose building at the road junction of Vilharjeva and Šmartinska.

The need to fill a gap in the inner city area, near the intersection of the main passenger hub and where apartment buildings stop and urban buildings begin, exceeded the threshold of complexity due to the size and interconnectedness of the activities involved. Zoran Madon, Director of Metropola, the largest Real Estate Agency in Slovenia, speaks in superlatives about Situla.

How did the idea for Situla evolve?

The idea followed the establishment of the project company, Tridana d.o.o., which includes the partners Architron, Kraški zidar and Metropola and combines their extensive experience in the fields of project development, construction and marketing. The plans for the basic spatial conditions of the Situla complex are laid down in the Municipality of Ljubljana construction plan, prepared by Rok Klanjšček and his colleagues from the Real Inženiring company. Our company prepared the construction design project and contextual design of the complex and implemented an architectural design competition, together with the Slovenian Chamber of Architecture and Spatial Planning. The renowned bureau Bevk & Perović et al., who carried out the task to perfection, was awarded the construction design project. The specifics of the complex, which is also the most comprehensive building technique yet, were planned by Architron.

When did construction of the complex begin and how far along is it at this moment?

We began construction in 2010, having concluded preparations the previous year and completion is scheduled for 2012. This will be followed by the procedures for obtaining the operating permit. A little more than five years will have been required from the design concept to realisation, a normal time frame for such a large building.

What advantages do you recognise in living in the city centre?

Today, it is very important to be in the centre of the action. Time has become our most valuable asset and we will undoubtedly save more if our jobs, schools, nurseries, doctors, banks, post offices, trains, urban transport, restaurants and nightclubs are close at 76

hand. Situla not only offers the above, due to its location in the city centre, but it is also designed as an independent miniature city.

Our goal is to offer the tenant or user, complete daily care, which includes a small food store with superior delicacies, various trade and commercial premises, a bank branch, a wellness-fitness oasis, a restaurant, a coffee bar and a car wash.

What’s so special about Situla’s urban design?

Situla is a building complex or large urban house. This means that the size and interconnection of its contents exceed the limits of conventional buildings. The house is self-sufficient on the one hand, as people live, work or do business there and can obtain basic goods and services so that they do not need to go out for every little thing. On the other hand, the form and content are integrated into the structure of the city centre, thus enabling mutual supplementation. The distances to other facilities in the city centre are mostly manageable on foot and this represents a great advantage in terms of both comfort and environmental impact. Situla is also part of the broader Passenger Centre Ljubljana complex, the main and largest passenger terminal in Slovenia, bordered by the city’s key roads and represented on its north-east corner by an almost 80m high tower.

What is the cost of the total investment?

EUR 91m!

Who is the main lender and what type of loan is involved?

Since the very beginning, Hypo-Alpe-Adria Bank stood behind the Situla Project. The long-term loans from our investors have enabled construction of the building without delay.

REAL ESTATE & CONSTRUCTION

How is security ensured?

The building complex will have a 24-hour reception that will provide exclusive ‘concierge’ services and highly professional security and entrance services. In addition, access to all entrances and exits of the facility will be controlled using state-of-the-art equipment for monitoring and response in the event of crime, fire and other emergencies. The building is earthquake-proof and constructed in line with regulations.

What will the total area be?

The complex covers nearly 80,000 gross square metres of underground and above-ground surfaces and consists of 226 apartments, 6,000 square metres of offices, 5,000 square metres of commercial service areas and 855 square metres of proprietary and public parking spaces.

Potential residents will undoubtedly inquire about noise, given that the complex is located right next to the railway station. How will you resolve this problem?

Despite the heavy traffic and proximity to the railway station, the transmission of noise to the dwellings has been resolved through the use of top-quality windows and ventilation of spaces so that they need not be opened unless the tenants choose to do so. These are windows with triple glazing and aluminium frames, with an interrupted thermal bridge and RAL implemented installation without thresholds - elements of which few buildings can boast. These windows unquestionably provide heating savings and also offer panoramic views of the city. In addition to the windows, the building has a built-in ventilation system that providing complete air conditioning and supply of fresh air, at a controlled temperature and humidity, to all spaces and at the same time, provides cost savings through heat recovery. Under-floor heating in the spaces eliminates the need for radiators and other heating elements that cause the circulation of air and dust.

Are the apartments and business premises intended only for purchase or also for rent?

All units in the Situla business residential complex are intended for purchase.

How and where were the materials selected?

The best materials available in the EU were used in the construction of Situla, in accordance with the design of a luxury building complex.

What will be the cost per square metre?

The prices of the apartments range from EUR 3,142/m2 to 3,878/ m2 including VAT. The price per square metre of housing also

includes the purchase of storage but does not include the purchase of a parking space. The prices of the business spaces range from EUR 2,000/m2 to 2,400/m2 excluding VAT. This price range was defined for the third extended construction phase and does not include the purchase of parking spaces. Commercial premises are selling for EUR 2,430/m2 to 3,400/m2 excluding VAT. This price range also applies for the third extended construction phase and does not include the purchase of parking spaces. Storage space can also be purchased.

For whom is Situla intended?

For all those who enjoy urban life and those who desire a high level of residential culture. The diversity of the residential and business premises enables everyone to find a space that will satisfy their needs. Situla is also intended for all business people, as it provides for a comfortable journey by train, bus or plane in close proximity, including connections to the fastest communication networks. It is also intended for those who invest in real estate.

How many units have already been sold and how large has the interest in the complex been?

Interest is relatively high and increasing in line with the pace of concluding construction. We can say that, given already signed sales contracts and agreements, the complex can already boast 30 percent occupancy.

Do you expect to sell all units despite the economic and financial crisis?

Absolutely. We are quite confident. We believe in the fact that the housing at Situla currently comprises the best on offer in Ljubljana.

The construction and materials are superior therefore purchasing will be a good investment, especially in these turbulent times where the majority of assets lie in securities or worse – in digital records on computers. A wall is still a wall, even in times of crisis and is always very useful!

COMPANY NOTES Tridana d.o.o.

Slovenska cesta 58 1000 Ljubljana, Slovenia T: +386 (0)1 430 53 77 info@situla.eu www.situla.eu

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REAL ESTATE & CONSTRUCTION

Franci Pliberšek, Managing Director, MIK Celje

Smart Solutions

MIK Celje, producer of plastic, aluminium and wooden windows and doors, offers solutions for the modernisation or new glazing of existing buildings. During its 20 year history, the company has been led by Managing Director, Franci Pliberšek. Under his leadership, it has grown and developed into a socially responsible company with 200 employees. The vision and future goals of the company are clearly defined and in tune with their slogan: ‘We are turning challenges into success’.

What is the key to the success of your company? The competition in your industry is getting increasingly stiff and you’re pitted against powerful companies from Slovenia and abroad.

Admittedly, the competition is stiff, but MIK carved its niche in the industry from the very beginning through quality and in particular, a full range of solutions. Of course, hard though it is to get to the top, it is much harder to stay there. To stay on top, you have to be 100 percent proactive. There is no time to rest. We started with innovative solutions. Our development has never been limited to our key product - which is windows. We have been trying to discover what we can offer people who are facing the inevitable – window replacement – that would not only be more economical but also contribute to the quality of their life and make it healthier. Over the past year, we launched two products in Slovenia and foreign markets that represent world-class innovation in terms of the quality of indoor living. We remain innovative, offering integrated solutions that improve our customers’ lives. If we do not get such solutions from our suppliers, we develop them on our own. Today, our suppliers are buying our solutions. We are also increasing exports. In our expansion to foreign markets, we are greatly helped by the Recognised for Excellence (R4E) quality certificate, awarded by the European Foundation for Quality Management, that we acquired in 2009. The complete evaluation process that we had to undergo to get the certificate gave us new insight in where the system needs to be fine-tuned, so that we also become competitive abroad. From the outset, MIK adhered to its vision of being a leader in its industry and offering its customers solutions that will truly improve the quality of their lives.

The general trend is toward quality living and energy efficiency.

What are your key products in this area?

As a result of the trend for achieving the highest energy efficiency possible, the development of windows has taken the direction of 78

increasing window tightness and insulation. Our PVC, wooden or aluminium windows are all energy-efficient and provide excellent thermal insulation value. However, quality windows alone are not enough. In seeking increasingly tight and thermall insulating windows, there has been disregard for problems resulting from the tightness of the buildings, i.e. the complete change of the climate in the room given that modern windows prevent uncontrolled air exchange. We tackled this problem by developing MIKrovent, a unique local ventilation system that replaces the need for aeration of a room by opening windows, while conserving 87 percent of the heat from the outgoing air, with 100 percent air exchange within the room. MIKrovent does not require any special construction interventions and can be installed on new or on existing windows and is therefore appropriate for both new and refurbished housing.

The result is the same in all cases – a well-ventilated room without opening the windows and losing heat. If we set aside energy efficiency a little and focus on energy as such, we have made a major step forward. Energy Windows or MIK Energy Plates, which we have developed with a renowned Slovenian innovator, Vili Poznik, are setting new standards in terms of quality of life.

Energy Windows are enriched with the special MIK Energy Plate,

REAL ESTATE & CONSTRUCTION

to which 300,000 pieces of information are added, as part of a special information procedure for harmonising and improving the energy of water and air and strengthening our health and well being.

How extensive is your cooperation with foreign partners?

Are the materials in your products manufactured in Slovenia?

What share of your output do you export?

MIK still largely operates in the Slovenian market, but of course, we also focus on foreign markets. From 2002, we have been constantly present in Albania, where we have a showroom and we are successfully expanding our PVC carpentry to more distant markets such as the Caribbean. Sales in other foreign markets are quite dispersed but generally show a positive growth trend.

In 2011, we exported 22.8 percent of our output. We expect our proven business excellence to generate 50 percent of our revenue in foreign markets, in future years. As for our suppliers, they are mostly foreign companies. We import all window profiles and most of the other materials required for the manufacture of high quality building carpentry from Germany.

What is your view of the national programme to increase energy efficiency? Do you think that more promotion in this area and incentives for the refurbishment of buildings that are energy wasters, could significantly affect the volume of your business?

Of course. Slovenia has done way too little in recent years in terms of both public and private energy consumption. We are committed to implementing the EU energy efficiency strategy, known as “20-20-20 by 2020” (reducing greenhouse gas emissions by 20 percent increasing the share of renewable sources to 20 percent and reducing energy use by 20 percent) and we have set strict norms, but little has been done to truly implement these norms. If we look only at energy consumption – according to publicly available statistics – the average energy use in Slovenia is 160 kWh/m2 in public buildings and 120 kWh/m2 in private buildings. European norms specify 56 kWh/m2 of actually consumed energy after one year of operation. For that reason, due to excessive greenhouse gas emissions, we will have to pay a EUR 90m fee every year, starting from 2013. Had Slovenia invested more in the energy rehabilitation of existing buildings in the past 4-5 years, as some other countries have done, energy use would have been reduced and the fee could have been halved. If the government adequately encouraged the energy rehabilitation of buildings it would definitely also increase economic growth in all sectors involved in energy rehabilitation.

We are ready for that. For now, we are largely working on this alone by developing appropriate solutions. Some knowledge comes from the profession as I am an architect by training, but we have

learned a lot over the years by ourselves or from examples of good practice. This gives us much credibility, particularly with our foreign partners, who, in addition to the quality of products, also highly value know-how in practical solutions to problems and we do have that. Our solutions in both the renovation of existing buildings and in the construction of new energy-efficient buildings thus end up being applied abroad.

What are your development plans for the coming years?

We definitely intend to maintain our market position. Therefore, the emphasis in our company continues to be on development and innovation. We want to become a leading manufacturer and supplier of PVC, wooden and aluminium window systems and glass facades and a provider of complete glazing solutions for living-friendly spaces in South East Europe. Already this year, we have introduced a new generation of ventilation systems, MIKrovent 300, which provides even greater air flow and our development department is already contemplating the next step and designing MIKrovent 400.

Among other things, we are also involved in the development of innovative colour coatings for blinds that will enable the generation of electricity to power MIKrovent and the blinds. We are also fully active in the field of Energy Windows or MIK Energy Plates. We are carrying our tests on coverings used food production facilities (greenhouses) and we are more than satisfied with the results. Not only have we developed a completely natural way of improving water and air in our environment, but with the Energy Plate we have even managed to increase the quality and quantity of food produced in a completely natural way. I am sure you will hear much more about this in coming years. In addition to technical development and innovation, our company is also largely focused on innovation in the field of social responsibility. We are carrying out several projects relating to sport, culture and humanitarian aid that encourage development in the immediate and broader social environment and we want to make headway in this area. Our goal is to become one of the ten most socially responsible companies in Slovenia, and I dare I say it, we are on the right track.

COMPANY NOTES MIK, d.o.o.

Celjska cesta 55 3212 Vojnik, Slovenija T: +386 (0)3 425 50 50 mik@mik-ce.si www.mik-ce.si

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RETAIL

Feeling the Pinch Last year, the Slovenian retail sector felt the pinch of the crisis more prominently, with leading retailers registering smaller profits and losses compared to the year before. But 2011 will undoubtedly be remembered for the failed attempt to sell grocery retailer, Mercator to its Croatian rival, Agrokor.

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n 2011, Slovenia’s retail sector saw its turnover drop by 1.1 percent. Motor fuel excluded, retailers saw their sales fall by 5.5 percent in December 2011 compared to December 2010. The rate of decrease was the same for food and non-food products.

On the plus side, revenue from motor fuel and car repairs increased 5.8 percent for the year.

Lower profit

Photo: BOBO

Mercator Group, Slovenia’s largest retailer accounting for 41 percent of the country’s retail market, made a EUR 23.8m net profit in 2011, down 21.6 percent year-on-year, while its sales revenue increased 5.4 percent to EUR 2.93bn.

The Group’s net profit decreased in 2011 because of the increasingly difficult economic situation in the second half of the year, the negative trend of the Serbian dinar and the Croatian kuna

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in the last quarter of 2011 and because of the extra investment needed for price competitiveness, the company stated.

Remaining cautious, the retailer’s Supervisory Board adopted the Group’s business plan for 2012, which will be adjusted quarterly due to the uncertain situation on the market.

Furthermore, the Group expects to make EUR 15.7m in net profit in 2012, 34 percent less than in 2011 due to of the strained economic situation which will also mean fewer investments. The retailer curbed its investment plan, totalling approximately EUR 88.5m.

Selling assets In a sector that is expected to shed jobs in 2012, Mercator Group, employing more than 12,000 people in Slovenia at the end of 2011, is not planning major changes in the number of employees.

However, to reduce its debt, Mecator plans to raise an estimated EUR 500m with the sale of real estate in Slovenia and Croatia, in 2012 and 2013 and use the proceeds for deleveraging.

“It is very important for successful operation and further growth of the Mercator Group to utilise the potential of its real estate,” the company said in a press release.

Mercator says it owns “disproportionally more real estate” than other European retailers. The move is in line with the Group’s medium term business plan and comes on top of an ongoing programme disposing of undeveloped land and unwanted properties.

However, 2011 in Mercator’s books will be marked by the attempt of its Croatian rival, Agrokor, to buy a 52.1 percent stake in the retailer that was being sold by a consortium of owners. The owners, including debt-ridden Pivovarna Laško, were hoping to raise EUR 832m from the sale. However, Agrokor’s repeated attempts to take over Mercator were met with strong political resistance in Slovenia which was most significantly reflected in the failure of the State owned NLB bank, part of the consortium with a 10.75 percent stake in Mercator, to finalise the sale. Agrokor’s decision to withdraw its

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Covering losses Slovenia’s third largest retailer, Tuš Group, saw its financial results drop significantly in the wake of the crisis, with the company registering losses in 2009 and 2010. The Group, with 15 percent market share, generated a net loss of EUR 19.6m in 2010, while the year before the net loss stood at over EUR 45m. The Group, which holds 14 percent of the Slovenian retail market, generated net revenue of EUR 824.2m in 2010, 0.5 percent higher than 2009.

The core company, Tuš Holding, increased its net operating loss in 2010 by EUR 1m to EUR 6.1m, while net revenue stood at EUR 5.2m in 2010, 22.6 percent more than the year before.

The Celje-based group allocated EUR 78.4m for investments, mostly for the construction of shops and petrol stations, for renovations and for the expansion of its telecommunications network.The energy division of the Group was one of the fastest growing segments, according to investment, at the end of 2010 the Group owned 19 petrol stations. The stations were subsequently sold to Hungarian energy company, Mol, in May 2011.

In 2011, the Group also sold its six supermarkets in Serbia to retailer Idea, a company owned by Croatian food group Agrokor, for an undisclosed sum. Tuš Holding said in a press release that the sale was a strategic move to achieve long term optimisation of the holding’s operations and was an important move in the development strategy to 2015.

The sale comes after the retail chain Tuš was reported to be having trouble paying its suppliers and the holding reaching a deal with banks for a seven-year moratorium on loans.

While the Celje-based group was tight-lipped about its debts and dealings with the banks, the daily newspaper, Dnevnik reported

that total debt of Tuš Holding amounted to EUR 670m and that it had EUR 6.60 of outstanding liabilities for every euro in capital.

The Group, employing around 4,500 people and the largest Slovenian privately-held company, maintains that it is fully solvent and has sufficient capital, while adding that its “financial liabilities are fully manageable”.

With the outlook for 2012 being less than optimistic, domestic retailers are expected to face more competition from lower cost outlets such as Hofer and Lidl, with customers looking for cheaper products and substitutes for branded goods. With everyone in the business remaining on the cautious side, Slovenian retailers will certainly follow the developments closer than ever.

Business tendency in retail trade

Source: SURS

bid resulted in Mercator shares plummeting 7.36 percent to EUR 129.70 per share on 13 February 2012.

Confidence indicator 20

15 10

5 0

-5 -10

Jan 2011

Dec 2011

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RETAIL

BTC City Ljubljana

The Wonderful World of Shopping

BTC City Ljubljana ranks among Europe’s largest business, shopping and recreation-entertainmentculture centres and is visited annually by 21 million people from Slovenia and abroad. Over the past year, the wide ranging offer of BTC City Ljubljana was enriched by the new Crystal Palace, with its pleasing interior, modern architecture and its business and conference facilities, culinary delights, a relaxation centre and a large shopping mall, the Shopping Gallery.

Among the largest in the world

Today more than 450 stores await visitors to BTC City Ljubljana, all at the one location, offering diverse products such as food, clothing, cosmetics and interior design equipment. BTC City Ljubljana covers over 475,000 square metres.The business centre includes more than 3,000 companies from Slovenia and abroad, providing shopping, recreational, entertainment and cultural content. BTC City is a lively place with modern architecture, designed by more than 40 Slovenian and foreign architects and urban planners.

Crystal Palace: modern architecture and a welcoming environment

Crystal Palace, one of the most recent additions to BTC City, is a special experience. With its uniquely designed space, planned as a combination of rich and varied programmes in which highend business and commercial activities are intertwined with an advanced exclusive service programme, it is the answer to the

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needs and demands of the modern consumer. Standing 89 metres tall, Crystal Palace is the highest building in Slovenia with its outstanding architectural design achieving the highest safety and environmental standards.

In building Crystal Palace as a business, commercial and community centre covering 46,783.60 square metres, BTC wanted to meet the highest expectations and demands of its visitors – both in terms of architectural and environmental standards and in terms of creativity and comfort. The superior technologically and environmentally-friendly materials, original and modern architecture and elegant and comfortable interiors of Crystal Palace, create a space that enables its users and visitors to feel comfortable, safe and relaxed. It is also easily accessible for disabled people as it does not contain any architectural barriers.

Crystal Palace also boasts a large business and convention centre, while the commercial skyscraper and the Shopping Gallery are connected by a large green terrace covering 2,500 square metres of green space, creating the sensation of a spacious urban garden, ideal for relaxation and socialising.

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Shopping Gallery: quality and variety in one place One of the central elements of Crystal Palace is the Shopping Gallery. It covers 2,800 square metres, with 21 shops on the ground floor and first floor and a Forma F+ sports store over three levels.

The Shopping Gallery offers visitors a wide range of prestigious and established brands and the offer is continuously expanded.

Women’s business fashion is available at Jones, elegant women’s shoes at Cristobal and a wide selection of handbags, shoes, belts and other fashion accessories at Glam. The Björn Borg shop offers

a variety of men’s, women’s and children’s underwear, swimwear, footwear, sleepwear, hosiery and fashion accessories, while the De Luxe Fashion store distinguishes itself for its range of Italian clothing, handbags and men’s and ladies shoes. Top-quality shirts can be found at Invidiauomo, luxurious lingerie at Vita Mea, Baldinini and Fabi shoes at Galerija, whilst a broad range of cosmetic products is available at Yves Rocher. Apple products are sold at the iStyle Apple Premium Reseller, road navigation products at Garmin and top German furniture at Rolf Benz. Home Sweet Home is the right place to shop for home furniture and accessories and Illy coffee is only one of the fine products available at the Espresso boutique. Steklarna Rogaška, one of the world’s leading manufacturers of crystal products also has a showroom at the Shopping Gallery, boasting works by world-renowned Slovenian designer, Oskar Kogoj, amongst its wares. In addition, visitors to the Shopping Gallery can use a multifunctional SKB ATM, the Čisto belo (pure white) laundry facility, the 3DVA stand stocking a broad selection of tobacco products and Slovenian and foreign newspapers, the Venera shop erotic boutique offering erotic accessories and the Babadu store with its rich selection of creative and environmentally friendly toys.

Culinary pampering for all tastes No one will be hungry at Crystal Palace. The diVino restaurant, spread over three floors and blending modern and rustic styles in its interior, provides true gourmet delights. The offer includes meat dishes with an emphasis on grilled meat and Mediterranean cuisine.

You can enjoy a cocktail in the relaxed atmosphere of its green terrace, while goodies from the Gorica hills, encapsulating Slovenia’s culinary tradition, are available in the Dulcis Gourmet corner.

In addition to the restaurant, Crystal Palace includes the Twenty cafe and pastry shop. Placed at the top of Crystal Palace, on the 20th floor, it boasts a unique view of the Kamnik-Savinja Alps and overlooks the town centre on the west side. There you can enjoy delicious French pastries, designed and made in accordance with the latest trends and from carefully selected natural ingredients.

The cafe also offers a wide selection of snacks, richly garnished hot sandwiches, natural juices and hot drinks.

Wellness In addition to gourmet delights, Crystal Palace offers the Aktivita Healthness wellness centre, where your health, beauty and body shaping needs are taken care of. Nail and hand care, with the help of Alessandro products, is provided at the manicure island, Kristalna manikura, in the Shopping Gallery.

Always tuned In The concept of BTC City Ljubljana is based on a rich and varied offer. Its diverse and competitive offer is continuously being updated with new, hip content. BTC City Ljubljana symbolises a modern shopping experience, fully satisfying the needs of even the most sophisticated consumer.

COMPANY NOTES Skai Center d.o.o. Šmartinska 152 1000 Ljubljana, Slovenia T: +386 (0)1 585 23 00 info@kristalna-palaca.com www.kristalnapalaca.si

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FOOD & DRINKS INDUSTRY

Food for Thought The Slovenian food and drink sector has faced different battles in 2011. While some companies are struggling to achieve profits and reduce debt, the government has introduced some measures that could help the sector, both in the short and long term.

T

he beginning of 2011 started with a price hike-food, nonalcoholic and alcoholic beverages went up by 4.9 percent each. The main reasons for the food price increase were cited to be the high prices of agricultural inputs and grain prices increasing by 130 percent year-on-year in global markets. The Agriculture, Food and Forestry Ministry said the price increase for some products was expected, while for others such as cereals, “there is currently no explanation for the raging prices”, the former Minister for Agriculture, Dejan Židan, said. He sees the main problem in the unreasonably long payment periods - in some cases up to 90 days - for food that is sold relatively quickly. Margins are believed to be another problem, producers have established that margins in Slovenia are frequently much higher than in Central Europe.

Source: SURS

Consumer price indices 12 month average growth 100

100

Food Non-alcoholic beverages Alcoholic beverages

100

100

100

100

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Dec 2009

Dec 2010

Dec 2011

Encouraging local growth

To tackle the problem of margins and achieve a fairer distribution of added value in all parts of the food production supply chain, the government established a working group bringing together producers, the food manufacturing industry, retailers, consumers and academics.The government also passed an act that aims to regulate relationships in the food supply chain and to promote Slovenian food products. In addition, the government wants to encourage the production of local food and as a consequence, it adopted changes to the agricultural land act, which aims to protect agricultural land as a key condition for food production and food security. The changes introduce financial compensation for transformation of construction land into agricultural land. In case a hectare of agricultural land is lost in one location it could be created somewhere else. The reasons behind the changes are evident: in 1991, 561,000 hectares of agricultural land was in use in Slovenia, while at the end of 2009 this had shrunk to 468,000 hectares. Furthermore, the best quality agricultural land, such as fields and gardens, shrunk from 195,000 to 175,000 hectares.

Fighting for shelf space The government’s resolution to work toward protecting Slovenian food production was evident in its reaction to the attempted sale of the majority stake in Mercator by a consortium of banks and Pivovarna Laško to the Croatian retailer and food manufacturer, Akgrokor. The government was adamantly against it. “One must not forget that food production in Slovenia is very important,” Židan said.

“There is no official data, but individual estimates say that between 38 percent and 40 percent of the food produced in Slovenia is sold via Mercator’s shelves.

“Food is always mostly sold in the local market, with the average European country selling less than 10 percent of their locally produced food abroad. Slovenia stands out here, it exports more than 18 percent of the food it produces.”

FOOD & DRINKS INDUSTRY

percent to EUR 1.9m. Furthermore, the financial loss amounted to EUR 20.6m, up from EUR 9.8m in the same period in 2010.

However, there was some good news. Brewer Pivovarna Union, part of Pivovarna Laško, sold its majority stake in beverage producer, Fructal to Nectar, Serbia’s biggest soft drink and jam producer.

Pivovarna Union received EUR 35.3m for the 93.73 percent stake in Fructal, putting the total value of Fructal at EUR 50.2m.

Nectar, which has a 50 percent market share in Serbia, also took over the debt of the Ajdovščina-based company, enabling Laško to reduce its debt by EUR 48m.

Photo: BOBO

Export factor

Apart from the fear that Slovenian food and drink manufacturers might lose major shelf space, Židan also pointed out that the income of thousands of people depends on the food production industry. In Slovenia, around 80,000 people work in agriculture, 14,000 in the food manufacturing industry and almost 5,000 engage in artisan food production. “Thus, we are talking about 100,000 people who live off food production in Slovenia,” Židan added.

Good news?

Heavily indebted beverage maker Pivovarna Laško was one of the companies in the consortium hoping to sell its stake in Mercator and raise much needed cash. The Group generated EUR 253m in sales revenue in the first nine months of 2011, up 6 percent from the same period the previous year. Net profit however, was down 80.7

The group around bread and pasta producer Žito – also put up for sale in March 2011 – faced different problems than those of Laško. Due to the increase in grain prices, the group’s net profit slumped 97 percent to EUR 22,800 for the first nine months of 2011 compared to the same period the previous year. The domestic market accounted for 84 percent of Žito’s revenue with sales at home increasing 1.4 percent and sales on markets abroad, the most important markets being those in South East Europe, Germany and France, were up 9.3 percent. Žito Chairman, Toni Balažič, stated exports were the key element helping drive sales figures higher for the first time in years.He also added that bread sales were picking up and highlighted the opening of Žito’s own chain of bakeries around the country labelled ‘Kruharna’.

Local success Slovenian wine producers also registered increased sales in the domestic market. Of the total 29 million litres of wine sold in 2010, 24 million litres were sold in the domestic market, a 14 percent increase on the year before. However, exports fell 4.7 percent. The export of Slovenian bottled wines increased 62 percent, but overall value of exports decreased due to sales of cask wine halving.

Slovenia exports 76 percent of white wine to countries outside the EU, the leaders being China, Croatia, the US, Italy, Bosnia and Herzegovina, Germany and Serbia. It exports 65 percent of red wine to the EU. Slovenia has seen growth in the share of imported wine, in 2010 it imported more than seven million litres.

The developments in the sector in 2011 indicates what is likely to happen in 2012: more locally produced food and more focus on exports. Whether this is a recipe for success remains to be seen.

Laško Brewery, the source of good beer and bad financial moves.

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Healthcare & PHARMACEUTICALS

Prescription for Success While most industries struggle amid the economic slowdown, Slovenia’s pharmaceutical manufacturers seem to be immune to the crisis, registering rising profits in 2011.

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he sector that employs nearly 26,000 people in over 700 companies, continues to be a major contributor to the government’s purse and accounts for a hefty portion of Slovenia’s export mix, with 72 percent of sales in foreign markets. Krka and Lek, Slovenia’s key pharmaceutical companies, are the leading manufacturers of generic drugs in Central and Eastern Europe (CEE) and the engine of the sector’s growth.

The right medicine

Krka shares lose value despite excellent business results (Price per share in EUR) 70 60 50 40 30 20 10 0

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Feb 2009

Feb 2010

Feb 2011

Feb 2012

Source: LJSE

Krka continues to be the major force in Slovenia, being the country’s third largest exporter and its most important corporate taxpayer. The Novo mesto-based generics maker certainly does not feel the crisis, generating EUR 1.01bn in sales revenue in 2011, an unprecedented figure marking a 6 percent increase from the year before. The core company’s revenues were up 10 percent to EUR 932m, with estimated net profit of EUR 165m. The group’s net profit is projected to be somewhat higher.

Healthcare & PHARMACEUTICALS

The results not only met, but exceeded, expectations. The reasons for such good results are partially due to a growing demand for pharmaceuticals. Krka Chairman Jože Colarič is upbeat about the prospects for growth, saying that the golden era of generic drugs will last for many more years as many drugs go off-patent in the coming years.

“Demand (for generic drugs) is on the increase simply because the advanced western economies have also been trying to reduce costs for healthcare and medicine, while the growth in Central and Eastern Europe has been in consumption per capita,” Colarič said in an interview with STA. “That’s where Krka, as a generics maker, steps in with quality, safe and efficient products at accessible prices.”

Foreign success Foreign markets accounted for 90 percent of Krka’s overall revenue. The company’s biggest market is Central Europe, where sales rose by a tenth, to EUR 293.7m with Poland alone accounting for EUR 130.3m in revenue.

Eastern Europe accounts for just over a quarter of overall sales and saw growth of 17 percent. Russia is the single biggest market, generating EUR 191.7m in sales, up 13 percent year-on-year.

The situation in Poland, the second biggest market, is somewhat different because of the impact of reforms in the prescription and dispensing of medicines which have been boycotted by doctors and pharmacists, but Colarič expects the market to normalise in the first half of 2012.

The company also saw a seven percent growth in South East Europe, with revenue in Slovenia dropping one percent and in Western Europe and overseas markets it was down seven percent.

Colarič sees Krka’s potential not so much in new markets, but in the area spanning from Vladivostok in the Far East to Lisbon in the West. “We are present at both points but in between there is still a lot of potential and nearly one billion people who want reliable and affordable products such as ours.”

Krka sells its products to 70 countries and is also present in the Arab world, Iran, Malaysia, China, Hong Kong, Southern and Central Africa, Latin America and the US, but it still sees opportunities in Europe - it opened new companies in Spain, Italy and France at the end of 2011.

Dual listing Due to poor liquidity of the Ljubljana Stock Exchange, Krka is seeking a parallel listing in a foreign market, most likely Warsaw. “If the economic situation is right, we will appear there by the end of June with a block of shares; we currently have a fund of 5.7 percent of treasury shares worth more than EUR 100m.”

Keen to offer its shares to institutional investors, Krka has been choosing between Warsaw and London after consultations with twelve leading international investment banks interested in the quotation.

One of the reasons the Warsaw Stock Exchange is the preferred choice, is because Poland is Krka’s second biggest market and Krka has a plant there employing 800 people. “The London Stock Exchange is too big for us”, Colarič explained. “If we opt for Warsaw, we’ll be the biggest pharmaceutical company listed there by market capitalisation.”

Colarič sees no need for Krka to try to raise fresh capital through a public offering of fresh shares, its indebtedness is very low. He does not rule out the possibility in the case of a major project, for example, noting that Krka is eyeing takeover targets.

“Unless they are too big and a threat to our stability in the case of a takeover, we are interested in all pharmaceutical companies with end products in indication groups that we don’t yet have in our portfolio” Colarič said.“But I can assure you that our financial stability is very good.”

Photo: BOBO

The Swiss impact The Novartis’ division Sandoz, under whose umbrella is Ljubljana’s Lek, also enjoyed a successful 2011. Last year it generated EUR 7.3bn in sales revenue, an increase of 10 percent over the previous year. Operating profit increased by eight percent to USD 1.4bn.

The company reported that the year was also successful for Lek, but no concrete results were disclosed.

As reported on the company’s website, 2011 was marked by growth in production in all Sandoz locations in Slovenia and sales growth in the Slovenian market. Sandoz increased its market share in Slovenia in both prescription and OTC drugs, according to Lek. Lek’s role within the unit is significant since the company acts “as a global development center for products and technology; a global manufacturing centre for active pharmaceutical ingredients and medicines; a competence centre for the development of vertically integrated products; a Sandoz competence centre in the development and manufacturing of biosimilar products and a supply centre for the markets of Central and Eastern Europe (CEE), South Eastern Europe (SEE) and the Commonwealth of Independent States (CIS) and it is responsible for sales in the Slovenian market,” according to the company’s website.

Based the above and despite the gloomy expectations for economic development in 2012, the pharmaceutical sector has much to look forward to based on the results it has registered throughout the crisis. There may not be significant economic growth but there certainly will be growth in demand for generics, ensuring the pharmaceutical sector remains ahead of the game.

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Healthcare & PHARMACEUTICALS

Danica Zorin Mijošek, Director, Kozmetika Afrodita

Unveiling the Secrets of Nature The successful development of Kozmetika Afrodita has been a result of a well-formulated and visible identity which is actively communicated to consolidate market share, despite a flood of rival products. The key to future evolution is the development of a competitive advantage in the production of natural cosmetics.

How does Kozmetika Afrodita cope with the enormous competition in the cosmetics field and what is the key to your success in the battle against large multinationals with enormous promotional infrastructure and global brands?

Kozmetika Afrodita is successful in fighting the growing competition in the cosmetics field. The key to our success is that we take account of all factors in the basic marketing mix which can be easily utilised through focussed promotion of quality products at affordable prices.

What are your key products and how do they differ from competing products on the market?

Our key products are, without doubt, facial care and anti-cellulite products. Our production covers two segments, general consumption with products for facial care, body care, anti-cellulite care, hand and foot care, shower & bath, hair care & hair design and products for professional skin and hair care – Salon Exclusive – for use in beauty salons, wellness centres, spa centres and hairdressing salons. In this group we have also created a HOME CARE line of products so that our customers can continue high-quality care at home, after visiting a beauty salon.

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Our products differ from rival products on the market primarily because of the high content of natural active ingredients and their proven effect. Kozmetika Afrodita stands behind its claims and published results because we want to provide customers with highquality, affordable cosmetics in the long term, not only as part of the current cosmetic trend. Our cosmetics are effective, healthy and skin-friendly and conform to the Eco Cert certificate. It is also very important to our customers that they are not tested on animals.

Healthcare & PHARMACEUTICALS

What are your key markets and what proportion of your revenue comes from exports?

Our key market is Slovenia where we sell 60 percent of our total output. The remaining 40 percent is tied to the markets of the former Yugoslavia, especially Croatia as our key foreign market, followed

by Bosnia and Herzegovina, Serbia, Macedonia and Kosovo. As for the rest of Europe, we are present in Hungary, Poland, Austria, the Czech Republic and Italy and of course, our products are sold to a minor extent in the United States and Australia where they are in demand. We are trying to remain realistic and within our capability in terms of business volume and we are therefore opening up foreign markets gradually and carefully. This year our focus is on entering the Russian market.

In view of the increasing general emphasis on the importance of sustainable development and the use of natural ingredients and materials, do you also invest in new technology and socalled natural products that generally also create higher added value?

Current trends in cosmetics are moving production in two directions: completely ‘natural’, certified cosmetics which of course have a higher added value and ‘pharmaceutical’ products, where new technological discoveries quickly and effectively solve such problems as skin aging, etc. If you want to keep pace with cosmetic trends, you have to constantly invest in new technology and in employee training, new materials and raw materials. We, at Kozmetika Afrodita, are aware of the importance of innovation and we support and encourage it in our employees. Finally, our development laboratory turns out between 20 and 30 new products annually.

In addition to highlighting the ‘friendliness’ and ‘naturalness’ of your products, what are you doing to increase the visibility of your brand and what popular projects/products have you developed lately?

We are increasing our visibility by carefully selecting market communication tools based on target group segmentation. I can say that we are quite successful, given the size of our input compared with the investment in advertising in Slovenia made by international brands. We have done a lot in recent years in public relations, in terms of corporate communication and we have very good cooperation with all retailers in the form of sales promotion and promotion in the retail sector. The proof of our successful work is our repeated place among the TOP 50 Slovenian and foreign brands - Si. Brand 2011.

Our flagship product in the general consumption programme is definitely the Natural Lift natural facial care line, with a lifting effect that is achieved within an hour and the content of natural

ingredients of up to 96 percent. The main product in the professional programme is the GOLD 24 Ka facial care line, with particles of pure gold which is a key contributor to our success and proof that Slovenian companies do have the necessary courage, knowledge and capability.

How have the economic crisis and falling demand affected your company? In particular, how do you finance your development programmes and make investments, given that most companies are faced with major problems caused by undercapitalisation and the credit crunch?

Our operations have suffered from the economic crisis and falling demand. However, we have not recorded negative growth as our products are medium priced and high quality. I believe that through opening new markets and launching new products, we will manage to maintain, if not increase, our market share. In terms of investment, over the past year we completed a major project involving a new logistics centre that will enable us to streamline operations. Our growth has been gradual, but steady and the financial fundamentals of the company are sound, but we make no secret of our concerns should the problems of undercapitalisation and the credit crunch continue or escalate.

Given your performance, you are likely also to be closely watched by your competitors. Do you have any offers from potential strategic partners from abroad or are you perhaps planning to take over a company in the region?

We plan to remain a private Slovenian company for the time being.

I believe that the company will retain its sound fundamentals only through gradual and planned growth and we are therefore not planning to take over any company or make business moves that would stretch our capacity too thin. My intention is for the company to remain a leading Slovenian manufacturer of quality cosmetics in the long term and we will continue to work toward acquiring new customers with our own resources.

COMPANY NOTES Kozmetika Afrodita d.o.o.

Kidričeva 54 3250 Rogaška Slatina, Slovenia T: +386 (0)3 812 11 60 tajnistvo.afrodita@siol.com www.kozmetika-afrodita.com

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TOURISM

A Variety of Attractions For years Slovenia has struggled to create an appealing campaign to attract tourists to the country. The main problem has been one that is nice to have – the fact that the country offers so much variety and diversity that it is almost impossible to find one phrase, attraction or symbol which sums up its appeal. And so, in recent years, variety itself has become the main selling point.

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I Feel Slovenia’, the slogan adopted in 2007, aims to emphasise the ‘first rate, feel-good experience’ offered by the nation. The country’s numerous spas and wellness centres have an important role to play here, but so too does the country’s gorgeous natural beauty and its welcoming people.

Slovenia places much on its environment, emphasising the quality and quantity of close-to-nature experiences on offer. Of course, many visitors choose to make the most of the cycling, hiking and skiing opportunities while, also ensuring their holiday includes a pampering session in a spa and copious amounts of good local food and wine.

Demographics

Photo: I. Lapajne

As to where those visitors come from: on the whole, from the key European markets. Those hailing from Italy, Germany, Austria, Croatia, Great Britain, Benelux and Russia account for two thirds of all tourist overnight stays in Slovenia. The reasons they choose

to visit vary. Many of those from Austria are attracted to Slovenia’s thermal resorts; Germans and Britons tend to favour the mountains; Italians, the coast. Some only pay a brief visit to Slovenia on the way to somewhere else: the country’s location makes it part of the route for many tourists travelling south to the Adriatic coast.

The biggest challenge is attracting those from ‘new’ markets.

The tourist boards of Croatia and Slovenia have joined together to promote the two countries to the lucrative, Far East market, but there are challenges. For one, accessibility. Air connections remain weak in places and need to be addressed by Transport Ministries and through bilateral deals. In addition, the visa regime is a real obstacle. The process is time consuming and demanding at present.

The government must reform it, if tourists from new markets are to be attracted in any significant numbers.

Points of interest Such visitors also need to be confident that there is enough on offer to occupy their attention through a long stay – these are not tourists popping in on the way somewhere else or people opting for a quick break. Slovenia is not rich in conventional tourist attractions (with the notable exception of Postojana Cave which received its 34th million visitor in July 2011). However, its capital Ljubljana is highly appealing – a ‘downsized’ Vienna, it offers many shopping and leisure activities.

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TOURISM

Unpredictable winters are fought with an armada of artificial snow-cannons, but the challenge Slovenian ski resorts have been facing in recent years is what to do in the months when even artificial snow won’t stick. The result has been a number of bike downhill tracks, rail-sleds and other adrenaline facilities which can attract visitors during the summer months. The areas have also been made more attractive to hikers. The biggest ski slope operator is Unior Turizem which owns the facilities at both Rogla and Krvavec.

Another sport is also attracting tourists to Slovenia: golf. The country’s most famous courses are located around Slovenian castles such as Otočec (owned by Krka Turizem) and Mokrice (Terme Čatež), appealing to those looking for a very special golfing holiday with top class accommodation and gourmet food.

Business tourism When considering tourism, the focus is generaly on holiday visitors but business tourism is an increasingly important sector.

According to the International Congress and Convention Association, Slovenia came in 44th place in 2010 with 44 registered meetings. Just ten years earlier, only 25 meetings were counted. This segment is directed and promoted by the Slovenian Convention Bureau which is optimistic and reserved at the same time. Optimistic because Slovenia is gaining more and more recognition as a congress destination but cautious and unwilling to take anything for granted, due to the economic crisis and stiff competition in the region.

Upward trend

Ski lift

Photo: B. Cvetkovič

Slovenia’s richness in healing waters is another huge asset when it comes to attracting visitors. Fifteen Slovenian natural resorts, extending from the seaside to the Panonian plain, boast an attractive variety of services spread between health and leisure, family and individual and from everyday to high-end. After a series of takeovers, the biggest groups in this business are Krka Turizem, Sava Hotels & Resorts and Terme Čatež. The health of the businesses running Slovenia’s health resorts varies, however.

Whilst Terme Čatež reported a EUR 3.4m profit for the first nine months of 2011, others such as Rimske Toplice are faced with suffocating debt.

The figures do seem to suggest that the tourist industry is starting to pick up after the economic crisis. Following a record breaking 2008 and a dismal 2009, tourist arrivals and stays are increasing again. In the first half of 2011, tourism rose roughly 10 percent.

The fastest growing group of visitors is from Russia, up 62 percent in 2011. Of course, it is unfortunately the case that an increase in the number of stays and visits does not necessarily correspond to an increase in money spent by visitors.

It may still be a relatively unknown place to many of the worlds population but Slovenia is making progress when it comes to tourism. Promotional activities are making a difference, as are word-of-mouth recommendations from those who have sampled the beauty of the country. But the best promotion may be one that was completely unplanned: the appearance at the 2010 World Cup by the Slovenian national football team significantly boosted interest in the country.

Slovenia’s thermal waters are not the only natural features around which tourist attractions have been created. Its mountains are also key to its tourist appeal. While Slovenia’s ski resorts may be small – all together they would only add up to the size of a large French or Italian ski area – they offer as much variety as the country itself.

Winter resorts can be found across the country and some even extend into other countries. Two years ago, the high altitude Kanin resort in Slovenia was connected to Italy’s Sella Nevea, making it the first joint, cross-border resort of reasonable size. It is not the only novelty attracting skiers to Slovenia. This year’s big idea was a unified weekly ski-pass, allowing visitors to check in at any ski-lift in Slovenia.

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TOURISM

Kempinski Palace Portorož

A Mediterranean Legend Built in the days of the Austro-Hungarian Empire, this historic five-star Superior hotel was brought to life after 20 years of loneliness. In the past it was known for its glamour and counted as one of the most luxurious hotels between Venice and Dubrovnik. Today, the renovated Kempinski Palace Portorož, carries on the tradition of the Mediterranean legend and ultimate luxury.

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he luxury Kempinski Palace Portorož, the first and only 5 Star, superior hotel in Slovenia with an amazing view over the Adriatic Sea, boasts 164 superior and deluxe rooms and 17 suites, most overlooking the sea. All rooms in the Kempinski Palace Portorož are individually air conditioned, with a state of the art audio video system including LCD TV, phone and broadband Internet access. For conferences, seminars, team building, product presentations and gala dinners, the Kempinski Palace Portorož offers six meeting rooms and a unique ballroom, the Crystal Hall, for up to 250 guests. State of the art audio visual

equipment and a dedicated team will, ensure that your event is an unforgettable experience. Apart from the modern meeting rooms, the Kempinski Palace Portorož offers its guest’s a choice of two á la carte restaurants, Fleur de Sel and the Sophia Restaurant, with a mixture of modern and global culinary trends and an innovative food & beverage concept.

The Kempinski Rose SPA offers luxurious and quality service in an elegantly designed and ambient space, impressing even the most demanding guests. Step into paradise, spreading 1,500 m2. and including outdoor and indoor swimming pools, a jacuzzi, sauna area and unforgettable moments for complete revitalisation. Take the time for yourself and discover how to regenerate your body and relax your mind with the choice of many different facial and body treatments, massages, peelings, baths and saunas. Pamper yourself with beauty treatments from the well known luxury cosmetic brands: ELEMIS and CARITA, pure extravagance from head to toe.

Experience the beauty of desire, by sea, on land or in the air. See Istria from a boat deck and become an explorer of the medieval pearl – the town of Piran, the more than 700 year old salt pans and Istrian villages. Enjoy yachting, sailing and daily excursions to Venice by catamaran for up to 300 people or go truffle hunting, cycling, horseback riding or rest in olive groves and vineyards. The mild Mediterranean climate, the impeccable products and service will guarantee an unforgettable experience and the success of your event.

COMPANY NOTES Kempinski Palace Portorož Obala 45 6320 Portorož, Slovenia T.: +386 (0)5 692 70 70 reservations.portoroz@kempinski.com www.kempinski.com/portoroz

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TOURISM

TOURISM

Postojnska Jama

Awakening the Sleeping Beauty It has only taken a year for Slovenia’s premiere tourist curiosity, Postojna Cave, to restore global visibility and well deserved attention. The business results also speak for themselves, all due to the bold and visionary leadership of its new owner, Marjan Batagelj.

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he amazing Postojna cave is certainly a unique, natural formation and as such, a tourist site with a high degree of significance for this part of Europe. A few minutes from the cave sits Predjama castle, adding a worthwhile experience for a memorable day. One could say that making a good business out of such a natural blessing comes easily but it would be a classic understatement. The example of Postojna cave demonstrates what a smart and determined approach can create in a very short time, despite unfavourable market conditions.

When entrepreneur, Marjan Batagelj, purchased the operating licence along with the cave’s infrastructure, it was far from organised, it was abandoned and messy. Employees were unhappy without a trace of ambition; the marketing was ‘underfed’. “The guest just didn’t feel welcome. Also, it has vanished out of Slovenian consciousness and identity. We had forgotten there was global curiosity, a history of 33 million visitors, as if we were ashamed of it,” explains Batagelj. Apart from that, the business structure of the facility was a mess, the cave was a cash cow for a set of particular ambitions and full of conflicting interests.

The power of ‘Brilliant’ Batagelj’s first moves were simple, yet efficient. The company name ‘Tourism Kras’ was renamed back to ‘Postojna Cave’, with the logo depicting ‘Brilliant’, the cave’s trademark stalagmite. “When Brilliant was put back on the chest of employee uniforms the smile came back instantly. Not only is this totemic symbol a powerful identifier of the local community, it gave employees the sense of a single goal. Now, when a decision has to be made, only one question matters - is it good for the cave? If the answer is negative, it is in the same words explicable to anyone. Before, nobody dared say it because of the unclear interests of the superiors. At the same time there was a constant dilemma as to whether someone was doing right or wrong,” Batagelj clarifies the company’s philosophy.

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When he took over, he kept all the existing staff. The fear of layoff turned into respect: “I acknowledged their decades of expertise but showed them that their view was very narrow.” That’s where a set of top experts came in to broaden the scope. “There is a misconception that so many things have gone better because of the many changes we introduced. But all we did was put this train back on a single rail,” says Batagelj, adding that Postojna Cave is the only privately owned business among Slovenia’s top tourist destinations. All the rest are registered as public institutions.

The three elements The positive attitude of anyone involved in the business was the first, essential step. The second goal was to introduce the best available information infrastructure. In this regard, Postojna Cave is a showcase of the most advanced solutions in ticketing, web presentation and audio guides. The latter is available in 14 languages, something that practically no one else in the world has to offer. The audio presentations that accompany the visitor through the cave are not mere translations but a careful customisation according to cultural references, symbols and narration style of a particular national language.

Marjan Batagelj is keen to explain his fascination with the differences in aesthetic perception in different cultures – such as Japanese compared to Italian. It is all a part of the third and most important thing - raising the level of the experience. The ‘Wow!’ element is an ongoing process which involves provoking all senses, not only the eyes: the sound of silence in the cave, the smell of moisture, the music, the lighting which guides the sight.

“There are many natural points of interest in open spaces where you can look around, observe. In a cave on the other hand, we have absolute control over the guest’s impulses in a perfect, natural, three-dimensional environment. For 90 minutes we can influence perception by our design.”

TOURISM

Marjan Batagelj, Director of Postojna Cave operator Postojnska Jama

The million barrier

One of the targets initially set by the management was to bring a million guests to Postojna Cave every year but that number quickly turned out to be less relevant than it seemed. “We realized this should not be our goal. It is easy to achieve a million by lowering the ticket price but that would be unsustainable. It is better to aim for 650,000 highly satisfied guests.” Another way to bring more people without over populating the place, is through levelling the curve of very high visit peaks. The plan is to vary ticket pricing hourly, while seasonally the demand will be regulated by setting up additional offers, such as exhibitions during the less attractive months.

Upward trend “There is nothing extreme in it. We have made modest estimations.

Plans should always be realisable,” Batagelj stated about the business results. When the Slovenian Tourist Board announced a 4 percent growth in the sector, Postojna Cave wanted to be better and set the goal at 5 percent In the end it was 10 percent. Actually, 6 percent growth in visits, 19 percent in profit and 5 percent in jobs. These numbers point to the fact that a single tourist spends more, that the quality of the experience has indeed surpassed the quantitative rise in visitors. Batagelj proudly acknowledges that domestic visits grew by over a third in 2010-2011. “We have not encouraged visits through discounts which would be an easy thing to do with domestic guests who could fill the off-peak hours. The importance is in the fact that they have rediscovered their most precious natural curiosity.”

The radius circle of 150km is suitable for daily visits and is easy to manage in the terms of promotion. Then there is an abundance of transitional visits, particularly active during the summer holiday season, while a completely different thing is the distant markets, requiring a special approach. At this point, the Cave is inseparable from Slovenia itself, promoting itself hand in hand with the Slovenian Tourist Board and its brand ‘I Feel Slovenia’. “When

we advertise ourselves in the Far East and the Americas, it is evident that no one will come over here just to see the cave. We are only the most important assembly piece in Slovenia’s tourist image and we try not to be egotistical.” After all, the visits to the Cave have always reflected the overall trend in Slovenian (and earlier in Yugoslav) tourism.

Too small to be selfish Batagelj gets particularly critical when it comes to the attitude of Slovenian tourism. “In Slovenia we need to change the mentality.

We should be aware that a guest is our common guest and should be shared. Only then will the stay period be extended. Here, we could build hotels and fill them with guests, make them stay, but we are much happier if a guest feels good at our place for five hours and then goes back to Ljubljana with unforgettable memories.” The criticism of the selfishness also derives from the idea of a unified tourist ticket for Slovenia which was not well received among other possible partners. But he did not bother - instead they hope to join a network with Schombrunn Palace in Vienna, the Doge’s Palace in Venice, Croatia’s Plitvice National Park and the Budapest Parliament - to offer a common tourist ticket. They have indicated they will welcome Postojna Cave. Recently, tourist journalists awarded the achievements of Marjan Batagelj with the Crystal Triglav. He comments: “It is a special feeling. After a year and four months in business, I have won the hearts of tourist journalists who are particularly critical. The recognition was received with pride, but on the other hand I know that it would put me under even more surveillance. It is a nice kind of burden.”

COMPANY NOTES Postojnska Jama Jamska cesta 30 6230 Postojna, Slovenia T: +386 (0)5 700 01 00 info@postojnska-jama.si www.postojnska-jama.si

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Miha Kovačič, Slovenian Convention Bureau

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Your First Step Toward Organising a Meeting

he Slovenian Convention Bureau is a body, set up in 2004, to promote and market Slovenia as a meeting and incentive travel destination and to attract international meetings to the country. This non-profit organisation is a useful source of expert and objective information and advice on destinations, meeting venues and service providers.

The Slovenian Convention Bureau acts as a professional intermediary between meeting planners and suppliers, assisting organisers to select the most appropriate solution for their event.

Members include convention centres and hotels, professional conference organisers and destination management companies, the Ljubljana Convention Bureau, the Maribor Tourist Board, airline, incentive and other service providers. The Slovenian Tourist Board is a strategic partner.

Free service The Slovenian Convention Bureau is the central point of contact for meeting planners, seeking objective information and advice on all aspects of organising an event in Slovenia, including: • venues, • accommodation, • professional conference organisers, • destination management companies,

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• incentive providers, • event agencies, • technical suppliers, • transportation and • catering services.

Acting as an independent guide and providing free service, we will provide you with all the necessary information, assist in finding the ideal location for your event, connect you with the most suitable partners and forward your request for proposal.

We can supply you with every necessary detail about our country, as well as maps, brochures, DVDs and photographs to enable you to make the choice that suits you best. To conclude your decisionmaking, we can also co-ordinate an inspection visit.

COMPANY NOTES Slovenian Convention Bureau Dunajska 156 1000 Ljubljana, Slovenia T: +386 (0)1 569 12 60 info@slovenia-convention.com www.slovenia-convention.com

SoUtH eaSt eURoPean eXHiBition foR MeetinGS, eventS & incentive tRaveL

www.conventa.info

“when we meet at conventa show, the cup of coffee is on us!”

TOURISM

Jerneja Kamnikar, Director, Vivo Catering

It´s All About Good Taste

The time when business events meant only discussion about hard economic topics is long gone.

Today, they are becoming an increasingly more important segment of tourism. Attention needs to be paid to all aspects, including catering which plays a crucial role in networking and the overall perception of the event. Jerneja Kamnikar, Director of the Vivo catering company, a top catering provider with international renown, is an expert at turning every event into a uniquely memorable experience.

Networking is becoming a key part of every business event. In what way can catering aid networking to be more successful?

Catering can establish a certain main theme which connects guests and encourages them to start mingling. This can be done in many ways; especially vital is suitable table placement and food and drink selection. Also tasks given to guests, e.g. workshops and

team building, can stimulate networking. The importance of an event greatly suffers if it is unsuitably devised, if the formal part is not followed by informal socialising or if the client opts for the cheapest catering, lacking quality and tasteful food and drink.

However, there are certain events where networking is not desired due to time limitations hence, talking to the client beforehand to figure out the purpose of the catering, is a definite must.

What are some general differences between a good and a bad event from the catering perspective?

Catering is a very broad term, sandwich delivery can also be considered catering in a certain context. We are specialists for event catering where organisation, logistics and knowledge about the event are of extreme importance –this is what separates professional, high quality catering from less professional. Primarily, our work is preparing and serving food however, our attributes are measured differently from a classic restaurant. We need to present strong knowledge of protocol, social and business etiquette and proper communication. Mastering these so-called ‘soft elements’, which are very sensitive and on which the majority of things depend, is vital. People need to be aware of us at the event, but we must not be a disturbing factor. A hospitality event can improve the client’s

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TOURISM

reputation and even the country’s however, if unsuitable, it can easily destroy it. In our case, we are both creators of a culinary show and executors, therefore everything is in harmony which is one of the advantages of our firm. But a lot of self-criticism and awareness of what one is capable of doing with the knowledge and circumstances we find ourselves in, is needed to be really on top.

In these times of recession, companies often neglect the importance of corporate events for their business partners.

What are they putting at risk?

Today the social part with catering is the added value of an event and it gives it a broader meaning. Corporate events are of key importance as they create a platform for exchanging thoughts, ideas and good relations, hence a good selection of dishes and beverages is a fundamental companion to the socialising because it enhances the quality of the event and sticks in the minds of the invited guests.

Catering is therefore an investment, not a cost. Managers with a vision will therefore not skip catered corporate events which are in their agendas, they are well aware of the benefits of socialising over chosen culinary delights and select wines. At Vivo we are able to advise our clients about creating a memorable event. Good advice, optimism and the right selection of dishes and drinks are our advantage, they are an expression of our support of the client and simply the way we function. Also they are a result of the current state of affairs, which is why we established the four pillars of our Vivo catering brand. With Vivo economy, Vivo elegance, Congress Vivo and Wedding Vivo, we offer our clients the option to choose from various services in accordance with the needs of each segment.

This diversification was necessary in order to adapt to the global economic crisis. We are now postioned for the future.

What is Slovenia’s potential to present its uniqueness at business events?

Slovenia is at the crossroads of the Alpine, Mediterranean and Pannonic landscapes which is profoundly evident in its cuisine.

This is most definitely one of the segments through which we can present our country and its roots. We are devoting ourselves to this to a great extent, we are aware of the richness of our cultural heritage and the need to preserve and promote it. However, today’s lifestyle has brought changes in food consumption, so Vivo has modified the traditional dishes to suit modern needs. There is still a lot to be explored in this field. But the general rule of international business events is to be careful with the selection of dishes, Slovenian cuisine is heavy and the flavours are strong. Additionally, one needs to be aware that catering also plays a role as an ambassador of the location where the event is taking place. It acts as an indirect promoter of

the country and is an expression of its culture. The goal of an event is to make a good impression of Slovenia on its guests.

How is it possible to be creative time and time again?

European and global trends are focused on the totality of visual elements as culinary experiences. Therefore, I can say that only the sky is the limit to creativity. Attention to detail and striving for complete harmony in every small, tiny element offers a vast sphere to be unique. Perhaps it is times of recession that encourage innovation, creativity, change and adaptability. Vivo is at the top of event catering and very often the first to introduce novelties in Slovenia. In order to express creativity, we developed the brand ‘Vivo catering design’ which enables certain traditional elements to be included through cuisine. Now is the time of creativity, imagination and invention and if you do not employ it in your activities, you slowly drift into oblivion.

COMPANY NOTES Vivo Catering, d.o.o.

Pot na fužine 2 1000 Ljubljana, Slovenia T: +386 (0)1 546 16 57 catering@vivo.si www.vivo.si

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Suzana Žilič Fišer, Director General of ECOC 2012

The Cultural Centre of Europe The European Capital of Culture Maribor 2012 (ECOC 2012) is definitely the biggest cultural, social and entertainment project in Europe in 2012. Including 412 different projects consisting of more than 2000 events concentrated in the City of Maribor and partner cities in the region. Suzana Žilič Fišer, PhD, Director General of ECOC 2012, explains the basic idea behind the project and its potential for the wider promotion of Slovenia.

What was your motivation in submitting the candidacy for the European Capital of Culture 2012 and what are the key goals of this major project?

Numerous advantages facilitated the sovereign candidacy of the City of Maribor and its partner cities for the title of ECOC 2012.

Its favourable geographical position; the optimal symbiosis between natural and artificial environments; its status as a cultural and tourist destination; the richness of its traditional cuisine and crafts and its amiable, hospitable and tourist-friendly population constitute a good basis for developing cultural tourism as the leading branch for the future of the tourism industry in the region. The proximity of existing and potential tourism markets and the resulting prospects for the development of traditional and new marketable cultural and tourist products are also worth mentioning. Cooperation with the border regions in the realisation of the joint cultural tourism projects and the introduction of complementary tourist activities allows additional synergies. The entire ECOC 2012 area (Eastern Slovenia) also boasts incredible diversity in landscape and climate, with a pleasant and ecologically unburdened natural environment and protected areas. Our vision is mainly to do with the fact that Maribor and its surroundings, due to their vigorous cultural creativity, will experience accelerated development in various areas, not only in culture and this development will be carried out by the citizens.

How did you formulate the programme? Is it both a cultural project and a wider social and entertainment project? How did you strike a balance between attractiveness for the masses and quality, the cultural value of content?

I can say with certainty that the projects are aimed at the population at large, both from a generational point of view – there are events intended specifically for children, families, the middle-aged and the elderly – and in terms of interest. The programme content includes high art with an emphasis on new approaches, building a dialogue between the city and art and seeking new forms of creative living.

It also touches the margins of society and social and environmental topics, providing examples of good practice as well as multi-media reflection, linking the city and the region in a wider European context.

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What are the largest venues where you expect the greatest attention and most visitors? How are the partner cities involved in the project and the Slovenian State as a whole?

Individual projects will be implemented in existing venues such as the Union Hall, the National House, the Slovenian National Theatre, the Maribor Puppet Theatre, the Vetrinjska Mansion, the Literature House, the ECOC 2012 Salon, the Udarnik Cinema, the Maribor Art Gallery, City Park, K8, the Bakery, the KGB, the MKC, Kibla, the Great Cafe, Castle Square, Club 2012 and also existing and refurbished venues (Leon Štukelj Square) in the partner cities, as well as in existing buildings and locations that, to date, have not been used for cultural events. This, after all, is part of the goal of revitalising the old city core.

What is the financial structure of the project? Have you been successful in battling the effects of the economic crisis which have hit the economy and public, state and municipal finances?

The ECOC 2012 Project is being funded with public resources at the local and national levels. 85 percent of all funds are allocated for the programmes and 15 percent for the general expenses of the institution and promotional activities. The Ministry of Culture is expected to provide half the funding, one quarter will come from the

CULTURE

as a whole. I expect the quality of the content to promote the mission and idea of the ECOC 2012, which is the encouragement of art, intercultural dialogue and tolerance, the development of creativity and raising the quality of life.

budget of the Municipality of Maribor and the other quarter from the five partner cities. We also received European funds through the Melina Mercouri award. We are however, aware of the gravity of the economic crisis which all too often affects culture.

How many visitors do you expect? What type of visitors do you expect? How much is the project oriented toward Slovenia and how much toward promotion abroad, in the countries from where tourists arrive in Slovenia?

The ECOC 2012 aims to attract visitors from abroad, but above all from Slovenia. The entire region, all six cities and the cities where the ECOC 2012 events will be held, has set a goal to increase the visibility and volume of visits to Slovenia as well as neighbouring countries. Neighbouring countries are also the main target of the international promotion of the European Capital of Culture project.

In particular, Austria has already shown great interest in the events announced. Maribor alone has reported a significant increase in the number of visitors from abroad over the past two years and Ptuj, Murska Sobota, Novo mesto, Velenje and Slovenj Gradec are also trying to join the ride. According to statistical estimates, the projected number of visitors is about two million, but I am personally reluctant to bandy about figures.

How did you connect with other institutions that promote Slovenia abroad: the Slovenian Tourist Board, individual tourism companies and not least, the government communication office?

Under a broad promotional plan for Slovenia and neighbouring countries, in cooperation with the Slovenian Tourist Board and other local tourist service providers, we participated in various tourist fairs in Europe where we presented the programme. We were present, with materials and workshops, at festivals and events that are part of the ECOC 2012 and were implemented last year. In October 2011, we launched so-called ‘street promotions’ in all of the cities participating in the project. We had major promotional activities at fairs and other events abroad in Berlin, Zagreb, London, Vienna, Brussels, Mons, Graz, Belgrade, Rijeka, Salzburg and Amsterdam. These were mainly tourism fairs where we were part of Slovenia’s overall offer.

How many domestic and foreign performers will we see as part of the programme? What is the share of foreign participants and how did you inspire them to participate? What are the available funds: how much for the success of the promotion and how much for the attractiveness of the event?

The indicative number of foreign participants is about 240. The programme content will be implemented through co-producers.

Given that 85 percent of the funds are intended for artistic content, I believe that we have an interesting and attractive programme. At a corporate level, we will try to do whatever we can to increase the awareness and visibility of the ECOC 2012 project, its vision and its mission to encourage the development of the cities and the country

The opening and first impression is crucial for any major event. How pleased are you with the volume of visits and the response?

The response, both from Slovenia and neighbouring countries, has been excellent. During the opening weekend, Maribor was visited by more than 15,000 guests who had the opportunity to enjoy a varied programme, adapted for all ages and tastes. During the opening ceremony on 14 January 2012, 12,500 people gathered in Leon Štukelj Square and we were pleased that the events were also attended by prominent political and business figures from Slovenia and neighbouring countries, which proves that the event is seen as a first-class social and cultural phenomenon. On this occasion, I must thank the President of the Republic, Dr Danilo Turk who, with his honorary patronage and in particular the content of his address, left a strong mark on the opening of the ECOC 2012.

How satisfied are you with the response of the Slovenian economy? Do our companies see such events as just another cost, a necessary evil or do they also see them as a business and promotional opportunity?

The ECOC is a successful, important and popular project, not only for Slovenian culture and society but certainly as a project with a European dimension. It also represents a great opportunity for the promotion of Slovenian companies. In 2012 however, the broader economy will also become part of this great collective narrative.

The economy and culture are the driving forces for development, also leading to a friendlier environment after 2012. Some economic operators have joined the project in accordance with their capability and many see significant potential for the strengthening of the region. However, as a result of the difficult economic situation, such participation is lower than it would be in a different economic period.

COMPANY NOTES Maribor 2012 - European Capital of Culture Vetrinjska ulica 30 2000, Maribor, Slovenia www.maribor2012.eu

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BUSINESS & MEDIA SERVICES

Marko Kolbl, Director, Europlakat Group

From Large Billboards to Bicikelj Europlakat has been present in the Slovenian market since 1992 and was one of the first companies to put up largersized advertising billboards. This marked the beginning of outdoor advertising in Slovenia as we know it today. It was followed by the rapid development of the industry, shaping the image of today’s cities with its illuminated showcases of various dimensions, other modern advertising facilities and urban equipment. Europlakat, with its panoply of methods for outdoor advertising, focuses predominantly on urban centres throughout Slovenia. These methods include more than its advertising billboards in cities. They also include bus overhangs which the company regularly maintains in all city municipalities. It also set up a self-service bike rental system in Ljubljana in 2011, dubbed Bicikelj.

Bicikelj and the new large illuminated showcases in Ljubljana are the company’s more recent major investments. Could one therefore say that outdoor advertising has been spared the effects of the crisis?

Just like the other segments of the advertising industry and indeed, most of the economy, our company has also been affected by a decline in consumption. Revenue has fallen and we have therefore also had to deal with cost reductions. We saw the crisis as a challenge.

We re-thought our strategy and sought opportunities that would again encourage growth as soon as possible. The answer lay in new investment. In 2011 we invested approximately EUR 4m in the establishment of the Bicikelj self-service, bike rental system and new large, illuminated showcases. This is a project that will guarantee business for Europlakat in Ljubljana for the next 15 years and is therefore extremely important for us. We can offer our clients new networks of large illuminated showcases, in the capital, as an extra upgrade on our offer. The City of Ljubljana and its inhabitants and visitors have also benefited from this project, they will be able to use our bicycles virtually for free for the next 15 years.

How would you assess the position of outdoor advertising in comparison to what other advertising media has to offer?

What are your advantages?

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BUSINESS & MEDIA SERVICES

We could, in general, divide such media into those that accompany us at home or in the office and those whose messages we receive on the go. The majority of the media, focusing on at-home and at-work advertising, are television, the press and the internet.

People perceive our medium of advertising while they are on the go or when spending their free time outdoors, particularly in cities.

Recently, we are accompanied by various mobile devices while on the go however, the use of such media cannot be compared to advertising on large billboards. Outdoor advertising is simply out there and we cannot but see it. It is part of the urban landscape and impacts our cultural experience. We can define the location or geographical area where we want to get our message across via outdoor advertising, quite accurately. At Europlakat, we have focused particularly on advertising in urban centres, where the daily movement of people is the most intense. Today we speak of a mobile generation that spends a large amount of time, each day, en route to work or school or going on various errands.

Development in traffic movement measuring technologies and cognitive psychology over recent years has enabled more precise measurements of the size of the audience. In this way, advertisers can accurately assess the cost of contacting the recipients of their messages on outdoor advertisement media in comparison to television, print media or the internet.

Television remains, by far, number one in terms of advertising share. How do you view the division of the advertising pie?

At the moment television undoubtedly remains the primary medium through which advertisers can address the general public. Statistics show that people spend a great deal of time in front of the television.

However, due to the abundance of television programmes, viewer attention is dispersed amongst these various channels. Television, in short, is competing more and more with the internet which can be accessed not only at work but all the time, including at home. In the future, we can expect advertisers to earmark a portion of their current television advertising budget for internet advertising and most probably, also for outdoor advertising. Advertising on the Web will also prove interesting for advertisers in the future in terms of networking with other media. This also applies to TV, print, radio and outdoor advertising.

So, new and also mobile technology will continue to increasingly impact the industry?

That’s right. Mobile technology is especially interesting in terms of connecting with other advertising channels. This applies not only to advertising, but also to the entire infotainment industry.

In terms of outdoor advertising, it will be interesting to follow the development of mobile technology enabling the recognition of certain content via visual images. We can, for example, take the case of the matrix or QR codes which were initially developed to identify industrial products. Today, some advertisers also add them to their messages, enabling consumers to access additional content via applications on their mobile devices. Such technological development is extremely beneficial to outdoor advertising which serves as a type of reminder, as a supplementary medium in

advertising campaigns. Consumers see messages on outdoor advertising media and can then, via applications on their mobile devices, avail themselves of certain services, such as purchasing tickets or accessing additional content.

What are the trends in outdoor advertising abroad? Have you noticed any new developments you might like to introduce in Slovenia?

There are three main trends. One concerns the number of billboards for outdoor advertising which is moving in the direction of ‘less is more’. Smaller surfaces imply less distracting elements and make messages more effective through a limited number of ads. The second trend involves the replacement of classic large advertising billboards with illuminated showcases. Europlakat has also taken note of this, removing approximately a quarter of its classic large roadside billboards throughout Slovenia in the last few years. They have been partially replaced with contemporary illuminated showcases in urban centres. On the whole, we still offer considerably less advertising area then we did, for example four or five years ago. The third trend involves moving toward the development of digital surfaces in outdoor advertising. This form is not suitable for Slovenia as such surfaces are intended for the display of dynamic messages comparable to TV ads. Such digital surfaces are usually installed at large traffic hubs where large masses of people have to wait.

How do you see the advertising industry in the future? What do you expect from outdoor advertising?

A period of uncertainty lies ahead, which also applies for most of the economy. The last three years have proven that, even in such conditions, it is always possible to perform well, to undertake new projects and seek opportunities for additional business or to introduce improvements. The worst thing to do would be to just wait for better times. The environment may be more or less encouraging for the operations of our company, however, the end result will depend on people who will endeavour to attain the maximum effect under the given conditions. We do not expect compelling growth. Based on the new elements in our offer, we expect the share of outdoor advertising, together with Web advertising, to grow in comparison with other advertising segments.

How did Ljubljana welcome the Bicikelj system? Do you intend to expand it or introduce it in other cities in Slovenia?

The response to Bicikelj has been excellent. Already, after half a year of operation, the Bicikelj system boasts more than 27,000 registered users of our bicycles and we recorded more than 400,000 rentals. The number of daily rentals has not significantly decreased even this winter, although the weather conditions are not the most favourable for cycling. System expansion is not envisaged for now as the financing possibilities of such expansion must be discussed first. Considering the criteria employed by the owner of this system, the company JCDecaux, Ljubljana is the only city in Slovenia large enough to facilitate the implementation of the envisaged project business model.

COMPANY NOTES Europlakat d.o.o.

Koprska ulica 98 1000 Ljubljana T: +386 (0)1 200 15 50 info@europlakat.si www.europlakat.si

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BUSINESS & MEDIA SERVICES

Romana Logar, Director, AJPES

Primary Source for Business Information AJPES is an indispensable primary source of official public and other information on business entities in Slovenia. Information from the public registers and databases can be accessed, free of charge, via the AJPES web portal (www.ajpes.si). For a fee, AJPES also offers credit rating information on Slovenian businesses.

How can foreigners use AJPES as a data source for information about Slovenian business partners?

AJPES manages the Business Register of Slovenia as the central public database of all business entities, based in Slovenia, which perform profitable or non-profit activities. A constituent part of the business register is the court register, in which courts register companies and other legal entities. Subsidiaries of foreign companies are also entered into the court register. AJPES also publishes all publicly available documents from the court register concerning the registration of companies and all other legal entities in the court register. Thus, AJPES provides free access to all public information from the business register/court register about a particular company, including details of shareholders and ownership of shares, with the exception of joint stock companies where access to data about shareholders is provided by the Central Securities Clearing Corporation.

AJPES offers, with the purpose of providing a transparent business environment, access to the annual reports of companies, sole proprietors, co-operatives and legal entities governed by public law, as well as audited annual reports for companies that are subject to statutory audits. AJPES also sends information about companies, 104

electronically, to the European Business Register (www.ebr.org) network, which is a commercial service.

What is the role of AJPES in the registration procedure for companies and sole proprietors?

In Slovenia, the registration of companies and sole proprietors is carried out through a national, electronically guided system called ‘One Stop Shop’ (eVEM). Registration applications have been filed through the eVEM system in Slovenia by sole proprietors since 2005 and by companies since 2008. The 12 regional branches of AJPES offer free service for the registration of simple limited liability companies, i.e. companies that are established by a single member or several members and which pay their share capital in money. The registration of joint stock companies or limited liability companies, which can also pay their share capital through contributions in kind, is implemented through the eVEM system by notaries. In addition to AJPES, eVEM services in Slovenia are provided by other organisations (the Chamber of Commerce and Industry of Slovenia, the Chamber of Craft and Small Businesses of Slovenia, the Public Agency for Entrepreneurship and Foreign Investments, administrative units, etc.) at more than 150 eVEM

BUSINESS & MEDIA SERVICES

points in Slovenia. AJPES is the most successful of these providers as it receives about 80 percent of applications from companies and about 45 percent of applications from sole proprietors. Courts issue decisions on the registration of companies: applications that are filed correctly take two days to process. AJPES is the registration authority responsible for sole proprietors: registration takes less than a day.

AJPES also manages other public registers and publishes other public information?

AJPES supplements information in the business register with information from other registers, thus increasing the transparency of the Slovenian business environment.

• Courts publish procedural acts and public documents relating to insolvency proceedings (bankruptcy, compulsory settlement, liquidation) for companies, sole proprietors, individuals and consumers on the AJPES web portal.

• The register of bank accounts contains information on the bank accounts opened and closed by businesses, with banks in Slovenia, over the past 5 years.

• The register of bills protested due to default contains information entered by notaries about bill protests due to defaults that are issued by business entities. The register was launched in 2011 to better establish bills of exchange as an instrument of payment insurance, although this objective was not reached in the register’s first year.

• The register of non-possessory liens and seized movable property contains information on non-possessory liens on movable property which is seized from the owner officially or the owner has given of his or her own volition.

How does AJPES contribute to the reduction of administrative burdens?

Since AJPES both receives and provides information in a fully electronic manner, it is an important contributor to reducing administrative burdens in the country. Let me illustrate this with the submission of annual reports: all businesses submit annual reports to AJPES in electronic form, most of them for three purposes at once: (1) to present them to the general public (via the AJPES web portal), (2) for tax purposes (AJPES sends them to tax administration) and (3) for statistical purposes (AJPES sends them to the national statistics office). Slovenia has already exceeded the goal of reducing administrative burdens for all companies, not only for micro and small companies, which is what the EU is seeking to achieve through its current proposal for a directive on the annual accounts of certain types of companies.

In what way does AJPES provide public information from those sources for the re-use of public information?

In line with the EU Directive on the re-use of public sector information and the Slovenian regulations adopted on the basis of it, AJPES provides the re-use of public information for noncommercial purposes, free of charge (to public institutions) and

for commercial purposes upon payment of compensation (e.g. to competitive credit rating organisations and to business entities for the purpose of incorporating it into their own business processes, etc.).

AJPES is also known for monitoring insolvency indicators in the Slovenian economy, what are the trends?

The credit crunch and relatively high average indebtedness of Slovenian companies has led to an increase in the number of bankruptcies, compulsory settlements and liquidations. In 2011, the number of initiated insolvency procedures was more than 30 percent higher than in 2010. In such a situation, it is of key importance for foreign business partners to check the credit rating of their Slovenian business partners.

What does an AJPES credit rating offer?

AJPES offers quality credit ratings according to the AJPES S.BON model which states the probability of payment default, calculated for each company, for a period of one year from its last annual report.

This model takes into account the rules from European standards for credit rating agencies and classifies Slovenian companies into 10 credit rating classes according to their credit risk.

Credit rating information also includes, in addition to the (unsolicited) S.BON credit rating, daily updated information about the payment discipline of a company (the existence of matured liabilities), financial data about business operations in recent years and a comparison to the rest of the industry is also shown.

AJPES offers the quickest access to the credit ratings of Slovenian companies through its web portal in the form of eS.BON credit information.

As one of its commercial services, AJPES also offers a collection of financial data and indicators, FI-PO AJPES, which along with the AJPES S.BON credit rating provides an additional analytical tool for comparing the long-term operations of Slovenian companies for individual years with chosen competitors or activities.

We assume that the AJPES’s web pages have a large number of visitors?

It is true, in 2011 the AJPES web portal reported nearly 8 million visits by more than 900,000 unique visitors. These figures have been increasing year after year.

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

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BUSINESS & MEDIA SERVICES

Miroslav Pikovnik, President of the Board, Unija računovodska hiša

Knowledge and Trust UNIJA, the best accounting firm in Slovenia in 2009, 2010 and 2011, support their clients beyond their basic need for accurate and legally compliant accounting services, they work on the basis of mutual trust - a core value of UNIJA. The company mission statement states their goals - long term economic growth of our clients, our own personal growth and a commitment to social responsibility.

What are the main challenges in the accounting field, in these times of economic crisis and significant problems for businesses?

Timely and accurate information for management is definitely what separates good accounting from bad. Quality accounting is a source of information for management and therefore, such information must be timely and organised, i.e. it must clearly signal opportunities and risks to management. Unfortunately, accounting departments all too often provide management with large amounts of data that may be of interest to management but does not require any particular action. There is the principle of ‘less is more.’ Accurate and timely information can save significantly more money for a company than the cost of accounting.

In what way do your services differ from those of others? There is stiff competition, why should your company be selected?

On account of our timely and professional service, supported by specialist consultants who prepare timely information for management and our modern technology which enables costeffective solutions throughout the region. Our clients can receive a wide range of diverse services from one place, from accounting to tax consulting, HR services, internal audit to due diligence, throughout the Adriatic region.

In which markets are you present? Does the focus of your work shift from one market/country to another?

Our primary market is definitely Slovenia but we are also present in Serbia, Croatia and Bosnia and Herzegovina. In the other countries of the Adriatic region we provide our services through partners.

How do you view the law and implementation of regulations that deal with your area of work? Would you simplify things in Slovenia or ‘debureaucratise’ them, as the politicians put it?

I am convinced that we still have a great deal of reserve in that area and the biggest problem is still the fact that professionals from the 106

practical sphere, do not participate in the creation of new regulations and so one phrase in a regulation can give rise to a revolution, as happened recently for example, when cash payments to businesses were restricted.

Given that you are very familiar with the structure of many companies, how do you assess the economic growth outlook for this year and next?

When listening to the response of others to similar questions recently, we have often wondered whether we live in a different world or if all our clients are only successful companies. In general, we do not see any significant changes and we are discussing expansion into foreign markets, new programmes, etc. with our clients. In 2011, we nearly achieved the equivalent revenue of 2008, while in 2012 the same volume and growth should be maintained for the most part. Apart from industries that depend on construction, I can almost say that there have been no fluctuations with regard to our clients since 2008. Changes have however taken place in most of these companies and no one has been waiting for times, such as those prior to September 2008, to come again. It is probably also true that for good companies, crisis is only a new circumstance to which they must adapt, while for underperformers it is definitely a great excuse.

COMPANY NOTES

Unija računovodska hiša, d.d.

Tržaška cesta 515 1351 Brezovica, Slovenia T: +386 (0)1 360 20 00 Info@unija.si www.unija.si

USEFUL INFORMATION

Slovenia: Facts & Figures 400 km Radius • More than 45 million consumers • 11 countries, jointly representing more than 40% of the total GDP of the EU

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

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

GEOGRAPHY Area: 20,273 km2

Internet address: .si

Time zone: GMT/UTC +1

POLITICS

Length of coastline: 46.6km

President of the Republic: H.E. Dr Danilo Turk (since December 2007) Prime Minister: H.E. Janez Janša (SDS - Slovenian Democratic Party) (since February 2012) Government: Prime Minister, 11 ministers, 1 ministers without portfolio

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

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

USEFUL INFORMATION

Corporate income tax

20%

Tax relief

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

Capital gains tax

0-20% (depending on holding period)

VAT (Value added tax)

8.5% - reduced rate; 20% - standard rate

Social security contributions

16.1% paid by employer; 22.1% paid by employee

Payroll

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

Main macroeconomic indicators of Slovenia Real growth rates in %, unless otherwise indicated 2008

2009

2010

2011

2012*

2013*

GROSS DOMESTIC PRODUCT 3.6

-8.0

1.4

0.5

0.2

2.0

GDP (in EUR billion)

GDP (real growth rate)

37,280

35,311

35,416

35,789

36,356

37,590

GDP per capita (in EUR)

18,437

17,295

17,286

17,437

17,778

18,349

GDP per capita (PPS)

22,700

20,500

20,700

91

87

85

GDP per capita (PPS EU27=100) POPULATION, EMPLOYEMENT, WAGES Registered unemployement (annual average in thousands)

63.2

86.4

100.5

110.7

116.1

118.8

Rate of unemployement by ILO in %

4.4

5.9

7.2

8.1

8.6

8.8

Gross wage per employee

2.5

2.5

2.1

0.2

-0.1

0.3

- Private sector

2.0

1.0

3.2

0.9

0.6

1.1

- Public sector

3.9

5.8

-1.8

-1.8

-1.9

-1.8

Labour productivity (GDP/employee)

1.0

-6.3

4.0

2.2

1.6

2.7

INTERNATIONAL TRADE Exports of goods and services

2.9

-17.2

9.5

7.3

2.9

6.0

Imports of services

8.2

-12.0

2.6

1.2

1.7

4.3

-2,574

-456

-297

-192

-176

321

-6.9

-1.3

-0.8

-0.5

-0.5

0.9

4.3

0.6

-0.1

0.1

-0.5

0.3

71.3

76.1

76.8

77.3

76.8

75.6

3.7

-0.1

-0.7

0.0

-0.5

0.3

53.2

55.8

56.0

56.5

56.4

55.6

Current account balance in EUR m As a percent share relative to GDP FINAL DOMESTIC DEMAND Final consumption As a % of GDP Private consumption As a % of GDP Government consumption As a % of GDP Gross fixed capital formation As a % of GDP

6.1

2.9

1.5

0.3

-0.7

0.3

18.1

20.3

20.8

20.8

20.4

20.0

7.8

-23.3

-8.3

-10.5

0.0

4.0

28.8

23.4

21.6

19.4

19.3

19.8

1.471

1.393

1.327

1.392

1.318

1.318

2.1

1.8

1.9

2.0

1.8

1.8

EXCHANGE RATES AND PRICES Rates of USD to EUR Inflation rate (end of the year) Inflation (year average) Brent Crude Oil Price USD/barrel

5.7

0.9

1.8

1.8

1.8

1.8

96.9

61.7

79.6

111.0

105.0

100.0

Sources: SORS, BS, ECB, Ministry of Finance, Eurostat, calculations estimates and forecasts by IMAD/ *forecast

109

USEFUL INFORMATION

Foreign Embassies (in Ljubljana) Albania Zaloška cesta 69 T: + 386 (0)1 547 36 50 embassy.ljubljana@mfa.gov.al

Republic of France Barjanska 1 T: +386 (0)1 479 04 00 contact@ambafrance–si.org

Republic of Lithuania Emonska cesta 8 T: + 386 (0) 1 244 56 00 amb.si@urm.lt

Slovak Republic Tivolska cesta 4 T: +386 (0)1 425 54 25 emb.ljubljana@mzv.sk

Republic of Austria Prešernova cesta 23, T: +386 (0)1 479 07 00 laibach–ob@bmeia.gv.at

Geogia Cankarjeva cesta 7 T: + 386 (0)8 382 65 98 ljubljana.emb@mfa.gov.ge

Republic of Macedonia Rožna dolina, Cesta IV/2 T: + 386 (0) 1 421 00 21 makamb@siol.net

Kingdom of Spain Trnovski pristan 24 T: +386 (0)1 420 23 30 emba.espa.eslovenia@siol.net

Republic of Azerbaijan Mesarska cesta 22 Tel: + 386 (0) 30 321 231 e_hasanov@azermbassy.at

Federal Republic of Germany Prešernova cesta 27 T: +386 (0)1 479 03 00 germanembassy–slovenia@siol.net

Montenegro Njegoševa cesta 14 T: + 386 (0) 1 439 53 64/65 embamon–lj@t–2.net

Switzerland Trg republike 3/VI T: +386 (0)1 200 86 40 lju.vertretung@eda.admin.ch

Kingdom of the Netherlands Palača Kapitelj, Poljanski nasip 6 T: + 386 (0) 1 420 14 60 lju@minbuza.nl

Republic of Turkey Livarska ulica 4 T: +386 (0)1 236 41 50 turkemb.ljubljana@mfa.gov.tr

Republic of Poland Bežigrad 10 T: +386 (0)1 436 47 12 lublana.amb.sekretariat@msz.gov.pl

Ukraine Teslova ulica 23 T: +386 (0)1 421 06 04 emb_si@mfa.gov.ua

Portugal Trg republike 3/X T: +386 (0)1 47 90 540 embportlju@siol.net

United Kingdom Trg republike 3/IV T: +386 (0)1 200 39 10 info@british–embassy.si

Romania Smrekarjeva ulica 33a T: +386 (0)1 505 82 94 embassy.of.romania@siol.net

United States of America Prešernova cesta 31 T: +386 (0)1 200 55 00 usembassyljubljana@state.gov

Belgium Trg republike 3/IX, T: +386 (0)1 200 60 10 ljubljana@diplobel.fed.be Bosnia and Herzegovina Kolarjeva 26, T: +386 (0)1 234 32 50 ambihlju@siol.net Federative Republic of Brazil Kongresni trg 3 T: + 386 (0) 1 244 24 00 mail@brazil.si Republic of Bulgaria Opekarska cesta 35 T: + 386 (0) 1 283 28 99 People’s Republic of China Koblarjeva ulica 3 T: +386 (0)1 420 28 55 kitajsko.veleposlanistvo@siol.net Republic of Croatia Gruberjevo nabrežje 6 T: +386 (0)1 425 62 20 croemb.slovenia@mvpei.hr Republic of Cyprus Komenskega ulica 12 T: + 386 (0) 1 232 15 42/3/4 embassy.cyprus@siol.net Czech Republic Riharjeva ulica 1 T: +386 (0)1 420 24 50 ljubljana@embassy.mzv.cz Kingdom of Denmark Eurocenter, Tivolska cesta 48 T: +386 (0)1 438 08 00 ljuamb@um.dk Arab Republic of Egypt Opekarska cesta 18A T: + 386 (0) 1 429 54 20 embassy.ljubljana@mfa.gov.eg Finland Ajdovščina 4/8 T: +386 (0)1 300 21 20 sanomat.lju@formin.fi

110

Greece Trnovski pristan 14 T: +386 (0)1 420 14 00 gremb.lju@mfa.gr Apostolic Nunciature of the Holy See Krekov trg 1 T: +386 (0)1 433 92 04 apostolska.nunciatura@rkc.si Republic of Hungary Ulica Konrada Babnika 5 T: +386 (0)1 512 18 82 mission.lju@kum.hu India Maurerjeva ulica 29 T: +386 (0)1 513 31 10 amb.ljubljana@mea.gov.in Islamic Republic of Iran Tolstojeva ulica 8 T: + 386 (0)1 589 71 00 infoslo@mfa.gov.ir Ireland Palača Kapitelj, Poljanski nasip 6 T: +386 (0)1 300 89 70 ljubljanaembassy@dfa.ie Italian Republic Snežniška 8 T: +386 (0)1 426 21 94 archivio.lubiana@esteri.it Japan Trg Republike 3/XI T: +386 (0)1 200 82 81 info@embjp.si Republic of Kosovo Dvorec Sela, Zaloška cesta 69 Tel: + 386 (0) 1 541 54 10 veleposlanistvo.kosovo@siol.net Republic of Latvia Tavčarjeva ulica 10 T: + 386 (0) 1 434 16 20 embassy.slovenia@mfa.gov.lv

Russian Federation Tomšičeva ulica 9 T: +386 (0)1 425 68 75 ambrus.slo@siol.net Republic of Serbia Slomškova ulica 1 T: +386 (0)1 438 01 10 amba.srbije.lju@siol.net

Bolivarian Republic of Venezuela Emonska cesta 8 Tel: + 386 (0) 82 051 280 emba.venez.eslovenia@siol.net

Slovenian Embassies Abroad Albania Ambasada E Republikës Së Sllovënissë, EGT Tower, P.11/1 kati i 3 Rr. »Abdyl Frasheri«, Tiranë T: 00 35 54 22 74 8 58 vti@gov.si Argentina Embajada De La Republica De Eslovenia Avenida Santa Fe 846 p. 6° C1059ABP Buenos Aires T: 00 54 11 48 94 06 21 vba@gov.si Australia Embassy of the Republic of Slovenia PO BOX 284, Civic Square Canberra, ACT 2608

T: 00 61 2 6290 0000 vca@gov.si Austria Botschaft Der Republik Slowenien Nibelungengasse 13/3 A-1010 Wien T: 00 43 1 586 13 09 vdu@gov.si Belgium Ambassade De La Republique De Slovenie Rue du Commerce 44, 4eme etage 1000 Bruxelles T: 00 32 2 213 6327 vbr@gov.si Bosnia and Herzegovina Ambasada Republike Slovenije Bentbaša 7

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Slovenian Embassies Abroad Konzularni oddelek: Bjelave 73 7100 Sarajevo T: 00 387 33 572 450 vsa@gov.si

Consulate office in Banja Luka Ul. Kralja Petra I. Karađorđevića 85a, 78000 Banja Luka T: 00 387 51 211 210 Brazil Embaixada Da República Da Eslovênia SHIS - QL 8 - Conjunto 8 Casa 7 - Lago Sul CEP: 71620-285 Brasília / DF T: 00 55 61 3365 1445 vbi@gov.si Czech Republic Velvyslanectví Republiky Slovinsko Pod Hradbami 15, 160 41 Praha 6 T: 00 420 2 33 08 12 11 vpr@gov.si Montenegro Veleposlaništvo Republike Slovenije Atinska ulica 41, 81000 Podgorica T: 00 382 20 618 150 vpg@gov.si Denmark Embassy of the Republic of Slovenia Amaliegade 6, 2nd fl., 1256 Copenhagen T: 00 45 33 73 01 20 vkh@gov.si Egypt Embassy of the Republic of Slovenia 21 Soliman Abaza St., 6th Floor, Mohandessin, Cairo T: 00 20 2 3749 98 78 vka@gov.si Finland Embassy of the Republic of Slovenia Etelaesplanadi 24A, FIN-00130 Helsinki T: 00 358 9 228 99 417 vhe@gov.si France Ambassade De La Republique De Slovenie 28, rue Bois-le-Vent, 75116 Paris T: 00 33 1 44 96 50 71 vpa@gov.si Greece Embassy of the Republic of Slovenia 280, Kifissias Ave. & 1, Dimokratias Str. 154 51 Neo Psychico, Athens T: 00 30 210 672 00 90 vat@gov.si

112

Croatia Veleposlanštvo Republike Slovenije Alagovićeva 30, 10000 Zagreb T: 00 385 1 63 11 000 vzg@gov.si India Embassy of the Republic of Slovenia 46, Poorvi Marg Vasant Vihar, New Delhi-110 057 T: 00 91 11 4166 2891 vnd@gov.si Iran Embassy of the Republic of Slovenia No. 30, Narenjestan 8th Alley, Pasdaran Ave.(North of Dr.Lavasani Ave.) P.O. Box 19575-459, Tehran T: 00 98 21 2283 6042 vte@gov.si Ireland Embassy of the Republic of Slovenia Morrison Chambers, 2nd Floor 32 Nassau Street, Dublin 2 T: 00 353 1 6705 240 vdu@gov.si Italy Ambasciata Della Repubblica Di Slovenia Via Leonardo Pisano 10, 00197 Roma T: 00 39 06 80 914 310 vri@gov.si Israel Embassy of the Republic of Slovenia Top Tower 19th Floor, 50 Dizengoff Street POB 23245, Tel Aviv 61321 T: 00 972 3 629 35 63 vta@gov.si Japan Embassy of the Republic of Slovenia 14-12 Minamiaoyama 7-chome Minato-ku Tokyo 107-0062 T: 00 81 3 5468 6275 vto@gov.si Canada Embassy of the Republic of Slovenia 150 Metcalfe Street Suite 2200 Ottawa, Ontario K2P 1P1 T: 00 1 613 565 57 81 vot@gov.si China Embassy of the Republic of Slovenia No. 57, Block F, Ya Qu Yuan, King’s Garden Villas

18 XIAO Yun Road Chaoyang District 100016 Beijing T: 00 86 10 6 468 11 54 vpe@gov.si Kosovo Embassy of the Republic of Slovenia Anton Ceta Street, No. 6, 10000 Priština T: 00 381 38 224 112 mpi@gov.si Hungary Szlovén Köztársaság Nagykövetsége Cseppkő ut. 68, 1025 Budapest II. T: 00 36 1 438 56 00 vbp@gov.si

FYR Macedonia Ambasada na Republika Slovenija Vodnjanska 42, MK-1000 Skopje T: 00 389 2 317 87 30 vsk@gov.si Germany Botschaft Der Republik Slowenien Hausvogteiplatz 3-4 D-10117 Berlin T: 00 49 30 206 145-0 vbn@gov.si

Netherlands Embassy of the Republic of Slovenia Anna Paulownastraat 11 2518 BA The Hague T: 00 31 70 310 8 690 vhg@gov.si Poland Ambasada Republiki Słowenii Ul. Staroscinska 1 m. 23-24 02-516 Warsaw T: 00 48 22 8 49 82 82 vvr@gov.si Portugal Embassy of the Republic of Slovenia Avenida da Liberdade 49, 6° Esq 1250 - 139 Lisboa T: 00 351 21 342 33 01 vli@gov.si Romania Embassy of the Republic of Slovenia Str. Puskin Alexandru 10 Sector 1, Bucharest T: 00 40 21 300 27 80 vbk@gov.si Russian Federation Embassy of the Republic of Slovenia Ul. Malaja Dmitrovka 14/1 127006 Moskva T: 007 495 737 63 55 vmo@gov.si

Slovakia Embassy of the Republic of Slovenia Ventúrska 5, 813 15 Bratislava T: 00 421 2 5726 7700 vbs@gov.si Serbia Ambasada Republike Slovenije Dositejeva ulica 41, 1000 Beograd T: 00 381 11 303 84 77 vbg@gov.si Spain Embajada De La Republica De Eslovenia Hermanos Bécquer,7-2 28 006 Madrid T: 00 34 91 411 68 93 vma@gov.si Sweden Embassy of the Republic of Slovenia Styrmansgatan 4, 1st fl.

114 54 Stockholm T: 00 46 8 54 565 885 vst@gov.si Switzerland Botschaft Der Republik Slowenien Schwanengasse 9, CH-3011 Bern T: 00 41 31 310 90 00 vbe@gov.si Turkey Embassy of the Republic of Slovenia Kiralngiç Sokak No. 36 06700 G.O.P., Ankara T: 00 90 312 405 4221 e-mail: van@gov.si Ukraine Embassy of the Republic of Slovenia Bogdana Khmelnytskogo 48 01030 Kiev T: 00 380 45 585 23 30 vki@gov.si Vatican Ambasciata Di Slovenia Presso La Santa Sede Via della Conciliazione, 10 00193 Roma T: 00 39 06 683 30 09 vva@gov.si Great Britain Embassy of the Republic of Slovenia 10 Little College Street London SW1P 3SH T: 00 44 20 7222 5700 vlo@gov.si United States of America Embassy of the Republic of Slovenia 2410 California Street, NW Washington, D.C. 20008 T: 00 1 202 386 66 10 vwa@gov.si

USEFUL INFORMATION

Permanent Representations

General Consulates

Austria Permanent Representation of the Republic of Slovenia to the United Nations, OSCE and other International Organisations in Vienna Gumpendorfer Strasse 11/18 A-1060 Wien T: 00 43 1 581 34 08 25 mdu@gov.si

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

Belgium Représentation Permanente De La République Aupres L’union Européenne Rue du Commerce 44, 1000 Bruxelles T: 00 32 2 213 63 00 spbr@gov.si Representation Permanente De La Repuplique De Slovenie Aupres De Nato In Weu NG Building, Nato HQ Blvd. Leopold III, 1110 Bruxelles T: 00 32 2 707 27 69 mna@gov.si France Representation Permanente De La République De Slovénie

Aupres Du Conseil De L’europe 40, Allee de la Robertsau, 67000 Strasbourg T: 00 33 3 88 36 60 25 msb@gov.si Permanent Representation of the Republic of Slovenia to OECD 28, rue Bois-le-Vent, 75116 Paris T: 00 33 1 44 96 50 69 mpa@gov.si Switzerland Permanent Mission of the Republic of Slovenia to the UN Office and other International Organisations in Geneva 37 - 39 Rue de Vermont, 1202 Geneve T: 00 41 22 716 17 80 mge@gov.si United States of America Permanent Representation of the Republic of Slovenia to the United Nations 600 Third Avenue, 24th Floor New York, N.Y. 10016 T: 00 1 212 370 30 07 mny@gov.si

Italy Consolato Generale Della Repubblica Di Slovenia Ul./Via S. Giorgio 1 34123 Trieste T: 00 39 040 30 78 55 kts@gov.si China Consulate of the Republic of Slovenia in Shanghai 2107A Westgate Tower 1038 West Nanjing Road 200041 Shanghai T: 00 86 21 621 830 55 Hungary Szlovén Köztársaság Fökonzulátusa, Kossuth u. 39

H-9970 Szentgotthárd T: 00 36 94 553 110 kmn@gov.si Germany Generalkonsulat Der Republik Slowenien P.F. 150829, D-80045 München Lindwurmstr. 14 D-80337 München T: 00 49 89 543 98 19 kmu@gov.si United States of America Consulate General of the Republic of Slovenia 55 Public Square, Suite 945 Cleveland, Ohio 44113 T: 00 1 216 589 92 20 kcl@gov.si Consulate General of the Republic of Slovenia 600 Third Avenue, 21st Floor New York, N. Y. 10016 T: 00 1 212 370 30 06 kny@gov.si

Partners of the Publication Ministry of Economic Development and Technology of the Republic of Slovenia Kontnikova 5 1000 Ljubljana, Slovenia T: +386 (0)1 400 33 11 gp.mg@gov.si www.mg.gov.si Ministry of Foreign Affairs of the Republic of Slovenia Prešernova cesta 25, P.P. 481 1001 Ljubljana, Slovenia T: +386 (0)1 478 20 00 info.mzz@gov.si www.mzz.gov.si Economic diplomacy Trubarjeva 3 1001 Ljubljana, Slovenia T: +386 (0)1 478 66 42 gospodarska-diplomacija.mzz@gov.si Slovenian Tourist Board - STO Dimičeva 13 1000 Ljubljana, Slovenia T: +386 1 589 85 50 info@slovenia.info www.slovenia.info

114

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

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

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

Ljubljana Jože Pučnik Airport Zg. Brnik 130a 4210 Brnik-aerodrom, Slovenia Passenger information: +386 (0)4 206 19 81 T: +386 (0)4 206 10 00 info@lju-airport.si www.lju-airport.si

AmCham Slovenia Dunajska cesta 156 1000 Ljubljana T: +386 (0)8 205 13 51 office@amcham.si www.amcham.si

SAVE S.p.A. – Aeroporto di Venezia Marco Polo Viale G. Galilei 30/1 - 30173 Tessera – Venezia, Italy

www.veniceairport.it