SLOVENIA CONTROL, Slovenian Air Navigation Services, Limited

SLOVENIA CONTROL, Slovenian Air Navigation Services, Limited ANNUAL REPORT 2011 The air traffic control service is the unseen hand that monitors, directs and coordinates

air traffic, every day, in all weather and

around the entire world. INTRODUCTION 4 CORPORATE VISION, MISSION STATEMENT AND VALUES 5 COMPETITION POLICY 7 DEVELOPMENT POLICY 7 ABOUT THE COMPANY 9 OFFICIAL STATUS AND LINE OF BUSINESS 10 ORGANISATIONAL STRUCTURE 11 CEO’S REPORT 13 CORPORATE GOVERNANCE STATEMENT 15 SUPERVISORY BOARD REPORT 16

i MANAGEMENT REPORT 18 1 KEY EVENTS AND FACTORS AFFECTING PERFORMANCE IN 2011 AND AFTER THE END OF THE FINANCIAL YEAR 19 2 MAJOR FIGURES 23 3 PROVISION OF AIR NAVIGATION SERVICES IN 2011 25 4 INVESTMENTS 43 5 RISK MANAGEMENT 45 6 AIR TRAFFIC DATA FOR 2011 47 7 KEY PLANS FOR 2012 AND EXPECTATIONS FOR COMPANY’s DEVELOPMENT 62

ii FINANCIAL REPORT 65 1 INDEPENDENT AUDITOR’S REPORT 66 2 FINANCIAL STATEMENTS 68 3 NOTES TO THE FINANCIAL STATEMENTS 74

ABBREVIATIONS USED 100 INTRODUCTION ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 5

CORPORATE VISION, MISSION STATEMENT AND VALUES

Corporate vision Mission statement

With the help of highly qualified and highly motivated Our mission is: personnel, we at Slovenia Control (hereinafter referred to as the company) strive unceasingly for excellence in • to be an air traffic control service provider with providing air navigation services that are safe, flexible Single European Sky certification, providing air navi- in capacity, reasonable in terms of price, cost-effective, gation services that are safe, flexible in capacity, close-to-nature and of the very highest quality, in Slove- reasonable in terms of price, cost-effective, close-to- nian airspace and also outside as necessary, to satisfy nature and of the very highest quality, in Slovenian our customers’ needs. airspace and also outside as necessary;

In conjunction with our business partners and institu- • to be ready to provide air navigation services as an tional partners, we are endeavouring to put in place the active partner within the functional airspace blocks Single European Sky. in Slovenian territory.

Our mission will be carried out by highly qualified, highly motivated personnel. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 6

Corporate values Professionalism Achieved by means of competence, accuracy, dili- At the company we have identified and defined the gence, conscientiousness and responsibility in meet- common values that guide all our employees and form ing the highest standards in the performance of work part of our organisational culture, while shaping the processes. very essence of our mission and vision as a company. Dedication to service Safety A socially responsible attitude towards stakeholders. Attaining, guaranteeing and constantly improving the defined safety levels and targets is a basic guideline Respect for the company, the aim being to achieve excellence An honest, impartial, sincere, trustworthy and friendly in the provision of services that are safe, flexible in attitude to co-workers, colleagues in the industry and capacity, acceptable in terms of price, cost-effective, stakeholders. close-to-nature and of the very highest quality. Safety is prioritised over and above all the company’s other Teamwork values. Achieved through non-discriminatory, co-dependent and mutually supportive collective work with co-work- Reliability ers, colleagues in the industry and stakeholders. For our partners, our customers and the public, we aim to be a reliable partner in our business activities. Know-how We build on raising the level of the general, profes- Responsibility sional and specialist know-how of employees. We en- With the responsibility that our employees show in deavour to develop a humane relationship to work and providing air navigation services, we aim to ensure that the people in the work process, and to train people to air traffic is safe, continuous and efficient. adapt rapidly to change. We invest in education for individuals to develop their careers and to achieve personal growth. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 7

COMPETITION DEVELOPMENT POLICY POLICY

As a public utility, we provide services in the public Slovenia Control holds the authorisation to provide air interest, and are the only company of this type in Slo- navigation services, namely air traffic services, com- venia. Unlike employees of other companies, to pro- munications, navigation and surveillance services, and vide air navigation services our employees must have aeronautical information services. The company pro- special knowledge and skills that are not comparable to vides the technical and operational capacity for provid- any other professions in the country. ing air navigation services in a manner that is safe, free of disruption, flexible in capacity, reasonable in terms of price, cost-effective, close-to-nature and of the very highest quality, adapting constantly to the actual current or future air traffic density in the given airspace.

In line with the requirements of the Act on the Provi- sion of Air Navigation Services (Official Gazette of the Republic of Slovenia, Nos. 30/06 \[official consolidated version], 109/09, 62/10 \[ZLet-C] and 18/11 \[ZUKN-A]) and in line with the company’s own articles of association, the company has adopted a five-year business plan that is a strategic document in accordance with the requirements of Slovenian legislation and the Single European Sky regulations. It outlines the com- ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 8

pany’s development strategy, with the aim of demon- • improving the company’s organisation and services strating the company’s contribution to the sustainable by completing construction and successfully realis- development of the air traffic control system through ing the project for the new air traffic control centre the improvement of the overall effectiveness of air (ATCC) with commercial premises at Ljubljana Jože navigation services. The company reviews and updates Pučnik Airport; the five-year business plan each year. • maintaining and upgrading the company’s technological infrastructure in line with the European guide- The development policies summarised in the current lines reflected in EU regulations, the recommenda- Business Plan for 2012-2016 focus on attaining and tions of the European Organisation for the Safety of improving effectiveness in air navigation services in the Air Navigation (Eurocontrol) and, above all, through key performance areas of safety, environment, capacity the SESAR (Single European Sky ATM Research) and cost-efficiency in line with the performance areas programme for attaining operational targets in the defined in the central ATM plan, the Performance Plan areas of safety, capacity and cost-efficiency; for the 2012-2014 reference period of 5 June 2011 and • actively participating in the development and shap- the addendum to the Performance Plan for the 2012- ing of the Functional Airspace Block Central Europe 2014 reference period of 7 November 2011, which sets in line with EU regulations on the Single European binding (and other) performance targets that were Sky; defined as key performance indicators (KPIs) by the • providing high-quality HR development. Slovenian government for the first reference period between 2012 and 2014 in the provision of air naviga- In pursuing its business activities with an emphasis on tion services, all with reference to the priority safety quality, flexibility in capacity, cost-efficiency and reason- targets. able pricing, while meeting its EU-wide performance targets the company will focus on its number-one prior- The business plan provides evidence that the compa- ity: ensuring the safety of air traffic. ny’s financial and administrative resources and financial strength are sufficient to provide adequate technical We at Slovenia Control will pursue the development and operational capacity and expertise for the provision policies by taking all necessary action in a timely man- of air navigation services and air traffic management, ner to ensure that operations are not disrupted and to and discloses any impact on user fees resulting from meet the company’s targets. the pursuit of the strategy and the business plan, while setting out the achievement of the following strategic objectives as the company’s development policy:

• retaining and maintaining the certification to provide air navigation services in Slovenia, thereby meeting the strategic objective of remaining a designated air navigation service provider (ANSP) inside and outside the Slovenian aeronautical information zone; • maintaining and improving the level of safety in line with the requirements set out at European and national level, and the standards and recommendations of international civil aviation organisations; • maintaining and improving excellence in the field of quality and organisation; ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 9

ABOUT THE COMPANY

Business name: Contact information: KONTROLA ZRAČNEGA PROMETA SLOVENIJE, d.o.o. Tel: +386 1 4734850 SLOVENIA CONTROL, Slovenian Air Navigation Ser- Fax: +386 1 4734860 vices, Limited Email: [email protected] Internet: www.sloveniacontrol.si Abbreviated business name: KZPS, d.o.o. The company’s governance bodies are the general Slovenia Control, Ltd meeting, the supervisory board and the CEO. The founder’s rights are exercised by the Capital As- Registered office: sets Management Agency. Kotnikova 19a, SI–1000 Ljubljana, Slovenia CEO: AFTN: LJLAYFAX Franc Željko Županič, Ph. D. Registration number: 1913301 Tax identification number: SI18930492 Supervisory board: Owner’s representatives: Transaction accounts: Mirko Komac, M. Sc. (president) Banka Koper d.d.: SI56 1010 0004 3347 840 Janez Kolar, M. Sc. (deputy-president) UniCredit Banka Slovenija d.d.: SI56 2900 0005 5404 414 Monika Pintar Mesarič (deputy-president until term of NLB d.d.: SI56 0292 2025 4167 737 office ended on 6 December 2011) Igor Nered (term of office ended on 17 January 2012) Status in companies register: limited liability company Registration application number: 1/39042/00, Ljubljana Workers’ representatives: District Court Žiga Ogrizek Zoran Pajič Standard classification of core business activity: 52.230 Service activities incidental to air transportation

Ownership: 100% owned by the Slovenian state Nominal capital: €1,091,118

Number of employees: 216 (as at 31 December 2011) ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 10

OFFICIAL STATUS AND LINE OF BUSINESS

Slovenia Control was established on the basis of the 10 March 2004 laying down the framework for the Act on the Provision of Air Navigation Services, in ac- creation of the single European sky, Regulation (EC) cordance with the Companies Act and the Public Utili- No. 1070/2009 of the European Parliament and of the ties Act, and in connection with the Aviation Act. The Council of 21 October 2009 amending Regulations (EC) company’s legal and organisational status under the No. 549/2004, (EC) No. 550/2004, (EC) No. 551/2004 Companies Act is a limited liability company, whose and (EC) No. 552/2004 in order to improve the perfor- owner and founder is the Slovenian state. The company mance and sustainability of the European aviation sys- has the status of a public company under the Public tem (OJ L 300 of 14 November 2009) having also been Utilities Act, as it provides the public utility of air navi- taken into account. gation services. The company has (in accordance with its articles of association) three institutions via which The company’s officially registered business activities governance is exercised: the general meeting, the su- allow it to assume responsibility for various tasks. The pervisory board and the CEO. The founder’s rights are company’s core business activity has a NACE clas- exercised by the Capital Assets Management Agency sification of 52.230 (service activities incidental to air of the Republic of Slovenia. transportation), which includes air traffic control and management provided as part of the following air navi- In the rest of the world, the company goes under its gation services: English name of Slovenia Control, Slovenian Air Naviga- • air traffic services; tion Services, Limited. • communications, navigation and surveillance services; The Slovenian government established the company in • aeronautical information services. 2004, and removed responsibility for the provision of air navigation services from the Civil Aviation Adminis- The company pursues these activities as part of its tration as a body within the Ministry of Transport (under mission, for which reason it was established. the Act Amending the Government of the Republic of Slovenia Act [Official Gazette of the Republic of Slove- The company and its personnel are the sole agency nia, No. 8/12], the Ministry of Transport has now been in Slovenia to pursue the activity of air traffic control absorbed into the Ministry of Infrastructure and Spatial and management. Its activities cannot be compared to Planning, but for the purposes of this annual report the any other business in the country, and the employees name “Ministry of Transport” as it applied in 2011 will therefore hold a very specific position at the company, be used). The spin-off of the company represented an comparable solely to those at companies pursuing effective separation to ensure the independence of the same business activities in the rest of the world. the national supervisory authority from air navigation Given the specific nature of their skills and know-how, service providers, as required by Article 4 (national su- employees at the company are involved in numerous pervisory authorities) of Regulation (EC) No. 549/2004 activities affecting the development of the profession, of the European Parliament and of the Council of regulations and developments in this area. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 11

ORGANISATIONAL STRUCTURE

The company provides air navigation services in Slo- The company’s core business activity is pursued venia in accordance with Slovenian legislation, with through three operational departments: European standards, with the standards and recom- • Air Traffic Services, mendations of the International Civil Aviation Organisa- • Communications, Navigation and Surveillance, and tion (ICAO) and Eurocontrol, with letters of agreement • Aeronautical Information Services. (LoAs) concluded with neighbouring air traffic controls, and with international treaties by which Slovenia is Training for all operational personnel is provided at the bound. Flight School.

The company’s organisational structure supports the All tasks related to HR, organisational and legal affairs, safe, continuous, efficient and sustainable provision of finances and accounting, investment and current main- the air navigation services provided by the company, tenance, and public procurement are carried out at the and provides for the requisite adaptability and respon- General Management Department. siveness to changes in the environment in which it does business. Tasks related to air traffic safety, air navigation service provider certification, international affairs and strategic The internal organisation and the job description planning, quality, security, IT, public relations and secre- system at the company are set out by a document tarial work are given special treatment in the organisa- entitled Rules on the Internal Organisational Structure tional structure, and are the responsibility of the CEO’s and System of Positions, which defines the key tasks staff. and activities pursued via processes at individual organisational units. The organisation of the company is dictated by the pursuit of its core business activity, the provision of air navigation services in accordance with the Aviation Act and the Act on the Provision of Air Navigation Services. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 12

SLOVENIA AIR NAVIGATION SERVICES, LIMITED

CEO

DIRECTOR'S STUFF International Affairs and Strategic Planning, Security, Quality andPublic Relations

Safety Department

IT Department

Certification Department

AIR TRAFFIC COMMUNICATIONS, AERONAUTICAL GENERAL SERVICES (ATS) NAVIGATION AND INFORMATION FLIGHT SCHOOL MANAGEMENT SURVELLANCE (CNS) SERVICES (AIS) DEPARTMENT

Development and Technical Flight Publications Financial Support to ATS Surveillance Service (AIP) Department

Information and Data Processing Human Resources Technological Communications Systems Service Management and Support to ATS Centre (NOTAM/ (DP) Legal Department COM)

AROs Ljubljana Area Air Maintenance Communications Traffic Control and Procurement Service (COM) Service (ACC) Department Brnik, Portorož, Maribor, Cerklje ob Krki

Brnik Airport Air Navigation and Traffic Control Airports Service Service (TWR LJ) (NAV)

Maribor Airport Air Surveillance System Traffic Control Service (SUR) Service (TWR MB)

Portorož Airport Air Traffic Control Service (TWR PZ)

Cerklje Airport Air Traffic Control Service (TWR CER)

Employees work at the company’s HQ at Kotnikova 19a in Ljubljana, and at Ljubljana Jože Pučnik Airport, Mari- bor Edvard Rusjan Airport, Portorož Airport and Cerklje Figure 1 Organisational structure Airport. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 13

CEO’S REPORT

Last year was a successful one for Slovenia Control, The most important element in the pursuit of our busi- as we recorded a 7.5% increase in traffic in Slovenian ness activities is the retention of the certificate to pro- airspace. We surpassed our forecast for the number vide air navigation services. After passing an assess- of en-route service units by 15.4% (up 16.3% on ment of compliance with the common requirements, 2010), while the forecast for terminal service units was on 1 December 2011 we were awarded the certificate achieved. We also achieved the forecast ROE, ensured to provide Air Traffic Services (ATS), Aeronautical smooth progress in all investments, most notably the Telecommunications Services i.e. Communications, construction of the new ATCC, and met our annual Navigation and Surveillance Services (CNS) and Aero- targets. The magic mark of one thousand operations nautical Information Services (AIS) by the Civil Aviation per day was passed several times last year. Here it is Agency of the Republic of Slovenia, and at the end of very important to note that we provided our air traffic the month a new training organisation certificate to control and management services safely, efficiently train personnel for air navigation services was awarded and with the requisite quality. There were a number of to the Flight School. noteworthy achievements last year, but we will also long remember the tragic loss of two young air traffic Air traffic safety is of key importance to air traffic control controllers, Domen and Bogdan. and management, and we give it our full attention. In our Safety Management System we endeavour to achieve Construction work continued on the new ATCC, the the highest possible level of safety culture on the part of company’s most important development project, in all of our employees. In addition, we focus on maintain- which a large number of personnel from all departing our services at a high level and quality in line with ments and areas of expertise were involved throughout international standards and current regulations. the year. Construction and finishing work was executed, and the majority of public contracts for equipment, We again passed a control assessment to maintain our systems and services related to the construction were ISO 9001:2008 certification. This quality certification completed or entered the final phase. The fixtures and under the international standard is a reflection of our fittings at the building, the external organisation, and consistent implementation of a process approach in the installation and integration of operational systems the quality management system. Our quality policy, air and devices are all planned for 2012. traffic safety policy and security policy form an insepa- rable thread through all common activities that guar- Other noteworthy achievements during the year in- antee that we provide air navigation services safely, clude the purchase of new DVOR radio navigation effectively and efficiently as demanded by our mission equipment at Dolsko and the relocation of the existing statement. VOR/DME equipment to Portorož Airport, thereby in- creasing airspace capacity in addition to making a posi- The company took an active international role, partici- tive contribution to safety. pating in the FAB CE project and in international organ- ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 14

isations (ICAO, Eurocontrol, CANSO). Slovenia Control • successfully completing the new ATCC and making joined in the FAB Central Europe (FAB CE) project, to- it operational; gether with Austria, Bosnia and Herzegovina, the Czech • attending to HR development and successful social Republic, Croatia, Hungary and Slovakia. In this project dialogue; the FAB CE Agreement was signed at ministerial level • following the guidelines for the development of at Brdo pri Kranju on 5 May 2011. The FAB CE ANSP European airspace through successful involvement Agreement was signed at the same time. in the international arena, in particularly activities within the project to establish the FAB CE by the The target for the FAB CE project is the establishment end of 2012; of a functional airspace block in Central Europe by the • improving the quality system and the system for end of 2012, as required by European legislation, for meeting the common requirements for the provision which reason the implementation phase was underway of air navigation services to retain the certification to at full speed in 2011. provide air navigation services; • finalising the regulation of the relationship with the Another important matter was the company’s involve- state in respect of the assets under management ment in the drafting of the national Performance Plan by transferring the government-owned air navigation 2012-2014 in line with European legislation, which services infrastructure used by the company to the sets the binding (and other) performance targets that company as a capital contribution. Republic of Slovenia set for itself for the first reference period of monitoring key performance indicators Our plans for 2012 and the ongoing development of the (KPIs) in the provision of air navigation services. The company are ambitious. I firmly believe that with our binding targets for the first reference period are suf- know-how, expertise and constructive work attitude, ficient capacity, and cost-efficiency (per service unit), our motivated and committed staff, and our creative ap- which depends on the level of costs and the volume of proach to dialogue, we will succeed in our mission and air traffic. On the basis of the Performance Plan 2012- meet our targets for the future. 2014, the company drew up the Annual Business Plan for 2012 and the Business Plan for 2012-2016, which were approved by the supervisory board and the transport minister. Franc Željko Županič, Ph. D. CEO We are already focusing on the programme and targets set out in the new business plan. The adverse economic situation and the financial crisis, which have been reflected in subdued forecasts for the aviation industry, will also require even greater responsiveness from us, the ability to adapt to the changing situation on the market, and a continuous drive for greater efficiency. The major tasks and targets for 2012 include: • maintaining and improving the level of safety and quality of service by means of flexible capacity, reasonable pricing and cost-effectiveness while meeting the EU-wide performance targets; • securing sufficient financial resources to ensure the company suffers no disruption to business and can carry out its planned investments; ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 15

CORPORATE GOVERNANCE STATEMENT

The company did not adopt its own corporate gover- • Commission Implementing Regulation (EU) No. nance code during the 2011 financial year. Its corporate 1035/2011 of 17 October 2011 laying down common governance was undertaken in accordance with the requirements for the provision of air navigation ser- relevant legislation in the area, in particular: vices and amending Regulations (EC) No. 482/2008 and (EU) No. 691/2010 (OJ L 271 of 18 October • the Act on the Provision of Air Navigation Services 2011, pp 23-41); and (Official Gazette of the Republic of Slovenia, Nos. • the company’s own articles of association. 30/06 [UPB1], 109/09, 62/10 and 18/11); • the Aviation Act (Official Gazette of the Republic of The CEO of the company hereby declares that the Slovenia, No. 81/10 [UPB4]); company has adopted the Corporate Governance Code • the Companies Act (Official Gazette of the Republic for Companies with State Capital Investments and of Slovenia, Nos. 65/09 [UPB3], 83/09, 33/11, 91/11, the Guidelines for Reporting of Companies with State 100/11 and 32/12); Capital Investments and will uphold them in its opera- • the Public Utilities Act (Official Gazette of the Repub- tions, the two aforementioned documents of 18 Janu- lic of Slovenia, Nos. 32/93, 30/98, 127/06, 38/10 and ary 2011 having been adopted by the Capital Assets 57/11); Management Agency of the Republic of Slovenia at the • Regulation (EC) No. 1070/2009 of the European meeting of its Council on 13 January 2011 on the basis Parliament and of the Council of 21 October 2009 of the Act on Corporate Governance of State Capital amending Regulations (EC) No. 549/2004, (EC) No. Investments (Official Gazette of the Republic of Slove- 550/2004, (EC) No. 551/2004 and (EC) No. 552/2004 nia, Nos. 38/10, 18/11, 77/11 and 22/12). The aforemen- in order to improve the performance and sustainabil- tioned code and guidelines can be found on the Capital ity of the European aviation system (OJ L 300 of 14 Assets Management Agency’s website at November 2009, pp 34-50); www.auknrs.si/en/IMPORTANT_DOCUMENTS/. • Commission Implementing Regulation (EU) No. 1034/2011 of 17 October 2011 on safety oversight in Ljubljana, 23 May 2012 air traffic management and air navigation services and amending Regulation (EU) No. 691/2010 (OJ L 271 of 18 October 2011, pp 15-22); Franc Željko Županič, Ph. D. CEO ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 16

SUPERVISORY BOARD REPORT

Make-up and work of the supervisory the two documents. It also discussed the annual report board for 2010, which was approved and was then the subject of a resolution of acknowledgement by the general Make-up of the supervisory board in 2011 meeting. Under the company’s articles of association, the supervisory board has six members, four of whom are ap- Under the authorisation of the Capital Assets Manage- pointed by the founder, and two of whom are elected ment Agency, the supervisory board issued a consoli- by the works council. dated version of the company’s own articles of association, amendments to which had been passed by the As at the end of 2011, the supervisory board consisted Capital Assets Management Agency itself. of: Mr Mirko Komac, M. Sc. (president), Mr Janez Kolar, M. Sc. (deputy-president), Mr Igor Nered as rep- During the 2011 financial year the supervisory board resentatives of the founder, and Mr Zoran Pajič and Mr reviewed the company’s performance, both from a Žiga Ogrizek as workers’ representatives. financial point of view and from the point of view of the legality of its operations, and reviewed the achieve- Meetings of the supervisory board in 2011 ment of the business plans, the realisation of planned The supervisory board held ten meetings during 2011, investments and the implementation of resolutions of which six were ordinary meetings, and four were passed by the supervisory board and the founder. All correspondence sessions. supervisory board resolutions passed in 2011 were realised. Monitoring of the company’s performance and other supervisory board activities in 2011 The company’s financial performance was reviewed on The supervisory board devoted its greatest attention the basis of regular reports. The company’s borrowing in 2011 to the company’s streamlining measures. To was within the framework of the forecast, and through- this end it also passed a resolution about potential cost out the year it covered its financial liabilities regularly optimisation, and diligently monitored cost controls and and on time. their impact of the price of services.

The supervisory board also focused on the progress of Annual report for 2011 the construction of the ATCC at Ljubljana Jože Pučnik Airport. After the close of the 2011 financial year the supervisory board reviewed the company’s annual report The supervisory board discussed and approved the for 2011, which in accordance with the Companies Business Plan for 2012 and the Five-Year Business Plan Act was submitted to the designated auditor, Ernst & for 2012-2016, having taken an active part in drafting Young, for auditing. The aforementioned annual report ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 17

was compiled in accordance with the Companies Act Plans for 2012 and the Slovenian Accounting Standards. It presents the conditions and the results of the company’s perfor- In 2012 the supervisory board will continue to super- mance in 2011, and consists of two sections, namely vise the company’s operations and performance regu- the management report and the financial report. larly and efficiently. It will devote particular attention to planned investments, most notably the construction of The management report presents the company’s per- the new ATCC, and to cost controls. formance in 2011. It describes the key developments and factors affecting performance in 2011 and after the end of the financial year, the main figures for 2011, the provision of air navigation services in 2011, investment, Mirko Komac, M. Sc. risk management, air traffic figures, key plans for 2012 President of the supervisory board and the expectations for the company’s development.

In connection with the review of the financial report, the supervisory board finds that it has been compiled clearly and transparently, and that the financial statements present a true and fair picture of the company’s assets and liabilities, financial position and income during the year. The financial statements have been itemised, and notes to individual items of the financial statements have been provided.

At its 66th ordinary meeting of 31 May 2012 the supervisory board reviewed the annual report for the 2011 financial year as compiled and audited, and adopted a positive position on the audit report issued by the audit firm Ernst & Young d.o.o. The supervisory board then passed a resolution proposing to the founder that it be briefed on and adopt the company’s annual report for 2011. It also reviewed the proposal for the use of the distributable profit, and passed a resolution proposing to the founder that the distributable profit in the amount of €3,741,680.65 remain undistributed and not earmarked for distribution.

The supervisory board assessed the company’s performance in 2011 as successful. I MANAGEMENT REPORT ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 19

1 KEY EVENTS AND FACTORS AFFECTING PERFORMANCE IN 2011 AND AFTER THE END OF THE FINANCIAL YEAR

Traffic in Europe (EU27) recorded a slight increase in The company pursued the activity of air traffic control the early part of the year, but unfortunately the trend and management in line with the relevant require- came to an end, and traffic figures were even heading ments, standards and recommendations, made urgent downwards by the end of the year. The final figure was and safe adjustments to the needs of air traffic, per- nevertheless up 2.6% on 2010. The forecasts had been formed well and ended the year with a positive liquidity for significantly higher growth in 2011, but the gap position. between the traffic forecast and realised traffic was considerable. Traffic in Europe increased slowly and un- One of the company’s highlights of the 2011 financial evenly after the initial economic crisis. Growth in traffic year was its active involvement in the drafting of the would have been larger, had there not been extreme national Performance Plan 2012–2014 in line with events such as the volcanic ash cloud, strong storms Single European Sky regulations, which sets the bind- and strikes. The changes in traffic varied greatly in dif- ing (and other) performance targets that Slovenia set ferent parts of Europe. for itself for the first reference period of monitoring key performance indicators (KPIs) in the key performance Slovenia is part of the area where traffic increased areas (KPAs) of capacity and cost-efficiency. When the most. Evidence of this is the increase of 7.5% in drafting the document the company worked with the the number of flights in the Ljubljana FIR, significantly relevant ministry in the process of formal consultation more than the average increase in Europe in 2011. with service users and interest groups. The company’s representatives also attended the June and Novem- The increase in traffic also brought a change in its ber ordinary meetings of the Enlarged Committee for breakdown in Slovenian airspace, which had an ad- Route Charges under the aegis of Eurocontrol and ditional beneficial impact on the company’s revenues: the European Commission in the process of formal the number of en-route service units was up 16.3% consultation with service users in connection with the on 2010, and up 15.4% on the forecast in the business national cost bases and unit rates for 2012 and the first plan. The reason for the additional increase was the reference period of 2012 to 2014. use of longer flight paths and the higher weight of the aircraft flying through Slovenian airspace. The number of terminal service units was equal to the forecast in the business plan, and unchanged from the previous year. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 20

2011 the permanence of the boundary in opening and closing the fourth sector and the use of level cap- January ping in neighbouring air traffic controls.

• The company passed a control assessment of the May quality system and was awarded ISO 9001:2008 certification valid until 19 January 2013. • The FAB CE Agreement and FAB CE ASNP Agree- ment were signed at Brdo pri Kranju. February • An MoU between the national supervisory authorities was signed in Bratislava. • The company drew up its Five-Year Business Plan • Slovenia’s new Civil Aviation Agency began operat- for 2011-2015 and the Business Plan for 2011, which ing on 1 May 2011. As the national supervisory au- were approved by the government. thority, the Civil Aviation Agency conducts supervi- • The company received the approval of the govern- sion in accordance with Commission Regulation No. ment for the conclusion of a contract to purchase a 1315/2007 of 8 November 2007 on safety oversight voice communication system (VCS). in air traffic management (amending Regulation No. 2096/2005). An essential element of safety super- March vision is supervision of the fulfilment of the common requirements in accordance with Commission • A Memorandum of understanding was approved be- Implementing Regulation (EU) No. 1035/2011 (previ- tween the national supervisory authorities. ously Regulation 2096/2005/EC). • The company held its first general meeting, at which • On the basis of a government resolution the com- its amended articles of association were approved. pany signed an agreement with the government • The installation of the technical infrastructure (data regulating the mutual relationship in connection with cable network, wiring for powering operational sys- assets for the provision of air navigation services in tems) began at the new ATCC. the transitional period. • The company joined the pan-European network for April the exchange of operational data in real time (PENS ANSP VPN). • The supervisory board adopted a new consolidated version of the articles of association, which entered June into force on 19 April 2011. • The first supplies of technical operational systems • Flight measurements of the VOR/DME POR equip- for the new ATCC were undertaken. The cable in- ment at the Portorož Airport location were suc- frastructure and some of the server cabinets were cessfully conducted. Having obtained the operating installed. permit, the equipment was brought into operational • Construction was carried out at Kresniški Vrh for use. the upgrade of the DVOR/DME Dolsko navigation • The company participated in the drafting of the na- equipment (procurement of new equipment) and at tional Performance Plan for the 2012-2014 reference Portorož Airport for the installation of the used VOR/ period of 30 June 2011. DME navigation equipment. • Mr Domen Novak, an air traffic controller at the ACC, • The sectorisation and sector boundaries were de- lost his life in a traffic accident on his way to work. fined at the ATCC: basic boundaries in four sectors • The Avio Fun meeting was held at Maribor Edvard at FL245, FL325 and FL355, primarily for reason of Rusjan Airport. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 21

• A consultative workshop was held at the Ministry October of Transport on the attainment of the requirements of Commission Regulation (EU) No. 73/2010 of 26 • The operating permit was obtained for the multi- January 2010 laying down requirements on the qual- channel radio station in the ATCC. The system was ity of aeronautical data and aeronautical information brought online. for the Single European Sky. November July • The company participated in the drafting of the ad- • The active network equipment was installed at the dendum to the national Performance Plan for the new ATCC. 2012–2014 reference period of 30 November 2011. • The company’s annual report for 2010 with the pro- • The ILS at Ljubljana Jože Pučnik Airport was out of posal for the use of the distributable profit and the operation. The fault was rectified during the same audit report were reviewed and approved by the su- day. pervisory board, and were discussed at the second general meeting, which approved the distributable December profit in the amount of €2,901,736.53 remaining undistributed. • The hardware for one of the most important systems for the operation of the ATCC, the KAMI August flight data processing system, was upgraded. This enhanced the reliability and availability of the entire • The upgrade of the VOR/DME DOL navigation equip- system. ment to DVOR/DME DOL equipment at Kresniški • The company passed an external assessment of the Vrh was successfully completed. The flight inspec- compliance of its provision of air navigation services tion services (the calibration) having been success- with the common requirements of Commission fully made and the operating permit obtained, the Implementing Regulation (EU) No. 1035/2011, which equipment was brought into operational use. entered into force in September 2011. On 1 Decem- ber 2011 the company was awarded its certificate September for Air Traffic Services (ATS), Aeronautical Telecom- munications Services (CNS) and Flight Information • A significant amount of operational equipment for Services (AIS). the new ATCC was delivered: individual parts of the • The company drew up the Annual Business Plan for radar and flight data processing system, the techni- 2012 and the Business Plan for 2012–2016, which cal control system and the voice communications were discussed and approved by the supervisory system. The installation of systems was begun in board and the transport minister. The company’s line with the finishing of construction work in indi- business plans are coordinated with the national vidual premises. Performance Plan for the 2012-2014 reference pe- • The CEO approved the HR training development riod of 30 June 2011 and the addendum to the na- strategy. tional Performance Plan for the 2012–2014 reference • Mr Bogdan Jehart, an air traffic controller at Maribor period of 30 November 2011. aerodrome control, lost his life in an aviation acci- • The training organisation certificate for the work of dent at Slovenj Gradec airfield. the Flight School was renewed at the end of the month. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 22

2012

January March

• The company again passed a control assessment of • Having received its first two ratifications, the FAB the quality system under the ISO 9001:2008 stan- CE Agreement entered into force on 20 March 2012 dard without non-compliance or major deviations, for Austria and Hungary. thereby retaining its certification until 19 January • The company adopted its own code of ethics, which 2013. sets out the company’s values, the principles of the • The CEO approved new rules for the implementa- relationship between the company and its employ- tion of public procurement orders, which regulate ees, and all areas of responsibility via provisions on public procurement procedures, the duties and the implementation of the code, supervision and responsibilities of all those participating in public further development. procurement procedures, and the detailed actions of • Simulations of the optimal sectorisation for the 2012 the contract managers in connection with the per- season were conducted. formance of the contracts. • The incorporation of the Ronchi radar into the sys- • The Civil Aviation Agency suspended the provision tem was undertaken. of air navigation services by Cerklje aerodrome control. April

February • The National Assembly ratified the FAB CE Agree- ment, which must also be debated by the National • The transport minister approved the rules on air traf- Council. fic controllers’ work hours and rest periods, which • The activities in connection with the change in mag- experts at the company have helped to draft. netic declination concluded with the release of AIP • Portorož Airport was closed for several days be- AIRAC amendment 033/12, which entered into force cause of strong winds. on 5 April 2012. • The Civil Aviation Agency ended the suspension of • The company conducted an internal assessment of the provision of air navigation services by Cerklje the quality system under the ISO 9001:2008 stan- aerodrome control on 17 February. dard and an internal assessment of the fulfilment of the common requirements of air navigation service providers in accordance with Commission Imple- menting Regulation (EU) No. 1035/2011. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 23

2 MAJOR FIGURES

The company finances itself by means of revenues Sales revenues in 2011 amounted to €33,265 thou- from the en-route charges and terminal charges paid sand, of which €30,844 thousand was from en-route by airlines. The charges for services provided to airlines charges, €3,185 thousand was from terminal charges, are charged by Eurocontrol, which then transfers the and €743 thousand was from other sales revenues. The money to the company for the services provided. operating income for 2011 has been reduced by €1,507 thousand as a result of the over-recovery of charges. An international agreement sets out the way in which Other operating income amounted to €173 thousand, en-route unit rates are calculated. The price is deter- of which €161 thousand consisted of EU subsidies for mined on the basis of the projected costs, investment projects and €12 thousand was from reversals of provi- and traffic in the following year. Any differences be- sions and from products and services. tween the actual revenues and expenses and those projected are taken into consideration in the calculation of the charges over two years (over- or under-recovery). The terminal charges are determined in the same way.

In 2011 the en-route charge was calculated at €73.48, while the terminal charge was €256.75. Despite the recession, the company succeeded in recording higher- than-forecast traffic, thereby achieving over-recovery, which will be taken into consideration in the calculation of the unit rate for 2013. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 24

Table 1 Major figures

€ thousands 2011 2010

Sales revenues 33,265 30,142 EBIT 985 74 4 Net profit 840 499 Non-current assets 27,072 19,162 Current assets 9,270 5,036 Equity 4,942 4,102 Non-current liabilities 16,247 9,907 Current liabilities 8,510 7,255 Indicators 2011 2010 EBIT / sales revenues 3.0% 2.5% Net profit / sales revenues 2.5% 1.7% ROE 18.6% 13.9% ROA 2.7% 2.1% Number of employees 2011 2010 At year-end 216 214 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 25

3 PROVISION OF AIR NAVIGATION SERVICES IN 2011

The company provides air navigation services in Slovenia 3.1 AIR TRAFFIC SERVICES in accordance with Slovenian legislation, with European standards, with the standards and recommendations Ensuring the safe, orderly and expeditious flow of air of the International Civil Aviation Organisation (ICAO) traffic is the priority of the Air Traffic Services (ATS). and Eurocontrol, with letters of agreement (LoAs) con- The company provides en-route air traffic control in cluded with neighbouring air traffic controls, and with Slovenian airspace, other than the upper Mura sector, international treaties by which Slovenia is bound. As an and a section of Austrian airspace (part of Kärnten), and air navigation service provider, the company provides also provides aerodrome and approach air traffic control the services of providing air traffic control, management at the four domestic airports, Ljubljana Jože Pučnik, and guidance, issuing the requisite aeronautical informa- Maribor Edvard Rusjan, Portorož and Cerklje. Air navi- tion, and installing, upgrading and maintaining air traffic gation services are provided in part of the Mura sector control and guidance systems on the basis of air naviga- by the Austrian company Austro Control for operational tion service provider certificate no. 37224-1/2010/37 of 1 reasons, while Slovenia Control provides air navigation December 2011, which was issued by the Civil Aviation services in Kärnten on the same grounds. Agency. On the basis of its licence to train personnel to provide air navigation services (no. 60404-4/2011/5 of 29 The major activities and developments realised at the December 2011), the Flight School operates under the ATS in 2011 were: company’s aegis, providing professional training for air navigation service personnel. Capacity The requisite staffing ensured that sectors were suffi- In pursuing its core business activity, in 2011 the com- ciently open to traffic to achieve the forecast increase of pany also carried out all infrastructure-related activities, 7% in capacity, and to ensure minimal delays (forecast: planned investments and projects with the aim of 0.19 minutes per flight; actual: 0.002 minutes per flight). meeting the objectives set out in the Business Plan for 2011 and the Five-Year Business Plan for 2011-2015. Reorganisation At the end of last year a Development and Support The company defined the following objectives in the Department was created at the ATS, at which the work Business Plan for 2011: planning process was centralised and a simulation of • air traffic safety; the new ACC sectorisation for the 2012 summer sea- • airspace capacity; sons was undertaken. • the ATCC project (covered in the section on investment); Procedure • HR development; • ATS staff participated in the preparation of the docu- • international cooperation; mentation in connection with the ATCC (launch) • renewal of certificate to provide air navigation services. project; ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 26

• the operational agreements (internal and external), ATS representatives worked successfully with the fol- instructions and relevant documents were updated lowing departments and stakeholders: as appropriate; • Communications, Navigation and Surveillance • the project to install the new DVOR/DME DOL and (CNS), on all relevant matters at the company (the to relocate the VOR/DME POR was successfully ATCC project, the upgrade of FDPS/RDPS, commu- completed, with all necessary documents and an- nications); nouncements; • AIS departmental services, on all relevant matters at • new take-off and landing procedures in connection the company (AIPs, NOTAMS, etc.); with the new VORs were formulated; • the Civil Aviation Directorate at the Ministry of Trans- • preparations for the implementation of RNAV proce- port, on the preparation of the legal basis for the op- dures continued; eration of air navigation services and on the prepara- • the network of flightpaths in Slovenian airspace was tion of an expert basis as an aid to the directorate’s updated; decision-making; • contingency procedures were prepared for the pos- • the Ministry of Defence, on the organisation of sible non-operation of the Koralpe and Ljubljanski Cerklje Airport and other matters of significance to Vrh radars. ensuring no disruption to the ministry’s operations; • air navigation service providers in neighbouring Training countries (operational agreements, KANIN area); • all the planned training for operational personnel in • working groups within Eurocontrol; and connection with new work licences was provided; • working groups within the FAB CE. • all training within the framework of the IANS was provided in conjunction with the Flight School; Participation in assessments • the requisite refresher courses and seminars were All units actively participated in the assessment for provided. SIST EN ISO 9001:2008 certification.

Cooperation and communications with users • all requisite communication with representatives of all three international airports was undertaken; • The ATS worked with Aerodrom Ljubljana d.d. on the following projects: –– the upgrade of the navigation light system; –– the elimination of follow me; –– the preparation of documents and training involving the two companies; and –– the Airport Adverse Weather Steering Group, with the involvement of the Environment Agency; • Work was undertaken with Adria Airways d.d. on the following projects/initiatives: –– the Airport Safety Action Group (ASAG). • The airports were kept open as appropriate for ordinary hours and extraordinary duties. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 27

3.2 COMMUNICATIONS, NAVIGATION Work on the various projects was particularly intensive AND SURVEILLANCE in 2011. The majority of projects were related to the technical migration of the ATCC to the new building. The core activities of Communications, Navigation and The installation of the technical operational infrastruc- Surveillance (CNS) are the maintenance, planning and ture began in the spring, while the installation of the installation of devices and systems. The majority of its technical operational systems began later, when the activities were devoted to this purpose in 2011. ambient conditions in the premises allowed.

Custody over devices is divided among particular de- The technical migration meant that project activity partmental services with regard to their principal func- diminished in other areas as a result of a lack of hu- tions: surveillance systems, communications systems, man resources. The main investment was in navigation automated systems, and airport navigation systems equipment, while activity in other areas focused on in- and other equipment at airports. In addition, CNS was vestment maintenance and the maintenance of system also responsible for the maintenance of power and capacity and reliability. Those departmental services air conditioning systems affecting operational work, with a lower project workload primarily focused on and partly of the facilities in which the systems are technical supervision at all three locations. housed.

Maintenance was carried out according to a monthly 3.3 AERONAUTICAL INFORMATION maintenance plan, although some major maintenance SERVICES jobs were given special timetables. Regular flight measurements of all radio navigation devices were carried The aeronautical information services provided within out in accordance with ICAO recommendations for the the framework of the Aeronautical Information Services needs of other clients, while measurements of lighting provide for the prompt announcement and distribution devices were also carried out. of the latest aeronautical information by means of the issue of the AIP, NOTAM messages and pre-flight in- In addition to regular maintenance, CNS also con- formation for pilots, the acceptance and issue of flight ducted technical controls of systems and devices at plans, and the provision and management of the aero- the system monitoring and control centres in Ljubljana, nautical fixed telecommunications network (AFTN) and Brnik and Maribor. The Brnik and Maribor system moni- other services related to users’ needs for safe flying. In toring and control centres are manned during the day addition to the work and duties related to the provision (subject to the airports being open), but at night inspec- of aeronautical information in accordance with interna- tions are taken over by the Ljubljana centre, which op- tional standards and recommended practice, the AIS erates 24 hours a day, via remote diagnostics. also carries out operational work and duties related to the processing and distribution of the data required for CNS participates in various working and project groups accurately accounting en-route and terminal charges. involved in the planning, installation and operational launch of various technical devices. CNS is also re- The major activities and developments realised in 2011 sponsible for project management and project offices were as follows: that before the reorganisation were under other de- • A negotiated procedure to award a public goods partments. Because the majority of project work is contract for the purchase of a duplicate of the exist- conducted within CNS, the function of project manage- ing AFTN/AMHS system was carried out as part of ment has now been combined with project implemen- the new ATCC project. The decision to purchase a tation. duplicate was made primarily because during the ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 28

migration it will be necessary to work from two • Training in the production of aviation maps was pro- COM centres simultaneously, which would create vided for AIP personnel. a problem for operational and technical personnel • The company upgraded to EAD Release 6, thereby should work be undertaken on two different sys- obtaining new functionality in INO Data Provider tems. At the same time the operational personnel and Data User. Because the changes were small, merely needed refresher training lasting a day and personnel were merely briefed on the changes and a half, whereas on a completely new system poten- functionalities; no training was necessary. tially from a different manufacturer even the techni- • An upgrade to the WFS system was begun, but was cal personnel would have needed significantly more not completed in 2011. The upgrade will bring new training. An agreement was signed on 26 Septem- functionality for the automatic graphical illustration ber 2011 for the supply of a system from Thales Air of NOTAMs online, and the option of recalculating Systems, and a factory acceptance test was passed contaminated zones in the event of disruption by in Paris in December. volcanic ash. • March saw the beginning of a project to eliminate • The company participated in Eurocontrol’s VOLCEX errors caused by the change in magnetic declina- 2011 drill, which simulated a volcanic eruption and a tion and the annual increase (changes in all aviation volcanic ash cloud. Based on information about the maps, change in the official alignment of the runways simulated movement of the ash cloud, it was neces- at Ljubljana Jože Pučnik Airport and Maribor Edvard sary to release “real” NOTAMs with a clear indica- Rusjan Airport, measurement of all radio navigation tion that the messages were a drill. equipment). It was necessary to calculate and check • The AIS was actively involved throughout the year more than 800 different flight path segments, take- in the design of the new website, where most infor- off and landing procedures, sports airfields, etc. The mation is of concern to the AIS, and so the website project was completed on 9 February 2012, with now focuses on this information (NOTAMs, AIP, illus- the announcement of all the changes caused by the tration of closed military zones, emergency informa- change in magnetic declination in an AIP. tion, and other aeronautical information). • On the basis of the strategy to achieve compliance • The personnel at the AIS were also involved with Commission Regulation (EU) No. 73/2010, a throughout the year in the construction of the new consultative workshop was held in conjunction with ATCC. the Civil Aviation Directorate that was aimed at all • Training was provided for ARO operator rating with suppliers and generators of aeronautical information. endorsement for Brnik for four employees, which All the requisite documentation was prepared for will allow for greater flexibility in planning work in an international invitation to tender for the manage- the sector. ment and support of the implementation of Com- • There were 948 Series A, 410 Series B and 1,295 mission Regulation No. 73/2010 at the company. The Series C NOTAMs published. international invitation to tender was announced, • In 2011 the AIS reviewed and processed 305 docu- and the tenders were analysed. On this basis a ments in connection with applications for flying treaty was signed for the supply of software to en- foreign-registered ultralight aircraft in Slovenian sure data traceability from information supplier to airspace. On the basis of these documents the com- publication in an AIP. The software complies with the pany issued an appropriate number of licences to fly requirements of the ICAO and Eurocontrol. foreign-registered ultralight aircraft in Slovenian air- • A three-week course entitled Air Traffic & Navigation space, as dictated by the Rules on Ultralight Aircraft. Services South Africa was provided under contract for Frequentis, the client, in the use of EAD AIP and CHART applications in South Africa. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 29

3.4 hUMAN RESOURCES

Activities in the field of HR and organisation focus on meeting the company’s objectives set out in the strategic plan and annual business plans, in particular HR development as one of the company’s strategic objectives.

The company had 216 employees as at 31 December 2011. The average age of the workforce was 39.8 in 2 011.

Table 2 Breakdown of the workforce as at 31 December 2011

Breakdown of the workforce

Air traffic control positions requiring a licence • air traffic services positions: air traffic controllers 104 • air traffic services positions: operators 15 • communications, navigation and surveillance positions 34 • aeronautical information services positions 25 Total licensed personnel: 178 Support positions for air traffic control services that require deep knowledge of aviation 9 General positions 29 Total workforce 216

Table 3 Breakdown of the workforce by gender in 2010 and 2011

Gender Number as at Number as at Change in 2011 31 Dec 2010 31 Dec 2011

Men 169 171 + 4; - 2 Women 45 45 0 Total 214 216 + 2 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 30

Table 4 Breakdown of the workforce by qualifications in 2010 and 2011

Qualifications Number as at Number as at Change in 2011 31 Dec 2010 31 Dec 2011

Secondary 90 90 0 2-year tertiary / Level VI/1 39 38 - 1 4-year tertiary / Level VI/2 41 39 -2 University level / Level VII 36 40 + 4 Master’s degree / Level VIII/1 8 8 0 Doctorate / Level VIII/2 0 1 +1 Total 214 216 +2

There were four new employees hired in 2011: The company realised the following planned HR devel- • two people were hired to train as technicians; opment objectives in 2011: • one person was hired for certification duties; • one person was hired as an intern in security. • training The company provided all the prescribed training for Two employees lost their lives in accidents in 2011. operational personnel for obtaining and retaining the work licence, and ensured that all employees were 3.4.1 HR development able to upgrade and build on their skills. It also supported and encouraged employees in earning higher The company’s personnel are one of the most impor- qualifications, by helping to co-fund the various tant resources in its successful pursuit of its core busi- study programmes in which they enrolled. An HR ness of air traffic control and management. Therefore, Development Strategy was adopted at the company since its very inception, one of the strategic objectives as the basis for drawing up annual training plans. at the company has been HR development, which is included in each year’s business plan as an objective. • the remuneration system Thanks to their know-how, skills and motivation, high- The company ensured the implementation of the quality personnel are a vital productive force, and are valid collective agreements and the on-the-job per- defined as the company’s most important asset. The formance rules, and also took measures approved in company’s key to success is the proper management 2010 as part of the current remuneration policy: of its human resources, which it achieves by targeting –– the maintenance of wages at the level of July its HR policies on constant training and improvement 2010, so that the basic wages for positions and for the workforce. the defined types and levels of bonuses in the collective agreements and internal bylaws re- mained at the level of July 2010, and –– the payment of the annual leave allowance to employees in the amount of the national mini- mum wage. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 31

Through these measures the company held costs • an employee satisfaction survey was conducted; within the forecast boundaries in 2011. • a management assessment questionnaire was drawn up in conjunction with the works council; • interviews with employees • the voluntary supplementary pension insurance pre- The company’s activities in 2011 focused on upgrad- mium was raised to the amount stipulated by law as ing the system of annual interviews. In conjunction not included in the taxable base; with the works council, the General Management • immunisation against seasonal and pandemic influ- Department’s Human Resources Management and enza was organised; Legal Department drew up a new questionnaire for • the senior management held interviews with em- conducting the annual interview, and organised and ployees with the aim of improving communication provided manager training as preparation for the an- within the company; nual interviews with employees, which began being • the management regularly attended sessions of the conducted in early 2012 for the previous year. Vari- works council, responding to all initiatives and ques- ous forms of formal and informal communications tions from the employees; and briefings for employees have been developed • regular information updates for employees contin- at the company, and the senior management and ued via the monthly house journal Radial; heads of department are available throughout the • informal social events were organised for the em- year for talks with employees. In the interviews the ployees; employees can put forward their own suggestions, • congratulations continued to be sent to employees make criticisms and discuss their expectations in on their birthdays; connection with the job. • financial support was provided for employees participating in sports clubs and societies formed by • manager development company employees, and the company was also The company continued its manager development involved in the presents for children organised in De- project in 2011. This measure ensured that there was cember by the unions. ongoing training for managers in the areas of work organisation, target-setting, delegation of duties, 3.4.2 Air traffic control training problem-solving, managerial responsibilities and communication. Given the special requirements for training personnel working in air traffic control, the company places very • concern for employees’ health great importance on providing training and education The company provided medical check-ups for man- for its employees. This is the role of the Flight School, agers and other employees, in line with the safety which carries out all the requisite activities for training statement and risk assessment. Training was also employees working in the field who require a work provided in occupational health and safety, fire pro- licence or permit for their work, with the help of in- tection and evacuation. Within the framework of this house and outside instructors, who are engaged as objective the company also conducted two unan- required. nounced controls to support measures to raise employee awareness in the prevention, detection and The Flight School provided training in 2011 for the sanctioning of alcohol consumption and intoxication needs of all three operational departments, as follows: with psychoactive substances. • ARO operator rating with endorsement for the Lju- bljana location for four candidates; In addition to the above, the following HR development • FIS endorsement for two candidates; activities were also carried out last year: • maintenance, modification and operational launch ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 32

of technical equipment and devices for three candi- 3.5 AIR TRAFFIC SAFETY dates; • two external initial courses (AB-INITIO) for Slovenian Safety in air traffic is vitally important for air traffic Army personnel for 20 candidates. control and management, and is the common thread in all operating procedures. The company’s safety man- The Flight School also coordinated training abroad at agement system meets all the requirements of Com- the Institute of Air Navigation Services (IANS), which mission Implementing Regulation (EU) No. 1035/2011 operates under the aegis of Eurocontrol, for 33 employ- in connection with the implementation of the Single ees on 21 different courses. European Sky, and the requirements of correspond- ing national regulations. On this basis, for the area of The study documentation is also updated and expand- air traffic safety management the company has been ed under the aegis of the Flight School. New versions declared a certified provider of air navigation services. of several documents were created in 2011: Since 2006, on the basis of reports of standing su- • the Manual for the air traffic controller training pro- pervision as part of the Eurocontrol agency’s ATM gramme; Safety Framework Maturity Survey programme, the • the Ljubljana ACC training plan. company’s air traffic safety management system has exceeded the target level of maturity for air navigation The manual and the training plan were approved by the service providers in the ECAC group. Ministry of Transport on 14 March 2011. The organisational structure of the safety management Updated versions of two internal documents were also system comprises the Safety Department, which func- produced in 2011: tions within the CEO’s Office, the Slovenia Control • the Instructions for the procedure for testing the Safety Committee and Local Safety Group, where competence of air traffic controllers; members and employees have precisely defined tasks • the Procedure for renewing ratings and endorse- and responsibilities with regards to air traffic safety. ments in the air traffic controller licence. Investigative commissions and persons responsible for carrying out safety assessments, as well as the ad hoc activities of the SMS system, are determined on the basis of relevant decisions by the company management. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 33

Figure 2 Structure of the safety management system

SLOVENIA CONTROL CEO

SLOVENIA CONTROL SAFETY COMMITTEE

CEO CABINET

SAFETY DEPARTMENT INVESTIGATION OVZP COMMISSION

SAFETY SAFETY ASSESSMENT MANAGER RESPONSIBLE

LOCAL SAFETY SAFETY SPECIALIST SAFETY SPECIALIST SAFETY SPECIALIST COMMITTEE

ATCC LJUBLJANA

TWR BRNIK

TWR MARIBOR

TWR PORTOROŽ

TWR CERKLJE

Permanent Role AIS

Temporary Role CNS

The number of filed reports on safety events has con- Reporting Culture, which is based on consistent appli- stantly risen since 2004, while the levels of event-re- cation of the principles of a Just Culture, has ensured lated criticality have fallen, indicating at the same time the predicted level of maturity in reporting. an improvement in two measurable parameters. The ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 34

The company devotes special attention to the Just • determining responsibility at all levels of manage- Culture and its implementation, since it brings im- ment to achieve satisfactory efficiency of air naviga- provements to the efficiency and quality of reporting tion services, with the commitment and cooperation processes and to the exchange of safety information, of all company employees; which enables high-quality analysis and communication • observing the principles of the Just Culture in pro- of acquired information to all partners involved in the cedures of reporting and investigating safety events area of air traffic safety. Application of the principles and associated corrective measures. of the Just Culture is incorporated into the company’s safety culture programme, which began with an analy- In 2011, permanent activities in the safety sector were sis of the safety culture in 2009 and is continuing with pursued in the form of cooperation with: implementation based on analysis of recommendations • other company sectors and departments in connec- made. tion with implementing processes and activities of the safety management system; In the Eurocontrol definition, the Just Culture is a prin- • Slovenia’s Ministry of Transport and Ministry of De- ciple under which operational expert personnel and fence; others responsible for air traffic safety (this involves • Eurocontrol, the European Organisation for the mainly expert personnel in the field of providing air nav- Safety of Air Navigation; igation services – air traffic controllers, technical staff, • air carriers in Slovenian airspace; engineers, pilots, expert personnel at airports and so • APAC (Austrian Product Assurance Company, Ltd.) in forth) are not penalised for actions, failures or decisions the area of formulating safety assessments for the that are consistent with their skills and experiences of project ATCC Ljubljana; what is termed the honest mistake, while on the other • organisational structures for air traffic safety in hand there is no room for gross negligence, deliberate neighbouring countries and countries involved in the violations or destructive acts. FAB CE project.

In our Safety Management System, along with the As part of the Air Traffic Safety target, the business implementation of basic procedures for achieving, en- plan for 2011 defined three operational safety objec- suring and improving air traffic safety, we endeavour to tives: achieve the highest possible level of safety culture on • Safety Achievement; the part of all of our employees. The company’s safety • Safety Assurance; management system ensures: • Safety Promotion. • a clear and preventive approach to systematic safety management in providing air navigation services, The fulfilment of activities as part of the operational with the aim of constant improvement; goals of safety achievement, safety assurance and • putting an acceptable level of safety in first place rel- safety promotion can be seen in the fact that the com- ative to commercial, environmental, social and other pany’s safety management system meets without ex- factors in providing air navigation services; ception the requirements of Commission Implement- • reducing the risk of an air accident, incident or ing Regulation (EU) No. 1035/2011 regarding the Single safety event, as result of provision of air navigation European Sky and national regulations, as confirmed services on the lowest rational and practically fea- by the certificate issued by the Civil Aviation Agency sible level; of the Republic of Slovenia, document number 37224- • personal awareness of the importance of safety and 1/2010/37 of 1 December 2011. Furthermore, in exter- responsibility among all employees in providing air nal controls performed by the Eurocontrol agency for navigation services; 2011, the company’s safety management system again ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 35

exceeded the target level of maturity for air navigation Fulfilment of measures as part of the operational objec- service providers in the ECAC countries. tive Safety Assurance is evident in the fact that in the process of reporting within the safety management Measures implemented under the operational objec- system, there were no type AA or A safety events. In tive of Safety Achievement were carried out in the form 2011 the Safety Department conducted three commis- of the following basic activities: sion investigations and thirteen (13) internal investiga- • Effective implementation of formalised procedures tions for safety events with a lower level of safety risk. in the safety management system, in line with the document Operational Safety Management Manual, and preparation of new and revision of existing an- nexes to this document. • Revising the current documents for the safety management system in line with identified best practices in the field of air traffic safety. • Analysing the safety effects of external service providers for the company based on the existing meth- odology and recommendations of Eurocontrol and the ICAO international organisation. • Training up the company’s management personnel in relation to managing air traffic safety.

Figure 3 Number of reports for the air traffic sector and departments

180 160 140 120 100 80 60 40 20 0 ATS ATCC TWR TWR TWR TWR Ljubljana Brnik Maribor Portorož Cerklje ob Krki ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 36

Figure 4 Number of completed reports for a specific trend

RCF LOA Laser

Bird Strike Paragliders Coordination Complex events Runway excursion A/C technical eventsATC Non compliance Airspace infringement

Measures implemented under the operational objec- 3.6 RETAINING THE CERTIFICATE TO tive of Safety Promotion were carried out in the form of PROVIDE AIR NAVIGATION SERVICES the following basic activities: • Cooperation of the company in the Eurocontrol ES2 On 1 December 2011 the Civil Aviation Agency of the programme (successor to the SASI programme). Republic of Slovenia extended the licence of the air • Use of the company intranet (KZPS Portal) to raise navigation services provider (No. 37224-1/2010/37) for the efficiency and quality of providing information to Air Traffic Services (ATS), Aeronautical Telecommunica- employees related to activities in the area of air traf- tions Services i.e. Communications, Navigation and fic safety management. Surveillance Services (CNS) and Aeronautical Informa- • Carrying out activities in line with the action plan for tion Services (AIS). With this certificate, the company additional improvements to the company’s safety demonstrates the capacity to provide these services culture. based on fulfilment of the legal requirements of Com- mission Implementing Regulation (EU) No. 1035/2011 of 17 October 2011 laying down common requirements for the provision of air navigation services and amending Regulations (EC) No. 482/2008 and (EU) No. 691/2010, and the previously valid Commission Regula- tion (EC) No. 2096/2005.

The process of recertification of the company as a provider of air navigation services took 12 weeks, from September to the issuing of the certificate in December 2011. During this time the size bracket of working hours needed to demonstrate fulfilment of the ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 37

legal requirements to provide air navigation services 3.7 QUALITY amounted to 1055 working hours. The accreditation firm Bureau Veritas d.o.o. conducted In addition to the process of recertification, as the na- its second control assessment at the company in the tional supervisory authority, the Slovenian Civil Aviation month of January 2012, and extended the validity of Agency conducted continuous monitoring throughout the quality certificate under international standard ISO 2011 of the company’s compliance for providing air 9001:2008. navigation services. The company’s most intensive workload in terms of ensuring the capacity to provide The control assessment covered all processes at all air navigation services was in the second half of 2011 company locations (Ljubljana, Portorož, Maribor, Brnik (and continued into 2012), in consequence of discover- and Cerklje ob Krki). The successfully concluded con- ing non-compliance with the legal requirements on the trol assessment is the result of efforts from all com- part of the operator of Cerklje ob Krki Airport. These in- pany employees, indicating progress, hard work and stances of non-compliance in fact had a direct negative awareness-raising about the importance of procedural effect on the air navigation services provided by the improvements. company at Cerklje ob Krki Airport. In line with the assessment plan, a comprehensive In the first half of 2011, prior to the process of recer- internal assessment was conducted in October, and tification, the company carried out planned internal this involved 18 employees who are trained as internal inspections of compliance with the requirements of assessors. Internal assessment was conducted at all Commission Regulation (EC) No. 2096/2005 of 20 De- locations and also involved all processes in the com- cember 2005 laying down common requirements for pany. The internal assessment results gave us a basis the provision of air navigation services. Through internal for corrections and preventive measures in individual inspections, the company ensured compliance with the processes, and this also served as a basis for updat- aforementioned regulation, and at the same time it es- ing individual rules of procedure, in line with the actual tablished the conditions for successful recertification at situation. Following the internal assessment, a survey the end of the year. The size bracket of working hours of satisfaction was also conducted in connection with needed directly for internal inspections amounted to the internal assessment, and this was completed by 200 working hours in 2011. The annual extent of work- the internal assessors. The survey showed that the ing hours for internal inspections of compliance was internal assessors were satisfied with the organisation supplemented by activities of the Certification Depart- of the assessment, and there were just some minor ment for establishing productive dialogue with the discrepancies in the cooperation of individual persons national supervisory authority, the Civil Aviation Agency being assessed. of the Republic of Slovenia, in line with internationally identified best practices (ATM Safety Management The company organised a refresher seminar for all Interface between ANSP and NAA/NSA, Eurocontrol internal assessors, and in 2011 trained up two employ- DNM/COO/NOM/SAF, Ed. 1.0 of 28 February 2011). ees as new internal assessors. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 38

3.8 SECURITY 3.9 iNTERNATIONAL COOPERATION

In 2011 an assessment of the level of threat to op- 3.9.1 Functional Airspace Block Central Europe – erational data was made in the area of the security FAB CE management system, in cooperation with Communi- cations, Navigation and Surveillance. Equally, in 2011 Through its own representatives, who together with we started to formulate an assessment of the level of representatives from the Slovenian Ministry of Trans- threat to remote facilities, on the basis of which the port represent the Republic of Slovenia, in 2011 the Manual for the Protection of Remote Facilities is being company continued its active and successful coopera- overhauled. tion in the project of creating the Functional Airspace Block Central Europe (hereinafter: FAB CE), in line with In the area of technical protection, a security fence EU regulations on the Single European Sky. was erected at the Oljska Gora facility, and individual mechanical protection elements were added, while The establishing of FAB CE is being conducted in three mechanical protection was also put in place at the phases, as follows: new DVOR/DME at Dolsko. Throughout the year we • the FAB CE Preparatory Phase, which ended with conducted basic or ongoing maintenance on existing the signing of the FAB CE agreement; systems of technical protection. • the FAB CE Implementation Phase, which ended with the ratification of the FAB CE agreement by all In the area of fire safety, a system of active fire protec- member states of FAB CE; tion was established at radar Charlie, involving gas ex- • the FAB CE Operation Phase, which will commence tinguishing and fire alerting. Together with the technical once FAB CE begins operating, at the latest after 4 firefighting service of Aerodrom Ljubljana d.d., a Fire December 2012. Protection Plan was devised for the company’s facilities at Ljubljana Jože Pučnik Airport. At the same time, The FAB CE Implementation Phase continued in 2011, individual enhancements were made to fire safety at and this involved the drafting of project implementing these facilities. During the year, the external profes- documents for the official functioning of FAB by 4 De- sional expert for fire protection also conducted regular cember 2012. The Implementation Phase of the project fire safety inspections. is also being funded partly by the European Commis- sion (TEN-T funding). As part of our physical protection measures, we upgraded individual protection procedures and began In accordance with the FAB CE Agreement and the physical protection of technical premises at the new FAB CE ANSP Agreement, which were signed in ATCC facility. May 2011, permanent project structures have already been set up on the part of the countries (Council, The company also cooperated in the overhaul of regu- Joint Civil-Military Coordination Committee, National latory legal acts in the area of security, especially in Supervisory Authority Coordination Committee, Legal terms of the obligatory organisation of the security Committee) and on the part of the navigation service department and critical infrastructure. providers (CEO Committee, Steering Committee, SubCommittee(s)). While the FAB CE ANSP Agreement entered into force immediately on being signed, the FAB CE Agreement entered into force on 20 March 2012, based on ratification by the first two countries, Austria and Hungary. In 2012 the Agreement has also ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 39

now been ratified by the Czech Republic, Slovakia and The following major activities were pursued in 2011 un- by Slovenia, through the Act Ratifying the FAB CE der the TransNEW project: Agreement, which was published in the Official Gazette • supplementing the contact database for researchers of the Republic of Slovenia, No. 35, of 14 May 2012. and small and medium sized enterprises involved in research in the field of transport in Slovenia; Active cooperation between representatives of the • carrying out further activities to promote completion company and the government has proven to be ex- of the questionnaire and inclusion in the database of tremely effective, and must be continued on that level contact persons; in the future. • preparation and organisation of an international regional workshop held on 30 September 2011 in 3.9.2 TransNEW project Ljubljana under the aegis of the company. The workshop was attended by 80 representatives of trans- On 1 January 2010 the company started cooperating port research from Croatia, Bosnia and Herzegovina, in the international project TransNEW, as one of the Macedonia, Serbia, Kosovo, the UK, Belgium, Czech 16 partners or coordinators in the project. The project Republic and Poland. lasted 24 months, in 2010 and 2011. The purpose of the TransNEW project under the European Union Seventh This project was concluded at the end of 2011. Framework Programme was to assess, analyse and define the potentials and accelerate development strate- gies and research in the field of transport in 26 new EU Member States, and to link together countries in what is called the European Research Area (ERA).

The company was involved in the TransNEW project in determining regional priorities and promoting research in the area of transport in Slovenia, while it was also responsible for organising regional workshops for the Western Balkan countries – Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Macedonia and Kosovo.

The workshop was held on 30 September 2011 in 3.9.3 Other cooperation Ljubljana, and attendance at the workshop provided participants with the chance to exchange ideas with The company continued its cooperation in drafting an European Community officials and experienced part- important development document, the Local Single ners of European projects. The aim of the workshop Sky Implementation Plan (LSSIP) and in drafting impor- was to bring together potential partners and to form a tant reports for Eurocontrol regarding the financial ef- consortium of projects in the area of transport that will/ fectiveness of ATM activities (ATM Cost Effectiveness have been submitted in future European Commission Report - ACE Report), and monitored development of tenders. All this represented an outstanding opportu- the SESAR project and the functioning of the associa- nity for researchers and organisations from the new EU tions CANSO and ATCA. Member States, who have perhaps not yet cooperated in European projects. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 40

3.10 PUBLIC PROCUREMENT ORDERS business, procedures are followed in accordance with the Public Procurement Act. The company considers any spending of funds to be a public procurement order. Public procurement orders In the implementation of public contracts, we observe are fulfilled in accordance with the valid legislation in the following fundamental principles: this field, the Public Procurement Act (Official Gazette • cost-effective expenditure; of the Republic of Slovenia, Nos. 128/06, 16/08, 19/10 • efficiency and effectiveness; and 18/11; hereinafter the Public Procurement Act) and • equal treatment of bidders; the Public Procurement in Water Management, Energy, • transparency of the public procurement procedure; Transport and Postal Services Act (Official Gazette of • ensuring competition between bidders and the Republic of Slovenia, No. 72/2011-UPB3, hereinaf- • proportionality. ter: Public Procurement in Water Management, Energy, Transport and Postal Services Act ) and secondary In 2011 a total of 448 public procurement procedures legislation. were concluded with a total value of €10,051,152.42 excluding VAT, of which: The company follows procedures in line with the Public • 246 procedures at a total value of €1,367,412.74 ex- Procurement in Water Management, Energy, Transport cluding VAT in accordance with the Public Procure- and Postal Services Act in the procurement of goods, ment Act; services and construction works that are directly tied • 202 procedures valued at €8,683,739.68 excluding to the core business, that is, managing and controlling VAT in accordance with the Public Procurement in air traffic. For the procurement of goods, services and Water Management, Energy, Transport and Postal works that are not directly associated with the core Services Act.

Table 5 Procedures in accordance with the Public Procurement Act

Order forms of up to €20,000 in 2011 type No of procedures value service 138 580,807.50 goods 104 226,957.32 construction 0 0.00 242 807,764.82 Call for bids of €20,000 to 40,000 in 2011 type No of procedures value service 2 188,000.00 goods 0 0.00 construction 0 0.00 2 188,000.00 Open procedures and other procedures of more than €40,000 in 2011 type No of procedures value service 1 300,000.00 goods 1 71,647.92 construction 0 0.00 2 371,647.92 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 41

Table 6 Procedures in accordance with the Public Procurement in Water Management, Energy, Transport and Postal Services Act

Orders forms of up to €40,000 in 2011 type No of procedures value service 73 947,154.75 goods 98 889,790.49 construction 9 300,389.40 180 2,137,334.64 Call for bids of €40,000 to €80,000 in 2011 type No of procedures value service 2 114,909.20 goods 0 0.00 construction 0 0.00 2 114,909.20 Open procedures and other procedures of more than €80,000 in 2011 type No of procedures value service 4 1,300,700.00 goods 15 4,320,152.95 construction 1 810,642.89 20 6,431,495.84

In 2011 the company intensively prepared and carried out procedures for awarding public procurement orders relating to the supply of goods and/or services for the construction of a new Air Traffic Control Centre (ATCC), especially for the supply of the necessary equipment for installation. This generated an increase in the number of both higher-value procedures and lower-value procedures carried out. The company expects such intensiveness to continue in 2012, up until the new facility it occupied. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 42

3.11 fiNANCE AND ACCOUNTING air traffic control and management in a safe, efficient, continuous and sustainable manner, as laid down in The tasks of the finance and accounting area are per- Annex I to Commission Implementing Regulation (EU) formed by the Financial Department, which is part of No. 1035/2011 (previously Regulation 2096/2005/EC). the General Management Department. Activities in the financial and accounting field are directed towards A permanent solution to the issue of using infrastruc- ensuring the unimpeded and effective operation of the ture for air traffic control and management is the company, and include cooperation with representatives transfer of infrastructure to the company as a capital of government and contractual partners, with manage- contribution from the sole company owner (the state). ment and other organisational units in the company, The manner and scope of the transfer of infrastructure and the preparation of reports and analyses for internal to the company as a capital contribution has been and external users. Accounting services are provided coordinated by the company with the Ministry of Infra- for the company by an external contractual partner. structure and Spatial Planning, so the final regulation of relations associated with the infrastructure is envis- One of the priority tasks for the Financial Depart- aged in 2012. ment is to ensure current liquidity as well as funds for planned investments. In 2011 the company settled its obligations within the agreed deadlines, and ensured 3.12 LEGAL AFFAIRS funds for the fulfilment of planned investments relative to time and procedural possibilities. Other important Activities in the legal area provided support for all com- activities involved: pany units in 2011. The contribution in the legal area • arranging the reimbursement of costs associated was reflected most in the support for the holding of with flights that were exempt from the payment of company supervisory board meetings, in implementing charges; annual general meeting decisions, support for internal • participation in the ATCC project and in other invest- and international projects, in the regulatory field in the ment projects; drafting and coordination of internal company docu- • cooperation in the FAB CE project and financial ments, and in cooperation in adopting the implement- monitoring and reporting on the implementation of ing regulations of the line ministry. projects financed by the European Commission. The implementation of prescribed procedures of re- Regulation of relationship towards assets under porting was ensured in line with legislation, especially management under the Integrity and Prevention of Corruption Act and the Management of Capital Investments of the Re- Since the start of operations in 2004, the company’s public of Slovenia Act, and in this relation cooperation business of air traffic control and management has with bodies operating on that basis. required the use of infrastructure that was procured before 2004 and is in state ownership. Up until the ab- Other work in the legal area covered the settling of olition of Slovenian Accounting Standard 35, the use of relations of material law and land register status, ad- infrastructure was regulated as assets under manage- vice in the conclusion of contracts, the preparation of ment. Since 1 January 2010, however, the use of these individual legal opinions and legal advice in virtually all assets has been governed by an Agreement regulating areas of law. the mutual relationship in connection with assets for the provision of air navigation services in the transitional period. This serves to ensure the services of ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 43

4 INVESTMENTS

4.1 AIR TRAFFIC CONTROL CENTRE – ATCC • planning, procurement, setting up and start-up of operational technical infrastructure and One of the most important objectives for the company • planning, procurement, setting up and start-up of in 2011, and at the same time the most important in- technical systems and devices for the ATCC. vestment, was the Air Traffic Control Centre – ATCC. The company continued its activities under the project, Technical infrastructure started to be installed in the which is divided into three parts: spring of 2011, when the first operational premises were • building subproject; arranged to the extent that cables could be installed. In • system subproject (technical migration) and this way the following infrastructure was successfully • start-up subproject (operational part). put in place and taken over by the end of the year: • operational LAN cables, which will be used for data The building subproject involved the conclusion over the communication at the centre and between individual entire facility of all construction and fitting works, except centres; for parquet flooring, all installation conduits and the as- • antenna cables; sembly of non-operational installations. The end of the • other special copper wiring for all non-IP protocols, year saw concluding fitting and installation works for the which will be used at the new centre; common and commercial part of the facility (non-opera- • cables for operational and non-operational energy tional part), while all construction, fitting and installation and the system of uninterrupted supply. works in operational premises were completed. By the middle of the year all these premises and other parts In 2012 we envisage the conclusion of infrastructure of the facility were handed over to the next phase of implementation in those premises where the condi- works, the execution of operational installations. The sur- tions were not yet right by the end of 2011 in construc- roundings have for the most part been arranged, except tion terms. for works in the second phase of machine installations (external connection of machinery rooms), concluding The systems and devices at the new centre are being layers of the traffic arrangements and planting. For 2012 put in place gradually, in line with the implemented in- there are plans to complete the construction elements frastructure and with the relevant ambiental conditions. for the energy supply of the facility, the system of sup- The emplacement of systems necessarily requires plying critical consumption points, the supply of fire con- space and the right conditions (cleanliness of the trol switchboards and a system of technical protection space, control of access, appropriate temperature and of the facility, arrangement of access and completion of humidity). In 2011 the following projects were being the facility surroundings, the supply of office equipment implemented: and other furnishings. • installation, testing and takeover of the voice communication system (VCS); Investments in the project of technical migration cover • installation and testing of the active network of mainly: equipment for data communication; ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 44

• installation of the system for voice and data recording; 4.2 OTHER INVESTMENTS • installation of machinery for the migration of FDPS and SDPS software; In addition to investments in the new centre, in 2011 • delivery and set-up of the active telecommunication we also carried out certain other investments. Most infrastructure; activities were in the area of navigation, where we • delivery and set-up of the system for technical su- continued the cycle of replacing older navigation equip- pervision (display of device status, graphic proces- ment. In the middle of the year we thus replaced the sor and system for control and alarms); main navigation asset, VOR/DME at Dolsko. We pro- • installation and takeover of devices for the transfer of cured more modern equipment that operates on the images and sounds to controller work stations (KVM); Doppler principle (DVOR). The technology is especially • numerous smaller projects – implementation of de- appropriate for our type of terrain, and for this reason vices urgently needed for the operation of the new we anticipate even greater accuracy of the signal and centre (central source of precise time, antenna sys- high availability of the device. We moved the used tems and so forth). VOR/DME system from Dolsko to Portorož, where to date there was no such type of navigation device. In The installation of systems will be finished in 2012 and this way we enabled the formulation of new instrumen- will be concluded with the process of integration into tal procedures for flights arriving at and departing from the entire system, by testing and acquisition of the op- Portorož Airport, which enables the use of the airport erating licence. in bad weather, the guiding of traffic away from settle- ments (noise) and also greater safety. Within the start-up subproject, the main objectives were the purchase of certain equipment (work stations In the communication field we implemented a new for all operational air traffic control personnel, opera- multi-channel radio station at ACC. In this way we im- tional screens, chairs), the preparation of all plans for proved the availability of radio communications in the the transfer of activities, preparation of procedures and event of a degradation of technical systems. appropriate safety analysis for the safe and efficient moving of the operational part in the ATCC project. In The area of supervisory systems did not involve any 2011 we provided equipment for operational work sta- major investments during the year. Preparation of tions for air traffic controllers, with the requisite chairs documentation and project conditions was pursued (CWP – Controllers Working Position, Senior Working for upgrading the Watchman radar to MODE-S and the Position, Flight Data Operators Working Position) and movement of that radar to a new and better location. the main and auxiliary screens for displaying radar images for ACC. Drafts of all the relevant documents for The majority of investments for the automated sys- relocation were made, as follows: tems area were made at the new centre. Furthermore, • plans for air traffic regulations for the time of the outdated hardware for the flight data processing sys- relocation; tem at the old centre (FDPS – KAMI) was replaced, • plans for personnel during the relocation (monthly which significantly increased the reliability and availabil- and daily plans for implementing double shifts); ity of the system. • operational procedures and processes; • changes to the presentation of applications; In the area of energy and air conditioning we carried • input data for carrying out safety analyses; out only investment maintenance. Several worn out • training plans. devices were replaced.

The implementation of plans is in line with the time- table for moving envisaged in the second half of 2012. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 45

5 RISK MANAGEMENT

Air traffic control is a specific and demanding business, 5.2 fiNANCIAL RISKS and is exposed to numerous general and special risks, which need to be adequately monitored and managed. The risks to which the company is exposed in its opera- With the strong involvement of the company in the tions are: international environment, we are aware that risk man- • cash flow risk; agement is increasingly important and demanding. The • price risk; company has identified key types of business and finan- • interest rate risk and cial risk and the mechanisms for their management. • asset risk.

Airlines using the company’s services have in recent 5.1 sTRATEGIC RISKS years struggled with declining numbers of air pas- sengers in Europe, the declining value of the euro and Strategic risks are associated primarily with coopera- high fuel prices, and this could see some airlines, espe- tion with the government, with international coopera- cially smaller ones, become insolvent or even declare tion, strategic planning, the acquisition and ownership bankruptcy. The weaker financial position of air carriers of assets and with the market and market structure. increases the risk of the company’s receivables not being settled within the agreed deadlines, which contrib- We manage strategic risks: utes to cash flow risk. • through active cooperation with the government, particularly in resolving open questions that affect The company is involved in the system of international the company’s operations; accounting and charging for services under the aegis • through active cooperation in the international area, of Eurocontrol, which charges, receives and collects primarily with other air traffic control service provid- payments for the company for services rendered. Euro- ers and relevant international organisations in the control is highly successful in collecting, and this mark- field of civil aviation; edly reduces cash flow risk. The company manages • through strategic planning of investments with cash flow by planning costs, revenue and cash flows, five-year and annual business plans in line with the and by using short-term lines of credit. requirements and targets of the Single European Sky (ATM Master Plan), the national Implementation Plan Price risk is managed by means of calculating the 2012–2014 and international standards in this field; charges set by the Eurocontrol Principles for estab- • by retaining the licence to provide air navigation ser- lishing the cost-base for en route charges and the vices for air traffic control services (ATS), communi- calculation of the unit rates. In line with this, prices cations, navigation and surveillance services (CNS) for services rendered are formulated on the basis of and aeronautical information services (AIS), which is envisaged costs and traffic. Owing to the system of re- a condition for performing those activities for which imbursement of all justified costs, price risk is low and the company was established. manageable. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 46

The risk of changing interest rates to which the com- ty. Risks in this area are managed through measures pany is exposed, is limited to the risk of the Euribor targeted towards the development of professional changing, since the company has loans with interest staff, including planned education and training of expert rates tied to that rate. The company manages expo- personnel, international links in this field, improve- sure to interest rate risk by monitoring interest rates, ments to working conditions, provision of information negotiating for competitive loan terms with lending to employees and social dialogue. institutions, and by planning the necessary additional financing. Among the operational risks that are very significant for the company’s operations and the performance of its Asset risk relates primarily to the regulation of relations business are risks in the area of legislation, including in between the owner and the company regarding infra- particular risks of legislative change. It is very important structure. We are planning to have these relations fully for the company that its experts actively participate in settled in 2012. amendments to legislation with Slovenian and international institutions. The company is not exposed to currency risk, since it receives all income and has most of its expenditure in euros. 5.4 iNFORMATION RISKS

The major information risks we have identified are 5.3 OPERATIONAL RISK linked to the quality of equipment and the network, supervision and intellectual property. The main defined operational risks are development and maintenance of equipment, expert human resourc- The company manages information risks: es and legislation. The company is actively managing • through its high-quality equipment and network; risk in these three areas. • through supervision; • through intellectual property Through amendments to the legal basis, the first step and by ensuring that important information arrives in was taken in 2009 towards reducing the risks associ- due time and without any misuse at the most impor- ated with the administration or ownership of assets tant users. for performing activities and consequently with the planning of investments and further development. In 2011 the company implemented the adopted safety Irrespective of the status of these assets, the com- policy, the modernisation of equipment and the busi- pany has managed risks in this area to date through ness IT service. Parallel to this, works were carried out strategic planning of investments, development and at the new ATCC facility on the passive and active parts maintenance of equipment. Monitoring development of equipment that are essential to begin the migration in this area and investments in modern equipment are of IT equipment and services. among the major factors that significantly contribute to fulfilment of the most important business objectives of Through the adopted safety policies and continued de- the company, air traffic safety and capacity in Slovenian velopment planning in the area of information technol- airspace. ogy, we will ensure the more effective management of information risks. A professional staff with appropriately expert training and concomitant remuneration is essential for the operation of the company and for ensuring air traffic safe- ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 47

6 AIR TRAFFIC DATA FOR 2011

6.1 INTRODUCTION of providing services in Dolsko Sector in the en-route phase and in all three terminal zones. The company provides air navigation services in Slove- nian airspace (FIR Ljubljana) on behalf of the Republic Number of service units of Slovenia, in accordance with the Act on the Provision of Air Navigation Services. The area of responsibility in The price of the service for an individual IFR flight that which the company provides air navigation services is is not exempt from payment of charges is determined defined both in the Act on the Provision of Air Naviga- on the basis of the product of the unit rate in the en- tion Services and in the Letters of Agreement between route or terminal phase and the number of service Area Control Centres (hereinafter: LoAs), which de- units in the en-route or terminal phase. termine the boundaries of responsibility for providing airspace services. In line with LoAs, the Ljubljana area The number of en-route service units is calculated ac- air traffic control is therefore charged with providing air- cording to the formula: space services that are not identical to Ljubljana FIR. En-route service units = (distance in km / 100) x Ljubljana FIR is the national airspace (figure 5) in (MTOW / 50) 0,5 which, under the Chicago Convention, the Republic of Slovenia has exclusive sovereignty, and for which in ac- The number of terminal service units is calculated accordance with international treaties the Republic of Slo- cording to the formula: venia charges fees for services rendered in all phases of a flight (en-route, terminal) irrespective of who the Terminal service units = (MTOW / 50) 0,7 actual service provider is. Where: For the en-route phase, the Ljubljana Area Control Cen- distance is the shortest distance in kilometres be- tre is responsible for providing air navigation services in tween the entry and exit points in Ljubljana FIR; Dolsko Sector, which includes a part of Austrian, Italian MTOW is maximum take-off weight. and Croatian airspace (figure 6), while Vienna Area Con- trol Centre is responsible for providing services in Mura Sector (figure 7).

In addition to services in the en-route phase, the company provides services in the terminal phase, specifically in the terminal zones of Ljubljana, Maribor and Portorož (figure 8). The company is thus in charge ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 48

Figure 5 Ljubljana FIR Figure 7 Mura Sector

Figure 6 Dolsko Sector Figure 8 Terminal zones in Ljubljana FIR ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 49

6.2 AIR TRAFFIC ANALYSIS

Air traffic analysis covers the trend of the number of IFR flights and the link between this trend and the number of service units, which in the en-route and terminal phases affect the level of company revenue. The source of data used in the analysis is company data and data from Eurocontrol Stratfor and CRCO.

In 2011 a total of 369,863 flights were made in Slove- nian airspace, of which 17,074 were VFR (visual flight rules) and 352,789 IFR (instrument flight rules).

IFR flights are divided in terms of flight phase into en- route and terminal phases, and also in terms of the airspace in which the flight is carried out. For a clearer illustration we use the diagram below, which shows two different divisions of IFR flights.

Figure 9 Division of IFR flights by flight phase and airspace

IFR flights FIR Ljubljana

352,789

IFR flights Mura Sector IFR flights Dolsko Sector IFR flights Terminal IFR flights En-Route

85,287 267,502 34,733 232,769

IFR flights Dolsko Sector En-Route IFR flights Dolsko Terminal

232,769 34,733 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 50

Ljubljana FIR

The number of flights reached a record level in 2008, In 2009 Slovenia recorded an average of 4.2% fewer but with the onset of the economic crisis at the end of all IFR flights (en-route and terminal phases). In 2010 of 2008, air traffic in Europe fell dramatically. In 2009 there were 4.8% more flights, which translated into an all IFR flights at the EU27 level (en-route and terminal increase of 0.4% relative to the 2008 value. phases) fell on average by 7.2%, while 2010 showed a modest growth averaging 0.2%, meaning that for the In 2011, there were 7.9% more flights compared to entire EU27 region 2010 still showed 7% less flights 2008, and 7.5% more than in 2010, while the EU27 relative to 2008. In 2011 the number of flights in the area showed a 2.6% growth. entire EU27 region increased by 2.6% over 2010. The above values relate to IFR flights in Ljubljana FIR, irrespective of the air navigation service provider and irrespective of flight phase.

Figure 10 IFR flights in Ljubljana FIR

7.0% 4,8% 5,0% 11,1% 9,4% 9,4% 9,6% 9,9% 9,4% 8,6% 8,1% 7,5%

All IFR flights in slovenian airspace. En-route and Terminal, regardless of which servi- Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. ce provider provided the service. Includes sector Dolsko (Sloveniacontrol) and sector 7,0% 2,4% 5,2% 28,2% 5,0% 9,5% 10,3% 11,5% 5,8% 2,1% 1,7% -1,5% Mura (Austrocontrol).

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (Statfor), Slovenia Control 2011 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 51

Dolsko Sector

In Dolsko Sector, where the service is provided by space where the service is provided by ACC Ljubljana, the company via Ljubljana Area Control Centre (ACC meant an increase of 0.3% in 2010 relative to the 2008 Ljubljana), the number of all IFR flights (en-route and value. In 2011 the number of IFR flights rose by 10.1% terminal phases) fell on average by 6.2% in 2009, while compared to 2010 and 10.5% compared to 2008 (figure 2010 saw a growth averaging 7%, which for the air- 11).

Figure 11 IFR flights in Dolsko Sector

8,5% 6,5% 6,9% 14,7% 12,9% 13,1% 12,9% 13,1% 12,4% 11,3% 10,8% 10,1%

All IFR flights (en- route and terminal) for which service was provided by ATTC Ljubljana. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. 8,5% 4,4% 7,5% 36,9% 8,5% 13,5% 10,3% 14,0% 7,6% 2,4% 5,0% -0,4%

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (Statfor), Slovenia Control 2011 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 52

6.2.1 Traffic in en-route phase

In the en-route phase the number of IFR flights, following a drop of 3.1% in 2009 from 2008, rose in 2010 by 6.6% compared to 2009, meaning an increase of 3.3% over 2008. In 2011 the number of flights rose by 9.1% compared to 2010, and compared to 2008 this was an increase of 12.6% (figure 12).

Figure 12 IFR flights in en-route phase in Ljubljana FIR

8,8% 6,0% 6,4% 12,2% 10,5% 10,7% 11,0% 11,5% 10,9% 10,1% 9,7% 9,1%

All IFR En- route flights, regardless of which service provider provided the service. Includes sector Dolsko (Sloveniacontrol) Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. and sector Mura (Austrocontrol). 8,8% 3,0% 7,2% 27,4% 6,3% 11,4% 12,2% 13,7% 7,3% 3,7% 3,6% 0,0%

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (Statfor), Slovenia Control 2011

In the same period the trend in the number of service units in the en-route phase fell in 2009 by 3.1%, while the number of service units rose in 2010 by 10.33% and in 2011 by an additional 16.3% (figure 13). In 2011 the number of service units in the en-route phase increased by 24.3% over 2008.

Figure 13 Service units in en-route phase in Ljubljana FIR

19,3% 14,8% 15,0% 22,3% 20,3% 20,2% 19,9% 19,9% 18,9% 17,5% 17,1% 16,3%

All service units in slovenian airspace for Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. which en-route charge is charged. 19,3% 9,9% 16,3% 40,9% 15,3% 20,0% 18,6% 20,1% 12,4% 6,5% 11,6% 4,6%

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (CRCO), Slovenia Control 2011 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 53

The trend in the number of IFR flights and in the num- The reason lies in the fact that the number of IFR ber of service units is not always consistent, since the flights in the en-route phase in Dolsko Sector, where number of service units in the en-route phase depends air routes are longer, rose in 2011 by 12.8% (figure on the distance flown and aircraft weight. While the 14), which compared to 2008 signifies an increase of trend in the number of IFR flights and service units 17.7%, while the number of IFR flights in Mura Sector, in 2009 was consistent (–3.1%), the aforementioned where air routes are shorter, was almost the same in trend was less consistent in 2010, when the number 2011 as in 2010, or to be precise there was an increase of IFR flights rose by 6.6%, and the number of service of 0.05% (figure 15), which compared to 2008 meant units rose by 10.3%. In 2011 the number of IFR flights an increase of 0.7%. rose by 9.1% compared to 2010, while the number of service units in the en-route phase in Ljubljana FIR increased by 16.3%.

Figure 14 IFR flights in en-route phase in Dolsko Sector

11,3% 8,6% 9,4% 16,9% 15,2% 15,6% 15,5% 15,8% 15,1% 13,9% 13,5% 12,8%

All IFR flights for which service is provided Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. by ATTC Ljubljana (Sloveniacontrol). 11,3% 5,6% 10,8% 37,2% 10,9% 16,9% 15,3% 17,5% 10,0% 4,5% 8,5% 1,8%

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (Statfor), Slovenia Control 2011

Figure 15 IFR flights in en-route phase in Mura Sector

2,6% -0,2% -0,8% 1,0% -0,7% -0,9% 0,2% 0,9% 0,9% 1,0% 0,3% 0,0%

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. All IFR flights in slovenian airspace for which services is provided by Austrocontrol. 2,6% -3,3% -1,8% 5,4% -5,0% -1,7% 4,8% 4,5% 0,8% 1,4% -8,0% -4,7%

Yearly change 10/11 month 10 / month 11 Source: Eurocontrol (Statfor), Slovenia Control 2011 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 54

IFR traffic under company’s control

Data below includes just traffic for which the company in 2011 compared to 2010. In all there were 267,502 was responsible, in other words they relate to Dolsko flights carried out in Dolsko Sector in 2011, averaging at Sector traffic. The data used are from the company’s 733 IFR operations per day. database and from Eurocontrol (Statfor). At the same time the following milestones were Ljubljana Area Control Centre, which provides the ser- achieved in comparison with previous achievements vice in Dolsko Sector, recorded a 10.1 percent growth (number of IFR operations):

Table 7 Milestones in number of IFR flights Dolsko Sector

Maximum values in previous years Year 2011 2010 2009 2008 The highest number of IFR operations per hour was on 2 July 2011 91 88 79 79 between 10.00 and 11.00 UTC The highest number of IFR operations per day was on 13 August 2011 1184 1029 928 977 The highest number of IFR operations in a week was from 1 August to 7 7129 6383 5843 6255 August 2011 The highest number of IFR operations in a month was in July 2011 30.861 27.488 25.617 27.045

The Area Control Centre can divide up the airspace in In 2011 Area Control Centre accumulated in total a which it provides the service into a maximum of four maximum of 58 sector hours per day, three more than vertical sectors. This prevents the overloading of air in 2010. A total of 16,011 sector hours were completed, traffic controllers and ensures adequate flow in the which is 6% more than in 2010. This is tied directly to airspace. The number of sector hours per day is the the quantity of IFR flights in Dolsko Sector, which in- sum of the openness of all four sectors. This factor is creased in 2011 by 10.1%. directly tied to the human resources available at Area Control Centre. The FIS Section at Area Control Centre performed 17,074 VFR operations in 2011, which is 24.3% more than in 2010.

Table 8 Number of VFR flights

Year VFR operations Change in % relative to previous year 2009 14,930 2010 13,733 -8.02 % 2011 17,074 +24.3 % ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 55

Forecasts and actual traffic in 2011 in Dolsko Sector

In 2011 traffic was above expectations. Before 2011 an increase of 4.7% was expected, but at the end of the year it had increased by 10.1% over 2010.

Figure 16 Traffic from 2003 to 2011 Source: Slovenia Control 2011

138398 163200 188000 194833 225448 242147 227114 242942 267504

2003 2004 2005 2006 2007 2008 2009 2010 2011

Figure 17 Traffic from 2008 to 2011, forecasts for 2012 Source: Slovenia Control 2011

35000 2008 2009 2010 2011 30000 Prediction 2012

25000

20000

15000

10000

5000

0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 56

Flight level data

Data on flight levels are from the company database. This covers all changes up to the automatic handover of flight transponding to the neighbouring air traffic control. As in previous years, the most heavily congest- ed flight levels were 350 (altitude of 35,000 feet) and 370 (altitude of 37,000 feet).

Figure 18 Traffic by flight level Source: Slovenia Control 2011

2010 2011 +400 390 380 370 360 350 340 330 320 310 300 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 130 -120 DEP

0 10000 20000 30000 40000 50000 6000

The DEP column includes all IFR flights in terminal phase. For ease of reading, data have been merged for under FL 120 and over FL 400.

A comparison with 2010 shows that the increase in traffic has been much more pronounced in the upper airspace. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 57

Breakdown of traffic by days

The number of IFR flights in Dolsko Sector is evenly and Saturday stand out, the latter being the most con- distributed throughout the year by days in the week gested day. On average there were 19.8% more IFR (second column in figure 19). It should be borne in flights on Saturdays in the summer season than on mind that this shows the average number of flights average Tuesdays. Among the numerous distinctive throughout the year. There are specific variances at features there was the feature of complexity, since on certain times of year, and these can be balanced out at Saturdays the breakdown of traffic is much more com- other times of year. It should also be noted that this is plex owing to the pronounced tourist traffic to Croatian an average for 11 weeks (at least 819 IFR flights daily airports (Split, Pula, Rijeka, Zadar). and at most 1,184 flights daily). The first column shows the distribution of IFR flights in Dolsko Sector by days The record in the number of IFR flights in Dolsko Sec- in the summer season (June-September). Thursday tor was set on Saturday, 13 August 2011.

Figure 19 Traffic by days in the week Source: Slovenia Control 2011

2011 jun-sep 2011 total

1200

1000

800

600

400

200

0 MON TUE WED THU FRI SAT SUN ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 58

Average number of IFR flights in Dolsko Sector by hours of the day

Figure 20 shows the average number of IFR flights in The trend pattern for the number of flights is similar for Dolsko Sector by hours of the day. The dark blue curve the entire year and the summer season. shows the average number of flights in hours in the summer season (June-September), and the light blue shows the average number of flights in hours throughout the year.

Figure 20 Traffic by hours (UTC) Source: Slovenia Control 2011

2011 entire year 2011 summer season 80

0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 59

6.2.2 Traffic in terminal phase

In the terminal phase the number of IFR flights contin- which is a drop of 21.9% compared to 2008. The in- ues to fall. In 2009, there was a drop of 10.9% from crease in the month of April is a result of the extremely 2008, and a fall of 7.7% in 2010 compared to 2009. In low number of flights in April 2010 owing to a volcanic 2011 there was a 5-percent drop in traffic (figure 21), eruption, which crippled air traffic throughout Europe.

Figure 21 IFR flights in terminal phase

-4,7% -3,1% -4,7% 3,8% 1,3% -0,4% -1,6% -2,6% -3,1% -3,9% -4,5% -5,0%

All IFR terminal flights for airports Ljublja- Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. na, Maribor and Portorož. -4,7% -1,4% -7,4% 35,1% 6,2% -7,0% -7,2% -8,0% -6,6% -10,7% -11,6% -11,5%

month 10 /month 11 Yearly change 10/11 (Source: Eurocontrol (Statfor), Slovenia Control 2011)

The basic data on traffic obtained from individual aerodrome air traffic controls are shown in Table 9.

Table 9 Basic data on traffic for individual aerodrome air traffic controls

Month/year Portorož Maribor Brnik Cerklje ob Krki Aerodrome Aerodrome Aerodrome Aerodrome Control Control Control Control Number of IFR operations in 2011 1651 2886 32856 Average daily number of IFR operations 4.5 7. 9 90.0 Maximum daily number of IFR operations 23 30 135 Number of VFR flights in 2011 14681 24433 18431 9287 Average daily number of VFR operations 40.2 66.9 50.5 25.4 Maximum daily number of VFR operations 183 268 179 199 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 60

In the same period the trend in the number of service units in the terminal phase fell in 2009 by 11.83%, then fell in 2010 by an additional 6.06% relative to 2009. In 2011 the number of service units in the terminal phase increased by 0.3% over 2010 (figure 22).

Figure 22 Service units in terminal phase

-3,0% 0,9% 1,2% 11,7% 8,1% 6,5% 3,7% 1,6% 1,1% 0,9% 0,7% 0,3%

All service units in slovenian airspace for which terminal charge is charged. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec. -3,0% 5,0% 1,9% 50,8% -2,3% 0,9% -7,5% -9,0% -1,6% -1,3% -0,9% -5,9%

month 10 /month 11 Yearly change 10/11 (Source: Eurocontrol (CRCO), Slovenia Control 2011)

6.2.3 Summary of air traffic analysis

Number of IFR flights

By number of IFR flights, following a steep decline in there was a wide variety of movement in Slovenian 2009, which was a consequence of the general eco- traffic by individual phases. In the en-route phase the nomic crisis, air traffic in Slovenia recovered at a sig- growth in 2011 was very pronounced for Slovenia nificantly faster pace in 2010 (+4.8% 2010/2009) than (+9.1% 2011/2010; +12.6% 2011/2008), especially for in EU27 (0.2% 2010/2009), and was even higher in Dolsko Sector (+12.8% 2011/2010; +17.7% 2011/2008), Slovenia than in 2008 (+0.4% 2010/2008), which is not while traffic fell additionally in the terminal phase in true of EU27 (–7% 2010/2008). In 2011 there was fur- 2011 (–5% 2011/2010; –21.9% 2011/2008). ther growth in EU27 of 2.6%, while Slovenia showed growth of 7.5%.

Similar growth can also be observed in the airspace serviced by the company (Dolsko Sector in the en- route phase and three terminals in the terminal phase), where traffic showed an equally pronounced recovery and exceeded 2008 (+10.1% 2011/2010; +10.5% 2011/2008). This trend in traffic applies as the average of both flight phases (en-route and terminal), where ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 61

Number of service units

The number of service units in the en-route phase followed the trend in traffic, but in 2011 this grew in Slo- venia even more rapidly than the number of IFR flights in the en-route phase (+16.3% 2011/2010) and was in fact significantly higher than 2008 (+24.3% 2011/2008).

The cause of the higher growth in the number of service units lies primarily in the higher growth in Dolsko Sector traffic, where air routes are longer, and the modest decline in Mura Sector traffic, where air routes are shorter.

The number of service units in the terminal phase was in line with the negative trend in traffic, and grew slightly in 2011 (+0.3% 2011/2010), but was still far from achieving the 2008 value in Slovenia (–16.9% 2011/2008).

6.3 ANALYSIS OF REGULATIONS AND dELAYS IN 2011

In 2011 the lowest number of delays was calculated in air traffic for the past decade. Equally, we caused no delays owing to capacities or a lack of operative personnel (air traffic controllers). The published sectoral configurations, sector capacities and planning of operative personnel entirely met the traffic needs.

Regulations in air traffic and the resulting delays in Slo- venian airspace were caused only twice in 2011. Regu- lation of air traffic flow was introduced owing to: • a fire at UPS in January and • failure of the FDPS system in July.

Both regulations caused air traffic delays totalling 515 minutes. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 62

7 KEY PLANS FOR 2012 AND EXPECTATIONS FOR COMPANY’S DEVELOPMENT

Based on planned traffic and envisaged costs of pro- The Annual Business Plan for 2012, company targets, viding air navigation services for 2012, the company planned investments and other company activities for achieved the envisaged reduction in the unit rate of 2012 are harmonised with the Business Plan for 2012– 3.5% compared to 2011 in the en-route phase and 2016. The adopted Annual Business Plan is the basis maintained terminal unit rate on the level of the last for pursuing activities and company operations in 2012, three years, in line with the adopted Annual Business which will ensure: Plan for 2012. In this way the company is following the • safe, continuous, high-quality, reasonably priced and requirements of European legislation and the European cost-effective provision of the air traffic control and Commission regarding the establishment of the EU- management; wide performance targets and alert thresholds in pro- • fulfilment of planned investment; viding air navigation services between 2012 and 2014, • employee social security and motivation; the guidelines of the Slovenian Ministry of Infrastruc- • achieving the set strategic company objectives (set ture and Spatial Planning and the recommendations of out in the section Development Policy) and thereby the International Air Transport Association (IATA). the long-term development and sustainability of the company. Through the adopted business plan the company will ensure the performance targets are met for the first The company defined the following objectives in the reference period between 2012 and 2014 for Slovenia, Business Plan for 2012: in line with the EU-wide performance targets in both • air traffic safety; key performance areas: • airspace capacity; • in the area of capacity, achieving the target value for • the Air Traffic Control Centre project – ATCC; the performance indicator the “average en-route de- • HR development; lay in air traffic flow management (ATFM)” per flight • international cooperation; in 2014 of 0.03 minutes per flight; • ensuring permanent compliance with common • in the area of cost-efficiency, achieving the target requirements for the provision of air navigation ser- value for the performance indicator the “average vices and retention of the certificate to provide air unit rate for en-route air navigation services” as ex- navigation services. pressed in real terms in euros in 2009 prices in 2014 in the amount of €60.30, taking into account the In line with the adopted Annual Business Plan for 2012, trend of decline in prices per service unit of 3.5 per- the key company plans for 2012 are aimed at efficient cent a year on average in the period between 2012 performance of the primary business, the public ser- and 2014. vice of providing air navigation services in the Republic of Slovenia. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 63

Through high-quality, flexible and cost-effective opera- mon requirements for providing the air navigation tions, the company will focus on its number-one prior- services it provides; ity, ensuring the safety of air traffic. Managing air traffic • by implementing internal assessments, to ensure safety is vitally important for air traffic control and man- and continuously improve compliance with the re- agement, and is the primary common objective in all quirements of Implementing Regulation (EU) No. operating procedures. In order to ensure the necessary 1035/2011 and implementation of all activities re- level of safety in air traffic, the company will carry out quired for extension of the certification as a provider activities in line with the established processes of the of air navigation services; Safety Management System (SMS), which is based on • final settling of relations with regard to assets under national and European regulations and the standards management, specifically the transfer of infrastruc- and recommendations of international civil aviation or- ture for providing air navigation services as a capital ganisations. contribution of the state into the company; • following the guidelines for the development of Another company objective is ensuring air traffic ca- European airspace through successful involvement pacity, so there is a need to provide services in the in the international arena, particularly in the area of extent demanded by traffic, minimising restrictions and regional cooperation to establish the Central Europe delays. The company will keep in step with needs in Functional Airspace Block; respect of the openness of all international airports in • expert cooperation with the competent state author- Slovenia. ities in drafting regulations relating to the company’s business. All activities and tasks will be geared towards achieving the company’s objectives, where in addition to the Taking into account the annual plan of inspections and above, the following are important: continuous supervision over the provision of air naviga- • investment in modernising systems and devices tion services on the part of the Slovenian Civil Aviation as part of the main company development project, Agency, in 2012 the company anticipates an increase construction of the Air Traffic Control Centre (ATCC), in the workload. On the assumption of fewer identified completion of all works, supply and assembly of op- discrepancies with the legal requirements of Commis- erational equipment and moving to the new facility; sion Implementing Regulation (EU) 1035/2011 of 17 • investment in modernising navigation, communica- October 2011 laying down common requirements for tion and surveillance infrastructure across the area the provision of air navigation services and amending of the entire country, to ensure and maintain ad- Regulations (EC) No. 482/2008 and (EU) No. 691/2010, equate airspace safety and capacity; the performance of inspections and continuous super- • attending to HR development; vision of compliance by the Civil Aviation Agency in • progressive development of the company’s quality 2012 will require 1200 working hours. Of this 43% will assurance and pursuing all activities necessary for be in offices at the Ljubljana location, 9% each at Lju- retaining the certification SIST EN ISO 9001:2008; bljana Jože Pučnik and Maribor Edvard Rusjan airports, • establishing a system of fulfilling common require- 12% each at Portorož and Cerklje ob Krki airports and ments for providing air navigation services, which 15% the locations of the company’s communications, in a systematically formal and comprehensively navigation and surveillance systems. With the aim of documented manner define the scope and methods managing the company’s workload in connection with of working and actions deemed to indicate the com- assessing fulfilment of the legal requirements of the pany’s compliance with the common requirements, air navigation service provider, and to achieve ratio- and which also indicate how the company intends nalisation effects for efficient use of working time, the to demonstrate its fulfilment and to fulfil the com- Certification Department will progressively integrate ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 64

the process of internal compliance assessment into processes of internal assessment of the quality management system.

In the area of airport telecommunications, the main thrust of development activities will be steered towards planning and equipping the new Air Traffic Con- trol Centre – ATCC. Furthermore, new investment is planned in navigation equipment, with replacement of the instrument landing system at Ljubljana Jože Pučnik Airport. This will maintain the highest possible category for landing in reduced visibility – CAT IIIB.

In the area of surveillance systems, we will continue activities related to obtaining a new radar location at which we will set up the upgraded “Watchman” radar. This will ensure long-term independent coverage of Slovenia with its own radar signal, including in the MODE-S method. In terms of preparations for moving to the new centre the area of automated systems is regarded as one of significant importance. At the same time minor upgrades are planned in 2012 for the flight data processing system, particularly upgrading with essential functionalities and protocols that will be obligatory for all EU Member States from 2012 on.

The general objective is still to ensure high availability, reliability, capacity and functionality of key technical systems and devices and maintaining a high level of safety awareness among all employees in the sector. II FINANCIAL REPORT ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 66

1 INDEPENDENT AUDITOR’S REPORT ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 67 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 68

2 FINANCIAL STATEMENTS

2.1 bALANCE sheet as at 31 December 2011

ASSETS Notes Current year Previous year A. Non-current assets 27,071,740 19,162,066 Intangible assets and non-current prepayments and accrued I. 332,093 314,591 income 1. Long-term property rights (patents, licences, trademarks) 3.2.1. 110,903 52,401 2. Non-current prepayments and accrued income 3.2.2. 221,190 262,190 II. Property, plant and equipment 3.2.3. 26,352,967 18,592,471 1. Land and buildings 471,836 480,172 a) Land 221,680 221,680 b) Buildings 250,156 258,492 2. Production plant and equipment 8,279,175 8,469,483 3. Other equipment 5,940 7,673 4. Property, plant and equipment in acquisition 17,596,016 9,635,143 a) Property, plant and equipment under construction or in 17,596,016 9,635,143 production III. Investment property 0 0 I V. Non-current investments 0 0 1. Non-current investments other than loans 0 0 2. Long-term loans granted 0 0 V. Non-current operating receivables 0 0 1. Non-current operating receivables from undertakings in the group 0 0 2. Non-current trade receivables 0 0 3. Other non-current operating receivables 0 0 VI. Deferred tax assets 3.2.4. 386,680 255,004 B. Current assets 9,270,428 5,035,747 I. Assets available for sale 0 0 II. Inventories 3.2.5. 242,422 233,218 1. Materials and commodities 242,422 233,218 III. Current investments 3.2.6. 5,519,506 1,401,000 1. Short-term loans granted 5,519,506 1,401,000 I V. Current operating receivables 3.2.7. 3,359,069 3,367,880 1. Current trade receivables 3,098,242 3,138,667 2. Current operating receivables from others 260,827 229,213 V. Cash and cash equivalents 3.2.8. 149,431 33,649 C. Current prepayments and accrued income 3.2.9. 443,153 377,911 TOTAL ASSETS 36,785,321 24,575,724 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 69

EQUITY AND LIABILITIES Notes Current year Previous year A. Owner’s equity 3.2.10. 4,941,910 4,101,966 I. Called-up capital 1,091,118 1,091,118 1. Nominal capital 1,091,118 1,091,118 II. Share premium account 0 0 III. Profit reserves 109,112 109,112 1. Statutory reserves 109,112 109,112 I V. Revaluation surplus 0 0 V. Profit brought forward 2,901,736 2,402,410 VI. Loss brought forward 0 0 VII. Net profit for the financial year 839,944 499,326 VIII. Net loss for the financial year 0 0 B. Provisions, non-current accruals and deferred income 3.2.11. 4,491,624 2,317,714 1. Provisions for pensions and similar commitments 2,416,767 1,750,083 2. Non-current accruals and deferred income 2,074,857 567,631 C. Non-current liabilities 3.2.12. 16,247,069 9,907,230 I. Non-current financial liabilities 11,794,572 4,660,534 1. Non-current financial liabilities to banks 11,794,572 4,660,534 II. Non-current operating liabilities 4,452,497 5,246,696 1. Other non-current operating liabilities 4,452,497 5,246,696 III. Deferred tax liabilities 0 0 D. Current liabilities 8,509,913 7,254,862 I. Liabilities included in disposal groups 0 0 II. Current financial liabilities 3.2.14. 1,473,131 575,000 1. Current financial liabilities to banks 1,473,131 575,000 III. Current operating liabilities 3.2.15. 7,036,782 6,679,862 1. Current trade payables 4,398,410 3,936,862 2. Current operating liabilities for advances received 0 154 3. Other current operating liabilities 2,638,372 2,742,846 E. Current accruals and deferred income 3.2.16. 2,594,805 993,952 TOTAL EQUITY AND LIABILITIES 36,785,321 24,575,724 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 70

2.2 iNCOME statement for the period from 1 January to 31 December 2011

Notes Current year Previous year A NET SALES REVENUE 3.2.17. 33,264,835 30,142,410 1. Net sales revenue in Slovenia 732,283 712,066 2. Net sales revenue in the EU 32,530,292 29,427,814 3. Net sales revenue in the rest of the world 2,260 2,530 B CHANGE IN VALUE OF INVENTORIES 0 0 C CAPITALISED OWN PRODUCTS AND SERVICES 0 0 D OTHER OPERATING INCOME 3.2.18. 173,217 156,615 E OPERATING EXPENSES 32,453,129 29,554,947 1. Costs of goods, materials and services 7,819,096 7,042,046 a) Material costs 3.2.21. 392,453 346,431 b) Service costs 3.2.22. 7,426,643 6,695,615 2. Labour costs 3.2.23. 19,807,853 18,797,041 a) Wages and salaries 15,099,713 14,261,337 b) Costs of pension insurance 1,880,514 1,729,846 c) Social security costs 2,043,739 1,914,971 d) Other labour costs 783,886 890,887 3. Write-downs 3.2.24. 1,984,380 2,013,401 a) Amortisation and depreciation 1,646,472 1,465,738 Revaluation operating expenses for intangible assets and b) 328,159 1,432 property, plant and equipment c) Revaluation operating expenses for working capital 9,749 546,231 4. Other operating expenses 3.2.25. 2,841,800 1,702,459 F OPERATING PROFIT 984,923 744,078 G FINANCE INCOME 3.2.19. 8,485 404 1. Finance income from participating interests 0 0 2. Finance income from loans granted 8,136 280 3. Finance income from operating receivables 349 124 H FINANCE EXPENSES 3.2.26. 26,636 64,273 1. Finance expenses from financial liabilities 26,567 64,167 2.. Finance expenses from operating liabilities 69 106 I OTHER INCOME 3.2.20. 94,270 16,573 J OTHER EXPENSES 3.2.27. 5,495 4 K TOTAL PROFIT 1,055,547 696,778 L TOTAL LOSS 0 0 M CORPORATE INCOME TAX 3.2.29. 347,280 189,888 N DEFERRED TAXES 3.2.4 131,677 (7,564) O NET PROFIT FOR THE FINANCIAL YEAR 839,944 499,326 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 71

2.3 sTATEMENT of other comprehensive income for 2011

Current year Previous year A NET PROFIT FOR THE ACCOUNTING PERIOD 839,944 499,326 Changes in revaluation surplus for intangible assets and property, plant B 0 0 and equipment C Changes in revaluation surplus for available-for-sale financial assets 0 0 Gains and losses from translation of financial statements of foreign D 0 0 operations (exchange rate differences) E Other items of comprehensive income 0 0 F TOTAL COMPREHENSIVE INCOME FOR THE ACCOUNTING PERIOD 839,944 499,326

The statement of other comprehensive income has been compiled in Variant I in accordance with Slovenian Accounting Standard 25.8.

2.4 sTATEMENT of profit distribution for 2011

Current year Previous year A Net profit for the financial year 839,944 499,326 B Net loss for the financial year 0 0 C Profit brought forward 2,901,736 2,402,410 D Loss brought forward 0 0 E Decrease in share premium account 0 0 F Decrease in profit reserves 0 0 1. Decrease in statutory reserves 0 0 Decrease in reserves for own shares held in treasury 2. 0 0 and own participating interests 3. Decrease in reserves under the articles of association 0 0 4. Decrease in other profit reserves 0 0 G Increase in profit reserves 0 0 1. Increase in statutory reserves 0 0 Increase in reserves for own shares held in treasury 2. 0 0 and own participating interests 3. Increase in reserves under the articles of association 0 0 4. Increase in other profit reserves 0 0 H DISTRIBUTABLE PROFIT 3,741,680 2,901,736 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 72

2.5 sTATEMENT of cash flows for 2011

Current year Previous year A. Cash flows from operating activities a) Income statement items 2,504,567 2,028,937 Operating revenues (other than revaluation) and finance income from operating 33,532,322 30,315,598 receivables Operating expenses excluding depreciation/amortisation (other than revaluation) -30,812,152 -28,089,209 and finance expenses from operating liabilities Corporate income tax and other taxes not included in operating expenses -215,603 -197,452 Changes in net working capital (and accruals and deferrals, provisions and b) 3,181,173 2,477,317 deferred tax assets and liabilities) from balance sheet operating items Opening less closing operating receivables 8,811 -699,110 Opening less closing prepayments and accrued income -24,242 1,631,619 Opening less closing deferred tax assets -131,676 7,564 Opening less closing inventories -9,204 -24,664 Closing less opening operating liabilities -437,279 949,192 Closing less opening provisions, accruals and deferred income 3,774,763 612,716 c) Net cash flow from operating activities (a + b) 5,685,740 4,506,254 B. Cash flows from investing activities a) Receipts from investing activities 8,485 404 Receipts from interest received and shares in the profit of other undertakings 8,485 404 associated with investing activities b) Expenditures from investing activities -13,583,977 -6,991,780 Acquisitions of property, plant and equipment -9,465,471 -6,390,780 Acquisitions of current investments -4,118,506 -601,000 c) Net cash flow from investing activities (a + b) -13,575,492 -6,991,376 C. Cash flows from financing activities a) Receipts from financing activities 8,032,169 17,330,165 Receipts from increase in non-current financial liabilities 7,134,038 0 Receipts from increase in current financial liabilities 898,131 17,330,165 b) Expenditures from financing activities -26,636 -15,147,869 Interest payments related to financing activities -26,636 -64,273 Repayments of current financial liabilities 0 -15,083,596 c) Net cash flow from financing activities (a + b) 8,005,533 2,182,296 D. Closing balance of cash and cash equivalents 149,431 33,649 x) Net cash flow for the period (Ac + Bc + Cc) 115,781 -302,826 y) Opening balance of cash and cash equivalents 33,649 336,475

The statement of cash flows has been compiled in Variant II, i.e. using the indirect method in accordance with Slovenian Accounting Standard 26. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 73

2.6 sTATEMENT of changes in equity for 2011

Nominal Statutory Profit Net profit for Total capital reserves brought the financial owner’s forward year equity A. Opening balance in period 1,091,118 109,112 2,402,410 499,326 4,101,966 B. Transfers into equity 0 0 0 839,944 839,944 Capital increase 0 0 0 0 0 a) Entry of net profit for the financial year 0 0 0 839,944 839,944 C. Transfers in equity 0 0 499,326 (499,326) 0 Distribution under supervisory board a) 0 499,326 (499,326) 0 resolution b) Dividend payments 0 0 0 0 Distribution to statutory reserves under c) 0 0 0 0 0 Article 60 of the Companies Act D. Transfers from equity 0 0 0 0 0 a) Dividend payment 0 0 0 0 0 E. Closing balance in period 1,091,118 109,112 2,901,736 839,944 4,941,910

2.7 sTATEMENT of changes in equity for 2010

Nominal Statutory Profit Net profit for Total capital reserves brought the financial owner’s forward year equity A. Opening balance in period 1,091,118 109,112 1,841,118 561,292 3,602,640 B. Transfers into equity 0 0 0 499,326 499,326 a) Entry of net profit for the financial year 0 0 0 499,326 499,326 C. Transfers in equity 0 0 561,292 (561,292) 0 Distribution under supervisory board a) 0 0 561,292 (561,292) 0 resolution b) Dividend payments 0 0 0 0 Distribution to statutory reserves c) 0 0 0 0 0 under Article 60 of the Companies Act D. Transfers from equity 0 0 0 0 0 a) Dividend payment 0 0 0 0 0 E. Closing balance in period 1,091,118 109,112 2,402,410 499,326 4,101,966 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 74

3 NOTES TO THE FINANCIAL STATEMENTS

3.1 sUMMARy of accounting policies The carrying amount of intangible assets must be ANd assumptions reassessed at the end of each financial year at least. Should the expected useful life of an intangible asset The financial statements were compiled in accordance with a determinable useful life differ significantly from with the Slovenian Accounting Standards and the Com- the previous assessment, and should there be a mate- panies Act (ZGD-1). The figures contained in the finan- rial change in the expectations of future benefits from cial statements are based on accounting documents the asset, the amortisation period and the amortisation and ledgers administered in accordance with the Slove- method must be modified as appropriate. The differ- nian Accounting Standards. ence between the net return at disposal and the book value of a disposed intangible asset is transferred to re- During the preparation of these financial statements, valuation operating income if the net return at disposal the following basic accounting assumptions were is greater than the book value, or to revaluation operat- applied: an accrual basis, a going concern basis, and ing expenses if the book value is greater than the net the quality of the financial statements, i.e. clarity, rel- return at disposal. evance, reliability and comparability. In the accounting policies, the following basic accounting principles were Should the book value of an intangible asset increase applied: prudence, substance over form, and material- as a result of revaluation, the increase is recognised ity. directly in equity as a revaluation surplus, and is disclosed as an item in the statement of comprehensive Intangible assets and non-current prepayments and income. An increase from revaluation is nevertheless accrued income recognised in profit or loss should it reverse a decrease from the revaluation of the same asset that had previ- Intangible assets comprise investments in industrial ously been recognised in profit or loss. intellectual property rights and other rights, and the goodwill of acquired undertakings. They are non-mone- The company must test whether an intangible asset tary assets, and generally have no physical form. with an indeterminable useful life or an intangible asset that is no longer in use has been impaired by compar- Intangible assets are disclosed in the books of ac- ing its book value with its recoverable amount on the count as a separate original cost or revalued original balance sheet date. Each year goodwill acquired during cost, a separate adjustment to value as the cumulative business combinations must be tested for impairment. write-down resulting from amortisation, and a separate impairment loss; they are entered in the balance sheet Property, plant and equipment at the carrying amount, which is the original cost minus the adjustment to value and the accumulated impair- Items of property, plant and equipment are disclosed ment loss. in the books of account as a separate original cost or ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 75

revalued original cost, and a separate adjustment to a decrease from the revaluation of the same asset value, where the adjustment to value represents the that had previously been recognised in profit or loss. cumulative write-down resulting from depreciation. A decrease in the book value as a result of revaluation They are entered in the balance sheet at the carrying is recognised in profit or loss, and is charged directly amount (the net book value), which is the original cost against equity in the revaluation surplus item until the minus the accumulated write-down. balance of the revaluation surplus for the same asset has been exhausted. In the event of downward revaluation, the amount is disclosed directly in profit or loss, unless the item of The book value of an item of property, plant and equip- property, plant and equipment in question had previ- ment may not exceed its recoverable amount. The re- ously been subject to an upward revaluation, when the coverable amount is the greater of the fair value minus increase from revaluation is reduced by the decrease selling costs, or the value in use. from revaluation until exhausted, the remainder being disclosed in profit or loss. Depreciation is charged on the historical cost of de- preciable assets, minus the estimated residual value. The actual original cost of an item of property, plant Items of property, plant and equipment are depreciated and equipment includes its purchase price, all costs of on an individual basis. The straight-line method is used. making the asset fit for its intended use, and an esti- Should there be a change in the depreciation method mate of the costs of decommissioning, removal and during the accounting period, the effects of the change restoration. Where the original cost of an item of prop- must be measured and described, and the reasons for erty, plant and equipment is large, it is broken down the change stated. into parts. Subsequent expenditure in relation to property, plant and equipment goes to increase its original Depreciation is charged at the rates that are set for in- cost, if it is likely that the future economic benefits will dividual items of property, plant and equipment and are be greater than originally estimated. not changed during the financial year. The depreciation rates used are given in the note on property, plant and The company’s property, plant and equipment is valued equipment. using the original cost model. Non-current and current investments The revaluation of an item of property, plant and equipment entails a change in its book value, and arises Investments are financial assets, and are disclosed because of the use of the revaluation model and the on the balance sheet as non-current or current invest- decrease in book value as a result of impairment. ments. Non-current investments are those that the company holds for more than one year and does not An item of property, plant and equipment valued using intend to sell. Those non-current investments in the the revaluation model must be disclosed in the reval- debts of other undertakings, sovereign debt or the ued amount, which is its fair value on the day of revalu- debts of other issuers (investments in loans) that fall ation, minus any subsequent depreciation adjustment due for payment within one year of the balance sheet and subsequently accumulated impairment loss. An date are transferred in the balance sheet to current increase in book value as a result of revaluation is rec- investments. ognised directly in equity as a revaluation surplus, and is disclosed as an item in the statement of compre- Upon initial recognition investments are classed as: hensive income. An increase from revaluation is nev- • financial assets at fair value through profit and loss, ertheless recognised in profit or loss should it reverse • held-to-maturity investments, ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 76

• loans and receivables, or benefit is not taxable, the tax base of the asset is the • available-for-sale financial assets. same as its book value.

Investments are initially disclosed at fair value. Where Receivables a financial asset is not classed as an asset at fair value through profit or loss, the transaction costs directly Receivables are initially disclosed in the amounts deriv- associated with the purchase or issue of the asset are ing from the relevant documents, on the assumption included in the initially recognised value. that they will be recovered.

Where the company is accounting an investment af- Receivables for which it may be presumed that they ter the settlement date, it must initially recognise an will not be settled or settled in full are deemed doubt- investment that is subsequently measured at original ful, or disputed if judicial proceedings have been initi- cost or amortised cost at its fair value on the trade ated over them. date, plus the transaction costs. The revaluation of receivables entails a change in their The revaluation of investments entails a change in their book value. It may be done at the end of the financial book value. Contractually imputed interest and other year or during the financial year. The company creates changes in the principal of the investment are not adjustments to the value of trade receivables from classed as revaluation. It primarily arises as revaluation customers against whom judicial recovery proceedings to fair value, revaluation for reason of impairment or have been initiated, and from customers in liquidation revaluation to reverse impairment. against whom composition or bankruptcy proceedings have been initiated. Fair value is deemed proven if it is possible to measure it reliably. Receivables expressed in foreign currencies are translated to the domestic currency at the ECB’s reference Deferred taxes exchange rate on the balance sheet date. An increase in receivables goes to increase finance income, while The accounting treatment of deferred tax assets and a decrease in receivables goes to increase finance ex- liabilities is the result of the accounting of current and penses. future tax consequences. Cash and cash equivalents The company accounts deferred tax using the balance sheet liability method, which focuses on temporary Cash is a legal means of payment that is the medium differences. Temporary differences are differences of economic exchange for goods and services in the between the tax base of an asset or liability and its car- real economy, in the market and in the allocation of rying amount in the balance sheet. The tax base of an labour. Cash consists of cash in hand, book cash (de- asset or liability is the amount attributed to that asset posits) and cash in transit. or liability for tax purposes.

The tax base of an asset is the amount that will be de- Current accrued and deferred items ductible for tax purposes against any taxable economic benefits that will flow to the company when it recovers Current accrued and deferred items comprise receiv- the carrying amount of the asset. Where the economic ables and other assets and liabilities that are expected ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 77

to occur within one year, and whose occurrence is Provisions may only be used for the items for which likely and whose size can be reliably estimated; receiv- they have been created, but in reasonable circumstanc- ables and liabilities relate to known or as-yet-unknown es may also be used for items of the same type. corporates and individuals vis-à-vis whom the receivables and debts will occur, while assets entail products Provisions and non-current accruals and deferred in- or services that will be borne. come are not subject to revaluation. At the end of the accounting period, they are adjusted such that their Current accrued and deferred items are classed as value is equal to the present value of the expenditure assets (current prepayments and accrued income) or foreseen as necessary to settle the obligation. liabilities (current accruals and deferred income). After the end of the accounting period for which the Owner’s equity provision was created, the entire unused portion is transferred to the relevant item of income. The total owner’s equity of the company must be itemised as called-up capital, the share premium account, Liabilities profit reserves, profit brought forward, net profit for the financial year, and equity revaluation adjustments. Current and non-current liabilities are initially valued in the amounts deriving from the relevant documents of The revaluation of equity entails a change in its book their occurrence. value as a result of the revaluation of assets. It is done at the end of the financial year or during the financial Non-current liabilities are disclosed as non-current year. financial liabilities and non-current operating liabilities. Non-current financial liabilities comprise long-term Provisions, non-current accruals and deferred borrowings, while non-current operating liabilities income comprise long-term trade credits, non-current notes payable, non-current operating liabilities for advances Provisions are created for current obligations arising received, other non-current operating liabilities, and de- from past events, when the expectation is that they ferred tax liabilities. They are increased by the amount will be settled at a time that cannot be determined of imputed interest or reduced by the repaid amounts with certainty, and whose size can only be approxi- and any other types of settlement where an agreement mately estimated. Non-current accruals and deferred with the creditor exists in this regard. income disclose deferred income (government grants and donations received for acquiring property, plant and The portion of non-current liabilities that has already equipment or for covering specific costs) that will be fallen due for payment and the portion of non-current covered by deferred expenses in a period of more than liabilities that falls due for payment within one year are one year. They are used to cover the depreciation costs disclosed as current liabilities in the balance sheet. of these assets and other costs, and are consumed by being transferred to income. Current liabilities are disclosed separately as current financial liabilities and current operating liabilities. Cur- Provisions in the form of accrued costs are used to rent financial liabilities comprise borrowings. Current cover costs or expenses incurred in the future, and can operating liabilities comprise advances and deposits arise from reorganisation, expected losses from oner- from customers, trade payables to domestic suppli- ous contracts, pensions, jubilee benefits, and termina- ers and suppliers in the rest of the world, liabilities for tion benefits at retirement. uncharged goods and services, liabilities to employ- ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 78

ees, liabilities to government institutions and other of imputed interest and shares in the profit of other liabilities. undertakings, and as revaluation finance income. Re- valuation finance income arises upon the disposal of Non-current and current liabilities expressed in foreign investments. currencies are translated to the domestic currency at the ECB’s reference exchange rate on the balance Expenses sheet date. An increase in current liabilities goes to increase ordinary finance expenses, while a decrease in Expenses are divided into operating expenses, finance non-current liabilities goes to increase finance income. expenses and other expenses.

Revenue a) Operating expenses

Revenue is itemised into operating income, finance Operating expenses comprise all costs incurred in the income and other income. financial year, recorded by type, such as material costs, service costs, adjustments to the value of working cap- a) Operating income ital, and amortisation/depreciation. Revaluation operating expenses arise in association with property, plant Operating income comprises sales revenue and other and equipment, intangible assets and working capital operating income associated with products and ser- as a result of their impairment, where the decrease in vices. their value is not covered by the revaluation surplus in equity from a previous increase in their value. Sales revenue comprises the selling price of merchandise and materials sold and services rendered during b) Finance expenses the accounting period. Revenues from the sale of merchandise and materials are measured on the basis Finance expenses comprise expenses from financ- of selling prices stated in invoices or other documents ing activities and expenses from investing activities. minus discounts approved when the sale is made or Finance expenses primarily comprise paid interest, subsequently, including those for early payment. while expenses from investing activities have the nature of revaluation finance expenses. Revaluation Other operating income associated with products and finance expenses arise in association with investments services comprises subsidies, grants, reimbursements, as a result of their impairment, where the decrease in compensation, premiums and similar income. their value is not covered by the revaluation surplus in equity. Revaluation operating income arises on the disposal of property, plant and equipment and intangible assets as the surplus of their selling price over their carrying amount. b) Finance income

Finance income comprises income from investing activities. It arises in association with investments, and also in association with receivables in the form ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 79

3.2 Notes to individual items in the financial statements

All the notes relate to 2011, unless stated otherwise. The monetary units in the tables are euros, without cents.

General notes

The government and company signed a contract on The transfer of the infrastructure in the sense of the 1 December 2006 regulating mutual relationships in ZZNSZP-B was not realised in 2010, for which reason connection with certain infrastructure for providing the Slovenian government adopted resolution no. air navigation services (the infrastructure contract) by 37200-4/2011/6 stating that an Agreement on the virtue of which the infrastructure was placed under the Regulation of Mutual Relations in Connection with As- company’s management. sets for the Provision of Air Navigation Services in the Transitional Period (hereinafter: the Lease Agreement) In light of Slovenian Accounting Standard 35, where be concluded with the company, to ensure the provi- it is stipulated that undertakings have assets under sion of air traffic control and management in a safe, management recorded for accounting purposes no efficient, continuous and sustainable manner as stipu- later than 31 December 2009, the Ministry of Transport lated in Commission Regulation (EC) No. 2096/2005, and the Ministry of Finance ruled in 2009 that the most the assets being leased in the period between 1 Janu- suitable form for the future regulation of the owner- ary 2010 and the completion of the capital increase ship of the assets under management and the use of procedure at the company. The Lease Agreement was air traffic control and management infrastructure was signed by the company and by the then Ministry of the transfer of the infrastructure to the company as a Transport on behalf of the government. The agreed an- capital contribution, for which it was necessary to bring nual leasing charge is the same as the annual deprecia- the Act on the Provision of Air Navigation Services into tion charge for the assets under lease (see Notes 3.2.3 line. The Act Amending the Act on the Provision of Air and 3.2.13). Navigation Services (ZZNSZP-B) was adopted on 16 December 2009, and entered into force on 12 January 2010. The adoption of the ZZNSZP-B provided for the transfer of the infrastructure to the company as a capital contribution by the Slovenian state. The transfer of the infrastructure in the sense of a non-cash contribution was to be undertaken in 2010, and the rebooking executed on 1 January 2010. ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 80

3.2.1 Long-term property rights

2011

Original cost

Item Balance as at Acquisition Transfer Disposal Balance as at 1 Jan 2011 into use 31 Dec 2011

Long-term property rights 316,529 123,860 0 25,056 415,333 Long-term deferred development costs 0 0 0 0 0 TOTAL 316,529 123,860 0 25,056 415,333

Adjustment to value

Item Balance as at Acquisition Transfer Disposal Balance as at 1 Jan 2011 into use 31 Dec 2011

Long-term property rights 264,128 65,358 0 25,056 304,430 Long-term deferred development costs 0 0 0 0 0 TOTAL 264,128 65,358 0 25,056 304,430

Carrying amount

Item Balance as at Increase Transfer Decrease Balance as at 1 Jan 2011 into use 31 Dec 2011

Long-term property rights 52,401 123,860 0 65,358 110,903 Long-term deferred development costs 0 0 0 0 0 TOTAL 52,401 123,860 0 65,358 110,903 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 81

2010

Original cost

Item Balance as at Acquisition Transfer Disposal Balance as at 1 Jan 2010 into use 31 Dec 2010 Long-term property rights 272,502 44,027 0 0 316,529 Long-term deferred development costs 0 0 0 0 0 TOTAL 272,502 44,027 0 0 316,529

Adjustment to value

Item Balance as at Acquisition Transfer Disposal Balance as at 1 Jan 2010 into use 31 Dec 2010 Long-term property rights 213,178 50,950 0 0 264,128 Long-term deferred development costs 0 0 0 0 0 TOTAL 213,178 50,950 0 0 264,128

Carrying amount

Item Balance as at Increase Transfer Decrease Balance as at 1 Jan 2010 into use 31 Dec 2010 Long-term property rights 59,324 44,027 0 50,950 52,401 Long-term deferred development costs 0 0 0 0 0 TOTAL 59,324 44,027 0 50,950 52,401

3.2.2 Non-current prepayments and accrued income

Item Balance as at Increase Decrease Balance as at 1 Jan 2011 31 Dec 2011 Non-current prepayments and accrued income 262,190 0 41,000 221,190 TOTAL 262,190 0 41,000 221,190

Non-current prepayments and accrued income com- costs for the charge for superficies on the land for the prise long-term deferred costs until the end of 2013 ATCC at Ljubljana Jože Pučnik Airport for the period to for ensuring the implementation of the Italian radar im- 2038 in the amount of €68 thousand. age from the supplier SELEX Sistemi Integrati SpA in the amount of €153 thousand, and long-term deferred ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 82

3.2.3 Property, plant and equipment

2011

Original cost

Item Balance as Acquisition Transfer Disposal Balance as at at 1 Jan 2011 into use 31 Dec 2011 Land 221,680 0 0 0 221,680 Buildings 277,842 0 0 0 277,842 Property under construction 8,230,496 5,024,346 4,000 0 13,250,842 Production plant and equipment (owned) 12,927,742 1,705,047 884,788 13,748,001 Production plant and equipment (non-cash 71,848 0 0 1,865 69,983 contribution) Production plant and equipment under construction 1,404,646 4,456,095 0 1,515,567 4,345,174 Small inventory 96,584 4,474 0 5,286 95,772 TOTAL 23,230,838 11,189,962 4,000 2,407,506 32,009,294

Adjustment to value

Item Balance as at Depreciation Transfer Disposal Balance as at 1 Jan 2011 into use 31 Dec 2011 Land 0 0 0 0 0 Buildings 19,350 8,336 0 0 27,686 Property under construction 0 0 0 0 0 Production plant and equipment (owned) 4,485,786 1,552,174 0 556,323 5,481,637 Production plant and equipment (non-cash 44,320 14,374 0 1,524 57,170 contribution) Production plant and equipment under construction 0 0 0 0 0 Small inventory 88,911 6,230 0 5,307 89,834 TOTAL 4,638,367 1,581,114 0 563,154 5,656,327

Carrying amount

Item Balance as at Increase Transfer Decrease Balance as at 1 Jan 2011 into use 31 Dec 2011 Land 221,680 0 0 0 221,680 Buildings 258,492 0 0 8,336 250,156 Property under construction 8,230,496 5,024,346 4,000 0 13,250,842 Production plant and equipment (owned) 8,441,956 1,705,047 0 1,880,639 8,266,364 Production plant and equipment (non-cash 27,528 0 0 14,715 12,813 contribution) Production plant and equipment under construction 1,404,646 4,456,095 0 1,515,567 4,345,174 Small inventory 7,673 4,474 0 6,209 5,938 TOTAL 18,592,471 11,189,962 4,000 3,425,466 26,352,967 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 83

2010

Original cost

Item Balance as Adjustment Balance as Acquisi- Transfer Disposal Balance as at 31 Dec to opening at 1 Jan tion into use at 31 Dec 2009 balance 2010 2010 Land 0 0 221,680 0 0 221,680 Buildings (owned) 130,087 130,087 147,755 0 0 277,842 Buildings (under 1,849,292 (1,849,292) 0 0 0 0 0 management) Property under construction 3,425,977 3,425,977 5,321,407 516,888 0 8,230,496 (owned) Production plant and 11,698,754 705,171 12,403,925 567,924 0 44,107 12,927,742 equipment (owned) Production plant and equipment (non-cash 75,664 75,664 0 0 3,816 71,848 contribution) Production plant and equipment (under 5,379,725 (5,379,725) 0 0 0 0 0 management) Production plant and equipment under 805,925 805,925 810,399 211,678 0 1,404,646 construction Small inventory (owned) 90,249 90,249 7,614 0 1,279 96,584 TOTAL 23,455,673 (6,523,846) 16,931,827 7,076,779 728,566 49,202 23,230,838

Adjustment to value

Item Balance as Adjustment Balance as Deprecia- Transfer Disposal Balance as at 31 Dec to opening at 1 Jan tion into use at 31 Dec 2009 balance 2010 2010 Land 0 0 0 0 0 0 Buildings (owned) 11,384 11,384 7,966 0 0 19,350 Buildings (under 217,308 (217,308) 0 0 0 0 0 management) Property under 0 0 0 0 0 0 construction (owned) Production plant and 2,811,959 336,343 3,148,302 1,381,591 0 44,107 4,485,786 equipment (owned) Production plant and equipment (non-cash 31,536 31,536 15,135 0 2,351 44,320 contribution) Production plant and equipment (under 3,979,482 (3,979,482) 0 0 0 0 0 management) Production plant and equipment under 0 0 0 0 0 0 construction Small inventory (owned) 80,094 80,094 10,096 0 1,279 88,911 TOTAL 7,131,763 (3,860,447) 3,271,316 1,414,788 0 47,737 4,638,367 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 84

Carrying amount

Item Balance as Adjustment Balance as Increase Transfer Decrease Balance as at 31 Dec to opening at 1 Jan into use at 31 Dec 2009 balance 2010 2010 Land 0 0 0 221,680 0 0 221,680 Buildings (owned) 118,703 0 118,703 147,755 0 7,966 258,492 Buildings (under 1,631,984 (1,631,984) 0 0 0 0 0 management) Property under 3,425,977 0 3,425,977 5,321,407 0 516,888 8,230,496 construction (owned) Production plant and 8,886,795 368,828 9,255,623 612,031 0 1,425,698 8,441,956 equipment (owned) Production plant and equipment (non-cash 44,128 0 44,128 2,351 0 18,951 27,528 contribution) Production plant and equipment (under 1,400,243 (1,400,243) 0 0 0 0 0 management) Production plant and equipment under 805,925 0 805,925 810,399 0 211,678 1,404,646 construction Small inventory (owned) 10,155 0 10,155 7,614 0 10,096 7,673 TOTAL 16,323,910 (2,663,399) 13,660,511 7,123,237 0 2,191,277 18,592,471

From 1 January 2007, in accordance with the contract 4/2011/6 the company removed the assets under man- regulating mutual relationships in connection with cer- agement from its books of account. tain infrastructure for providing air navigation services, the company disclosed the aforementioned infrastruc- The company also makes separate disclosure of the ture in its books of account separately from other prop- assets comprising the non-cash contribution by the erty, plant and equipment as property, plant and equip- Slovenian government as the 100% owner, which in- ment under management. The company depreciates creased the nominal capital by €89,616 in November production plant and equipment under management at 2007 on the basis of a notarial protocol. an annual rate of 20%, and buildings under management at an annual rate of 3%. The assets disclosed as property under construction in the amount of €13,250 thousand and the assets In addition to property, plant and equipment under disclosed as production plant and equipment under management, the company also made separate dis- construction in the amount of €4,345 thousand are closure of property, plant and equipment purchased in earmarked for the construction of the new ATCC at 2004 and 2005 for which funding from the state bud- Ljubljana Jože Pučnik Airport, which is projected to be get was received, and which should therefore be dis- transferred into use at the end of 2012. closed separately from the assets under management in the opinion of the Court of Audit.

In accordance with Slovenian Accounting Standard 35 and Slovenian government resolution no. 37200- ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 85

3.2.4 Deferred tax assets

The company recognised deferred tax assets on the basis of the calculation of provisions for jubilee benefits and termination benefits at retirement, and provisions for unexploited annual leave. The effect of the change in deferred tax assets has been recognised in profit or loss in the amount of €131,677.

Item Balance as at Decrease Increase Balance as at 31 Dec 2010 31 Dec 2011

For jubilee benefits 61.136 1.302 0 59.834 For termination benefits at retirement 193.868 0 71.978 265.846 For annual leave 0 61.000 61.000 TOTAL 255.004 1.302 132.978 386.680

3.2.5 Inventories

The company holds vital spare parts for the radar systems in an inventory. Inventories are measured at original cost upon initial recognition and at the end of the accounting period.

Item Balance as at Decrease Increase Balance as at 31 Dec 2010 31 Dec 2011

Spare parts 233.218 8.129 17.333 242.422 TOTAL 233.218 8.129 17.333 242.422

3.2.6 Current investments

As at 31 December 2011 the company disclosed a deposit of €4,200 thousand at UniCredit Banka Slovenije remunerated at an annual interest rate of 1%, and a deposit of €1,320 thousand at Banka Koper remunerated at an annual interest rate of 1.1%.

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Loans granted 5.519.506 1.401.000 TOTAL 5.519.506 1.401.000 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 86

3.2.7 Current operating receivables

As at 31 December 2011 the company held €8 thousand of receivables in Slovenia up to 30 days past due. Adjustments to the receivables are created and sub- stantiated on behalf of the company by Eurocontrol at the end of the individual accounting period. The receivables are not secured.

Item Balance as at Adjustments Closing balance as Balance as at 31 Dec 2011 at 31 Dec 2011 31 Dec 2010 Trade receivables from customers in 140,567 0 140,567 144,161 Slovenia Trade receivables from customers in the 3,970,186 1,012,663 2,957,523 2,968,200 rest of the world Receivables from government institutions 260,161 0 260,161 229,213 Other operating receivables 818 0 818 26,306 TOTAL 4,371,732 1,012,663 3,359,069 3,367,880

3.2.8 Cash and cash equivalents

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Cash in hand 0 0 Cash in bank balances 149,431 33,649 Foreign currency cash in bank balances 0 0 TOTAL 149,431 33,649 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 87

3.2.9 Current prepayments and accrued income

The company created current prepayments and ac- control in the amount of €377 thousand, for insurance crued income for the deferred costs of infrastructure in the amount of €17 thousand and for other deferred maintenance by Comsoft and Thales Air Systems in the costs in the total amount of €32 thousand. amount of €17 thousand, for the prepayment of the membership fee for the first quarter of 2012 to Euro-

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Short-term deferred costs 443,153 377,911 Short-term accrued income 0 TOTAL 443,153 377,911

3.2.10 Owner’s equity

Increases or decreases in equity derive from the net The calculation for the revaluation to preserve the pur- profit for the current period, after the consideration chasing power of capital on the basis of growth in con- of the tax calculation and the adjustment to deferred sumer prices in accordance with Slovenian Accounting taxes. Standard 8.30 is as follows:

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Nominal capital 1,091,118 1,091,118 Statutory reserves 109,112 109,112 Profit brought forward 2,901,736 2,402,410 Net profit for the financial year 839,944 499,326 Total owner’s equity 4,941,910 4,101,966 Growth in consumer prices 2.00% 1.90% Effect of revaluation on the basis of growth in consumer prices 82,039 68,450 Adjusted net profit for the financial year 757,905 430,876 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 88

3.2.11 Provisions, non-current accruals and deferred income

Additional provisions for termination benefits at retirement were created in the amount of €678 thousand, while provisions for jubilee benefits were reduced by €11 thousand. The deferred tax assets were adjusted accordingly.

Item Balance as at Decrease Increase Balance as at 31 Dec 2010 31 Dec 2011

Provisions for jubilee benefits 367,151 11,177 0 355,974 Provisions for termination benefits at retirement 1,382,932 0 677,861 2,060,793 TOTAL 1,750,083 11,177 677,861 2,416,767

In accordance with Section 9 of the Introduction to the • Commission Regulation (ES) No. 1794/2006 of 6 Slovenian Accounting Standards, on the basis of chang- December 2006 laying down a common charging es in accounting estimates the company made adjust- scheme for air navigation services (OJ L 341 of 7 ments in 2008 to the book value of certain assets December 2006), Article 10, Annex VI, based on new information, in the context of a reason- • Decree on terminal charges for air navigation ser- able presumption of present and future economic ben- vices (Official Gazette of the Republic of Slovenia, efits. The effect of the change in accounting estimates No. 103/06 of 5 October 2006), Article 9, in 2008 was an increase in assets and consequently in • Decision No. 81 of the enlarged Eurocontrol com- revenues in the current period. mission amending the principles for establishing the cost-base for en-route charges and the calculation That the recognition of the difference between forecast of the unit rates (Official Gazette of the Republic of income and costs and actual income and costs in a Slovenia, No. 3/05 of 11 January 2005), Article 1, particular calendar year is reasonable is supported by Paragraph 1.5. the method in which the balance of over-recovered or under-recovered assets is included in the cost base. The company increased non-current accruals and de- This method is set out in the following EU documents: ferred income by €1,507 thousand on the basis of the change in accounting estimates and the EU legal basis in 2011.

Item Balance as at Decrease Increase Balance as at 31 Dec 2010 31 Dec 2011

Accruals and deferred income (over-recovery) 567,631 0 1,507,226 2,074,857 TOTAL 567,631 0 1,507,226 2,074,857 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 89

3.2.12 Non-current financial liabilities 3.2.13 Non-current operating liabilities

The company holds two approved long-term loans Non-current operating liabilities to owners for assets from Banka Koper d.d. The interest rate agreed on the under management stood at €7,050 thousand as at 31 loan in the amount of €3,231 thousand is 0.315 per- December 2009 on the basis of the infrastructure con- centage points over the 3-month Euribor. The loan is tract and the recommendations of the Court of Audit. being repaid in three-monthly instalments, with a final On the basis of the Act on the Provision of Air Naviga- deadline for repayment of 1 February 2019. The second tion Services (the ZZNSZP-B), the liability was envisaged long-term loan in the amount of €11,500 thousand, as the subject of a capital increase at the company by with an interest rate of 1.90 percentage points over the Slovenian government, the 100% owner. In light of the 3-month Euribor, is being repaid in three-monthly Slovenian Accounting Standard 35 and Slovenian govern- instalments, with a final deadline for repayment of 1 ment resolution no. 37200-4/2011/6, on 1 January 2010 April 2021. the company removed the assets under management from its books of account, and reduced the non-current Instalments totalling €1,473 thousand fall due for liabilities by the carrying amount of the aforementioned payment in 2012, this amount having been disclosed assets in the amount of €2,663 thousand. among current liabilities. Thus the company disclosed a debt of €11,795 thousand from non-current financial The envisaged capital increase did not happen in 2011. liabilities as at 31 December 2011. The company has also disclosed a non-current liability in The company has not pledged any of its own property the amount of €66 thousand to Thales Air Systems for for borrowings. the purchase of equipment, which falls due for payment in 2013. Liabilities in the amount of €794 thousand fall- ing due for payment in 2012 have been disclosed among current operating liabilities. 2011 Item Balance as at Decrease Increase Balance as at 31 Dec 2010 31 Dec 2011

Non-current liabilities for assets under management (equipment) 3,039,009 0 0 3,039,009 Non-current liabilities for assets under management (buildings) 176,207 0 0 176,207 Non-current liabilities for assets under management (Court of 1,171,097 0 0 1,171,097 Audit, 2004-2005) Other non-current operating liabilities 860,383 794,199 0 66,184 TOTAL 5,246,696 794,199 0 4,452,497

2010 Item Balance as at Adjustment Balance as at Balance as at 31 Dec 2009 to opening 1 Jan 2010 31 Dec 2010 balance Non-current liabilities for assets under management 4,070,425 -1,031,415 3,039,010 3,039,009 (equipment) Non-current liabilities for assets under management (buildings) 1,808,191 -1,631,984 176,207 176,207 Non-current liabilities for assets under management (Court of 1,171,097 0 1,171,097 1,171,097 Audit, 2004-2005) Other non-current operating liabilities 1,654,583 0 1,654,583 860,383 TOTAL 8,704,296 -2,663,399 6,040,897 5,246,696 ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 90

3.2.14 Current financial liabilities

The company has disclosed the instalments of liabilities arising from long-term borrowings that fall due for payment in 2012 in the total amount of €1,473 thousand among current financial liabilities (see Note 3.2.12).

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Short-term borrowings from banks in Slovenia 0 0 Long-term borrowings (portion maturing in 2012) 1,473,131 323,132 TOTAL 1,473,131 323,132

3.2.15 Current operating liabilities

The company had no past-due liabilities as at 31 December 2011.

Item Balance as at Balance as at 31 Dec 2011 31 Dec 2010

Trade payables (Slovenia) 2,630,774 2,353,177 Trade payables (rest of the world) 1,767,636 1,583,685 Liabilities for advances 0 153 Liabilities to employees 979,711 1,091,336 Liabilities to government institutions 1,647,554 1,591,543 Other operating liabilities 11,107 59,968 TOTAL 7,036,782 6,679,862

3.2.16 Current accruals and deferred income

Under Slovenian Accounting Standard 12, the company the leasing charge for 2010 was set at €991 thousand, created current accruals and deferred income as short- while the leasing charge for 2011 was set at the same term accrued costs and short-term accrued expenses. amount. The accrued annual leasing charge is equal to the annual depreciation of the assets under lease. Ac- Under the Agreement on the Regulation of Mutual Re- cruals in the amount of €610 thousand were also cre- lations in Connection with Assets for the Provision of ated for unexploited annual leave. Other current accru- Air Navigation Services in the Transitional Period, which als and deferred income in the amount of €3 thousand ensured the provision of air traffic services in a safe, comprise short-term accrued expenses vis-à-vis Adria efficient, continuous and sustainable manner as stipu- Airways. lated in Commission Regulation (EC) No. 2096/2005, ANNUAL REPORT 2011 SLOVENIA CONTROL, SLOVENIAN AIR NAVIGATION SERVICES, LIMITED 91

3.2.17 Net sales revenue

The company makes separate disclosure of revenue also disclosed separately as described in detail in Point from en-route charges and revenue from terminal 3.2.11 of this report in the disclosures relating to non- charges. Revenue under-recovery and over-recovery is current prepayments and accrued income.