Unconsolidated and Consolidated Annual Report 2011
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SLOVENSKA ODŠKODNINSKA DRUŽBA, d.d. SLOVENSKA ODŠKODNINSKA DRUŽBA COMPANY AND GROUP UNCONSOLIDATED and CONSOLIDATED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2011 Ljubljana, April 2012 Slovenska odškodninska družba Group and Company Annual Report 2011 . 2 Slovenska odškodninska družba Group and Company Annual Report 2011 STATEMENT BY THE MANAGEMENT BOARD Members of the Management Board of the Slovenska odškodninska družba, d.d., Ljubljana company (hereinafter: the Company), composed of the president of the Management Board Tomaž Kuntarič MSc., member of the Management Board Matjaž Jauk and member of the Management Board Krešo Šavrič approve: • that the business report of the Slovenska odškodninska družba Company and Group for 2011 includes a fair presentation of the development of the Company's operations and results and its financial position, including a specification of the principal types of risk which the Company and other companies included in the consolidation are exposed to as a whole; • that the financial statements, together with the notes to the financial statements, have been prepared on the assumption of a going concern and in accordance with the valid legislation and International Financial Reporting Standards adopted by the EU. • that appropriate accounting policies have been consistently applied and that accounting estimates have been made on the principle of prudence and operating efficiency. Krešo Šavrič Matjaž Jauk Tomaž Kuntarič MSc. Member of the Member of the President of the Management Board Management Board Management Board Ljubljana, 25 April 2012 3 Slovenska odškodninska družba Group and Company Annual Report 2011 TABLE OF CONTENTS STATEMENT BY THE MANAGEMENT BOARD ..................................................................................3 LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD .................................................. 5 BUSINESS REPORT ........................................................................................................................... 7 1. SLOVENSKA ODŠKODNINSKA DRUŽBA, D.D. .......................................................................8 1.1. COMPANY DETAILS ........................................................................................................................ 8 1.2. MAJOR POST BALANCE SHEET EVENTS ...................................................................................15 2. SLOVENSKA ODŠKODNINSKA DRUŽBA GROUP ................................................................ 16 2.1. STRUCTURE AND ORGANIZATION OF THE GROUP .................................................................16 2.2. BASIC ONFORMATION ON SUBSIDIARIES WITHIN THE GROUP .............................................17 2.3. BASIC INFORMATION ON THE ASSOCIATES WITHIN THE GROUP .........................................17 3. THE MACROECONOMIC ENVIRONMENT IN 2011 ................................................................. 21 4. OPERATIONS OF SLOVENSKA ODŠKODNINSKA DRUŽBA, D.D., AND THE GROUP BY AREA ................................................................................................................................. 23 4.1. SETTLEMENT OF LIABILITIES ARISING FROM DENATIONALISATION ....................................23 4.2. SETTLEMENT OF LIABILITIES ARISING FROM COMPENSATIONS FOR CONFISCATED PROPERTY PURSUANT TO THE ABROGATION OF THE PENALTY OF CONFISCATION OF PROPERTY ............................................................................................................................... 27 4.3. SETTLEMENT OF LIABILITIES FOR COMPENSATIONS TO THE VICTIMS OF WAR AND POST-WAR VIOLENCE ..................................................................................................................28 4.4. LIABILITIES UNDER THE REIMBURSEMENT OF INVESTMENTS IN THE PUBLIC TELECOMMUNICATIONS NETWORK ACT ..................................................................................30 4.5. IMPLEMENTATION OF OWNERSHIP TRANSFORMATION OF THE INSURANCE COMPANIES ACT ........................................................................................................................... 31 4.6. MANAGEMENT OF THE EQUITY INVESTMENTS OF THE GROUP ............................................33 4.7. INVESTMENT PORTFOLIO AND LIQUIDITY MANAGEMENT ......................................................35 4.8. RENTING OUT PROPERTY – THE PRINCIPAL ACTIVITY OF THE COMPANY PS ZA AVTO, D.O.O. ................................................................................................................................... 38 4.9. RISK MANAGEMENT ..................................................................................................................... 39 FINANCIAL REPORT ........................................................................................................................ 41 5. STATEMENT BY THE MANAGEMENT BOARD ON ITS LIABILITY ....................................... 42 6. INDEPENDENT AUDITOR’S REPORT .................................................................................... 43 6.1. OPINION FOR SLOVENSKA ODŠKODNINSKA DRUŽBA, D.D. ....................................................43 6.2. OPINION FOR THE SLOVENSKA ODŠKODNINSKA DRUŽBA GROUP ...................................... 45 7. FINANCIAL STATEMENTS OF THE SLOVENSKA ODŠKODNINSKA DRUŽBA COMPANY AND GROUP ......................................................................................................... 47 7.1. STATEMENT OF THE FINANCIAL POSITION /BALANCE SHEET ............................................... 47 7.2. STATEMENT OF THE COMPREHENSIVE INCOME .....................................................................48 7.3. CASH FLOW STATEMENT ............................................................................................................49 7.4. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..........................................................50 8. IMPORTANT ACCOUNTING POLICIES .................................................................................. 52 8.1. THE REPORTING COMPANY ........................................................................................................52 8.2. IMPORTANT ACCOUNTING POLICIES ........................................................................................53 9. NOTES AND DISCLOSURES .................................................................................................. 66 9.1. NOTES TO THE FINANCIAL STATEMENTS .................................................................................66 9.2. MANAGEMENT OF FINANCIAL RISKS OF THE COMPANY/GROUP ........................................101 9.3. RELATED PARTY TRANSACTIONS ............................................................................................104 9.4. DISCLOSURE ACCORDING TO ITEM 12 AND 13 OF ARTICLE 69 OF ZGD-1 ..........................107 9.5. OPERATINGSEGMENTS .............................................................................................................107 9.6. CONTINGENT LIABILITIES AND CONTINGENT ASSETS .........................................................108 9.7. POST- BALANCE SHEET EVENTS .............................................................................................109 4 Slovenska odškodninska družba Group and Company Annual Report 2011 LETTER FROM THE PRESIDENT OF THE MANAGEMENT BOARD Dear shareholders and business partners, The year 2011 was a year of partial recovery in the international financial markets which unfortunately did not apply to the Slovenian capital and financial markets. However, adverse conditions from previous years in the Slovenian capital market continued as it did not follow this positive trend abroad, and consequently the Slovenian stock exchange index fell. Reasons for the adverse conditions in the Slovenian capital market are multifaceted and require special treatment. Adverse conditions in the Slovenian market, which is crucial to Slovenska odškodninska družba, d.d. (hereinafter: the Company) highlighted more than ever before the importance of quality management. The Company successfully handled the changes in circumstances and all risks in the international markets as well as in Slovenia. The result of quality management of mostly cash assets, which we can also influence with our decisions, is a positive income from managing the financial instruments despite the adverse crisis in the financial markets. This particularly required the structuring and optimization of debt and more active involvement in the operation of some companies in which we hold an equity interest. We were successful in our mission and, in spite of unfavourable economic conditions, provided sufficient resources for meeting our legal obligations. We managed the property entrusted to us with due care and responsibility in order to meet all our obligations with our own financial resources in the long term. At the end of 2011, on 7 December 2011, 20 years had passed since the enforcement of the Denationalisation Act. According to the data of the Ministry of Justice which follows the realization of denationalisation, 99.1% of cases were legally finalized with administrative authorities and 97.4% with district courts on 31 December 2011 (considering cases according to Article 5 of the Denationalization Act). Mostly, the most complex and difficult denationalisation cases remained unsolved, therefore, the year 2011 was pretty difficult according to the substantive side of solving denationalisation cases. The Company decided on extremely comprehensive