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. Our high market share in the segments of beer, mineral and natural waters, non-alcoholic and other beverages indicate that the Pivovarna Laško Group, with its wide range of high-quality products, remains the best choice on the Slovenian market. We must also mention that with strong distribution and integration within trade flows on the domestic market we achieved more than 80% of planned total sales. Therefore, sufficient manoeuvring room still exists on foreign markets for organic growth in performance and for generating ties with local producers, distributors and other potential partners Development of strategic commercial brands (trademarks) and increasing the profitability of companies within the Group In 2007, our operations are oriented towards developing strategic brands, with a tradition that goes back centuries, and representing the core of our activities on the beverage market. Besides the aforementioned, we shall also enhance cooperation among companies within the Group on domestic and foreign markets. We shall strive for a higher level of productivity and profitability. This shall be assured through targeted development of subsidiaries focused on key commercial brands, markets and consumers, in the production sense as well as in marketing. The Pivovarna Laško Group plans an increase of beverages sold of 6.7% in 2007, representing 5.4 million hl of all beverages. This indicates that revenues will increase by 8%, operating profit by 30% and cash flow from operations by 10%. Remaining committed and independent in the future We wish to remain an independent beverage producer within the region. Our stable market position on the domestic market is the result of commitment and tradition, both cultivated by the Pivovarna Laško Group. With serious consideration to strategy, we shall also adapt this business practice to foreign markets. We are certain that we and you, our respected shareholders, will be rewarded for loyalty and commitment to Pivovarna Laško. Boško Šrot, Director
15 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Supervisory Board Report
Pursuant to Article 282 of the Companies Act (hereinafter: ZGD-1), the Supervisory Board of Pivovarna Laško, d.d. shall submit a report to the General Meeting of shareholders in which it represents the Supervisory Board‘s one year of operation. The Supervisory Board shall accurately and conscientiously review the report of the Management Board, audit report and the Management Board’s recommendation on utilisation of distributable profit. Work of the Supervisory Board The Supervisory Board of Pivovarna Laško, d.d. was appointed in 2003 and served its third term of office in 2005. The members of the Supervisory Board were as follows: Boris Završnik – chairman, and members Gorazd Čuk, Mirjana Dimc Perko, Olga Jakhel Dergan, Mirko Kaluža and Simon Zdolšek – representing the shareholders, and Marko Jugovič, Bojan Košak and Andrej Kebe – representing the workers.
The Supervisory Board of Pivovarna Laško, d.d. in 2006 comprised the following members: Boris Završnik – chairman, Mirjana Dimc Perko, Mirko Kaluža, Iztok Seničar, Anton Turnšek and Simon Zdolšek – representing the shareholders, and Marko Jugovič, Bojan Košak and Andrej Kebe – representing the workers.
On 16 June 2006, the General Meeting of shareholders appointed Iztok Seničar and Anton Turnšek to the Supervisory Board as representatives of the shareholders, replacing members Gorazd Čuk and Olga Jakhel Dergan. On 17 December 2005, Supervisory Board member Olga Jakhel Dergan handed in her resignation from the Pivovarna Laško Supervisory Board, effective 1 January 2006, due to personal reasons. The same occurred with Supervisory Board member Gorazd Čuk on 9 May 2006 who resigned from the Pivovarna Laško Supervisory Board, also for personal reasons.
Since its last report to the General Meeting of shareholders on 10 May 2006, the Supervisory Board held four regular sessions and one correspondence session. Members regularly attended Supervisory Board sessions and the average attendance at sessions was 84%. The Supervisory Board of Pivovarna Laško, d.d. regularly deliberated on the following key areas within the company‘s operations: the company’s current operations and financial position, the work of the Management Board, current investment activities and the implementation of Supervisory Board resolutions.
The following were the most important aspects of Pivovarna Laško‘s performance: • The company successfully carried out its plans in comparison with the previous year: it sold 1,131,212 hectolitres of beer and water, and generated SIT 20,004,086 billion in net sales revenues; it increased its net profit by 16.3% and recorded an EBITDA cash flow of SIT 6,110,182,000, which is an increase of 11.8% over 2005. • On 10 May 2006, Pivovarna Laško, d.d., on the basis of a sales contract dated 30 August 2005, booked over 106,950 newly issued shares of Poslovni sistem Mercator, d.d., Ljubljana from Slovenska odškodninska družba d.d. As a result of this share transfer, Pivovarna Laško owned 317,498 MELR shares, which represents an 8.84% stake in Poslovni sistem Mercator, d.d. Consequently Pivovarna Laško, d.d. and Pivovarna Union, d.d. together hold a 19.07% stake in Poslovni sistem Mercator, d.d., Ljubljana. • In the past year AT Kearney continued advising on the successful performance of the Pivovarna Laško Group by exploiting synergies in the fields of purchasing, sales, production and human resources. • The Pivovarna Laško Group‘s operations are on a sound footing. The Group successfully implemented an employment reduction plan by reducing the number of employees within the Group from 2,058 to 1,366 workers. In 2006, the Group sold 5,061,241 hectolitres of beverages. 16 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 • In eliminating negative effects on the environment, Pivovarna Laško, d.d. established regular operation of the pre-purification plant which purifies all technical water up to 85%. Verification of the Management Board’s Annual Report for the 2006 financial year At its 16th regular session of 9 May 2007, the Supervisory Board discussed the audited Annual Report for the 2006 financial year, which was audited by PricewaterhouseCoopers, d.o.o., Ljubljana. The audit applied to the parent company Pivovarna Laško, d.d. and to the Pivovarna Laško Group. • The 2006 performance assessment of Pivovarna Laško, d.d. is very favourable, with operating results exceeding the average results and performance indicators of the agro- industrial sector in Slovenia, as well as the performance indicators of the Slovenian economy. • Pivovarna Laško, d.d. remained the leading producer of beer, which is evident from their 52% market share. • The Supervisory Board regularly monitored the management and performance of the company and regularly verified the business performance result. The Management Board provided the Supervisory Board with monthly up-to-date operating results of the parent company and the Group, and with all information it required to conduct its supervisory activities. • On 26 April 2007, PricewaterhouseCoopers, d.o.o., Ljubljana handed down a positive opinion on the performance of Pivovarna Laško, d.d. and the Pivovarna Laško Group for 2006.
On the basis of the activities and factors described above, and detailed verification of the 2006 Annual Report submitted by the Management Board, the Supervisory Board determined that: • The Annual Report of Pivovarna Laško, d.d. and the Pivovarna Laško Group for 2006 has been compiled in a clear and transparent manner; • The Annual report of Pivovarna Laško, d.d. and the Pivovarna Laško Group for 2006 represents a true and fair picture of the assets, liabilities, financial position and operating result of Pivovarna Laško, d.d. and the Pivovarna Laško Group.
The Supervisory Board had no comments on the 2006 Annual Report submitted by the Management Board and adopted it in its proposed text at its 16th regular session of 9 May 2007 At the same regular session, the Supervisory Board also approved the use of distributable profit. Use of Distributable Profit The Supervisory Board endeavours to promote the interests of its shareholders and the long- term prospects of the company, and thus supports management in its decision to subordinate the distribution of profits to the company’s development concept, on the one hand, and as shareholders’ interests for capitalisation of investments through appropriate paid out dividends on the other. The Management Board and the Supervisory Board propose that the distributable profit for the 2006 financial year in the amount of EUR 4,493,118.84 (SIT 1,076,731,000), comprising EUR 6,093,269.07 (SIT 1,460,191,000) net profit for the 2006 financial year and EUR 1,600,150.23 (SIT 383,460,000) retained losses from previous years, shall be used as follows: • the portion of distributable profit in the amount of EUR 3,499,061.10 (SIT 838,515,000) is to be used to pay out a gross dividend of EUR 0.40 (SIT 95.85) per share; • the remainder of the distributable profit in the amount of EUR 994,057.74 (SIT 238,216,000) should remain undistributed, with the General Meeting deciding on its use in the following financial years.
17 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Dividends will be paid out to shareholders entered in the register of shareholders at the Central Securities Clearing Corporation in Ljubljana as at 20 June 2007. The dividends shall be paid out within 60 days of resolution adoption. Conclusion The Pivovarna Laško Supervisory Board finds that the Management Board has been successful in its management of the company in 2006. Through carefully managed financial operations and the implementation of set goals, the management has fulfilled the expectations of the Supervisory Board. The Supervisory Board therefore: • adopted the annual report for the 2006 financial year with the proposed text, submitted by the Management Board at its regular session of 9 May 2007, • determined the use of the distributable profit in conjunction with the Management Board, and • proposed to the General Meeting of shareholders that when the resolution on the use of the distributable profit is adopted, it will grant official approval for the actions of the Pivovarna Laško Management Board and Supervisory Board in 2006
Boris Završnik Chairman of the Supervisory Board
18 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Company Profile
PIVOVARNA LAŠKO, d.d., Trubarjeva 28, 3270 Laško, was entered in the register of companies under application number 1/00171/00 at the Celje District Court under order number SRG 95/00673 in September 1995.
Abbreviated business name: PIVOVARNA LAŠKO, d.d.
Organisational form: public limited company
Share capital: SIT 8,747,652,000
No. of shares issued: 8,747,652
Share quotation: Ljubljanska borza, stock exchange listing of regular shares Share designation: PILR
Registration number: 5049318 Tax number: 90355580 Activity code: 15960
Nature of business and key activities: BEER PRODUCTION
Director: Boško Šrot Chairman of the Supervisory Board: Boris Završnik
Transaction accounts:
TRR no. 1: Banka Celje 06000-0001199122 TRR no. 2: Nova LB 02232-0020104463 TRR no. 3: Nova KBM 04515-0000909883
Telephone: 03/ 734 80 00 Telefax: 03/ 573 18 17 E-mail: [email protected] Website: www.pivo-lasko.si
19 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Milestones in the History of Pivovarna Laško
1825 Historical beginnings of Pivovarna Laško. Mead and gingerbread maker Franz Geyer converted the Valvasor Hospital into a brewery, and the building still stands today.
1838 The brewery was bought by Heinrich August Uhlich, who exported beer to India and Egypt.
1867 Anton Larisch built a new brewery at the foot of Mts Sveti Krištof and Šmihel. His brewery was the largest in Lower Styria at the time.
1889 The brewery was bought by Simon Kukec, a brewer from Žalec and an ardent Slovenian patriot. His innovation was to begin brewing both light and dark beer, using water from a thermal spring; he also made Ležak and Porter, the latter subsequently renamed Temno Laško Pivo. The Laško Pivo brand became increasingly well established, and more beer was sold under that name. He also exported it to Egypt and Budapest.
1924 The brewery made its final consignment of beer. A majority shareholding was secretly bought by the rival Union Brewery in Ljubljana, and production was abandoned. The closure of the brewery hurt many of the inhabitants of Laško, but the dream of reopening the brewery was to inspire the local innkeepers.
1929 Representatives of the innkeepers‘ cooperatives decided to build a new brewery in Laško as a public limited company.
1938 After numerous complications and bitter opposition from rivals, Pivovarna Laško opened, and a new Laško beer, named Zlatorog, gained popularity with beer drinkers. Even the German occupying forces allowed the Laško Pivo brand to be retained because of its quality.
1944 The brewery was destroyed during the bombing of the railway bridge. After the Second World War, production began in 1946, although the company was formally established in 1947. In the years after the Second World War, Pivovarna Laško remained a single company. Since 1960, Pivovarna Laško has seen a huge rise in sales, from 60,000 hectolitres to 1,300,000 hectolitres.
1990 After the brewery was organised in accordance with the provisions of the Companies Act, it was entered in the register of companies as a socially-owned company under court order SRG 23/90 on 31 May 1990.
1991 In line with the Companies Act, the brewery was transformed into a public limited company under mixed joint ownership. An appraisal of the company‘s share capital and social capital was made on 30 September 1991, and the distribution of shares was carried out on this basis.
1995 Pivovarna Laško was transformed into a public limited company with known owners at its first General Meeting on 20 April 1995 and was entered in the register of companies under Decision SRG 673/95 of 08 September 1995. The brewery thus became a public limited company with more than 15,000 shareholders.
20 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 2000 With the capital link-up with Radenska, d.d., Radenci, Jadranska Pivovara, d.d., Split and Vital, d.d., Mestinje, the year 2000 was one of the most important turning points in the company‘s history. The turn of the millennium also entailed the beginning of a new business strategy for developing the company through its capital links with the aforementioned companies.
2002 The company succeeded in its public bid to take over Pivovarna Union, d.d., Ljubljana, acquiring 47.86% of all its shares.
2003 Pivovarna Laško continued making capital investments in 2003, acquiring a 24.98% stake in Delo d.d., Ljubljana, becoming its largest shareholder.
2004 In December 2004, Pivovarna Laško acquired a further 27,011 shares in Pivovarna Union, or 5.98% of its total shares. This brought Pivovarna Laško‘s shareholding in Union to 53.85%.
2005 In February 2005, Pivovarna Laško bought Interbrew Central European Holding B.V., Netherland’s entire stake in Pivovarna Union of 186,400 shares, thus raising its ownership share to 95.17%. The Slovenian Competition Office issued its consent to the announced amalgamation of Pivovarna Laško, d.d. and Pivovarna Union, d.d. in May 2005.
2006 Key events: May 106,960 newly issued shares of Poslovni sistem Mercator d.d., Ljubljana were booked over from Slovenska odškodninska družba d.d., Ljubljana to Pivovarna Laško, d.d. Upon the transfer of shares, the public limited company Pivovarna Laško held 317,498 MELR shares, or an 8.34% stake in the company.
June The regular annual General Meeting of shareholders of Pivovarna Laško, d.d. was held successfully.
September In remedying negative effects on the environment, operation of the purification plant started, within which regular operation of the pre-purification plant of Pivovarna Laško, d.d., which purifies all technical water up to 85%, was established. On 22 September 2006, based on the resolution of the General Meeting of shareholders adopted on 16 June 2006, the entry of the amendment of the company‘s statute in the register of companies became final and legally valid, which determined the company’s share capital and newly introduced no-par-value shares (shares without nominal value). From that point onwards the share capital amounted to SIT 8,747,652,000.00, divided into 8,747,652 ordinary transferable registered no-par-value shares.
October On 4 October 2006, KDD – The Central Securities Clearing Corporation in Ljubljana changed the data on the nominal value of Pivovarna Laško, d.d. shares under the designation PILR and PILH within the central register of dematerialised securities without performing actual replacement, so from this date onward it reads: 1 unit. As at 4 October 2006 a total number of 8,578,085 shares under the designation PILR and 169,567 shares under the designation PILH were hereby subscribed upon entry in the central register.
21 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Business Report
Introduction The public limited company Pivovarna Laško successfully brings together the majority of Slovenian beverage producers within the Pivovarna Laško Group, also supplemented by Jadranska Pivovara, d.d., Split. In the financial year 2006, the Pivovarna Laško Group did not acquire any major strategic partner, not even in South Eastern Europe, even though this represents continuity in the business development strategy of the Group. All the companies in Slovenia linked to the Pivovarna Laško Group through their capital (Pivovarna Laško, Pivovarna Union, Radenska, Fructal and Vital Mestinje), successfully continued their efforts aimed at achieving optimum cooperation in the supply and sales sectors in the 2006 financial year. The results of this cooperation were evident in the purchase of raw materials, packaging, semi-manufactures and other materials under more favourable terms with regard to both time limits and prices. Given the nature of such links, the synergic effects are only visible over a longer period of time. In the sales sector, the synergic effects of the amalgamation were somewhat less visible in 2006 as we started intensifying efforts in that direction relatively late in this area, but in 2007 and subsequent years we expect these types of results to be more favourable. All the companies in the Pivovarna Laško Group, excluding Jadranska Pivovara Split and Fructal Ajdovščina, operated more successfully in 2006 as independent units than they did in 2005. The aforementioned companies ended the 2006 financial year with losses. In 2007, the business strategy of the parent company and the Pivovarna Laško Group will continue to focus on acquiring new sales markets in the European Union and in South Eastern Europe. In all these sales markets we will continue to build our marketing approach, aiming at the recognisability of all products with already established brands, and will continue to strive to achieve more favourable terms of supply.
23 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Sales The total sales of beer in 2006 is on the same level as in 2005, although we recorded a rise of 21% in sales of water. While beer sales rose in Slovenia, Montenegro, Kosovo, Macedonia and on convertible markets, they fell considerably in Serbia, Bosnia-Herzegovina and Croatia.
Sales of beer and water 1,400,000
1,200,000
1,000,000
800,000
600,000
400,000 Beer sales 200,000
0 Water sales (hl) year 2004 2005 2006
(%) 2004 2005 2006 Beer sales 96.7 96.5 95.8 Water sales 3.3 3.5 4.2 Total 100.0 100.0 100.0
Sales of beer on domestic and foreign markets 1,400,000
1,200,000
1,000,000
800,000
600,000
400,000 Domestic market 200,000
0 Foreign market (hl) year 2004 2005 2006
(%) 2004 2005 2006 Domestic market 73.3 77.8 81.3 Foreign market 26.7 22.2 18.7 Total 100.0 100.0 100.0
24 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Sales structure by type of beer in 2005
(%) 2004 2005 2006 5.6% alcohol content Jubilejnik 0.1 0.0 0.0 5.1% alcohol content. Bandidos Tequila 3.4 1.8 0.9 5.0% alcohol content CB Jadransko Lager – 0.3 0.6 4.0% alcohol content Bandidos Ice – 4.4 4.5 4.0% alcohol content Bandidos Hot – – 0.5 2.4% alcohol content Bandidos Light Lemon – – 0.4 4.9% alcohol content Zlatorog 64.1 65.6 66.9 4.9% alcohol content Laško Club 22.5 17.7 14.8 4.9% alcohol content Hyhemp – – 0.0 4.9% alcohol content CB Konzum K-plus – 0.9 1.1 4.8% alcohol content Kaltenberg – – 0.1 3.5% alcohol content Export Pils 6.8 6.5 7.9 2.7% alcohol content Laško Lahko 1.3 1.2 1.1 2.5% alcohol content Roler 0.5 0.4 0.2 1.7% alcohol content Gren 0.5 0.4 0.2 5.9% alcohol content Laško Temno 0.7 0.7 0.8 4.0% alcohol content Netopir 0.1 – – Total 100.0 100.0 100.0 CB – commercial brand
1.1% 1.7% 3.1% 4.5% Zlatorog Laško Club 7.9% Export Pils Bandidos Ice 66.9% Bandidos ostalo 14.8% Laško Lahko Other
25 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Slovenian market Total consumption of domestic and foreign beers rose in 2006, reaching 1,699,000 hl. Consumption was higher than in 2005 by 5.6%. The Slovenian beer market was faced with increased competition from low-priced, medium-priced and high-priced imported beer, although the rapid increase in imports from previous years, which rose to 40% annually in 2004 and 2005, stood at 6% in 2006. We are observing an increase in the volume of investments made by foreign competitors, the most active of which are MB, Heineken, Staropramen, Efes, Veltins and Stigl (direct investments in draft beer equipment and other restaurant furnishings, and in events).
Pivovarna Laško adopted a series of measures in 2006 to adapt to the changing market conditions. We launched two new products, Bandidos Hot and Bandidos Light Lemon, while stopping production of Gren and Roler.
In order to reduce costs and achieve synergic effects, we carried out the following organisational changes:
• centralisation of the service department within Pivovarna Laško providing services for Pivovarna Laško, Pivovarna Union and Radenska; • commencement of sales of Pivovarna Union and Fructal products as merchandise at all retail units of Pivovarna Laško (Radenska products have been included since 2005 within the sales range of business units).
Changes were made to our price policy in 2006 by amending the sales pricelist twice and by selectively raising prices (1 March and 1 October), while being able to maintain a competitive edge over low-priced imported beer through the discount sale of CB Pils Export.
In 2006 we managed to maintain our market share in terms of quantity with regard to 2005. Pivovarna Laško’s market share stood at 51.9%, Pivovarna Union’s market share (together with their CB) at 36.2% and imported beer at 11.9%. The market share of imported beer has not increased drastically compared to the previous year.
Market share of the two largest Slovenian breweries
(%) 2004 2005 2006 Pivovarna Laško 53.7 52.1 51.9 Pivovarna Union 37.4 36.1 36.2
Out of Pivovarna Laško’s total beer sales on the Slovenian market in 2006, amounting to 881,195 hl, 518,855 hl of beer (59%) were sold through the wholesale network in 2006, representing 2% growth over 2005, and 362,341 hl of beer (41%) were sold by retailers, a rise of 9% over 2005.
As in all previous years, we managed to keep our payments policy well under control in 2006 by using bank guarantees to secure payments from customers. We have hardly ever had to deal with payment failures.
Sales of Oda mineral water in 2006 was up 21% compared to 2005 and amounted to 47,347 hl. The impact of cheap mineral water imports has been felt even more strongly than that of very low-priced imported beers.
27 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Sales on the Slovenian market through wholesale networks and 600,000 retail units 500,000
400,000
300,000
200,000
Wholesalers 100,000
0 Retail units (hl) year 2004 2005 2006
(%) 2004 2005 2006 Wholesalers 61.7 60.6 58.9 Retail units 38.3 39.4 41.1 Total 100.0 100.0 100.0
Foreign markets In 2006, Pivovarna Laško sold 202,449 hectolitres of beer on foreign markets, a sales drop of 15.7% from 2005. The Pivovarno Laško Group selected Croatia, Italy and Bosnia-Herzegovina as priority export countries. Croatia The sales figure index of Jadranska Pivovara for 2006 in comparison to 2005, excluding sales of commercial brands, stands at 83.2, while at 92.6 when including CB.
In 2006 we altered the method of exporting to the Croatian market, mainly with Jadranska Pivovara becoming Pivovarna Laško’s exclusive beer importer on the Croatian market as at 1 January 2006. Buyers who purchased beer directly from Laško besides buying it from Jadranska Pivovara up to 1 January 2006, are regarded as Jadranska Pivovara buyers from the aforementioned date onward.
We continued production of commercial brand beer in Laško for commercial systems operating on the Croatian market.
As in 2005, the concentration of distribution routes through the Horeca network and concentration of the retail market, and consequently increased pressure for better sales conditions and additional investments in marketing in cooperation with distributors, is still being carried out. These links also gave rise to requests for better sales conditions and, as a result, lowered revenues.
In marketing terms, mainly media related, the year was marked by the football World Cup, characterised by major investments in the media made by both leading breweries. Jadranska Pivovara and Pivovarna Laško followed this concept with available assets.
In evaluating the results we have to take into account that political tensions recurring at intervals also had a negative effect on sales of Slovenian goods.
28 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Bosnia-Herzegovina, Serbia, Montenegro, Kosovo, Macedonia While we increased sales of Laško beer in Montenegro, Kosovo and Macedonia in 2006, there was a marked drop in sales in the markets of Bosnia-Herzegovina and Serbia. The causes were as follows: • customs duty of 16% (B-H); • continued introduction of support prices (B-H); • customs duty of 30% (Serbia); • there was a constant drop in the purchasing power of consumers; • the insolvency and poor financial discipline of our importers’ major customers, who use much of the revenue from beer sales for investments and prefer to pay for beer through countertrade; • the selling prices of beers from local breweries are significantly lower than the prices of our beer; • even when our importers and sales promoters manage to convince owners of catering establishments to equalise the price of our beer with that of local brewers, catering establishments are interested in promoting sales of domestic beers, as they make significantly higher profits from local beer due to the much lower purchase price; • breweries owned by foreign multinationals invest heavily in market communication (breweries are among the strongest advertisers); • in addition to media communication, these breweries also invest huge funds in the market itself by unlimited distributing of promotional materials, branding sales outlets, sponsoring events, etc.; • there is still strong propaganda in Bosnia-Herzegovina, Serbia and Montenegro urging people to buy domestic products in order to support the domestic industry.
29 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Other foreign markets Sales of Pivovarna Laško’s products in the EU and other markets were 9% higher in 2006 than in 2005.
The greatest increase in sales by individual countries was most noticeable in Austria. The reason for higher beer sales in 2006 on the Austrian market lies in modifications to the sales approach on the market, with larger emphasis placed on the Horeca segment where we successfully introduced the special beer brands Bandidos ICE and Bandidos Tequila.
Beer sales in Italy, our largest sales market within the EU, increased by 8% in 2006. The sales increase is linked with the commencement of sales of Pivovarna Laško’s products at two retailer chains, Coopca and Ipercoop, which did not stock any of our products until 2006.
Beer sales in other countries (Canada, Switzerland, Germany, Malta, Island, Togo, USA and Australia) are at a lower level in comparison with the previous year.
Productivity Labour productivity, as measured by the quantity of beer and water sold per employee, stands at 3,232 hectolitres of beverages per person. This figure is up 8.8% compared to 2005.
Company productivity
2004 2005 2006 Beer sales (hl) 1,124,829 1,080,522 1,083,644 Sales of natural drinking water (hl) 37,938 39,326 47,567 Total 1,162,767 1,119,848 1,131,212 Average number of employees 403 377 350 Work hours 681,827 625,797 582,067 Productivity (hl per person) 2,885 2,970 3,232 Productivity (hl per work hour) 1.7054 1.7895 1.9434
30 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Marketing Market research External as well as internal sources of information were used for market research. We used 1.1% of the resources earmarked for marketing activities for external research, which is on a par with the previous year. The results of external research are of fundamental importance, along with internal information, especially in a rapidly changing environment. We use the information obtained in this manner as an additional tool for monitoring marketing trends, both in terms of sales and communications. Product development The focus of product development is on the diversification of the current product range and its expansion to new types of packaging:
• cardboard six-packs the Laško Club brand for foreign and domestic markets • expansion of our draught beer offer – CB Zlatorog Coolkeg: test bottling and canning and market testing (through retail sales on the Slovenian market).
We expanded the Bandidos brand with two new flavours, Hot and Light Lemon, which we introduced to the Slovenian market in April, while continuing to expand our offering to several foreign markets. Market communication We used around 10% of our entire sales revenue for market communication on the domestic and foreign markets in 2006. The structure of the use of funds by markets was as follows:
Country share in % • Slovenia 51% • Exports 49%
The strategy of promoting sales in Slovenia in 2006 included the promotion of two brands, Laško Pivo Zlatorog and Bandidos.
We divided the planned sales promotion activities with regard to the place of implementation and method of promotion. In terms of place of implementation, the emphasis was on promotion in the catering sector, and in terms of method, we divided the activities into promotions organised by the promotion department of Pivovarna Laško itself (discount price parties, tasting parties and, to an extent, VIP events and so-called sales events) and promotions involving the marketing service of Pivovarna Laško and implemented, in principle, with hostesses. In the beginning of 2006, we postponed the implementation of complex activities to the post-season (bottle promotion – the 2005 concept) in agreement with management with regard to other priority activities of the promotion department, in order to optimise promotional activities. Besides the standard activity concepts implemented during 2005, we also prepared certain innovations for 2006.
In 2006, as in every year, we continued to equip catering establishments and introduced an innovative approach in selecting promotional items for the implementation of promotional activities for the Zlatrog and Bandidos brands.
31 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 In order to familiarise future catering personnel with the characteristics of our beer and how to serve it, we are continuing to organise guided tours for catering school students. We also support maintaining good relations with business partners by organising guided tours to Pivovarna Laško through the TIC (Tourist Information Centre).
The advertising of our brands was mainly aimed at the Bandidos brand, as introducing new products undoubtedly requires advertising support. Both new products, Hot and Light Lemon, were supported communication-wise as part of the integral advertising campaign which took place in May and June (TV, radio, printed advertisements, Internet, WC advertisements) and by notifying buyers and consumers at sales outlets (letters to buyers, leaflets, billboards, catering equipment: t-shirts, trays, table covers, items for implementing promotional activities).
During the football World Cup we expanded the advertising content toward promoting the Laško Pivo Zlatorog brand. The campaign was supported with the slogan “Enjoying together”.
In the area of sponsorship, we continued to work in the direction of our strategic guidelines from previous years. The majority of sponsorship funds went towards corporate sponsorship.
In terms of market communication on foreign markets we ensured support of activities led by sales managers for individual markets and cooperated with Jadranska Pivovara’s marketing department in designing activities for the Croatian market. We organised advertising activities on the following foreign markets:
• Croatia: We prepared animated advertisements in January and February for broadcasting alpine skiing and handball competitions to support the Laško Pivo Zlatorog brand. Between April and June the advertising campaign, which included advertising in print and on billboards besides the introduction of a new TV advertisement (also adapted for use on the market of Bosnia-Herzegovina), took place. In May we prepared a support campaign for the introduction of Bandidos Ice, which was advertised on TV as well as in the print media. All remaining advertising in 2006 was limited to occasional needs and to supporting sales promotion and sponsorship activities. • Bosnia-Herzegovina: The Laško Pivo Club brand was advertised within the football World Cup (TV, billboards). • Serbia: “megaboard” in Belgrade, Laško Pivo brand (leased for the entire year). • On the markets of Kosovo and Macedonia we advertised through importers. • Italy: print.
We also made our presence felt at fairs:
• in February at the Pianeta Birra in Rimini, Italy; • in May at the agricultural food fair in Novi Sad and at the Prival Label fair in Amsterdam (joint participation of companies within the Pivovarna Laško Group); • in August we attended the BeerFest in Belgrade together with Pivovarna Union; • in September Laško Pivo participated at the “days of beer” in Zrenjanin.
In the autumn we organised activities linked with New Year promotion and designed the foundation for the 2007 marketing plan. In October, together with agencies for market communication, we solved the dilemma with regard to the architecture of the Laško Pivo brand and adopted the concept of unified communication on all markets under the umbrella brand Laško Pivo.
32 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Human resources management Knowledge, enterprise, partnership, responsibility and appreciation. These are the values that forge our common culture, the guiding principles of each employee. They also guide us in selecting new personnel and are the starting point for nurturing future leaders.
The year 2006 in the human resources sector was aimed at continuing implementation of the restrictive employment policy and further progress to achieving the goals set in previous years, oriented toward the reduction of employees and rise in the structure of qualifications. An innovation that we focused on in the past year was the start of cooperation within the field of human resource transactions among companies within the Pivovarna Laško Group, and the first results are already becoming apparent. In 2006, we introduced a central register of employee training, with which employees obtain functional knowledge closely related to their work position. At the end of 2006, a new corporate collective agreement (15 years have passed since the previous adoption of such act) was adopted, the amendments of which will be apparent in 2007, when the aforementioned agreement becomes effective. Employees by sector Pivovarna Laško had 339 employees as at 31 December 2006, with an index of 92.4 compared to the same period of the previous year, which means 7.6%, or 28 fewer employees.
Employees by sector as at 31 December
2004 % 2005 % 2006 % Company management 16 4.2 15 4.1 17 5.0 Administration and IT Department 23 6.0 24 6.5 22 6.5 Sales Sector 77 20.2 74 20.2 70 20.6 Production and Technology Sector 227 59.6 219 59.7 198 58.4 Business Economy Sector 23 6.0 22 6.0 21 6.2 Human Resources and Legal Safety Sector 15 3.6 13 3.5 11 3.2 Total 381 100.0 367 100.0 339 100.0
No significant deviations appeared in any sectors in 2006.
33 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Age structure of the workforce
Age tree of Pivovarna Laško as at 31 December 2006 14 13 13
11 11 11 10 10 9 9 9 8 8 8 Men: 7 7 220 employees, or 64.9% 6 6 average age = 43.6 years 5 5 5 5 4 3 3 3 3 3 2 2 2 2 age in 1 1 1 years 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64
1 1 1 1 1 1 2 2 2 2 2 3 3 3 3 4 4 4 4 4 Women: 5 119 employees, or 35.1% 6 6 average age = 41.7 years 7 7 7 7 7 Total: 8 339 employees average age = 43 years 11
The average age of employees was down by a month in comparison with 2005 and is approaching 43 years. The highest number of employed men and women falls within the 35 to 40 age group and represents a little less than one quarter of all employees. If we also add the age group of people aged between 40 and 45 years, they collectively represent 43% of all employees. The average age of employees has risen by almost three years since 2000, when it was 39.97 years.
This is the result of new retirement conditions, which tend to increase the length of service and retirement age during the transitional period. Given that the transitional period will last until 2014, the consequences of this will continue to be felt in the future.
34 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Overview of the workforce
Employees as at 31 December 2004
Women % Men % Total % Regular employees indefinite time 129 98.5 243 97.2 372 97.6 Regular employees definite time 1 0.8 7 2.8 8 2.1 Trainees definite time 1 0.8 – – 1 0.3 Total 131 100 250 100 381 100
Employees as at 31 December 2005
Women % Men % Total % Regular employees indefinite time 124 99.2 238 98.4 362 98.7 Regular employees definite time – – 3 1.2 3 0.8 Trainees definite time 1 0.8 1 0.4 2 0.5 Total 125 100 242 100 367 100
Employees as at 31 December 2006
Women % Men % Total % Regular employees indefinite time 118 99.2 217 98.6 335 98.8 Regular employees definite time – – 3 1.4 3 0.9 Trainees definite time 1 0.8 – – 1 0.3 Total 119 100 220 100 339 100
The ratio between male and female employees has not changed significantly in recent years and remains 2/3 in favour of men. The percentage of women in the total workforce stood at 35.1% at the end of 2006, a 2.9% rise from the end of the previous year. Consequently, the share of men in the workforce decreased by one percent from 65.9% in 2005 to 64.9% in 2006.
35 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Qualifications structure and employee training Last year, we continued towards our goal of gradually increasing the qualifications structure of our employees. The number of employees with secondary school and 2- and 4-year tertiary education increased by 1.9% in comparison with 2005 at the expense of unskilled, semi- skilled and skilled workers.
Continual technological development requires greater knowledge and a higher level of qualifications than in the past. Our goal must therefore be to upgrade the structure of qualifications of our employees. In particular we will try to take this fact into account when employing new people, and we must provide on-the-job training for our existing employees. There must be greater emphasis on providing technical training for unskilled labourers, whose knowledge would have to be mainly technically oriented.
Qualifications structure of the employees of Pivovarna Laško as at 31 December
2004 Share in % 2005 Share in % 2006 Share in % Master’s 3 0.8 2 0.5 2 0.6 4-year tertiary 38 10.0 40 10.9 44 13.0 2-year tertiary 28 7.3 25 6.8 26 7.7 Secondary 93 24.4 91 24.8 81 23.9 Skilled 110 28.9 105 28.6 91 26.8 Semi-skilled 34 8.9 34 9.3 33 9.7 Unskilled 75 19.7 70 19.1 62 18.3 Total 381 100.0 367 100.0 339 100.0
36 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 We are well aware of the necessity of being constantly up-to-date with innovations in individual areas, to upgrade personal capabilities and knowledge, in view of the fact that they represent a precondition for good work performance. Our support and understanding of educational requirements encourage employees to acquire functional knowledge through internal and external courses and seminars and promote workers in pursuing part-time studies or on-the-job training.
Currently, 37 workers are pursuing on-the-job training, which is 10.9% of all employees. In 2006, nine employees decided to pursue on-the-job training. Eight employees are attending postgraduate studies, seven 4-year tertiary education programmes, 21 2-year tertiary programmes and one is attending secondary school.
Eight employees successfully completed their on-the-job training in 2006. Four obtained level VII qualification, three level VI and one level V qualification. We also reimbursed educational costs for the employee who attended and successfully completed secondary school, obtaining a level V qualification, even though no education contracts were signed to that effect.
The company shall continue to offer training opportunities to its employees for obtaining essential expert knowledge, mainly in technical areas.
Legally prescribed courses and other training for implementation of job activities also took place with regularity. Workers attended various linguistic and computer training courses, as well as occupational health and safety courses, fire-safety and other courses.
In the past year, within the scope of the human resources department, we established a central register of all types of training, providing that the planning and realisation of the training itself was still reserved for individual departments. Data on the skills obtained by additional training of individuals is recorded in the human resources records of qualifications based on reports and copies of certificates and diplomas.
In 2006, we participated in a public tender for co-financing training and education for employees in promising companies in the Republic of Slovenia, funded by the European Social Fund and the Slovenian Ministry of Labour, Family and Social Affairs. We received SIT 2,300,000 for the implementation of programmes for obtaining valid public formal education and for professional training programmes.
37 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Employment of disabled persons The Decree on determining quotas for the employment of disabled persons came into effect in 2006 pursuant to the Vocational Rehabilitation and Employment of Disabled Persons Act. The Decree determines the portion of employed disabled persons within the total number of employees working for individual employers, who are obliged by law to employ a certain quota of disabled persons. The quotas are determined differently with regard to activities and total number of employees – for Pivovarna Laško, d.d. a 6% quota applies. If a company employs more disabled persons than determined by the quota, whose disability did not occur due to injury at work or occupational disease, the company is entitled to a bonus for exceeding the quota. On the contrary, the company shall calculate and perform payment to the fund for stimulating employment of disabled persons each month upon the payment of salaries.
With regard to the fact that we exceeded the quota of disabled persons in the company, as we employed 29 disabled persons, meaning 8.5% of all employees, we are entitled to the aforementioned bonus. Of these 29, seven are entitled to work part-time, while the remaining 22 are entitled to certain work-related restrictions with regard to their health. Voluntary supplementary pension insurance The pension plan was introduced in 2001 and has been running since then without any major difficulties. At the end of 2006, the company included 333 employees in the plan. The majority are in the 20/80 system, and only three employees are not prepared to contribute a 20% participation. Therefore, pursuant to applicable regulations the company transferred only the minimum premium amount to their accounts, amounting to SIT 4,692.00 monthly for the previous year. The percentage of workers who were included in the pension plan without their co-participation in premium payment is in decline, as these were workers who had less than five years to fulfil their retirement conditions. Wages The average gross wage of employees in 2006 stood at SIT 412,740, which means 1.8% more than in the same period in 2005. The employees were given the option to either accept 10% of their wages in shares and 90% in cash or the entire wage in cash. 47% of all employees decided to accept wages in cash, while the other 53% still receive their wages partly in shares. Working hours An analysis of working hours in the past years has demonstrated a decreasing trend with regard to the potential working hours fund as a result of the restrictive employment policy.
The number of paid public and national holidays increased in 2006 – there were 11 holidays in 2006, while only eight public holidays in 2005. Even the indicator of absence from work due to sickness (sick leave) is positive, as there were 3,440 hours less of such absences in the analysed period compared to the previous year. In 2005, the company again revealed a high percentage of working hour efficiency or working hour productivity, which stood at 78%.
38 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Environmental report During the past thirty years, environmental protection issues have become significant. Thus, much more attention is being paid to these issues.
The amount of expenditures related to the environment which must be paid by companies is constantly rising. These expenditures occur in regular business as well as in financing environmental investments which the companies take up to meet the standards of existing and future environmental regulations. With the accession of Slovenia to the European Union, environmental protection will become the basic requirement for development, production and consumption of products. A large part of Slovenian industry, mainly its exports, will increasingly be met with constant changes arising in the global economy.
Pivovarna Laško realised a long time ago that it must act in an environmentally friendly manner and direct its business policy at least toward legally prescribed standards relating to environmental protection. Water supply – water resources In 2006, maintenance work was performed on water supply systems according to the annual plan, and breakdowns were constantly noticeable on the Jepihovec (Jepihovec – Laško) and Lurd (Rimske Toplice – Laško) water supply systems due to the poor state of the pipelines. We also eliminated a number of minor breakdowns, which are common in such an extensive network.
In 2006 we did not make any major investments; however, the more significant works were implemented as follows:
• with the support of the Geological Survey of Slovenia we started preparing a hydrogeological description of water reservoirs and monitoring points, including the proposal of the monitoring plan for obtaining concessions with regard to ground water exploitation for beer production within Pivovarna Laško; • together with the Geological Survey of Slovenia we reviewed promising regions for obtaining extra quantities of drinking water; • regarding the rehabilitation of Zdraviliška ulica we installed and renewed part of the pipeline in Rimske Toplice; • we managed to restore a section of the pipeline in Huda Jama and Beli Studenec; • we rehabilitated part of the pipeline at the water supply section Voluš – Vrh by installing vents and outlets; • we rehabilitated part of the Tabor – Laško pipeline; • we replaced part of the pipeline located on the bottling and canning plant’s yard running from Pivovarna to Marija Gradec; • we restored the Z3 and Z4 water reservoirs and rehabilitated 300 metres of the pipeline in Borovke; • we replaced a 150-metre Salonit pipeline section in the village of Na Pristavi; • we installed an electrical connection and an automatic chlorination device in the Trije studenci (Globočaj) water supply system; • we restored and upgraded a two-kilometre section of the water supply system in Zgornja Rečica.
In 2006, we assured a continuous supply of drinking water to all consumers connected to the public water supply system under our management.
39 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Investments in water resources and the water supply system 250,000
200,000
150,000
100,000
Water supply system maintenance 50,000 Lurd aquifer Investments in water resources 0 and the water supply system 000 SIT) (’ year 2004 2005 2006
(’ 000 SIT) 2004 2005 2006 Water supply system maintenance 99,087 103,879 116,484 Lurd aquifer 8,981 50,345 120,127 Investments in water resources and the water supply system 108,068 154,224 236,611
Changes in beer-making technology which contributed to the reduction of emissions into the environment in 2006 The installation of a yeast separator prior to filtration was regarded as a vital beer production project. The separator eliminates suspended yeast from the beer and thus reduces the concentration of yeast by a factor of ten. Therefore, we actually reduced the consumption of the filtration agent and extended filtration time by around 40%. The consumption of water and energy was reduced, while 40% less of filtration agent waste (diatomaceous earth), which contains three times less organic substances (yeast), is generated as a result of this installation. Environmental burdening is thus reduced with the suspended yeast, which is directed from the separator to a bed to be dried and then sold as animal feedingstuffs.
In the entire area of beer production and in the energy and maintenance sector we installed ecological containers, absorption means and carpets for preventing the spread of hazardous substance spills. We minimised the possibility of waste oils, chemicals and other hazardous substance entering into the environment as a result of a potential accident (spill). Besides the introduction of ecological containers and absorbents, we also trained production operators regarding the correct use of protective equipment.
Together with the Faculty of Chemistry and Chemical Technology in Maribor we drew up a detailed model of water consumption on individual devices for production, bottling and canning of beer. We compiled a list of proposals for reducing water consumption in beer production comparing water consumption norms of European breweries. In 2007 we gradually began to take measures to reduce water consumption.
This year we verified and optimised conditions for 2CO collection, which result from alcoholic
fermentation of the beer. Thus we collect more of the newly formed CO2 and minimise the
loss of industrial CO2 into the environment, which we use in purified form in the production of beer in a protective atmosphere.
40 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Planned investments Investment in a device for the degasification of industrial water will enable the use of degasified water in the cellar area and in beer filtration. By doing this we reduce beer losses and the consumption of raw materials and industrial water, while also minimising organic pollution of waste water.
Diatomaceous earth waste from the filtration of beer is currently being dehydrated and dumped as untreated waste. In order to stabilise such waste, a special project has been introduced which includes the mixing of diatomaceous earth with wood ashes, meaning that the mixture of such wastes is used as a sealer layer at the municipal mixed waste dump. The emission of organic substances into the environment is strongly reduced with stabilised waste.
In 2007, by renewing automation in the welding plant, we intend to install new software which will also provide us with an opportunity for further optimisation of production and welding plant cleaning. We anticipate a reduction in water consumption and cleaning agents, while also reducing beer losses as well as the quantity and load of waste water.
We shall continue to implement measures for reducing beer losses during production, bottling and canning. The quality of work, careful production planning, reduction of losses during repeated beer pumping, filtration, and bottling and canning of beer represent the key possibilities for a reduction of beer turbidity, meaning that the level of raw material, energy and water consumption along with emissions to the environment will be reduced.
In June 2006 we started operation of the joint purification plant upon successful acquisition of a permit for the test run. Monitoring of all emissions into water and air and noise monitoring was performed up until July 2007. Professional preparation and a review of the necessary documentation for regular operation of the purification plant also took place during this period.
The purification plant processed approximately 460,0003 m of industrial waste water in 2006. In 2006, industrial waste water was purified in two phases, anaerobic and aerobic, with greater efficiency than expected. Besides the anaerobic reactor achieving almost 90% efficiency, the subsequent municipal aerobic purification plant can also achieve excellent purification results. Achieving the legally prescribed parametric values for releasing water into the tributary of the Savinja River has become standard practice.
Based on biogas monitoring we clearly notice increased sulphur content, and therefore it is necessary to upgrade to a desulphurisation device to be able to use the biogas in Pivovarna Laško’s boiler room.
We submitted an application for obtaining an environmental protection licence (IPPC) for the production plant of Pivovarna Laško in October 2006, the deadline of which was set as October 2007 at the latest. We shall also obtain a IPPC licence for the purification plant in October 2007.
41 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Overview of investments in the environment
(’ 000 SIT) 2004 2005 2006 Investments in water resources 108,068 154,224 236,611 Lurd aquifer 8,981 50,345 120,127 Water supply system maintenance 99,087 103,879 116,484 Water 9,918 456 1,349 Contributions for water reimbursements 9,918 − − Water concession − 456 1,349 Waste water 785,855 386,812 107,687 Purification plant 574,146 352,346 33,218 Provisions for the purification plant 207,709 − − Contributions from the water communities of Slovenia − 30,466 70,469 Compensation for fishermen’s families 4,000 4,000 4,000 Solid waste – environmental duty 42,756 43,714 55,544 Outlays for environmental protection - waste packaging 42,756 43,714 53,632 Environmental duty for waste packaging − − 1,896 Environmental duty for electronic and electrical equipment - abroad − − 16 Total 946,597 585,206 401,191
The contribution of improvements beneficial to the environment is not only in the reduction of environmental load, but the innovations and improvements also assure reduced consumption of materials, water and energy, in addition to reducing the expenses of waste removal and waste water purification. In certain circumstances it is also possible to improve the quality of products and reduce losses. Efficient environmental approaches also affect the company’s good reputation, which Pivovarna Laško certainly possesses.
The highly restrictive and extensive legislation relating to environmental protection in Slovenia also provides a new challenge to the purchasing profession. Environmental awareness has thus been largely shifted to suppliers in the European Union. Problems relating to waste, residue and excess materials are solved mutually among the consumers and suppliers.
Pivovarna Laško also strives to achieve and maintain a responsible attitude toward the environment by controlling the effects of its activities, products and services on the environment in consideration of its environmental policy and goals. This is implemented in compliance with increasingly restrictive legislation, economic policy development and other measures which encourage environmental protection and support the growing concern for environmental issues and sustainable development. Report on water supply systems As a manager of water supply systems we also continued to assure healthy drinking water in sufficient quantities in the past year. The supply of drinking water was undisturbed as we remedied major breakdowns with rapid repairs and interventions. We provided regular maintenance and fulfilment of HACCP principles with regard to the water supply system.
We distributed 1,228,000 m3 of water to consumers living within the entire water supply system of Laško and its surroundings. Of the aforementioned amount, 837,000 m3 were used by holdings, while the remaining 391,000 m3 by households. 161,000 m3 of water were distributed to the surrounding supply systems. We also connected 51 new consumers to the public water supply system during this period. We installed 32 meters for consumers who had previously been supplied with water based on payment of a lump sum without possessing water meters. In the previous year we replaced 411 water meters as part of regular
42 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 replacement services.
Together with the Geological Survey of Slovenia we researched promising water resources in the entire region to which we supply water. Besides performing measurements and research of natural water reservoirs, the Geological Survey of Slovenia also identified areas where it will be possible to collect water by using wells. Given that this is quite a complex task, work has continued throughout this year. With the support of the Geological Survey of Slovenia we also started preparing hydrogeological descriptions of existing water reservoirs and have been monitoring them in order to obtain the relevant concession.
Major activities performed in the previous year:
• we restored the Z3 and Z4 reservoirs in Borovke. We also renewed 300 metres of pipeline in this region. We took care of the layout of banks beside the stream that flows by the water reservoirs and replaced 150 m of the drainage (outflow) system; • we replaced 150 metres of Salonit pipeline from the water tank to the village Na Pristavi; • alongside Trubarjeva ulica in Laško we replaced the pipe fittings for connectors due to poor condition; • as part of the rehabilitation of Zdraviliška ulica we installed and renewed part of the pipeline in Rimske Toplice; • we rehabilitated part of the Tabor – Laško pipeline; • we managed to restore a section of the pipeline in Huda Jama and Beli Studenec; • we replaced part of the pipeline located on the bottling and canning plant’s yard which runs towards Marija Gradec; • we restored and replaced approximately 200 metres of pipeline at the chlorination station in Zgornja Rečica; • we rehabilitated part of the pipeline at the water supply section Voluš – Vrh by replacing vents and outlets; • we installed an electrical connection and device for automatic chlorination of the Trije Studenci water supply system in Globočaj; • we continued remote control of pumping stations and water tanks. We equipped the Petek water tank with a mobile station which helps us gather important data.
43 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 44 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Ownership capital structure and share price trends Pivovarna Laško has been organised as a public limited company since 1995. At the close of the financial year, the company had 9,660 shareholders, 4.4% fewer than at the end of 2005.
Number of shareholders as at 31 December
2004 2005 2006 Number of shareholders 10,727 10,109 9,660 Chain index − 94.2 95.6
Ownership capital structure As at 31 December 2006 the company‘s share capital stood at SIT 8,747,652,000, divided into 8,747,652 shares without a nominal value, all paid up in full. All the shares are ordinary, registered shares issued as book-entry securities (dematerialised), under the designation PILR and PILH. As at 31 December 2006, 8,578,085 shares were entered under the designation PILR and 169,567 shares under the designation PILH in the central register of KDD (Central Securities Clearing Corporation in Ljubljana).
Ownership structure of Pivovarna Laško as at 31 December 2006 9.0% 19.1% 11.1% State funds 0.0% Banks
Investment companies, mutual funds 20.0% and coverage insurance funds 40.8% Other legal entities Own shares fund Natural persons
(%) 2004 2005 2006 State funds 14.1595 14.2738 9.0574 Banks 11.4117 10.6267 11.0890 Investment companies, mutual funds and coverage insurance funds 21.0010 17.6311 19.9649 Other legal entities 30.1426 36.8554 40.7809 Own shares fund 0.0135 0.0032 0.0021 Natural persons 23.2717 20.6098 19.1058 Total 100.0 100.0 100.0
The ownership structure of Pivovarna Laško changed slightly in 2006. Infond Holding d.d. remained the largest shareholder, increasing its 17.45% stake from 2005 to 24.43%. It was followed by Center naložbe d.d., which owns a 11.18% stake, which was not among the top ten shareholders of last year, and Kapitalska družba d.d. with a 7.06% stake, the same as last year but dropping by one position. Among major holders were Bank Austria Creditanstalt AG, NFD-1 Delniški investicijski sklad d.d., Delniški Vzajemni Sklad Triglav steber I and Vzajemni sklad Probanka globalne naložbe. Other companies owned less than 3% of Pivovarna Laško, d.d.
45 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Management – company director Boško Šrot owned 8,517 shares (0.0974%) in Pivovarna Laško, d.d. as at 31 December 2006.
As at 31 December 2006, the number of shares owned by members of the Supervisory Board (hereinafter: SB) was as follows: Andrej Kebe – SB vice-chairman 10,101 (0.1155%), Anton Turnšek – SB member 9,773 (0.1117%), Bojan Košak – SB member 17,632 (0.2016%) and Marko Jugovič – SB member 5,264 (0.0602%). The other members of the Supervisory Board were not holders of Pivovarna Laško, d.d. shares as at this date. Shares Shares in Pivovarna Laško, d.d. have been listed on the Ljubljana Stock Exchange as ordinary shares under the designation PILR since 1 February 2000.
A total of 169,567 Pivovarna Laško, d.d. shares have the designation PILH and are reserved for denationalisation beneficiaries following the procedure of ownership transformation. If the issued decision benefits the denationalisation beneficiary, the share designation is changed from PILH to PILR and can be traded on the organised securities market.
As at 31 December 2006, the company held 183 lots of redeemed treasury shares in its portfolio, or 0.0021% of all shares. In 2006, the company acquired 4,500 lots of treasury shares with a total value of SIT 35,347,000 and it sold 4,587 lots of treasury shares with a total value of SIT 36,013,000, which were purchased by employees.
The book value of a share was SIT 5,256.08 as at 31 December 2006 in line with IFRS. The market value of a share exceeds the book value by 83.2% and stands at SIT 9,629.98. Each share gives its owner voting rights at the annual General Meeting of shareholders and the right to participate in profits.
The management of the company is authorised, on the basis of a decision adopted at the General Meeting of 9 August 2002 and by arrangement of the Supervisory Board to increase the share capital of the company by up to 50%, which amounts to SIT 4,373,826,000, within five years following the entry of amendments to the company’s statute (Articles of Association) in the court register on 14 May 2003. At the same time the management of the company has the right to make decisions, when increasing the company’s share capital, on the exclusion of the pre-emptive right of shareholders to subscribe new shares. Thus far, the management has not realised or used authorised capital. The General Meeting has not yet decided on the conditional increase in share capital.
In previous years, the company has paid out almost 50% of annual net profits as dividends, with the remainder being allocated to investments and the formation of provisions. The company management intends to support this long-term policy regarding dividends in the future. Real growth of dividends is expected to correspond to growth in business operations.
46 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Average market value of a PILR share in 2006
9,600 9,400 9,200 9,000 8,800 8,600 8,400 8,200 8,000 7,800 7,600 7,400 7,200 (SIT) January February March April May June July August Septermber October November December
(SIT) Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Average market 7,433 7,363 7,346 7,561 7,789 7,765 7,863 8,152 8,152 8,592 9,059 9,606 value of the share
Book value of a PILR share as at 31 December for the 1997–2006 period
6,000 5,000 4,000 3,000 2,000 1,000 0 (SIT) 1997 1998 1999 2000 2001 2002 2003 2004 *2005 *2006
(SIT) 1997 1998 1999 2000 2001 2002 2003 2004 *2005 *2006 2,946 3,323 3,747 4,335 4,715 5,302 5,529 5,469 4,819 5,256 * in line with IFRS
The book value of a share dropped from SIT 5,856 to SIT 4,819 in 2005 due to the transition to IFRS.
47 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Audited financial statements of Pivovarna Laško, d.d. with the independent auditor’s report for the fiscal year 2006 in accordance with IFRS Balance sheet of Pivovarna Laško, d.d. as at 31 December 2006
(’000 SIT) 31.12.2006 31.12.2005 Index 2006/2005 ASSETS NON-CURRENT ASSETS 96,249,424 80,554,241 119 Intangible assets 94,006 45,560 206 Property, plant and equipment 10,119,146 10,966,776 92 Investment properties 873,524 976,020 90 Non-current investments in subsidiaries 54,272,274 53,246,651 102 Available-for-sale financial assets 27,188,452 11,243,279 242 Long-term loans 2,302,029 2,096,066 110 Deferred income tax assets 1,399,993 1,988,899 70 CURRENT ASSETS 5,480,746 26,749,531 20 Non-current assets held for sale 354,855 − − Inventories 1,714,926 1,690,968 101 Trade and other receivables 2,269,475 2,443,367 93 Current income tax receivables 562,170 − − Available-for-sale financial assets − 22,226,147 − Short-term loans 545,669 303,539 180 Cash and cash equivalents 33,651 85,510 39 TOTAL ASSETS 101,730,170 107,303,772 95 EQUITY CAPITAL AND RESERVES (MAJORITY CAPITAL) 45,978,343 42,150,948 109 Share capital issued 8,747,652 8,747,652 100 Share premium 24,533,797 24,533,797 100 Revenue reserves 8,434,971 8,443,238 100 Revaluation available-for-sale financial investment 3,185,192 285,538 − Net profit from previous years (383,460) (1,115,054) − Net profit for the year 1,460,191 1,255,777 116 TOTAL EQUITY 45,978,343 42,150,948 109 LIABILITIES NON-CURRENT LIABILITIES 24,542,452 23,457,139 105 Borrowings 23,345,730 23,086,167 101 Employee benefits 279,464 275,814 101 Deferred income tax liabilities 917,258 95,158 964 CURRENT LIABILITIES 31,209,375 41,695,685 75 Trade and other payables 2,636,229 2,828,561 93 Current tax liabilities − 291,034 − Borrowings 28,573,146 38,576,090 74 TOTAL LIABILITIES 55,751,827 65,152,824 86 TOTAL EQUITY AND LIABILITIES 101,730,170 107,303,772 95
48 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Income statement of Pivovarna Laško, d.d. for 1 January to 31 December 2006
(’000 SIT) 1.1.−31.12.2006 1.1.−31.12.2005 Index 2006/2005 Net sales revenues 20,004,086 18,721,076 107 Changes in inventories of products and work in progress 161,337 (67,252) – Other operating revenues 263,212 340,453 77 Costs of goods, materials and services 11,493,252 10,667,723 108 Employee benefit expenses 2,436,427 2,519,272 97 Depreciation and amortisation of intangible and tangible fixed 2,261,341 2,279,075 99 assets Write-downs of non-current and current assets 66,143 48,593 136 Other operating expenses 322,740 293,058 110 OPERATING PROFIT 3,848,741 3,186,556 121 Financial income 431,440 321,669 134 Financial costs 2,098,747 1,967,263 107 FINANCIAL COSTS – NET (1,667,307) (1,645,594) − PROFIT BEFORE INCOME TAX 2,181,434 1,540,962 142 Income tax expense 721,243 285,185 253 PROFIT FOR THE YEAR 1,460,191 1,255,777 116 Share of majority owners in net profit 1,460,191 1,255,777 116 Earnings per share: - basis (SIT) 166.92 143.56 116 - diluted (SIT) 166.92 143.56 116
Cash flow statement of Pivovarna Laško, d.d. for 1 January to 31 December 2006
(’ 000 SIT) 1.1.−31.12.2006 1.1.−31.12.2005 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 6,378,717 4,731,290 Income tax paid (806,357) (302,335) NET CASH GENERATED FROM OPERATING ACTIVITIES 5,572,360 4,428,955 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (PPE) (1,421,465) (1,190,723) Proceeds from sale of PPE 106,296 411,356 Purchase of intangible assets (53,492) (10,369) Purchase/sale of available-for-sale financial assets 7,687,581 (41,199,260) Interest received 74,214 109,226 Dividends received 357,226 212,443 NET CASH USED IN/GENERATED BY INVESTING ACTIVITIES 6,750,360 (41,667,327) CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (2,098,747) (1,238,260) Proceeds from borrowings 26,643,539 59,542,441 Repayment of borrowings (36,386,920) (20,653,436) Proceeds from treasury shares (8,268) (14,369) Dividends paid out to Company’s shareholders (524,183) (437,181) NET CASH USED IN/GENERATED BY FINANCING ACTIVITIES (12,374,579) 37,199,195 NET DECREASE IN CASH AND CASH EQUIVALENTS (51,859) (39,176) Cash and cash equivalent at the beginning of the year 85,510 124,686 Cash and cash equivalents at the end of the year 33,651 85,510
49 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 – (8,267) (524,183) 2,899,654 1,460,191 (532,450) Total 2,899,654 4,359,845 42,150,948 45,978,343 – – – – – 285,538 2,899,654 2,899,654 2,899,654 3,185,192 for-sale for-sale financial Revaluation Revaluation investments of available- – – – – 1,460,191 year (1,255,777) 1,255,777 1,460,191 1,460,191 for the for (1,255,777) Net profit profit Net – – – – – 731,594 (524,183) 1,255,777 from from (383,460) years (1,115,054) previous previous Net profit profit Net – – – – – – (8,267) (8,267) Total Total 8,443,238 8,434,971 revenue revenue reserves – – – – – – (8,267) (8,267) 2,306,826 2,298,559 reserves Revenue Revenue – – – – – – 666 666 (2,005) (1,339) shares Treasury Treasury – – – – – – (666) (666) 2,005 1,339 shares treasury Reserves for – – – – – – – – Legal Legal 6,136,412 6,136,412 reserves – – – – – – – – Share 24,533,797 24,533,797 premium – – – – – – – – 8,747,652 8,747,652 Share issued capital BALANCE as at 1 JanuaryBALANCE as at 2006 in line with IFRS Statement of changes in equity of Pivovarna Laško, d.d. for 1 January to 31 December 2006 1 January 31 December for to d.d. Laško, of changes in equity of Pivovarna Statement 000 SIT) (’ Fair value gains: value Fair net of tax financial assets, Available-for-sale Net income/expense recognised directly recognised income/expense Net in equity Profit for the financial year for the financial Profit Total recognised income for 2005 for income recognised Total Transfer of net profit from the previous year the previous from of net profit Transfer Purchase/sale of treasury shares Purchase/sale Payment of dividends Payment BALANCE as at 31 December 2006 31 December BALANCE as at
50 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 – (14,432) (110,315) (437,181) 1,255,777 (110,315) (451,613) Total 1,145,462 41,457,099 42,150,948 – – – – – 395,853 285,538 (110,315) (110,315) (110,315) for-sale for-sale financial Revaluation Revaluation investments of available- – – – – 260,798 260,798 1,255,777 year (260,798) 1,255,777 1,255,777 for the for Net profit profit Net – – – – – (260,798) (437,181) (417,075) from from (697,979) years (1,115,054) previous previous Net profit profit Net – – – – – – (14,432) (14,432) Total Total 8,457,670 8,443,238 revenue revenue reserves – – – – – – (14,432) (14,432) 2,321,258 2,306,826 reserves Revenue Revenue – – – – – – 4,519 4,519 (6,524) (2,005) shares Treasury Treasury – – – – – – 6,524 2,005 (4,519) (4,519) shares treasury Reserves for – – – – – – – – Legal Legal 6,136,412 6,136,412 reserves – – – – – – – – Share 24,533,797 24,533,797 premium – – – – – – – – 8,747,652 8,747,652 Share issued capital BALANCE as at 1 JanuaryBALANCE as at 2005 in line with IFRS Statement of changes in equity of Pivovarna Laško, d.d. for 1 January to 31 December 2005 1 January 31 December for to d.d. Laško, of changes in equity of Pivovarna Statement (’000 SIT) Fair value gains: value Fair net of tax financial assets, Available-for-sale Net income/expense recognised directly recognised income/expense Net in equity Profit of the financial year of the financial Profit Total recognised income for 2005 for income recognised Total Transfer of net profit from the previous year the previous from of net profit Transfer Purchase/sale of treasury shares Purchase/sale Payment of dividends Payment BALANCE as at 31 December 2005 31 December BALANCE as at
51 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 52 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Financial statements of Pivovarna Laško, d.d. – explanatory notes The financial statements of Pivovarna Laško, d.d. have been compiled in accordance with the Companies Act and International Financial Reporting Standards (IFRS).
The Supervisory Board of Pivovarna Laško, d.d. discussed the audited unconsolidated financial statements at its meeting of 9 May 2007 and approved their publication.
The financial statements for 2006 were audited by PricewaterhouseCoopers d.o.o.
Pivovarna Laško, d.d. successfully completed the financial year 2006. It managed to increase its beer production on the domestic market by 4.9% and maintain its leading market share in Slovenia under far from favourable beverage production circumstances. The company failed to achieve set goals due to the drop in beer sales on the markets of Bosnia and Herzegovina, Serbia, Montenegro and Croatia. The difficulties that we experienced on the aforementioned markets are of a fiscal nature, although we were also confronted with rejection of Slovenian goods. The fiscal policy on the market of Bosnia and Herzegovina does not acknowledge the invoice price for further taxation but 30% higher support prices. Therefore, Slovenian beer is at a disadvantage in comparison with domestic and imported beer from Croatia and Serbia, which is also available on this market. We managed to generate only 84.3% of the sales revenue from 2005 on foreign markets in 2006.
The index of total sales of beer in 2006 in comparison with the previous year stood at 101.0.
Pivovarna Laško generated SIT 20,004,086,000 in net sales revenues in 2005, 6.8% up from the previous year. Sales on the domestic market accounted for 88.8% of revenues, with foreign markets accounting for the remaining 11.2%.
At SIT 16,579,894,000 operating expenses were 4.9% higher than in the previous year, mainly due to a rise in service costs and the purchase price of goods and materials sold. Depreciation and amortisation expenses stood at SIT 2,261,341,000, or 0.8 % down from the previous year.
In 2006, the company generated an operating profit of SIT 3,848,741,000, up 20.8% from 2005. Cash flow from operating activities (EBITDA) stood at SIT 6,110,082,000, up 11.8% from the previous year.
Financial revenues were up 34.1% compared to 2005. Financial expenses were 6.7% higher than in 2005 due to an increase in financial liabilities for loans taken out.
In 2006, Pivovarna Laško, d.d. generated a total profit of SIT 2,181,434,000, up 41.6% from 2005. Due to changes in tax legislation, taxation increased by 174.9%, although the determined tax liability for 2006 was offset entirely with deferred tax assets, established on the basis of effects of the transition to IFRS, which reduced retained earnings.
The company‘s net profit was 16.3% higher than in the previous year, standing at SIT 1,460,191,000. Distributable profit stood at SIT 1,076,731,000 in 2006.
53 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Important business events Based on the resolution of the General Meeting of shareholders adopted on 16 June 2006, the entry of the amendment to the company’s statute (Articles of Association) in the register of companies became final and legally valid on 22 September 2006, which determined the company’s share capital and newly introduced no-par-value shares (shares without nominal value). From that point onwards the share capital stood at SIT 8,747,652,000.00, divided into 8,747,652 ordinary transferable registered no-par-vale shares. On 4 October 2006, KDD – Central Securities Clearing Corporation in Ljubljana changed data entered in the central register of dematerialised securities on the nominal value of Pivovarna Laško, d.d. shares under the designations PILR and PILH without actually performing the replacement, thus from this date onwards it reads: 1 unit. As at 4 October 2006 a total number of 8,578,085 shares under the designation PILR and 169,567 shares under the designation PILH were hereby subscribed upon entry in the central register.
Instead of paying in four annual instalments, Pivovarna Laško made an early payment on 31 January 2006 for the shares of Poslovni sistem Mercator, d.d. to Slovenska odškodninska družba, d.d. in accordance with the sales contract dated 30 August 2005 purchasing 440,891 shares at SIT 38,458.54 per share, and for 106,950 of the shares that Slovenska odškodninska družba acquired in the recapitalisation procedure at a price of SIT 39,037.41 per share.
On the same day, namely on 31 January 2006, Pivovarna Laško, d.d. sold 367,437 Poslovni sistem Mercator shares to its subsidiary Pivovarna Union, d.d. at the same price as at the purchase of shares, so for SIT 38,458.54 per share. Pivovarna Laško thus owns 210,548 shares in Poslovni sistem Mercator, d.d., or a 6.37% stake, as at 31 January 2006, while Pivovarna Union, d.d. owns 367,437 shares, or 10.948%, of all Poslovni sistem Mercator d.d. Ljubljana shares.
On 10 May 2006, Pivovarna Laško, on the basis of a sales contract dated 30 August 2005, booked over 106,950 newly issued shares of Poslovni sistem Mercator, d.d., Ljubljana, from Slovenska odškodninska družba d.d. Ljubljana. As a result of this share transfer, Pivovarna Laško owned 317,498 MELR shares, representing an 8.84% stake in Poslovni sistem Mercator, d.d. Consequently Pivovarna Laško, d.d. and Pivovarna Union, d.d. together held a 19.07% stake in Poslovni sistem Mercator, d.d., Ljubljana. Events after the balance-sheet date The ownership structure of Management Board and Supervisory Board members within the company’s share capital partly changed as at 26 January 2007 and is now as follows: Boško Šrot – Director 8,840 (0.101%), Andrej Kebe – Vice-Chairman of the Supervisory Board 9,691 (0.110%), Bojan Košak – member of the SB 17,670 (0.201%) and Marko Jugovič – 5,306 (0.060%). The ownership share of SB member Anton Turnšek did not change as at 31 December 2006, while the remaining SB members hold no PILR shares.
54 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Financial ratios
I. Profitability ratios *2005 *2006 EBITDA margin 29.5 34.6 Operating margin 17.0 23.0 Net profit margin 6.7 14.6 Return on equity 3.0 6.4 Return on assets 3.0 4.9 Return on invested capital (ROIC) 12.3 25.8 * in line with IFRS
II. Activity ratios *2005 *2006 Days sales of inventories 33 38 Days sales outstanding 33 36 Operational cycle 66 74 Supplier payment period 35 40 Net cash flow days 31 34 Net sales to invested capital 0,89 1,12 Net sales per employee (‘000 SIT) 49,625 56,389 Personnel costs per employee (‘000 SIT) 6,678 6,868 Average number of employees 377 355 * in line with IFRS
III. Financial condition ratios *2005 *2006 Quick ratio 0.60 0.11 Current ratio 0.65 0.18 Equity to total assets ratio 0.39 0.45 Debt to equity ratio 1.46 1.05 Net debt (borrowings) to equity ratio 0.92 1.04 Borrowings / EBITDA 11.12 6.99 Equity to non-current assets ratio 0.52 0.48 Long-term funds to non-current assets ratio 0.82 0.73 Interest coverage 4.36 45.53 * in line with IFRS
55 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 56 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Vision The successfully concluded financial year 2006 confirms that the company‘s business policy is correct and that it will continue to ensure successful development in the future. As a rule, Pivovarna Laško has always been ranked as one of the most successful companies in Slovenia‘s agro-industrial sector. We confidently expect the company to report similar business results in the future despite much tougher business conditions.
The company ranks among the most successful breweries in Europe in terms of the entire production and bottling process and in terms of product quality.
Pivovarna Laško aims to retain the level of excellence it has achieved and its leading position in this sector in Slovenia. The project of consolidating the Slovenian beverage industry and the continuous seeking of new possibilities to utilise synergies will continue to be the basic strategy of our business policy. Only a consolidated company can compete successfully with foreign corporations on either the Slovenian market or on foreign markets. The company‘s further development depends primarily on the realisation of this project, but it will in any case focus on capital ties with other beverage producers, mainly in South Eastern Europe.
Pivovarna Laško has already proved many times that know-how and will are the key factors in overcoming the problems that arise in business conditions that are getting more challenging each year. We plan to be even more successful in the future, in particular by making better use of the synergy found in related companies with capital ties.
Pivovarna Laško aims to provide its loyal customers with the very highest quality of all of its products, and to ensure that its owners, the shareholders, see successful development and security in their investments and a satisfactory return on their capital.
57 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Performance of Affiliates
About the Pivovarna Laško Group The Pivovarna Laško Group brings together producers of beer, mineral, spring and natural waters, soft drinks, liquor and other alcoholic beverages, and syrups for beverage production, and performs wholesale as well as retail sales.
PARENT COMPANY Pivovarna Laško, d.d.
SUBSIDIARIES ASSOCIATED UNDERTAKINGS Talis, d.o.o., Maribor Delo, d.d., Ljubljana Ownership: 100.00% Ownership: 24.99% Pivovarna Union, d.d., Ljubljana Slovita, d.d.o., Moskva Ownership: 96.72% Ownership: 25.00% Jadranska Pivovara, d.d., Split Ownership: 94.55% Vital Mestinje, d.o.o., Mestinje Ownership: 95.53% Radenska, d.d., Radenci Ownership: 92,06% RA&LA, d.o.o., Sarajevo Ownership: 97.01%
About the Pivovarna Union Group
The Union Group includes the following associated undertakings: the parent company Pivovarna Union, d.d., Ljubljana (96.72% owned by Pivovarna Laško, d.d.), and subsidiaries Fructal živilska industrija d.d., Ajdovščina (91.70% owned by Pivovarna Union, d.d.), Fructal Zagreb, d.o.o. (100% owned by Fructal, d.d.), Eurofruit Sarajevo, d.o.o. (100% owned by Fructal, d.d.) and Fruktal Mak, a.d. Skopje (89.39% owned by Fructal, d.d.).
58 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Performance Beverage producers are met almost every year with changing business conditions. These changing conditions largely depend on the weather, which can be favourable one day and unfavourable the next. The conditions for beverage sales in 2006 were more favourable than in 2005, although there were no significant changes to market circumstances in comparison to previous years. With the introduction of an increasing number of retail chains on the Slovenian market, competition in the beverage industry is becoming extremely stiff.
The Pivovarna Laško Group (hereinafter: Group) sold 5.06 million hl of various types of beverages in the financial year 2006, which is a 3.7% increase over 2005.
Sales volume of the companies in the Group
(hl) 2004 2005 2006 Index 2006/2005 Beer 1,355,482 2,064,166 2,091,255 101.3 Laško 1,124,829 1,080,522 1,083,644 100.3 Split 230,653 194,318 199,452 102.6 Union − 789,326 808,129 102.4 Mineral water 759,740 701,820 680,685 97.0 Radenska 759,740 701,820 680,685 97.0 Natural drinking water 163,138 334,102 355,603 106.4 Radenska 125,200 161,170 183,370 113.8 Laško 37,938 39,326 47,567 121.0 Union − 126,054 124,024 98.4 Fructal − 7,552 642 8.5 Fruit juices, iced teas 345,276 1,736,281 1,891,668 108.9 Radenska 221,400 241,990 301,357 124.5 Vital 123,876 126,163 146,804 116.4 Union − 455,764 535,189 117.4 Fructal − 912,364 908,318 99.6 Syrups 33,344 34,271 34,119 99.6 Vital 33,344 34,271 34,119 99.6 Other alcoholic beverages − 8,658 7,941 91.7 Fructal − 8,658 7,941 91.7 Total 2,656,980 4,879,298 5,061,241 103.7
The Group‘s sales volume exceeded the results achieved in 2005 in almost all key beverage areas:
BEER sales were 27,000 hl higher, exceeding 2005 sales by 1.3% MINERAL WATER sales were 19,000 hl lower, at 97% of the sales from the previous year NATURAL DRINKING WATER sales were 21,000 hl higher, exceeding 2005 sales by 6.4% FRUIT JUICE AND ICED TEA sales were 155,000 hl higher, exceeding 2005 sales by 8.9% SYRUPS sales were 1,000 hl higher, exceeding 2004 sales by 2.3% OTHER ALCOHOLIC BEVERAGES sales stood at 7,900 hl, an 8.3% drop from 2005
59 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Radenska, d.d., Radenci The history of Radenska, d.d. extends back to 1869, when landowner Dr Karel Henn filled the first bottles with local mineral water. Over 50 years later (in 1923), this mineral water was recognised as medicinal, and since 1936 it has used three red hearts as its logo. The Radenska “Tri srca” brand is one of the oldest brands in Slovenia.
Radenska‘s core business is the bottling and marketing of mineral and spring waters and soft drinks.
In 2000, the two companies merged on the basis of a friendly takeover of Radenska by Pivovarna Laško. This was a turning point for Radenska, as the company found it easier to achieve the goals of the merger with the Pivovarna Laško Group:
• coordinated participation in the markets of joint suppliers and ensuring the best possible supply conditions • coordinated participation in the buyers‘ market with joint business partners • joint participation in the expansion of the sales area in the domestic and, especially, foreign markets
Business conditions change year after year, becoming increasingly more challenging, as the competition on the market is extremely stiff. That is why the financial year 2006, by comparison with previous years, is still one of the transitional years of adjusting to the European market and the changed business conditions in the markets of former Yugoslav republics. Radenska, d.d. set strategic goals in 2006, the fulfilment of which for the most part contributed to the company’s solid financial results.
The characteristic of the year 2006 was that the sales portfolio of products expanded in the flavoured water sector with the new OAZA brand, which on its appearance alone points to the renewal of PET packaging and transition from paper labelling to PP (polypropylene) labels for the entire sales range of Radenska, d.d.
Radenska, d.d. regards 2006 as a successful financial year. Regardless of tough conditions in the sector of energy sources and materials, whose prices rose more than expected and to a greater level than could be subsequently corrected by their own prices, the result is solid. They achieved a result that is encouraging to the entire company by implementing certain measures, generating 6.9% more net sales revenue than the year before and approximately the same figure as planned for 2006. We are witnessing a further drop in the consumption of sparkling (carbonated) mineral waters, not only in Slovenia but also in European markets. Radenska even increased its water and soft drink sales in this period.
Total sales of all products stood at 1,165,410 hl of beverages, meaning 5.5% more than in 2005. Even though the consumption of sparkling beverages was on the decline, these types of beverages continued to account for the bulk of beverage sales. In 2006, the company‘s sales were as follows: • mineral water 58.4% • spring water and table water 15.8% • other soft drinks 25.8%
61 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 In 2006, Radenska managed to increase its productivity per employee by 18.8 %, primarily through downsizing.
By selling 116.5 million litres of beverages and through sales of goods, materials and services, Radenska generated a net sales revenue of SIT 7.7 billion, a 6.9% rise from 2005. Its operating profit was SIT 303.9 million, and EBITDA stood at SIT 1.4 billion. Its net operating profit was SIT 1.69 billion. The company also increased added value per employee by SIT 795,000 compared to 2005. In 2006, the company generated a net cash flow of SIT 2.8 billion, up 25.5% from the previous year.
Overall, the operation of Radenska in 2006 was more successful than in the previous year. We can therefore expect the same trend to continue in the future.
The existing market environment in connection with evident trends affected the aggressively set primary goals in performance for 2007, determined as a rise of 9.1% in the overall volume of beverage output (litres). It also plans to generate EUR 34.8 million in net sales revenue and EUR 2.6 million in operating profit. The company also plans to improve indicators (ratios) that demonstrate activity, efficiency and the performance of internal processes. The company therefore plans an increase in added value per employee of 11.8% and in productivity per employee of 18.4%.
62 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 63 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Jadranska Pivovara, d.d., Split Jadranska Pivovara, d.d., Split was established in 1970, when it started producing beer. The company‘s core activity is the production and sale of beer. The Silosi unit was operational up until last year and was sold in 2006. Since 2000 the company has been licensed to produce and sell the Kaltenberg beer brand. This licensed contract was prolonged to 2015 at the start of 2007.
In 2000, Pivovarna Laško became the majority owner of Jadranska Pivovara, d.d. by purchasing 94.55% of its total value.
Last year, sales of beer on the Croatian market increased by 4% according to statistical analyses. Jadranska Pivovara sold 199,452 hl of beer in the financial year 2006, which was up 2% from 2005. The sales share of individual brands is as follows: • Zlatorog 46.6% • Kaltenberg 42.1% • other commercial brands 11.3%
The majority of the sales revenue (91.6%) was generated by the company on the Croatian market, while 8.4% of total sales were made on foreign markets, mainly in Bosnia and Herzegovina.
In 2006 Jadranska Pivovara generated SIT 4.9 billion in total revenues, 13.8% more than in the previous year. The reported losses in the amount of SIT 860 million were a result of losses arising from regular operation and certain other influences, including extraordinary payment of severance and negative financial effects of selling the Silosi unit (the book value was higher than the purchase price). Disregarding these one-off financial effects on operating profit, the losses would have been significantly greater, but in any event smaller than in 2005.
The company plans to increase its sales volume by 7.8% in 2007 by selling 215,000 hl of beer. Next year, the company will focus on becoming more active in terms of sales, and it has hired the consulting firm AT Kearney in an effort to achieve the integral streamlining of its operations, mainly by reducing costs and ensuring cost-effectiveness and profitability.
The company plans to generate SIT 4.33 billion in total revenue in 2007. It also projects losses, which will be covered, with a rehabilitation plan within the next years, by 2010.
65 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Vital Mestinje, d.o.o., Mestinje Vital, d.o.o. was established over 40 years ago, and its core activity is fruit processing and the production and bottling of fruit juices, syrups and other still soft drinks.
Vital also owns the Frupi brand, which is firmly established on the Slovenian market.
Pivovarna Laško became its majority owner in 1999 with a 51% interest in Vital. In 2004, 29,000 shares were removed from the company‘s treasury shares fund on the basis of a decision adopted at the shareholders‘ General Meeting. This increased the ownership stakes of the remaining shareholders, and Pivovarna Laško became the owner of 63.79% of Vital. In December 2005, the transformation of Vital Mestinje, d.d., a joint stock company, into a limited company was completed and a request was filed for the registration of the company, which was accomplished in 2006. As at 31 December 2006 Pivovarna Laško became the holder of a 95.53% stake in Vital Mestinje, d.o.o.
In 2006, Vital increased its sales by 12.8%, selling over 180,000 hl of all of its products. Like other beverage producers, Vital was faced with problems in 2006, but overcame them successfully, as evidenced by its solid financial performance.
The share of sales of the company’s own brands dropped on account of the production of different commercial brands (CB).
In 2006, Vital Mestinje performed its role in bottling commercial brands for the Mercator, Tuš and Spar Slovenija retail chains, where volume increased by 34%, meaning that commercial brands represent two thirds of the company’s production. The CB increase by 34% and drop of the Frupi commercial brand by 13% are primary sales indicators which greatly affect the economic result of performance.
The implementation of synergy measures was completed in compliance with the adopted programme dynamics of the consulting firm AT Kearney. Employee numbers were reduced by 10% (also through early termination with severance pay). Only 44 workers were employed at the end of the year. Employee reduction willl likely affect performance in the upcoming years.
The economic efficiency of operations was satisfactory despite major structural changes in the production of low-return commercial brands and greater costs relating to severance pay. The company generated SIT 1.38 billion in sales revenue, which is on the same level as last year, and SIT 22.5 million in gross profit.
Vital Mestinje is designated as the holder of bottling services within the Pivovarna Laško Group for commercial retailers and thereby contributes to the success of the main commercial brands of the Pivovarna Laško Group in the soft drinks sector.
In 2007, the company plans a volume of sales around the same level as in 2006, SIT 1.4 million in total revenues, SIT 43 million in total profit and intends to improve financial ratios with regard to cost effectiveness and profitability.
67 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Union Group The companies linked by the Union Group include: Pivovarna Union, d.d., Ljubljana; Fructal živilska industrija d.d., Ajdovščina (91.70% owned by Pivovarna Union, d.d.); Fructal Zagreb, d.o.o. (100% owned by Fructal, d.d.); Fruktal Mak, a.d., Skopje (89.39% owned by Fructal, d.d.); and Eurofruit d.o.o., Sarajevo (100% owned by Fructal, d.d.).
The core activity of the parent company, Pivovarna Union, d.d., is the production of beer, soft drinks and water. The core activity of Fructal, d.d. is the production of fruit juices. Fructal Zagreb, d.o.o. and Eurofruit, d.o.o. only sell and distribute the products of Fructal, d.d. Fruktal Mak, a.d., Skopje also produces juices and beverages.
The Union Group was created in 2001 when Pivovarna Union, d.d. took over Fructal, d.d. In early February 2005, Pivovarna Laško, d.d. became the majority owner of Pivovarna Union, d.d. by purchasing 41.3% of its shares, and Pivovarna Union, d.d. became part of the Pivovarna Laško Group.
In 2006, Pivovarna Union, d.d. surpassed the planned results even though business conditions were increasingly challenging, strongly influencing beverage sales. Other companies in the Union Group, Fructal, d.d., Fruktal Mak, a.d. and Fructal Zagreb, d.o.o., were well behind relative to their sales plans, which was reflected in operating losses.
The successfully completed year 2006 for Pivovarna Union, d.d. is evidence of its business policy being correctly oriented, ensuring successful performance in the future.
The declining trend of beer consumption in the developed world within the brewery industry continues, and thus greater emphasis is put on soft drinks such as flavoured water, water and juices. The transition of consumers to non-sparkling, less sweet and less intensified beverages with lower fruit content continued in this sector. Greater pressure from retail chains on the improvement of supply conditions also continued, as well as the appearance of new requirements on brand bottling, which represent direct competition to our brands. A growing number of consumers are looking for low-priced products and commercial brands, not only in soft drinks but also in beer. All these trends are evident on our export markets, mainly in the area of the former Yugoslavia. Besides the influence of foreign and domestic competition on these markets, economic policies of these countries, which strive to strengthen the domestic economy by reducing taxes on domestic products and by urging people to buy domestic products, also greatly affect sales. Increased investments of foreign competitors in catering establishments and increased imports of standard beer and all types of soft drinks are apparent in Slovenia in the catering sector.
Pivovarna Union, d.d. and Fructal, d.d. achieved solid results on the Slovenian market by undertaking several measures in reacting to changing conditions and by adjusting to competition by introducing their own products, bottling commercial brands, with promotional and other campaigns, and increasing their activity on the market. Companies within the Union Group were not successful in exports, mainly to southern markets, so within the Pivovarna Laško Group we also plan to continue intensifying activities to halt negative trends and reposition our products, while at the same time striving to acquire new sales markets in the EU and countries of South Eastern Europe.
The Union Group sold 2,384,242 hl of all beverages in 2006 on the Slovenian and foreign markets, meaning 4% more in comparison with the previous year, but 1% less than planned. The Group sold 808,129 hl of beer, 7,941 hl of liquors, 1,443,506 hl of soft drinks and 124,666 hl of water. It also sold 1,938 tons of food products, a 12% drop from 2005 and 21% less than planned.
69 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 The Union Group sold 1,755,996 hl of all beverages in Slovenia, meaning 7% more than in 2005 and 5% more than the planned quantity. The Union Group also sold 951 tons of food products, which is 2% less than in the previous year and 9% less than planned.
In 2006, the Union Group sold 628,248 hl of all beverages on export markets, down 4% from 2005 and 15% less than planned, as well as 987 tons of food products, 19% less than in 2005 and 29% less than the planned quantity.
In 2006, the Union Group’s consolidated net revenue stood at SIT 35,304,910,000, a 4.4% rise from the previous year. Net sales revenues of the controlling company were 9.9% higher than in 2005, while the Fructal Group generated 1.3% less than in the previous year due to a drop in sales on foreign markets. Other operating revenues standing at SIT 734,621,092,000 were 22.5% lower than in 2005. All costs and expenses of the Union Group in 2006 stood at SIT 34,840,123,000, a 3.8% rise from 2005. 95.9% of all costs and expenses were represented by operating costs; financial expenses amounted to 2.2%, while income tax and deferred taxes amounted to 1.9%.
The net operating result for 2006 was a profit of SIT 1,514,763,000 of which the net operating result of the Group was a profit of SIT 1,558,869,000 and the minority result for the financial year included reporting losses in the amount of SIT 44,106,000.
In 2006, the Group generated a net cash flow in the amount of SIT 5,010,921,000, which was 14.2% of the net sales revenues and 6.2% higher than in 2005. The EBITDA of the Union Group for 2006, standing at SIT 6,069,308,000, was 11.9% higher than in 2005.
As at 31 December 2006, total assets stood at SIT 56,114,790,000 and were 50% higher in comparison with 31 December 2005.
The asset structure changed on account of non-current assets, which represented 78.4% of all assets, compared to 71.7% the year before. Current assets represented 21.6% of all assets, 28.3% in the year before.
All units of non-current assets were lower in comparison with the previous year, while non- current investments were 15-times higher, standing at SIT 20,124,852,000, representing 45.8% of all non-current assets. The increase of non-current investments was mainly a result of Mercator shares purchased by the controlling company and the revaluation of these and other shares to market value.
A total of 48.7% of all current assets were current trade receivables standing at SIT 5,917,774,000, which rose by 15% on account of receivables from domestic customers. Inventories standing at SIT 4,555,843,000, which were 10.4% lower, represented 37.5% of all current assets. In 2006, the Group also acquired available-for-sale financial assets in the amount of SIT 806,700,000, representing 6.6% of all current assets. It did not hold any current investments at the end of 2005. The Group booked derivative financial instrument in the amount of SIT 615,610,000 among available-for-sale financial assets, and revaluation available-for-sale financial investments were increased by the same amount.
Equity in the amount of SIT 31,400,538,000 represented 56% of liabilities and was 23.3% higher in comparison with 2005. The equity share within total assets dropped by 12.1%. The reason was the increase of non-current financial liabilities 26.7 fold from SIT 422,966,000 to SIT 11,300,312,000 and increased liabilities for deferred tax by SIT 1,079,892,000 and an increase in current liabilities by 8%.
In 2006, the Group reduced liabilities to suppliers by 19.5%, while increasing them to
70 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 government institutions by 66.1%, mainly due to increasing the controlling company’s liability arising out of income tax.
The performance of the Fructal Group, which incurred losses, also had a significant influence on the aforementioned Group results beside the performance of the controlling company, which had solid performance indicators in 2006. Losses were accumulated by three companies, Fructal, d.d., Fructal Zagreb, d.o.o., and Fruktal Mak, a.d.
The Fructal Group sold 916,901 hl of beverages and 1,938 tons of food products in 2006. Thus, 91.8% of the planned annual beverage quantity was achieved, although the volume of sales dropped by 1.3% in comparison to the previous year. In addition, 79.4% of the food product plan was achieved, although with an 11.6% drop in sales compared to 2005.
Fructal, d.d. sold 825.283 hl of beverages, which is 1.3% less than in 2005, and 1,938 tons of food products, meaning 11.6% less. In 2006, Fruktal Mak, a.d., sold 91,618 hl of beverages produced in Macedonia, which is 0.6% less than in the previous year. Neither Fructal, d.d. nor Fruktal Mak, a.d. achieved the forecasted level of sales, falling short by 7.8% and 12.0%, respectively. The retailer Fructal Zagreb, d.o.o. also fell short of the sales plan by 27.2%.
Fructal, d.d. ended 2006 with losses in the amount of SIT 777,750,000, which is a significant decline from 2005, which ended with losses in the amount of SIT 68,348,000. Fructal, d.d. failed to achieve the forecasted net sales revenues, as revenues in the amount of SIT 13,617,419,000 only amounted to 89.9% of the planned revenues and 98.4% of the 2005 target. Though domestic market revenues rose by 1.9 %, there was a 7.3% drop on foreign markets, reflecting only 76% of the planned annual figure. Costs and expenses increased by 7.9%, which was reflected in losses due to the decline in revenues. In 2006, Fructal, d.d. was faced with major price increases of principal raw materials used, which meant significantly higher production prices. The main increase of costs is due to write-downs, impairments and adjustments of outmoded inventories of materials and products, and receivables from customers, mainly in respect of its subsidiaries.
The main increases among assets are increases of non-current investments by 10.9% due to revaluation of investments to market value and increases of receivables from customers by 7.5%. All other important asset groups are lower compared to 2005. The structure of liabilities remained the same at 54% of equity and 46% of various non-current and current liabilities. In 2006, the company managed to reduce non-current liabilities toward banks (by half) but increased current liabilities by 5.7%, meaning cumulatively 2% higher liabilities toward banks.
Fruktal Mak, a.d., Skopje, mainly due to the significant cost increase of input raw material and failure to achieve sales plans on export markets, ended 2006 with losses in the amount of SIT 50,437,000. Net sales revenues were increased by 1.4%. The company greatly increased sales on the domestic market by 73.6%, as a result of which the percentage of revenues on the domestic market increased from 24.5% to 42.0%. At the same time the company generated 22.0% less on sales to foreign markets. The decision of the controlling company Fructal, d.d. to cover the sale of fruit syrups from Slovenia instead of Macedonia influenced a major part of the decline of sales to export markets. Production in Macedonia became more expensive than in Slovenia due to an extraordinary increase in prices of raw materials, mainly due to an increase in the price of sugar. The company then managed to fill the capacities of the syrup lines by bottling low-cost syrups in PET packaging, representing an alternative to local syrup producers.
In past years, the company experienced severe liquidity problems, irregularly settled payments
71 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 to suppliers, and permanently increased liabilities to Fructal, d.d., its largest creditor. In 2006, the company managed to regularly service liabilities to financial institutions upon the increase of operations and made an agreement to take out new loans for remedying liquidity issues, for production and information technology upgrades, and for fleet investments due to the sales reorganisation in Macedonia.
As at 31 December 2006, the company reported SIT 1,374,679,000 of financial and operating liabilities, which exceeded their working capital by SIT 413,653,000. Its debt to the parent company still represents one of the key issues of Fruktal Mak’s financial rehabilitation, as it owes SIT 560,744,000, meaning 40.8% of all liabilities, to Fructal, d.d.
The operations of Fructal Zagreb, d.o.o. in 2006 were marked by the replacement of its director on two occasions. In 2006, the company faced major issues on the Croatian market, which influenced the reported losses at the end of the year. New packaging was introduced on this market in 2006, which caused a 15 to 30% rise in prices. Some product prices drastically rose with the packaging introduction, and sales were halved as a result of this. Boycotts of Slovenian products also occurred as of 1 June 2006 at the largest retailer in Croatia, Konzum, which holds a market share rising above 20% on the Croatian market. Fructal Zagreb only remained on shelves containing food for children at Konzum’s retail outlets.
In 2006, the company sold 12.7% more than in 2005 in terms of quantity. It generated SIT 1,785,914,000 sales revenues, which is 2.5% more compared to the previous year but only 60% of the planned amount. The company ended the financial year with losses in the amount of SIT 103,888,000, as expenses prevailed over revenues. Due to high costs and receivables from customers, liabilities to the parent company, Fructal, d.d., amounting to SIT 1,249,758,000, also increased by 7.9% in comparison with the previous year.
Družba Eurofruit, d.o.o., Sarajevo, registered for trade and marketing services and 100% owned by Fructal, d.d., is the general agent for Fructal, d.d. and Pivovarno Union, d.d. in Bosnia and Herzegovina. The company is responsible as a legal person for product quality to all importers on the market of Bosnia and Herzegovina. According to the agency contract, Fructal, d.d. covers planned and documented actual costs arising from the subsidiary’s operations for Eurofruit, d.o.o. Eurofruit, d.o.o. failed to generate other operating revenues in 2006.
Pivovarna Union, d.d. plans to sell 1,545,600 hl of all types of beverages in 2007, which is 5.3% more than the sales output in 2006. It forecasts the sale of 78% of all beverages on the domestic market, while selling 22% on foreign markets.
By developing new products and enhancing their own existing and commercial brands, the company aims to provide quality products and regular and timely customer service.
The planned operating profit for 2007, standing at SIT 3.33 billion, is on the same level as the amount generated in the previous year. The planned EBITDA stood at SIT 5.42 billion and was 5% lower than the amount generated in 2006.
The policy of optimising the number of employees continued in 2007, and therefore a reduction of employees by 6% is expected by the end of the year.
73 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 The Union Group’s activity in the 2007 financial year shall be oriented to the financial rehabilitation of Fructal, d.d., Ajdovščina and Fruktal Mak, a.d., Skopje, both incurring losses in 2006.
Fructal, d.d. plans a rise in the volume of sales by more than 10% in 2007, while forecasting a minimal positive operating profit.
74 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Audited financial statements of the Pivovarna Laško Group with the independent auditor’s report for the fiscal year 2006 in accordance with IFRS Consolidated balance sheet of the Pivovarna Laško Group as at 31 December 2006
(’000 SIT) 31.12.2006 31.12.2005 Index 2006/2005 ASSETS NON-CURRENT ASSETS 119,737,398 90,071,865 133 Intangible assets 22,830,234 22,754,767 100 Property, plant and equipment 45,358,404 50,041,116 91 Investment properties 1,596,943 1,727,782 92 Available-for-sale financial assets 42,957,598 7,585,899 566 Investments in associates 5,073,655 5,004,206 101 Long-term loans 325,026 398,306 82 Trade and other receivables 30,050 30,216 99 Deferred income tax assets 1,565,488 2,529,573 62 CURRENT ASSETS 44,516,765 57,321,484 78 Non-current assets held for sale 562,356 − − Inventories 8,226,837 9,223,933 89 Trade and other receivables 9,599,950 8,776,078 109 Current income tax receivables 568,297 − − Available-for–sale financial assets 19,660,963 36,675,556 54 Short-term loans 4,225,827 2,094,458 202 Derivatives 1,231,220 − − Cash and cash equivalents 441,315 551,459 80 TOTAL ASSETS 164,254,163 147,393,349 111 EQUITY CAPTIAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS 68,220,438 54,734,376 125 OF THE COMPANY Share capital issued 8,747,652 8,747,652 100 Share premium 24,533,797 24,533,797 100 Revenue reserves 8,323,040 8,323,040 100 Revaluation of available-for-sale financial investments 12,064,525 2,604,085 463 Net profit from previous years 10,043,757 6,256,416 161 Net profit for the year 4,507,667 4,269,386 106 MINORITY INTEREST 4,489,177 5,582,339 80 TOTAL EQUITY 72,709,615 60,316,715 121 LIABILITIES NON-CURRENT LIABILITIES 44,060,915 31,813,299 138 Borrowings 35,469,105 24,399,661 145 Employee benefits 1,188,338 1,381,285 86 Provisions 549,656 473,112 116 Trade and other payables 11,398 11,944 95 Deferred income tax liabilities 6,842,418 5,547,297 123 CURRENT LIABILITIES 47,483,633 55,263,335 86 Trade and other payables 10,756,366 11,042,382 97 Current tax liabilities 849,742 492,184 173 Borrowings 35,877,525 43,728,769 82 TOTAL LIABILITIES 91,544,548 87,076,634 105 TOTAL EQUITY AND LIABILITIES 164,254,163 147,393,349 111
75 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Consolidated income statement of Pivovarna Laško Group for 1 January to 31 December 2006
(’000 SIT) 1.1.−31.12.2006 1.1.−31.12.2005 Index 2006/2005 Net sales revenues 66,434,399 63,865,377 104 Changes in inventories of products and work in progress 39,036 (23,014) – Other operating revenues 1,741,597 2,437,017 71 Raw material and consumables used 40,667,274 39,827,988 102 Employee benefit expenses 11,673,994 11,548,349 101 Depreciation and amortisation of intangible 7,590,485 7,384,578 103 and tangible fixed assets Write-downs of non-current and current assets 347,487 636,038 55 Other operating expenses 1,970,231 1,512,738 130 OPERATING PROFIT 5,965,561 5,369,689 111 Financial income 3,056,355 1,336,033 229 Financial costs 3,233,059 1,804,033 179 Share of (loss)/profit of associates 119,486 100,077 119 FINANCIAL COSTS – NET (57,218) (367,923) – PROFIT BEFORE INCOME TAX 5,908,343 5,001,766 118 Income tax expense 1,306,109 767,859 170 PROFIT FOR THE YEAR 4,602,234 4,233,907 109 Minority interest in profit 106,651 103,830 103 Equity holders (majority interest) of the company 4,495,583 4,130,077 109 Earnings per share for profit attributed to the equity holders of the Company: - basis (SIT) 513.93 472.16 109 - diluted (SIT) 513.93 472.16 109
76 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Consolidated cash flow statement of the Pivovarna Laško Group for 1 January to 31 December 2006
(’000 SIT) 1.1.−31.12.2006 1.1.−31.12.2005 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 12,646,291 13,920,219 Income tax paid (1,185,578) (209,814) NET CASH GENERATED FROM OPERATING ACTIVITIES 11,460,713 13,710,405 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of subsidiaries – net costs − (17,446,398) Purchase of property, plant and equipment (PPE) (2,879,870) (4,426,861) Proceeds from the sale of PPE 166,484 684,729 Purchase of intangible assets (91,984) (5,857,563) Purchase/sale of available-for-sale financial assets (11,323,902) (19,493,181) Interest received 2,053,526 627,452 Dividends received 1,052,867 648,209 NET CASH USED IN/GENERATED BY INVESTING ACTIVITIES (11,022,879) (45,263,613) CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (3,233,060) (1,853,261) Proceeds from treasury shares (8,268) 5,285 Proceeds from borrowings 64,253,901 69,541,972 Repayment of borrowings (61,035,701) (35,408,057) Dividends paid out to Company’s shareholders (524,850) (437,181) NET CASH USED IN/GENERATED BY FINANCING ACTIVITIES (547,978) 31,848,758 NET DECREASE IN CASH AND CASH EQUIVALENTS (110,144) 295,550 Cash and cash equivalent at the beginning of the year 551,459 255,909 Cash and cash equivalents at the end of the year 441,315 551,459
77 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 – – 12,084 (524,849) 4,602,234 9,460,440 Total Total (524,849) (1,157,009) equity 8,315,515 72,709,615 12,917,749 60,316,715 – – – – – – 106,651 (1,199,813) 4,489,177 5,582,339 interest Minority (1,093,162) (1,199,813) – – 12,084 42,804 (524,849) 4,495,583 9,460,440 Total Total (524,849) of the 9,515,328 holders to equity to 68,220,438 14,010,911 54,734,376 Company attributable attributable – – – – – – – 9,460,440 9,460,440 9,460,440 2,604,085 for-sale for-sale financial 12,064,525 Revaluation Revaluation investments of available- – – – – 12,084 12,084 Net Net 4,495,583 (4,269,386) 4,507,757 4,507,667 4,269,386 the year profit for for profit (4,269,386) – – – – 42,804 42,804 42,804 (524,849) 4,269,386 from from years 6,256,416 3,744,537) previous previous 10,043,757 Net profit profit Net – – – – – – – – – – 2,186,628 2,186,628 reserves Revenue Revenue – – – – – – – – 666 666 (1,339) (2,005) shares Treasury Treasury – – – – – – – – (666) (666) 1,339 2,005 shares Reserves for treasury for – – – – – – – – – – Legal Legal 6,136,412 6,136,412 reserves – – – – – – – – – – Share Share 24,533,797 premium 24,533,797 – – – – – – – – – – Share Share issued 8,747,652 8,747,652 capital BALANCE as at 31 December 2006 31 December BALANCE as at Payment of dividends Payment Purchase/sale of treasury shares Purchase/sale Transfer of net profit from the previous year the previous from of net profit Transfer Total recognised income for 2006 for income recognised Total Profit for the financial year for the financial Profit Net income/expense recognised di - recognised income/expense Net rectly in equity Foreign exchange gains/losses exchange Foreign Increase/decrease Fair value gains: value Fair net of tax financial assets, Available-for-sale Consolidated statement of changes in equity of the Pivovarna Laško Group for 1 January to 31 December 2006 1 January 31 December for to Group Laško of changes in equity of the Pivovarna statement Consolidated (’000 SIT) BALANCE as at 1 JanuaryBALANCE as at 2006 in line with IFRS
78 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 – 130,309 249,016 646,317 596,039 (14,432) 126,826 (437,181) 4,233,907 Total Total (451,613) (1,503,855) (1,118,492) equity 4,360,733 60,316,715 56,407,595 57,526,087 – – – – – – – 103,830 646,317 596,039 937,924 (304,432) 5,582,339 1,041,754 4,540,585 4,540,585 interest Minority – – – 139,309 249,016 (14,432) (437,181) 4,130,077 Total Total (451,613) (811,098) of the (1,199,423) (1,118,492) 3,318,979 holders 54,734,376 to equity to 51,867,010 52,985,502 Company attributable attributable – – – – – – – – – (1,199,423) (1,006,976) 2,064,085 3,803,508 4,810,484 for-sale for-sale financial (1,199,423) (1,199,423) Revaluation Revaluation investments of available- – – – – – – – 139,309 284,486 139,309 284,486 (284,486) Net Net 4,130,077 (284,486) 4,269,386 4,269,386 the year profit for for profit – – – – – – 284,486 249,016 249,016 249,016 (437,181) from from years (152,695) (8,151,097) 6,256,416 6,160,095 previous previous 14,311,192 Net profit profit Net – – – – – – – – – – – (14,432)– (14,432) 2,201,060 2,186,628 2,201,060 reserves Revenue Revenue – – – – – – – – 7,290 7,290 (2,005) (2,005) (2,005) (2,005) (7,290) (7,290) shares Treasury Treasury – – – – – – – – 2,005 7,290 2,005 2,005 2,005 7,290 (7,290) (7,290) shares Reserves for treasury for – – – – – – – – – – – – – Legal Legal 6,136,412 6,136,412 6,136,412 reserves – – – – – – – – – – – – 5,546,745 Share Share 24,533,797 premium 24,533,797 18,987,052 – – – – – – – – – – – – – Share Share issued 8,747,652 8,747,652 8,747,652 capital BALANCE as at 31 December 2005 31 December BALANCE as at Payment of dividends Payment Purchase/sale of treasury shares Purchase/sale Transfer of net profit from the previous year the previous from of net profit Transfer Total recognised income for 2005 for income recognised Total Profit of the financial year of the financial Profit Net income/expense recognised recognised income/expense Net directly in equity Foreign exchange gains/losses exchange Foreign Increase/decrease Purchase of shares Purchase Other – trademarks assets revaluation Fair value gains: value Fair net of tax financial assets, Available-for-sale BALANCE as at 1 JanuaryBALANCE as at 2005 Adjustments upon audit Adjustments Consolidated statement of changes in equity of the Pivovarna Laško Group for 1 January to 31 December 2005 1 January 31 December for to Group Laško of changes in equity of the Pivovarna statement Consolidated (’000 SIT) BALANCE as at 1 JanuaryBALANCE as at 2005 – 2005 audited
79 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 80 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Consolidated financial statements of the Pivovarna Laško Group – explanatory notes The Supervisory Board of Pivovarna Laško, d.d. discussed the audited consolidated financial statements of the Pivovarna Laško Group in line with IFRS for 2006 at its regular meeting of 9 May 2007 and approved their publication.
The financial statements for 2006 were audited by PricewaterhouseCoopers d.o.o. of Ljubljana.
The group of companies in which Pivovarna Laško, d.d. holds financial investments is as follows:
Corporate name Company objective Country Ownership share in % Subsidiary companies Vital Mestinje, d.o.o. production of beverages Slovenia 95.530 Radenska, d.d. production of beverages Slovenia 92.060 Talis, d.o.o. production of beverages Slovenia 100.000 Jadranska Pivovara, d.d. production of beverages Croatia 94.550 RA&LA, d.o.o. wholesale Bosnia and Herzegovina 97.010 Pivovarna Union, d.d. production of beer and beverages Slovenia 96.720 Associated undertakings Delo, d.d. newspaper publishers Slovenia 24.989 Slovita, d.o.o. Moscow wholesale Russia 25.000
The Union Group includes the following associated undertakings: Pivovarna Union, d.d., Ljubljana (96.72% owned by Pivovarna Laško, d.d.), the subsidiary Fructal, d.d., Ajdovščina (91.70% owned by Pivovarna Union, d.d.), Fructal Zagreb, d.o.o., Zagreb (100% owned by Fructal, d.d.), Eurofruit, d.o.o., Sarajevo (100% owned by Fructal, d.d.) and Fruktal Mak, a.d., Skopje (89.39% owned by Fructal, d.d.).
In 2006, the Union Group and all aforementioned subsidiaries were included in the consolidation between 1 January 2006 and 31 December 2006.
Due to material insignificance, the financial statements of the subsidiaries Talis, d.o.o., Maribor, and RA&LA, d.o.o., Sarajevo, were not included in the consolidation.
The method of complete consolidation was used for the companies in the Group to compile the consolidated financial statements.
The consolidated financial statements for the Pivovarna Laško Group were drafted according to International Financial Reporting Standards (IFRS) on the basis of EU Regulation 1602/2002 and Article 51 of the Companies Act.
The Regulation and Act stipulate the application of IFRS for consolidated financial statements, including for companies whose securities are quoted on any of the official securities markets in EU Member States and are subject to consolidation on the basis of Article 53 of the Companies Act. The accounting rules and valuation methods used to prepare the financial statements for the reporting period for the Pivovarna Laško Group according to IFRS were consistent with the provisions of the IFRS. The same applies to comparative financial statements.
In 2006, the Pivovarna Laško Group sold 5.061 million hl of all beverages, which is a 3.7% increase over the previous year. The sales plan was not achieved mainly due to the decline in beer and mineral water sales on foreign markets.
81 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Pivovarna Laško generated SIT 66.4 billion in net sales revenues in 2006, 4.0% up from the previous year.
The Pivovarna Laško Group‘s operational expenditure for 2006 amounted to SIT 62.2 billion, which is a 2.1% increase over the previous year.
The operating profit of the Pivovarna Laško Group in 2006 amounted to SIT 6.0 billion. Pre- tax profit amounted to SIT 5.9 billion, 18.1% higher than in the previous year. Net profit was 8.7% higher than in 2005.
In 2006, the tax burden for the current tax increased partly due to the change in tax legislation (suspension and decrease of certain types of relief) and partly due to utilisation established receivables for deferred tax upon transition to IFRS and conversion of remaining receivables for deferred tax to new, lower tax rates from legal persons’ income. The deferred tax, which reduced the current operating profit, amounted to SIT 196,539,000. It refers to the reduction of receivables for deferred tax in the amount of SIT 928,486,000, reducing the net operating profit, and to the reduction of liabilities for deferred tax arising from the revaluation of commercial brands to new tax rates in the amount of SIT 731,947,000, increasing the current operating profit.
Total assets of the Pivovarna Laško Group as at 31 December 2006 stood at SIT 164.2 billion, which increased in comparison to the previous year due to the increase in available-for-sale financial assets. The Group acquired a 3.19% stake in Poslovni sistem Mercator in 2006. Financial investments also increased due to revaluation to higher fair market values.
The Group’s total equity capital without minority interest, in accordance with IFRS, stood at SIT 68.2 billion, which is SIT 13.5 billion more than as at 31 December 2005. Due to the revaluation of financial investments, the revaluation of available-for sale financial assets increased to SIT 12.1 billion.
Retained net profit in line with IFRS stood at SIT 10.0 billion and was SIT 3.8 billion higher than in the previous year.
Financial liabilities increased by SIT 3.2 billion in comparison with the previous year due to the need to finance new financial investments.
82 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Events after the balance-sheet date The subsidiaries Pivovarna Union, d.d., Ljubljana and Radenska, d.d., Radenci acquired shares from the issuer Poslovni sistem Mercator d.d., Ljubljana under the designation MELR, with Pivovarna Union acquiring 96,953 shares, and Radenska 96,952 shares as at 12 February 2007. The price per share stood at EUR 187.27. Upon the acquisition of shares, Pivovarna Union owned 464,390 shares, or a 12.33% stake, while Radenska owned 96,952 shares, or a 2.57% stake. Considering the stake that Pivovarna Laško, d.d. holds, this being a 8.43% stake (317,498 shares), the controlling company, Pivovarna Laško, d.d. and its subsidiaries, upon the transaction, hold a total of 878,840 shares of the issuer, or 23.34 % of all issued shares of Mercator d.d.
The companies Pivovarna Laško, d.d., Radenska, d.d., Radenci and Talis, d.o.o., Maribor announced their takeover intention to purchase shares of Delo, časopisno in založniško podjetje d.d., Ljubljana on 12 March 2007 pursuant to the Takeovers Act (Official Gazette of the RS, No. 79/2006, hereinafter: ZPre-1). On the date of announcing the takeover intention, Pivovarna Laško, d.d. was and still is the holder of 166,790 shares, Radenska, d.d. holds 127,928 shares, while Talis, d.o.o., Maribor holds 20 shares of the issuer Delo, d.d., Ljubljana, which collectively represents 294,738 shares, or 44.1587% of all issued shares.
Pivovarna Laško, d.d., together with Radenska, d.d. and Talis, d.o.o., as at 2 April 2007 announced a takeover bid for the purchase of shares from Delo, časopisno in založniško podjetje d.d., Dunajska 5, Ljubljana. The takeover bid expired on 3 May 2007. Pivovarna Laško, d.d. acquired 333,036 shares, or 49.94%, as a result of the takeover bid, which together with the shares held prior to this transaction, represented 300,096, or 74.92%, of all Delo, d.d. shares. Pivovarna Laško, d.d., together with Radenska, d.d. and Talis, d.o.o., therefore owned 628,044 shares upon the takeover bid, meaning a 94.09% stake of all Delo, d.d. shares.
The Securities Market Agency issued a decision on 8 May 2007, within which it established that, even though the companies performing the takeover did not determine it, within the bid itself, the minimum number of shares for which a takeover bid must be accepted, and the takeover bid was successful. The Competition Protection Office of the RS, with a decision dated 19 April 2007, decided that the concentration of Pivovarna Laško, d.d. and Delo, d.d. complies with the rules of competition and that the Office would not contest it.
On 31 January 2007, the director of the subsidiary Fructal, d.d., Ajdovščina, Miran Božič, was given notice without fault on his account and a new director, Anton Balažič, was nominated in his place as at 1 February 2007 for a five-year term.
The term of Zlatko Hohnjec, the director of Radenska, d.d., Radenci, expired as at 28 Februray 2007. He was replaced by Tomaž Blagotinšek, nominated as at 1 March 2007 for a five-year term.
83 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 84 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Vision of the Pivovarna Laško Group The Pivovarna Laško Group plans sales of 5.399 million hl of all types of beverages for the 2007 financial year. It plans to sell 41% of beer, 38.9% soft drinks, 19.4% water and 0.8% other beverages within the forecasted volume of sales. The plans are set optimistically, including a 6.7% increase of beverage sales, meaning that we shall strive to increase sales by 338,000 hl in 2007 in comparison with the previous year.
The Group plans to generate EUR 307 million in sales revenue, an operating profit of EUR 34 million and an increase in EBITDA by 10% to EUR 63 million.
With these plans the Group‘s vision is to remain the leading producer of beer and mineral and spring waters in Slovenia, with a dominant market share, and to be a competitive producer of soft drinks with a significant market share.
Forecast and actual sales by companies in the Group
(hl) 2007 forecast Actual sales in 2006 F-07/A-06 index Beer 2,212,900 2,091,225 105.8 Laško 1,150,000 1,083,644 106.1 Split 215,000 199,452 107.8 Union 847,900 808,129 104.9 Mineral water 689,277 680,685 101.3 Radenska 689,277 680,685 101.3 Natural drinking water 356,392 355,603 100.2 Radenska 185,892 183,370 101.4 Laško 50,000 47,567 105.1 Union 120,500 124,024 97.2 Fructal − 642 − Fruit juices, iced teas 2,101,329 1,891,668 111.1 Radenska 372,088 301,357 123.5 Vital 145,718 146,804 99.3 Union 577,200 535,189 107.3 Fructal 1,006,323 908,318 110.8 Syrups 31,578 34,119 92.6 Vital 31,578 34,119 92.6 Other alcoholic beverages 8,191 7,941 103.1 Fructal 8,191 7,941 103.1 Total 5,399,667 5,061,241 106.7
The Group forecasts an increase in sales of beer, mineral water, fruit juices and iced teas. The Group forecasts a repeat of the actual sales from previous year in the natural drinking water segment, with somewhat lower sales of syrups. Sales of other alcoholic beverages is forecasted at around the same level as in 2005, which would be an improvement from last year.
By emphasising high quality and recognisability of its products, the Group aims to be successful on foreign markets, especially in South Eastern Europe, in terms of sales of beer, mineral water and soft drinks, and to match its competitors throughout Europe in terms of performance and return on capital.
85 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Group beverage sales forecast for 2007 by type (volume)
2,500,000
2,000,000
1,500,000 Beer Mineral water 1,000,000 Natural drinking water Fruit juices, iced teas 500,000 Syrups
(hl) 0 Other alcoholic beverages Beer Mineral Natural Fruit juices, Syrups Other water drinking iced teas alcoholic water beverages
(hl) 2007 forecast % Beer 2,212,900 41.0 Mineral water 689,277 12.8 Natural drinking water 356,392 6.6 Fruit juices, iced teas 2,101,329 38.9 Syrups 31,578 0.6 Other alcoholic beverages 8,191 0.2 Total 5,399,667 100.0
86 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Group beverage sales forecast for 2007 (structure)
0.6% 0.2% 6.6%
Beer 12.8% Mineral water Natural drinking water 41.0% Fruit juices, iced teas Syrups 38.9% Other alcoholic beverages
Group business plan for 2007
(’000 SIT, except for the number of employees) 2007 forecast Total revenues 77,669,984 Total expenditure 70,045,009 Depreciation and amortisation 7,080,922 Gross profit 7,624,975 Taxes 1,761,535 Net profit 5,863,440 Cash flow (net profit + depreciation and amortisation) 12,944,362 Number of employees 1,727
87 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 Issued by: Pivovarna Laško, d.d., Trubarjeva ul. 28, 3270 Laško, Slovenia Graphic design: Zvone Kosovelj, Studio Zodiak / Photography: Janez Pukšič Realised by: Studio Zodiak / Print: Dikplast, Celje / Impression: 200 copies / July 2007
88 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 89 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8 WorldReginfo - 4ad35390-8d6f-42ea-b156-fe62e4ed67e8