2006 Annual Report Worldreginfo - 4Ad35390-8D6f-42Ea-B156-Fe62e4ed67e8 Worldreginfo - 4Ad35390-8D6f-42Ea-B156-Fe62e4ed67e8 2006 Annual Report
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2006 Annual Report WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 2006 Annual Report This annual report is a summary. 1 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Pivovarna Laško, d.d., as the successor to the 180-year tradition of beer making in Laško, successfully completed the merger of Slovenian beverage producers. The amalgamation of the Slovenian beverage industry in recent years has resulted in consolidation of the company. We are now putting all our efforts into developing and enhancing our main activity – beverage production – on domestic and foreign markets. It is important that we have owners who believe in our company, vision and goals, and for this reason we focus on ensuring the satisfaction of our shareholders, customers, employees and the wider community. All this is directed towards achieving a bold plan: to become one of the major corporations in the beverage industry in South Eastern Europe in terms of the production and sale of beer, mineral, spring and natural waters, soft drinks, syrups for the production of drinks and other alcoholic beverages. 3 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Vision To become a leader in the production and sale of beverages. To consolidate the reputation of recognised brands on both domestic and foreign markets, thus increasing market share in individual markets. Mission We want to bring together the majority of Slovenian beverage producers and thus become one of the larger corporations in the area of beverage production in South Eastern Europe. We will aim to please consumers with the quality of our products and thus reaffirm our business image. Values Knowledge, enterprise, partnership, responsibility and appreciation. It is on the basis of these values and with a positive attitude towards the community at large that we implement our policies with well-conceived strategies in the areas of marketing and supply development, human resource organisation and management, technological development and financial asset management. Group of affiliates Parent company Pivovarna Laško Group Pivovarna Laško About the Group Production of beer, mineral, Production of beer and spring and natural waters, soft natural waters drinks, syrups for the production of beverages, and other alcoholic beverages, including retail and wholesale services. Structure Pivovarna Laško, d.d. Pivovarna Laško, d.d. Pivovarna Union, d.d., Ljubljana with subsidiaries Radenska, d.d., Radenci Jadranska Pivovara, d.d., Split Vital Mestinje, d.o.o., Mestinje Talis, d.o.o., Maribor RA&LA, d.o.o., Sarajevo Due to the financial insignificance of the companies Talis and RA&LA, they will not be dealt with in detail in further text. 5 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Performance highlights Pivovarna Laško Performance indicators 25,000,000 20,000,000 15,000,000 Net sales revenues 10,000,000 Net profit 5,000,000 Net cash flow 0 (’ 000 SIT) (’ year 2004 *2005 *2006 (’000 SIT) 2004 *2005 *2006 Net sales revenues 18,444,935 18,721,076 20,004,086 Net profit 1,214,492 1,255,777 1,460,191 Net cash flow 3,683,877 3,534,852 3,721,532 EBITDA 3,755,429 5,465,631 6,110,082 EBITDA in sales revenues 20.4% 29.2% 30.5% * in line with IFRS Share profitability 250 200 150 100 Net profit per share 50 Dividend paid out per share 0 (SIT) year 2004 *2005 *2006 (SIT) 2004 *2005 *2006 Net profit per share 139 144 167 Dividend paid out per share 50 60 96 * in line with IFRS 6 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Employees 440 420 400 480 460 340 Employees as at 31 December 320 300 Average number of employees (number of employees) year 2004 2005 2006 2004 2005 2006 Employees as at 31 December 381 367 339 Average number of employees 403 377 355 PILR share value comparison as at 31 December 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 Share book value 2,000 1,000 0 Share market value (SIT) year 2004 *2005 *2006 (SIT) 2004 *2005 *2006 Share book value 5,469 4,819 5,256 Share market value 7,183 7,429 9,630 * in line with IFRS 7 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Market share of beer sales on the Slovenian market 60.0 50.0 40.0 30.0 Pivovarna Laško 20.0 Pivovarna Union 10.0 0.0 Imported beer (%) year 2004 2005 2006 (%) 2004 2005 2006 Pivovarna Laško 53.7 52.1 51.9 Pivovarna Union 37.4 36.1 36.2 Imported beer 8.9 11.8 11.9 Total 100.0 100.0 100.0 Share of exports in the total beer sales of Pivovarna Laško 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 Beer sales 200,000 Exports (hl) 0 year 2004 2005 2006 (hl) 2004 2005 2006 Beer sales 1,124,829 1,080,522 1,083,644 Exports 300,342 240,230 202,449 Share (in %) 26.7 22.2 18.7 8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Performance highlights Pivovarna Laško Group Performance indicators 70,000,000 60,000,000 50,000,000 40,000,000 Net sales revenues 30,000,000 20,000,000 Net profit 10,000,000 0 Net cash flow 000 SIT) (’ year 2004 *2005 *2006 (’000 SIT) 2005 *2006 *2007 Net sales revenues 31,093,994 63,865,377 66,434,399 Net profit 1,113,674 4,233,907 4,602,234 Net cash flow 5,270,710 11,618,485 12,192,719 EBITDA 5,034,978 12,754,267 13,556,046 EBITDA in sales revenues in % 16.2 20.0 20.4 * in line with IFRS Employees 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 Employees as at 31 December (number of Employees) 0 year 2004 2005 2006 Employees 2004 2005 2006 Employees as at 31 December 1,043 2,058 1,844 9 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Share of exports in the total beverage sales of the Pivovarna 6,000,000 Laško Group 5,000,000 4,000,000 3,000,000 2,000,000 Sales of all beverages 1,000,000 0 Exports (hl) year 2004 2005 2006 (hl) 2004 2005 2006 Sales of all beverages 2,656,980 4,879,298 5,061,241 Exports 663,512 1,164,952 1,153,780 Share (in %) 25.0 23.9 22.8 10 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Forecast for the year 2007 Pivovarna Laško Group Total sales of beverages by the Pivovarna Laško Group and sales 2,700,000 forecast 2,400,000 2,100,000 Soft drinks, syrup 1,800,000 1,500,000 Water 1,200,000 900,000 Beer 600,000 300,000 0 Other alcoholic beverages (%) year 2005 2006 vision 2007 (hl) 2005 2006 vision 2007 Soft drinks, syrup 1,770,552 1,925,787 2,132,907 Water 1,035,922 1,036,288 1,045,669 Beer 2,064,166 2,091,225 2,212,900 Other alcoholic beverages 8,658 7,941 8,191 Total 4,879,298 5,061,241 5,399,667 (%) 2005 2006 vision 2007 Soft drinks, syrup 36.3 38.0 39.5 Water 21.2 20.5 19.4 Beer 42.3 41.3 41.0 Other alcoholic beverages 0.2 0.2 0.2 Total 100.0 100.0 100.0 11 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Table of Contents Foreword by the Director 15 Supervisory Board Report 16 Corporate Profile 19 Milestones in the History of Pivovarna Laško 20 Business Report 23 Introduction 23 Sales 24 Marketing 31 Human resource management 33 Environmental report 39 Ownership structure and share price trends 45 Audited financial statements of Pivovarna Laško, d.d. with the independent auditor’s report for the fiscal year 2006, in accordance with IFRS 48 Vision 57 Performance of Affiliates 58 About the Pivovarna Laško Group 58 Performance 59 Radenska, d.d., Radenci 61 Jadranska Pivovara, d.d., Split 65 Vital Mestinje, d.o.o., Mestinje 67 Union Group 69 Audited financial statements of the Pivovarna Laško Group with the independent auditor’s report for the fiscal year 2006, in accordance with IFRS 75 Vision of the Pivovarna Laško Group 85 13 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Dear Shareholders, We have successfully completed the first independent financial year of the Pivovarna Laško Group. This is clearly evident from the Group’s 2006 operating results, which make us proud. We sold more than five million hectolitres of beverages and surpassed sales from 2005 by 3.7%. We increased net sales revenue by 4%, standing at SIT 66.4 billion. Operating profit, at SIT 5.9 billion, increased by 18%, while net profit in the amount of SIT 4.6 billion increased by 9%. Cash flow from operations (EBITDA) stood at SIT 13.6 billion and exceeded the amount from the previous year by 6%. A total of 1,839 employees were employed in the Pivovarna Laško Group in 2006, which is 9% less than in the previous year. Successful performance was also reflected in the market value of shares, which increased by 29.6% and stood at SIT 9,630.00 as at 31 December 2006. Firmly established on the domestic market, with long-term goals on foreign markets Beverage production is one of the most competitive industries, where multinational corporations, trading companies and demanding consumers all play key roles.