Annual report 2011 lasko group

LAŠKO GROUP • ANNUAL REPORT • 2011

LAŠKO GROUP

ANNUAL REPORT

2011

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1. INTRODUCTION 4

1.1 Statement by the Chairman of the Management Board 5

1.2 Report of the Supervisory Board on verification of the Annula Report. 7

1.3 Significant business achievements of the Laško Group 11

1.4 Significant business achievements of Pivovarna Laško, d. d. 15

1.5 Vision, mission, values and strategic objectives 19

1.6 Presentation of the Laško Group 21

1.7 Presentation of the parent company Pivovarna Laško, d. d. 24

1.8 Significant events in 2011 26

2. BUSINESS REPORT 32

2.1 Corporate governance 33

2.2 Statement on corporate governance and compliance

with the Corporate Governance Code 50

2.3 Report of the Management Board on extent of influence according

to Article 545 of the Companies Act (ZGD-1) 54

2.4 Shareholders and the impact of economic and other trends

on business operations 56

2.5 Sales 65

2.6 Supply flows 75

2.7 Production 77

2.8 Quality control 84

2.9 Investments 88

2.10 Performance analysis 93

2.11 Risk Management 112

2.12 Financing and the sale of investments 116

2.13 Marketing activities 119

2.14 Plans for 2012 and the development strategy 127

2.15 Events following the conclusion of the fiscal year 130

2.16 Events prior to the 2012 fiscal year 133

CONTENTS

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3. SUSTAINABLE DEVELOPMENT 136

3.1 Human Resources Management 137

3.2 Communications 142

3.3 Responsible attitude towards the social environment 144

3.4 Environmental protection 146

4. FINANCIAL REPORT 156

4.1 Audited financial statements of Pivovarna Laško, d. d 157

4.1.1 Statement of the Financial Position 157

4.1.2 Income Statement 159

4.1.3 Statement of comprehensive income 160

4.1.4 Statement of changes in shareholder’s equity for 2011 161

4.1.5 Statement of changes in shareholder’s equity for 2010 162

4.1.6 Cash flow statement 163

4.1.7 Covering balance sheet losses for the fiscal year 164

4.1.8 Accounting policies and notes to the financial

non-consolidated statements 164

4.1.9 Statement of the Management 221

4.1.10 Independent Auditor’s Report 222

4.2 Audited consolidated financial statements of the Laško Group 224

4.2.1 Consolidated Statement of the Financial Position 225

4.2.2 Consolidated income statement 227

4.2.3 Consolidated statement of comprehensive income 229

4.2.4 Consolidated statement of changes in owner’s equity for 2011 230

4.2.5 Consolidated statement of changes in owner’s equity for 2010 232

4.2.6 Consolidated statement of cash flows 234

4.2.7 Accounting policies and notes to the financial

consolidated statements 235

4.2.8 Statement of the Management 306

4.2.9 Independent Auditor’s Report 308

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1.

INTRODUCTION

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ThE SALE OF ThE COMPANy FRUCTAL wAS IMPLEMENTED IN 2011 IN AN EFFORT TO STABILIzE ThE

FINANCIAL SITUATION OF ThE LAŠKO GROUP, ENABLING US TO REDUCE ThE DEBT BURDEN By A

GOOD EUR 50 MILLION.

Dear Shareholders, valued Business Partners and Colleagues,

The year 2011 presented many turning points for Pivovarna Laško and the Laško Group After years of stag-

nation, the Group finally achieved a significant growth in product sales, primarily in foreign markets, which

clearly shows that the business strategy boldly set a year ago is correct and feasible. The sale of the company

Fructal was implemented in 2011 in an effort to stabilize the financial situation of the Laško Group, enabling

us to reduce the debt burden by a good EUR 50 million.

The key tasks of the Management Board of Pivovarna Laško in 2011 were again aimed at negotiating the

rescheduling of financial obligations with banks, activities related to the disinvestment of assets that do not

represent our core business and the implementation of the growth strategy for the sale of products in foreign

markets for our products are domestic market leaders in all segments and increased investment in sales and

market shares would not have the effects that would justify the investment.

In 2011 the Laško Group attempted to sell its business stake in Mercator, first independently and then as

a member of a consortium for the divestment of a majority stake however due to the differing interest of

the decision-makers, the sale was not realised. Thus, the business results of Pivovarna Laško were again

significantly affected by the high level of indebtedness and the fact that we have not yet achieved an agree-

ment regarding the long-term rescheduling of debts with creditor banks in 2011. The Management Board

successfully managed the difficult financial situation and ensured the liquidity of the companies in the

Group irrespective of the fact that we had to repay interest on loans in the amount of EUR 23.1 million in 2011.

OPERATIONS IN 2011 MARKED By SALES GROwTh

The parent company Pivovarna Laško generated EUR 94.3 million in net sales revenues, EUR 10.7 mil-

lion in operating profit and a net loss of EUR 15.5 million. Pivovarna Laško sold 976 thousand hectolitres of

beverages in 2011.

1.1

STaTEmENT by ThE ChairmaNOf ThE maNagEmENT bOard

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The Laško Group sold 4.4 million hectolitres of beverages in 2011 and generated EUR 323.4 million in net

sales revenues, representing a 5.5% increase over the previous year while operating revenues amounted to

EUR 321.9 million and had increased by 0.6%. Operating profit with amortisation for the Group amounted

to EUR 23.4 million in 2011.

The Laško Group generated 84.0% of its net sales revenues from sales of products and services on the

domestic market and 16.0% on foreign markets in 2011. The sale of beer represents the greatest share in

the sales structure with 44.9%, followed by mineral and spring waters with a 24.9% percent share. Non-

alcoholic beverages and other beverages represented a 30.2% share of total sales.

ShARE OF SALES ON FOREIGN MARKETS INCREASED

The business strategy to increase sales in foreign markets has proved to be a good one. While the overall

beverage market in Slovenia is stagnating and investments to increase sales would be economically unjusti-

fied, in 2011 we managed to significantly increase sales of products and strengthen the market position of

key brands in key foreign markets in the region. Product sales increased the most in the markets in Italy

and Croatia.

INTO 2012 wITh NEw PRODUCTS AND A FOCUS ON FOREIGN MARKETS

The year 2012 will be the one in which the Laško Group has prepared business plans without the company

Fructal, since the sale of the aforementioned company was concluded in late 2011. The basis of planning the

business results of the Laško Group companies in 2012 comprises the growth strategy adopted by the Group

in September 2010 for the period until 2014. Basic assumptions of the Group’s Growth Strategies up to 2014

are the reorganisation of the Group into a contractual group, disposal of unnecessary assets and property

and the reprogramming of loans.

The Group is planning total beverage sales of 4.1 million hectolitres in 2012 with 57% comprising sales of

beer, 29% sales of mineral, spring and water with additives and 14% sales of remaining non-alcoholic and

other beverages.

We are planning even more intensive growth (30%) on the most important export markets and the consoli-

dation of the positions of the brands of the Group. We plan to achieve this through additional exploitation of

the synergies of a joint presence of all the Group companies in major markets achieved in 2011, expansion

of flavours and packaging under brand names in innovative segments and segments with growth potential,

and introduction of new products and flavours, with an emphasis on providing quality products and optimiz-

ing the brand portfolio.

The Laško Group will, despite the uncertain economic climate and uncertainty regarding the disposal of

investments and the possibility of paying its obligations, attempt to further streamline operations, optimize

costs and manage financial and other risks in order to realise the objectives of the Business Plan for 2012.

Dušan Zorko, MSc

Chairman of the Management Board of Pivovarna Laško, d. d.

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ThE SUPERVISORy BOARD ASSESSES ThAT ThE OPERATIONS OF PIVOVARNA LAŠKO, D. D. AND ThE

LAŠKO GROUP AND ThE wORK OF ThE MANAGEMENT BOARD IN 2011 wERE IN ACCORDANCE wITh

ExPECTATIONS BASED ON ThE GENERAL DETERIORATION OF ThE ECONOMIC SITUATION AND

ChANGED FINANCING CONDITIONS.

COMPOSITION OF ThE SUPERVISORy BOARD

The Supervisory Board of the Company operated under the following composition in the 2011 fiscal year:

CAPITAL REPRESENTATIVES

Marjan Mačkošek, Chairman (mandate expired on 31 March 2011)

Peter Groznik, DSc

Vladimir Malenković, DSc (Chairman as of 29 April 2011)

Borut Bratina, DSc (mandate commenced on 24 June 2011)

Borut Jamnik (mandate commenced on 24 June 2011)

EMPLOyEE REPRESENTATIVES

Andrej Kebe, Deputy Chairman (mandate expired on 1 April 2011)

Bojan Košak (mandate expired on 6 April 2011)

Bojan Cizej (mandate commenced on 6 April 2011, Deputy Chairman as of 13 April 2011)

Dragica Čepin, MSc (mandate commenced on 4 August 2011)

As of 8 April 2011, the Supervisory Board operates under the following composition: Vladimir Malenković

(Chairman, capital representative) Bojan Cizej (Deputy Chairman, employee representative), Peter Groznik,

DSc (member, capital representative), Dragica Čepin (member, employee representative), Borut Bratina

(member, capital representative), Borut Jamnik (member, capital representative).

COMPOSITION OF ThE SUPERVISORy BOARD COMMITTEES

The Audit and Human Resources Committees operated within the scope of the Supervisory Board in 2011

under the following compositions:

1.2

rEpOrT Of ThE SupErviSOry bOard ON vErifiCaTiON Of ThE aNNual rEpOrT

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AUDIT COMMITTEE

Peter Groznik, DSc, Chairman

Bojan Košak, member (mandate expired on 13 April 2011)

Bojan Cizej, member (mandate commenced on 13 April 2011)

Marko Koleša, external member (mandate expired on 20 October 2011)

Igor Teslić, external member (mandate commenced on 21 October 2011)

As of 21 October 2011, the Audit Committee operates under the following composition: Dr. Peter Groznik,

DSc, Chairman and Bojan Cizej and Igor Teslić, members.

hUMAN RESOURCES COMMITTEE

Borut Jamnik, Chairman

Borut Bratina, DSc, member

Dragica Čepin, MSc, member

The Supervisory Board appointed the Human Resources Committee in the aforementioned composition

on 21 October 2011.

OPERATIONS OF ThE SUPERVISORy BOARD

The operations of Pivovarna Laško, d. d. were supervised by the Supervisory Board of the Company in

accordance with statutory provisions and the Statute of the Company which met at 17 regular sessions and

3 regular sessions.

Throughout the period of 2011, the Supervisory Board concurrently reviewed the work of the Management

Board. The Supervisory Board paid special attention to the liquidity situation of Pivovarna Laško, d. d. and

the companies in the Laško Group, divestment of investments of the Laško Group, activities connected to the

rescheduling of financial liabilities of Pivovarna, d. d. and the companies of the Laško Group, cost manage-

ment, relevant legal issues and verification of the achievement of business results. Due to the situation expe-

rienced by the companies, the Supervisory Board continued to work on the majority of the aforementioned

topics which were also regular items on the agendas of meetings of the Supervisory Board.

Significant resolutions of the supervisory board

In addition to the above, the Supervisory Board also treated other current matters and adopted the key

resolutions that follow:

• The Supervisory Board confirmed and adopted the Audited Annual Report of Pivovarna Laško, d. d. and

the Laško Group for 2010.

• The Supervisory Board appointed Mirjam Hočevar as member of the Management Board of the Com-

pany, responsible for finance as of 1 April 2011.

• The Supervisory Board elected Vladimir Malenković, DSc as Chairman of the Supervisory Board as of

29 April 2011.

• The Supervisory Board voted for the conclusion of an agreement on the joint sale of shares of Mercator,

d. d. which the companies of the Laško Group signed on 8 June 2011.

• The Supervisory Board agreed with the Management Board’s proposal that an extraordinary General

Meeting of Shareholders of the Company be convened on 30 July 2011 due to the acquisition of consent

of the General Meeting for a transaction for which the Management Board of the Company required its

consent in accordance with Article 47 of the Takeovers Act.

• The Supervisory Board, at the proposal of the Chairman of the Management Board Dušan Zorko, MSc

appointed Marjeta Zevnik as member of the Management Board of Pivovarna Laško, d. d., responsible

for legal, human resources and general affairs for a mandate spanning from 5 August 2011 to 30 August

2015 and Matej Oset as member of the Management Board, responsible for the production and technical

sector for a mandate spanning from 5 August 2011 to 30 August 2015.

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• The Supervisory Board confirmed and adopted the Semi-Annual Report of Pivovarna Laško, d. d. and the

Laško Group for 2011.

• The Supervisory Board appointed a three-member Human Resources Committee on 21 October 2011

which operates under the following composition: Borut Jamnik, Chairman, Borut Bratina, DSc, member

and Dragica Čepin, MSc, member.

• The Supervisory Board was acquainted with the systems of fluctuation, management and reduction of

material costs and costs of services in the companies of the Laško Group.

• The Supervisory Board was acquainted with the Business Plan of the Laško Group and Pivovarna Laško, d. d.

for the 2012 fiscal year.

OPERATIONS OF ThE AUDIT COMMITTEE

The Audit Committee met for three sessions in 2011. The Committee at its session on 28 February 2011

was acquainted with the unaudited, unconsolidated financial statements of Pivovarna Laško, d. d. for 2010.

A summary of visits by individual companies of the Laško Group, performed by the Audit Committee was

submitted at the session. The Audit Committee was acquainted with the Independent Auditor’s Report of

the auditing firm Deloitte Revizija d.o.o. at its session on 31 March 2011. The Audit Committee also reviewed

the Audited Annual Report for 2010 and proposed that remuneration of members of supervisory boards in

the companies of the Laško Group be standardised. The Audit Committee reviewed the investment in Birra

Pija at its session on 24 November 2011. It also adopted a decision at the same session to review all larger

transactions of the Group (over EUR 100,000) and analyse the disinvestment processes.

OPERATIONS OF ThE hUMAN RESOURCES COMMITTEE

The Human Resources Committee met for three sessions in 2011. At its session on 21 November 2011,

the Human Resources Committee reviewed the employment and individual contracts of members of the

Management Board and treated the proposal to amend the management of companies in the Laško Group.

VERIFICATION OF ThE ANNUAL REPORT

The Supervisory Board reviewed the Audited Annual Report of Pivovarna Laško, d. d. and the Laško Group

for 2011 at its supervisory board session on 21 May 2012.

The Annual Report was audited by the auditing firm Deloitte Revizija d.o.o., Ljubljana. The auditing firm

issued its positive opinion of the Annual Report with notes on 6 April 2011. The Supervisory Board found no

objections to the auditor’s report and approved it.

The Supervisory Board had no objections to the Annual Report of Pivovarna Laško, d. d. and the Pivovarna

Laško Group for 2011 and unanimously confirmed it at its session on 21 May 2012.

PROPOSAL FOR ThE COVERAGE OF LOSS

In addition to confirming the Audited Annual Report of Pivovarna Laško, d. d. and the Laško Group for

2011, the Supervisory Board also confirmed the proposal of the Management Board for the coverage of loss

of 2011.

The proposal of the Management Board regarding the coverage of loss is as follows:

“The Management Board recommends to the Supervisory Board and General Meeting that net loss for 2011

in the amount of EUR 15,528,268 be covered through other profit reserves and capital reserves.”

The Supervisory Board reviewed the proposal of the Management Board regarding the coverage of loss,

giving it its consent.

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The Supervisory Board assesses that the operations of Pivovarna Laško, d. d. and the Laško Group and the

work of the Management Board in 2011 were in accordance with expectations based on the general deteriora-

tion of the economic situation and changed financing conditions.

The Supervisory Board has drawn up this report for the General Meeting of Shareholders of the Company

in accordance with Article 282 of the Companies Act (ZGD-1).

Laško, on 21 May 2012

Chairman of the Supervisory Board:

Vladimir Malenković, DSc

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ThE LAŠKO GROUP MANAGED TO REDUCE ITS NUMBER OF EMPLOyEES By 2.5% IN ACCORDANCE

wITh ThE MULTI-ANNUAL RESTRICTIVE EMPLOyMENT POLICy OF ThE GROUP. IN LINE wITh ThE

STRATEGy IN 2012, wE PLAN TO MAINTAIN MARKET ShARES OF SALES IN ThE SLOVENIAN MARKET

AND AChIEVE A BOLD 30 PERCENT GROwTh IN FOREIGN MARKETS. ThE ShARE OF ExPORTS IN

ThE TOTAL SALES STRUCTURE OF BEVERAGES INCREASED By 3 PERCENTAGE POINTS.

SALES REVENUES AND OPERATING PROFIT wITh AMORTISATION (EBITDA)

0.0

in E

UR

mil.

Net sales revenues

EBITDA - normalized

2009 2010 2011

47.538.958.3

323.4306.4327.0

90.0

180.0

270.0

360.0

450.0

Sales revenues increased by 5.5% in 2011, while operating profit with amortisation (EBITDA) increased

by 22.1%.

Net sales revenues are shown throughout the Business unless expressly stated otherwise, while only rev-

enues from retained operations are shown in the consolidated income statement.

Normalized EBIT is calculated from operating profit, which is increased or reduced by the impact of one-

off events, such as: the revaluation of real estate and investment property and the formation of revaluation

adjustments to receivables. Normalized EBITDA is the sum of normalized EBIT and depreciation.

1.3

SigNifiCaNT buSiNESS aChiEvEmENTS Of ThE LaškO grOup

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Normalized net profit in addition to the above listed adjustments adjustment is additionally adjusted for

the impairment of investments accrued deferred tax receivables under this heading.

RETURN ON ASSETS (ROA) AND RETURN ON EqUITy (ROE)

0.0

in %

Return on equity (ROE)

Return on assets (ROA)

2009 2010 2011

0.60.7

2.4 2.92.9

7.4

3.0

6.0

9.0

12.0

KEy DATA ON OPERATIONS OF ThE LAŠKO GROUP

( in EUR ) 2009 2010 2011

Net sales revenues 327,026,846 306,418,155 323,412,454

Net profit -162,099,646 -25,818,805 -27,506,298

Net proft - normalised 17,862,773 4,455,000 3,962,000

Net cash flows1 45,862,955 28,896,457 28,068,978

EBIT -5,229,918 -9,886,015 9,887,269

EBIT - normalized 30,263,656 14,484,000 23,419,000

EBITDA 22,770,264 14,555,442 29,473,247

EBITDA - normalized 58,263,838 38,925,457 47,525,978

Long-term assets 564,998,357 265,643,825 321,093,374

Short-term assets 116,797,789 371,207,876 248,589,915

Equity 162,594,380 131,889,003 125,473,457

Long-term liabilities 136,988,946 89,069,856 47,605,283

Short-term liabilities 382,212,820 415,892,842 396,604,549

1 Normalised net profit with amortisation

(In 2011 normalized depreciation is reflected in the net cash flow1 and in EBITDA - normalized.)

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INDICATORS

2009 2010 2011

Normalized net profit from revenes prodaje 5.5 % 1.5 % 1.2 %

EBIT share in sales revenues 9.3 % 4.7 % 7.2 %

EBITDA share in sales revenues 17.8 % 12.7 % 14.7 %

Return on equity (ROE)2 7.4 % 2.9 % 2.9 %

Return on assets (ROA)3 2.4 % 0.7 % 0.6 %

Liabilities / equity 3.193 3.829 3.536

2Normalized net profit / average balance of equity in the period

3Normalized net profit / average balance of assets in the period

NUMBER OF EMPLOyEES

( as at 31 Dec ) 2009 2010 2011

In the Group, without Delo, d. d., Ljubljana 1,462 1,422 1,392

In Delo, d. d., Ljubljana 469 445 428

Total 1,931 1,867 1,820

The number of employees in the company Delo, d. d., Ljubljana is displayed separately as Delo, d. d. does

not fall under the same activity as the other companies in the Laško Group. Employees of the Fructal Group

are also included in the total employee figure for 2011 regardless of the fact that as of 12 December 2011, the

Fructal Group is no longer a part of the Union Group, or subsequently the Laško Group.

ShARE OF ExPORTS IN TOTAL SALES OF BEVERAGES OF ThELAŠKO GROUP

( in hl ) 2009 2010 2011

Total sale of beverages 4,552,891 4,225,503 4,400,717

Exports 983,381 938,089 1,124,111

Share (in %) 21.6 22.2 25.5

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PLANS FOR 2012

OVERALL SALE OF ALL BEVERAGES OF ThE GROUP AND PLANS FOR ThE UPCOMING yEAR

Juices, syrups

Water

Beer

Other alcohol

0

5000.000

1.000.000

1.500.000

2.000.000

2.500.000

in h

ecto

litre

s

2010 2011 Plans 2012

( in hl ) 2010 2011 Plans 2012

Juices, syrups 1,317,025 1,318,659 557,380

Water 1,054,352 1,098,181 1,181,113

Beer 1,845,989 1,974,735 2,341,709

Other alcohol 8,137 9,142 2,427

Total 4,225,503 4,400,717 4,082,629

Total sales without Frucal and Fruktal Mak 3,443,924 3,651,979 4,082,629

( in % ) 2010 2011 Plans 2012

Juices, syrups 31.2 30.0 13.6

Water 24.9 24.9 28.9

Beer 43.7 44.9 57.4

Other alcohol 0.2 0.2 0.1

Total 100.0 100.0 100.0

The Laško Group is planning the sale of 4,083 million hectolitres of all types of beverages in 2012, reflect-

ing an 11.8% increase over sales in 2011 if the sales of the companies Fructal, d. d., Ajdovščina and Fuktal

Mak, a. d., Skopje for 2011 are omitted. The plan the Group has set is an optimistic one because it is planning

increase sales on foreign markets. In line with the strategy in 2012, the Group plans to maintain its market

shares in the Slovenian market and realise a bold 30% growth in foreign markets.

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wE SUCCESSFULLy IMPLEMENT ThE ADOPTED SALES STRATEGy IN FOREIGN MARKETS. IN 2011,

ThE ShARE OF ExPORTS IN TOTAL SALES VOLUME REAChED 27.5 PERCENT AND IS 2 PERCENTAGE

POINTS hIGhER ThAN ThE PREVIOUS yEAR.

SALES REVENUES AND OPERATING PROFIT wITh AMORTISATION (EBITDA)

0

in m

io. E

UR

Net sales revenues

EBITDA - normalized

2009 2010 2011

16.618.226.0

94.391.399.7

26.0

52.0

78.0

104.0

130.0

Sales revenues increased by 3.3% in 2011 in comparison to the previous year, while operating profit with

amortisation (EBITDA) decreased by 9.2%.

Normalized EBIT, EBITA and net profit are calculated in the same way as the data on the Laško Group on

pages 11 and 12 of this Report.

1.4

SigNifiCaNT buSiNESS aChiEvEmENTS Of pivOvarNa LaškO, d. d.

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RETURN ON ASSETS (ROA) AND RETURN ON EqUITy (ROE)

Return on equity (ROE)

Return on assets (ROA)

-3.0

0.0

3.0

6.0

9.0

in %

2009 2010 2011

-0.1

+0.6

+1.9

-0.4

+1.9

+5.2

NORMALISED NET PROFIT AND MARKET CAPITALIzATION

Net profit/Net loss

Market capitalization at the end of the period

-20.0

-10.0

Nor

m. n

et p

rofit

/net

loss

in E

UR

mil.

Mar

ket c

apita

lizat

ion

in E

UR

mil.

-0.0

10.0

20.0

2009 2010 2011

0

200

400

600

800

1.000

+9.0 +2.4

-0.5237

14096

KEy DATA ON OPERATIONS OF PIVOVARNA LAŠKO, D. D.

( in EUR ) 2009 2010 2011


Net profit/loss -44,973,818 -6,292,260 -15,528,268

Net profit - normalized 8,973,079 2,439,500 -516,176

Net cash flow1 15,881,650 9,435,574 5,778,254

EBIT 16,898,111 11,223,795 10,719,167

EBIT - normalized 19,054,490 11,223,795 10,257,235

EBITDA 23,806,682 18,219,869 17,013,597


Long-term assets 398,843,120 294,360,182 320,277,999


Equity 129,302,643 124,168,015 109,365,419



1Normalized net profit including depreciation

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INDICATORS

2009 2010 2011

Net profit or loss from sales revenues 9.0 % 2.7 % -0.5 %

Normalised EBIT share in sales revenues 19.1 % 12.3 % 10.9 %

Normalised EBIDTA share in sales revenues 26.1 % 20.0 % 17.5 %

Return on equity (ROE)2 5.2 % 1.9 % -0.4 %

Return on assets (ROA)3 1.9 % 0.6 % -0.1 %

Liabilities / equity 2.301 2.349 2.708

2Normalized net profit / average balance of equity in the period3Normalized net proit / average balance of assets in the period

NUMBER OF EMPLOyEES

2009 2010 2011

Employees as at 31 Dec 321 318 329

Average number of employees 324 324 326

ShARE OF ExPORTS IN TOTAL SALES OF BEVERAGES OF PIVOVARNA LAŠKO, D. D.

( in hl ) 2009 2010 2011

Sales of all beverages 1,011,539 968,697 975,838

Exports 213,226 250,371 268,631

Share (in %) 21.1 25.8 27.5

MARKET ShARE OF BEER SALES ON ThE SLOVENIAN MARKET

( in % ) 2009 2010 2011

Pivovarna Laško 45.1 42.3 40.6

Pivovarna Union, brands 34.2 35.9 39.4

Pivovarna Union, private labels 5.5 6.4 6.9

Imported beer 15.2 15.4 13.1

Total 100.0 100.0 100.0

DATA REGARDING PILR ShARES

2009 2010 2011

Total number of issued shares 8,747,652 8,747,652 8,747,652

Net profit / loss per share (in EUR) -5.14 -0.72 -1.78

Dividend per share (in EUR) / / /

Market value per share on 31 Dec (in EUR) 27.15 15.99 11.02

Avg. Price per share / net profit or loss per share -5.28 -22.21 -6.19

Book value per share on 31 Dec (in EUR)4 14.78 14.19 12.50

Avg. price per share / book value per share 1.84 1.13 0.88

Market capitalization in EUR (31 Dec) 237,498,752 139,874,955 96,399,125

4Equity on 31 Dec / total number of shares

•

ThE GOLDEN whEAT EAR

hAS ALwAyS SyMBOLIzED

PROSPERITy FOR MAN. AT

PIVOVARNA LAŠKO wE TAKE

CARE TO SELECT ThE FINEST

GRAINS AND CAPTURE SOME

OF ThE SyMBOLISM IN OUR

GOLDEN hUED DRINKS.

•

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wE ARE REALISING OUR MISSION By CREATING BRAND NAMES wITh ADDED VALUE FOR OUR CU-

STOMERS AND ShAREhOLDERS AND RESPONSIBLE AND ENVIRONMENTALL-FRIENDLy OPERATIONS

wITh whICh wE STRIVE TO ATTAIN SUPERIOR RESULTS.

VISION

To become the leader in the production and sales of beverages. To strengthen the reputation and

recognition of individual recognised brands on both domestic and foreign markets and increase

market shares on individual markets.

MISSION

We create brands with added value for our customers and shareholders. With responsible and

environmentally-friendly operations we strive to achieve superior results in a better world.

VALUES

Knowledge, enterprise, partnerships, responsibility and appreciation. It is on the basis of these

values that we realise our objectives through well-conceived strategies in the areas of marketing

and development of offers, organisation, human resources management, technological develop-

ment, financial resources management and a positive attitude to the wider social community.

STRATEGIC OBjECTIVES

The production and sale of innovative and trendy products, maintenance of the market positions

of own brand names on the domestic market, and recovery and expansion of previously achieved

positions on foreign markets. We will achieve planned cost effectiveness through professionally

qualified employees acting as teams and in accordance with the policies of the Laško Group.

1.5

viSiON, miSSiON, valuES aNd STraTEgiC ObjECTivES

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LAŠKO GROUP PIVOVARNA LAŠKO, D. D.

PRESENTATION Production of beer, Production of beer,

mineral, spring and naturalwaters, natural waters,

waters, non-alcoholic beverages and non-alcoholic beverages and

syrups for the production of beverages, other alcoholic beverages.

other alcoholic beverages,

newspaper and publishing activities,

retail and

wholesale services and other postal

and courier activities.

PIVOVARNA LAŠKO, D. D.

COMPOSITION Radenska, d. d., Radenci including the subsidiary company

Pivovarna Union, d. d., Ljubljana

Jadranska pivovara – Split, d. d.

Vital Mestinje, d. o. o.

Delo, d. d., Ljubljana including the subsidiary companies

Laško Grupa, d. o. o. Sarajevo

Firma Del, d. o. o., Laško

Laško Grupa, d. o. o., Zagreb

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ThE LAŠKO GROUP BRINGS TOGEThER PRODUCERS OF BEER, MINERAL, SPRING AND NATURAL wA-

TERS, NON-ALCOhOLIC BEVERAGES, SPIRITS AND OThER ALCOhOLIC BEVERAGES AND SyRUPS

FOR MAKING BEVERAGES. IT IS ALSO INVOLVED IN NEwSPAPER AND PUBLIShING ACTIVITIES, RETA-

IL AND whOLESALE TRADE ACTIVITIES AND POSTAL AND COURIER ACTIVITIES.

Equity ownership structure as at 31 December 2011:

Parent company

• PIVOVARNA LAŠKO, d. d., Slovenia

Associated companies

• RADENSKA, d. d., Radenci, Slovenia

81.96% ownership stake

(An explanation of the ownership stakes and voting rights is given on page 58 of this Report.)

• PIVOVARNA UNION, d. d., Ljubljana, Slovenia


• JADRANSKA PIVOVARA – Split, d. d., Croatia


• VITAL MESTINJE, d. o. o., Slovenia

96.92% business share

• DELO, d. d., Ljubljana, Slovenia

100% ownership stake – of which 80.834% is owned by Pivovarna Laško, d. d.

and 19.166% by Radenska, d. d.

• LAŠKO GRUPA, d. o. o., Sarajevo, Bosnia and Herzegovina

100% ownership stake – of which 69.23% is owned by Pivovarna Laško, d. d., 1.97% by Radenska, d. d.,

11.48% by Pivovarna Union, d. d., Ljubljana and 17.32% by Fructal d. d.

1.6

prESENTaTiON Of ThE LaškO grOup

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• FIRMA DEL, d. o. o., Laško, Slovenia

100% business share

• LAŠKO GRUPA, d. o. o., Zagreb, Croatia

100% business share

Pivovarna Laško, d. d. draws up the consolidated annual report for the parent company and for the sub-

sidiaries in the Laško Group. Due to their material irrelevance, the following companies are not included in

the consolidation: Firma Del, d. o. o., Laško, Laško Grupa, d. o. o., Sarajevo, Radenska Miral, d. o. o., Radenci,

Radenska, d. o. o., Zagreb and Radenska, d. o. o., Belgrade (More information is given in the note on sub-

sidiaries on page 101 of this Report).

Subsuduary companies

• BIRRA PEJA, Sh. a., Peć, Kosovo


• THERMANA, d. d., Laško, Slovenia


• SLOPAK, d. o. o., Ljubljana, Slovenia

29.22% business share

Pivovarna Union, d. d. was the 93.73% owner of the company Fructal, d. d., which was the 83.39% owner of the

company Fruktal Mak, a. d., Skopje until 16 December 2011. On 16 December 2011, the company Nectar, d. o. o.

from Bačka Palanka became the new owner of Fructal, d. d. in the same proportion.

As of 18 January 2012, a part of the previously associated company Birra Peja, Kosovo became a part of

the Laško Group, for Pivovarna Union, d. d. had become the 57.63% owner of the aforementioned company.

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PIVO

VARN

AU

NIO

N, d

. d.,

Ljub

ljana

Ow

ners

hip:

97,8

95 %

No.

of s

h.: 4

41.6

17

JAD

RAN

SKA

PIVO

VARA

- Sp

lit, d

. d.

Ow

ners

hip:

99,

459

% N

o. o

f sh.

: 5.3

96.8

52

RAD

ENSK

A, d

. d.,

Rade

nci

Ow

ners

hip:

81,9

6 %

No.

of s

h.: 4

.148.

703

VIT

AL,

d. o

. o.,

Mes

tinje

Busi

n. s

hare

: 96,

92 %

DEL

O, d

. d.,

Ljub

ljana

Ow

ners

hip:

100

% N

o. o

f sh.

: 667

.464

RAD

ENSK

A M

IRA

L,d.

o. o

., Ra

denc

iBu

sin.

sha

re: 1

00

%

(Not

e on

ow

ners

hip

and

votin

g rig

hts

in R

aden

ska

on p

age

58of

this

Ann

ual R

epor

t.)

PIV

OVA

RN

A L

AŠK

O, d

. d.

Subs

idia

ry c

ompa

nySu

bsid

iary

com

pany

Subs

idia

ry c

ompa

nySu

bsid

iary

com

pany

Subs

idia

ry c

ompa

ny

LA

ŠKO

GR

OU

P

Pare

nt c

ompa

ny

Pivo

varn

a La

ško

Ow

ners

hip

in D

elo

80,8

34 %

No.

of s

h.: 5

39.5

36

Rade

nska

Ow

ners

hip

in D

elo

19,16

6 %

No.

of s

h.: 1

27.9

28

Subs

idia

ry o

f Del

o:IZ

BERI

, d. o

. o.,

Ljub

ljana

Busi

n. s

hare

: 10

0 %

Subs

idia

ry c

ompa

nySu

bsid

iary

com

pany

LAŠK

O G

RUPA

, d.o

.o.,

Sara

jevo

Busi

n. s

hare

: 10

0 %

FIRM

A D

EL, d

. o. o

.,La

ško

Busi

n. s

hare

: 10

0 %

Pivo

varn

a La

ško

Busi

n. s

hare

in L

aško

Gru

pa S

araj

evo

69,2

3 %

Rade

nska

Busi

n. s

hare

in L

aško

Gru

pa S

araj

evo

1,97

%

Pivo

varn

a U

nion

Busi

n. s

hare

in L

aško

Gru

pa S

araj

evo

11,48

%

Fruc

tal

Busi

n. s

hare

in L

aško

Gru

pa S

araj

evo

17,3

2 %

Subs

idia

ry c

ompa

ny

LAŠK

O G

RUPA

, d.o

.o.,

Zagr

eb

Busi

n. s

hare

: 10

0 %

on 3

1 dec

embe

r 20

11

(Pro

cedu

res

for t

he

dive

stm

ent o

f a b

usin

ess

stak

e of

Fru

ctal

in L

aško

G

rupa

Sar

ajev

o to

the

com

pani

es in

the

Lašk

o G

roup

are

und

erw

ay.)

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ThE hISTORICAL BEGINNINGS OF PIVOVARNA LAŠKO REACh BACK TO 1825, whEN ThE MEAD AND

GINGERBREAD MAKER FRANz GEyER SET UP A BREwERy IN ThE FORMER VALVASOR hOSPITAL. ThE

BUILDING whICh STILL ExISTS TODAy IS NOw ThE LOCATION OF ThE SAVINjA hOTEL. ONE hUN-

DRED AND EIGhTy-SIx yEARS hAS PASSED SINCE ThEN, wITh PIVOVARNA LAŠKO GROwING FROM

A LOCAL BREwERy TO ThE LEADING PRODUCER OF BEER AND TOGEThER wITh ThE OThER COM-

PANIES IN ThE GROUP, INTO ThE LEADING PRODUCER OF MINERAL AND NATURAL wATERS, NON-

-ALCOhOLIC BEVERAGES AND OThER BEVERAGES ON ThE SLOVENE MARKET.

1.7.1 COMPANy PROFILE

PIVOVARNA LAŠKO, d. d., Trubarjeva 28, 3270 Laško, was entered into the register of companies under

registration no. 1/00171/00, at the District Court of Celje, under the court decision no. SRG 95/00673 of

September 1995.

Abbreviated company name: PIVOVARNA LAŠKO, d. d.

Organisation type: public limited company

Share capital: EUR 36,503,305

Number of shares issued: 8,747,652 no par-value shares

Listing of shares: Ljubljana Stock Exchange, stock exchange listing of regular

shares

Ticker symbol: PILR

Company registration number: 5049318

Tax Identification Number: SI90355580

Activity code: 11.050

1.7

prESENTaTiON Of ThE parENT COmpaNy pivOvarNa LaškO, d. d.

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Type of business and principal activity:

PRODUCTION OF BEER

Five-member

Management Board: Dušan Zorko, MSc, Chairman of the Management Board

Marjeta Zevnik

Mirjam Hočevar

Gorazd Lukman

Matej Oset

Chairman of the Supervisory Board: Vladimir Malenković, Dsc

TRANSACTION ACCOUNTS:

Raiffeisen Krekova banka, d. d. IBAN SI56 2430 0900 0054 863

Nova Kreditna banka Maribor, d. d. IBAN SI56 0451 5000 0909 883

Nova Ljubljanska banka, d. d., Ljubljana IBAN SI56 0223 2002 0104 463

Abanka Vipa, d. d. IBAN SI56 0510 0801 2922 332

Unicredit banka Slovenije, d. d. IBAN SI56 2900 0000 1820 159

Hypo Alpe-Adria-Bank, d. d. IBAN SI56 3300 0000 2722 975

Banka Sparkasse, d. d. IBAN SI56 3400 0100 1922 773

Banka Celje, d. d., Bančna skupina Celje IBAN SI56 0600 0000 1199 122

Probanka, d. d. IBAN SI56 2510 0970 0565 280

Telephone: +386 3 734 80 00

Fax: +386 3 573 18 17

Website: info@pivo-Laško.si

Website: http://www.pivo-Laško.si

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ThE COMPANIES IN ThE LAŠKO GROUP CONCLUDED AN AGREEMENT ON ThE jOINT SALE OF ShA-

RES OF ThE COMPANy MERCATOR, D. D. wITh ThE COMPANIES NOVA LjUBLjANSKA BANKA, D. D.,

ABANKA VIPA, D. D., NFD hOLDING, D. D., NFD 1 DELNIŠKI INVESTICIjSKI SKLAD, D. D., GORENjSKA

BANKA, D. D., NOVA KREDITNA BANKA MARIBOR, D. D., hyPO ALPE-ADRIA-BANK, D. D. AND BANKA

CELjE, D. D. ON 15 jUNE 2011.

1.8.1 SIGNIFICANT BUSINESS EVENTS IN PIVOVARNA LAŠKO, D. D.

VALIDITy OF RESOLUTIONS OF ThE 15Th REGULAR GENERAL MEETING OF ShAREhOLDERS

The PanSlovenian Shareholders’ Association (PSSA) filed a lawsuit on 1 October 2009 at the District Court

in Celje due to the establishment of invalidity and subordination due to the challenging of the decisions of

the 15th General Meeting of Shareholders held on 31 August 2009. The court rejected the demands of the

suing part in their entirety through its judgement of 1 February 2011. The suing party PSSA filed an appeal

against the aforementioned judgement on 1 March 2011 which the Higher Court in Celje rejected in its deci-

sion of 17 November 2011 thereby confirming the decision of the court of first instance. As of the day of issue

of the decision of the Higher Court, the economic dispute was concluded in its finality.

LAwSUIT OF PERUTNINE PTUj D.D. AGAINST PIVOVARNA LAŠKO, D. D. BASED ON A COMFORT LETTER

Pivovarna Laško, d. d. was handed a lawsuit on 15 February 2011 by the District Court in Celje in which

the plaintiff Perutrnina Ptuj, d. d. was demanding payment of EUR 10,116,488.71 with pp from the defend-

ant Pivovarna Laško, d. d. The plaintiff indicated in the lawsuit that it had suffered damages in the denoted

amount since the defendant had failed to fulfil in full the obligations stemming from the comfort letter of

10 January 2009 which the previous director of Pivovarna Laško, d. d. Boško Šrot had signed on behalf of

the defendant. Pivovarna Laško, d. d. finds the claim of the plaintiff to be unjustified as it also asserted in its

appeal. The court of first instance has not yet made a judgement regarding the matter.

ChANGES IN ThE COMPOSITION OF ThE MANAGEMENT BOARD

Based on his resignation statement of 14 March 2011, the mandate of the Supervisory Board member re-

sponsible for finance Robert Šegi ended on 31 March 2011. Mirjam Hočevar was appointed the new member

to the Supervisory Board responsible for finance as of 1 April 2011 for a mandate period until 30 August 2015

based on the recommendation of the Chairman of the Management Board Dušan Zorko, MSc at the session

on 31 March 2011.

1.8

SigNifiCaNT EvENTS iN 2011

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The Supervisory Board of Pivovarna Laško, d. d., upon the recommendation of the Chairman of the Man-

agement Board Dušan Zorko, MSc appointed the additional members of the Management Board on 5 Au-

gust 2011, namely: The appointment of additional members to the Management Board is based on an amend-

ment of the Statue approved at the 17th regular General Meeting of Shareholders on 24 June 2011, which now

enables the appointment of a maximum five-member Management Board.

ChANGES IN ThE COMPOSITION OF ThE SUPERVISORy BOARD

Based on the resignation statement submitted by the Chairman of the Supervisory Board Marjan Mačkošek

at the regular session of the Supervisory Board on 31 March 2011, Mr. Marjan Mačkošek’s mandate as Chair-

man and member of the Supervisory Board ended on the said date. The Supervisory Board of the Company

appointed Dr. Valdimir Malenković as Chairman of the Supervisory Board at its regular session on 29 April

2011.

The mandate of member of the Management Board and employee representative Andrej Kebet ended on

1 April 2011, the same day he submitted his resignation. At the same session, namely on 6 April 2011, the

Worker’s Council recalled Bojan Košak as member of the Supervisory Board and employee representative

and elected Bojan Cizej as the new member of the Supervisory Board and employee representative and ap-

pointed him Deputy Chairman of the Supervisory Board of the Company on the same day. The Worker’s

Council of Pivovarna Laško, d. d. elected Dragica Čepin as member of the Supervisory Board and employee

representative on 3 August 2011, whose mandate commenced on 4 August 2011.

The General Meeting of the Company elected the Capital representatives Borut Jamnik and Borut Bratina

as members of the Supervisory Board on 24 June 2011, whose mandates will run from the day of appoint-

ment until 31 August 2013.

As of 8 April 2011, the Supervisory Board operates under the following composition: Dr. Vladimir

Malenković – Chairman, Bojan Cizej – Deputy Chairman and Dragica Čepin, Dr. Borut Bratina, Dr. Peter

Groznik, DSc and Borut Jamnik – members.

ChANGES TO ThE COMPOSITION OF ThE AUDIT COMMITTEE OF ThE SUPERVISORy BOARD

The Supervisory Board of the Company appointed Bojan Cizej as member of the Audit Committee of the

Supervisory Board of the Company and Bojan Košak as additional member of the Audit Committee at is

session on 13 April 2011.

The Supervisory Board of the Company recalled Marko Koleša as member of the Audit Committee of the

Supervisory Board of the Company and appointed Bojan Košak as additional member of the Audit Commit-

tee at is correspondence session on 20 October 2011. As of 21 October 2011, the Supervisory Board operates

under the following composition: Dr. Peter Groznik,, DSc – Chairman and Bojan Cizej and Igor Teslić –

members.

ESTABLIShMENT OF ThE hUMAN RESOURCES COMMITTEE OF ThE SUPERVISORy BOARD

The Supervisory Board appointed a three-member Human Resources Committee on 21 October 2011

which operates in the following composition: Borut Jamnik – Chairman, Borut Bratina, DSc – member,

Dragica Čepin, MSc – member.

GENERAL MEETING OF ShAREhOLDERS

Two General Meetings of Shareholders of Pivovarna Laško, d. d. were held in 2011, on 24 June 2011 and 30

July 2011. The resolutions adopted at both sessions and other information is available on the website of the

Ljubljana Stock Exchange - SEOnet and the Company’s website.

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TAKEOVER BID OF KS NALOžBE, D. D.

Pivovarna Laško, d. d. received notification of a takeover from the KS Naložbe, d. d., Dunajska 9, 1000 Lju-

bljana on 8 July 2011 Pivovarna Laško, d. d. received the takeover bid and brochure for the purchase of shares

of Pivovarna Laško, d. d. on 4 August 2011. The takeover bid was valid from 4 August to 30 September 2011.

On 6 October 2011 Pivovarna Laško, d. d. received the decision of the Securities Market Agency (SMA)

regarding the result of the takeover bid by the acquiring company KS Naložbe, d. d. In its decision, SMA

established that the takeover bid had been successful. Two holders of possessed 44 shares of PILR-denoted

shares, representing 0.0005% of all shares of the target company, approved the takeover bid.

PERMISSION GRANTED FOR ThE REPAyMENT OF LOANS TO NKBM FROM PLEDGED ShARES OF ThE COM-

PANy RADENSKA, D. D., RADENCI

Pivovarna Laško, d. Pivovarna Laško, d. d. received a judgment on 22 November 2011 from the District

Court in Maribor, whereby the court in the dispute between the plaintiff Nova kreditna bankathe Maribor,

d. d. (NKBM) against the defendant Pivovarna Laško, d. d. due to the omission of payment of receivables in

the amount of EUR 7,349,552.52 with appertaining value from pledged securities decided to grant authroisa-

tion for the execution of the pledged 345,304 shares of Radenska d. d., Radenci labeled RARG to repay the

claim in the amount of EUR 7,349,552.25 with the legal default interest.. Defendant Pivovarna Laško, d. d., is

obliged to allow the sale of those securities and payment of claims from the proceeds achieved by their sale.

The judgment is final. On the basis of the aforementioned judgment, at the proposal of NKBM the District

Court in Celje through a writ of execution ordered the enforcement of the pledged shares in the company

Radenska d. d., Radenci. The writ of execution is final.

Pivovarna Laško, d. d. had pledged the aforementioned securities of the company Radenska, d. d., Radenci

to the company NKBM on the basis of a contract on the pledging of dematerialized securities, concluded on

5 June 2009 between the company NKBM as the creditor and the company Center naložbe, d. d., Maribor

as the debtor and Pivovarna Laško, d. d., as the lienee to secure a loan that the company Center naložbe, d. d.

had obtained from NKBM. The previous director of Pivovarna Laško, d. d. Boško Šrot had signed the denoted

contract on the pledging of dematerialized securities in the name of the Company.

CONTRACT ON ThE TEMPORARy SALE OF ShARES

Pivovarna Laško, d. d. concluded a contract with Deželna banka Slovenije, d. d. on 30 November 2011 on

the temporary sale of securities and pursuant to the contract, temporarily sold the bank 600,000 shares of

the company Radenska, d. d., Radenci. As a result of the sale, the ownership stake of Pivovarna Laško, d. d.

in Radenska, d. d., Radenci temporarily decreased from 93.81 to 81.96%. This contract regards the redemp-

tion right, with voting rights arising from the heading of the ownership of the temporary shares of Pivovarna

Laško, d. d., which thus has 93.81% of the voting rights.

TAKEOVER INTENTION OF ThE COMPANy MERCATOR, D. D.

Pivovarna Laško, d. d. received notification of a takeover intention on 22 December 2011 by fax and on 23

December 2011 by mail from the company Mercator, d. d. (hereinafter: acquirer) in which it informed the

Management Board of Pivovarna Laško, d. d., in accordance with Article 24 of the Takeovers Act (ZPre-1),

of its intention to submit a takeover bid for all shares of the issuer Pivovarna Laško, d. d., with the ticker

symbols PILR and PILH. The acquirer did not submit a takeover bid within the statutory 30 days following

the publication of the takeover intention for it had abandoned the takeover intention on 19 January 2012.

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1.8.2 SIGNIFICANT BUSINESS EVENTS IN ThE LAŠKO GROUP

FILING OF AN ACTION FOR DAMAGES By ThE COMPANIES OF ThE LAŠKO GROUP

In accordance with the decision of the 16th regular General Meeting of Shareholders on 16 July 2010, the

Management Board of Pivovarna Laško, d. d. filed an action for damages with the District Court in Celje

against the company Atka-Prima, d. o. o. as the former controlling company and former director of Pivo-

varna Laško, d. d. Boško Šrot. In the action for damages, Pivovarna Laško, d. d. is demanding reparation

in the amount of EUR 13,336,488.76 with pp due to damages suffered by the Company due to transactions

carried out in 2008 and 2009.

The subsidiaries Pivovarna Union, d. d., Radenska, d. d., Radenci, Fructal, d. d. and Delo, d. d. also filed

actions for damages on 15 February 2011 with the competent courts against the company Atka-Prima, d. o. o.

and Boško Šrot. In the actions for damages, the subsidiaries are demanding reparation in the amount of

EUR 116,689,233.34 with pp due to damages suffered by the subsidiaries due to transactions carried out in

2008 and 2009.

A possibility exists that the companies will file additional lawsuits in the future for damages suffered for

the entire scope of damage suffered is not yet known, also due to non-concluded judicial procedures.

PROCEDURE FOR ThE SALE OF ShARES OF ThE COMPANy MERCATOR, D. D.

The sale of the Group’s entire ownership stake, namely 23.34% in the company Mercator, d. d., whose

owners are Pivovarna Laško, d. d., (8.43%), Pivovarna Union, d. d., (12.33%) and Radenska, d. d., Radenci

(2.57%) (hereinafter: Laško Group) represents one of the measures from the Strategy of the Laško Group

until 2014 (hereinafter: Strategy) to resolve the difficult financial position of the companies in the Laško

Group. The strategy adopted by the Supervisory Board of Pivovarna Laško, d. d. in September 2010 which

envisages the sale of all shares of Mercator, d. d. is in accordance with the common position of the creditor

banks on the strategyies of the companies of the Laško Group, as stated in the letter from the creditor banks

of 18 August 2010.

Based on the adopted Strategy, the Laško Group published a tender in February 2011 for the submission

of binding bids for the purchase of 878,840 shares or a 23.34% stake in Mercator d. d., Ljubljana, owned by

the companies of the Laško Group. Based on the tender, three binding offers were obtained with the most

favourable bid submitted by the company Agrokor, d. d. from Zagreb, which offered to purchase the 23.34%

stake in Mercator, owned by the Group companies for the price of EUR 206 per share of Mercator, d. d. Dur-

ing the sales process, a selling price of EUR 221 per share was negotiated.

The Consumer Protection Office (CPO) published a decision on 26 April 2011 prohibiting the Central

Securities Clearing Corporation (KDD) from executing an order for the transfer of those registered shares

of the company Mercator, d. d., with the ticker symbol MELR, whose owners were Pivovarna Laško, d. d.,

Pivovarna Union, d. d. and Radenska, d. d., Radenci without the prior consent of the CPO.

The companies of the Laško Group lodged an appeal against the decision of the CPO of 26 April 2011 with

the Supreme Court of the Republic of Slovenia that same day. The Group also filed a proposal for a tempo-

rary order for the postponement of its execution. The Supreme Court adopted a decision on 29 April 2011

that the request for a temporary order was to be rejected.

Due to the CPO decision of 26 April 2011 and decision of the Supreme Court of 29 April 2011 due to which

the companies of the Laško Group could not dispose of the shares of the company Mercator, d. d., the offer

of the company Agrokor, d. d. for the purchase of a 23.34% stake in the company Mercator, d. d. owned by

the companies in the Laško Group could not be accepted.

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The companies in the Laško Group concluded an agreement on the joint sale of shares of the company

Mercator, d. d. with the companies Nova Ljubljanska banka, d. d., Abanka Vipa, d. d., NFD Holding, d. d.,

NFD, d. o. o., Gorenjska banka, d. d., Nova kreditna banka Maribor, d. d., Hypo Alpe-Adria-bank, d. d. and

Banka Celje, d. d. (hereinafter: sales consortium) on 15 June 2011. Banka Koper, d. d. also entered the agree-

ment in July 2011. The total stake of the sales consortium in Mercator, d. d. now amounted to EUR 52.10%. The

company ING bank N. V. from London was selected as the financial consultant for the sale of the investment.

In October 2011, the financial consultant at ING bank presented the sales consortium with the unbinding

offers received, which totalled four, one of them from a strategic bidder.

Since November 2011, were held in exclusive negotiations with the sole strategic supplier, the company

Agrokor, d. d. from Zagreb, on the basis of the exclusivity agreement, concluded between the consortium of

vendors and the company Agrokor, d. d.

In December 2011, all sellers, except for NLB d. d. and the Laško Group had confirmed the sales agreement

for shares of Poslovni sistem Mercator, d. d.

The Supervisory Board of Pivovarna Laško, d. d. gave its consent for the sale of 317,498 shares or an 8.43%

stake in the company Poslovni sistem Mercator, d. d. owned by Pivovarna Laško, d. d. and the company

Agrokor, d. d. for EUR 221 per share at its session on 27 January 2012, the price of which may be changed

as envisaged by the defined mechanism in the sales agreement. Consent for the sale of 464,390 shares or

a 12.33% ownership stake in the company Mercator, d. d., owned by Pivovarna Union, d. d., through the

company Agrokor, d. d., was given by the General Meeting of Shareholders of Pivovarna Union, d. d. on 31

January 2012. The acquisition of the aforementioned consent for the sales of shares in Mercator, d. d., owned

by Agrokor, d. d. was mandatory pursuant to Article 12a of the Statute of the company and in the case of

Pivovarna Union, d. d., on the basis of Article 330 of the Companies Act (ZGD-1). The consent of the General

Meeting and Supervisory Board of Radenska, d. d., Radenci for the sale of 96,952 shares or a 2.57% owner-

ship stake in Mercator, d. d., owned by Radenska, d. d. was not required.

On 7 February 2012 the financial adviser in the sale ING Bank notified the sales consortium that Agrokor

d. d. had withdrawn from the sales process.

DECISION OF ThE SECURITIES MARKET AGENCy (SMA)

With the decision of the Securities Market Agency (ATVP) of 9 December 2008 in connection to the

judgment of the District Court in Ljubljana of 25 October 2010 and the judgment of the Higher Court in

Ljubljana on 19 may 2011, the legal entities Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d.,

Radenci were found guilty of committing a misdemeanour in accordance with the first indent of the first

paragraph of Article 71 in connection to the fourth paragraph of Article 71 of the Takeovers Act. Pursuant

to the fourth paragraph of Article 71 of the Takeovers Act, Pivovarna Laško, d. d. and Pivovarna Union, d. d.

were fined EUR 170,000 and Radenska, d. d. EUR 160,000. All legal recourse against the aforementioned

decisions were depleted following the rejection of the appeal by the Higher Court in Ljubljana on 19 May

2011. Based on the lodged proposal of the companies Pivovarna Laško, d. d. and Pivovarna Union, d. d., ATVP

allowed the fine to be paid through 12 monthly instalments.

ChANGES TO ThE COMPOSITION OF ThE MANAGEMENT BOARD OF PIVOVARNA UNION, D. D.

The Supervisory Board of Pivovarna Union, d. d. at its regular session on 24 August 2011 and upon the

recommendation of the Chairman of the Management Board of Pivovarna Union, d. d. Dušan Zorko, MSc

appointed Mirjam Hočevar, responsible for finance and Gorazd Lukman, responsible for sales and com-

merce as members of the Management Board of Pivovarna Union, d. d. for mandates from 1 September 2011

to 31 Januray 2016.

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APPOINTMENT OF ThE NEw DIRECTOR OF RADENSKA, D. D., RADENCI

The Supervisory Board of Radenska, d. d., Radenci at its regular session of 11 August 2011 adopted a deci-

sion that the mandate of the incumbent director of the company Zvonka Murglja at his request that his man-

date cease prematurely and without fault would cease as of 31 August 2011, and appointed Milan Hojnik as

the new director of the company at the same session for a mandate of 5 years, commencing on 9 January 2011.

ChANGES IN ThE SUPERVISORy BOARDS OF SUBSIDIARIES

Members of the supervisory board of the subsidiary Pivovarna Union, d. d. Anton Turnšek, Janko Remic

and Franc Rojnik submitted their resignation statements as members of the Supervisory Board of Pivovarna

Union, d. d. at the supervisory board session on 22 April 2011 and on the day of appointment of the new

members of the Supervisory Board, at the General Meeting of Shareholders of Pivovarna Union, d. d. on 22

June 2011, the General Meeting appointed as new members of the supervisory board of the company the fol-

lowing persons: Vladimir Malenković, Dsc, Peter Groznik, DSc and Bojan Cizej, all for mandates of 4 years.

Member of the supervisory board of the subsidiary Pivovarna Union, d. d. Marjet Zevnik submitted her

resignation statement on 5 August 2011 that she was resigning from the position of member of the Supervi-

sory Board and employee representative that same day. The Worker’s Council elected Primož Mlekuš as new

member of the Supervisory Board and employee representative for a mandate commencing on 14 October

2011 until 2 January 2014.

Member of the supervisory board of the subsidiary Radenska, d. d., Radenci Marjeta Zevnik submitted

her resignation statement that she was resigning from the position of member of the supervisory board of

Radenska, d. d., Radenci as of the date of appointment of a new member to the supervisory board of the de-

noted company. The General Meeting of Radenska, d. d., Radenci appointed Pavel Teršek as new member of

the supervisory board of the company on 21 June 2011 with a four-year mandate commencing on 22 June 2011.

CONCLUSION OF ThE SALE OF ThE STAKE IN ThE COMPANy FRUCTAL, D. D.

The subsidiaries Pivovarna Union, d. d. and Nectar, d. o. o. from the Republic of Serbia successfully

concluded the procedure of sale of an ownership stake in the company Fructal, d. d. owned by the company

Pivovarna Union, d. d. on 16 December 2011 based on the sales agreement of 25 July 2011. Nectar, d. o. o.

paid Pivovarna Union, d. d. EUR 35.3 million for the 93.73% ownership stake in the company Fructal, d. d.,

thereby becoming the 93.73% owner of Fructal d. d. The payment received for Fructal, d. d. will significantly

contribute to the de-leveraging of the Laško Group in accordance with the financial restructure agreed with

bank creditors and owners.

ACTION FOR DAMAGES FILED By DELO, D. D., LjUBLjANA

On 9 November 2011 the company Delo, d. d., Ljubljana as the plaintiff filed an action for damages against

the defendants Peter Puhan and Andrijan Starina Kose for the payment of EUR 11,315,191.50. The first hear-

ing and main hearing in connection to the action brought about by Pivovarna Laško, d. d. against Atko Prima,

d. o. o. and Boško Šrot is scheduled for 2 April 2012.

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2.

BUSINESS REPORT

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CORPORATE GOVERNANCE OPERATES ACCORDING TO A TwO-TIER SySTEM whEREBy ThE COM-

PANy IS MANAGED By ThE MANAGEMENT BOARD AND SUPERVISORy BOARD.

The principles of management of Pivovarna Laško, d. d. arise from valid legal norms in the Republic of

Slovenia, internal acts of the Company and established good work practices. Management is carried out ac-

cording to a two-tier system whereby the Company is managed by the Management Board and its operations

monitored by the Supervisory Board.

The bodies of the Company as set out in the Statute of Pivovarna Laško, d. d. are the General Meeting of

Shareholders, Supervisory Board and Management Board of the Company.

2.1.1 GENERAL MEETING OF ShAREhOLDERS

Pursuant to the provisions of the Companies Act, the General Meeting of Shareholders is the supreme

body of the Company. The will of the shareholders who adopt fundamental and statutory decisions are im-

plemented on the Company. One share represents one vote at the General Meeting. Pivovarna Laško, d. d.

has no shares with limited voting rights. Own shares do not enable voting rights at the General Meeting.

The General Meeting of Shareholders convenes the Management Board of its own initiative, at the request

of the Supervisory Board or at the written request of the shareholders of the Company who possess at least a

5% equity stake in the Company. The Supervisory Board may also convene a General Meeting. Shareholders

may realise the rights from shares directly at the General Meeting or through their representatives.

The General Meeting makes decisions according to the majority of votes cast unless otherwise provided

by law or the Statute of the Company. The General Meeting decides on the following matters which require

a three-quarter majority vote:

• amendments to the Statute,

• reductions in share capital (including conditional increases),

• approved increases to share capital,

2.1

COrpOraTE gOvErNaNCE

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• status changes and termination of the Company,

• exclusion of shareholders’ preferential rights in the issue of new shares,

• election and early discharge of members of the Supervisory Board,

• other matters, if so prescribed by law or the Statute.

The General Meeting makes decisions regarding the granting of discharges to the Management and Su-

pervisory Boards of the Company, and at the same time, makes decisions regarding the use of distributable

profit. By granting discharges the General Meeting confirms and approves the work of the Management and

Supervisory Boards for the business year. Discussions regarding the granting of discharges are carried out

in combination with discussions on the use of distributable profit. If the General Meeting does not grant

discharges, this is not deemed that the Management Board was given a vote of no confidence.

Whenever the General Meeting of Shareholders decides that the distributable profit is to be used for

dividends, the dividends belong to the shareholders who as owners are entered in the central register of

securities at the Central Securities Clearing Corporation on the cut-off date which shall be decided through

a decision on the use of distributable profit at each time.

The shareholder is obliged, when requested, to inform the Company on the eventual form of the dividend

transfer (data regarding the transaction account) and company registration number or PIN and tax number.

If the shareholder fails to do so, the dividend will not be paid out in accordance with the provisions of the

Statute.

ATTENDANCE AT GENERAL MEETINGS

The right to participate and vote at the General Meeting of Shareholders is held by those shareholders

who have been entered into the share register of dematerialized shares at the Central Securities Clearing

Corporation by the end of the fourth day prior to the convocation of a General Meeting (cut-off date) and who

personally, or through a representative or nominee, gave notification of their attendance to the Management

Board of the Company by the end of the fourth day prior to the convocation of the General Meeting.

Members of the Management Board and Supervisory Board may attend the General Meeting even if they

are not shareholders Media representatives may also attend the General Meeting if they give notification of

their attendance to the Management Board of the Company in writing within three days at the latest prior to

the convocation of the General Meeting.

CONVOCATION AND IMPLEMENTATION OF ThE GENERAL MEETING OF ShAREhOLDERS

A General Meeting of Shareholders is convened when it is for the benefit of the Company or when it is nec-

essary in accordance with law and the Statute of the Company. Two General Meetings of Shareholders were

held in 2011. 17. The 17th regular General Meeting of Shareholders of Pivovarna Laško, d. d. was convened on

21 May 2011 and held on 24 June 2011. The 18th extraordinary General Meeting of Shareholders was convened

on 15 July 2011 and held on 30 July 2011.

DECISIONS OF ThE 17Th GENERAL MEETING OF ShAREhOLDERS

The following important decisions were adopted at the 17th regular General Meeting regarding the de-

noted items in the agenda:

RESOLUTIONS TO ITEM 2:

2.1. The General Meeting is acquainted with the Report of the Supervisory Board of the Company

regarding the examination and adoption of the Audited Annual Report for 2010.

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2.2. The General Meeting is informed that as at 31 December 2010 net operating loss for 2010 amount-

ed to EUR 6,292,260 and that the Management Board with the Supervisory Board’s consent

covered this loss through other profit reserves in the amount of EUR 542,466 and capital reserves

in the amount of EUR 5,749,794.

2.3. The General Meeting is acquainted with the remuneration of the Management Board and mem-

bers of the Supervisory Board of the Company for tasks performed for the Company and its sub-

sidiaries for the 2010 business year.

2.4. The General Meeting is acquainted that in accordance with Article 327 of the Companies Act and

based on the findings of the Report on the Findings of a Special Audit of the Management of

Individual Transactions of Pivovarna Laško, d. d., dated 27 February 2010, an action for damages

was filed on 12 January 2011 within the legally prescribed deadline.

2.5.1. The General Meeting grants discharges to the members of the Supervisory Board of the Company

for the 2010 business year.

2.5.2. The General Meeting grants discharges to the members of the Supervisory Board of the Company

for the 2010 business year.

RESOLUTIONS TO ITEM 3:

The Statute of the Company is amended so that Article 12 of the Statute shall read:

»Article 12«

The Management Board runs the company independently and on its own responsibility.

In accordance with the Statute of the Company, the Company Management Board may have a maximum

of five members, one of whom shall be appointed the Chairman of the Management Board. The Chairman

and members of the Management Board are appointed and recalled by the Supervisory Board, whereby

members of the Management Board are appointed at the Chairman of the Management Board’s recom-

mendation.

The mandate of the Chairman and members of the Management Board is 5 (five) years.

The Management Board shall adopt decisions according to the majority of votes cast by the members of

the Management Board and in the case of a two-member Management Board, by consensus. The Chairman

and members of the Management Board shall each have one vote.

The Chairman of the Management Board and one of the Management Board members together represent

and act on behalf of the Company.

The Management Board shall with the consent of the Supervisory Board adopt the Rules of Procedure of the

Management Board with which the manner of work and competences and responsibilities of individual mem-

bers of the Management Board shall be regulated in connection to managing the business of the Company.”

RESOLUTION TO ITEM 7:

Borut Jamnik and Borut Bratina, DSc are elected as new members of the Supervisory Board – capital

representatives, whose mandates shall commence on the day of their election and expire on 31 August 2013.


The General Meeting appoints the auditing firm Deloitte Revizija d.o.o., Ljubljana as auditor of the Com-

pany for the audit of the financial statements for 2011.

The top five shareholders who had voting rights at the General Meeting were (by number of votes and

percentage of all shares in share capital):

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• Hypo Alpe-Adria-Bank, d. d. – 618,202 or 7.07%,

• Kapitalska družba, d. d. – 617,488 or 7.06%,

• Probanka, d. d. – 614,911 or 7.03%,

• GB, d. d., Kranj – 542,448 or 6.20%,

• Skagen Kon-Tiki Verdipapirfond – 499,286 or 5.71%.

The top five shareholders at the General Meeting had a total of 2,892,335 votes or a 33.06% share of all

shares of the Company or a 45.18% share of voting rights and 57.77% share of capital present.

NLB, d. d. as the largest shareholder of the Company at the General Meeting had no voting rights.

The proposed resolution (ITEM 4) in connection to increasing share capital through a capital increase was

not adopted for less than 75% of the votes were cast in favour of the resolution.

ITEMS 5 AND 6 were removed from the agenda of the General Meeting for the following reason:

Additional unresolved questions arose from creditors following the convocation of the general meeting

which need to be resolved prior to deciding on the establishment of a contractual group. In the mutual

interest of the Company, the shareholders and important creditors mutually agreed on the design of a con-

tractual group which will be a subject of decision-making at an extraordinary general meeting which will be

convened by the end of this year.

CONVOCATION AND IMPLEMENTATION OF ThE ExTRAORDINARy GENERAL MEETING OF ShAREhOLDERS

18. The extraordinary 18th General Meeting of Shareholders was convened on 15 July 2011 and held on 30 July 2011.

DECISIONS OF ThE ExTRAORDINARy GENERAL MEETING

The General Meeting was acquainted with and adopted the following important decisions at the18th ex-

traordinary General Meeting of Shareholders of Pivovarna Laško, d. d.:

RESOLUTION TO ITEM 2 (IN OPPOSITION TO ThE PROPOSAL OF ThE ShAREhOLDER MIRjAM hOčEVAR):

The General Meeting gives its consent for the item of business for which the Management Board of the

Company requires the consent of the General Meeting in accordance with Article 47 of the Takeovers Act

(ZPre-1), namely:

a.) The General Meeting of Shareholders of the company Pivovarna Laško, d. d. gives its consent that the

companies of the Laško Group (Pivovarna Laško, d. d. and its subsidiaries Pivovarna Union, d. d. and Raden-

ska, d. d.), may continue the sale of the shares of the company Poslovni sistem Mercator, d. d. in accordance

with the Agreement on the Joint Sale of Shares of the company Poslovni sistem Mercator, d. d., no. 2011/0601

concluded on 15 June 2011 and that they may conclude a mandate contract with a consultant for the sale, i.e.

ING Bank, N. V., London. This consent does not grant consent for the final execution or sale of shares of the

company Poslovni sistem Mercator, d. d.

b.) The General Meeting of Shareholders of the company Pivovarna Laško, d. d. agree that the subsidiary

company Pivovarna Union, d. d. sell the companies Nectar, d. o. o., Bačka Palanka, Republic of Slovenia, repre-

senting 2,348,470 registered nominal shares with the ticker symbol FRAG of the issuing company Fructal, d. d.,

which represents a 93.7% stake in the share capital of Fructal, d. d. for a price of EUR 35.3 million.

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The top five shareholders who had voting rights at the General Meeting were (by number of votes and

percentage of all shares in share capital):

• Hypo Alpe Adria Bank AG – 618,202 or 7.07%,

• Kapitalska družba, d. d. – 617,488 or 7.06%,

• Probanka, d. d. – 614,911 or 7.03%,

• GB, d. d., Kranj – 542,448 or 6.20%,

• NFD 1, delniški investicijski sklad, d. d. – 446,465 or 5.10%.

The top five shareholders at the General Meeting had a total of 2,389,514 votes or a 32.46% share of all

shares of the Company or a 44.36% share of voting rights and 67.84% share of capital present.

NLB, d. d. as the largest shareholder of the Company at the General Meeting had no voting rights.

CONVOCATION AND IMPLEMENTATION OF ThE ExTRAORDINARy GENERAL MEETING OF ShAREhOLDERS

FOLLOwING ThE CONCLUSION OF ThE BUSINESS yEAR

The extraordinary 19th General Meeting of Shareholders was convened on 29 December 2011 and held on

30 January 2012.

DECISIONS OF ThE ExTRAORDINARy GENERAL MEETING


traordinary General Meeting of Shareholders of Pivovarna Laško, d. d.:

ITEM 2 OF ThE AGENDA: INCREASE OF ShARE CAPITAL ThROUGh A CAPITAL INVESTMENT (RECAPITALISATION):

The General Meeting decided on the proposal of the Management and Supervisory Board and on the contra-

ry proposal of the shareholder KS Naložbe, d. d., both of which envisage an increase in share capital by a max-

imum of EUR 36,503,304.96 by issuing up to 8,747,652 new ordinary, freely transferable registered shares for

cash contributions, with the selling price (issue amount) per share amounting to EUR 10.00. The proposed

resolutions were not adopted. Adoption of decisions requires a three-fourths majority or 75% of the votes cast.

ITEM 3 OF ThE AGENDA: APPROVAL OF ThE GENERAL MEETING REGARDING ThE MANAGEMENT CONTRACT

AND AMENDMENT OF ThE STATUTE (AUThORISED CAPITAL)


3.1. The General Meeting of the Company gives its consent to the Management Contract which was concluded on

27 December 2011 between Pivovarna Laško, d. d. as the parent company and Pivovarna Union, d. d. as the subsidiary.

The General Meeting also gives its approval for the Management Cotnract which was concluded on 27 De-

cember 2011 between Pivovarna Laško, d. d. as the parent company and Radenska, d. d., Radenci as the subsidiary.

The resolution was passed with 3,983,759 votes cast, or with 81.22% of the voting rights.

On the basis of management contracts, Pivovarna Laško, d. d. as the parent company also assumed the

obligation that upon the request of external minority shareholders of subsidiaries, it also acquire all of their

shares as compensation as represented by the shares of the parent company Pivovarna Laško, d. d., labelled

PILR. For this reason, the General Meeting with 3,965,175 or 79.28% votes cast also adopted the amendment

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to the Statute - Article 10a (Resolution 3.2.) which authorizes the Management Board to increase the share

capital by a maximum of 5 (five)% of the share capital of the Company through the issue of new ordinary

registered shares for a material contribution, i.e. for external shares of minority shareholders of subsidiaries

(authorized capital). The authorisation is granted to the Management Board for a period of one year from the

date of entry of the statutory changes in the court register.

ITEM 4 OF ThE AGENDA: AMENDMENT OF ThE STATUTE (AUThORIzED CAPITAL) – REqUIREMENT OF KAPI-

TALSKA DRUžBA, D. D. FROM 20 DECEMBER 2011

At the request of Kapitalska družba, d. d., dated 20.12.2011, the General Meeting decided on an amendment

of the Statute whereby the Management Board, within five years of the entry of the amendment to the Statue

in the court register would be authorized to increase the share capital of the company by a maximum of

50% of the share capital existing at the time of adoption of the amendment to this Statute, which represents

a maximum of EUR 18,251,652.48 through the issue of new for cash contributions. The resolution was not

adopted. Adoption of decisions requires a three-fourths majority or 75% of votes cast.

ITEM 5 OF ThE AGENDA: REPROGRAMMING OF FINANCIAL LIABILITIES


The General Meeting calls on the creditor banks to come to an agreement with Pivovarna Laško, d. d. other

companies in the Laško Group regarding a the complete long-term reprogramming of financial liabilities

under favourable market conditions by 30 March 2012. The reprogramming of debt should include a mora-

torium on the repayment of the principal that will mature until receipt of the proceeds from the sale of the

investment in Mercator, d. d., or until the recapitalization of the parent company Pivovarna Laško, d. d., but

not longer than 30 June 2013. Through the reprogramming of loans, all the companies in the Laško Group

will achieve a sustainable debt level (2-3 x EBITDA) within 10 years at the latest. The long-term dynamics of

the rescheduled repayment of obligations should be adjusted to the planned cash flows from the core activi-

ties of individual companies within the Group. This will enable the companies to reduce their high levels of

financial risk while allowing normal operations, development and long-term existence.

The resolution was passed with 4,192,427 or 93.60% of the votes cast.

ITEM 6 OF ThE AGENDA: ACqUAINTANCE wITh AND CONSENT OF ThE GENERAL MEETING TO ThE CON-

TRACT OF SALE OF ShARES OF POSLOVNI SISTEM MERCATOR, D. D.

Under this agenda item the General Meeting had to decide on proposed resolutions, however the share-

holders were only made acquainted with the Contract for the sale of shares of Poslovni sistem Mercator, d. d.

The basis for deciding on granting consent to the denoted contract which the General Meeting had to decide

on based on Article 47 of the Takeovers Act (ZPr-1) no longer existed following the withdrawal of Mercator, d. d.

from the takeover intention of 19 January 2012.

ITEM 7 OF ThE AGENDA: CONSENT TO PERFORM CONTROL FUNCTIONS IN SUBSIDIARIES


In accordance with Article 41 of the Companies Act (ZGD-1), the General Meeting gives its consent for the ap-

pointment of Supervisory Board members of Pivovarna Laško, d. d. into the supervisory boards of subsidiaries.

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ITEM 8 OF ThE AGENDA: AMENDMENTS TO ThE STATUTE OF ThE COMPANy


8.1. The Statute of the Company shall be amended so that a new Article 14a shall be added to the Statute

which shall read:

»Article 14. a«

The members of the Management Board may be appointed to the management boards and supervisory

boards of the Company’s subsidiaries which are or may be in competition with the activity of the Company. “

The Statute of the Company shall be amended so that a new Article 16a shall be added to the Statute which

shall read:

»Article 16. a«

The members of the Supervisory Board may be appointed as members to the supervisory boards of the

Company’s subsidiaries which are or may be in competition with the activity of the Company. “

8.2. Article 23 of the Statute of the Company shall be amended so that Article 23 of the Statute shall read:

»Article 23«

Supervisory Board members are entitled to the payment of a session fee for their work for participation

in sessions and to reimbursement of travel and other eligible costs incurred in connection with their work.

The amount of payment for performance of their function, attendance fees and reimbursement of travel

and other eligible costs referred to in the preceding paragraph shall be determined by the General Meeting.

Payment to external members of committees of the Supervisory Board shall be decided by the Supervisory Board.”

The Statute of the Company shall be amended so that a new third paragraph shall be added to Article 39

of the Statute which shall read:

“The amendment of Article 23 of the Statute, adopted by the General Meeting of the Company on 31 January

2012 shall enter into force on 1 January 2012.”


ITEM 9 OF ThE AGENDA: DETERMINATION OF ThE AMOUNT OF REMUNERATION OF ThE SUPERVISORy BOARD


The General Meeting adopted a decision based on the amendment to the Statute - a new Article 23 (see

resolution 8.2 under the previous agenda item) with 3,958,736 or 80.72% of the votes cast whereby remu-

neration for the members of the Supervisory Board for performance of their function, attendance fees and

reimbursement of travel and other eligible costs referred to in the preceding paragraph shall be determined

by the General Meeting.

PLANNED ChALLENGING ACTIONS

The shareholder KS Naložbe, d. d. has announced a challenging action regarding the adopted resolutions

3.1. and 3.2.

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2.1.2 SUPERVISORy BOARD

The fundamental function of the Supervisory Board is to supervise the management of the Company’s

business operations. The Supervisory Board appoints and discharges the members and Chairman of the

Management Board.

The composition of the Supervisory Board is defined by the Statute of the Company. The Supervisory

Board of Pivovarna Laško, d. d. has six members, each of whom has the same rights and responsibilities

unless otherwise stipulated by the Statute. Four members of the Supervisory Board elected by the General

Meeting of Shareholders are capital representatives, while the other two members of the Supervisory Board

are employee representatives and are elected by the Worker’s Council.

The Supervisory Board is appointed by the General Meeting of Shareholders through a simple majority

vote of the shareholders in attendance, except for the members of the Supervisory Board elected by the

Worker’s Council. The members of the Supervisory Board are elected for a period of four years and may

be re-elected after the expiry of their mandates. The Supervisory Board appoints the Chairman and Deputy

Chairman of the Supervisory Board from amongst their members.

The Chairman convenes and chairs the sessions of the Supervisory Board and is authorised to declare its

will and announce decisions adopted by the Supervisory Board. The Chairman of the Supervisory Board rep-

resents the Company in disputes with the members of the Management Board and the Supervisory Board

represents the Company in disputes against other bodies of the Company and third parties, if not otherwise

agreed for each particular case. The Chairman of the Supervisory Board is always the representative of the

shareholders. Sessions of the Supervisory Board are convened by the Chairman on his own initiative, on

the initiative of any member of the Supervisory Board, or on the initiative of the Management Board. The

Supervisory Board takes decisions at the sessions.

The Supervisory Board must within one month from the submission of the annual report review the

annual report and proposal for use of the distributable profit and draft a written report for the General Meet-

ing of Shareholders and deliver it to the Management Board. If the Supervisory Board confirms the annual

report, the annual report is adopted.

COMPOSITION OF ThE SUPERVISORy BOARD COMPOSITION OF ThE SUPERVISORy BOARD

AS AT 31 DECEMBER 2010 AS AT 31 DECEMBER 2011

Capital representatives: Capital representatives:

Marjan Mačkošek, Chairman Vladimir Malenković, DSc, Chairman

Peter Groznik, DSc Borut Bratina, DSc

Vladimir Malenković, DSc Borut Jamnik, DSc

Peter Groznik, DSc

Employee representatives: Employee representatives:

Andrej Kebe, Deputy Chairman Bojan Cizej, Deputy Chairman,

Bojan Košak Dragica Čepin, MSc

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1. VLADIMIR MALENKOVIć, DSC

Vladamir Malenković has been a member of the Supervisory Board of Pivovarna Laško, d. d. since 31 Au-

gust 2009 and Chairman of the Supervisory Board of Pivovarna Laško, d. d. since 29 April 2011.

Born: in 1966.

Education: DSc in Strategic Management from the Faculty of

Economics in Ljubljana in 2005

He is employed as a member of the management board of

Premogovnik Velenje, d. d.

2. BORUT BRATINA, DSC

Borut Bratina has been a member of the Supervisory Board of Pivovarna Laško, d. d. since June 2011.

Born: in 1957.

Education: DSc in Legal Sciences - Faculty of Law, University of

Maribor, 1997.

He iseEmployed at the Faculty of Economics and Business,

University of Maribor as Associate Professor of Business Law

and the Chair of the Business and Corporate law.

3. BORUT jAMNIK

Borut Jamnik has been a member of the Supervisory Board of Pivovarna Laško, d. d. since 24 June 2011.

Born: in 1970.

Education: BSc in Mathematics Engineering.

He is employed as the chairman of the management board of

the company Modra zavarovalnica, d. d.

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4. PETER GROzNIK, DSC

Peter Groznik has been a member of the Supervisory Board of Pivovarna Laško, d. d. since 16 July 2010.

He was born in 1973.

Education: DSc in Finance, Kelley School of Business, Indiana

University Bloomington (United States), 2003.

He is employed at the University of Ljubljana, Faculty of Eco-

nomics.

5. BOjAN CIzEj

Bojan Cizej has been a member of the Supervisory Board of Pivovarna Laško, d. d. since 6 April 2011.

Born: in 1963.

Education: BSc in Food Technolgy, Biotechnical Faculty, Uni-

versity of Ljubljana, 1993.

He is employed at Pivovarna Laško, d. d. as the Director of the

Production-Technical Division.

6. DRAGICA čEPIN, MSC

Dragica Čepin has been a member of the Supervisory Board of Pivovarna Laško, d. d. since August 2011.

Born: in 1960.

Education: MSc in Economics, Economics Business Faculty,

University of Maribor, 2001.

She has been employed at Pivovarna Laško, d. d. since 1981.

ChANGES TO ThE SUPERVISORy BOARD OF PIVOVARNA LAŠKO, D. D.

The changes implemented in 2011 are described on page 27 of this Annual Report.

AUDIT COMMITTEE OF ThE SUPERVISORy BOARD OF PIVOVARNA LAŠKO, D. D.

The tasks of the Audit Committee are defined in Article 280 of the Companies Act, with key tasks com-

prising:

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• monitoring of the financial reporting process and statutory audits of the annual and consolidated finan-

cial statements,

• review and monitoring of the independence of the auditor for the Company’s annual report,

• submitting proposals to the Supervisory Board for the appointment of a candidate as auditor of the

annual report,

• supervision over the integrity of financial information provided by the Company,

• assessment of the drawn-up annual report including the drafting of proposals for the Supervisory

Board.

COMPOSITION OF ThE AUDIT COMMITTEE COMPOSITION OF ThE AUDIT COMMITTEE


Peter Groznik, DSc – Chairman Peter Groznik, DSc – Chairman

Bojan Košak Bojan Cizej

Marko Koleša Igor Teslić

ChANGES TO ThE COMPOSITION OF ThE AUDIT COMMITTEE OF ThE SUPERVISORy BOARD


ESTABLIShMENT OF ThE hUMAN RESOURCES COMMITTEE OF ThE SUPERVISORy BOARD OF PIVOVARNA

LAŠKO, D. D.

The Corporate Governance Code for Joint-Stock Companies (hereinafter: Code) in point 13.1 recommends

that the Supervisory Board in addition to the audit committee also form a human resources committee.

The tasks of the human resources committee are specified in detail in Annex B of the Code. The Human

Resources Committee is particularly responsible for:

• providing assistance to the Supervisory Board and preparing proposals on criteria and candidates for

membership in the Management Board whereby it must evaluate the balance of skills, knowledge and

experience required and prepare a description of the qualifications required for each individual appoint-

ment,

• assessing the size, composition and functioning of the Management Board at regular intervals,

• providing support in evaluating the work of the Management Board and preparation of reasoned grounds

for the recall of individual board members if required,

• providing support in the design and implementation of the remuneration system for the Management

Board.

The Supervisory Board appointed a three-member Human Resources Committee on 21 October 2011

which operates under the following composition: Borut Jamnik – Chairman, Borut Bratina, DSc – member.

Dragica Čepin, MSc – member.

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COMPOSITION OF ThE hUMAN RESOURCES COMPOSITION OF ThE hUMAN RESOURCES

COMMITTEE COMMITTEE


/ Borut Jamnik – Chairman

/ Borut Bratina, DSc

/ Dragica Čepin, MSc

ChANGES IN ThE SUPERVISORy BOARDS OF SUBSIDIARIES


2.1.3 MANAGEMENT BOARD

The Management Board runs the Company and adopts business decisions independently and at its own

risk and represents the Company in disputes with third parties, adopts the Company’s development strategy,

ensures proper management and treatment of risks, acts with due care and diligence and protects the busi-

ness secrets of the Company.

The Management Board is composed of five members, namely: Dušan Zorko, MSc – Chairman of the

Management Board, Marjeta Zevnik – member of the Management Board, responsible for legal, human

resources and general affairs, Mirjam Hočevar – member of the Management Board, responsible for finance,

Gorazd Lukman – member of the Management Board, responsible for the areas of sales and commerce and

Matej Oset – member of the Management Board, responsible for the production and technical sector.

The Chairman and members of the Management Board are appointed and recalled by the Supervisory

Board, whereby members of the Management Board are appointed at the Chairman of the Management

Board’s recommendation. The mandate of the Chairman and members of the Management Board is five

years. The Chairman of the Management Board and one of the Management Board members together rep-

resent and act on behalf of the Company. The Management Board may appoint a procurator.

ChANGES TO ThE COMPOSITION OF ThE MANAGEMENT BOARD OF PIVOVARNA LAŠKO, D. D.

The changes implemented in 2011 are described on pages 26 and 27 of this Annual Report.

COMPOSITION OF ThE ThREE-MEMBER COMPOSITION OF ThE FIVE-MEMBER

MANAGEMENT BOARD MANAGEMENT BOARD


Dušan Zorko, MSc – Chairman Dušan Zorko, MSc – Chairman

Robert Šega Marjeta Zevnik

Gorazd Lukman Mirjam Hočevar

Gorazd Lukman

Matej Oset

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1. DUŠAN zORKO, MSC

Chairman of the Management Board of Pivovarna Laško, d. d.

Born: in 1956.

Education: MSc in Economics, VEKŠ, Maribor, 1988.

Dušan Zorko began his professional career at Kovinotehna and

later became director of TOZD Zunanja trgovina. Two years later,

he assumed the management of the company Kovintrade and in

2004, the management of Pivovarna Union. On 24 July 2009 he

became the Chairman of the Management Board of Pivovarna

Laško, d. d. He is also a member of the presidency of the Hand-

ball Association of Slovenia.

2. MARjETA zEVNIK

Marjeta Zevnik is a member of the Management Board, responsible for legal, human resources and

general affairs.

Born: in 1961.

Education: BSc LL, Faculty of Law, University of Ljubljana,

1986, judicial exam 1991.

She began working in 1986 as a legal clerk at Pivovarna

Union, d. d. and in 1992 became assistant director of sales. In

2001 she was promoted to Director of General Administration.

She became a member of the Management Board of Pivovarna

Laško, d. d. on 5 August 2011.

She is also the Chairman of the Supervisory Board of Delo, d. d.

and a member of the Supervisory Board of ČŽP Večer, d. d. She

performs the function of Secretary General of the Association

of Slovenian Breweries and is a member of the the administra

tion committee of the Olimpija Academic Sports Association.

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3. MIRjAM hOčEVAR

Mirjam Hočevar is a member of the Management Board of Pivovarna Laško, d. d., responsible for

finance.

Born: in 1962.

Education: BSc in Mathematics Engineering, Faculty of Math-

ematics and Physica, University of Ljubljana, 1990.

She began working at Pivovarna Union, d. d. in 1990 as a legal

clerk, and in 1991 became head of information systems devel-

opment and in 1994 was promoted to head of the computer

centre. In 2002 she became the assistant to the CFO and in

2004 Finance Director of Pivovarna Union, d. d. She became a

member of the Management Board of Pivovarna Laško, d. d. on

1 April 2011 and from 1 September 2011 onwards, is also a

member of the Management Board of Pivovarna Union, d. d,

responsible for finance.

She is also a member of the supervisory boards of Radenska, d. d.

Radenci and Fructal, d. d., (until 27 January 2012) and adminis-

tration committee of Birra Peja, Kosovo.

4. GORAzD LUKMAN

Gorazd Lukman is a member of the Management Board of Pivovarna Laško, d. d., responsible for sales

and commerce.

Born: in 1959.

Education: Commercialist, Business Commercial College Celje,

obtained in 2004.

His professional career began at Kovinotehna Celje. He relo-

cated to SCT Celje and became the head of the consignment

warehouse in the company Hmezad Export-Import, Žalec in

1989. He also tried his hand as a private caterer, until becoming

the Director of Commerce at Engrotuš in 1983. He has been a

member of the Management Board of Pivovarna Laško, d. d.

since 1 November 2009.

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5. MATEj OSET

Matej Oset is a member of the Management Board of Pivovarna Laško, d. d., responsible for the produc-

tion-technical sector and procurement.

Born: in 1968.

Education: BSc in Food Technology, Biotechnical Faculty, Uni-

versity of Ljubljana, 1992.

He began working at Pivovarna Laško, d. d. in 1993 as a tech-

nologist in production and in 1997 was promoted to the posi-

tion of head of beer production. In 2004 he became the head of

the Production and Technical Sector and has been a member of

the Management Board of Pivovarna Laško, d. d. since 5 August

2011. He is also the Chairman of the Assembly GIZ a Slovenian

breweries, board member of the Chamber of Agricultural and

Food Companies of Slovenia, a member of the supervisory

board of SLOPAK and representative of the Assembly of the

Association of Employers of Slovenia. He also cooperates with

the Biotechnical Faculty in Ljubljana as an associate lecturer.

ChANGES IN ThE COMPOSITIONS OF ThE MANAGEMENT BOARDS OF SUBSIDIARIES

The changes implemented in 2011 are described on pages 30 and 31 of this Annual Report.

2.1.4 MANAGEMENT IN ThE GROUP

The Laško Group consists of the parent company Pivovarna Laško, d. d., five subsidiaries in Slovenia and

three subsidiaries abroad. All the subsidiaries are majority owned by the parent company (more details on

pages 21 through 23 of this Report)

Members of the management and administrative bodies of the subsidiaries as at 31 December 2011:

RADENSKA, D. D., RADENCI

Management Board Zvonko Murgelj, until 31 August 2011

Milan Hojnik, since 1 September 2011

Supervis. Board Capital representatives: Employee representatives:

Dragica Čepin, MSc – Franko Lipičar –

Chairwoman Deputy Chairman

Mirjam Hočevar Dominik Omar

Marjeta Zevnik, until 21 June 2011

Pavel Teršek, since 22 June 2011

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RADENSKA MIRAL RADENCI, D. O. O. (SUBSIDIARy OF RADENSKA, D. D., RADENCI)

Management Board Zvonko Murgelj, until 31 August 2011

Milan Hojnik, since 1 September 2011

Supervisory Board The company does not have a Supervisory Board.

PIVOVARNA UNION, D. D., LjUBLjANA

Management Board Dušan Zorko, MSc – Chairman

Gorazd Lukman, since 1 September 2011

Mirjam Hočevar, since 1 September 2011


Anton Turnšek – Chairman, Marjeta Zevnik – Deputy

until 22 June 2011 Chairwoman,

until 5 August 2011

Peter Groznik, DSc – Chairman, Primož Mlekuš,

since 22 June 2011 since 14 October 2011

Franc Rojnik, until 22 June 2011 Terezija Peterka

Janko Remic, until 22 June 2011

Bojan Cizej, since 22 June 2011

Vladimir Malenković, DSc,

since 22 June 2011

jADRANSKA PIVOVARA - SPLIT, D. D.

Management Board Nenad Buljan, until 31 January 2011

Zlatko Bebić, since 1 February 2011


Gorazd Lukman – Chairman Goran Domljanović

Pavel Teršek – Deputy Chairman

VITAL MESTINjE, D. O. O.

Management Board Mira Močnik


DELO, D. D., LjUBLjANA

Management Board Jurij Giacomelli


Marjeta Zevnik – Chairwoman Branimir Piano

Robert Šega – Deputy Chairman Jure Flerin

Dragica Čepin, MSc

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IzBERI, D. O. O., LjUBLjANA (SUBSIDIARy OF DELO, D. D., LjUBLjANA)

Management Board Samo Čok


Jurij Giacomelli – Chairman The company does not have any

Dragica Čepin, MSc representatives.

Mojca Međedović,

until 5 April 2011

Irma Gubanec, since 6 April 2011

Following the amendment of the Articles of Association in October 2011, the company Izberi, d. o. o.,

Ljubljana no longer possesses a supervisory board for the Articles of Association the no longer is a body for

managing the company.

LAŠKO GRUPA, D. O. O., SARAjEVO

Management Board Šerif Krajišnik


FIRMA DEL, D. O. O., LAŠKO

Management Board Dušan Zorko, MSc


LAŠKO GRUPA, D. O. O., zAGREB

Management Board Boris Matijaščić


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ThE MANAGEMENT BOARD AND SUPERVISORy BOARD OF PIVOVARNA LAŠKO, D. D. hEREBy DECLA-

RE ThAT ThE COMPANy OBSERVES ThE CORPORATE GOVERNACE CODE FOR jOINT STOCK COM-

PANIES OF 08.12.09, whICh COMMENCED USE ON 1 jANUARy 2010, wITh SEVERAL ExCEPTIONS

ThAT DO NOT INTERVENE IN GOOD MANAGEMENT PRACTICES AND IN ThE CASES

2.2.1 COMPLIANCE OF COMPANy MANAGEMENT wITh ThE PROVISIONS OF ThE CORPORATE GOVERNMENT CODE FOR jOINT STOCK COMPANIES

The Management Board and Supervisory Board of Pivovarna Laško, d. d. hereby declare that the Company

observes the provisions of the Corporate Governace Code for Joint Stock Companies of 8 December 2009,

which commenced use on 1 January 2010 (hereinafter: Code), with several exceptions that do not intervene in

good management practices and in the cases denoted in this Statement. The Statement is a constituent part

of the Annual Report for 2010 and is also available on the Company’s website www.pivo-Laško.si.

The Statement refers to the 2011 business year, i.e. from 1 January to 31 December 2011. No changes have

occurred in the Company’s corporate governance since the conclusion of the accounting period up to the

Statement’s publication.

The Code is published on the website of the Ljubljana Stock Exchange www.ljse.si.

The explanations of the Management and Supervisory Boards of the Company regarding discrepancies

from individual provisions of the Code are given in continuation:

• Provision 1: The Company operates in accordance with its key objective, which is to maximize the Com-

pany’s value, and other objectives such as long-term value creation for shareholders, observance of social

and environmental aspects of operations with the aim of ensuring sustainable development of the Com-

pany, even though these objectives are not stated in the Company Statute.

• Provision 2: The management of the Company is focused at realising the strategic growth objectives of

the Laško Group until 2014 and the establishment of a new business model for the Group. The bases for

strategic growth and the new business model were approved by the Supervisory Board of the Company at

2.2

STaTEmENT ON COrpOraTE gO-vErNaNCE aNd COmpliaNCE wiTh ThE COrpOraTE gOvErNaNCE COdE

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its session on 23 April 2010. The presentation of the strategy and new business model of the Group was

published on the website SEOnet of the Ljubljana Stock Exchange on 14 May 2010. The special document

Corporate Governance Policy of the Company was rejected by both the Management and Supervisory

Boards.

• Provisions 8 (second paragraph) and 17.2: The members of the Supervisory Board did not sign the indi-

vidual statements regarding the fulfilment of independency criteria as denoted in Point C.3 Annex C of

the Code. Based on knowledge available to the Company, the members of the Supervisory Board fulfil all

criteria of independency as defined in Point C.3 Annex C of the Code.

• Provision 8.7: The Rules of Procedure of the Supervisory Board do not contain provisions regarding

communications with the public in connection to decisions adopted at its sessions. The Chairman of the

Management Board is, on the basis of a decision of the Supervisory Board, authorised to carry out com-

munications with the public. Important decisions of the Supervisory Board are published on the SEOnet

website of the Ljubljana Stock Exchange and on the websites of the companies in the Group.

• Provision 11: The Supervisory Board does not have a secretary. The tasks of the secretary of the Supervi-

sory Board are performed by the General Sector Director or his deputy.

• Provision 16.1; The remuneration of members of the Management Board is fixed. After adopting the an-

nual report, the Supervisory Board may at its own discretion based on the criteria defined in an individual

contract, grant a member of the Management Board a reward for the previous year, which may be paid

out in cash or as shares in the Company (variable component).

• Provision 20: The Company has not defined a Communications Strategy as a constituent part of the

Management Policy. Expert services ensure Company communications and transparency of operations

in a manner pursuant to the provisions of the Code.

• Provision 21.3: The Company does not publish reports in foreign languages.

2.2.2 MAIN ChARACTERISTICS OF ThE INTERNAL CONTROL AND RISK MANAGEMENT SySTEMS IN CONNECTION TO ThE ACCOUNTING REPORTING PROCEDURE

Pivovarna Laško, d. d., manages risks and implements internal control procedures at all levels. The pur-

pose of internal controls is to ensure the accuracy, reliability, transparency and intervisibility of all processes

and the management of risks related to financial reporting. The internal control system at the same time

establishes a mechanism for preventing irrational use of assets and contributes to cost-effectiveness.

The internal control system includes procedures to ensure that:

• transactions are recorded on the basis of credible accounting documents, based on which transactions

are recorded accurately and fairly, providing a guarantee that the company disposes of its assets in an

honest and fair manner;

• transactions are recorded and financial statements drawn up in accordance with the applicable legislation;

• any unauthorised acquisition of the use and disposal of company assets, which would have a significant

effect on financial statements are prevented or detected in a timely manner.

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Internal control in the Company is carried out by the Finance, Accounting and Controlling Department

which is responsible for bookkeeping and the preparation of financial statements in accordance with ap-

plicable accounting, tax and other regulations. The adequacy of control operations within the scope of the

information system is examined by authorized external contractors on an annual basis.

2.2.3 ExTERNAL AUDIT

REGULAR ExTERNAL AUDIT

To ensure consolidation and standardisation within the Laško Group, the General Meeting of Sharehold-

ers of Pivovarna Laško, d. d., Pivovarna Union, d. d., Ljubljana, Radenska, d. d., Radenci and Delo, d. d.,

Ljubljana appointed the auditing firm Deloitte Revizija, d. o. o., Ljubljana, as the certified auditor which

within the scope of auditing the financial statements reports to the Management Board, Supervisory Board

and Audit Committee of the Supervisory Board on its findings.

2.2.4 DATA IN ACCORDANCE wITh ThE SIxTh PARAGRAPh OF ARTICLE 70 OF ThE COMPANIES ACT (zGD-1)

3. Data on significant direct ownership of Company securities is given on pages 57 and 58 of this Annual

Report. Direct ownership thereof by the Management Board is disclosed on page 61 of this Annual Report.

4. The Statute of the Company does not contain any provisions granting holders of securities any special

controlling rights.

6. The Statute of the Company does not contain limitations regarding particular shares or a defined num-

ber of votes. The Statute of the Company prescribes that shareholders intending to attend a General Meeting

of Shareholders must register at the headquarters of the Company by the end of the fourth day at the latest

prior to the convocation of the General Meeting or they will not be able to attend the General Meeting or

implement their voting rights.

8. In accordance with the Statute of the Company, the Company Management Board may have a maxi-

mum of five members, one of whom shall be appointed the Chairman of the Management Board. The

Chairman and members of the Management Board are appointed and recalled by the Supervisory Board,

whereby members of the Management Board are appointed at the the Chairman of the Management Board’s

recommendation. The Supervisory Board may also prematurely recall the Chairman of the Management

Board or an individual Management Board member in accordance with the law. Pursuant to the Company’s

Statue, the Supervisory Board consists of six members. The Supervisory Board is appointed by the General

Meeting of Shareholders through a simple majority vote of the shareholders in attendance, except for the

two members of the Supervisory Board who are employee representatives who are elected by the Worker’s

Council. A three-quarter majority vote is required for the premature recall of a Supervisory Board member.

The Company’s Statute defines that a three-quarter majority vote by the General Meeting is required for an

amendment of the Statute.

9. The General Meeting of Shareholders empowered the Management Board of Pivovarna Laško, d. d.

on 31 August 2009 to purchase own shares at a redemption price which could not be higher than the share

price valid on the regulated market with the aim of maximizing the intrinsic value of the Company’s shares.

The total number of shares obtained for the purpose described in the previous paragraph could not, together

with the other own shares of the Company, exceed 10% of the Company’s share capital The authorisation

of the Management Board for the purchase of the treasury shares remains valid for 36 months from the

receipt of the General Meeting decision. The Management Board may not acquire treasury shares for the

sole purpose of trading.

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2.2.5 DATA REGARDING ThE OPERATIONS OF ThE GENERAL MEETING OF ShAREhOLDERS

Data on operations of the General Meeting of Shareholders and its key competences and a description of

shareholders’ rights and the method of their declaration are included in the chapter Management on pages

33 through 39 of this Annual Report.

2.2.6 DATA REGARDING ThE MANAGEMENT AND SUPERVISORy BOARDS

Data on the composition and operation of management and control bodies and their committees are in-

cluded in the chapter Management, on pages 40 through 47 of this Annual Report.

Laško, 12 March 2012

Dušan Zorko, MSc Vladimir Malenković, Dsc

Chairman of the Management Board Chairman of the

Supervisory Board

Marjeta Zevnik

Member of the Management Board

Mirjam Hočevar


Gorazd Lukman


Matej Oset


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wITh ThIS REPORT, PIVOVARNA LAŠKO, D. D. IS DENOTING MEASURES FOR ThE RESTITUTION OF

DAMAGES FROM DAMAGING LEGAL TRANSACTIONS whICh wERE CONCLUDED By ThE PREVIOUS

MANAGEMENT BOARD OF ThE COMPANy.

Pivovarna Laško, d. d. as a subsidiary company within the scope of a multi-level going concern concluded

legal transactions in 2008 and 2009 which were established as damaging to the Company.

The loans given to the companies Center naložbe, d. d. and Infond Holding, d. d. were never paid back.

The purchase of shares of Thermana, d. d., – Zdravilišče Laško from the company Infond Holding, d. d. was

implemented according to the acquisition price which was higher than the assessed market value of the

shares of Thermana, d. d. at that time. The parent company in the multi-level going concern

The Management Board of Pivovarna Laško, d. d. as a diligent manager took all measures required, namely:

• Pivovarna Laško, d. d. registerd its outstanding receivables in the bankruptcy proceedings against Infond

Holding finančna družba, d. d. on 29 March 2010 and submitted a request for the establishment of a

creditor’s committee. Bankruptcy proceedings have been initiated.

• On 17 March 2010 Pivovarna Laško, d. d. registerd its outstanding receivables in the compulsory settle-

ment proceedings against the company Center naložbe, d. d. Bankruptcy proceedings were initiated

against Center naložbe, d. d. on 13 August 2010 in accordance with the decision of the District Court in

Celje. The Company submitted a request for the formation of a creditor’s committee, supplementing

the application on 10 November 2010 with a separation right and the legal default interest.. Bankruptcy

proceedings have been initiated.

• The Company filed an action for damages on 12 January 2011 against the defendants: the company Atka-

Prima, d. o. o. and Boško Šrot as its co-owner and the legal representative and director of Pivovarna Laško,

d. d. at that time for the payment of EUR 13.3 million. The procedure is underway with the first hearing

of the main hearing held on 2 April 2012.

A possibility exists that Pivovarna Laško, d. d., will file additional lawsuits in the future for damages suf-

fered for the entire scope of damage suffered is not yet known. Two potential compensations for damages

exist according to currently known facts:

2.3rEpOrT Of ThE maNagEmENT bOard Of pivOvarNa LaškO, d. d. ON ExTENT Of iNfluENCE iN aCCOrdaNCE wiTh arTiClE 545 Of ThE COmpaNiES aCT (Zgd-1)

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• The pledging of 345,304 shares of Radenska, d. d., Radenci whose owner is Pivovarna Laško, d. d. to in-

sure a loan given to the company Center naložbe, d. d. in the amount of EUR 6,250,000 taken out at the

bank NKBM, d. d. on the basis of a short-term framework loan from 12 March 2009; in this transaction

Pivovarna Laško, d. d. acted as the lienee based on the contract on the lien on dematerialized securities of

5 June 2009. The book value of the pledged shares on 31 December 2011 was EUR 3,637,650. On 22 No-

vember 2011 Pivovarna Laško, d. d. received the judgment of the District Court in Maribor, whereby the

court allowed the payment of claims from the value of the pledged shares and authorized the execution

on the pledged shares to repay the claim in the amount of EUR 7,349,552.25 and legal default interest.

Pivovarna Laško, d. d. received a writ of execution from the District Court in Maribor, whereby the court

approved the proposed writ of execution entry in the register of KDD for the 345,304 pledged shares,

the sale of these shares, and repayment to the creditor or NKBM from the amount acquired from the

sale. Once the shares are sold in the enforcement procedure and NKBM paid from the resulting amount,

Pivovarna Laško, d. d. will experience deprivation or damages;

• patronage statement of 31 December 2008 and 10 January 2009; Pivovarna Laško, d. d. received a cor-

respondence from Perutnina Ptuj, d. d. on 23 November 2009 in which the latter indicated that based on

the loan agreement with the companies Infond Holding, d. d. and Center naložbe, d. d. and the comfort

letter of 31 December 2008 signed by the previous Director of Pivovarna Laško, d. d. Boško Šrot on behalf

of Pivovarna Laško, d. d. it had paid off the liability. Since the companies had ceased repayment of the

loans, Perutnina Ptuj, d. d. had demanded payment in the approximate amount of EUR 11 million from

Pivovarn Laško, d. d. based on the patronage statement. Pivovarna Laško, d. d. did not acknowledge the

claim for it was not acquainted with the existence of the patronage statement of 31 December 2008 nor

the circumstances and business relationship among the legal persons. Perutnina Ptuj, d. d. for the en-

forcement of the aforementioned claim filed a lawsuit which Pivovarna Laško, d. d. received on 15 Febru-

ary 2011 whereby Perutnina Ptuj, d. d. is demanding payment in the amount of EUR 10,116,488.71 with pp

from the defendent Pivovarna Laško, d. d. The plaintiff Perutnina Ptuj, d. d. indicated in the lawsuit that it

had suffered damages since the defendant had failed to fulfil the obligations stemming from the patron-

age statement of 10 January 2009. Pivovarna Laško, d. d. lodged a reply in which it repudiated the claim

amount in full, seeing no grounds for the plaintiff’s claim. The court of first instance has not yet made

a decision regarding the claim. If Perutnina Ptuj, d. d. succeeds with the lawsuit Pivovarna Laško, d. d.

will be at a disadvantage and suffer damages.

Laško, 6 April 2012

Dušan Zorko, MSc

Chairman of the Management Board

Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset


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TODAy PIVOVARNA LAŠKO, D. D. whO hAS NEARLy 7,500 DOMESTIC AND FOREIGN ShAREhOLDERS

IS EMBARKING ON A PATh OF DEVELOPMENT wITh ThE FOLLOwING BASIC BUSINESS ORIENTATI-

ON: TO PROVIDE USERS ThE MOST qUALITATIVE BEER ALONGSIDE ExCELLENT SUPPLy ThEREOF

TO ThE MARKET.

Pivovarna Laško has been organized as a joint stock company since 1995. The Company had 7,492 share-

holders at the end of the 2011 business year, which is 448 shareholders or 5.6% less than in 2010.

NUMBER OF ShAREhOLDERS

2009 2010 2011

Shareholders as at 31 Dec 8,268 7,940 7,492

Chain index / 96.0 94.4

2.4.1 IMPACT OF ECONOMIC AND OThER TRENDS ON BUSINESS OPERATIONS

Heavy fiscal encumbrances (excise duties) on products again influenced beer consumption in Slovenia in

2011. The stricter economic circumstances and resulting decrease in the living standard of the population led

to poor competitiveness of beer in comparison to other comparable beverages, especially wine, which is not

burdened by excise duties on alcoholic beverages.

2.4.2 EqUITy OwNERShIP STRUCTURE

The share capital of the Company as at 31 December 2011 amounted to EUR 36,503,305 and is divided into

8,747,652 no par-value shares all of which have been paid in full. All shares are ordinary and registered in

dematerialized form, bearing the PILR and PILH ticker symbols. As at 31 December 2011, 8,611,481 shares

bearing the PILR symbol and 136,171 shares bearing the PILH symbol were registered in the central register

of the Central Securities Clearing Corporation (KDD) in Ljubljana.

2.4

SharEhOldErS aNd ThE impaCT Of ECONOmiC aNd OThEr TrENdS ON buSiNESS OpEraTiONS

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EqUITy OwNERShIP STRUCTURE OF PIVOVARNA LAŠKO, D. D. AS AT 31 DECEMBER 2011

NLB, d. d.

Hypo Alpe-Adria-Bank, AG

Kapitalska družba, d. d.

Probanka, d. d.

Other legal entities

Natural persons

Foreigners

15.1 %

13.6 %

26.6 %7.0 %

7.1 %

7.1 %

23.5 %

EqUITy OwNERShIP STRUCTURE OF PIVOVARNA LAŠKO, D. D. AS AT 31 DECEMBER 2010

NLB, d. d.

Kapitalska družba, d.d.

Hypo Alpe-Adria-Bank, AG

Probanka, d. d.

14.9 %

13.8 %

26.7 %7.0 %

7.0 %

7.1 %

23.5 %

Other legal entities

Natural persons

Foreigners

( in % ) 2009 2010 2011

Legal entities 79.1 71.4 71.3

Natural persons 13.7 13.8 13.6

Foreigners 7.2 14.9 15.1

Total 100.0 100.0 100.0

LARGEST ShAREhOLDERS

Ten of the largest shareholders possessed a total of 6,161,064 shares or 70.4% of total share capital on 31

December 2011, representing a decrease of 221 shares over the amount in 31 December 2010.

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TEN LARGEST ShAREhOLDERS OF PIVOVARNA LAŠKO, D. D. AT ThE END OF ThE yEAR

( 31 Dec 2011 ) No. of shares in % Rank

NLB, d. d. 2,056,738 23.512 1.

Hypo Alpe-Adria-Bank, AG 618,202 7.067 2.

Kapitalska družba, d. d. 617,488 7.059 3.

Probanka, d. d. 614,911 7.029 4.

GB, d. d. Kranj 542,448 6.201 5.

Skagen Kon-tiki Verdipapirfond 499,286 5.708 6.

NFD1, delniški podsklad 443,557 5.071 7.

Abanka, d. d. 285,463 3.263 8.

Banka Celje, d. d. 252,500 2.886 9.

Banka Koper, d. d. 230,471 2.635 10.

Total - Top ten largest shareholders 6,161,064 70.431

Other minority shareholders 2,586,588 29.569

Total - All shareholders 8,747,652 100.000


NLB, d. d. 2,056,738 23.512 1.

Kapitalska družba, d. d. 617,488 7.059 2.

Hypo Alpe-Adria-Bank, AG 615,515 7.036 3.

Probanka, d. d. 614,911 7.029 4.

GB, d. d. Kranj 542,448 6.201 5.

Skagen Kon-tiki Verdipapirfond 499,286 5.708 6.

NFD1 delniški investicijski sklad, d. d. 446,465 5.104 7.

Abanka, d. d. 285,463 3.263 8.

Banka Celje, d. d. 252,500 2.886 9.

Banka Koper, d. d., dvojezična firma: Banka 230,471 2.635 10.


Other minority shareholders 2,586,367 29.566


The equity ownership structure of the Company did not essentially change in 2011 with banks prevailing as

the owners as in 2010. NLB, d. d., the largest shareholder retained its 23.51% stake in Pivovarna Laško, d. d.

This was followed by Hypo Alpe-Adria-Bank, AG, with a 7.07% stake, having increased its stake by 0.03%

and Kapitalska družba, d. d. with the same number of shares as in the previous year.

Other large shareholders include Probanka, d. d., followed by GB, d. d., Kranj, Skagen Kon-tiki Verdipa-

pirfond and NFD 1, delniški podsklad, with at the end of 2011 possessed identical ownership stakes as at the

end of the previous year. Other companies owned less than 5% of the shares of Pivovarna Laško, d. d. bearing

the PILR ticker symbol as at 31 December 2011.

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Equity ownership structure of the subsidiaries

LARGEST ShAREhOLDERS OF RADENSKA, D. D., RADENCI (ACCORDING TO AN ExCERPT FROM ThE CENTRAL

SECURITIES CLEARING CORPORATION (KDD))


Pivovarna Laško, d. d. 4,148,703 81.960 1.*DBS, d. d. 600,000 11.853 2.

Slovenijales, d. d. 22,062 0.436 3.

Radenska, d. d., Radenci 19,236 0.380 4.

Štern Blaž 4,666 0.092 5.

Slatnar Sonja 2,063 0.041 6.

Vrankar Anton 1,500 0.030 7.

Potočnik Marko 1,451 0.029 8.

4 F, d. o. o. 1,260 0.025 9.

Camlek Marija 1,164 0.023 10.


Other minority shareholders 259,751 5.132


* The ownership stake of 11.85% in the shares of Radenska, d. d., Radenci of the company DBS, d. d. is also

entered at KDD. In substance, it regards a redemption right, whereby under the contract, the voting rights

due to ownership by the temporary seller, that is, Pivovarna Laško, d. d. More information is given in the note

in the financial section of this Report, on pages 180 and 181.


Pivovarna Laško, d. d. 4,748,515 93.810 1.

Slovenijales, d. d. 22,062 0.436 2.


Kozelj Bojan 6,042 0.119 4.

GBD, d. d. 4,666 0.092 5.

Počivavšek Tadej 2,063 0.041 6.

Vrankar Anton 1,500 0.030 7.

Potočnik Marko 1,451 0.029 8.

4 F, d. o. o. 1,260 0.025 9.

Camlek Marija 1,164 0.023 10.




The ownership stake of the parent company Pivovarna Laško, d. d. decreased temporarily from 93.810% at

the end of 2010 to 81.960% at 31 December 2011.

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LARGEST ShAREhOLDERS OF PIVOVARNA UNION, D. D., LjUBLjANA


Pivovarna Laško, d. d. 441,617 97.895 1.

May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Štern Blaž 120 0.027 4.

Potočnik Marko 118 0.026 5.

Pintar Nina 100 0.022 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 50 0.011 9.

Slatnar Sonja 50 0.011 10.

Total - Top ten largest shareholders 446,246 98.921


Total - All shareholders 451,114 100.000



May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

GBD, d. d. 120 0.027 4.

Potočnik Marko 118 0.026 5.

Energoplan, d. d. 100 0.022 6.

Pintar Nina 100 0.022 7.

Srakar Drago 86 0.019 8.

Pivovarna Union, d. d. 69 0.015 9.

Laknar Frančiška 40 0.009 10.

Total - Top ten largest shareholders 446,275 98.927



The ownership stake of the parent company Pivovarna Laško, d. d. increased from 97.892% at the end of

2010 to 97.895% as at 31 December 2011.

OwNERShIP STAKES IN jADRANSKA PIVOVARA – SPLIT, D. D.



Other minority shareholders 29,365 0.541 2.




Other minority shareholders 29,365 0.894 2.


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The ownership stake of the parent company Pivovarna Laško, d. d. and other small shareholders in the

company Jadranska pivovara - Split, d. d. increased from 99.106% at the end of 2010 to 99.459% as at 31

December 2011. The number of shares as at 31 December 2011 was greater than the last day of the previous

year due to a capital increase carried out by conversion of debt into equity by the parent company Pivovarna

Laško, d. d.

BUSINESS STAKES IN ThE COMPANy VITAL MESTINjE, D. O. O.


Pivovarna Laško, d. d. 96.920 1.

Other minority shareholders 3.080 2.

Total - All shareholders 100.000

The business stake of the parent company Pivovarna Laško, d. d. and other minority shareholders in the

company Vital Mestinje, d. o. o. as at 31 December 2011 remained unchanged in comparison to the previous

year.

OwNERShIP STAKES IN ThE COMPANy DELO, D. D., LjUBLjANA





The business stake of the parent company Pivovarna Laško, d. d. and other minority shareholders in the

company Delo, d. d. as at 31 December 2011 remained unchanged in comparison to the previous year.

BALANCE OF ShARES AND STAKES OF MEMBERS OF ThE MANAGEMENT BOARD OF PIVOVARNA LAŠKO, D. D.

IN ThE COMPANy’S ShARE CAPITAL AS AT 31 DECEMBER 2011

( shareholder ) Membership No. of shares Participation in %

Dušan Zorko Mgt Brd - Chairman 450 0.005

Marjeta Zevnik Management Board 548 0.006

Mirjam Hočevar Management Board 548 0.006

Matej Oset Management Board 574 0.007

Total 2,120 0.024

The remaining members of the Management Board were not holders of shares of of Pivovarna Laško, d. d.

as at 31 December 2011.

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BALANCE OF ShARES AND STAKES OF MEMBERS OF ThE SUPERVISORy BOARD OF PIVOVARNA LAŠKO, D. D.

IN ThE COMPANy’S ShARE CAPITAL AS AT 31 DECEMBER 2011

( shareholder ) Membership No. of shares Participation in %

Bojan Cizej Supervisory Board 3,180 0.036

Dragica Čepin Supervisory Board 3,413 0.039

Total 6,593 0.075

The remaining members of the Supervisory Board were not holders of shares of Pivovarna Laško, d. d. as

at 31 December 2011.

INCREASE OF ShARE CAPITAL

The General Meeting of Pivovarna Laško, d. d. decided to increase the share capital of the Company

through capital investments on 24 June 2011, however, the resolution was not adopted.

AUThORIzED AND CONDITIONAL CAPITAL

The General Meeting of Shareholders of the Company did not conclude any decisions regarding the con-

ditional increase of shares or authorised capital in 2011.

AUThORIzATION TO ThE MANAGEMENT BOARD FOR ThE ACqUISITION OF OwN ShARES

The General Meeting of Shareholders empowered the Management Board of Pivovarna Laško, d. d. on 31

August 2009 to purchase own shares at a redemption price which could not be higher than the share price

valid on the regulated market with the aim of maximizing the intrinsic value of the Company’s shares.

The total number of shares obtained for the purpose described in the previous paragraph could not, to-

gether with the other own shares of the Company, exceed 10% of the Company’s share capital The authorisa-

tion of the Management Board for the purchase of the treasury shares remains valid for 36 months from the

receipt of this decision, namely until 31August 2012.

The Management Board may not acquire treasury shares for the sole purpose of trading. If the Manage-

ment Board of the Company discovers that it no longer needs the shares obtained for the aforementioned

purpose, it may dispose of them with the consent of the Supervisory Board of the Company.

2.4.3 ShARES

Shares of Pivovarna Laško, d. d. with the PILR ticker symbol have been quoted on the securities market of

the Ljubljana Stock Exchange since 1 February 2000 as ordinary shares. The share capital of the Company as

at 31 December 2011 amounted to EUR 36,503,305 and is divided into 8,747,652 no par-value shares. As at 31

December 2011, 8,611,481 shares bearing the PILR symbol and 136,171 shares bearing the PILH symbol were

registered in the central register of the Central Securities Clearing Corporation (KDD) in Ljubljana.

The Company still has PILH shares from the ownership restructure procedure reserved for denationaliza-

tion beneficiaries. If a decision is issued in favour of the denationalization beneficiary, the share changes

from a PILH share to a PILR and begins quoting on the organised securities market.

Reserves for own shares decreased in 2011 due to the sale of 4,156 lots of PILR to the subsidiary Pivovarna

Union, d. d. and its employees and a revaluation in the total amount of EUR 251,179. Pivovarna Laško, d. d.

did not acquire any treasury shares in 2011. As at 31 December 2011 Pivovarna Laško, d. d. owned 755 lots of

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PILR shares, Radenska, d. d. 21,195 lots and Pivovarna Union, d .d. 2,131 lots. Treasury shares were recalcu-

lated to the listed price on 31 December 2011 and comprised EUR 11.02 per share. The decline in the values

of shares had an effect on decreasing the capital of individual companies in the financial statements. Pivo-

varna, d .d. as the parent company has formed reserves for own shares for the total value of shares owned

by companies in the Laško Group. Reserves for own shares decreased by EUR 251,179 at the cost of other

revenue reserves.

The audited book value of PILR shares as at 31 December 2011 according to IFRS is EUR 12.50. The market

value of the shares at the end of 2011 amounted to EUR 11.02, and lagged behind the book value by 11.84%. Each

share gives its owner a voting right at the annual General Meeting of Shareholders and to participate in profits.

AVERAGE MARKET VALUE OF PILR ShARES IN 2011

0

10

20

30

40

50

jan feb mar apr maj jun jul avg sep okt nov dec

in E

UR

( in EUR ) jan Feb Mar Apr May jun jul Aug Sep Oct Nov Dec

Average

market 14.16 13.06 12.44 11.59 8.55 8.34 10.47 10.89 11.37 11.81 11.85 11.36

value

of shares

BOOK VALUE OF PILR ShARES AS AT 31 DECEMBER FOR ThE PERIOD 2002 - 2011

0

8

16

24

32

40

200

2

200

3

200

4

*20

05

*20

06

*20

07

*20

08

*20

09

*20

10

*20

11

in E

UR

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( in EUR ) 2002 2003 2004 *2005 *2006 *2007 *2008 *2009 *2010 *2011

Book value 22.12 23.07 22.82 20.11 21.93 26.45 20.90 14.78 14.19 11.02

of shares

* pursuant to IFRS for all years from 2002 to and inclusive of 2006 - exchange rate: EUR 1 = SIT 239.640

The book value of the shares changed from EUR 24.44 to EUR 20.11 in 2005 due to the transition to IFRS.

2.4.4 FINANCIAL CALENDAR FOR 2012

General Meeting of Shareholders Foreseen for August 2012.

Entitlement to dividends If the General Meeting decides to pay out

dividends, then those shareholders

who are entered in the share register on the

third business day following the General

Meeting are entitled to dividends.

Payment of dividends Sixty days at the latest of the adopted decision on

the payment of dividends.

ANNUAL REPORT

The Company must publish the Annual Report within four months at the latest of the conclusion of the

business year, namely by 30 April.

INTERIM REPORT

The Company must publish an interim report for the first six months of the financial year as soon as pos-

sible and no later than two months following the end of this period, namely by 31 August.

qUARTERLy REPORTING

The Company must also publish quarterly reports on the first three and nine months of operations (quar-

terly reporting). The Company must publish the quarterly reports as soon as possible and no later than two

months following the end of quarterly accounting period (31 May and 30 September).

OThER INTERIM REPORTING

Pivovarna Laško, d. d. published the unaudited unconsolidated financial statements for 2010 with notes

on 15 March 2011. Pivovarna Laško, d. d. will not publish the unaudited consolidated financial statements for

2011 for in the envisaged period it will publish the audited Annual Report for 2011. The publication of unau-

dited unconsolidated and consolidated financial statementx is not legally prescribed or mandatory.

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ThE LAŠKO GROUP ATTAINED A GROwTh IN PRODUCT SALES IN 2011 IN COMPARISON TO ThE PRE-

VIOUS yEAR. ThE GOOD RESULTS wERE ThE RESULT OF A MORE INTENSIVE PRESENCE ON ALL

MARKETS AND hEIGhTENED COOPERATION OF ALL COMPANIES IN ThE GROUP.

2.5.1 LAŠKO GROUP

Sales of the Laško Group were quite successful in 2011 despite the negative economic indicators, increas-

ing unemployment and reduced purchasing power. The good results were the result of a more intensive

presence on all markets and heightened cooperation of all companies in the Group. The long-term business

development strategy of the Laško Group, which is based on the best possible supplying of the domestic

market and growth in foreign markets with quality products of the Group was taken into account.

Sales of the Laško Group 2011 comprised 3,652 million hl of beverages, signifying a 6.0% increase over

2010. The beer segment attained an index of 107.0, the water segment 104.2 and the non-alcoholic beverage

segment 106.1.

2.5

SalES

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SALES OF ThE LAŠKO GROUP IN 2011 ON DOMESTIC AND FOREIGN MARKETS

( in hl ) Sales in 2011 Index 11/10 sales (in%)

SLOVENIAN MARKET

Beer 1,453,060 105.0 39.8

Water 922,576 103.3 25.3

Non-alcoholic beverages 453,447 100.9 12.4

Other alcohol 844 / /

Total - Slovenian market 2,829,927 103.8 77.5

FOREIGN MARKETS

Beer 521,676 113.1 14.3

Water 175,604 108.6 4.8



Total - Foreign markets 822,052 114.5 22.5

TOTAL

Beer 1,974,736 107.0 54.1

Water 1,098,180 104.2 30.1


Other alcohol 1,272 / /

Total - Slovenian and foreign markets 3,651,979 106.0 100.0

The sales and marketing activities of Pivovarna Laško, d. d. are subject to the Strategy of the Laško Group

which is based on business growth and the monitoring of trends and changes on both the global and local

levels. Focus in 2011 was placed on maintaining market shares in the domestic market of all segments, in-

creasing sales in foreign markets and introducing new concepts and new sales channels while streamlining

marketing inputs within the scope of set objectives.

2.5.2 PIVOVARNA LAŠKO, d. d.

Quantity sales of the Laško Group in 2011 comprised 975,838 million hl, exceeding the quantities sold in

the same period last year by 0.7%. A new category called “other alcohol” was also introduced which includes

the apple wine called iC Cider.

Increased sales on foreign markets are extremely important for the long-term development of Pivovarna

Laško, d. d. where a growth of 7.3% has been recorded. The Company maintains its market share on the do-

mestic market and despite an increase in sales and marketing activities, the worsening economic conditions

had an effect on sales, reducing them by 1.5%.

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SALES OF PIVOVARNA LAŠKO, D. D. IN 2011 ON DOMESTIC AND FOREIGN MARKETS

( in hl ) Sales in 2011 Index 11/10 sales (in%)

SLOVENIAN MARKET

Beer 670,750 97.4 68.8

Water 30,488 101.6 3.1

Non-alcoholic beverages 5,125 / 0.5

Other alcohol 844 / 0.1

Total - Slovenian market 707,207 98.5 72.5

FOREIGN MARKETS

Beer 267,995 107.5 27.5

Water 53 88.3 /

Non-alcoholic beverages 155 16.9 /


Total - Foreign markets 268,631 107.3 27.5

TOTAL

Beer 938,745 100.1 96.3

Water 30,541 101.6 3.1


Other alcohol 1,272 / 0.1

Total - Slovenian and foreign markets 975,838 100.7 100.0

2.5.3 SLOVENIAN MARKET

1. LAŠKO GROUP

The Laško Group sold 2,830 million hl of beverages in 2011, representing a 3.8% increase over 2010. Beer

sales achieved an index of 105.0, waters 103.3 and non-alcoholic beverages 100.9. The growth in the share of

beer sales can be predominantly attributed to the extremely successful sale of beer mixes - radlers produced

in Pivovarna Union. The successful sales are the result of the unification of the sales marketing team, which

operates in accordance with the long-term strategy of the Group, taking into account best practices in the

Group and outside of it.

Traders continued to show a preference for their own brands and promote store brands with lower prices,

because they had established that brand loyalty is substantially modified upon a reduction in the purchasing

power of consumers. This is under normal conditions of purchasing power satisfactory for the beer, while

for water the essential element in deciding for a purchase is the purchase price.

The beer market in Slovenia in terms of volume in 2011 remained at the level of the previous year (1.6 mil-

lion hl). Slovenian consumers in Horeca remain loyal to domestic beer manufactures, while in stores they

also purchase more favourably priced foreign beers particularly present in discount stores. Beer imports

decreased by 10% in 2011 and possess a market share of 13.6%. Diminished buying power is also confirmed

by the fact that the share of purchases during promotional price campaigns has significantly increased.

The quantitative market share for Pivovarna Laško beer (together with its private label) in 2011 was 39.1%.

The share for Pivovarna Union (together with its store brands) comprised 47.3% and imported beer 13.6%.

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2. PIVOVARNA LAŠKO, D. D.

Pivovarna Laško, d. d. sold 670,750 hl of beer on the Slovenian market in 2011, which represents 71.5% of

total beer sales. Beer sales on the Slovenian market were 2.6% lower than in 2010.

Oda waters are sold almost entirely on the Slovenian market. Realisation was 1.6% higher than in 2010

and amounted to 30,488 hl.

Distribution from the central warehouse increased in 2011 due to a key Slovenian buyer changing its

method of supply. All the members of the Laško Group now supply this buyer from their central warehouses

since 1 January 2011.

Changes in the sales assortment:

• a beer with an additive Bandidos Sun 0.33 l in non-returnable bottles (singles and six-packs) was intro-

duced on the Slovenian market in March,

• the sweet beverage in the Malt apple 0.33 l and Malt peach 0.33 l flavours in returnable bottles was intro-

duced on the Slovenian market in March,

• the beer Laško Trim 0.5 l in returnable bottles was introduced on the Slovenian market in March,

• the apple cider iC Cider 0.4 l in non-returnable bottles (singles and three-packs) was introduced on the

Slovenian market in April,

• the draft beer Laško Zlatorog in 10 l returnable SmartDraft kegs was introduced on the Slovenian market

in the catering sector in April,

• the sweet beverage in the Malt apple 0.5 l and Malt peach 0.5 l flavours in cans were introduced on the

Slovenian market in June,

• the Company began filling beer under the Tuš trademark in cans (singles and six-packs) at the beginning

of the year,

• the Company began filling beer under the Lidl trademark (Deep) in 1.5 l plastic bottles in March,

• the Company terminated the product Bandidos Cuba Libre.

The Company increased the prices of different beers which varied for the specific products (2 - 8%) due to

the growth in commodity prices. The prices of waters remained unchanged.

The Company increased the number of promotions in 2011 and managed to prevent a decline in sales

compared to 2010.

As in all previous years, the Company managed the payment policy well in 2011, since most of the pay-

ments are secured by bank guarantees.

Sales were supported through Internet marketing activities, which included strong support for the spon-

soring of sports clubs (NK Maribor, Celje Laško RK and KK Zlatorog), advertising, sales campaigns, promo-

tion, sponsorship of marketing and sales events, other sponsorships and donations.

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Corporate advertising in the first half of 2011 was supported with sponsorships of sports teams and events,

and participation in major events. Higher exposure was achieved regarding the sponsorship of NK Maribor,

where both domestic and European matches were supported with activities at the Laško Vijol’čnem Fun Park.

Together with Pivovarna Union, the Company signed a four-year contract with the Basketball Federation of

Slovenia.

Communication in 2011 was focused on the returnable 0.5 l bottle and backed by a comprehensive com-

munications campaign “Flaško nazaj v Laško” (Return Your Bottle to Laško) with elements of ATL (TV ads,

print media) and BTL (online communication, social networking, visualization at sales points and promo-

tion sales in stores) communication elements.

Promotional activities regarding returnable packaging were backed by a national SMS prize game in the

summer with Garmin navigation systems, HP laptops, a Gilera scooter and VW Golf Cabrio as prizes.

The Company continued to market the Pivovarna Laško “Poln ponosa” (Full of Pride) communication

campaign, which was again supported by the (Let’s Go to the Mountains) summer campaign. Almost 7,000

walkers participated in 12 events.

In 2011, the Company focused on the Laško Club brand predominantly using BTL communication mecha-

nisms to emphasize the superiority of the beer and prestige of the premium brands. The highlight of the

campaign was a series of events in the Horeca channel - “Premium Clubbing”, which was advertised with

the aid of print advertisements, web communications and outdoor advertising (guerrilla advertising, LPP

bus branding). The campaign was supported by a variety of events in selected locations (Castle, Club Alaya,

Playa, PlusMinus), in which world-famous artists of the club music scene performed.

In 2011 the Company launched a new brand - iC Cider. The Apple wine or cider has been produced since

2008. The Company also prepared a comprehensive communications campaign, which included ATL and

BTL communication elements (TV ads, website, communications in social media, print ads, outdoor pro-

motions, sampling, tasting) which was supported with the sale of promotional sales packages with a glass

(in stores) and a series of minor and major events in Horeca (a partially mix with Premium Clubbing, ap-

pearances at the biggest Slovenian festivals, independent events). The key message of the comprehensive

communications campaign was “iC Cider - 100% star entertainment” which testified to the fun and youthful

brand personality and target audiences that would be addressed.

The Company launched a new flavour - Bandidos Sun (orange and pink guava) as a novelty in the line of

Bandidos in March, which with the aid of pressure over the accelerated network achieved a high index of dis-

tribution. The launch of the new brand was enhanced by the adaptation of the TV ad (Bandidos - For Always),

online communications, print media and events in Horeca. The Company also continued the “Bandidos

Freestyle assault” outdoor campaign.

The Company organized the “Support Your Local Spot” campaign as a separate project in 2011, which

called on action sportsmen and women to promote the local surroundings in which they practiced their

sport. The campaign began running from August 2011 and will continue in 2012.

In April 2012 the Company launched a new brand of soft drink Laško Malt, which consisted of two flavours

(apple and peach) at the time of its launch. The product was backed by elements of ATL and BTL communi-

cation (TV ad with Luka Žviže and Marcos Tavares - brand ambassadors), print ads and online advertising.

The campaign with Radio Center, connections to a number of driving schools and safe driving clubs also fell

under BTL activities for the brand. Laško Malt 0.33 l bottles were later joined by 0.5 l cans and the Multipack

(four-pack).

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Druing the summer of 2011, the “Let’s go to the mountains” campaign was expanded to 12 ascents and

supported with TV ads, a series of radio spots, print ads, news on the website and in the Slovenian daily

newspaper Slovenske novice.

In conjunction with Pivovarna Union, the Company within the scope of the European Basketball Champi-

onship prepared, organized and implemented the project “By Truck to Lithuania”, jointly acting as sponsors

of the Slovenian national basketball team. The campaign was integrated with the sales promotion of Slove-

nian beer in Lithuanian pubs, which represented “Slovenian fan ‘points’ throughout the tournament. The

project received an award for best sports sponsorship in 2011 at the SPORTO conference.

In the retail segment, sales activities regarding the leasing of additional pallet spaces were supported by

pallet wrappers multiple communications campaigns of Pivovarna Laško (Return Your Bottle Back to Laško,

Laško Club + glasses, Bandidos & Dance Republic Open Air).

In 2011 the Company modified its approach regarding the organization of the Piva in Cvetja beer and blos-

som successfully implementing it through a greater degree of participation.

3. PIVOVARNA UNION, D. D., LjUBLjANA

Pivovarna Union, d. d., sold 1,176,842 hl of beverages in Slovenia, representing a 7,8% increase over

2010. This high growth in sales is due to a 2.5% increase in beer sales, with the Radler as the bestselling

brand in 2011. The 3.3% decrease of water was the result of the increased competition from lower-price store

brands and the lack of presence in discount chains, which are attaining an increasingly higher retail market

share in the Slovenian market.

4. RADENSKA, D. D., RADENCI

Radenska, d. d. sold 818.0 89 hl liters of beverages in Slovenia in 2011, which represents 82.2% of the total

sales volume of the Company. It generated 91.2% of its net financial realisation on the Slovenian market.

Key products include water, which represented a 79.9% share in total sales volume and other non-alco-

holic beverages which possessed a 20.1% share. Radenska, d. d. d. d., remains within the Laško Group as the

holder of the activity of development and sale of natural mineral waters and soft drinks, on which marketing

and sales activities were also focused. Price campaigns were predominantly used for the ACE, iced tea and

the other brands.

2.5.4 FOREIGN MARKETS

The Laško Group sold 822.1 thousand hl of beverages on foreign markets in 2011, representing a 14.5%

increase over 2010. Beer sales achieved an index of 113.1, waters 108.6 and non-alcoholic beverages 130.7.

Despite the difficult economic conditions that also affected the Group’s export markets, the year 2011 was

very successful. The Group was also able to achieve sales growth through the intensification of work and a

new strategy for joint ventures in foreign markets for both the beer segment and non-alcoholic and alcoholic

beverages segments.

The Company considered the formalization of Laško Group Croatia and organisation of all the necessary

activities to establish Laško Group in Bosnia and Herzegovina as key steps for business success in 2011.

The Group’s Export Strategy Group is to sell its products through importers with whom long term busi-

ness relationships have been established, thereby ensuring the lowest possible level of risk. The Group

develops long term partnerships with key customers thereby ensuring the greater visibility of its brands.

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Besides selling its own brands, the Group attempts to ensure additional amounts through the production

of store brands or international brands with the aim of filling production capacities and reducing fixed costs

per unit of product.

OVERALL SALES OF ALL BEVERAGES OF ThE GROUP ON FOREIGN MARKETS

( in hl ) Sales in 2011 Sales in 2010 Index 11/10

Bosnia and Herzegovina 96,319 70,566 136.5

Serbia 21,323 12,146 175.6

Croatia 181,596 133,438 136.1

Kosovo* (9.347) 93.042 86,753 107.2

FYR Macedonia* (8.694) 10.811 14,872 72.7

Montenegro* (3.840) 860 2,651 32.4

Italy 282,360 263,935 107.0

Austria 44,117 39,476 111.8

Hungary 51,030 56,642 90.1

Other foreign markets 40,595 37,576 108.0

Total 822,053 718,055 114.5

*The Group began supplying the markets of Kosovo, FYR Macedonia and Montenegro with beer bottled under the license of

thePeć brewery in parentheses.

OVERALL SALES OF BEVERAGES OF PIVOVARNA LAŠKO, D. D. ON FOREIGN MARKETS


Bosnia and Herzegovina 27,015 21,333 126.6

Serbia 6,346 4,418 143.6

Croatia 90,888 75,971 119.6

Kosovo* (9.347) 3.979 17,510 22.7

FYR Macedonia* (8.694) 3.858 9,472 40.7

Montenegro* (3.840) 730 2,521 29.0

Italy 115,520 101,634 113.7

Austria 8,751 7,669 114.1

Hungary 2,169 2,284 95.0

Other foreign markets 9,375 7,559 124.0

Total 268,631 250,371 107.3

*The Group began supplying the markets of Kosovo, FYR Macedonia and Montenegro with beer bottled under the license of

thePeć brewery in parentheses.

Pivovarna Laško, d. d. continued its intensive sales approach and at the end of the year recorded a growth

in all key markets in comparison to the previous year. The Group began supplying the markets of Kosovo,

Macedonia and Montenegro through the licensed filling of the company Pivovarna Peć, thereby increasing

its competitiveness in these markets.

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BOSNIA AND hERzEGOVINA

The Laško Group sold 96.3 thousand hl of beverages in the market of Bosnia and Herzegovina in 2011,

which is 36.5% more than in 2010. It achieved an index of 141.2 for beer, 185.7 for waters and 129.0 for non-

alcoholic beverages. The new organisation for covering and dividing the markets of the Laško Group is

reflected in changed and increased sales. The Group jointly established and registered the company Laško

Grupa, d. o. o., Sarajevo for the possible importation of all products of the Laško Group. The Group esti-

mate’s that the beer market of Bosnia and Herzegovina is about 1.45 million hl, with the key competitors

being Carlsberg.

Pivovarna Laško sold 27,015 hl of beer on the market of Bosnia and Herzegovina in 2011 and achieved an

increase in sales with an index of 126.6 compared to 2010. In 2011 Pivovarna Laško exported products to the

importers (only draft beer) and a smaller amount of Kaltenberg filled under license to the importer Pivo-

varna Banja Luka. The decline in sales of previous years was reversed in 2011.

SERBIA

The Laško Group sold 21.3 thousand hl of beverage on the Serbian market in 2011, showing a 75.6% in-

crease over 2010. It achieved an index of 162.9 for beer, 134.4 for waters and 211.0 for non-alcoholic beverages.

Pivovarna Laško sold 6,346 hl of beer in Serbia in 2011 and achieved an increase in sales over 2010 with

an index of 143.6. The Group collaborates with the following importers of Paško beer on the Serbian market:

MV Sistem Beograd, SM Group Beograd (only draft beer), Union Company Sremska Mitrovica (only draft

beer); the Group ceased collaboration with the importer Vegro Company from Novi Pazar. The declining

sales trend was reversed in 2011. The Group also acquired a new customer IDEA, d. o. o, Belgrade to import

the private label K Plus. The Group estimates the size of the Serbian beer market to be 5.23 million hl with

key beer competitors comprising Jelen, Lav and Tuborg.

CROATIA

The Laško Group sold a 81.6 thousand hl of beverages on the market in Croatia in 2011, showing a 36.1%

increase 2010. Its index for beer was 205.3, for waters 90.6 and for non-alcoholic beverages 61.7. The Laško

Group established the company Laško Grupa, d. o. o., Zagreb, which excellently mplements the policy of the

joint presence of the Laško Group in the market. Radler Union contributed considerably to the good results

obtained in the market which the Group successfully launched the shelves of major retailers and restaurants.

It also signed a contract with Croatia’s largest retailer Konzum, enabling the Group to present all its leading

products on the retailer’s shelves.

Pivovarna Laško sold 90,888 hl of beer on the Croatian market and achieved an increase in sales with an

index of 119.6 with respect to 2010. In 2011 Orbico, d. o. o., Zagreb, which is an importer of Laško beer for the

Croatian market, also became an importer of Kaltenberg beer and private label beers of Konzum.

The Group prepared the beer TBZ Adria Grejp - radler grapefruit flavour, filled in basic 0.5 l cans for

Croatia’s largest retailer Konzum.

The size of the Croatian beer market is estimated to be 3.2 million hl with the key beer competitors being

the breweries Zagreb, Karlovec and Carlsberg Croatia.

REPUBLIC OF KOSOVO

The Laško Group sold 93.0 thousand hl of beverages is on the market of Kosovo in 2011. It achieves an

index of 25.8 for beer (changed distribution in 2011), 106.7 for waters and 143.9 for non-alcoholic beverages.

The size of the Kosovo beer market is estimated to be 340 thousand hl with the key beer competitors

comprising Nikšič and Skopje.

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Pivovarna Laško sold 3,979 hl of beverages on the market of Kosovo in 2011. This is a market where sales

of Laško beer have stabilized in the past years. In the beginning of 2011 the Company adopted the decision

that Pivovarna Peć brewery would bottle the Zlatorog brand name under a license for the markets of Kosovo,

Macedonia and Montenegro. This has increased competitiveness by reducing transport routes and greater

flexibility. This sale is not covered by the above amount. Pivovarna Laško bottles special types of beer. It is

present in both the hospitality industry as well as in all retail systems in Kosovo.

Pivovarna Union sold the most non-alcoholic beverages in Kosovo, namely 76,345 hl, which is 44% more

than in 2010 and 59% more than planned.

FyR MACEDONIA

A total of 10.8 million beverages were sold on the Macedonian market in 2011. It achieved an index of 46.9

for beer (changed distribution in 2011), 86.5 for waters and 222.6 for non-alcoholic beverages.

Pivovarna Laško sold 3,858 hectoliters of beer on the market of Macedonia in 2011. The Group also began

supplying this market with licensed filled beer under the Zlatorog brand from Pivovarna Peć, thereby in-

creasing competitiveness and flexibility by reducing transport routes. This sale is not included in the above

amount. The Group is present in the hospitality industry and in all medium and large retail systems. Two

multinational companies produce beer for retail, Heineken (SAEP) and Carlsberg (Prilep). The size of the

Macedonian beer market is estimated to be 680 thousand hl with the key competitors comprising the brew-

eries Skopje, Prilep and Kamenica.

MONTENEGRO

The Laško Group sold 860 hl of beverages on the market of Montenegro in 2011. The Group achieves an

index of 29.0 for beer (changed distribution in 2011) and 100 for waters.

Pivovarna Laško sold 730 hl of beer on the market of Montenegro in 2011. The Group began supplying this

market also with the licensed filling of beer from Pivovarna Peć, thereby increasing its competitiveness. This

sale is not included in the above amount. In the past the Group’s products were only present in the hospital-

ity industry and the retail chain, Mercator. The Group did not cooperated with the Delta chain due to exces-

sive positioning costs and payment defaults. The situation improved in 2011, both with regard to the Group’s

entry into a retail chain (Delta was acquired by a foreign retail chain) and the acquisition of a competitive

edge and product assortment due to the licensed filling in Pivovarna Peć. The size of the Montenegrin beer

market is estimated to be 340 thousand hl with the key beer competitors comprising the breweries Nikšič,

Apatin and Carlsberg.

ITALy

The Laško Group sold 282.3 thousand hl of beverages on the market in Italy in 2011, representing a 7.0%

increase over 2010. It achieved an index of 105.4 for beer and 113.1 for waters. The volume of beer sales in Italy

was 1% lower than the same period last year and 18% higher than planned.

Pivovarna Laško sold 115,520 hl of beer on the market in Italy in 2011 and achieved an increase in sales with

an index of 113.7 over 2010. In 2011 the Company managed to increase sales of own brands by 23%, the result

of a more intensive presence on the Italian market in the “retail” segment. Pivovarna Laško also performs

activities connected to the manufacture and filling of Ceres Top Beer Pilsner for the Danish Royal Unibrew

brewary. Ceres Top Beer Pilsner is for sale only in the Italian market. Sales of Ceres Top Pilsner amounted to

71,000 hl in 2011. The size of the Italian beer market is estimated to be 16.9 million hl with the key competi-

tors comprising Moretti, Peroni and Dreher.

Pivovarna Union has ceased cooperation with the buyer InBev Italia, for which it bottled Tennent’s beer

under license, so that the quantities of Tennent beer in the first half of last year affect the comparison with

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sales in the past. Sales of other private label companies in Atlanta in 2011 almost compensated for the loss

of Tennent’s beer. Sales of commercial and foreign brands of beer decreased by 3% over 2010 and were 56%

higher than planned. Sales of Union beer by 3% Higher than sales in 2010 and 19% lower than planned.

Radenska sold 49.8% of total sales in the European Union in the Italian market. More activities and a

constant presence in the market led to a growth in sales of 13% compared to 2011.

AUSTRIA

The Laško Group sold 44.1 thousand hl of beverages on the market of Austria in 2011 showing an11.8% over

2010. It achieved an index of 121.8 for beer, 109.4 for waters and 107.8 for non-alcoholic beverages.

Laško the Austrian market in 2011 sold the 7.8 51 hl of beer and about an increase in sales with an index

of 114, according to a 2010. The increase in sales in 2011 was due to more intense acts primarily in Pivovarna

Laško draft beer segment. The size of the Austrian beer market is estimated to be 8.2 million hl with the key

competitors comprising Puntigamer, Goesser and Stiegl.

hUNGARy

The Laško Group sold 51.0 thousand hl of beverages on the market in Hungary in 2011, reflecting a 9.9%

decrease over 2010. It achieved an index of 90.4 for beer and 121.0 for waters.

Pivovarna Laško sold 2,169 hl of beer on the market in Hungary in 2011. Sales were slightly lower with an

index of 95.0 compared to 2010. The size of the Hungarian beer market is estimated to be 6.5 million hl with

key competitors comprising Borsod, Dreher and Soproni.

OThER MARKETS

The Laško Group sold 40.6 thousand hl of beverages on other markets in 2011, reflecting an 8.0% over

2010.

Pivovarna Laško sold 9,375 hl of beer on other markets in 2011 and achieved an increase in sales with an

index of 124.0 compared to 2010. Pivovarna Laško commenced selling its products on the markets of China

and England in 2011. Other markets in which beer sales were recorded: Malta, Canada, Latvia, Switzerland,

USA, Australia, Slovakia, Romania, Sweden, Germany, Poland, Czech Republic, Netherlands and United

Arab Emirates.

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ThE COMPANy IS CONTINUING jOINT OPERATIONS wITh PROCUREMENT OFFICES IN ThE LAŠKO

GROUP whICh IN PAST yEARS hAS ShOwN GOOD RESULTS AND BROUGhT CERTAIN SyNERGy EF-

FECTS. GOOD AND CORRECT RELATIONS AMONG ThE GROUP’S MEMBERS, A COMMON AND UNI-

FIED APPROACh AND CONTINUOUS COMMUNICATIONS wITh SUPPLIERS IS ThE ROUTE wE wILL

TAKE..

The Group’s position on the procurement market again completely changed in 2011. Following a some-

what poorer offer in 2010, the offer of all types of materials improved considerably in 2011.

The supply of all the basic commodities was good in 2011 with surpluses again arising on the market (hops,

malt, corn meal, etc.). Despite a large enough supply and peaks in the upstream market, the global prices of

raw materials for our products increased significantly, which is sometimes difficult to grasp. The real cause

for the rise in raw materials for beer and sugar is not known. The rule that prices decline upon increased

demand apparently no longer applies. The only raw materials where a fall in prices was recorded in 2011 were

hops and hop extract.

The annual harvest of agricultural products was extremely varied throughout the European Union due to

climatic events. Better results were recorded in Eastern Europe (Czech Republic, Slovakia, Ukraine) and in

France, but poorer results were recorded in Central Europe (Germany, Austria, Hungary).

An interesting situation arose with regard to corn meal, because the Group is 100% dependent on the

Serbian market. Alongside very good quality and large quantities, the price in this market is 10 - 20% lower

than that in the EU.

Global trends in the plastics market led to dramatic price changes in 2011. The last three months of 2011

saw a substantial drop in the prices of these materials (over 20%). Forecasts for early 2012 envisage a re-

newed price incline, a forecast which was also prepared for all other raw materials.

The general economic situation in Slovenia and continued resolution of problems at Pivovarna Laško,

d. d. also had a negative effect on supplier confidence in 2011. The poorer liquidity situation with belated

payments of obligations and uncertainty regarding the future has awakened a certain fear and uncertainty

in suppliers. The Company is confronted with the fact that increasingly more suppliers are requiring some

2.6

Supply flOwS

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tpye of guarantee instrument for receivables or are setting up debt limits. Due to its correct relationship with

suppliers, many of whom have been the Company’s partners for years, the Company is already receiving

a normal supply. In 2011 it managed to negotiate longer payment deadlines with the majority of suppliers.

Sincere discussions and constant contact with suppliers are important. Despite the amount of problems

encountered, the Company was able to ensure all raw materials and repromaterials in 2011.

The Company is continuing joint operations with procurement offices in the Laško Group which in past

years has shown goods results, bringing certain synergy effects.

The benefits highlighted in past years no longer apply due to events which are known to all. Good and

correct relationships among the Group’s members, a joint and unified approach and ongoing communica-

tions is a path the Company intends to follow. These measures and improvement of the general situation will

enable the Company to gain back supplier trust which is nevertheless still good. Despite poorer operating

conditions in 2011, the Company managed to retain all its suppliers.

The Company managed to manage costs in 2011 by reducing and optimizing inventories and accelerating

savings with regard to the procurement of required materials. The Company managed to retain the costs of

supplied materials on an index of 102 in 2011 despite the unfavourable market situation and considerably

changed product structure.

With regard to operations regarding the maintenance of a human-friendly environment the Company will

invest a lot of effort into using ecologically suitable materials which preserve the natural environment in its

natural state to the greatest extent possible. In the procurement processes this predominantly involves ma-

nipulation of various types of packaging comprised of a variety of materials and the collection and recycling

thereof. Priority must comprise the use of lighter packaging, use of all types of packaging with the addition

of recycled materials and the like. Raising environmental awareness is a constituent part of the Company’s

operations.

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DESPITE ECONOMIC AND LIqUIDITy PROBLEMS, ThE COMPANy MANAGED TO SUCCESSFULLy PRO-

DUCE AND FILL AN ENTIRE ASSORTMENT OF PRODUCTS IN ThE COMPANIES OF ThE LAŠKO GROUP,

AT ThE SAME TIME INTRODUCING SEVERAL IMPORTANT NOVELTIES whICh CONFIRM ThE DEVE-

LOPMENTAL ORIENTATION AND INNOVATIVENESS OF ThE DEVELOPMENT TEAMS OF ThE GROUP.

Strategic guidelines in the areas of production, maintenance, investment, energy and ecology of the Laško

Group are based on achieving optimum productivity, a balance between flexibility and efficiency of indi-

vidual components of the production process, achieving synergies among group companies, the integration

of information technology in manufacturing processes, possibilities of modular extensions of certain pro-

duction sets and investments that will bring the highest possible return on invested capital. Thus, the Group

again continued in 2011 with a development and innovation orientation in all fields of beverage technology

and consistently fulfils objectives in the context of sustainable development to the greatest extent possible

given the difficult financial situation of the Group.

Despite economic and liquidity problems, the Company managed to successfully produce and fill an en-

tire assortment of products in 2011, at the same time introducing several novelties which confirm the devel-

opmental orientation and innovativeness the development teams of Pivovarna Laško. The Group is especially

proud of the outstanding sales success of Radler from Pivovarna Union and the gold medal for Laško pivo

awarded at the international beer assessment Monde Selection which only confirms the Company’s focus

on the highest standards of quality. The numerous years of joint effort with procurement in the selection of

superior raw materials and beer production materials has borne results. Time and time again the Group is

pleased to find that the quality standards of Pivovarna Laško exceed the norms and standards of suppliers,

who supply products or render services also to world-famous companies in the branch

In accordance with the optimization and rationalization of product lines objective, the Group attempted

by optimising the time required for the realisation of orders of products and stocks and logistic processes

to achieve better utilization of capacity, and at the same time combine the production of programs wherever

possible so as to establish bases for future investments by individual companies of the Laško Group.

The Group continued optimising the consumption of materials and resources, and strives to achieve all the

savings objectives set forth in the five-year project fro 2010-2014. The Group also attained extremely favourable

conditions for the purchase of electricity for the whole group and the synergy effects of a multi-year gas lease.

2.7

prOduCTiON

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Through energy management projects and the establishment of full control over the use of individual

energy products, the Group achieves a lower specific energy consumption of each energy source and, conse-

quently, lower costs, despite the fact that energy prices depend on stock market conditions.

In the research and development field, the Group also continues to perform research involving the in-

troduction of new sales articles, packaging materials and the most important raw materials for production.

One of the most important activities is the energy and environmental optimization of production processes

that the Group has implemented together with recognized Slovenian institutes and established providers of

such services.


In 2011, the production capacities of the places to brew beer were exclusively reserved for the brewing dif-

ferent types of wort.

The new light beer Laško Trim with a 2.5% alcohol content began production in the first half of the year

for the needs of the market.

To customer needs in product mix, The Company introduced beer for Lidl, Konzum and TUŠ into its

production programme due to consumer needs as beer for two potential buyers on the Italian market on

a trial basis. The entire wort hop production was 1,040,011 hl. In the second half of the year, the Company

also produced a special beer called Club Premium which was intended for exclusive bottling in glass bottles.

No larger problems were recorded in the production process other than variations in the quality of malt

of one of its major suppliers.

Due to poor customer demand for the product Ic Cider, the Company decided to modify the organoleptic,

which was well received.

Activities were undertaken all year to optimize the production processes (CIP systems, exchange of assets

with a view of reducing environmental burdening, etc.).

A great deal of time at technological and technical collegiums was devoted to mutual problem solving and

the realization of solutions. Topics also covered problems of the HACCP system. A very important segment

in terms of ensuring product safety are activities in the field of maintenance equipment, mainly the servicing

of the valves of fermentors and other functional parts of production.

We also educate employees, especially those working in key positions such as production maintenance

and quality control.

In October 2011 the Company successfully implemented re-certification of HACCP in the areas of water

resources and complete production and filling.

First an assessment by the buyer Konzum was implemented with controls also implemented by inspec-

tion services in the sectors of veterinary, health, metrology and ecology. No unconformities were found.

The Company continued cooperation activities with catering schools and caterers for the purpose of rais-

ing the treatment of draft beer and handling of beer on the market in general.

The number of reclamations was insignificant. They are still more of a technical nature with the predomi-

nant cause related to an expired date of use.

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The introduction of reclamation resolution and classification via the SAP information system will enable

a more accurate insight into the statistics and type of complaints.

In 2011, the optimisation of the production of Zlatorog beer at the Peć brewery (Birra Peja) was also imple-

mented. Regular visits of experts and constructive cooperation of both sides ensure a product that will meet

market requirements.

Due to limited PET filling capacities at the Company’s filling line, the filling of beer into 1.5 l and 2 l bottles

is being carried out at Proan, d. o. o., Slovenske Konjice.

COOPERATION wITh INSTITUTIONS

The task “effect of successive application of the yeast Saccharomyces Pastorianus” was realised in collabo-

ration with IHPS Žalec and the Biotechnical Faculty.

SŠTG Maribor secondary school invited the Company to cooperate with them within the scope of an adult

part-time education called”sommelier”, where the Company presented all the necessary skills in the field of

production and cultures and serving and drinking of beer.

MAINTENANCE AND ENERGy ENGINEERING

As every year until now, the Company meets the technical needs of production and bottling beer in the

field of maintenance and energy. The operational work is performed in line with predetermined plans re-

garding preventive works. Curative maintenance interventions generally arise during the main production

season upon full utilization of the production equipment.

In accordance with the implementation of preventive maintenance, plans were followed to streamline

costs and closely monitor the realization of expenditures. The realization of preventive maintenance was

performed in its entirety, with the consumption of financial assets lower than planned and also lower com-

pared to previous years. With regard to the overall money spent on maintenance in 2011, Pivovarna Laško

has an index of below 100 compared to the previous year. A part of the rationalization is based on minimiz-

ing the costs of building maintenance; otherwise its predominant purpose is to optimise the use of funds

for maintenance. The fact that machinery and equipment require more maintenance from year to year to

ensure productivity is one we cannot ignore. Therefore, in accordance with the five-year plan of investment,

it will be necessary to gradually restore the equipment, otherwise the cost will increase for maintenance and

the physical condition of equipment will become smaller and require more energy.

Energy production and consumption is projected at the level of the previous year. An increase in energy

costs, largely due to increasing prices of basic energy has also been noted. Thus the Company and produc-

tion’s task is the rational use of energy in both the manufacture and filling of beer.

In addition to essential maintenance, all required inspections for both energy and work process devices

were carried out in accordance with legislation.

2.7.2 PIVOVARNA UNION, d. d., LjUBLjANA

In 2011 Pivovarna Union produced 943,855 hl of beer. This figure only shows produced beer and does not

include the share of fruit juice in radler beer mixtures.

The radler beer mixtures of Pivovarna Union received a great response in 2011 not only in Slovenia but also

on the markets of neighbouring countries and the Balkans. Therefore, the Company continued to develop

new flavours in 2011, which is the only way of continuing the sales success story.

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Many development efforts have been made to maintain and improve the quality of beer produced in Pivo-

varna Union Successes in the field of quality can be seen in the laboratory results, where very good results

regarding the stability of beer and very stable results of other quality parameters and microbiological results

were achieved. House degustations also showed improvements in the aroma and flavour stability of beer.

Much effort has been directed at achieving savings in production without compromising the quality of

any product. In this way the Company continues to optimise water consumption, which has implemented

successfully for several years. Savings were also recorded for energy consumption and wastewater quantities.

In addition to beer produced in Pivovarna Union, the Company also assumed and filled 12,124 hl of Bavar-

ia beer for the Croatian market thereby continuing the already traditional cooperation with the established

Dutch brewery.

In 2011 the Company also continued with the filling of Mercator beer in plastic bottles in Pivovarna Laško.

A portion of the bottled beer production for retail chains has already been fully relocated to the Birra Pej

brewary.

In 2011 a few technological problems regarding quality deviations raw materials, were recorded but the

quality of the finished products were not affected. Following problems with the quality of corn meal at the

beginning of the year, the Company carried out a thorough review and assessment of the facilities of both

suppliers of corn meal from Serbia, with no variations recorded anymore. Some technological problems with

the malt during the summer months were observed, so it is necessary to continue with the assessments of

suppliers of raw materials, materials and production materials.

A total of 1,550,304 hl of beverages was bottled on the filling lines of which 1,041,776 hl comprised beer and

Radlers, 432,091 hl soft drinks and 75,483 hl Zala water. All requested sales quantities were ensured which

has been growing in line with the growth of quality of its products.

The Company consistently maintains acquired standards: ISO 14001, ISO 9001, NSF, IFS and HACCP.

MAINTENANCE AND ENERGy ENGINEERING

The Maintenance Department plays a very important role regarding the current state of the equipment-

Due to minimum investments in new technological equipment, more and more maintenance interventions

are required. The most sensitive is the area of electronics and control systemsFewer and fewer spare parts

are available for the old controllers. They are available but only repaired ones with new controllers almost

non-existent. For this reason, the bridge on the filling line for S4 returnable packaging, a few sets in the

shelves warehouse and in the place for brewing were renovated. Demanding work is performed by external

contractors. The aim in future is to elevate the professional level of maintenance in the field of industrial

process informatics.

The Company regularly monitors the costs of services and use of materials, which considering depending

the age of the technological equipment remains at an acceptable level.

ENERGy AUDIT

In 2011, the Company opted for an energy audit of technological processes; the project was conducted

jointly with external parties. The inspection of Pivovarna Union was oriented towards an integrated defini-

tion of its energy status and opportunities on one hand, and the implementation of recommendations for

effective energy use on the other. The estimated savings annually amounts to 3,000 MWh/ year. Measures

implemented in 2011:

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• transition to tariff measurement,

• optimisation of the preparation of sterilized water on the PET2 line,

• optimisation of the operation of the air conditioning systems,

• optimisation of the operations of the cooling of the combined cellars.

Some of the objectives the Company desires to achieve in 2012:

• introduction of systematic energy management in conjunction with the upgrading of the power control

information system,

• optimisation of the operation of technological filling lines,

• reconstruction of the energy system in the boiler rooms,

• creation of a systemic approach for increasing the utilization of waste heat in the Company,

• reduction of heat losses.

2.7.3 RADENSKA, d. d., RADENCI

Although the overall economic situation is anything but encouraging, Radenska can be proud of the fact

that it was able to satisfy all quantitative and technological requirements for products for sale. As the volume

of sales this year was 6% higher than sales in 2010, the company also produced 6% more products than in

the previous year, ie. 102.5 million litres of natural mineral, spring and table waters and non-alcoholic bever-

ages. Productivity also increased by 5.5%.

Given the increase in production and sales, the situation in terms of costs is less encouraging for in actual-

ity all the energy products and raw materials are becoming more expensive in line with global trends, which

is also being felt in decreased cost effectiveness.

The company’s operations are also monitored through the realization of objectives and indices from an

environmental perspective with the aim of reducing energy consumption per unit, which consequently also

has economic effects.

In 2011 the company also managed to reduce its consumption of electricity, natural gas, and nitrogen per

unit of output, whereas the consumption of process water, butane, CO2 gas, detergents and disinfectants

was slightly above the specific energy consumption per unit of 2010.The increase in the use of some of these

elements affects the product structure which partially changes each year, consequently leading to periodic

fluctuations in the consumption of energy and raw materials. The extensive preventive action in the area of

cleaning equipment, production technology and facilities due to the microbiological aspects of adulterated

sugar also contributed to the increase in consumption of detergents and disinfectants in 2011. Although the

company has managed to restrict the problems through preventative action, costs and resources spent on

chemical agents and cleaning itself and use of technological water have increased.

The synergy effects of the joint operations of the Laško Group can be felt with regard to the supply of

energy, particularly electricity, natural gas, and the procurement of certain raw materials, materials and

resources since the Group has more pull with suppliers due to larger quantities supplied.

The company lagged slightly below the results from the previous period in the area of standstills and yield

with respect to the bottling of non-alcoholic beverages. Production standstills most often due to intermediate

goods, mainly due to overall trend of saving and thus the impoverishment of certain production materials,

thus increasing the chances for error thereby causing additional delays in production; additionally the in-

creased number of standstills is caused by increasing older equipment, small batch production and an ever

wider assortment of products.

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Indicators of reclamations in 2011 indicate a slight increase in the indices. Reclamations are measured as

a percentage of reclamations to the value of invoiced sales of products. Reclamations increased compared

to 2010. No larger reclamations were received from customers however there were some individual cases

regarding various products and due to different reasons. The bulk of the irregularities had already been re-

moved by Radenska itself meaning that these reclamations were of an internal nature and were not perceived

by the consumer. A major proportion of “small” reclamations represent reclamations of products filled on

the aseptic lines. The cause of these complaints was of a microbial nature resulting from problems with

raw materials as well as filling equipment which is already obsolete. These represent products filled without

preservatives making them very sensitive to the smallest of irregularities. The company was able to decrease

these reclamations considerably through on the aseptic lines and also smaller investments implemented in

2010 and 2011. A great number of reclamations also arose due to expired dates of use. The aforementioned

problem is due to the fragmentation of the product range and sales of small quantities of certain products.

These issues are being resolved through the discontinuance of quite a number of products in 2012, which in

the past few years proved most critical and displayed poor sales.

In 2011 inspections of the company were carried out by the environment and spatial planning inspector,

health inspector, energy inspector and mining inspector, the last of which was performed due to the clas-

sification of springs natural mineral waters under the mining heading. All inspections were passed without

incidence. The environmental inspector only submitted a decision regarding completion of the application

on the use of all waters by Radenska and an inspection of the wastes generated in drilling wells.

In the field of equipment and building maintenance, the company achieved a 4% reduction in the costs

of service and spare parts thorugh a streamlining policy, which is a remarkable accomplishment. Consider-

ing the condition and age of the equipment and investments in the last five years which had been halved in

comparison to previous periods, this was a result the company did not dare even plan.

The company has been practicing so called self-maintenance in the last few years meaning that it is at-

tempting orient machine and equipment operators into thinking and action, not only operating equipment,

but also maintaining them. This has ked to staffing problems in the area of maintenance. The new orienta-

tion is being slowly enforced, but with satisfactory results. However, the company is faced with the problem

of “rejuvenating” personnel and replacing employees who have retired in all areas. Equipment is becoming

increasingly more complex, requiring adequate staff. The average age of employees at Radenska is 47.5 years.

2.7.4 VITAL MESTINjE, d. o. o.

In 2011 the company filled132,543 hl of beverages, which is 10% less than the previous year.

The primary objective now and in future periods is the rationalization of production. So in 2011 the com-

pany managed to halve the wastage resulting from preparation is final filling. It also decreased electricity and

heating oil consumption. Production was increased by 6%, a result which is partly a reflection of investment

in modern filling equipment, which was completed in 2010.

The company consistently strives to ensure fuller implementation of the guidelines of the HACCP system.

The company has undergone an external audit of the production facility pursuant to the HACCP system by

the buyer Hofer for the second year in a row,

Various inspection controls have been implemented, but no deficiencies were found.

In the area of maintenance and energy, the company was able to realize all activities that were set for this

period. These predominantly include regular annual servicing of key equipment. The main objective for the

future is the rationalisation of energy use.

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The main focus in the development of new products was on new PET packaging, which was implemented

into the product assortment. This regards plastic bottle with 38-15 threads. The company launched two new

flavours of Frupi in the 1 litre new plastic bottle, five flavours for the Tušbrand in 1, 5 l plastic bottles, two

flavours of the Spar brand and eight products in classic PET packaging.

Vital ensures continuous control from input materials to the output of finished products by maintaining

an overview over complete processes.

Inputs are carefully chosen according to previous patterns.

Great emphasis is dedicated to the preparation of products in line with manufacturing specifications

for each beverage and for each batch separately. No deviations from the standards were recorded. Physical,

chemical and microbiological controls are carried out regularly on a daily basis. A total of 4021 microbiologi-

cal samples were analyzed in 2011.

To achieve good results, the company abides by the principles of HACCP and good manufacturing prac-

tices.

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IN 2011 wE SUCCESSFULLy COMPLETED A PROjECT TO INTRODUCE ThE SAP qM MODULE FOR

ThE wORK OF ThE qUALITy DEPARTMENTS OF PIVOVARNA LAŠKO, PIVOVARNA UNION, RADENSKA

AND VITAL.

Internal control over quality and security was implemented in all companies in compliance with the re-

quirements of applicable laws and internal regulations in 2011. Appropriate remedial and corrective actions

were taken if discrepancies were found, to eliminate risks or reduce them to acceptable levels.

In 2011 the Group successfully completed a project to introduce the SAP QM module for the work of

the quality departments of Pivovarna Laško, Pivovarna Union, Radenska and Vital. The module will allow

the Group to further accelerate the processing and analysis of the results of its laboratories and even more

facilitate traceability from the raw material to the finished product or in the event of any reclamations in the

opposite direction.


In 2011 the Quality Control Department continued to perform its work in accordance with the prescribed

control plans. New control plans were defined for each new product however this did not present any major

problems for the experienced teams of the quality control departments. Due to the development and intro-

duction of new products (Peach Malt, Apple Malt, Lemon Lime Laško, Laško Orange and various licensed

and bottled beer store brands), a corresponding increase was made to the scope of analysis and control.

The Group followed the regular planned controls of intermediate materials, entry raw materials, phasal,

water analysis, intermediate products (beer and non-alcoholic beverages – lemonades), by-products, final

products, water analytics and developmental analytics without any incidences. EBC analytics, MEBAK meth-

ods, methods prescribed under current regulations, own methods, and of course compliance with HACCP

principles and good laboratory practices serve as the base for good analysis. The Group participates in regu-

lar laboratory collaborative schemes BAPS (Beer) and MAPS (malt), QWAS (water), where it achieves very

good results in the areas of both chemical and microbiological control.

2.8

QualiTy CONTrOl

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Except for the constant poor quality of German malt and minimal deviations in corn meal, there was no

evidence of major changes in the results of analyzes compared to the previous year. Intermediate materials

mainly meet the required standards (with the exception of capsules and sometimes labels).

The microbiological state of beer production and filling, filling of spring waters, final products and drink-

ing water within the scope of the water distribution system were monitored by the microbiological laboratory.

The bottling of new products (Trim Laško, Laško Malt Apple, Laško Malt Peach, IC Cider, Laško Orange and

Lapko Lemon Lime) and easement bottling for the company Proan, d. o. o., (Zlatorog beer, Lidl Deep) com-

menced in this period. The appropriate microbiological control was introduced in all production and filling

lines to ensure product safety.

The Company attained adequate microbiological quality of its products in 2011 thereby also ensuring the

appropriate safety of its products.

More than 24,900 samples were processed by the microbiological laboratory in the period from 1 January

to 31 December 2011 (source: Plilllis system, Pivovarna Laško).

Much attention was also paid to the schooling of the in-house tasting group in 2011. The Company has

been collaborating with the British company Flavor Activ for a number of years. The training of tasters

continued within the comparative scheme of global breweries to confirm the skills and regular training of

professional tasting groups. The Company is aware that the great attention devoted to sensory controls is a

necessary part of providing quality products and thus ensuring consumer satisfaction.

In 2011 much effort and energy was also invested in the construction and deployment of the new SAP

information system - Q-module M, which will entirely replace the existing TQM information system on

1 January 2012

The quality of products of Pivovarna Laško is always positioned at the forefront as a competitive advantage.

Therefore, consistently high quality is gaining in importance.


Pivovarna Union, d. d. successfully passed certification for four standards that govern its business. These

are: the ISO 9001, ISO 14001, NSF and IFS standards. The International Food Standard (IFS) is the most dif-

ficult to assess. The inspection is carried out three days, largely in the manufacturing facilities, warehouses

and workshops. The company achieved a higher level in the assessment, i.e. over a 95% success rate.

With a growing share of brands, large retail chains showed the need for uniform criteria for evaluating

suppliers. In 2002, the German Trade Association (HDE - Hauptverband des Deutschen Einzelhandels)

began designing the IFS standard. This standard was subsequently adopted by the French and Italian trade

associations. IFS is a standard recognized by the GFSI (Global Food Safety Initiative) - a non-profit associa-

tion that ensures the comparability of standards based on criteria of food safety.

The IFS standard combines the standard requirements of the HACCP Codex Alimentarius as well as the

rules of good business and good hygiene, traceability and labelling of food.

In order to prevent problems in the production process and consequently reduce costs, in 2011 the company

assessed the production of corn meal at one of its suppliers and as each year, monitored the briquetting of hops

for its needs. It also assessed one of the two main suppliers of bases for the production of non-alcoholic beverages

and performed an inspection at the premises of the the manufacturer of labels and manufacturer of EURO pallets.

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Quality, food safety and environmental protection at Fructal, d. d. are maintained with the aid of three sys-

tems according to the ISO 9001:2008, ISO 22000:2005 and ISO 14001:2004 standards. All three systems

are integrated into a single system that covers all business processes. The systems are also helpful during ex-

ternal inspections by customers and inspection supervisors who, in 2011 rated the operations of Fructal, d. d.

extremely positively. In 2011 Fructal, d. d. also successfully passed the aforementioned assessments as well as

assessments of ISO 9001, ISO 14001, and ISO 22000 for product safety and two more specialized standards:

SGF which confirms that Fructal is a manufacturer of genuine fruit juices and SI-01-ECO for the BIO line.

The company Fructal Mak, a. d., Skopje, which possesses the ISO 9001:2008 and HACCP certificates suc-

cessfully, passed the external assessments in the autumn of 2011. The HACCP assessment did not show any

discrepancies with recertification planned for November 2012.


The quality control department of Radenska d. d. operates in three laboratories to ensure the quality and

control of its products. Before the final release of products onto the market, analyses are always carried out

to confirm the suitability of the products.

In 2011 quality control was confronted with staffing problems. Consequently, it had to adjust the scope of

implementing control on intermediate processes and finished products.

The year 2011 was also marked by preparations for the introduction of the quality control module-QM

module. Workshops led by the representative, Sapphir were held in the period from March to June. A system

was set up within the scope of the workshops to optimally cover all processes in all quality control depart-

ments in the Laško Group. The company followed a “blue print” in June which had been prepared following

numerous adjustments. This was followed by the transfer of master data on quality control in October and

the successful completion of the QM project in December. As a result, a system for inputting, monitoring,

processing and archiving all data and results of analyzes carried out as part of quality control was established

also in Radenska.

The largest proportion of reclamation in 2011 represented complaints regarding as a result of expired dates

of use. These are followed by technological reclamations and complaints as a result of microbial malfunc-

tioning. The company manages to resolve the majority of technological problems before products are re-

leased for sale through real-time problem solving. In addition the company also noted quite a number of rec-

lamations regarding intermediate materials in 2011 whereby the manufacture of labels should be highlighted.

Quality control assurance is carried out in 3 laboratories:

• input control of intermediate materials, raw materials, PET materials, the design of prototypes,

• chemical control,

• microbiological control.

As each year to date, assessments were carried out by Pepsi Cola as well as an internal and external audit

of ISO standards and HACCP in 2011. The Pepsi assessment was carried out by a U.S. certification company

authorized by Pepsi Cola - AIB. During the assessment mainly minor inconsistencies were identified. Dis-

crepancies were resolved within the envisaged deadlines and a report on corrective measures implemented

sent to Pepsi.

Prior to the regular assessment, an assessment was first made by a representative of Pepsi Cola. The rep-

resentative checked the conformity of documentation and certificates to the requirements of Pepsi. Pepsi has

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a requirement that all suppliers must be approved by Pepsi Cola. This means that all supplied raw materials

and intermediate goods used for filling Pepsi products must be accompanied by appropriate documentation:

COC/COA. Larger deviations were not observed.

In 2011, assessment of the IFS standard was performed for the second time. This is a certificate which is

required for the sale of products in certain foreign retail chains. The inspection in 2011 was made at the re-

quest of the buyer, the Hofer retail chain. The audit was successfully completed with no discrepancies found.

The quality of its products is one of the basic principles of the company: concern for a health care products

for consumers, selection of quality and verified suppliers, compliance with statutory requirements regarding

internal controls, performance of required analyses to verify compliance, etc. The aforementioned must be

established and upgraded in all areas and all levels also in the future.


Vitalu ensures continuous control from the input of raw materials to the output of finished products by

maintaining an overview over the complete process.

Inputs are carefully chosen according to previous patterns.

Great emphasis is dedicated to the preparation of products in line with manufacturing specifications

for each beverage and for each batch separately. No deviations from the standards were recorded. Physical,

chemical and microbiological controls are carried out regularly on a daily basis. A total of 4021 microbiologi-

cal samples were analyzed in 2011.

To achieve good results, the company abides by the principles of HACCP and good manufacturing prac-

tices.

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ThE OBjECTIVE OF IMPLEMENTING BOTh INVESTMENT AND MAINTENANCE PROjECTS IS TO AChI-

EVE ThE OPTIMAL PERFORMANCE OF FILLING LINES, ENERGy EqUIPMENT AND MORE EFFICIENT

CONTROL OVER ThE USE OF FUNDS IN MAINTENANCE.

Notwithstanding the obsolesce of the Group’s production equipment and restricted investments in tech-

nology in recent years, in 2011 the Group met and even exceeded the ambitious target of maintaining the

same level of maintenance costs as in 2010, while correctly implementing all preventive maintenance work

to ensure the smooth operation of production capacities in the summer months.


SUPPLEMENTATION OF ThE ST2 LINE wITh NEw EqUIPMENT

Due to harsh economic conditions and financial constraints in 2011, this project was not approved for

realization of the planned period by the Management Board. The implementation and funding thereof has

been rescheduled for 2012.

In connection to the aforementioned project, the Company managed to elaborate the project documenta-

tion for energy infrastructure of the A0, A and B filling lines in connection to link them with the CHPP

(combined heat and power production). This phase has been designed up to the invitation to tenderers phase

for the elaboration of the project which will be implemented at the beginning of 2012.

The Company launched the new “Malt” product on the market in the spring of 2011. The technological pro-

cedure for preparing this beverage on the ST2 filling line also required the supplementation of equipment

on this line. Therefore the existing tunnel furnace had to be adapted to enable the required technological

phase of pasteurisation to be implemented.

EUR 103,000 was used for the denoted activities.

hIGh GRAVITy BREwING hGB

Market requirements and legality are continuously dictating new products, which not only generates new

production processes to follow these requirements, but also optimises manufacturing processes. Therefore,

2.9

iNvESTmENTS

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the development and production of new kinds of beer and other beverages with a higher or lower content of

extract required the installation of additional equipment.

The installation of suitable equipment for all technological and energy infrastructural connections in the

basement area were concluded in June 2011 as well as the successful release of the equipment into operation.

The device is successfully operating and fulfils all planned parameters for the development and supply of the

market with new products particularly in the area of brand merchandise.

Due to streamlining of the project’s implementation, the project was successfully implemented with only

EUR 258,000 of the earmarked EUR 300,000 utilised in the endeavour.

10 x 0.5 L CRATES

As the introduction of the small 10 x 0.5 l crate is closely connected to the “supplementation of the ST2

filling line with new equipment” project, the implementation and financing of this project will also be post-

poned until 2012.

“CIDER” PACKAGING

In 2009 the Company had already installed equipment in the boiling maturing cellars which enable the pro-

duction of cider and performed trial production and testing of the new product. By optimising the technologi-

cal process, the new product was able to be bottled in suitable packaging and offered to the market in May 2011.

The supplementation of formatting parts of the SMI, KHS and Krones parts of the ST3 filling line was

required to enable the planned activities for the launching of the new product on the market as well as con-

formity with requirements regarding bottling equipment and packaging types.

The investment costs comprised EUR 136,000.

REPLACEMENT OF VALVES FOR ThE zKT AMMONIA

The planned implementation of the project has been rescheduled for 2012 due to financial limitations.

ENERGy MANAGEMENT – SOFTwARE AND hARDwARE

In 2010 the Group managed to perform half of the project activities, enabling control and efficient use of

energy to be improved. Due to financial constraints in 2011 continuation of the project is rescheduled for 2012.

RENEwAL OF ThE IT CENTRE

All activities of this project have been rescheduled for 2012.

ECOLOGICAL PROjECTS – BIOGAS

As a result of the growth in energy costs and the TOC’s harmful emissions, the drying of waste brewar’s

yeast is no longer cost effective and was terminated by IRSOP. Large costs would arise if the wet waste

product was brought to a depot, also with regard to the transport thereof. Therefore in cooperation with the

Biotechnical and Chemical Faculties of Ljubljana, a research study entitled “Možnosti uporabe odpadnega

pivskega kvasa za pridobivanje bioplina v anaerobnem procesu razgradnje” (Possibilities of using waste

brewer’s yeast for obtaining biogas in the anaerobic degradation process) is underway.

A pilot test was implemented involving the direct introduction and degradation of brewer’s yeast suspen-

sion at the UASB reactor of the Company’s cleaning apparatuses during 2010 in which the planned results

were achieved. This year the company acquired 250,000 m3 of biogas which will replace the use of natural

gas in the boilers.

EUR 26,000 were used for the purpose of implementing a pilot test of the reactor.

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RECORDING OF wORK TIME

The Group managed to install the appropriate mechanical and software equipment in the areas of the

administrative buildings, main gates and gatehouses in the southern entrance in the second half of the year

enabling the successful commencement automated capture and processing of employee attendance at their

work positions already before the end of the year.

EUR 42,000 was spent for this purpose.

wATER SOURCES

Several activities as envisaged in the 2011 investment plan were implemented in this area but only up to

phases that did not require financing. Accelerated continuation of these activities is planned for 2012.


KEy INVESTMENTS:

In 2011, we replaced The old worn filters for beer, for which no spare part could be found was replaced with

new PALL filters on diatomaceous earth. The filter is needed for the production of small batches of specialty

beers which consumers require from the Company. The new filters will enable rational filtration of beer

with small losses due to their specific construction. As they are fully automated, productivity will increase.

The Company continued to invest in the recovery of waste water in 2011. This is a system for the collection

and reuse of wastewater, which will reduce the cost of water and at the same time, protect the environment.

The total quantity of water collected and reused in 2011 amounted to 31.000m3 therefore far less fresh water

was required. At the beginning of 2011 the company the rinsing water of the following machinery and equip-

ment were connected to the wastewater recovery system: D2 pasteurizers, D2 rinser, CIP filling and OBP-

2cooling water pumps. The collected water was reused in the cooling system (cooling towers); the system

was previously cooled with fresh water from wells.

Development of industrial electronics and control is extremely rapid, so the brewery has to replace defec-

tive assemblies with new ones continuously, because they can no longer be obtained on the market or due to

extremely long delivery times and high prices. Therefore old electronic control devices of key equipment sets

had to be replaced with new ones in 2011. Obsolete sets were repaired for the following: S4 filling machine,

in the shelved warehouse and in the place for brewing.

In 2011 investments were made in moulds and format parts non-alcoholic beverage filling lines since PET

bottles had been redesigned. These bottles are easier, cheaper and thus more environmentally acceptable

and have a new modern look.

The Company also purchased new returnable containers, barrels, crates and bottles, due to increased

sales and especially export sales because the packaging line is slower and resulted in a shortage of packag-

ing. Since the Company was unable to meet all orders of customers, it decided to implement emergency

purchases in addition to regular purchases.

Other investments were aimed at production plants and machinery, computer equipment, software for

sales promotion and storage capacities.

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Only half of the funds from amortisation were earmarked for investments in Radenska in 2011. Priority

was only given to projects that are urgently needed for the adaptation of equipment to new products and to

ensure smooth production.

REPLACEMENT OF ThE FILLING MAChINES AND BOTTLE CONTROLLERS ON TPO-1 LINES

The filling machine for 1-liter bottles on the TPO-1 filling line was replaced in May 2011. The filling ma-

chine from the manufacturer TPO ha been in use since 1994. It was worn out and microbiologically unfit for

filling non-carbonated water and non-alcoholic beverages. The equipment was also inflexible and unable to

be adapted to the new bottle stoppers. The 1-liter bottle was therefore filled on two filling lines, namely: the

1-liter Radenska Naturelle and 1-liter Ora beverages were filled on the P-PET lines and Radenska Classic on

the BLS-1 line. The new filling regime led to the filling of 1-liter glass only on the BLS-1 line thus relieving the

P-PET lines, which currently fills only PET packaging and no longer requires readjustment for glass packaging.

This also enables the use of all types of plastic stoppers and aluminium stoppers, since the primary pur-

pose was to maintain the company’s main brand Radenska Classic in glass packaging, which requires a

more elegant and suitable stopper.

Since these lines produce return packaging, the electronic inspection and control of glass bottles prior to

filling is a vital part of the lines. Existing electronic checks did not support the control of all vital elements of

bottles (thread, mineral deposits, etc.); in addition the existing machine was already worn out and obsolete.

The company selected a filling machine from the Slovenian supplier Vipoll and the electronic bottle

checker from the German manufacturer Heuft. The value of this investment was EUR 0.9 million. In line

with this investment, the company upgraded the equipment for filling returnable and non-returnable glass

packaging, i.e. packaging which represents the superiority of the key brand Radenska Classif, thereby also

enabling the modernisation of stoppers for these bottles and raised the quality level of the product due to

electronic bottle inspection, which is implemented using the equipment of one of the best manufacturers

of such equipment.

RESTORATION OF NATURAL MINERAL wATER wELLS

Most of Radenska’s wells were built in the seventies. As a result, problems began to emerge with the op-

eration of these wells. The filter fills of the wells slowly became saturated and impermeable, and also often

damaged. Because of these problems, the company has been modernising the existing wells by drilling a

new hole in the same aquifer in the immediate vicinity of existing wells. Old wells can not be rehabilitated

because other materials were used during the construction period. Therefore the company rebuilt the V-C

well, which is situated at the courtyard of the filling facility.. Work began in October and the well will be used

from December onwards. Work was carried by the company Georaz. The value of the investment was EUR

130,000.

ThE COMPUTERIzATION OF ThE wAREhOUSING OF INTERMEDIATE AND RAw MATERIALS AND INTEGRATION

OF qUALITy CONTROL IN ThE SAP INFORMATION SySTEM

The computerization of processes in this year also included the integration of the segment of intermedi-

ate and raw materials. Together with the company SAPHIR, the company integrated a module into the SAP

information, which supports the computerization and traceability of all materials that are an integral part of

products. This project is also implemented at the level of all members of the Laško Group. The project was

quite challenging, especially with regard to the transition to the new system, which required the inventory-

ing and integration all existing intermediate and raw materials. Thus all the production processes from entry

materials to storage and shipment of products are now IT supported.

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Implementation of the QM quality control module for the entire Laško Group into to the existing SAP

information system is also underway. This project will also enable greater connection with an importance

process, namely the quality control with data in the information system which will facilitate and integrate the

work and quality control parameters directly to the data of production and utilised raw materials and other

materials used for products.

PALLETISING PROjECT FOR DD PALLETS

Market needs required the automation of packaging of products in half on so-called Düsseldorfer (DD)

pallets The aforementioned was implemented until now through the manual shifting of packages on pallets

and re-packaging on DD pallets and for certain products directly from the line, but with a reduced capac-

ity. Products on DD pallets are becoming more frequent with the current method of providing this type of

packing involving a great deal of physical work. Consequently, the company commenced the project for the

automatic reloading of products from EURO pallets to DD pallets using a robot and simultaneously adapted

the P-PET line for direct packing on DD pallets without reduced capacities. The scope of this project will be

exchanged on this line are The pallet wrapping machine on these lines will also be replaced within the scope

of the aforementioned project due to obsolesce and insufficient capacity. The project will be implemented in

phases and will be completed in February 2012. The value of the project amounts to EUR 400,000.


The company Vital concluded a continuous cycle of investment in 2010 that assured everything needed

to achieve the appropriate level of quality, productivity and flexibility of its operations No investments were

envisaged for 2011. Nevertheless, activities in connection to the rehabilitation of energy and in particular, the

boilers, commenced in 2011.

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ThE LAŠKO GROUP CONSIDERS ThE 2011 FISCAL yEAR AS A yEAR OF RESOLUTION AND CONFRONTA-

TION wITh LIqUIDITy PROBLEMS ThAT AROSE DUE TO NON-STRATEGIC FINANCIAL INVESTMENTS

IN ThE PAST. ThE COMPANy wILL OBTAIN STRONGER MATERIAL BASES FOR REALISING ThE SET

DEVELOPMENT STRATEGy ThROUGh REORGANIzATION, DISINVESTMENTS AND REPROGRAMMING.

The joint stock company Pivovarna Laško successfully combines the majority of Slovenian beverage pro-

ducers into the Laško Group, which is complemented by the companies Jadranska pivovara – Split, d. d. and

the newspaper and publishing company Delo, d. d., Ljubljana.

The companies in the Laško Group companies are still in a difficult financial situation, for the Group is

highly indebted. Additionally, the maturities of financial liabilities represent a high level of financial risk.

The divestment of assets available-for-sale will allow the redemption of the indebtedness of the Laško Group

to a sustainable level of debt. The investment portfolio, specifics of individual investments and illiquidity

on the capital market impeded and disabled the immediate divesture of unnecessary property at reasonable

values.

The market position of the Laško Group on the domestic market in the areas of beer, water and other non-

alcoholic beverages is stable, as reflected both in its market share and volume of beverages sold. Terms of

sales in 2011 worsened so the Group’s business policy promptly adjusted the current situation on an ongoing

basis. The business policy regarding the supplying of consumers was found to be a good one. The Group

increase sales of beverages in foreign markets in line with the strategy in 2011. The achieved sales results in

2011 are proof that the Group has traditional and development capacities and the knowledge and energy to

pursue its strategy of growth.

All companies in Slovenia which are in terms of capital integrated into the Laško Group (Pivovarna Laško,

Pivovarna Union, Radenska, Fructal until the end of 2011 and Vital) in 2011 continued and implemented their

efforts for optimum cooperation in the supply and sales areas. The results of such cooperation were reflected

in the supply of raw materials, packaging, intermediate goods and other materials under favourable supply

conditions and terms, as well as price conditions. Synergy effects are visible only after a longer period of

time for such connections.

2.10

pErfOrmaNCE aNalySiS

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The stricter market situation and demands of commercial companies for greater sales benefits shows that

the Group’s orientation, namely the sale of products via its own Horeca distribution network - distribution

of products for subsequent sale to the catering sector was a good one. Considering the reorganization prob-

lems of such an important business function, it is unrealistic to expect immediate more favourable business

results, for the entire synergy effect will only be visible in future years.

In 2012 the business strategy of the parent company Pivovarna Laško, d. d., and of the Laško Group will

predominantly be to acquire new sales markets both on the markets of the European Union as well as on

the markets of South-Eastern Europe. The Group will continue upgrading the marketing approach to ensure

product awareness of the products of already established brands and will continue to strive towards achiev-

ing more favourable supply conditions on all these markets.

2.10.1 BUSINESS OPERATIONS OF ThE GROUP

The Laško Group sold a total of 4.001 million hl of all types of beverages in 2011, reflecting a 4.1% increase

over 2010.

OVERALL SALE OF BEVERAGES OF ThE LAŠKO GROUP


Beer 1,974,735 1,845,989 107.0

Mineral water 657,224 595,497 110.4

Natural spring water 184,842 187,658 98.5

Flavoured water 256,115 271,197 94.4

Fruit juices, nectars 311,422 333,546 93.4

Other non-alcoholic beverages 951,788 921,941 103.2

Syrups 55,449 61,538 90.1

Other alcohol 9,142 8,137 112.4

Total 4,400,717 4,225,503 104.1

Higher sales of beverages, especially beer and mineral waters in 2011, are the result of increased activity

in foreign markets, which in the future will also require increased sales activity; higher domestic sales, con-

sidering the market share of sales on the Slovenian market will sooner become an illusion than reality. Even

better sales results in the past year were partially hindered by the general economic situation, reflected in

the decline in living standards and consequently, reduced demand and consumption of beverages, which is

mainly reflected in the sale of natural waters, flavoured waters and fruit juices.

FINANCIAL DATA OF ThE GROUP

The Laško Group (including the Fructal Group) generated EUR 323.4 million in total net sales revenues

in 2011, representing a 5.6% increase over the previous year. Net sales revenues from products and services

amounted to EUR 319.5 million Compared to the same period last year, net profit had increased by EUR 14.9

million or 4.8%. Net sales revenues from products and services on the domestic market increased by EUR

8.9 million , and by EUR 6 million on foreign markets.

Out of total sales revenues, 84% were generated on the domestic market with the remainder, 16% gener-

ated on foreign markets. The Group still achieves its greatest share of foreign market revenues from the

markets of the former Yugoslavia with the share of sales on EU markets also increasing.

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Without the Fructal Group (maintained operations), the Laško Group generated net sales revenues of EUR

264.7 million which represents an increase of EUR 14.4 million over 2010. The share of revenues from beer

sales was 55.8%, the share from sales of other beverages 20.9%, from the newspaper-publishing business

20.6% and from other headings 2.7%.

Operating expenses which amounted to EUR 321.9 million in 2011 increased by EUR 1.8 million compared

to 2010 or by 0.6%. Operating expenses without the Fructal Group (the latter represents the discontinued

operations) amounted to EUR 255 million and were EUR 16.2 million or 6.8% higher than in 2010. Costs

of materials increased the most, namely by EUR 12.9 million or 16.6% mainly due to increases in the prices

of certain strategic raw materials, intermediate goods and energy. Labour costs in comparison to 2010 in-

creased by EUR 0.3 million. Depreciation costs had decreased by EUR 1.4 million, costs of provisions by

EUR 0.2 million and costs of other services by EUR 0.4 million. The Group revalued property, investment

property and brands in 2011. The Group recognised impairments due to revaluation and a revaluation of

operating expenses in the amount of EU 11.3 million of which EUR 5.8 million relates to the impairment of

brands of Delo, d. d. In 2010 an impairment of long-term assets of EUR 8.7 million was disclosed reflecting

a EUR 2.5 million decrease over the previous year.

Operating profit (EBIT) amounted to EUR 9,9 million in 2011. The Group recognised certain one-time

operating events in 2011, such as the impairment of brands, revaluation of long-term assets and unaccounted

for depreciation due to the discontinuation of operations which had a negative effect on the current operat-

ing result in the amount of EUR 13.4 million. The normalised EBIT has been adapted to these business

events and amounted to EUR 23.4 million. The adapted EBIT in 2010 amounted to EUR 16 million repre-

senting EUR 7.4 million less than 2011.

The Laško Group generated EUR 27.5 million in total net losses in 2011. Total normalised cash flows from

operations (EBITDA) amounted to EUR 47.5 million and was EUR 8.5 million higher than the previous year.

The Group disclosed a negative financing result in the amount of EUR 41.2 million. Financial expenses

from interests paid to creditors amounted to EUR 24.6 million. and exceeded the normalised EBIT by EUR

1.2 million, meaning that the operating profit generated is insufficient to completely cover interest expenses.

The Laško Group also showed an impairment of investments in a total value of EUR 26 million among fi-

nancial expenses in 2011 of which EUR 21.5 million of the impairment regarded impairment of MELR shares.

A portion of the impairment in the amount of EUR 17.7 million directly increases other comprehensive

income and has no effect on the value of the Group’s capital.

NOTES TO ThE STATEMENT OF FINANCIAL POSITION OF ThE GROUP

The financial position of the Laško Group is extremely serious. The high level of financial debt burdens

current operations and is threatening its existence and development. So as to resolve the liquidity position,

the divesture of all non-strategic investments began to be intensively carried out in 2010 in line with the

Group’s adopted 5-year operating strategy. Procedures for the sale of a 93.73% stake in Fructal, d. d., 79.25%

stake in the newspaper company Večer, d. d., 100% stake in the company Delo, d. d., 23.34% stake in Poslov-

ni sistem Mercator, d. d., and all other investments and property not required for business commenced in

2011. The procedure of sale of the company Fructal, d. d. which was 93.73% owned by Pivovarna Union, d. d.

to the strategic partner Nectar from Serbia was successfully implemented in December 2011. The proceeds

from the sale amounted to EU 35.3million.

As at 31 December 2011 the assets of the Group totalled EUR 569.7 million and were EUR 67.2 million or

10.6% lower in 2010. The assets predominantly decreased due to the sale of the Fructal Group, impairment

of the brands of Delo and impairment of the investment in Poslovni sistem Mercator and Probanka. They

increased due to the rise in short-term operating receivables.

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The share of long-term assets totalled 56.4% or 321.1 million. The value of long-term assets increased by

EUR 55.5 million mainly due to the transfer of investment in Delo, d. d. from of non-current assets available-

for-sale back to individual types of assets. The assets of the company Delo, d. d. were disclosed among non-

current assets available-for-sale in accordance with IFRS 5 in 2010 due to their envisaged sale. Currently, no

reason remains for the classification of the investment among assets available-for-sale since it appears that

the investment in its current form can not be sold in the short-term (within one year) at a reasonable price.

Total liabilities of the Group totalled EUR 444.2 million of which financial liabilities comprised a 87.6%

share or EUR 389 million. Financial liabilities decreased by EUR 8.5 million compared to the previous year.

The decrease is due to the repayment of loans to banks from the acquisition price received for the Fructal

Group. Liabilities rose due to the renewed inclusion of the financial liabilities of Delo, d. d. in the amount

of EUR 13.4 million.

The surplus of short-term liabilities over short-term assets of the Group totalled EUR 148 million on the

last day of 2011 which has resulted in a high degree of liquidity risk. The negative surplus had increased by

EUR 103.6 million in comparison to the last day of 2010 predominantly due to the impairment of the invest-

ment and Delo brands and the transfer of Delo’s assets and liabilities from the group available-for-sale back

to individual types of assets and liabilities.

In the event of successfully concluded divestments, the Group will immensely decrease its indebtedness

and consequently its exposure to liquidity risk. Within the Group, indebtedness of individual companies will

decrease in various degrees. Uncertainty remains regarding the success of the divestment of financial invest-

ments and unnecessary property, even alongside a successful disinvestment the partner company Pivovarna

Laško, d. d. will still remain over-indebted while individual subsidiary companies will have an excess of freely

liquid assets. Therefore the payment of dividends by the subsidiaries is envisaged in the financial restructur-

ing plan. In this way the parent company would partially improve its liquidity position and business result.

The increase in sustainable sources would enable the maintenance and increase of value of the assets or its

owners.

The equity of the Group as at 31 December 2011 comprised EUR 125.5 million and was EUR 6.4 million

lower than on the last day of 2010.

SALES By EMPLOyEE

Sales per employee - Laško Group

in E

UR

thou

sand

0.0

40.0

80.0

120.0

160.0

200.0

2009 2010 2011

177.7164.1169.4

Sales by employee in the Laško Group increased by 8.3% in 2011 in comparison to 2010.

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OPERATING ExPENSES FROM NET SALES REVENUES

Sales per employee - Pivovarna Laško, d. d.

in %

0.0

30.0

60.0

90.0

120.0

2009 2010 2011

99.5104.5104.6

Operating expenses from net sales revenues were 4.8% lower in 2011 compared to 2010.

PLANS

The Laško Group plans to sell 4,082,629 hl of all kinds of beverages on the domestic and foreign markets

in 2012, representing an 11.8% increase over 2011 whereby the sale of the companies Fructal, d. d. Ajdovščina

and Fruktal Mak a. d., Skopje were not observed so as to enable comparability of data. The plan the Group

has set itself is an optimistic one, considering that an increase of 30% in sales on foreign markets is planned.

2.10.2 OPERATIONS OF ThE SUBSIDIARy COMPANIES

The 2011 fiscal year will be remembered as one in which the Group was unable to realise the objectives set.

The reasons were many and ranged from lack of understanding and support by the Company owners and

banks to problems which arose from the reorganization of several business functions which in the initial

phase of introduction, are not yet optimally regulated. The Group expects to achieve its set business objec-

tives in the upcoming years.

The implemented impairment of several financial investments in 2011 will slacken somewhat in the up-

coming period, but will in no way impede the planned development process. It is not expected that these

events will have an effect on impairing the social security of employees.

Increased globalization both on the domestic and foreign markets will only allow competitiveness through

mergers and affiliation with similar companies. In line with the trend, the business-development strategy

of the parent company and Group was adjusted enabling a competitive presence on the market. The Com-

pany and Group are endeavouring to adapt the business strategy to all eventual new market situations on

individual markets.

The endeavours of all employees in 2011 as in recent years were oriented at improving product quality

enabled by the latest technological equipment in the production-filling process, especially the use of quality

raw materials and water. The Company is aware that it will only be able to successfully retain all loyal buyers

and consumers of all Pivovarna Laško products through product quality, a key objective also in 2012.

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qUANTITy OF BEVERAGE SALES:

( in hl ) 2009 2010 2011

TOTAL Sales 1,011,539 968,697 975,838


BEER Sales 978,833 937,721 938,745


WATER Sales 32,706 30,057 30,541


OTHER NON-ALCOHOLIC BEVERAGES Sales - 919 5,280

Chain index / / 574.5

OTHER ALCOHOL Sales - - 1,272

Chain index / / /

Sales of Pivovarna Laško, d. d. in 2011 by segment:

• BEER

938,745 hl,

representing a 0.1% increase over 2010;

• NATURAL DRINKING WATER

30,541 hl,


• OTHER NON-ALCOHOLIC BEVERAGES

5,280 hl,


• OTHER ALCOHOL

1,272 hl,

No sales of this beverage category were implemented in 2010.

Increased sales of beer in 2011 over the previous year is mainly due to higher sales in foreign markets,

lower sales recorded in the domestic market, partly as a result of higher consumption of beer mixtures as

a competitive product to beer. The lower sales in the markets of Kosovo, Macedonia and Montenegro, it is

because we are producing beer for those markets Pećko pivovaro passed on to Kosovo. An increase in sales

is observed on other foreign markets. Favourable sales results were particularly observed on the markets of

Croatia and Bosnia-Herzegovina.

Reduced sales of bottled waters which are predominantly sold on the domestic market were predominant-

ly due to the reduced standard of consumers. It was established that a portion of consumers had replaced

bottled water with regular tap water during the crisis period.

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FINANCIAL DATA

Pivovarna Laško, d. d. generated EUR 94.3 million in net sales revenues in 2011, representing a 3.3% in-

crease over the previous year. Net sales revenues from products and services amounted to EUR 74.6 million

and were EUR 0.5 million or 0.7% lower than in the previous year. Net sales revenues from products and

services decreased by EUR 1.7 million on the domestic market, but increased by EUR 1.2 million on foreign

markets. Revenues from sales of brands via the Horeca distribution channel also decreased, namely by EUR

2.9 million, with the company realising net sales revenues of EUR 0.6 million from the sale of materials

and merchandise.

Beer sales comprised a 95.9% share of total sales revenues, waters and other beverages a 2% share and

services a 2.1% share.

Out of total sales revenues from the sale of products and services, 84.6% were generated on the domes-

tic market with the remainder, 15.4% generated on foreign markets. The largest share of revenues is still

achieved on the markets of the former Yugoslavia with the share of sales on EU markets increasing.

Operating expenses in 2011 amounted to EUR 86.5 million and were EUR 6.7 million or 8.4% higher than

in 2010. Costs of raw materials and intermediate materials increased noticeably (EUR 0.9 million as did also

energy costs (EUR 0.3 million). Among costs of services, the greatest growth was recorded for the costs of

payment transactions (EUR 0.8 million) and costs of the sale of products (EUR 1.1 million).

In 2011 Pivovarna Laško d. d. generated EUR 10.5 million in operating profit (EBIT), EUR 16.8 million in

net cash flow from operating activities (EBITDA) and EUR 17.2 million in normalised EBITDA, representing

a decrease of EUR 1 million or 5.5% over the previous year.

The Group disclosed a negative financing result in the amount of EUR 28.9 million, which is EUR 10.2

million higher than the previous year.

The Group generated EUR 32.9 million in financial expenses, namely from interest in the amount of EUR

15.4 million and from the impairment of financial investments in the amount of EUR 17.5 million.

Financial expenses from interests increased by EUR 2.3 million in comparison to the previous year and

amounted to EUR 15.4 million, exceeding operating profit by EUR 4.9 million. Such high interest amounts

threaten the uninterrupted operations and development of the Company.

Financial expenses from the impairment of investments in the amount of EUR 17.5 million are related

to an impairment of investments in Delo, d. d. in the amount of EUR 8.2 million, an impairment of EUR

4.3 million of the investments in Poslovni sistem Mercator, an impairment of EUR 3.1 million of the invest-

ments in Probanka,d .d. and the revaluation of granted loans and interests to Jadranska pivovara - Split, d. d.

in the amount of EUR 1.8 million.

NET LOSS

In 2011 Pivovarna Laško, d. d. generated a EUR 16.4 million loss before taxes and a net loss of EUR 15.5

million.

NOTES TO ThE STATEMENT OF FINANCIAL POSITION

Total assets of the Company as at 31 December 2011 comprised EUR 405.7 million and were EUR 10.2 mil-

lion or were 2.4% lower than in 2010. Assets decreased primarily due to impairment of investment in work,

Mercator and Probanka, and increased as a result of higher short-term receivables.

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The share of long-term assets amounted to 79% or EUR 320.5 million. Compared to the previous year, the

value of fixed assets increased by EUR 26.4 million mainly due to the transfer of the investment in Delo, d. d.,

of non-current assets held for sale back to the long-term investments in subsidiaries. In 2010, the investment

in the company Delo, d. d. was disclosed among non-current assets available-for-sale in accordance with

IFRS 5 due to the envisaged sale thereof. Currently, the reasons for the classification of investments held for

sale there are no more d Because it has been shown that investment in the short term (within one year) in

its current form and at a reasonable price with high probability can not be sold.

Total liabilities of the Company amounted to EUR 294.7 million with financial liabilities comprising a

90.9% share of the amount or EUR 268 million. Financial liabilities increased by EUR 2.2 million com-

pared to the previous year. Short-term financial liabilities increased by EUR 23 million compared to the previ-

ous year predominantly due to the short-term part of long-term loans due in 2012. The share of short-term

liabilities in total financial liabilities is 90.9%.

As at 31 December 2011 Pivovarna Laško, d. d. showed a surplus of EUR 184.4 million of short-term li-

abilities over short-term assets, which has resulted in a high degree of liquidity risk. The negative surplus

had increased by EUR 62.8 million compared to the last day of 2010. predominantly due to impairment of

investments in Delo and the transfer of the investment from non-current assets available-for-sale back to the

long-term investments in subsidiaries.

In accordance with the adopted five-year strategy of operations for the Laško Group, procedures for the

sale of all non-strategic investments began to be intensively implemented in 2010. Procedures for the sale

of a 93.73% stake in Fructal, d. d., 79.25% stake in the newspaper company Večer, d. d., 100% stake in the

company Delo, d. d., 23.34% stake in Poslovni sistem Mercator, d. d., and all other investments and property

not required for business commenced in 2011. The procedure of sale of the company Fructal, d. d. which was

93.73% owned by Pivovarna Union, d. d. to the strategic partner Nectar from Serbia was sucessfully imple-

mented in December 2011. The purchase price was EUR 35,300,000.

Until the successfully implemented sale of individual investments, the Company will experience serious

liquidity problems which it will only be able to successfully resolve through agreements with banks (with

the latter acting as creditors or as important owners of the Company). Discussions with banks regarding the

possibilities of a comprehensive reprogramming of debt in the long-term are being carried out within the

scope of strategic measures. Discussions with regard to the reprogramming of debt are being implemented

daily whereas discussions regarding the acquisition of new sustainable sources have not yet taken place.

Equity of the company as at 31 December 2011 comprised EUR 109.4 million and was EUR 14.8 million

lower than on the last day of 2010.

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SALES By EMPLOyEE

Operating liabilities in net sales revenues

in E

UR

thou

sand

160.0

80.0

0.0

240.0

320.0

400.0

2009 2010 2011

289.3281.8307.6

Sales per employee in Pivovarna Laško, d. d. in 2011 increased by 2.7% compared with 2010 due to in-

creased net sales revenues, for the average number of employees has decreased by 2 workers.

OPERATING ExPENSES FROM NET SALES REVENUES

Operating liabilities in net sales revenues

in %

0.0

30.0

60.0

90.0

120.0

2009 2010 2011

91.587.485.4

Operating expenses in net revenue from sales in the year 2011 increased by 4.9% compared with 2010,

somewhat due to increased costs of materials, goods and services, but mostly due to increased write-offs.

PLANS

Pivovarna Laško, d. d. is planning to sell 1,040,918 hl of all beverages in the 2012 business year. This rep-

resents a 10.7% increase over 2011. A 6.2% increase in the sales of beer, 1.3% increase in the sale of natural

waters and 92.2% increase in other beverages is planned.

Following realisation of the planned quantities of beverage sales, the Company is planning net sales reve-

nues of EUR 97.1 million in 2012, a 4.0% increase over 2011. It also envisages that the efficiency and EBITDA

indicators in sales revenues will attain of 1.15 and 0.232 respectively in 2012.

CONCLUSION

The principal activity of Pivovarna Laško, d. d. is excellent. The EBITDA margin is comparable with other

comparable breweries around the world. The objective to increase revenues with the same amount of is the

same yield increase revenue. Financial expenses represent a burden for the Company due to high indebted-

ness. Procedures for the disinvestment of unnecessary assets, which would enable the Company to halve

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the level of debt is not feasible without the consensus of other stakeholders and as a result of the deepening

economic financial debt crisis, difficult. Redemption of debt will enable the controlled development of the

Company’s core activity. The Group requires systemic solutions, a single legitimate organization (contract

group), disinvestments, long-term rescheduling of financial liabilities and a capital increase.

The concluded 2011 fiscal year was not as successful as the periods several years ago, however the Group

has established that its business policy is correctly focused, ensuring continued successful development.

Pivovarna Laško, d. d., rightfully achieved its rank among the top food-processing companies in Slovenia in

the past. It is boldly expected that despite the stricter economic conditions and financial crisis the Company

will continue its operations showing positive results in the future.

Following the equipping of the entire production-filling process and quality of all its products, the Com-

pany will be able to compete with the most successful breweries in Europe.

The Company desires to maintain the achieved level of excellence and leading position in its branch in

Slovenia also in the future. The project involving the amalgamation of the Slovenian beverage industry and

continuous search for new possibilities for exploiting synergies will remain the key strategy of the Group’s

business policy. The Group will only be able to successfully compete with foreign corporations on the Slove-

nian and foreign markets through unification. The continued development of the Group will predominantly

be dependent on the realisation of the denoted project. Nevertheless, the Group will also endeavour to focus

on business connections with other beverage producers, particularly in the region of South-Eastern Europe.

Pivovarna Laško, d. d., has proven many times in the past that knowledge and willpower are the key fac-

tors which will enable it to overcome all problems encountered resulting from increasingly less favourable

operating conditions. The Company is planning to be even more successful in the future, predominantly

through improved exploitation of synergy effects of affiliated companies in the area of joint brand marketing

on foreign markets. In the future Pivovarna Laško, d. d., will continue to ensure its loyal consumers superior

quality products and successful development and the long-term stability of investment assets and adequate

yield on invested capital for its owners – the shareholders of the Company.

2.10.3 OPERATIONS OF SUBSIDIARIES

1. RADENSKA, D. D., RADENCI

COMPANy PROFILE

Development of the Radenska company commenced in 1869 when Dr. Harel Henn, a landowner, filled

the first bottles with mineral water. A good fifty years later, in 1923, the mineral water had gained a therepeu-

tic reputation, and has been marketed with the three-heart symbol since 1936. The Radenska Tri srca brand

is one of the oldest brand names in Slovenia.

The core business of Radenska is the bottling and marketing natural mineral and spring waters and non-

alcoholic beverages.

On the Slovenian market, the Company’s desire is to, under the brand name Radenska, remain the lead-

ing filling company of natural mineral waters, and in the area of bottled drinking waters and non-alcoholic

beverages to maintain its development as an active and competitive company with a significant market share.

In the export area, the Company strives to maintain its position as the leading Slovenian exporter of natural

mineral waters under the brand name Radenska, and as an active filling company and/or seller of those

specific products of Radenska which are, with regard to their quality, particularly interesting for the market

on the territory of the former republics of Yugoslavia and Central Europe.

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Radenska, d. d., Radenci, is subsidiary company of the parent company Pivovarna Laško, d. d. The owner-

ship share of the parent company represents a 81.96% stake the capital (an explanation of the ownership and

voting rights is given on page 59 of this Report).

Radenska, d. d., Radenci, also has ownership stakes in other companies and is the owner or co-owner of

the following companies: Radenska, d. o. o., Beograd (100% ownership) and Radenska, d. o. o., Zagreb (100%

ownership) - these companies are not active, and Miral, d. o. o. (100% ownership), Laško Grupa, d. o. o.,

Sarajevo (1.97% ownership) and Odem GIZ Slopak, d. o. o. (9.74% ownership).

BASIC ChARACTERISTICS OF OPERATIONS IN 2011

The total sales volume of Radenska, d. d. in 2011 in all areas comprised 93,939 million litres of beverages,

representing a 5.9% increase over 2010 and 3.7% less than planned. A slightly more quantitative shortfall in

the plan was recorded in waters (7.8%), while an increase (23.9%) was observed for non-alcoholic beverages.

Total net sales revenues from the sale of beverages in 2011 totalled EUR 28.4 million, showing a EUR 1.5

million or 5.9% increase over 2010. A total of 25.9 million products were sold in Slovenia, reflecting a 7.1%

increase over the previous year. Sales on the markets of South-Eastern Europe increased by EUR 0.7 million

but showed a 30.5% decrease over the previous year, a decrease of EUR 1.4 million or 11.0% on EU markets

and EUR 4.0 million or 8.0% decrease in other countries. Total sales of exported products amounted to EUR

2.5 million and reflect a 5.0% decrease over the previous year.

Total realisation of sales values in euros in Slovenia consisted of a 91.2% share in Slovenia, a 4.9% share

in the markets of the European Union, a 2.4% share in the markets of South-Eastern Europe and a 1.5%

share in other countries.

The volume sold on the Slovenian market totalled 818 thousand hl and represented 82.2% of all goods sold

opposed to the 82.3% share in 2010 and reflecting an increase of 41.6 thousand hl.

The company again managed to maintain and even increase its market shares in individual categories

compared to the competition in 2011 through activities for key buyers on the domestic market.

The company sold 93.8 thousand hl of beverages on the markets of the European Union, an increase of

8.9 thousand hl compared to 2010. A 9.4% increase in the share of volume sold was observed in 2011 over

the share recorded in 2010 (9.0%).

The company sold 63.5 thousand hl of beverages on the markets of South-Eastern Europe, decrease of

0.2% compared to 2010. A 6.4% decrease in the share of volume sold was observed in 2011 over the share

recorded in 2010 (6.8%).

The company sold 19.4 thousand hl of beverages on the markets of other countries, an increase of 11.0%

compared to 2010. A 2.0% increase in the share of volume sold was observed in 2011 over the share recorded

in 2010 (1.8%)

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KEy DATA ON OPERATIONS OF ThE COMPANy RADENSKA, D. D., RADENCI

( in EUR ) 2009 2010 2011


Net profit/loss -36,833,222 456,936 -1,776,502

Net cash flow1 -33,509,004 3,310,706 914,170

EBIT 1,467,336 1,254,152 1,232,730

EBIT - normalized 1,467,336 2,699,230 883,328

EBITDA 4,791,554 4,107,922 3,923,402


Long-term assets 73,358,307 67,647,568 73,966,026


Equity 83,758,794 81,102,108 79,736,226

Provisions 2,721,028 2,558,036 2,298,725

Long-term liabilities 8,565,555 6,618,526 692,295


1Net profit/loss with depreciation

In 2011 Radenska, d. d. generated EUR 31.8 million in operating revenues, EUR 30.6 million in operating

expenses and an operating result of EUR 1.2 million. Financial revenues which include revenues from the

disposal of investments or the sale of shares, revenues from dividends received, revenues from interest on

loans and financial revenues from operating receivables amounted to EUR 3.8 million. Due to the realistic

disclosure of financial investments owned by Radenska, d. d., a permanent impairment of the investments

in Mercator, d.d. (MELR shares) in the amount of EUR 3.9 million was carried out and an additional impair-

ment on the investments in Delo, d. d., (DELR shares) in the amount of EUR 1.9 million and together with

interest expenses and other financial expenses, generated EUR 7.1 million of all financial expenses, resulting

in the negative financing result in the amount of -EUR 3.3 million. Therefore the net operating result is nega-

tive and amounted to EUR -1.7 million.

EMPLOyEES

In 2011 Radenska, d. d. hired six new employees and lost 5 employees (retirement, agreed departures). The

number of employees at the end of the year increased by one employee, resulting in a total of 208 employ-

ees as at 31 December 2011. In 2012 the company plans to hire four new employees and is also planning to

increase work productivity due to a planned increase in production as in 2011.

CONCLUSION

The existing market environment in connection to known trends had an effect on the boldy set basic op-

erating objectives in 2012. Processes which will have continued synergy effects within the contractual group

will be continued.

2. UNION GROUP

PRESENTATION OF ThE GROUP

The Union Group was established in 2001 when Pivovarna Union, d. d., took over Fructal, d. d. Pivovarna

Union, d. d. is the parent company of the Union Group. In addition to parent company Pivovarna Union,

d. d., the Union Group also includes the companies Fructal, d. d. and Fruktal Mak, a. d., whose core activity

is the production of juices and beverages. Until 16 December 2011 Pivovarna Union, d. d. was the 93.73%

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owner of the company Fructal, d. d. which is the 89.4 percent owner of the company Fruktal Mak, a. d. On 16

December 2011 the company Nectar, d. o. o., from Bačke Palanke became the owner of Fructal, d. d. with an

identical stake. The Union Group has affiliated companies abroad, namely the companies Birra Peja, Sh. a.,

Kosovo and družba Birra Peja, Sh. p. k., Albania. As at 31 December 2011 Pivovarna Union, d. d. had a 39.55%

ownership stake in Birra Pei, Sh. a., Kosovo, the latter of whom is the 100% owner of a company in Albania.

The vision of the Union Group is to use its own trademarks to maintain a high level of awareness and at

the same time customer loyalty, both in Slovenia as well as on adjacent markets outside the Slovenian bor-

ders. It endeavours to become a strong regional producer with its own strong distribution network within

the scope of the Laško Group. The Union Group comprises socially responsible companies with a high

level of ecological awareness. The companies will continue implementing development and innovative pro-

grammes, which will initiate change and create new trends in the market.

Their mission is to ensure high quality beverages satisfying the needs of the most demanding customers,

which follow global trends and at the same time develop and discover new segments and trends, both in the

production of beer as well as in the production of non-alcoholic beverages, which are manufactured without

preservatives, the company takes into account the most demanding food and technological standards. The

Union Group creates a working environment for all its employees, which stimulates their professional and

personal development.

The strategic objectives of Union Group include the production and sale of innovative and trendy products,

maintenance of the market positions of own brand names on the domestic market, and recovery and expan-

sion of previously achieved positions on nearby markets. It intends to achieve planned cost effectiveness

with professional colleagues acting as teams and in accordance with the culture of the Union Group.


The Union Group sold 2,297,729 hl of beverages in 2011, reflecting a 6% increase in sales over 2010 and

1% less than the planned quantity. It sold 1,638 tons of food products, 10% more than in the previous year

and 9 % more than planned for 2011.

The Union Group sold 70% of all beverages sold on the Slovenian market, and 30% to export markets.

The best results were achieved in the sale of beer, which showed a 14% increase over the previous year and

12% over the planned amount. In Slovenia, it sold 13% more beer than in 2010 with growth recorded for both

its own brand names, which included the bestselling brand Radler, and commercial brands. Sales of non-

alcoholic beverages remained at the same level as the previous year. Sales of waters fell by 3% over 2010. In

addition to lower water consumption, a proportion of the consumers turned to discount chains in 2010, a

location where the Union Group with its waters is not present.

Despite the difficult economic conditions that have also marked the export companies of the Union Group,

these markets proved extremely successful for the Union Group. Through good work and the right strategy,

the Union Group managed to achieve a growth in sales chosen entry to these markets are both in the beer

segment as well as the soft segment and alcoholic beverages to achieve sales growth. The company sold 8%

more beverages to export markets than in 2010 and 8% more than planned.

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KEy DATA ON OPERATIONS OF ThE UNION GROUP

( in EUR ) 2009 2010 20112


Net profit/loss -51,645,016 -544,238 5,062,306

Net cash flow1 -39,120,762 10,732,943 12,230,152

EBIT 14,224,570 6,692,040 14,352,456

EBIT - normalized

(for impairment of real estate) 14,224,570 6,692,040 17,920,024

EBITDA 26,748,824 17,969,221 21,520,302

EBITDA - normalized

(for impairment of real estate) 26,748,824 17,969,221 25,087,870

Long-term assets 212,779,353 109,516,705 112,632,615


Equity 78,424,313 80,151,688 94,261,537

Provisions 60,400,381 32,929,532 13,760,576



2Maintained and generated operations together have been taken into account.

The Union Group generated EUR 164.7 million (of this EUR 57.8 million via the Fructal Group) in net

consolidated net sales revenues in 2011, representing a 10.5% increase over the previous year. Out of total

sales revenues, 78.1% were generated on the domestic market and the remainder, 21.9% on foreign markets.

Operating costs in the amount of EUR 153.3 million (EUR 55.3 million from the Fructal Group) were 6.3%

higher than in 2010 predominantly due to the higher costs for materials used (19.7%). The reason is the

greater quantity of sales and the related increased production and high prices of some raw materials, packag-

ing and shipping materials and energy, especially natural gas.

Costs of services were 2.5% higher predominantly due to higher costs of marketing, selling, leases, bank-

ing services and other various services.

Written-off values decreased by 10.9% in comparison to the previous year predominantly due to a 36.4%

decrease in amortization. The assets of the Fructal Group were not depreciated in 2011, as they had been

placed in the group of assets available-for-sale (IFRS 5). Real estate appraisals were performed at the end of

2011 and the effects of revaluation to the fair value recognized as revaluation expenses for fixed assets in the

amount of EUR 3.6 million resulting in the disclosure of a smaller operating result.

Labour costs decreased by 8%.

In 2011 the Union Group generated EUR 14.4 million in in operating profit (EUR 4.3 million via the Fructal

Group) which was 114.5% higher than the previous year. This is due partly to improved operations, partly due

to less depreciation to to the non-depreciation of assets of the Fructal Group. EBITDA amounted to EUR 21.5

million (EUR 4.3 million from the Fructal Group) and was 19.8% higher.

Financial revenues in the amount of EUR 12.4 million (EUR 7.0 million from the Fructal Group) were

133% higher than in 2010. A 54.6% share of these revenues represented profit from sale of Fructal shares, a

30.6% represented revenues from dividends received and the remainder interest received and profits from

the sales of smaller investments.

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Financial expenses in the amount of EUR 18.5 million (EUR 0.8 million from the Fructal Group) were

46.3% higher than in 2010. Since Agrokor had withdrawn from the sales procedure for Mercator, d. d. in

early February and due to fopoor predictions regarding poorer operations for the future, the stock price of

shares MELR shares fell. The shares were therefore permanently impaired by the difference between the av-

erage cost and stock on 31 December 2011 by the amount of EUR 8.9 million through profit or loss (financial

expenses). Almost half of the other financial expenses were interest on loans that had been received.

Net profit for the year 2011 amounted to EUR 5.1 million (EUR 8.4 million from the Fructal Group) where-

by the net profit for the majority owner comprised EUR 4.9 million and net profit for the owner of a non-

controlling interest amounted to EUR 0.2 million. The Union Group disclosed a loss of EUR 0.5 million

(EUR 0.9 million of the amount from the Fructal Group).

Since the company sold the Fructal Group at the end of 2011, a so-called “final consolidation of the” Union

Group was performed on 31 December 2011. Therefore in accordance with IAS 27 the Fructal Group is shown

in the statement of comprehensive income for the entire period of 2011, whereas it is no longer included in

the statement of financial position on 31 December 2011.

EMPLOyEES

At the end of 2011 the Union Group had 778 employees, representing a 2.4% decrease over the year before.

Due to the streamlining of employment in the past five years, the number of employees in the Union Group

has radically decreased. Uninterrupted operations were ensured through the re-allotment of personnel with-

in the Group and if this was not possible, temp agencies were used. If such personnel showed potential and

deemed necessary due to the nature of work, the Company hired them following a defined period. Urgent

replacements to ensure an uninterrupted work process is only possible in direct production while only real-

location of personnel or work is possible for auxiliary processes. Due to the sale of the Fructal Group in late

2011, the Union Group began 2012 with only 353 employees.

CONCLUSION

In 2012, in addition to the parent company Pivovarna Union, d. d. the Union Group will only consist of the

subsidiary Birra Pei, Sh. a, Kosovo and the company Birra Pei, which in 2011, were still affiliated.

The Union Group will operate in accordance with the adopted strategy of the Laško Group up to 2014. The

strategy is based on business growth, which should be achieved by increasing market shares in export mar-

kets and maintaining the market position on the Slovenian market. The group will continue to work inten-

sively and rapidly seek alternative scenarios for the sale of unnecessary assets and property and attempt to

reschedule loans with banks.

3. VITAL MESTINjE, D. O. O.

COMPANy PROFILE

The development of the company Vital Mestinja commenced over fifty years ago. The main activities of

the company are fruit processing and bottling of non-alcoholic beverages under its own trademark FRUPI.

The company is also an important beverage bottler for the retail trademarks of various chain stores. The lat-

ter represents 80% of the company’s activities and is too high so the future strategy will be to increase the

market share of the Frupi brand.

The company desires to regain its leading market share in syrups in the Slovenian market and at the same

time, focus on the increased quality of Frupi products which will be based on the Kozjansko apple which

constitutes the basic raw material. The company has capital ties with Pivovarna Laško, d. d., the latter of

which was the 96.92%owner of Vital Mestinja as at 31 December 2011.

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The total sales volume of the Frupi brand and other retail brands amounted to 12,778,911 litres and EUR

4,663,330 in terms of sales value. In terms of sales volume, 10% fewer products were sold than in 2010, and

in terms of sales value, sales were 3.8% higher than the previous year, mainly due to changes in the sales

structure. Sales of Frupi products in terms of quantity fell by 20% in 2011. On the other hand financially,

sales increased by 1%, which is very encouraging. The increased sales of FRUPI syrups contributed the most

to this increase. Sales of retail products fell by 3.5% in terms of quantity while the financial index is108.

KEy DATA ON OPERATIONS OF VITAL MESTINjE, D. O. O.

( in EUR ) 2009 2010 2011


Net profit/loss 47,569 -81,667 8,427

Net cash flow1 424,865 292,495 356,936

EBIT 48,000 -79,933 21,836

EBITDA 425,296 294,229 370,345

Long-term assets 2,066,005 2,530,278 2,203,549


Equity 3,439,456 3,357,788 3,366,215

Provisions 97,629 333,739 248,104

Long-term liabilities 800,101 945,675 716,604


Vital Mestinje ended the year with a profit of EUR 8,426.95, which is very encouraging since the company

had concluded 2010 with a large loss. The strategic decisions of Vital’s management (the cessation of all non-

viable products of FRUBI and retail brands) contributed to the positive operations in 2011. All retail brands

were cancelled since merchants refused to recognize the increase in prices.

Depreciation and amortization costs in 2011 were 7% lower than in 2010.

EMPLOyEES

The number of employees increased by 2 employees in 2011 with 37 employees at Vital Mestinja as at 31

December 2011. Three employees retired in 2011 and new employees highered to ensure the continuation of

the work process.

CONCLUSION

Given that the global presence of the economic recession,Vital is pleased to have concluded 2011 on a

positive note. The company was plagued by problems regarding raw material bases for the prices of several

materials had risen by more than 60%us in great trouble suroviski base, as the prices of certain raw materi-

als is also more than 60% (sugar, isoglucose, etc.). Nevertheless, through extraordinary cost-effectiveness,

streamlining, improved quality and reduced wastage, the company managed to ensure positive operations.

It followed the set objectives and achieved an increase of 15% in sales of Frupi syrups.

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4. DELO GROUP

PRESENTATION OF ThE GROUP

The Delo group consists of the parent company Delo, d. d., Ljubljana and its subsidiary Izberi d. o. o,

Ljubljana. On 1 January 2009, the company transferred the delivery of newspapers activity to the company

Izberi, d. o. o. and is the 100% owner of the aforementioned company. Delo, d. d., is one of the leading and

most influential companies on the Slovenian media market and an important shaper of public opinion. The

early work of the company Delo dates back to 1955 when a newspaper and publishing company was estab-

lished, Slovenski Poročevalec, which was the precursor to today’s company.

Delo, d. d., publishes two leading Slovenian daily newspapers, Delo and Slovenske Novice, the only Sun-

day newspaper, Nedelo, the specialized magazine Grafičar and four regular newspaper supplements. The

new magazines Onaplus, Deloindom+ and first recreational monthly Polet fit were also launched in 2011.

Readers can also read the newspapers and magazines on the web site delo.si, slovenskenovice.si, pogledi.si,

deloindom.si and polet.si.

The Delo Group follows technological developments and trends within branches, thereby satisfying even

the most demanding market conditions. Delo’s modern Printing Centre provides high-quality color printing

for its own newspapers and attachments, as well as the printing of editions for external clients.


The harsh economic conditions that contributed to the decline in sales of copies of printed media and

restricting advertising budgets continued in 2011. Despite the negative trend of pay-daily newspapers, the

Delo newspaper remains the most widely read work of the traditional daily newspaper, with the newspaper

Slovenske novice still the most widely read daily newspaper.

The entry of Delo as the first Slovenian newspaper to iPad and the commenced charging for applications

is an important milestone in the gradual transition to different platforms. A MOSS survey, which monitors

the movement of visitors online, confirms the correctness of the decision to develop digital content.

KEy DATA ON OPERATIONS OF ThE DELO GROUP

( in EUR ) 2009 2010 2011


Net profit/loss -11,522,245 -2,191,968 -1,470,864

Net cash flow1 -8,675,049 689,301 1,513,421

EBIT 556,397 366,578 278,235

EBITDA 3,403,593 3,247,847 3,262,520

Long-term assets 25,398,404 24,192,498 22,405,241


Equity 15,665,385 13,472,842 12,002,091

Provisions 7,229,171 5,691,875 4,397,194



The group generated EUR 55.5 million in revenues, reflecting a EUR 0.8 million increase over the previ-

ous year. This is the first year of modest growth for the group following several of decline, particularly in

difficult economic times. The group generated a positive operating result. The unfavourable business con-

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ditions, which limited the growth in revenues from the sale of newspapers and advertising space had the

greatest effect on profit and loss. During the year the group adapted itself to the current market conditions,

particularly with regard to measures involving cost rationalization. The negative total operating result was

caused by the negative financing result. Based on the valuations of the certified appraiser, Delo impaired the

financial investment in Večer, which had the greatest impact on the on negative financing result.

SIGNIFICANT BUSINESS EVENTS IN 2011

In 2011 the company continued implementing the conversion of the printed editions Delo, Slovenske

novice and Nedelo, launched three new magazines and developed digital content.

The artistic and contextual transformation of the daily newspapers successfully countered the steep de-

cline in sales of copies of all Slovenian media. The transformation of both newspapers was based on the

integration of the editorial boards of Delo and Slovenske novice. The redesign of Nedelo ranks as a major

development project geared at Sunday reading.

The exclusive magazine Onaplus - a magazine for women of vision was launched in March. Two new

magazines, one on living culture Deloindom+ and the first recreational monthly Polet fit were also launched

in the end of March.

According to recent data from the National Readership Survey (published in January 2012), newspaper

supplements of Delo have improved their market share. Thus, five supplements of the media company Delo

rank among the top ten most widely read print media in Slovenia.

At the end of February 2011 the Competition Protection Office issued its consent for the sale of shares

of ČZP Večer, d. d. to the company 3Lan, d. o. o. The Ministry of Culture issued a decision to the buyer on

December 2011 rejecting the issue of consent for the purchase of the shares of ČŽP Večer.

EMPLOyEES

A high educational structure is characteristic for the company and reflected in its activity and in the com-

plexity of its work processes. Activities for accelerating the retirement of all employees fulfilling the condi-

tions have been implemented since the beginning of the year. The company concluded 2011 with a smaller

number of employees than planned. At the end of December 2010 the companies Delo and Izberi had 443

employees, representing a 1% decrease in comparison to the end of 2009.

CONCLUSION

Priorities for management are primarily focused on increasing operational efficiency and thereby improve

business results.

The company Delo expects a strengthening of the demanding economic circumstances in 2011 which will

approximate those of 2011. The key factor of change in the branch will comprise the accelerated transition

to digital platforms in lieu of the threat of a decline in sales of printed daily newspaper editions and limited

advertisement budgets. Regardless of the stricter economic situation, the company Delo is planning operat-

ing revenues of almost EUR 56 million in 2012.

2.10.4 OPERATIONS OF ASSOCIATED COMPANIES

BIRRA PEjA, Sh. A., PEć

The Kosovo associate Birra Pei, Sh. a., Furnace (it also is the 100% owner of the subsidiary Birra Pei Al-

bania, which is deemed insignificant for the Union Group) recorded 18.5 million in total sales revenues in

2011 or 17 % more than in 2010. In terms of sales volume, it sold 247 thousand hl of beer (which represented

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70% of the total sales value, for the company also sells waters and non-alcoholic beverages), which is ap-

proximately at the level of the previous year. The market share of beer in Kosovo fluctuates at around 70%.

The largest competitors are Skopje and Nikšičko beer.

Financially, the company in 2011 recorded a net loss of EUR 0.7 million but this result is not comparable

with prior years, when the company from revaluations and write-offs of various assets totalling 6.2 million

recorded a net loss of EUR 8.2 million. Operating profit (EBIT) in 2011 totalled 0.5 million (2010: EUR -7.1

million) while the simplified cash flow from operations (EBITDA) in 2011 was 3.1 million (2010: EUR 1.3 mil-

lion). The company is still extremely burdened due to financing costs (the vast majority of them originate

from initial borrowing upon the privatization of the company), with expenses related to interest on loans

amounting to EUR 1.2 million.

The difficult liquidity situation (short-term liabilities at the end of 2011 exceeded short-term assets by a

good EUR 16 million with only 10% financed with capital) will be resolved in 2012 through the envisaged

capital injections of both strategic owners: Pivovarna Union, d. d. with a 58% stake as the new controlling

owner of the company (due to utilisation of the put option, Factor banka, d. d. as the previous 18% owner of

the company called on the Pivovarna Union, d. d. to redeem the denoted stake in December 2011) and Mr.

Luka Ekrem with his 42% stake. The company’s management is also counting good cooperation with banks

regarding the rescheduling of loans.

In 2012, the management of Birre Peje is planning moderate growth from both the aspects of sales volume

and in financial terms; the market of Albania represents the greatest challenge here. By improving constant

and strict financial supervision (the newly introduced financial - accounting system will aid in this endeav-

our), it is expected that the company will operate financially even better (planned net profit for 2012 is a posi-

tive zero and EBITDA EUR 4 million). Newly acquired operations, such as the bottling of the non-alcoholic

program Sola for the surrounding markets will contribute to a decrease in the cost per unit of product.

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ACTIVE RISK MANAGEMENT IS FOLLOwED By ThE TIMELy RECOGNITION AND RESPONSE TO PO-

TENTIAL ThREATS IN ORDER TO PREPARE APPROPRIATE MEASURES TO PROTECT AGAINST ThE

IDENTIFIED RISKS AND DECREASE ExPOSURE TO ThEM.

The operations of the Laško Group expose it to a variety of risks, both business and financial. It cannot

protect itself against all risks however they can be mitigated through timely action. Therefore, the Group

endeavours to the greatest extent possible to identify and cope with risks through an active approach.

Active risk management in followed by the timely recognitiom and response to potential threats in order

to prepare appropriate measures to protect against the identified risks and decrease exposure to them. Risk

management measures are incorporated into daily operations.

2.11.1 BUSINESS RISKS

Business risk is associated with the overall business operations and core business of the Laško Group.

Among them are The most important among them are market and procurement risks.

Market risks are reflected in the reduced level of demand for products or drop in purchasing power in all

markets and segments due to the financial crisis and decline in lending to households and firms by banks.

These risks have intensified due to the escalation of the situation sales markets, especially due to the arrival

of new competitors with cheaper products, closure of customs and other duties and unilateral actions by

countries to protect domestic production in markets outside of the EU. The Group attempts to reduce these

risks through partner relations with its customers, good quality, new products, efficient supply and partially

also through production outside of Slovenia. The Group is protected against the plagiarism and copying of

its products through trade mark protection with the Office for the Protection of Intellectual Property.

Procurement risks are important due to the exposure to prices of raw materials, which are dependent on

the harvest of individual crops (barley, corn) which slightly reduces the impact of globalization. The global

inflationary pressures of oil, poor agricultural harvests, climate changes, currency fluctuations, etc. play an

important role. The Laško Group increased its share of purchases of raw materials on the commodities mar-

kets, which allows for forward purchases and the fixing of purchase prices for a specified period. Selection

2.11

riSk maNagEmENT

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of suppliers has been implemented on the basis of organizational rules for quite some years so that they are

assessed in accordance with the international ISO 9001:2000 standard with transactions only carried out

with suppliers who are capable of quality control, follow the requirements of the clients and comply with

delivery times. The Group exploits synergies in the procurement area of identical and similar materials and

raw materials within the scope of joint purchases within the Laško Group.

2.11.2 OPERATING RISKS

Operating risks are associated with the implementation and monitoring of business processes and activi-

ties and the use and costs arising while implementing business processes.

Risks associated with the production process encompass the risk of an interruption in production capaci-

ties due to possible major breakdowns. This risk is estimated to be moderate; the production is ensured

through regular preventive routine maintenance, regular repairs and the replacement of worn parts with

new ones. At any rate, it should be emphasised that investments into production are not optimal due to a lack

of funding so risks associated with so-called “investment gaps” will be increase over the years. Risks related

to the safety of employees and the production of flawless products are managed with the aid of the ISO 9001,

ISO 14001, NSF, HACCP and IFS standards.

Risks operations are exposed to, to which the Group dedicates substantial a degree of attention include:

• property-legal risk, which is managed by the conclusion of relevant insurance transactions (fire, machin-

ery breakdowns, accident insurance, etc.);

• regulatory risks in terms of changes to the regulations of national and local regulators of competition

laws, legislation in the area of food production, consumer health protection, ecological legislation that in-

troduce environmental taxes (concessions for pumping water) or tax on non-returnable containers, and

tax and excise legislation, which were managed primarily through the preventive actions of professional

services, which follow changes in legislation in its areas of operation in a variety of ways;

• information risks that occur due to natural disasters, fire in the premises, a single component failure,

malfunction of the system or application software; they are managed through the creation of updated

backups of critical information systems and their segmentation and replication;

• environmental risks due to the ineffective use of all forms of energy, sub-optimal functioning of business

processes and embedded technologies which are managed through austerity measures, ongoing mainte-

nance and regular smaller investments and

• HR risks in terms of a lack of adequate personnel and healthy staff which are managed by informing

employees of healthy lifestyles, cooperation with physicians, management reviews, etc.

2.11.3 FINANCIAL RISK MANAGEMENT IN ThE LAŠKO GROUP

To ensure the long-term stability of the Group’s operations, concurrent and detailed monitoring and as-

sessment of financial risks are required. Financial risks are risks that may negatively influence the ability to

create financial revenue, control financial expenses, pre serve the value of financial resources and to control

financial liabilities. The entire activity of managing risks in the Group focuses on the unpredictability and il-

liquidity of financial markets, attempting to minimize the potential negative effects on the financial stability

and performance of the Group. The Finance Department predominantly deals with financial risks while the

sales departments are also involved in managing credit risk.

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In 2011 the Company again followed the objective of achieving stable operations and reducing exposure to

individual risks to an optimal level. Particularly significant among financial risks are credit risk, interest rate

risk, currency risk and liquidity risk and undoubtedly also the risk of a change in the fair values of financial

investments in tangible fixed assets and investment property. Exposure to particular types of financial risks

and measures for protection against them are implemented and evaluated based on the impacts on cash

flows.

Credit risks include all those risks affecting the decline of the company’s economic benefit due to insol-

vency of the company’s business partners (buyers) and failure to meet their contractual obligations. The

receivables of business partners and their maturities are concurrently monitored, reminders immediately

issued concurrently, default interest calculated, and judicial recovery of matured receivables thereby contrib-

uting to improved customer payment discipline. The Group also manages credit risk through appropriate

insurance of receivables which allows relatively quick and efficient recovery in the event of a deterioration

of customer payment discipline. Accounts receivables are insured with traditional instruments for claim

insurance, such as: bills, bank guarantee and mortgage. The Group partially insures foreign receivables via

the SID insurance company. The Group only operates under the system of advance (prepayment) payments

with customers that are considered risky with regard to deferred payments and that have a lower credit rating

, and we Credit risks are managed and represent a moderate rate of exposure for the Group.

Interest rate risks represent the possibility of a change in the reference interest rate on the financial mar-

ket, mainly due to long-term loans of the Group linked to a variable interest rate (EURIBOR). According to

economic forecasts for the Euro area, a turnaround in the trend of projected growth of the reference rate can

be expected. The current forecast is moving towards a reduction in the Euribor. Financing under variable

interest rate conditions represents two thirds of all Group financing while the other third represents loans

with a fixed interest rate. The hedging of interest rates is undoubtedly a good idea in the case of long-term

debt based on variable interest rates; the Group’s loan principals fall due within the next one or two years. In

September the Company achieved an agreement with bank creditors regarding a payment moratorium for

all long-term credit instalments and to extend the payment deadlines of all short-term loans till 30 March

2012. Events on the financial market are monitored since due to the high degree of indebtedness, the Group

will have to conclude an appropriate interest-rate hedge in the correct moment. The Group’s exposure to

interest rate risks is assessed as still high, but manageable.

Currency risk was not a subject of the Group’s exposure in 2011 as exports and imports are implemented

in EUR. Furthermore, the structure of the Group’s foreign sources of funding consists entirely of loans in

the common currency of the European Monetary Union.

Liquidity risk: Particularly significant among financial risks is liquidity risk, which means the risk of loss

due to short-term and long-term insolvency. In addition, the Group needs to monitor and ensure capital

adequacy, which means that the Group must always have sufficient long-term financial resources at its

disposal with regard to the volume and type of business it carries out. The Group must ensure an adequate

ratio between short-term liabilities and current assets. The Group disclosed an excess of current liabilities

over current assets, signifying the existence of significant liquidity risk. To avoid problems with the current

liquidity, the Group plans cash flow movements of inflows and outflows on the annual level, and also for

each individual month. The Group ensures coverage of possible daily liquidity deficiencies through suitable

credit lines for the short-term regulation of cash flows in the form of revolving credits and the allowable

transaction account limits. Nevertheless, the Group assesses that upon short-term loans with banks matur-

ing it will be possible to arrange renewals of the existing short-term funding resources. Discussions in the

sense of creating complete solutions in the form of a reprogramming of all the Group’s financing liabilities

for an extended period are carried out with bank creditors on an ongoing basis. In addition, all loans from

bank are appropriately secured with the assets of the Group, so should an unfavourable situation in the fi-

nancial market arise with banks requiring the repayment of loans at maturity, the Group can repay the loans

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by selling the assets of the Group. To achieve sustainable levels of financial debt, the Group actively sells

investments that are unnecessary for its business. The year 2011 was marked by a number of unpredictable

events that directly or indirectly affected the realization of disinvestments. The Group successfully sold the

investment in Fructal and Zavarovalnica Triglav, while the sales process for Mercator was unsuccessful. The

investment portfolio, specifics of individual investments and illiquidity on the capital market impeded and

disabled the immediate divesture of unnecessary property at a reasonable price. Until the conclusion of the

divestment procedures, the Group is still subject to a difficult liquidity situation, especially outside of the

season when it is expected that it will not be possible to settle all outstanding financial obligations. Given the

above, the Group expects to be able to come to an agreement with banks regarding the complete long-term

rescheduling of financial liabilities. Considering the aforementioned, the Group assesses that its exposure

to liquidity risk is quite high with regard to the situation on the financial market, as well as in the entire

economic space and requires special attention.

The risk of changes in fair value of financial investments in tangible fixed assets and investment property

is also undoubtedly an important financial risk. In connection with the disinvestment described under il-

liquidity risks it should be highlighted that financial investments are increasingly difficult to sell at desirable

prices, are tied to the purchase price which applied a few years ago when most of such investments acquired.

The financial risks of the Laško Group are described in the financial part of the Annual Report on pages

298 through 301, in Note 32.

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PROFITS FROM OPERATIONS IN 2011 wERE SUFFICIENT TO PAy 74% OF ThE INTEREST FROM FI-

NANCING ON ThE GROUP LEVEL. PIVOVARNA LAŠKO, D. D. COVERED 68% OF ThE INTEREST FROM

FUNDING wITh ThE PROFITS GENERATED FROM OPERATIONS IN 2011.

The widespread financial and economic crisis, which has long been present in the Slovenian business

environment, is also reflected in the constant difficulties in ensuring current liquidity, both within the Laško

Group and in the parent company Pivovarna Laško, d. d.

The year 2011 was marked by ongoing problems related tpo the regulation of both monthly and daily cur-

rent liquidity. Liquidity was especially problematic in the first three months of the year due to the off-season,

lower sales of the Group’s product assortment and the poor payment discipline of customers in general. The

Group must also prepare for the production season during these months. i.e. purchasing the required raw

materials, intermediate materials, advertising materials and carry out other activities that are required to

start-up production in the upcoming season.

ThE hIGh LEVEL OF INDEBTEDNESS REPRESENTS ThE GREATEST BURDEN TO ThE GROUP’S LIqUIDITy.

The greatest obstacle to short and long term liquidity is the high level of indebtedness of the Laško Group,

especially the two breweries, where the main debt burden is borne by Pivovarna Laško, d. d. As at 31 December

2011 the Group owes EUR 377.7 million to institutions on the financial market of which Pivovarna Laško, d. d.

is responsible for EUR 222.6 million, Pivovarna Union, d. d. for EUR 122.7 million, Radenska, d. d. for EUR

17 million and Delo, d. d. for EUR 15.4 million. In 2011 procedures were carried out for the sale of the 93.73%

stake in Fructal, d. d., owned by Pivovarna Union, d. d. The sale was successfully concluded and financially

realised on 16 February 2011. Pivovarna Laško, d. d., in addition to financial liabilities to financial institutions,

also has a financial liability towards the Group amounting to 42.4 million. Due to the high level of indebt-

edness, liabilities arising from financing represent a substantial burden for current liquidity. The Group in

general earmarks EUR 2 million on the monthly level for the payment of interests for loans received; of this

Pivovarna Laško, d. d. with EUR 1.2 million and Pivovarna Union, d. d. with EUR 0.65 million. Last year the

Laško Group utilised 60% of its EBITDA for the payment of interest from financing. Pivovarna Laško, d. d.

had earmarked over 90% of EBITDA generated in 2011 for interest payments in 2012 while Pivovarna Un-

ion, d. d. has earmarked 50% of its EBITDA of 2011 for this purpose. The profit generated from operations

in 2011 was sufficient to pay 74% of the interest arising from financing on the group level. Pivovarna Laško,

d. d. covered 68&% of the interest from operating profits in 2011 while Pivovarna Union’s operating profit

surpassed the amount of interest from financing by 16% in 2011.

2.12

fiNaNCiNg aNd ThE SalEOf iNvESTmENTS

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RESChEDULING AGREEMENT REAChED wITh ALL CREDITOR BANKS

The Company achieved agreements with all bank creditors regarding the rescheduling of all short-term

loans until 30 March 2012 and agreements on moratorium for the repayment of all credit instalments. The

Management Board is still endeavouring to negotiate a complete rescheduling of all financial liabilities in

the long-term. A financial restructuring plan with a detailed proposal for the repayment of loans by indi-

vidual banks was prepared for this purpose and, as such, was presented to all the creditor banks in a joint

meeting on 28 February 2012. The proposed financial restructuring plan provides for the divestment of

investments in Mercator and Delo and a proposed rescheduling of loans that are secured with the denoted

investments available-for-sale. The proposal includes the rescheduling with the moratorium until the time

of divestment. Other long-term loans will be rescheduled in the long-term through e repayment installments

that are adjusted to the cash flows of the breweries. After a month of negotiations with the banks, all the

creditor banks Pivovarna Laško, Pivovarna Union and Radenska coordinated their positions and reached

an agreement on the rescheduling of loans, which the Group was also informed of in writing. The banks

adopted the decision to extend the loans for a minimum period of one year, with repayments of individual

loans in accordance with the Group’s proposed rescheduling plan which is part of the financial restructuring

plan. Exceptions were two banks, whose position is that they would currently extend the loans by 6 months.

Some of the banks confirmed the rescheduling of loans for a period of 5 - 7 years. The banks rescheduled

the loans secured with shares of Mercator with a moratorium of one year. The financial restructuring plan

also envisages agreed lower interest rates which are being negotiated bilaterally with each bank. Since the

final decision on the rescheduling lies within the jurisdiction of the credit committees of banks, the signed

contracts on the reprogramming of loans is expected to be received from the banks by the end of April.

IMPLEMENTATION OF ACTIVITIES OF ThE LAŠKO GROUP wIThIN ThE SCOPE OF DIVESTMENTS

Laško Group constantly carries out activities related to the disinvestment of investments as well as other

unviable business assets.

Procedures for the sale of a 79.25% stake in Evening Company, which were carried out the second half of

2010, were suspended late last year. Ministry of Culture in its decision rejected the application of a potential

buyer for approval to acquire more than a 20% ownership stake in Večer, d. d. The Group will however con-

tinue with the sale of investments and new potential customers.

Sale of Delo, d. d., is suspended because an a lack of offers that would be consistent with the tender. The

Group will continue the procedures for the divestment of Delo, d. d.

Procedures for the sale of 93.73% stake in Fructal, d. d, have been taking place since February of last year.

The sales contract with the company Nectar of Serbia was signed on 25 July 2011. The transaction was com-

pleted successfully and realized financial realised on 16 December 2011. A portion of the proceeds received

from the sale (EUR 25 million) out of the EUR 35.3 million received was paid to the creditor banks for the

pledge on the shares and real estate of Fructal. EUR1 million remained on the fiduciary account for a period

of 18 months, and serves as a potential guarantee for the buyer. The remainder of the proceeds remains on

the deposit account of Pivovarna Union, d. d.

Last year the Management Board investment maximum efforts to sell a 23.34% stake of the Group’s

investment in Mercator, d. d., but due to objective reasons, the realization of the sale did not occur. The

Supervisory Board of Pivovarna Laško, d. d. adopted the following resolution on 4 May 2011: The Supervisory

Board agrees that it could not accept the offer of Agrokor due to the CPO decision no. 306-29/2011-4 of 26

April 2011 in the matter regarding an assessment of the conformity of the concentration and decision on the

rejection of the temporary order of the Supreme Court no. G 23/2011-11 of 29 April 2011 due to elimination

of the decision of the defendants no. 206-29/2011-4 of 26 April 2011, regarding the request for the issue of

a temporary order, the Company may not dispose of the MELR shares interim measures, pending further

unable to dispose of the shares MELR until further notice.

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Sale of Jadranska pivovara – Split, d. d., was suspended since no offers were received from potential buyers.

Activities to streamline operations are being implemented on a continous basis.

Activities for the sale of a stake in Thermana, d. d. are being implemented through the sales intermediary

NLB d. d. Pivovarna Laško, d. d. signed a sales agreement on the sale of shares of Thermana, d. d., Laško on

10 October 2011. The joint sale comprises a 51.96% stake in Thermana. A public tender for the sale of the in-

vestment was published in the newspaper Delo on 28 November 2011 No interested parties for the purchase

of the stake currently exist.

In February, the Group sold its entire block of shares of Triglav, d. d., labelled ZVTG for a price of EUR

17.50/share. The block of shares comprised 366,944 shares owned by Radenska, d. d. in the total value of

EUR 6,421,520.00, 17,712 shares owned by Pivovarna Union, d. d. in the total value of EUR 309,960.00 and

26,960 shares owned by Fructal, d. d. in the total value of €EUR 471,800.00.

A contract was signed with the company Final Art, d. o. o. for the sale of the following real estate:

• for Pivovarna Laško: the Hum and Savinja Hotels in Laško, Tri lilije sports hall in Laško, a warehouse at

Letališki 32 in Ljubljana and a warehouse in Varaždin,

• for Pivovarno Union: land and the “Bellevue Center” project and a warehouse in Maribor,

• for Radenska: an office building in Radenci.

• The Group successfully realised the sale of the warehouse in Varaždin and closed the financial transac-

tion.

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IN ORDER TO EFFECTIVELy MANAGE ThE SEGMENTS MORE RESPONSIVE TO MARKET SIGNALS

AND LONG-TERM GROwTh OF ThE LAŠKO GROUP, wE DIVIDED COMMERCIAL AND MARKETING

RESPONSIBILITIES BETwEEN ThE hEAD OF ThE BEER, wATER AND NON-ALCOhOLIC BEVERAGE

BRAND GROUPS.

A step to a higher level of performance of the Laško Group also includes the changed commercial sector

which was merged with the marketing and development sectors so that management is now delegated ac-

cording to beverage categories or brand groups. In order to effectively manage the segments more respon-

sive to market signals and long-term growth of the Laško Group, commercial and marketing responsibilities

were divided between the Head of brand groups of beer, water and non-alcoholic beverages in 2011.

2.13.1 BEER BRAND GROUP

MARKETING ACTIVITIES OF ThE BEER BRAND GROUP

Alongside the harsher economic conditions, marketing efforts in 2011 continued to be carried out so as to

best contribute to the successful operations of the Laško Group. Thus funds and activities were focused on

maintaining position in the domestic market and intensive growth in the foreign markets.

Intensive work regarding the development of new products at the beginning of the season provided a wide

range of new products that have defined the guidelines for further development of the Slovenian market

of beverages. All activities throughout the year either supported the newly launched products or umbrella

projects of both major Slovenian breweries.

PRODUCTS OF ThE BEER BRAND GROUP

Saturation of the domestic market and the large market share presents the Laško Group with a challenge,

how to defend its position of market leader, while growing through the development of new segments and

sub-segments. Four completely new brands of beer were presented on the market and two brands were

enriched with new products in 2011.

iC Cider wines were introduced as a novelty in April 2011 and represent a new potential segment in the

Slovenian market. iC Cider is a beverage with a 4% (percentage volume) content of alcohol, a type of “spar-

kling cider” with a distinct flavour of apples, which primarily targets wine drinkers and non-beer drinkers.

2.13

markETiNg aCTiviTiES

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Cider is one of the constantly growing segments in the beer industry and together with beer mixtures made

notable movements in a number of European markets in the last decade and at the same time, it is becom-

ing an increasingly more common practice for multinational breweries to include them in their portfolios.

Another movement in the beer brand group was created with the launch of two brands of malt beverages

- Laško Malt and Malt Union. While the Union Malt pineapple flavored beverage ia an already established

brand on certain markets of the former Yugoslavia, Malt Laško Malt from Pivovarna Laško and its two flavors

– apple and peach represent a novelty.

The declining trend in the consumption of alcoholic beverages has been globally observed as a growth

in the consumption of beers with lower or reduced alcohol content. In this light, the Company launched a

new light beer from Pivovarna Laško - Laško Trim. The name alone suggests that this product is intended

for more the active segment of the population who enjoy beer. With the classic 0.5 liter container and its

placement in the line of Laško umbrella brands, the Company desired to present a standard prized beer to

separate it from the aspect of price from the premium segment, which already includes Laško Light.

The new taste Union Radler Redorange with red orange and pomegranate flavours represented A major

novelty in the sub-segment of beer mixtures in 2011. Extension of product lines, following the success of Un-

ion Grape in the past two years was a logical move as proven by its successfully implemention and continued

growth of the Radler brand.

Changes were also implemented in the Bandidos line, where the Group presented the newcomer Bandi-

dos Sun-flavored orange and guava. Bandidos Sun later replaced the weaker sales of Bandidos Cuba Libre.

A wide array of new products required more sales activity, in particular added exposure at sales points in

the commercial segment and promotion in the catering sector. Existing items in the sales portfolio were

mainly supported through added exposure and collective promotional packs (Multipack 5 + 1, 3 + 1, m ulti-

pack + glass).

PRICES

Price positions as in the previous year did not change in 2011. The Zlatorog Laško and Union Light beer

Umbrella brands remained representatives of the middle price class while the Laško Club, Dark Laško, Laško

Light, Union and Premium Elixir brands are classified as specialty beers in the higher price range. Bandidos

ranked somewhat below the higher price range as a low premium product in 2011, joined by iC Cider. Export

Pils and Union Pils continue to be key products in the lower price range. Radler is a key generator of positive

sales results and was still embedded in the medium price range 2011, and was joined by Laško Malt which

has a slightly lower price position.

MARKETING COMMUNICATION

CORPORATE COMMUNICATIONS AND PROMOTION OF UMBRELLA BRANDS

Marketing communication activities in 2011 were implemented in line with longer-term projects to pro-

mote awareness of return packaging. Efforts and resources for the umbrella beer trade marks Zlatorog Laško

and Union Light were coordinated and focused throughout 2011.

Corporate communications alongside sponsorships for Pivovarna Laško were also supported with the

“Full of Pride” campaign of 2010, while Pivovarna Union continued implementing the “Connected in Pas-

sion”, campaign in 2011 which was upgraded with a series of “Little Union Dragon” animated ads to support

key sporting events throughout the year. The umbrella corporate campaigns were supported with elements

of traditional media with great emphasis was given to web advertising and communication through social

networks, which are the communication bases of younger target audiences.

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The Laško umbrella brand campaign “Flaško nazaj v Laško” focuses on the importance of return packag-

ing. The “Flaško nazaj v Laško” campaign was supported by traditional media through television ads and

print media and a national SMS prize game and online communications. Sweepstakes were conducted

through the summer months, with the response surpassing all similar activities carried out in Slovenia until

then. The campaign was supported with both umbrella brands which also included sales activities, with

increased activities focused on returnable packaging in the retail segment.

One of the key activities in 2011 was the repeat “Let’s go to the mountains” project of 2010. The campaign

was also carried out in 2011 partly as a solo project, and partly to support the “Full of Pride” umbrella corpo-

rate campaign.

Both breweries, with the aid of a multitude of media, also supported sports sponsorship through the cam-

paigns “Cheer the Laško Way!” and the “Little Union Dragon”. This enabled better activation of sponsorships

and further supported other activities in the field of sports sponsorships.

UNION RADLER

The company prepared an upgrade of the “Refreshments at the Finish Line” campaign alongside the

launching of Radler Redorange with the product supported by online communications and activities on the

Facebook web portal. Radler was further supported by television spots and the campaign “Refreshments at

the Finish Line” campaign in foreign markets.

IC CIDER

The development of the iC Cider brand required a comprehensive communication campaign at its launch,

which was entitled “iC Cider. 100% Star Entertainment” started in May 2011. The campaign was supported

with a comprehensive mix of traditional and modern media (television spots, print ads, outdoor advertising,

web advertising, communications in social networks) and with the support of the Horeco and other retail

sales channels. Degustations and product promotions were carried out during the season; communication

activities however followed a number of sales promotion activities, all with the objective of increasing brand

and segment awareness and a growth in the distribution index.

MALT BEVERAGES

The malt beverage segment was also supported with elements of traditional and modern media, and

included both the Laško Malt and Union Malt brands, The “It’s easier to start, if you know what awaits you

in the end” campaign was prepared for Laško Matl which supported top Slovenian athletes - the handball

player Luka Žvićej and the captain of the soccer club NK Maribor Marcos Tavares. The campaign was further

supported with the sales activities in retail and the Horeca distribution channels and especially through ac-

tivities at sporting events. The market presence of Union Malt was supported through printed ads and sales

promotion activities.

BANDIDOS

The Bandidos brand was supported with the “Forever” campaign in 2011 which accompanied the renova-

tion of the brand’s corporate identity in 2009. The media mix consisted of television spots, print ads, outdoor

advertising, web advertising and with an emphasis on direct communications through social networks. The

brand was also supported by the year-round project at the end of February 2012 - “Support Your Local Sport”,

with which the company desires to provide opportunities to young members of adrenaline sports through

a joint project to compete in an interactive way for financial assistance for their sports facility. In 2011 the

company continued implementing the “Bandidos Freestyle Assault” external campaign which the large Ban-

didos cushion within the scope of Festival Lent 2011, Beer and Blossom Festival 2011, Pulse of Youth 2011 and

larger sports events.

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DEVELOPMENT PROjECTS

With the introduction of two completely new brands and supplementation to the existing lines, the opti-

mal use of the product portfolio, timely replacement of less potential products and constant development of

products, product lines, segments and sub-segments will be of key importance for the Group.

Marketing and development in the Laško Group represents one of the key factors to help the Group escape

from an unfavourable situation, simply because the environment does not allow much room for outdated

concepts or non-observance of market characteristics.

It will continue to develop new tastes in the Radler segment which is successful in the domestic market

and in the foreign markets where the Union Radler brand acts as a challenger, prepare a supporting product

- Laško with different flavours of non-alcoholic juices. The beer mixture has all the characteristics of Radler

but will not be a generic brand, but be a part of the Laško line. The brand will be aimed at foreign markets

with the business goal of launching another radler in the beer brand group being improved presence in

the radler segment in foreign markets thereby supporting the Union Radler as an umbrella brand of Laško.

Flavours being developed are lemon with lime (Lemon & Lime) and orange guava (Orange). The product will

be available at the start of the season 2012.

The structure of the domestic market in terms of the portfolio of brands in Slovenia will not change, with

the only own brand of the Group remaining Union Radler. It should be noted that the Group has long been

collaborating with all key retailers in the Slovenian market, with whom it also carries out joint development

of their own retail brands; this will be reflected in the form of retail radler brands bottled by one of the

Group’s breweries.

The Group wishes to capture the malt segment on the domestic market and establish guidelines for the

development of the segment in the wider region. Therefore in 2012 the Group will optimize the product

portfolio and only maintain one of the two malts based on production capacities.

The segment of non-alcoholic and light beers is also an important segment in the long-term, which al-

though rising worldwide, is stagnating in the Slovenian market under their potential. The Laško Group will

thus optimize its light beer segment in 2012 and offer the market only one product, which will combine the

quality and favourable price policy of the current Laško Trim and Laško Light.

The optimization of cost-effectiveness will be addressed more and more and will be reflected in the con-

traction of individual packages of products and the launching of products on more markets, since the Group

has to utilise funds more effectively in order to fulfil its basic mission - to create products with added value

for consumers while still meeting its obligations to shareholders and creditors.

2.13.2 NON-ALCOhOLIC BEVERAGE BRAND GROUP

MARKETING ACTIVITIES OF ThE NON-ALCOhOLIC BEVERAGE BRAND GROUP

Laško Group offers a wide selection of soft drinks on the Slovenian market, a market where the majority of

sales are realised. The development of categories is focused on ice teas, nectars, fruit drinks, sports and en-

ergy drinks and syrups. Focus throughout the year remained on the iced tea segment, where Sola remained

the leading brand on the Slovenian market and the development of fruit drinks, which due to changed con-

sumer habits are gaining ground.

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The category of soft drinks will remain an important part of the Laško Group’s offer. Playing the role of

challenger in the market in the coming years, the Group will continue to ensure development and focus ef-

forts on increasing sales in the domestic market, as well as in those key markets in which the remainder of

produced beverages are realised.

PRODUCTS OF ThE NON-ALCOhOLIC BEVERAGE BRAND GROUP

ICE TEAS

The ice tea segment remains a part of the Laško Group, despite all the market challenges posed as the

leading producer in Slovenia. The ice tea brand Sola, along with the Radenska and Vital ice teas also played a

major role in 2011 and together, represent slightly less than half of the market share. The quality of the ice tea

line in Radenska was improved with a new composition without preservatives and sweeteners. The new line

which is now ready and is now prepared with a base of natural mineral water and equipped with a modified

design of labels is richer by a new member - ice tea with the flavour of cactus figs.

NECTARS

Sales of nectar in the retail sector (data without discount) fell in in comparison with the previous year. Part

of the decline can be attributed to the growth in discount sales on the Slovenian market; nevertheless Frupi

nectars remain the fourth best-selling nectars in Slovenia.

FRUIT DRINKS

Despite the overall decline in the market and in purchasing power, the consumption of fruit drinks in 2011

remained at the same level as the previous year. The Laško Group offers the Sola, Radenska ACE and Frupi

brands in this segment. A novelty in the segment is Sola Limonada which was presented in the first half of

the year while two new fruit drinks with the flavours currant -raspberry and orange-lime were launched by

Vital. In August Vital also launched the improved Bibita Orange and Bibita Tropic without artificial sweeten-

ers.

SPORTS AND ENERGy DRINKS

The Laško Group possesses two products in this beverage segment: Sola Isošport and Radenska Sprint.

Sales of the product were successful in 2011 with the share of sales also increasing for store brands, which

primarily compete on the level of prices.

SyRUPS

The syrup segment remains a key brand of Vital’s Frupi the sales of which rose compared to the previous

year.

CARBONATED DRINKS

The carbonated fruit drinks Style, Ora and licensed bottled Pepsi are also a part of the Laško Group’s of-

fer. The Group supplemented the successful Ora line with the flavour bitter lemon, prepared on the basis

of Radwnska spring water so that it contains its own carbon dioxide in 2011. The existing flavours of the Stil

brand, orange and lemon, were supplemented with the flavour apple.


SOLA

In April 2011 the Group began bottling of Sola soft drinks and Zala and Za water in a new plastic bottle.

The main objectives in developing the new bottles were to modernise the square shape in line with trends

and make a lighter and more environmentally-friendly bottle. Support activities were focused at acquainting

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consumers with the new plastic bottle. A media statement containing the key message of reducing carbon

footprints was prepared for the new look.

The Group organised “The only flavour that moves you” campaign in the media for Sola ice teas which

was supported by traditional and modern media. The Group continued implementing its successful promo-

tional campaign “Sola Move and Create” for the fifth consecutive year aimed at its youngest consumers. The

concept “Sola sports polygon and children’s creative workshops from empty plastic bottles” was prepared for

children’s events, swimming pools and bowling clubs.

The Group prepared a prize game “To school with Sola” and a promotional campaign with the same mes-

sage in September. The campaign was intended to promote the sale of the beverages Sola, Za and Zala at

newsstands across Slovenia.

The newcomer in the Sola Limonada line was supported by print ads and the “retro” coloured communica-

tion campaign “No more sour faces - new good Sola lemonade”, which was aimed younger target audiences.

VITAL

Vital Mestinje primarily carried out on site sales promotion activities in 2011. The renewal of Bibita was

supported by advertising in local and regional print media in August. The website of Vital Mestinje was

revamped in 2011 as part of the marketing and communication activities.

ORA

The product Ora bitter lemon launched in May was advertised on billboards and on television. In order

to establish contact with young people who form a key part of the target group, the Group focused commu-

nications at social networks and with promotional campaigns and sales promotion campaigns built brand

awareness. Ora with its effective communication mix earned second place in the terms of the total awards at

the Slovenian Advertising Festival (SOF).

ICE TEAS

The renovation of the image of ice tea and the launch of a new flavour for Radenska Ice Tea cactus fig were

carried out in November 2011 supported by promotions in stores and outdoor advertising.

CARBONATED FRUIT DRINKS

The Pepsi brand was advertised in the Colisseum Cinema chain centers and on television with a web site for

the Pepsi brand prepared at the end of the year. In June the Group supported with the BMX Pepsi Evolution

contest. Communication activities were also supported with sales promotion activities throughout the year.

DEVELOPMENT PROjECTS

The fruit drink segment with the Sola brand will continue to be developed; in 2012 two new flavours will

be added to the Sola Limonada brand and its overall image and character of the product itself revamped to

bring it closer to new drinkers.

Constant development in the new organizational structure to integrate certain services will ensure com-

petitive products and help the Laško Group better variegate the non-alcoholic beverage segment.

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2.13.3 wATER BRAND GROUP

MARKETING ACTIVITIES OF ThE wATER BRAND GROUP

Water is not just water. Laško Group is also one of the key players in the Slovenian market in the category

of water and has almost absolute control of certain segments. Although it possesses a high market share, the

harsh conditions and growing threat of the entry of competition has led the Group to spread and balance its

portfolio of water and water with additives. New opportunities for growth in a highly competitive market are

also constantly developing in the category of water.

PRODUCTS IN ThE wATER BRAND GROUP UNDER DEVELOPMENT IN 2011

STILL wATERS

The segment of still waters comprises Radenska Naturelle, Zala and Ode waters with the Group dominat-

ing the market segment in the upper, middle and lower price ranges due to its pricing policy. Oda and Zala

together cover nearly a quarter of the Slovenian market. The very nature of the products does not allow many

opportunities for development, so the Group desires brand movements and added value movement by opti-

mizing the design and composition of packaging. Zala spring water just like the beverage brands Sola and

Za product lines obtained a new plastic bottle, which with its reduced carbon footprint and attractive new

design can keep pace with any other competitive water on the market.

CARBONATED wATERS

The protagonist among carbonated waters is Radenska Classic as in the year before, and along with the

brand Radenska Light possesses over a 50% market shares and remains synonymous with mineral water

in Slovenia.

FLAVORED wATERS AND FUNCTIONAL wATERS

The Laško Group is also the leading provider of flavoured waters on the Slovenian market. The Group

offers the brands Za and Oasis which comprise flavoured waters, which together represent nearly two-thirds

of the market. Flavoured waters are an example of success for which continuous development is being im-

plemented in conjunction with marketing communications.

The brand Za was thus enriched with the flavours Za Sport and Za IceMint in 2011. Although it is the

first water containing fructose and a minimum of sugar in the Za line, Zala IceMint was given a new flavor

combination of lemon and mint. Radenska also added a new flavour to Oaza water. Following the testing of a

variet of flavours, the company selected cherry which was rounded of with an extract of white tea. The basic

guideline in Oaza waters is enjoyment however it was decided to also achieve the required functionality of

the product by adding extracts of healthy teas.

The family of functional waters was expanded with a new flavour and functional additives which were

interesting for the market. The company also launched Radenska Plus Feelgood strawberry flavor with a

significant addition for this group of products: L-Carnitine.


zALA AND zA - NEw PLASTIC BOTTLE

In April 2011 the Group began bottling Sola beverages and Zala and Za water in a new plastic bottle. The

main objective in developing the new bottles was to update the square shape in line with trends and make it a

lighter and more environmentally-friendly bottle. Support activities are focused in making raising consumer

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awareness of the new bottle. A media statement containing the key message of reducing carbon footprints

was prepared for the new look. The Group also prepared a refreshing new bottle design and for Zala spring

water and switched to a transparent plastic label.

This year the Laško Group was the only main sponsor during the top-viewed show in Slovenia this year

Slovenia ima talent (Slovenia has talent) with its Zala and Sola brands. The Group continued to implement

the market “full of life” communication campaign for the Zala brand. In addition to media advertising and

advertising at events, increasingly more emphasis is being placed on eco-advertising and occurrence. The

Zala brand won the Trusted Brand award for non-carbonated bottled water in 2011, showing that Slovenian

consumers trusted this brand the most.

A new product, Za IceMint with a lemon and mint flavour, was added to the still popular flavoured waters

of the Za brand in 2011. SI ZA? (How about it?) was the brand message, which win addition to TV spots was

supplemented with innovative 3D posters in Slovenia.

zA

In early June, in addition to Za IceMint, the Group also successfully surprised Slovenian consumers with

the new fruity Sola Limonada drink. A “retro” campaign on billboards with the message “No more sour

faces - the new good Sola lemonade” contributed to the successful and rapid recognition of the new product

on the market.

OAzA

The majority of marketing activities at Radenska began to take place in April 2011, with the launching of

Oaza cherry on the market. The new product was advertised in printed media and supported by activities

in stores (degustations, exposure). In May and June, Radenska organized the all-Slovene bonus campaign

“Find Oaza” which was supported by a variety of media: TV, billboards, print media, web and radio. The com-

munication campaign was accompanied by an additional promotional sale of cooling bags in the stores of

the largest Slovenian retailer.

FUNCTIONAL wATERS

The new flavour of Radenska Plus Feel Good was supported with print ads and key chains and degustation

at sales points in June.

NATURAL RADENSKA MINERAL wATERS

The Group was present as a sponsor of the show Slovenia has talent with an emphasis on the natural

mineral water Radenska Classic. Activities involving waters continued in June with the recording of the

television spot “The power of water” together with the Slovenian band Perpetuum Jazzile which was aired

in the summer. The campaign itself proved successful online and its high viewing rate set new milestones

in its category. To effectively reach younger target groups, the company actively communicated in social

networks throughout the year and with the “Come to the playground” campaign as an umbrella campaign

worth highlighting.

Promotional activities at Slovenian retailers were carried out in line with the communication activities.

The use of secondary packaging - foil as advertising space at points of sale should be highlighted as an ex-

ample of best practices in 2011, which the company communicated the positive properties of natural mineral

water consumption in 2011.

ODA

Oda, spring water from Pivovarna Laško, classified in the stagnating category of spring waters defended

its position as “Best Value” in 2011, maintaining its market share. Communication in the form of compre-

hensive campaign was not supported; the media mix primarily consisted of PR activities, small print ads and

online advertising during sales promotions.

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ThE LAŠKO GROUP’S DESIRE IS TO REMAIN ThE LEADING PRODUCER OF BEER AND MINERAL AND

SPRING wATERS IN SLOVENIA wITh A DOMINANT MARKET ShARE wITh AN EMPhASIS ON SUPERIOR

qUALITy, ,PRODUCT AwARENESS AND SUCCESSFUL SALES ON FOREIGN MARKETS.

The Laško Group will endeavour to remain the leading producer of beer and mineral and spring waters in

Slovenia with a dominant market share and a competitive producer with a more visible market share in the

field of non-alcoholic beverages.

With an emphasis on high quality and product awareness, the Group plans to be successful also on foreign

markets, particularly on the markets of South-Eastern Europe, in the area of selling beer, water and non-

alcoholic beverages; we also aim to be comparable with European competition as far as business efficiency

and return on equity are concerned.

PLAN FOR 2012 AND SALES IN 2011 OF ThE LAŠKO GROUP - By PRODUCT GROUP

( in hl ) Plans 2012 Sales 2011 Index 12/11

Beer 2,341,709 1,974,735 118.6

Mineral water 712,431 657,224 108.4

Natural spring water 210,969 184,842 114.1

Flavoured water 257,713 256,115 100.6

Fruit juices, nectars 27,600 25,306 109.1

Other non-alcoholic beverages 502,788 528,291 95.2

Syrups 26,992 24,194 111.6

Other alcohol 2,427 1,272 190.8

Together 4,082,629 3,651,979 111.8

(Divestment of Fructal and Frukt. Mak) 4,082,629 4,400,717 92.8

2.14

pLaNS fOr 2012aNd ThE dEvElOpmENTSTraTEgy

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- By INDIVIDUAL COMPANy

( in hl ) Plans 2012 Sales 2011 Index 12/11

Pivovarna Laško 1,040,918 975,838 106.7

Pivovarna Union 1,565,408 1,548,953 101.1

Radenska Radenci 1,032,805 994,734 103.8

Vital Mestinje 137,850 132,454 104.1

Birra Peja 305,648 - /

Total 4,082,629 3,651,979 111.8

The Group will continue with its strategic orientation placing emphasis on production and sale of inno-

vative and trendy products, maintenance of the market positions of our own brand names on the domes-

tic market, and recovery and expansion of previously achieved positions on foreign markets. It intends to

achieve planned cost effectiveness through professional colleagues acting as teams and in accordance with

the policies of the Laško Group.

Activities involving sustainable development and concern for the environment will continue to be im-

plemented to enable the Group’s social responsibility to be implemented through an optimal use of entry

materials, raw materials and energy. The Group will safeguard and protect its own water sources and prevent

negative effects on the environment due to development and investment activities.

Through an efficient and rational approach, The Group expects to resolve ecological effects; it will achieve

a competitive advantage by managing production, ecological and energy costs in this period of deteriorating

economic circumstances.

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qUANTITATIVE AND STRUCTURAL OVERVIEw OF ThE PLANNED SALES OF BEVERAGES IN 2012 FOR

ThE LAŠKO GROUP

Beer

Mineral water

Natural spring water

Flavoured water

Other non-alcoholic beverages

Syrups

Other alcoholic beverages

Fruit juices, nectars

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Plan 2012

in h

ecto

litr

es

( in hl ) Plans 2012 in %

Beer 2,341,709 57.4

Mineral water 712,431 17.5

Natural spring water 210,969 5.2

Flavoured water 257,713 6.3

Fruit juices, nectars 27,600 0.7

Other non-alcoholic beverages 502,788 12.3

Syrups 26,992 0.7

Other alcoholic beverages 2,427 0.1

Total 4,082,629 100.0

CONSOLIDATED INCOME STATEMENT OF ThE LAŠKO GROUP FOR 2012

( in EUR, exclud. no. of employees ) Plans 2012

Total revenues 272,766,374

Total expenses 244,626,188

Depreciation 18,685,438

Total profit 59,540,423

Taxes 6,495,634

Net profit 53,045,059

Net cash flow1 71,730,497

EBIT 29,992,413

EBITDA 48,677,851

Average no. of employee hours 915

1Net profit with depreciation

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ThE COMPANIES PIVOVARNA LAŠKO, D. D., PIVOVARNA UNION, D. D. LjUBLjANA AND RADENSKA, D. D.,

RADENCI TRANSFORMED FROM AN ACTUAL GROUP INTO A CONTRACTUAL GROUP.

CONCLUSION OF ThE PROCEDURE OF SALE OF ThE ShARES OF čzP VEčER, D. D. AND 3LAN, D. O. O.

On 13 December 2011, the Ministry of Culture issued a decision rejecting the application of 3 Lan, d. o. o.

for the issue of consent for acquisition of more than a 20% ownership stake in the company ČŽP Večer, d. d.

The acquisition of the denoted consent by the buyer 3Lan, d. o. o. was one of the deferred conditions for the

conclusion of the contract for the sale of 202,788 shares or a 79.24% stake in ČŽP Večer, d. d. which was

signed on 23 June 2010 between Delo, d. d. as the seller and the company 3 Lan, d. o. o. as the buyer. An

administrative dispute was permitted against the aforementioned decision of the Ministry. The deadline for

filing an appeal expired on 16 January 2012. An appeal was not filed so that the decision became final and the

sale procedure with the company 3 LAN, d. o. o. could not be implemented.

GENERAL MEETING OF ShAREhOLDERS OF PIVOVARNA LAŠKO

A General Meeting of Shareholders of Pivovarna Laško, d. d. was held on 30 January 2012. Details of the

rejected proposal and General Meeting decisions which were not adopted are published on the website of the

Ljubljana Stock Exchange, Ljubljana - SEOnet and on the Company’s website.

CONTRACTUAL GROUP

The Annual General Meeting of Shareholders of Pivovarna Laško, d. d. was held on 30 January 2012 (NLB

as the largest owner and Banka Celje due to the decision of the Securities Market Agency were unable to

exercise their voting rights). The General also adopted a resolution that approves the management contract

which has concluded on 27 December 2011 between Pivovarna Laško, d. d. Laško, d. d. as the parent com-

pany and Pivovarna Union, d. d. as the subsidiary and the management contract, which was concluded on

27 December 2011 between Pivovarna Laško, d. d. Laško, d. d. as the parent company and Radenska, d. d.,

Radenci as a subsidiary. The General Meetings of Shareholders of Pivovarna Union, d. d. and Radenska, d. d.,

Radenci also gave their consent to the individual management contracts on 31 January 2012 The manage-

ment contracts have linked Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d., Radenci from

actual an actual group into a contractual group.

2.15

EvENTS fOllOwiNgThE CONCluSiONOf ThE fiSCal yEar

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ACqUISITION OF A MAjORITy STAKE IN ThE COMPANy BIRRA PEjA, Sh. A., PEć

On 15 March 2011 Pivovarna Union, d. d. and Factor banka, d. d., as an extension of the contract of forward

sale of shares of Birra Pei, Sh. a., Kosovo which originated in March 2007, concluded contract on the put

sale option which would expire in 15 December 2011. On 29 November 2011 Factor banka, d. d., the 18%

owner of Birra Pei, Sh. a. at that time, on the basis of the above option contracts requested Pivovarna Union,

d. d., to purchase its 18% stake in Birra Peji, Sh. a. On the basis of the request of Factor banka, d. d., Pivovarna

Union, d. d. remitted EUR 4,739,782.22 on 15 December 2011 for the said 18% stake. The process of enforc-

ing the put options was concluded on 18 January 2012. As at that date, Pivovarna Union, d. d., became the

majority owner with a 57.6% stake of the denoted company in Kosovo.

SqUEEzE-OUT OF MINORITy ShAREhOLDERS IN jADRANSKA PIVOVARA – SPLIT, D. D.

Pivovarna Laško, d. d. implemented a procedure for the squeeze-out of minority shareholders in share-

holders in Jadranska pivovara – Split, d. d. It filed a request with the court, the latter of whom appointed a

court expert, i.e. authorized auditor who assessed the value of the shares at 14.79 kn; Pivovarna Laško then

specified an appropriate compensation in the amount of 16.5 kn. At an extraordinary general meeting of

Jadranska pivovara held on 24 February 2012, the decision was made to squeeze-out the company’s minority

shareholders. Pivovarna Laško owns 5,396,932 shares from the total share holding of 5,426,217, represent-

ing a 99.46% stake. The minority shareholders possessed the remaining 29,285 shares. After entry of the

decision in the court register, the shares will be transferred to Pivovarna Laško, unless a challenging action is

filed against the decision of the General Meeting. Compensation will be paid to shareholders after the entry

of the decision in the court register.

CRIMINAL INVESTIGATION AGAINST PIVOVARNA LAŠKO, D. D. DUE TO ThE ACqUISITION OF MELR ShARES

IN 2005

On 9 March 2012 Pivovarna Laško, d. d. received a decision from the Higher Court in Ljubljana whereby,

following an appeal to the District Attorney, allowed the criminal investigation which the District Court in

Ljubljana had already stopped on 3 June 2011. This regards a criminal investigation against several suspects,

including against the former director of Pivovarna Laško Bosko Šrot and two legal entities, including Pivo-

varna Laško, d. d. Among other things, fraud is alleged against two suspects, one of which is Bosko Šrot

under Article 217 of the Criminal Code in connection with Article 25 of the Criminal Code. The legal persons

are suspected of the criminal act of fraud under the Article 27 in respect to Article 25 of the Criminal Code.

The subject of the criminal proceedings in the case of Pivovarna Laško, d. d. was the purchase of Mercator

shares from SOD on 30 August 2005, which SOD had sold to Pivovarna Laško at a price of EUR 158.62 per

share. Bošk Šrot is accused of having participated in the execution of the transaction with the purpose of un-

lawfully acquiring proceeds for a third party, namely Pivovarna Laško, d. d. By specifically deceiving certain

natural persons, and consequently his omission of a competitive bid in the amount of EUR177.34 per share,

Boško Šrot created an economic benefit of at least EUR 8,279,124.39for Pivovarna Laško, d. d. Pivovarna

Laško, d. d., as a legal entity is alleged to be responsible for the offense, which was committed in complicity

with Boško Srot, since the alleged offense was committed in favour of Pivovarna Laško, d. d., which would

henceforth also have at its disposal unlawful proceeds of at least EUR 8.2 million.

LAwSUIT AGAINST ERA GOOD

On 13 January 2012, the Group received a lawsuit from the plaintiff Era of Good, d. o. o. against the defend-

ants Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d., Radenci for the recovery of damages

in the total amount of EUR 958,356.00 (EUR 509,749.55 from Pivovarna Laško, EUR 348,458.24 from Pivo-

varna Union and EUR 100,148.21 from Radenska) with default interest. The defendant in its lawsuit asserts

that the rebate policy such as the one established by the Laško Group constitutes an abuse of its dominant

position under Prevention of the Restriction of Competition Act (ZPOmK-2), that it is discriminatory. The

rebate policy of the Laško Group placed the defendant at a competitive disadvantage, causing damage to the

defendant. In this matter, the court issued a decision ordering the plaintiff and defendant to file a prepara-

tory form by 14 May 2012 at the latest in which they should indicate all relevant arguments and submit all

evidence. The Group feels the lawsuit to be without basis and unfounded.

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GENERAL MEETING OF ShAREhOLDERS OF POSLOVNI SISTEM MERCATOR, D. D.

The General Meeting of Shareholders of Poslovni system Mercator, dd, Ljubljana which was held on 30

March2012 among other decisions, also appointed a new nine-member supervisory board (6 members as

shareholder representatives and 3 members as employee representatives). As members of the new supervi-

sory board, the General Meeting also elected two members of the Management Board of Pivovarna Laško, d.

d. Marjeta Zevnik and Mirjam Hocevar, the latter of whom is also a member of the management board of

Pivovarna Union, d. d. Miriam Hocevar submitted her resignation on 4 April 2012 that she was resigning

form the position of member of the supervisory board of Poslovni system Mercator, d. d. and namely that

she would not accept the mandate with the explanation that the Laško Group had no intention to imple-

menting any control whatsoever over the company Poslovni system Mercator, d. d. The companies from the

Laško Group will support the members for the proposal for the members given by the supervisory board of

Poslovni system Mercator, d. d. at the next general meeting of shareholders of Poslovni system Mercator, d. d.

LOAN RESChEDULING AGREEMENT REAChED wITh BANKS

At the end of March 2012, EUR160 million in liabilities from short-term loans and instalments of long-

term loans of the two breweries matured. The Management Board is still endeavouring to negotiate a com-

plete rescheduling of all financial liabilities in the long-term. A financial restructuring plan with a detailed

proposal for the repayment of loans by individual banks was prepared for this purpose and, as such, was

presented to all the creditor banks in a joint meeting on 28 February 2012. The proposed financial restruc-

turing plan provides for the divestment of investments in Mercator and Delo and a proposed rescheduling

of loans that are secured with the denoted investments available-for-sale. The proposal includes the resched-

uling with the moratorium until the time of divestment. Other long-term loans will be rescheduled in the

long-term through e repayment instalments that are adjusted to the cash flows of the breweries. After one

month of negotiations with the banks are of 02.04.2012 all creditor banks Lasko Brewery, Union Brewery

and Radenska coordinate their positions and reach an agreement on the rescheduling of loans, of which we

were also informed in writing. The banks adopted the decision to extend the loans for a minimum period of

one year, with repayments of individual loans in accordance with the Group’s proposed rescheduling plan

which is part of the financial restructuring plan. The exceptions were two banks, whose position is that they

would currently extend the loans by 6 months. Some of the banks confirmed the rescheduling of loans for a

period of 5 - 7 years. The banks rescheduled the loans secured with shares of Mercator with a moratorium of

one year. The financial restructuring plan also envisages agreed lower interest rates which are being negoti-

ated bilaterally with each bank. Since the final decision on the rescheduling lies within the jurisdiction of the

credit committees of banks, the signed contracts on the reprogramming of loans is expected to be received

from the banks by the end of April.

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ONE hUNDRED AND EIGhTy-FIVE yEARS hAS PASSED SINCE PIVOVARNA LAŠKO GREw FROM A LO-

CAL BREwERy TO ThE LEADING PRODUCER OF BEER AND TOGEThER wITh OThER COMPANIES IN

ThE GROUP, INTO ThE LEADING PRODUCER OF MINERAL AND NATURAL wATERS, NON-ALCOhOLIC

BEVERAGES AND OThER BEVERAGES ON ThE SLOVENE MARKET.

1825

Historical beginnings of Pivovarna Laško. A producer and seller of honey and ginger-bread producer, Mr

Franz Geyer, in the former Valvasor Špital established a crafts brewery, which building still stands today.

1838

The brewery is bought by Mr Heinrich August Uhlich. He begins exporting beer to India and Egypt.

1867

Mr. Anton Larisch constructs the largest brewery of the time in Lower Styria along the foothills of St.

Kristof and Šmihel.

1889

The brewery is purchased by an extremely nationally oriented brewer from Žalec, Mr Simon Kukec. As

a novelty, he brews light and dark thermal beer as well as Ležak and Porter beer which is later renamed

Dark Laško beer. The Laško pivo brand becomes increasingly more validated and is also sold in Egypt and

Budapest.

1924

The brewery brews the last beer. The Ljubljana Brewery Union secretly buys up the majority of its shares

and ceases production. The closing of the Laško brewery had more than just a material effect. Initiatives to

reopen the brewery are met with the cheers of innkeepers.

1929

Representatives of innkeeper cooperatives decide to construct a catering shareholding brewery in Laško.

2.16

EvENTS priOr TO ThE 2011fiSCal yEar

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1938

After many complications and severe opposition by the competition, they open the shareholders’ brewery

Pivovarna Laško and present the new Laško beer under the trademark Zlatorog. Drinkers of the beer liked

the beer so much that German occupiers allow maintenance of the trademark Laško beer due to the quality

of the beer.

1944

During bombing of the railway bridge, the brewery was also hit and demolished. After World War II pro-

duction in the brewery began again already in 1946 and was officially stopped in 1947.

Since World War II Pivovarna Laško has constituted a single company the entire time. Particularly after

1960 the company has recorded an extraordinary development in sales: from 60,000 hl to 1,300,000 hl.

1990

After harmonization with the provisions of the Companies Act, the organization of the socially owned

company is entered into the court register as court decision no. Srg 23/90 of 31 May 1990.

1991

In accordance with the provisions of the Companies Act, it is transformed into a joint stock company in

mixed ownership. On 30 September 1991 the share capital and social capital of the company is assessed and

a division of shares implemented.

1995

At the first general meeting of shareholders of 20.04.95, Pivovarna Laško is submitted to ownership trans-

formation into a joint stock company with known owners. The company was entered into the court register

with decision no. Srg 673/95 of 8 September 1995. The company becomes a joint stock company with more

than 15,000 shareholders.

2000

Capital connections with Radenska, d. d., Radenci, Jadranska Pivovara, d. d., Split, and Vital, d. d., Mes-

tinje, represent one of the most significant turning points in the company history. A new business strategy

for development begins.

2002

The company succeeds with a public takeover bid of Pivovarna Union, d. d., Ljubljana. It obtains 47.86%

of all its shares.

2003

Continuation of capital investments. The company gains a 24.98% share in Delo, d. d., Ljubljana. The

company becomes its largest owner.

2004

In December the company obtains an additional 27,011 shares (5.98% of the assets) of the joint stock com-

pany Union Ljubljana. Pivovarna Laško, d. d., becomes a 53.85% owner of all shares of Union.

2005

In February the company buys the entire ownership stake namely 186,400 shares of the issuer Pivovarna

Union, d. d., Ljubljana from Interbrew Central European Holding B. V., Netherlands, thus becoming the

majority owner, with a 95.17% stake, of the company Union.

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In May the Competition Protection Office issues consent for the announced concentration of the compa-

nies Pivovarna Laško, d. d., and Pivovarna Union, d. d.

2006

Transfer posting of 106,950 newly issued shares of the company Poslovni Sistem Mercator, d. d., Ljubljana

from Slovenska Odškodninska Družba, d. d., Ljubljana to Pivovarna Laško, d. d. After the aforementioned

transfer of entry, the joint stock company Pivovarna Laško ownes 317,498 MELR shares or AN 8.34% stake

in Mercator.

2007

Takeover bid for the buyout of shares of the company Delo, časopisno in založniško podjetje, d. d., Lju-

bljana. The acquirers Pivovarna Laško, d. d., Radenska, d. d. and Talis, d. o. o. now possess a total of 628,044

shares, representing a 94.09% stake in the target company.

2008

A takeover bid for the purchase of shares of Pivovarna Laško, d. d. was published in February. The acquir-

ers, Infond Holding, d. d., Maribor, Cestno Podjetje Maribor, d. d., Fidina, d. d., Ljubljana and Koto, d. d.,

Ljubljana, acquire a total of 4,818,151 shares, representing a 55.08% stake in the target company. The acquir-

ers offer EUR 88.00 per PILR share and 2,488 shareholders of Pivovarna Laško, d. d., accept the takeover bid.

As at 31 December 2008 Infond Holding, d. d. is the majority owner of the company Pivovarna Laško, d. d.,

with a 52.97% stake.

2009

The bank creditors NLB, d. d., Hypo Alpe-Adria-Bank, d. d., Abanka, d. d., Banka Celje, d. d., Gorenjska

banka, d. d., Probanka, d. d., Nova kreditna banka Maribor, d. d. and Banka Koper, d. d., acquire shares of

Pivovarna Laško, d. d., (PILR), held by the company Infond Holding, d. d., pledged as insurance for the bank

loans during the period from August to September. The banks thus acquired a significant ownership stake in

Pivovarna Laško, d. d. As of 5 August 2009, Infond Holding, d. d., Maribor is no longer the majority owner

of Pivovarna Laško, d. d.

2010

At its 18th regular session on 23 April 2010 the Supervisory Board confirmed the bases of the new business

model and reorganisation of the Laško Group, which had been prepared and submitted by the Management

Board, also confirming the bases for the growth strategy of the Laško Group up to 2014. The new business

model envisages the restructuring of the Pivovarna Laško Group into a contractual and afterwards into a

unified company.

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3.

SUSTAINABLE DEVELOPMENT

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ThE GROUP IS AwARE ThAT EMPLOyEE SATISFACTION AND BUSINESS PERFORMANCE ARE INExTRI-

CABLy LINKED ThEREFORE IT SUCCESSFULLy ENSURES A hEALThy AND SAFE wORKING ENVIRO-

NMENT AND GOOD PARTICIPATION AMONG EMPLOyEES.. EMPLOyEES wITh ThEIR KNOwLEDGE,

EFFORTS AND COMPETENCE CONTRIBUTE TO GOOD qUALITy, AND CONSEqUENTLy CUSTOMER

SATISFACTION wITh ThE GROUP’S PRODUCTS.

The leadership of successful teams that create leading brands with added value for customers and share-

holders requires the right people. The Group strives to attain superior results with responsible and envi-

ronmentally-friendly operations. The Group’s key personnel are just as important as the development of

operations. The Group recognizes that employees represent the key to the competitiveness of companies in

the market, which is why the Group will devote a great deal of time to human resource management, the

personal development of each employee and the creation of a stable working environment. Its approach is to

increase the knowledge and skills of employees through practical work, training and a culture that rewards

people for taking responsibility and achieving results. Integration into a large system such as the Laško

Group provides employees many opportunities for professional and personal development.

3.1.1. EMPLOyMENT POLICy

Through the reorganization and optimization of business processes, improved technological equipage of

the companies and improved educational structure, the Group has systematically reduced the number of

employees in recent years. The Group observes the strategies of individual companies and the entire Group

and individual work loads and complexity of the work process in this endeavour. To achieve the objectives of

the Group, highly skilled, young and promising staff are hired.

3.1.2 hR DEVELOPMENT

Work regarding the development of employees began intensively in 2011 The Group conducted numerous

trainings for sales employees together with external providers for the development of sales skills which en-

able the sales sector to learn new techniques for achieving better results.

3.1

humaN rESOurCESmaNagEmENT

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A project to assess managerial competence, the result of which was an of the development of individual

skills and leadership potential of all participants in the who were project was implemented in October. In

addition, the project also enabled the Group to establish the state of the organisational climate and needs for

additional education.

As in the past, training was also provided to employees in the areas of informatics, foreign languages,

environmental protection, legislation and other specific skills by area.

The Laško Group employed 1,820 people at the end of 2011. The numbers of employees of individual com-

panies in the Group are as follow:

NUMBER OF EMPLOyEES By COMPANy OF ThE LAŠKO GROUP AS AT 31 DECEMBER 2011

No. of employees Share in %

Pivovarna Laško, d. d. 329 18.1

Radenska, d. d., Radenci 208 11.4

Pivovarna Union, d. d., Ljubljana 353 19.4

Fructal, d. d., Ajdovščina* 364 20.0

Fuktal Mak, a. d., Skopje* 61 3.4

Jadranska pivovara - Split, d. d. 40 2.2

Vital Mestinje, d. o. o. 37 2.0

Delo, d. d., Ljubljana 428 23.5

Total 1,820 100.0

*Note: The Fructal Group was sold on 16 December 2011 however it is included in the data on employees for 2011.

3.1.3 CONCERN FOR EMPLOyEE SATISFACTION

The employees in the Laško Group receive:

• awareness, care and training for Safety and Health at Work, an orderly work environment and periodic

medical examinations,

• premium payments of 3.5% for pension insurance for all employees for an indefinite period,

• accommodation at affordable prices in the Group’s holiday capacities, which are located at the coast,

mountains and thermal spas.

The Group also enabled employees to participate in making useful suggestions for improvements and

development, on both the organizational level and on the level of society as a whole.

In order to standardize employment and wage relationships between the companies in Group, the Laško

Group commenced with a project for standardising the systems of Pivovarna Laško, d. d., Pivovarna Union, d. d.

and Radenska, d. d. which will be completed in the first half of 2012.

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3.1.4 PERSONNEL IN PIVOVARNA LAŠKO, PIVOVARNA UNION, RADENSKA AND VITAL

Detailed staffing data for Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d. and Vital

Mestinje, d. o. o. is given in continuation for the Group’s core business in Slovenia - the beverage activity.

The number of employees in 2011 compared to 2010 increased by 9 people. This increase resulted from

a radical reduction in hiring workers through staffing agencies. The Laško Group had a total number of

927 employees as at 31 December 2011 of which 867 had employment contracts concluded for an indefinite

period and 44 for a fixed period.

NUMBER OF EMPLOyEES EMPLOyED FOR INDEFINITE AND FIxED PERIODS

PIVOVARNA LAŠKO Difference PIVOVARNA UNION Difference

( Employees ) 2009 2010 2011 11-10 2009 2010 2011 11-10

Indefinite period 305 298 303 5 334 317 323 6

Fixed period 6 8 15 7 14 36 26 -10

Part-time 10 9 10 1 5 5 4 -1

Trainees - 3 1 -2 - - - -

Total 321 318 329 11 353 358 353 -5

RADENSKA Difference VITAL Difference

( Employees ) 2009 2010 2011 11-10 2009 2010 2011 11-10

Indefinite period 219 205 207 2 36 33 34 1

Fixed period - 1 - -1 2 2 3 1

Part-time - - - - - - - -

Trainees 1 1 1 - - - - -

Total 220 207 208 1 38 35 37 2

SKUPAj Difference

( Employees ) 2009 2010 2011 11-10

Indefinite period 894 853 867 14

Fixed period 22 47 44 -3

Part-time 15 14 14 -

Trainees 1 4 2 -2

Total 932 918 927 9

AGE OF EMPLOyEES

The majority of employees are aged between 41 and 50 years. The average age of employees as at 31 Decem-

ber 2011 was 44.6 years and the average length of service 23.8 years.

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NUMBER OF EMPLOyEES By AGE CATEGORy AS AT 31 DECEMBER 2011

PIVOVARNA LAŠKO Index PIVOVARNA UNION Index

( Age ) 2009 2010 2011 11/10 2009 2010 2011 11/10

Less than 30 years 8 12 16 133.3 3 11 9 81.8

30 - 40 years 83 82 74 90.2 110 126 112 88.9

41 - 50 years 172 163 165 101.2 126 133 139 104.5

51 - 60 years 56 61 74 121.3 107 87 89 102.3

Over 60 years 2 - - / 7 1 4 400.0

Total 321 318 329 103.5 353 358 353 98.6

RADENSKA Index VITAL Index

( Age ) 2009 2010 2011 11/10 2009 2010 2011 11/10

Less than 30 years 18 20 19 95.0 5 2 4 200.0

30 - 40 years 26 25 31 124.0 10 7 6 85.7

41 - 50 years 75 67 57 85.1 18 19 20 105.3

51 - 60 years 100 94 98 104.3 5 7 7 100.0

Over 60 years 1 1 3 300.0 - - - /

Total 220 207 208 100.5 38 35 37 105.7

TOTAL Index

( Age ) 2009 2010 2011 11/10

Less than 30 years 34 45 48 106.7

30 - 40 years 229 240 223 92.9

41 - 50 years 391 382 381 99.7

51 - 60 years 268 249 268 107.6

Over 60 years 10 2 7 350.0

Total 932 918 927 101.0

EMPLOyEE TURNOVER

In 2011, 31 employees left the Group, 25 of whom left by mutual agreement or their fixed term contract

had expired. A relatively small number of employees retired in 2011. The reason for this lies in the fact that

in 2010 due to the announced early retirement pension reform, everyone who would fulfil the conditions in

the next 3 years retired.

EMPLOyEE EDUCATIONAL STRUCTURE

As at 31 December 2011, the actual educational level of employees was as follows:

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NUMBER OF EMPLOyEES By LEVEL OF EDUCATION

year 2009 year 2010 year 2011 Index 11/10

Primary school 184 162 160 98.8

Vocational school 286 260 269 103.5

Secondary school 252 274 269 98.2

College 82 85 88 103.5

University 117 125 129 103.2

Master’s 10 12 12 100.0

Doctorate 1 - - /

Total 932 918 927 101.0

The table above shows that the number of employees with a higher and college education increased while

the number of workers with a vocational education (4th educational level) decreased. The number of em-

ployees with secondary and primary education also decreased, confirming the Group’s focus on improving

the educational structure of its employees.

The majority of the employees had vocational or secondary school, because new jobs in the technical sec-

tor due to the nature of work require at least a 4th level of education. Employees are also additionally trained

in their work.

SICK LEAVE (ABSENTEEISM)

Sick leave fell in 2011, decreasing by 8105 hours or by 7.8%.

A total of 95,743 working hours or 11,968 days was lost due to absenteeism in 2011, meaning an increase

of almost 13.5 days per employee.

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IN 2011 PIVOVARNA LAŠKO, D. D. SySTEMATICALLy ESTABLIShED TwO-wAy COMMUNICATIONS BE-

TwEEN ThE COMPANIES OF ThE GROUP AND ThEIR INTERNAL AND ExTERNAL ENVIRONMENTS.

ThE PIVOVARNA LAŠKO TEAM PLANNED COMMUNICATIONS, SIMULTANEOUSLy ADAPTING ThEM TO

ThE INTERESTS OF VARIOUS PUBLICS whO hAVE AN EFFECT ON ITS OPERATIONS.

3.2.1 COMMUNICATIONS wITh INVESTORS

In accordance with the law, Pivovarna Laško provides investors and potential investors with sufficient, ac-

curate and timely information. Information within the scope of the Company’s information disclosure policy

encompasses business performance in the past and strategic development of the Company in the future.

Pivovarna Laško, the shares of which are quoted on the Ljubljana Stock Exchange, is pursuant to law

obliged to publish prescribed information on the website of the aforementioned stock exchange (seonet.ljse.

si), and to also publish this information on the website of the Company.

The set of activities with investors and potential investors includes regular general meetings of share-

holders, the convocation of press conferences alongside reporting on interim and annual operating results,

individual meetings of representatives of the Company with representatives of investment companies, and

announcement of interim and annual reports in printed media and on the Company’s web sites.

3.2.2 COMMUNICATIONS wITh ThE MEDIA

Pivovarna Laško regularly informs the media of the activities of the Company, its business operations,

plans and strategic guidelines via press releases. Relations with the media are based on planned, two-way

cooperation, timely and concurrent responses to the questions of journalists in accordance with applical

standards of the public relations profession.

3.2

COmmuNiCaTiON

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3.2.3 COMMUNICATIONS wITh BUyERS

In 2011, for the third year in a row, operators are available at the toll-free telephone number 080 1825, who

accept customer orders for all products of the Laško Group. The call centre, which is located in the Distribu-

tion Centre of the Laško Group in Ljubljana takes orders for all distribution channels (trade, catering and

institutions). In its three years of operation the call centre has established itself well among buyers who see

it as a key tool for ordering products which is now easier and more user friendly.

3.2.4 COMMUNICATIONS wITh EMPLOyEES

Healthy mutual relationships are one of the essential elements for attaining good business results. The

proper implementation of internal communication plans provides for sufficient notification, motivation and

satisfaction of employees. Pivovarna Laško concurrently informs employees of relevant information and no-

tifications for the public. At the highest frequency points in the Company, bulletin boards are available with

the use of the Internet, as a means of notification, rapidly rising. Important internal communication tools

are also the intranets of Pivovarna Laško and of the Laško Group. Use of the new tool has increased alongside

the increased needs for mutual communications between different organizational departments and mixed

project teams. The intranet enables interested persons joint access to specific documents. The communica-

tion tool has significantly contributed to the increased effectiveness of business processes.

Within three years after resuming the publishing of the Pivovarna Laško newsletter “Laski brewery,” which

is intended for employees of Pivovarna Laško and colleagues in the Laško Group and also available to other

interested persons, the newsletter has established itself as one of the key information tools for informing

the public and other interested publics. Employees receive the newsletter in electronic form while and the

newsletter is also available in printed form in five locations at the Company. It is also received by retirees of

Pivovarna Laško, journalists and representatives of other important publics. The newsletter is also available

as a file on the website of Pivovarna Laško.

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DESPITE ThE ChALLENGING FINANCIAL SITUATION wE AT PIVOVARNA LAŠKO CONTINUED ThE

POLICy OF BEING A SOCIALLy RESPONSIBLE COMPANy. ThROUGh ThE PLANNED USE OF ENVIRO-

NMENTALLy FRIENDLy TEChNOLOGIES OF OUR PRODUCTION PROCESSES whICh hAD ThE LEAST

IMPACT ON ThE LOCAL ENVIRONMENT IN 2011, wE USED ThE “RETURN ThE BOTTLE TO LAŠKO”

CAMPAIGN TO ENCOURAGE BUyERS OF OUR PRODUCTS TO USE RETURNABLE GLASS PACKAGING,

ThUS FURThER REDUCING ENVIRONMENTAL BURDENING.

In recent decades, Pivovarna Laško has also invested quite an amount of funds to reduce environmental

impacts and for the development of local communities in which it operates. This clearly depicts the great

concern and weight the Group focuses on environmental relations, quality of life in local communities and

social responsibility.

The superior products of Pivovarna Laško also reflect quality and tradition. Production processes are im-

plemented in accordance with very strict European environmental standards while waste water is routed to

a separate wastewater treatment plant.

Pivovarna Laško has been one of the most important Slovenian supporters of top sports in the last dec-

ade. The Laško Group is the largest sponsor of Slovenian sports in the country. Sports sponsorship, whose

success due to the small size of the Slovenian market can not be measured merely by sales results, is only

one of the segments of implementing the policy of a social responsible company. Pivovarna Laško as well as

the Group is active in the field of sponsoring the culture and development of local communities, as well as

health and welfare.

Pivovarna Laško for the second year in a row implemented the “Let’s go to the mountains” campaign in 2011 which

encourages climbing, socializing and leisure activities and raises money to restore Slovenian mountain trails.

Pivovarna Laško is also the general sponsor and one of the carriers of one of the most visited tourist events

in Slovenia – Pivo in cvetje (Beer and Blossoms) Festival. In 2011 Pivovarna Laško decided to also actively par-

ticipate in the contextual preparation of the event, particularly the music portion of the event. In 2011 Pivo-

varna Laško made all the arrangements required for the implementation of the Laško Group - patron of Slove-

nian contemporary music that will be implemented in 2012 which is the only such patron project in Slovenia.

The additional significance given to awareness of social responsibility is also reflected by donations for

predominantly humanitarian projects, non-profit activities, support of the development of smaller clubs and

associations in the local environments.

3.3

rESpONSiblE aTTiTudETOwardS ThE SOCialENvirONmENT

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•

hOP IS A VALUED FLAVOURING

INGREDIENT ThAT GIVES

DIShES A VERy SPECIAL TASTE.

AT PIVOVARNA LAŠKO wE MAKE

SURE OUR BEERS CONTAIN

jUST ThE RIGhT AMOUNT OF

SLOVENIAN PRODUCED hOP,

TO PLEASE ThE TASTES OF

EVEN ThE MOST DEMANDING

GOURMETS.

•

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ThE SUSTAINABLy FOCUSED SySTEM OF wORK ShOwN BRINGS LONG-TERM RESULTS whICh

IN ThE END ARE ExPRESSED AS INCREASED PROFIT FOR ThE GROUP, ESPECIALLy IN TERMS OF

STRENGThENING ThE REPUTATION AND RECOGNISABILITy OF ITS BRANDS.

The companies of the Laško Group removed the majority of their negative impacts on the environment

and was among the first to obtain the environmental permit, which is a necessary condition for operation

under the provisions of the IPPC Directives. The Group also continued with the active resolution of waste

brewer’s yeast which is now partially being introduced into the Pivovarna Laško’s treatment plant and during

the seasonal peaks through the sale thereof to biogas plants.


Pivovarna Laško desires to constantly decrease impacts on its living environment through a sustainable

development strategy, particularly in the areas of energy and ecological efficiency. The Company is aware

that sustainable development has to be one of the strategic guidelines of the Company supported by the

Management Board and integrated into the complete working process. The sustainably focused system of

work shown brings long-term results which in the end are expressed as increased profit for the Company,

especially in terms of strengthening the reputation and recognisability of its brands. The Company adheres

to guidelines involving sustainable increases of the exploitation of raw materials, the reduction of wastage in

production and improvement of ecological impacts on the environment as a result of its activities.

ECOLOGICAL PROjECTS – BIOGAS

The Group continued with the detailed monitoring of the operation of the anaerobic reactor for waste

water processing. which represents a major economic success due to the acquisition of biogas particularly

at through the addition of fresh yeast n industrial wastewater. The consumption of biogas which is used as a

substitute for natural gas in the boiler rooms and thus also represents the use of a renewable energy source,

was 392,000 m3.

IPPC ENVIRONMENTAL PERMIT (OVD)

The Group regularly carries out all required monitoring in accordance with the environmental permit.

The Group delivered all required reports to the Environmental Agency of the Republic of Slovenia within

the prescribed deadlines.

3.4

ENvirONmENTal prOTECTiON

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Some deficiencies were established were established within the annual inspection particularly in the areas

of waste water and changes in the technological procedure of yeast drying. The deficiencies were remedied

within the prescribed deadline and a request submitted to the Slovenian Environment Agency (ARSO) for a

modified environmental permit.

ECOLOGy IN ThE PRODUCTION OF BEER

The Group implemented a review of the state of the CIP optimization project for the beer bottling plant,

prepared solutions and implemented changes to the production equipment cleaning programmes. At the

same time the effectiveness of the cleaning equipment was improved and emphasis placed on decreasing

water use in this portion of production.

In the areas of beer production and bottling, the Group consistently decreases the use of fresh water in

line with best practices and supports measurements by suppliers of cleaning agents. In this manner, the

Group achieved a specific water consumption of 5.76 hl/hl of sold beer and water.

wATER CONSUMPTION FROM 2009 TO 2011

Total beverage sales

Water consumption

Bee

r sa

les

in th

ousa

nd h

l

0

200

400

600

800

1.000

1.200

2009 2010 2011

0

200

400

600

800

Wat

er C

onsu

mpt

ion

in th

ousa

nd m

3

( in hl ) 2009 2010 2011

Water consumption Per 1 hl beverages sold 6.06 5.66 5.76

In 2011 the Group continued with an even stricter separation of wastes throughout the entire level of all

companies, thereby decreasing the quantity of directly deposited municipal wastes even more than in the

previous year. Separately collected waste packaging and other secondary raw materials fractions are now

handed over only authorised waste collector for processing as of September.

wASTE DIATOMACEOUS SOIL

A very innovative approach was taken to tackle waste through a project involving waste Kieselguhr and

wood ashes in which the two waste materials will be used to create a usable material. The Company is plan-

ning to commence the mixing and use of the materials in 2012 which is also the envisaged timeframe for

commencing the closing the Strensko municipal waste depot which will result in the aforementioned mate-

rials also becoming commercially interesting.

wATER SOURCES

Works on the water supply network were for the most part carried out as planned in 2011 without any

major deviations from the plan. Adequate quantities of quality drinking water in the water supply system of

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Laško and other surrounding water supply networks were ensured throughout the entire period. No water

needed to be transported due to favourable hydrological conditions. Some sections of the water supply net-

work had to also be replaced in this period.

Supervision over the health suitability of the drinking water in the water supply network was carried out

in accordance with the Rules on drinking water and other legislation.

Regular inspections of plumbing facilities were conducted within the scope of preventive measures to en-

sure the health suitability of drinking water; remote control has also been set-up in certain facilities. Regular

cleaning and maintenance of water supply facilities is performed as a preventive measure according to the

HACCP plan and with the necessary records also kept.

In addition to regular maintenance in the past year, the Group also carried out the following major main-

tenance works:

• replacement and renovation of pipelines in the following areas: Voluš-Vrh, na Šmohorju, Rimske Toplice

(Partizanska, Završnikova and Cankarjeva ulica), Globoko, Podšmihel,

• cooperation with the Municipality of Laško regarding the following water supply networks: Vodiško-

Škofce, Curnovec, Marija Gradec, Trobni dol and Vrh-Radoblje-Strensko,

• renovation of the water storage tanks: Klinar, Lahomno – Železnik, Kuretno and Albreht,

• construction of the automatic switch of the Rudnik pumping station connected to the Laško water supply

network,

• installation of turbidity measurement devices in Globoča,

• arrangement of the drinking water catchment of the Jurkloster school and the pipeline to Kartuzija,

• cooperation in the basic design concept of the pipeline for Rimske Toplice-Laško,

• implementation of the Lurd L3 well,

• arrangement of the H7 well and pipeline connections to the H6 well.

ENERGy SUPPLy COMPANIES

The energy devices and equipment the Company has at its disposal have entirely met the needs which

constitute one of the links in the technological process, namely, within the framework of norms for these

purposes. At the same time, in the area of energy engineering, by monitoring and supervising the generated

emissions as a result of energy conversion, the Company endeavoured to achieve the minimum number of

units or, together with the checked measurements, fall within the framework of units as statutorily set.

A total of 13,214,040 kWh of electrical energy was required for all production and other functions, repre-

senting a specified use of 13.5 kWh/hl of beer. The use of natural gas comprised 3,085,886 Sm3 and amounts

to 3.2 Sm3/hl beer sold.

wASTEwATER TREATMENT PLANTS

The Company continued operation of the anaerobic wastewater treatment plant of Pivovarna Laško under

optimal conditions in 2011. In conjunction with the Public Health Institute Maribor, the Company regularly

monitors inflow and outflow from the treatment plant, which displays a high degree of purification. The total

annual quantity of waste water from the breweries was 392,502 m3.

Generated from the biogas, Biogas also arises during the operation of treatment plants and waste water;

a total volume of 712,481 m3 was produced in 2011, , which represents more than a 20% increase. Biogas is

used for heating wastewater at the wastewater treatment plant; most of it is used as an alternative source of

heat in the boiler rooms for the production of steam. Annually, the Company compensates 300,000 m3 (10%

consumption) of natural gas with biogas as a renewable source of energy.

In August, for the needs of a new biogas plant in Serbia the Group sold 128 tons of sludge from the anaero-

bic reactor, the production of which has been steadily increasing.

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OVERVIEw OF INVESTMENT AND COSTS IN ThE AREA OF ECOLOGy

An important factor in the selection of technological equipment are ecological characteristics which en-

sure high process exploitation, reduction of environmental pollution, fulfilment of legal standards, reduc-

tion of employee health risks and improvement of the Company’s public image. The Company earmarks a

specific share of its revenues for direct environmental operating costs which are depicted in the table below.

OVERVIEw OF INVESTMENTS INTO ECOLOGy IN PIVOVARNA LAŠKO, D. D.

( in EUR ) 2009 2010 2011

Investments in water resources 593,786 488,218 530,718

Water supply indemnities 1,125 999 340

Water supply maintenance 592,661 487,219 530,378

Water 62,446 53,925 56,438

Water reimbursements 32,805 33,931 37,638

Water concession 29,641 19,994 18,800

Waste waters 641,785 649,135 618,804

Wastewater treatment plant 641,785 611,527 603,608

Environmental duty - waste waters * 37,608 15,196

Wastes - environmental duty 417,813 233,720 238,538

Expenses for environmental protection

- waste packaging 394,366 195,140 191,331

Environmental duty - waste packaging 9,336 6,643 5,875

Environmental duty - electrical

and electronic equipment (abroad) 37 66 1,334

Waste diatomaceous soil treatment 14,074 31,871 39,998

Total 1,715,830 1,424,998 1,444,498

*The Company already covered environmental duties in the amount of EUR 22,469 via advance payments in 2008.

The Group desires to establish an effective environmental management system through a high level of

environmental awareness, education of the expert staff and practical performance of processes by all em-

ployees. The companies believe that the introduction of eco-technology solutions is relevant to the entire

business process.


Pivovarna Union in its business pays great attention to environmental concerns. In its environmental

policy, is committed to constant improvement of environmental management and prevention of pollution

and compliance with statutory requirements relating to environmental management.

In recent years, it has been systematically involved in reducing the amount of waste water. In 2011, Pivo-

varna Union completed the optimization of the CIP project, which commenced in 2008. A project to recover

waste water commenced in 2011. In 2012, this project will be regularly upgraded.

Pivovarna Union, d. d. passed all the prescribed measurements and monitoring required by the Environ-

mental Protection Act. Duties and obligations are identified in the IP-20-00. With the new neutralization sta-

tion, it now fully complies with all regulatory requirements, prior to that, deviations from the requirements

were only recorded for pH measurements of wastewater.

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An inspection was implemented in 2011. Discrepancies were resolved and a correspondence for the modi-

fication of the environmental permit also submitted. The changes are related to the discontinuation of use of

the drying machine for residues and yeast and related activities in the monitoring of certain laws.

The CIP optimization project was completed in 2011. All CIP rinsing programs in the last three years were

recorded. In 2012, only a recording of CIP rinsings on the PET2 line and inventorying of contingent water

on PET2 and their discharge to the recovery system remains.

The company achieved over 90% pH relevance level (legal obligation is more than 80%). on average in

2011. Suitability will surpass 95% following the connection of the new filtration system. No problems arose

at the gauging weir regarding the exceeding of the maximum allowable temperature.

In April 2011 changes to the CIP technology on CIP filtration programmes were implemented. Single-

phase CIP rinsing was introduced. Rinsing results are regularly monitored with no deviations from the not-

ed in 2011. It is estimated that the company has reduced the amount of channel water by around 5,000 m3.

• In 2012 the company will connect a new customer to the heat recovery system, i.e. the boiler water cool-

ing system. It will also connect a new source of recovered water, the S4 paster. According to calculations

for 2012, the use of recovered water will be between 35,000 m3 and 40,000 m3.

• The company regularly conducts a monthly analysis of the quality of recovered water because the water is

microbiologically contaminated therefore its processing will be required (nano- and micro-filtration) for

the connection of users to the filling lines which will be associated with higher investment costs.

In 2012 a project was created to recover hot water. This project will include the “CIP” place for brewing

system. The expected reduction in quantity of hot water used per year will amount to between 2,000 m3

in 3,000 m3. The company will continue with the recording of potential solutions to reduce consumption

of water per user. The possibility of local recovery of water from the S4, S5 and S4 glass bottle rinsing lines

(project “Bottle Guard”) was explored to this end. The company will examine the possibility of installing a

valve on the rinsing machine for glass bottles, which will block the flow of water into the system for decom-

missioning.

CONSUMPTION OF NATURAL RESOURCES By PIVOVARNA LAŠKO, D. D. (ExTRACTED AND ChANNELED wATER)

Measuring unit Cummul. 2009 Cummul. 2010 Cummul. 2011 Index 11/10

Pumped water m3 683,644 627,188 668,108 106.5

Recupurated water m3 - 2,103 31,129 /

Channeled water - dam m3 590,315 541,986 552,203 101.9

Channeled water - charged m3 552,484 493,599 537,196 108.8

Monthly rain mm 1,400 1,798 998 55.5

Monthly rain m3 51,789 66,537 41,294 62.1

Electricity MWh 20,376 16,806 19,243 114.5

Gas Sm3 4,285,664 4,181,340 4,202,312 100.5

Emissions - CO2 t 8,143 7,945 7,984 100.5

Filled quantities hl 1,476,620 1,371,026 1,549,350 113.0

Due to increased quantities of filled finished products, the quantity of water pumped from the previous

year increased.

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In 2011, the trend of reducing specific water consumption in beer production continued. Specific con-

sumption decreased from 4.6 to 4.3. Better results were noted in all months except for June and December.

The main reason for increased specific water consumption in December was the decreased production of

beer. In all months from April onwards there was a noticeable increase in water consumption due to the

testing of the new Pall filter.

The main measures implemented in 2011 were: single-phase CIP rinsing on the filtration programmes,

CIP optimisation and water recovery. The recovery project led to a decrease in specific use on the filling

lines. Beer production remains the main user of water. In 2012 the company plans to reduce consumption

in particular with the hot water recovery project.

The consumption of liquor increased compared to 2010. The increased consumption refers to the in-

creased operation of the S4 lines which are a major consumer of NaOH (25%). Consequently, the neutral-

izing device was burdened more with an increase also noted in HCL consumption. The Calgonit SN554 was

replaced with the Calgonit SN588 (project-phase filtration, CIP rinsing) in April. Consumption increased

due to higher concentrations of the new resource. Optimization of the use of liquor will be conducted via

the “Bottle guard” project in 2012.

Environmental management at Pivovarna Union, d. d. is conducted in compliance with the environmen-

tal permit (OVD), legislation, the requirements of the ISO 14001 standard and the environmental policy.

In 2011, in compliance with directives relating to CO2emissions, the company submitted an application

with which it will participate in the trading of emission certificates for the second trading period 2013 - 2020.

Based on the application, the company received a letter, which assessed the quantities of free emission al-

lowances, which the State provides to the economy. The reduction in free coupons is expected from 2013

onwards, meaning that the company will have to purchase the lacking coupons on the stock exchange (the

additional costs are currently hard to quantify because stock prices on coupons fluctuate).

MANAGEMENT OF PACKAGING wASTE

In 2011 the company reduced the weight of PVC bottle pre-forms, on average by 10%. Consequently, the

cost of packaging has decreased. In 2011 the company renovated the ecological island, extended the overhang

roof, repainted and adapted it and also enlarged the location for the disposal of containers. In 2012 it plans

to create an arranged space for the repairs of forklifts which will be equipped with waste oil separators. As

in 2011 the company experienced a lot of problems regarding breakdowns of the presses for the compaction

machine and is planning to purchase a new one in 2012.


Environmental awareness has been a constant companion of the work, efforts and dedication at Radenska

for many years.

To facilitate the management of environmental issues, the company decided to introduce the ISO

14000:1996 environmental standard to compliment the ISO 9001:2000 standard. The certificate was ac-

quired in 2002.

Radenska has been involved in the environmental aspect prior to the enforcement of the standard because

it is dependant on natural resources. Its affiliation with the environment and nature is already reflected in

its mission. Under the Radenska brand, it changes the natural wealth of this environment of natural mineral

water into marketable, qualitative and successful products.

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152

The rational use of raw materials and energy is closely related to the cost of its operations, so the benefit

is twofold.

ENVIRONMENTAL POLICy

The activity involving the “extraction, development, bottling of natural mineral, spring and drinking water

and production of non-alcoholic beverages and the marketing thereof” is highly dependent on diligent envi-

ronmental management. Therefore Radenska undertakes:

• to continuously monitor and meet the relevant legislative and other mandatory requirements and guide-

lines related to environmental and other aspects of the company’s activities and includes these require-

ments in its processes in the context of economic opportunities;

• to ensure that environmental planning remains an integral part of annual business planning and to

implement this activity for the sustained improvement of the arrangement of the environment, air qual-

ity, landscape and infrastructures and while seeking improvements, to foremostly focus on preventing

pollution thereby preventing the occurence of environmental problems;

• to strive for the rational use of all raw materials, materials and energy products entering the business

system or business processes and at the same time, wherever economically feasible, gradually replace

existing raw materials and energy products with more environmentally friendly ones;

• to develop and sell products and services with a clearly expressed environmental component;

• to endeavour to use environmentally friendly technologies in all new investments into equipment within

the scope of economically acceptable solutions;

• to identify all environmental aspects and monitor environmental impacts (waste generation, the use of

water, gas, electricity and other energy products and other emissions), to endeavour to continually reduce

the amount of consumption per unit of product and in the case of unconformities, take immediate ac-

tion;

• to constantly emphasize the importance of a preventive approach in managing environmental aspects

and thus endeavour to ensure continual improvements for pollution prevention for prevention is of vital

significance in the concern for the purity of groundwater, which is a natural source of wealth for our

company and the rational use of natural resources, energy and other materials and raw materials;

• to give preference to those suppliers who can adequately demonstrate good environmental practices

when cooperating with suppliers;

• to supports public campaigns to protect the environment and create an open relationship with the public

so as to establish a dialogue with local residents and other interested parties;

• to ensure the gradual increase in environmental and cultural knowledge of all employees;

• to regularly acquaint all employees and those working for or on behalf of the company and the interest-

ed public of environmental protection activities and objectives and achievements in the environmental

management field;

• to ensure that the company’s environmental policy is available to the public as a document and that the

policy is implemented and maintained and periodically reviewed.

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ENVIROMENTAL PROTECTION ACTIVITIES IN RADENSKA IN 2011

Environmental protection activities are associated with the implementation of environmental objectives

from previous years and current objectives for 2011. The objectives were geared towards reducing the envi-

ronmental burden of waste water, waste and streamlining energy consumption. Projects, covering environ-

mental protection activities in 2011 were:

• activity in wells (revised ordinance on the protection of water protection zones, determination of the

circle of potential contaminants, measures against polluters);

• cooperation with local and state authorities on legislative matters;

• protection of water resources - in accordance with the law;

• regulation of labelling water protection zones in accordance with the law and the proposed arrangement

of the entire image of wells;

• detailed inventory of all wells in the area of the Radenska spring area;

• detection of high-risk wells in terms of CO2 leaks and the creation of rehabilitation projects;

• rehabilitation of boreholes and VC landscaping around Radenska wells;

• activities to obtain concessions for the extraction of natural mineral, spring and tap water;

• search for possible rationalization of the throat of plastic bottles or weight optimization - design proposals;

• use of recycled PET materials;

• monitoring and optimization of energy and an energy audit - acquisition of bids;

• monitoring of natural mineral water, drinking and technological waters and wastewater;

• renovation/replacement of the worn out doors at the filling facilities;

• replacement of asbestos roofing;

• inspection and replacement of worn out parts of the compressed air and CO2 networks;

• replacement of equipment and rationalization (TPO-1 filling machine);

• cooling System - replacement of R-22 gas with a more environmentally-friendly one and central prepara-

tion of cooling water - preparation of projects;

• recording of amounts of withdrawals and CO2 use;

• replacement of all the outdoor lighting;

• new technological solutions to reduce waste quantities;

• measurements and, if necessary, remediation of noise in the production area.

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The key environmental policies will remain the same in 2012. The permanent objective of Radenska

remains the protection of water protection areas - a vital source of its business and the reduction of energy

consumption per unit of return.

Details of the implementation of environmental programs and objectives achieved with them are pre-

sented in the Environmental Report, which is attached to the Annual Report 2011 of Radenska, d. d. It also

contains the activities and objectives for the next period.


EVIRONMENTAL PROTECTION

In the field of environmental protection, the company ensures the enforcement of the requirements de-

fined in the environmental permit at all times. This essentially means the implementation of the prescribed

number of monitorings of waste and cooling water, careful management of other types of waste and the

keeping of appropriate records.

wASTEwATER TREATMENT PLANT

In 2011 A major repair was made to the treatment plant in 2011 which now operates flawlessly as demon-

strated in the monitorings of waste water.

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•

BARLEy GRAINS hAVE

hEALING PROPERTIES AND

ARE USED TO EASE MANy

AILMENTS. AT PIVOVARNA

LAŠKO wE PRODUCE MALT

FROM ThE hIGhEST qUALITy

BARLEy GRAIN, whICh IS AN

INDISPENSABLE INGREDIENT OF

ANy GOOD BEER.

•

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D. 4.

FINANCIAL REPORT

157

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D.4.1

audiTEd fiNaN Cial STaTEmENTS Of pivOvarNa LaškO, d. d.fOr ThE 2011 fiSCal yEar,iN aCCOrdaNCE wiTh ifrS

4.1.1. STATEMENT OF ThE FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D. AS AT 31 DECEMBER 2011

( in EUR ) Note 2011 2010

ASSETS

Non-current assets 320,277,999 294,360,182

Intangible fixed assets 1 1,395,064 1,635,341

Property, plant and equipment 2 49,161,657 53,673,619

Investment property 3 6,538,066 2,877,608

Non-current financial assets in subsidiaries 4.A 245,016,537 220,919,754

Financial assets available-for-sale 4.C 241,655 320,942

Long-term loans 5 3,310 16,296

Long-term receivables from financial leasing 6 751,266 573,467

Long-term deferred tax receivables 7 17,170,444 14,343,155

Short-term assets excluding short-term

deferred and accrued costs and revenues 85,159,806 121,469,248

Non-current assets available-for-sale 8 4,408,589 39,545,865

Inventories 9 8,544,047 8,877,962

Short-term operating receivables 10.A 20,735,181 13,999,334

Financial assets available-for-sale 11 50,026,401 56,698,549

Short-term loans 12 1,105,738 2,250,738

Cash in banks, cheques and cash in hand 13 339,850 96,800

Short-term accured and deferred costs and revenues 14 49,527 27,850

Total short-term assets 85,209,333 121,497,098

TOTAL ASSETS 405,487,332 415,857,280

158

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4.1.1. STATEMENT OF ThE FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D. AS AT 31 DECEMBER 2011

( c o n t i n u e d )

( in EUR ) Note 2011 2010

CAPITAL 109,365,419 124,168,015

Capital 15 109,365,419 124,168,015

Share capital 36,503,305 36,503,305

Capital reserves 64,675,034 79,811,653

Profit reserves 3,907,178 4,298,827

Revaluation surplus 4,279,902 3,554,230

LIABILITIES 296,121,913 291,689,265

Provisions and long-term accrued

costs and deferred revenues 16 1,421,397 2,450,385

Provisions for severance pay and jubilee awards 16.A 1,088,909 1,105,422

Long-term accrued costs and deferred revenues 16.B 332,488 1,344,963

Long-term liabilities 17 25,289,353 46,122,235

Long-term financial liabilities 17 25,289,353 46,122,235

Short-term liabilities excluding short-term

accrued costs and deferred revenues 18 263,928,111 236,977,903

Short-term operating liabilities 18.A 21,177,290 17,247,950

Short-term financial liabilities 18.C 242,750,821 219,729,953

Short-term accrued costs and deferred revenues 19 5,483,052 6,138,742

Total short-term liabilities 269,411,163 243,116,645

TOTAL LIABILITIES 405,487,332 415,857,280

The notes on pages 164 through 221 are a constituent part of the financial statements of Pivovarna Laško, d. d.

159

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4.1.2 INCOME STATEMENT OF PIVOVARNA LAŠKO, D. D. FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) Note 2011 2010

Net sales revenues 20 94,314,248 91,287,653

Changes in inventories of products

and work in progress 137,035 (1,352,664)

Other operating revenues 20.C 2,538,249 1,059,263

Costs of goods, materials and services 20 (65,869,989) (60,428,686)

Labour costs 20 (10,638,357) (10,270,645)

Amortisation and depreciation of intangible

fixed assets and property, plant and equipment 20 (6,294,430) (6,996,074)

Provisions 20 (61,137) (110,235)

Write-offs 20 (1,672,108) (194,499)

Other operating expenses 20.F (1,734,344) (1,770,318)

OPERATING PROFIT 10,719,167 11,223,795

Financial revenues 21 3,981,229 4,332,001

Financial expenses 21 (31,073,148) (22,945,211)

OPERATING PROFIT BEFORE TAX (16,372,752) (7,389,415)

Taxes 22 2,528,474 1,097,155

NET OPERATING PROFIT/LOSS FOR THE ACCOUNTING

PERIOD FROM RETAINED OPERATING PROFIT (13,844,278) (6,292,260)

Generated operating profit/loss

NET PROFIT/LOSS FOR THE ACCOUNTING

PERIOD FROM OPERATIONS 29 (1,683,990) -

TOTAL PROFIT FOR THE ACCOUNTING PERIOD (15,528,268) (6,292,260)

Net profit/loss per share from retained operating profit:

Net profit/loss per share 25 (1.5828) (0.7194)

Adjusted net profit/loss per share 25 (1.5828) (0.7194)

Net profit/loss per share from operations:

Net profit/loss per share 25 (0.1925) -

Adjusted net profit/loss per share 25 (0.1925) -

Net profit/loss per share:

Net profit/loss loss per share 25 (1.7753) (0.7194)

Adjusted net profit/loss per share 25 (1.7753) (0.7194)


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4.1.3 STATEMENT OF COMPREhENSIVE INCOME OF PIVOVARNA LAŠKO, D. D. FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) Note 2011 2010

Net profit/loss for the accounting period (15,528,268) (6,292,260)

OTHER COMPREHENSIVE INCOME

Financial assets available-for-sale 909,524 1,267,174

Profit/loss from revaluation of real estate (115,944) -

Deferred taxes from revaluation (67,907) (109,542)

OTHER COMPREHENSIVE INCOME 725,673 1,157,632

TOTAL COMPREHENSIVE INCOME 26 (14,802,595) (5,134,628)

Total comprehensive income/loss per share 26 (1.6923) (0.5870)

Adjusted total comprehensive income/loss per share 26 (1.6923) (0.5870)


161

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of P

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163

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4.1.6 CASh FLOw STATEMENT OF PIVOVARNA LAŠKO, D. D. FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) Note 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 24 12,929,274 19,921,166

Net cash generated from operations 12,929,274 19,921,166

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment 2 (2,855,220) (4,223,786)

Purchase of intangible fixed assets 1 5,040 (1,691)

Acquisition/sale of financial assets

available-for-sale 4.C,11 (608,472) (3,403,078)

Interest received 21 44,741 443,575

Dividends and capital gains 21 3,936,488 3,888,427

Net cash generated from investing activities 522,577 (3,296,553)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid 21 (15,396,786) (13,042,511)

Increase/decrease in borrowings 17,18.C 2,187,985 64,766,151

Repayment of borrowings - (68,380,736)

Net cash flow from financing activities (13,208,801) (16,657,096)

NET INCREASE/DECREASE

IN CASH AND CASH EQUIVALENTS 243,050 (32,483)

Cash and cash equivalents at the beginning of the year 13 96,800 129,283

Cash and cash equivalents at the end of the year 13 339,850 96,800


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4.1.7 COVERING BALANCE ShEET LOSSES OF ThE FISCAL yEAR

The net loss for 2011 was EUR 15,528,268.

( in EUR ) 2011 2010

Net loss for the financial year (15,528,268) (6,292,260)

Coverage of loss:

Portion of other revenue reserves for coverage of net loss 391,649 542,466

Portion of capital reserves for coverage of net loss 15,136,619 5,749,794

ACCUMULATED LOSS AS AT 31 DECEMBER - -

The Management Board proposed to the Management Board and General Meeting that net loss for the 2011

financial year in the amount of EUR 15,528,268 be covered through provisions from profit and capital reserves.

4.1.8 ACCOUNTING POLICIES AND NOTES TO ThE NON CONSOLIDATED FINANCIAL STATEMENTS

GENERAL INFORMATION

Pivovarana Laško, d. d. is a public limited company, registered at the District Court in Celje under the deci-

sion no. Srg 95/00673 and under the application no. 1/00171/00. It is classified as a large company and is

obliged to perform a regular annual audit of its operations. The main activity of the Company is the produc-

tion and sale of beer, malt and waters. It also performs other wholesale and retail trade activities.

Pivovarna Laško, d. d. (Company) is the parent company of the Laško Group with its headquarters in Slo-

venia: Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Group’s ordinary shares are quoted on the Ljubljana Stock Exchange under the designation “PILR”.

The Group’s share capital totals EUR 36,503,304.96 and consists of 8,747,652 ordinary freely negotiable

registered no-par-value shares No limitations on the payment of dividends and other equity payments exist.

ACCOUNTING GUIDELINES

The same accounting policies were applied in 2011 as in the preceding years

The financial statements are prepared in accordance with the International Financial Reporting Standards

(IFRS) as adopted by the International Accounting Standards Board (IASB) and interpretations issued by the

International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union.

These mandatory financial statements have been prepared to conform with legal requirements. In accord-

ance with law the Company must ensure the independent audit of the financial statements. The audit is lim-

ited to the audit of mandatory financial statements for general use thereby fulfilling the legal requirement o

fan audit of obligatory financial statements. The audit treats the obligatory financial statements as a whole

and does not offer assurance regarding individual types of items, accounts or transactions. Audited financial

statements are not intended for use by any party for the purposes of decision-making regarding ownership,

financing and any other concrete transactions connected to the Company. Correspondingly, users of the

obligatory financial statements may not rely exclusively on the financial statements and must carry out other

suitable procedures prior to making decisions.

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A) STANDARDS AND NOTES whICh hAVE COME INTO FORCE IN ThE CURRENT REPORTING PERIOD

The following amendments to the existing standards issued by the International Accounting Standards

Board (IASB) and adopted by the EU are currently valid:

• Amendments to IAS 24 “Related party disclosures” - Simplification of the disclosure requirements for

government-related entities and clarification of the definition of a related party, adopted by the EU on 19

July 2010 (effective for annual periods beginning on or after 1 January 2011);

• Amendments to IAS 32 “Financial instruments: presentation” – Accounting for the issue of shareholder

rights, adopted by the EU on 23 December 2009 (effective for annual periods beginning on or after 1

February 2010);

• Amendments to IFRS 1 “First-time Adoption of international financial reporting standards”- Limited

exemption from comparative IFRS 7 disclosures for first-time adopters, adopted by the EU on 30 June

2010 (effective for annual periods beginning on or after 1 July 2010);

• Amendments to various standards and interpretations “Improvements to IFRS (2010)” resulting from

the annual improvement project for IFRS published on 6 May 2010 (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS

27, IAS 34, IFRIC 13) primarily to remove inconsistencies and clarify wording, adopted by the EU on 18

February 2011 (most amendments are to be applied for annual periods beginning on or after 1 January

2011, depending on the standard/interpretation);

• Amendments to IFRIC 14 “IAS 19 – limit on a defined benefit asset, minimum funding requirements

and their interaction” - Prepayments of a minimum funding requirement, adopted by the EU on 19 July

2010 (effective for annual periods beginning on or after 1 January 2011);

• IFRIC 19 “Extinguishing financial liabilities with equity instruments”, adopted by the EU on 23 July 2010

(effective for annual periods beginning on or after 1 July 2010).

The adopted amendments of existing standards did not affect the Company’s accounting policies.

B) STANDARDS AND INTERPRETATIONS ISSUED By ThE IASB AND ADOPTED By ThE EU, BUT NOT yET EFFECTIVE

On the day of approval of these financial statements the following standards, revisions and interpretations

adopted by the EU have been issued, but are not yet effective:

• Amendments to IFRS 7 “Financial Instruments: disclosures” - Transfers of financial assets, adopted by

the EU on 22 November 2011 (effective for annual periods beginning on or after 1 July 2011).

The Company opted not to adopt these standards, amendments and interpretations before they enter

into force. The Company estimates that the use of these standards, amendments and interpretations will

not have a significant impact on the Company’s financial statements during the period of initial application.

C) STANDARDS AND INTERPRETATIONS ISSUED By ThE IASB, BUT NOT yET ADOPTED By ThE EU

Currently the IFRS as adopted by the European Union do not essentially differ from regulations adopted

by the IASB with the exception of the following standards and interpretations which were not confirmed for

use on 6 April 2012:

• IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January 2013);

• IFRS 10 “Consolidated Financial Statements” (effective for annual periods beginning on or after 1 Janu-

ary 2013);

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• IFRS 11 “Joint Arrangements” (effective for annual periods beginning on or after 1 January 2013);

• IFRS 12 “Disclosures of Interests in Other Entities” (effective for annual periods beginning on or after 1

January 2013);

• IFRS 13 “Fair Value Measurement” (effective for annual periods beginning on or after 1 January 2013);

• IAS 27 (amended in 2011) “Separate Financial Statements” (effective for annual periods beginning on

or after 1 July 2013);

• IAS 28 (amended in 2011) “Investments in Associates and Joint Ventures (effective for annual periods

beginning on or after 1 January 2013);

• Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards” - High hy-

perinflation and the removal of agreed on dates for first-time users of IFRS (effective for annual periods

beginning on or after 1 July 2011);

• Amendments to IFRS 7 “Financial Instruments: Disclosures”- Set-off of financial assets and liabilities

(effective for annual periods beginning on or after 1 January 2013);

• Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: disclosures” - Man-

datory date of establishment and disclosure of revenues.

• Amendments to IAS 1 “Presentation of Financial Statements” - Presentations of items of other compre-

hensive income (effective for annual periods beginning on or after 1 July 2012);

• Amendments to IAS 12 “Income Tax” - Deferred Tax: Recovery of Underlying Assets” (effective for an-

nual periods beginning on or after 1 July 2012);

• Amendments to IAS 9 “Employee Benefits”- Improvement of the accounting treatment of post-employ-

ment earnings (effective for annual periods beginning on or after 1 January 2013);

• Amendments to IAS 32 “Financial Instruments: Presentation”- Set-off of financial assets and liabilities


• IFRIC 20 “Stripping Costs in the Production Phase of a Surface Mine” (effective for annual periods

beginning on or after 1 January 2013).

The Company estimates that the adoption of these standards, amendments and interpretations will not

have a significant impact on the Company’s financial statements during the period of initial application.

At the same time, the accounting for the hedging of risks connected to the portfolio of financial assets and

liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Company assesses that the accounting of risk hedging connected to the portfolio of financial assets

and liabilities to be in accordance with the requirements of IAS 39: “Financial Instruments: Recognition and

Measurement” will not have a significant impact on the Company’s financial statements if used on the date

of the statement of financial position.

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1. RECOGNITION OF REVENUES

Revenues are recognised on the basis of the sale of products, services and merchandise and takeovers of

these on the part of customers (exclusive of VAT and excise duties) and foreseen reclamations, rebates and

discounts. Sales revenues are recognised when a significant portion of the risk and benefits of ownership of

the goods is transferred from the seller to the buyer.

Other revenues realised are recognised on the following basis:

• Interest revenues – are recognised upon their arising unless a doubt exists that they will be collected,

whereby the amount is written off for the replacement value. Interest revenues from that point on are

recognised on the basis of interest rates which serve as a deduction of future cash flows

• Revenues from dividends are recognised when the Company becomes entitled to receive dividend pay-

ments.

2. INVESTMENTS IN SUBSIDIARIES

A consolidated subsidiary is a company where the controlling company has the controlling capital share

or controlling influence due to other reasons which enters into a group for which joint financial statements

are prepared.

Investments into subsidiaries are assessed at their original historical costs. Revenues from profit sharing

are acknowledged as revenues from financing when they are paid or when the General Meeting approves a

decision on profit sharing and the payment of a dividend. Investments are impaired whenever their replace-

able values are lower than their book values. Losses attributed to impairments are immediately recognised

in the income statement.

3. INVESTMENTS IN ASSOCIATED COMPANIES

Associated companies are companies in which the Company has between 20% and 50% of the voting

rights, and which have a significant impact on business, but are not controlled. Financial investments in

associated companies are valued at cost. A review of their existence must be made each year to determine if

circumstances exist indicating the need for impairment. Valuations of investments in associated companies

by authorised business appraisers are carried out to this end. If the estimated value of investments is lower

than its cost, the difference is recognized as a financial expense and has a demonstrable impact on the level

of income.

4. REPORTING CURRENCy

A) FUNCTIONAL AND REPORTING CURRENCy

The items presented in the financial statements of the Company are denoted in euros (EUR), which is also

the functional and reporting currency of the Company.

B) TRANSACTIONS AND BALANCES

Foreign currency transactions are converted into the reporting currency using the exchange rate valid on

the day of the transaction. Profits and losses arising from these transactions and in the conversion of cash

and liabilities, denominated in a foreign currency, are recognised in the income statement.

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Exchange rate differences arising from debt securities and other financial instruments are recognised at

fair value and are included in the profit or loss of transactions with foreign currencies. Exchange rate dif-

ferences in non-monetary items such as securities kept for trading are shown as a portion of the increase

or decrease of fair value. Exchange rate differences in the sale of securities available-for-sale is recognised

directly in capital under revaluation surpluses, which are a constituent part of reserves.

5. INTANGIBLE FIxED ASSETS

Intangible fixed assets comprise investments in the acquisition of patents, licenses, brand names, good-

will, intangible fixed assets under development, computer software and other intangible fixed assets (IAS 38).

An intangible fixed asset is only recognised as an asset if it is likely that future economic benefits will flow to

the Company and if its cost can be reliably measured.

Pivovarna Laško, d. d. uses the cost model (IAS 38.74), thus intangible assets are carried at cost less any

amortisation and impairment losses and collective loss due to impairment.

A) PATENTS, BRAND NAMES AND LICENSES

Disbursements for the purchase of patents, brand names and licenses are capitalised and amortised using

the straight-line method during their “useful periods of life” (amortisation period). If the useful period of

life cannot be determinated, such assets are not depreciated and only a test of impairment is performed on

an annual basis.

If a revaluation is required, the value of intangible fixed assets must be estimated and written-off up to the

amount of their replacement values.

B) OThER INTANGIBLE ASSETS

Whenever computer software is not considered a constituent part of the appropriate computer hardware,

they are treated as intangible assets. Other intangible assets are shown at cost less any amortisation and

impairment losses and collective losses due to impairment. The useful period for other intangible assets is

10 years.

6. TANGIBLE FIxED ASSETS

Tangible fixed assets include real estate, equipment and piece inventory. Since 2008 real estate is valued

using the revaluation model. Prior to this period, they were valued at cost. When preparing the annual finan-

cial statements a test for signs of impairment and need for revaluation is conducted each year. Equipment

and piece inventory are carried at cost less any amortisation and impairment losses.

Amortisation is calculated according to the straight-line method. The expected functional useful lives of

individual asset groups are as follow:

real estate 20 - 40 years;

plant and machinery 4 - 10 years;

computer hardware 2 - 4 years;

motor vehicles 4 - 8 years;

other equipment 3 - 7 years.

Land is not amortised for it is considered to have an unlimited life. Similarly, assets under acquisition are

also not amortised until they are available for use.

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Since the book value of assets is greater than the estimated recoverable amount, assets must be revalued

to the estimated recoverable amount (impairment) – IAS 36.

Profits and losses arising from the disposal of land, buildings and equipment are determined on the basis

of their book values and have an effect on profit and loss. Returnable packaging (drums, bottles and crates)

are shown among tangible fixed assets while observing a useful life of 3 or 4 years.

Costs from financial liabilities for financing investments in tangible fixed assets are capitalized. Subse-

quent costs are included in the book value of the asset or are recognised as a special asset, which is only

suitable if the future economic benefits connected to this asset will be enjoyed by the Group and if the costs

of such an asset can be reliably measured. The book value of spare parts is not disclosed seperately. The

costs of all other repairs and maintenance work are included in the income statement in the period they oc-

cur. Amortization from revaluation is directly recognised as a cost in profit or loss. A revaluation surplus is

performed and recognised in retained earnings upon removal of the fixed asset from use.

7. INVESTMENT PROPERTy

Investment property is property (land and buildings, parts of buildings or both) owned by the Company

or under financial lease for the purpose of earning rent or increasing the value of the property. Investment

property is not used for production or the sale of goods or services, for administrative purposes or for regular

operations.

Investment property is land or buildings, acquired for the appreciation of long-term investments or leased

out and not for sale in the near future. Investment property is only recognised as an asset if it is likely that

future economic benefits will flow to the Company and if its cost can be reliably measured.

In 2008 the Company changed from using the cost method to using the fair value model for measuring

investment property.

8. FINANCIAL ASSETS

The Company classifies its investments into the following categories: financial assets at fair value through

profit or loss, loans and receivables, financial investments held-to-maturity and financial assets available-for-

sale. The classification depends on the purpose for which the investment was acquired.

A) FINANCIAL ASSETS AT FAIR VALUE ThROUGh PROFIT OR LOSS

This category is divided into two sub-categories: financial assets for trade and assets determined by fair

value through profit or loss upon recognition. Investments obtained for the purpose of generating profit

from short-term (less than one year) fluctuations in price are clasified as available-for-trade and fall under

short-term assets. These assets are measured at fair value; realised/unrealised profit and loss arising from

changes in fair value are included in the income statement for the period in which they arose.

B) LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with unchangeable or determinable payments

which are not traded on the active market. They are included under short-term assets, except those with

maturities exceeding 12 months following the balance sheet date. In this case, they are classified among long-

term assets. Loans and receivables are shown in the balance sheet under operating and other receivables

according to paid values while observing the effective interest rate.

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C) hELD-TO-MATURITy INVESTMENTS

Investments with fixed maturities which the Management Board of the Company intends to retain to ma-

turity are classified as investments held to maturity and are classified among long-term assets. The Company

did not possess any investments within the scope of this category in the current period.

D) FINANCIAL ASSETS AVAILABLE-FOR-SALE

Financial assets available-for-sale are those non-implemented financial assets marked as available-for-sale

or those not classified in any other category. Assets in this category are valued according to their fair values or

at cost if their fair value cannot be reliably ascertained. If the assets are valued according to their fair values,

a fair value revaluation is directly recognised in capital.

The Group assesses whether there is objective evidence that a financial asset or group of financial assets

is impaired on each balance sheet date. In the event of the sale of financial assets available-for- sale, the long-

term reduction in the fair value below the cost is characteristically considered an indicator of an impairment

of shares. If such evidence exists for a financial asset available-for-sale, the cummulative loss measured as a

difference between cost and the current fair value shown as an impairment loss in the income statement - is

removed from capital or comprehensive income and shown in the income statement. Reversals of impair-

ments shown in the income statement cannot be performed for capital instruments.

E) DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are used for managing interest rate risks. They comprise interest options

and interest swaps.

Derivative financial instruments are first recognised at cost on the day a contract is concluded and later

revalued to the fair value on the reporting date. Profits and losses connected to changes in fair value are im-

mediately recognised in profit and loss unless they are used as protection against risk.

9. IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets which have a limited functional life are not amortized and are tested annually for impairment. As-

sets which are amortised are tested for impairment whenever events or circumstances point to the impair-

ment of an asset. Losses due to impairment are recognised for the surplus of the book value amount over

the asset’s replacement value. The replacement value is higher for fair value assets less costs of sales and

value upon use.

For the purpose of establishing impairment, assets are broken down into their smallest unit for which

cash flows can be defined, independently from other units (cash generating units). The value of goodwill is

assessed annually depending on a need for impairment.

The Company posts all revaluations and impairments of tangible assets so that the revaluation/impair-

ment value becomes the new cost of the asset.

10. NON-CURRENT ASSETS AVAILABLE-FOR-SALE

Non-current assets (group for disposal) available-for-sale are those non-current assets for which the book

values are estimated to be reconciled predominantly with their sale in the following twelve months and

which will not be further used. The denoted assets are valued according to the lower of their book and fair

values, decreased by the costs of sale.

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11. INVENTORIES

Inventories are stated at the lower of cost and net realisable value according to the weighted average

pricing method. The value of finished products and work in progress consists of total manufacturing costs

which includes the costs of processing materials, production labour costs, amortization, services and other

manufacturing costs. The net realizable value is estimated based on customary sales prices decreased by the

costs of conversion and sales.

12. OPERATING RECEIVABLES

At initial recognition, operating receivables are shown at fair value and are later measured on the basis of

paid values using the effective interest rate method less impairment. Impairments of operating receivables

are made when the Company expects that it will not be capable of realising the entire amount of the matured

receivable. The impairment amount represents the difference between the book value and the current value

of (expected) estimated future cash flows discounted by the effective interest rate. The impairment amount

is recognised in profit or loss.

13. CASh AND CASh EqUIVALENTS

For the cash flow statement, cash and cash equivalents comprise cash on hand, sight deposits at banks

and investments into the money market instruments without bank overdrafts. Bank overdrafts are included

under short-term financial liabilities in the balance sheet.

14. PROVISIONS

Provisions are recognised when the Company shows a legal obligation as a result of past events for which

a probable likelihood exists in the future that it will have to settle the liability and when a reliable estimate of

the liability can be made. Provisions may not be formed to cover future losses from operations.

15. PROVISIONS FOR SEVERENCE PAy AND jUBILEE AwARDS

The net liabilities of the Company in connection to long-term benefits for years of service, except for pen-

sion schemes, are the earnings which employees obtain in exchange for their service during current and

previous periods. Such liabilities are calculated using the method of foreseen significance of units and are

discounted to their current values.

16. DEFERRED TAxES

Deferred taxes are shown in their entirety while observing liability methods based on temporary differenc-

es between taxes associated with assets and liabilities and disclosed tax amounts in the financial statements.

Deferred tax is calculated using the tax rate (and legislation) as prescribed by law valid on the balance sheet

date which is expected to be used at the time the deferred tax is realised or liability for deferred tax settled.

Deferred tax receivables are recognised if a possibility exists that a tax gain is expected in the future using

temporary differences. Deferred tax liabilities are recognised upon a revaluation of assets. Deferred tax li-

abilities are shown as a set-off amount in in the balance sheet. The tax rate in 2011 comprised 20%.

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17. OPERATING LIABILITIES

Operating liabilities comprise credit to suppliers for purchased merchandise or services and liabilities to

employees, the State, owners or others. Liabilities are recognised if it is likely that due to their settlement,

factors enabling economic benefit are decreased and the amount for settlement can reliably be measured.

They are initially recognised at fair value, and later measured according to realised payments using effective

interest rates.

18. FINANCIAL LIABILITIES

Financial liabilities are recognised at fair value upon their arising, exclusive of any arising transaction

costs. In subsequent periods, financial liabilities are measured according to their realised payment using

effective interest rates. Any difference between receipts (exclusive of transaction costs) and liabilities are

recognised in profit or loss throughout the entire period of the financial liability.

19. ShARE CAPITAL

Ordinary shares are classified under capital. Transaction costs directly associated with the issue of new

shares which are not connected to the acquisition of a company are shown as a decrease in capital. Any sur-

pluses over the fair value of received paid-in amounts in excess of the book value of newly issued shares are

recognised as a paid-in capital surplus.

20. OwN ShARES

If the company reacquired its own shares in the business year, the paid amount inclusive of transaction

costs and exclusive of tax is deducted from total capital as own shares (treasury shares) until these shares are

removed, reissued or sold. The company must form reserves for own shares in the identical amount for that

business year. At the same time, it must also form reserves for own shares for PILR shares owned by subsidi-

aries. Reserves for own shares are released when the Company disposes of its own shares or removes them,

crediting the source from which they were formed. Upon the sale of such shares, the difference between the

sale and book value of own shares is directly calculated into equity capital and has no effect on profit or loss.

Own shares is used for the purposes defined in Article 247 of the Companies Act.

21. DIVIDENDS

Until approved by the General Meeting of Shareholders, foreseen dividends are treated as retained earn-

ings.

22. REPORTING By SEGMENTS

Business segments are products or services which on the basis of risk and benefits, differ from the prod-

ucts and services of other segments. Regional (geographic) segments comprise products or services within a

specific economic environment which are exposed to risk and benefits which differ from risk and benefits in

other economic environments. Operations by segment are not individually disclosed in the annual reports of

individual companies but are disclosed in the Annual Report of the Laško Pivovarna Group.

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23. ASSESSMENT OF ThE VALUES OF INDIVIDUAL ITEMS

On the basis of assessments of management, business appraisers, actuaries and other experts, the fol-

lowing assets and liabilities were assessed: intangible fixed assets, real estate, investment property, financial

investments and provisions. Since these regard assessments, there is some uncertainty regarding the attain-

ment of specific assumptions used at valuation.

NOTES TO ThE UNCONSOLIDATED FINANCIAL STATEMENTS


year 2011 Licenses IFAs under

( in EUR ) and other IFAs acquisition Total

ACQUISITION COST

1 January 2011 3,354,786 5,039 3,359,825

Transfer from property, plant and equipment - (5,039) (5,039)

31 December 2011 3,354,786 - 3,354,786

CUMMULATIVE VALUE ADJUSTMENT

1 January 2011 1,724,484 - 1,724,484

Amoritsation and depreciation in the year 235,238 - 235,238

31 December 2011 1,959,722 - 1,959,722

CURRENT VALUE

31 December 2011 1,395,064 - 1,395,064

1 January 2011 1,630,302 5,039 1,635,341

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Leto 2010 Licenses and IFAs under ( in EUR ) other IFAs acquisition Total

ACQUISITION COST

1 January 2010 2,786,904 571,229 3,358,133

Direct acquisition - 1,468 1,468

Transfer from investments in progress 567,658 (567,658) -

Transfer from property, plant and equipment 224 - 224

31 December 2010 3,354,786 5,039 3,359,825


1 January 2010 1,493,124 - 1,493,124

Amoritsation and depreciation in the year 231,360 - 231,360

31 December 2010 1,724,484 - 1,724,484

CURRENT VALUE

31 December 2010 1,630,302 5,039 1,635,341

1 January 2010 1,293,780 571,229 1,865,009

There were no liens on the Company’s intangible assets as at 31 December 2011. The Company pledged

a portion of their brand names in the amount of EUR 50 million as security for short-term loans taken out

from banks which are a constituent part of the assets of the Company and in accordance with accounting

standards on own brand names are not disclosed in the financial statements.

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The divestment of tangible fixed assets represents the sale and write-off of such assets. The Company

did not financially lease any of its tangible assets. The Company has been utilizing the revaluation model

for valuing real estate since 2008 while equipment and piece inventory are valued using the cost model.

An authorised real estate appraiser performed an appraisal of the Company’s real estate on 31 December

2011. The negative revaluation effect in the amount of EUR 1,296,458 is shown among revalued operating

expenses while the positive revaluation effect of EUR 477,425 impacts the value of capital and increase the

revaluation surplus.

The Company realized a profit of EUR 22,723 from the sale of tangible fixed assets which is shown as

a revaluation of operating revenue and a loss of EUR 31,207 which is shown as a revaluation of operating

expenses.

The company pledged tangible fixed assets which on 31 December 2011 amounted to EUR 37,216,704 to

insure long- and short-term loans. The book value of pledged real estate amounted to EUR 31,649,609 and

pledged equipment EUR 5,567,095. As at 31 December 2011 the Company showed liabilities for the purchase

of tangible fixed assets of EUR 213,355.


year 2011

( in EUR ) Land Buildings Total

ACQUSITION COST

1 January 2011 11,786 3,311,912 3,323,698

Revaluations - enhancements/impairments 123,119 912,792 1,035,911

Requalification (transfer from assets

available-for-sale ) - 2,943,324 2,943,324

Transfer of equipment from 2010 - (414,962) (414,962)

Value adjustment of transfer from PPE from 2010 - 123,484 123,484

31 December 2011 134,905 6,876,550 7,011,455


1 January 2011 - 446,090 446,090

Transfer of valuation adjustment equipment - (213,313) (213,313)

Requalification (transfer from

assets available-for-sale ) - 240,612 240,612

31 December 2011 - 473,389 473,389

CURRENT VALUE

31 December 2011 134,905 6,403,161 6,538,066

1 January 2011 11,786 2,865,822 2,877,608

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year 2010 ( in EUR ) Land Buildings Total

ACQUSITION COST

1 January 2010 578,460 4,679,805 5,258,265

Transfer from PPE 11,786 996,971 1,008,757

Transfer to assets available-for-sale - (2,943,324) (2,943,324)

31 December 2010 590,246 2,733,452 3,323,698

ACCUMULATED VALUE ADJUSTMENT

1 January 2010 - 194,497 194,497

Impairments - 368,721 368,721

Transfer from PPE - 123,484 123,484

Transfer to assets available-for-sale - (240,612) (240,612)

31 December 2010 - 446,090 446,090

CURRENT VALUE

31 December 2010 590,246 2,287,362 2,877,608

1 January 2010 578,460 4,485,308 5,063,768

Investment property also includes property which is not used for carrying out the basic activity but leased

out by the Company. The Tri Lilije sports arena and catering facilities (Hotel Hum, Hotel Savinja and Tabor

Castle) and holiday facilities are all recorded as investment property. The Company generated EUR 514,257 in

expenses and EUR 224, 693 in revenues from investment property. The investment property was assessed

by a certified real estate appraiser on 31 December 2011. The assessed value of the Company’s investment

property on the last day of 2011 amounted to EUR 6,538,066 and is EUR 1,029,568 higher than the book

value. A revaluation of operating revenues in the amount of EUR 1,160,661 and a revaluation of operating

expenses in the amount of EUR 124,760 is shown under the revaluation heading.

The Management Board commenced with the procedure of divesting the catering facilities Hotel Hum

and Hotel Savinja and Tri lilije sports arena in the beginning of 2011. It assesses that the likelihood of the real

estate being sold within one year is quite small. At the end of 2010 it was foreseen that both hotels would be

sold within one year. Since this did not happen, both buildings with the appertaining functional land was

reclassified from non-current assets available-for-sale back to investment property at the end of 2011.

Investment property in the amount of EUR 4,784,910 has been pledged as insurance for long- and short-

term loans from banks.

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4. LONG– TERM FINANCIAL INVESTMENTS

4. A. LONG-TERM FINANCIAL INVESTMENTS IN SUBSIDIARIES

( in EUR ) 2011 2010

SHARES IN COMPANIES IN THE GROUP

In Slovenia:

Pivovarna Union, d. d., Ljubljana 169,269,001 169,267,846

Vital Mestinje, d. o. o. 1,457,761 1,457,761

Radenska, d. d., Radenci 46,387,081 50,023,603

Delo, d. d., Ljubljana 27,732,150 -

Firma Del, d. o. o., Laško 7,427 7,427

244,853,420 220,756,637

Abroad:

Laško Grupa, d. o. o., Zagreb 2,709 2,709

Laško Grupa, d. o. o., Sarajevo 160,408 160,408

163,117 163,117

Total 245,016,537 220,919,754

INFORMATION ABOUT ThE SUBSIDIARIES

Percentage Value of Profit/ Company Country of participation the total loss Company name activity the company in capital equity for 2011 ( in EUR ) ( in EUR )

Subsidiary companies

Vital Mestinje, d. o. o. beverage production Slovenia 96.920 % 3,366,215 8,428

Radenska, d. d., Radenci beverage production Slovenia 81.960 % 79,736,226 3,052,843

Union Group beverage and Slovenia 97.895 % 94,261,537 7,316,434

beer production

Delo Group newspaper and Slovenia 80.834 % 17,480,363 (1,528,898)

publishing

Firma Del, d. o. o., Laško beer production Slovenia 100.00 % 51,723 1,273

Jadranska Pivovara - Split, d. d. beer production Croatia 99.459 % 4,542,877 (3,731,895)

Laško Grupa, d. o. o., Sarajevo intermediate trade BiH 69.23 % 147,588 23,525

Laško Grupa, d. o. o., Zagreb intermediate trade Hrvaška 100.00 % 14,650 5,716

In accordance with IAS 27 the Company valuates long-term financial investments in subsidiaries accord-

ing to the cost model.

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The Company possesses 441,617 shares of the subsidiary Pivovarna Union, d. d. or a 97.895% stake,

539,536 shares in the subsidiary Delo, d. d. or an 80.834% stake, 5,396,852 shares in the subsidiary Jadrans-

ka pivovara – Split, d. d. or a 99.459% ownership stake and 4,748,703 shares in the subsidiary Radenska, d. d.

or a 93.813% ownership stake. The Company temporary sold 600,000 RARG shares (11.9%) in 2011. Despite

the the concluded contract on management rights and temporary transfer, Pivovarna Laško, d. d. remained

their owner so that the Company did not carry out a recognition of the investment. The share of voting rights

is higher as a result and currently comprises 93.813%.

In 2010 the investment in Delo, d. d. was disclosed among assets available-for-sale in accordance with

IFRS 5 due to the planned sale thereof. Currently, no reason remains for the classification of the investment

among assets available-for-sale since a high probability exists that the investment in its current form can not

be sold in the short-term (within one year) at a reasonable price. Procedures for streamlining operations and

a restructuring project are currently being implemented in Delo, d. d. It is estimated that the probability of

selling the denoted investments will be significantly higher following implementation of the restructuring

processes.

The Company also has majority ownership stakes in the following subsidiaries: Vital Mestinje, d. o. o.,

(96.92%), Laško Grupa, d. o. o., Zagreb (100%) and Laško Grupa, d. o. o., Sarajevo (69.23%).

For the purpose of establishing the need for impairment, appraisals of the investments in the company

Delo, d. d., including investments into the company Večer, were made by an authorised appraiser on 31

December 2011. The assessed value of the investments on the last day of 2011 amounted to EUR 27,732,150

or EUR 51.40 per share, reflecting a decrease of EUR 8,183,810 over the stated book value. The negative dif-

ference is shown as an impairment among financial expenses.

The investments in the subsidiaries Pivovarna Union, d. d., Radenska, d. d. and Vital Mestinje, d. o. o.

were not appraised by an authorised business appraiser. Based on appraisals from the previous year, man-

agement reviewed the realisation of assessed planned cash flows and established that the realised business

results of 2011 exceeded planned business results, thus it assesses that there is no need for an impairment

of the aforementioned investments.

Long-term financial investments in subsidiaries increased in 2011 due to additional purchases in the

amount of EUR 2,283. Pivovarna Laško, d. d. increased its investment in Pivovarna Union, d. d. by EUR 1,185,

its investment in Radenska, d. d. by EUR 1,128 due to new purchases.

1. FINANCIAL INVESTMENTS IN ThE SUBSIDIARy RADENSKA, D. D., RADENCI

In 2011, on the basis of a final judgment in a dispute between the plaintiff Nova Kreditna banka Maribor, d. d.,

as the lien creditor and defendant Pivovarna Laško, d. d., as the lien debtor, the Company reduced its in-

vestment in Radenska, d. d. by 345,304 shares, which the previous Management Board of Pivovarna Laško

had pledged to the benefit of the company Center naložbe for its receipt of a loan from NKBM. The credi-

tor NKBM filed a motion for enforcement at the District Court in Celje on 22 December 2011 based on

enforceable title (Article 17 of the Enforcement and Securing of Civil Claims Act), on the basis of which the

Court issued an Order of Execution that same day. Enforcement had not yet been implemented by the date

of confirmation of the financial statements on 6 April 2012 however due to the aforementioned facts, the

Company transferred a portion of the investments in the amount of EUR 3,637,650 corresponding to the

average book value of 345,304 RARG shares among assets available-for-sale. Due to the pledging of RARG

shares, financial expenses had already been recognised in 2009 and accrued costs and deferred revenues

formed in the identical amount.

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A framework contract (repurchase agreement) was conclude on 30 November 2011 between Deželna

banka Slovenija, d. d. and Pivovarna Laško, d. d. for the temporary sale of securities whose subject was the

repurchase of 600,000 RARG shares of Radenska. The book value of the shares as at 31 December 2010

comprised EUR 5,000,000. The annual depreciation rate is 6.5 %. The reacquisition date is 30 may 2012.

Pivovarna Union, d. d., Ljubljana is the pledger and jointly liable party.. The voting rights arising from the

ownership of the denoted shares belong to the temporary seller (Pivovarna Laško, d. d.) for the duration of

the repurchase agreement. Contextually, the repurchase transaction represents a financial liability for Po

Pivovarna Laško, d. d. therefore the Company did not show a reduction in the financial investment in the

shares of the subsidiary Radenska, d. d., and similarly, on 31 December 2011 did not show a decrease in the

management stake in the aforementioned company.

DENATIONALISATION REqUESTS PERTAINING TO RADENSKA, D. D., RADENCI

The denationalization beneficiary Rudolf Höhn-Šarič, Baltimore, USA lodged a request for the denation-

alisation of nationalised real estate in 1993. The lodged request regards the restitution of an ownership stake

in the former company and subordinate restitution into ownership and possession real estate and payment

of damages. In kind, this represents the majority of land and buildings inside the Radenci Health Resort in

Radenci and a portion of the land and buildings at the location of the current Boračeva bottling plant.

The denationalisation request which had been lodged on 4 May 1993 is being treated in line the Denation-

alisation Act in an administrative proceeding before the Administrative Unit of Gornja Radgona. After the

Supreme Court of the Republic of Slovenia in an audit proceeding in July 2009 ruled that the beneficiary

Rudolf Hohn-Šarič is deemed a Yugoslavian and Slovenian citizen from 28 August 1945 onwards, proceed-

ings commenced before the Administrative Unit of Gornja Radgona Three oral hearings were published in

April 2010, May 2011 and January 2012. The current proceedings encompass the filing of prepared forms,

clarification of facts and circumstances relevant to the decision in this matter and determination of the fact

whether the beneficiary had been entitled to receive compensation from a foreign country in line with the

Agreement on Subsidies and Countervailing Measures between Austria and Germany of 1962.

A motion for the return of assets pursuant to the Enforcement of Criminal Sanctions Act (ZIKS) which

was loded on 20 December 2012 is being carried out in non-contentious legal proceedings before the District

Court in Novo Mesto. The beneficiaries Michael Wiesler and Barbara Purre-Wiesler (the grandchildren of Dr.

The beneficiaries assessed the value to be EUR 14.5 million for half of the property requested in the dena-

tionalisation procedure. They are additionally enforcing the return of 12 brands of Radenska, d. d., Radenci

and payment of damages for the right to the mineral water and land on which the mineral water springs are

located All together, 20 prepared forms of the beneficiary Rudolf Hohn-Šarič have been lodged, and as many

answers. On 23 December 2010 the beneficiaries in accordance with the Enforcement of Criminal Sanctions

Act carried out the entry into the land register in the form of a notice of dispute on all land parcels that are

the subject of the denationalization procedure. Notices of dispute have also been placed on several brands of

Radenska at the Slovenian Intellectual Property Office.

The denationalisation requests are extremely important proceedings against Radenska, d. d. however it is

still to early to forecast the outcome and even more difficult to assess potential damage. This uncertainty may

impact the valuation of financial investments in the subsidiary in the future.

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2. FINANCIAL INVESTMENT IN ThE SUBSIDIARy DELO, D. D., LjUBLjANA

A) PROCEDURES IN ThE SALE OF A 100% STAKE IN ThE COMPANy DELO, D. D., LjUBLjANA

The Laško Group is selling its entire stake in the company Delo, d. d. In addition to Pivovarna Laško, d. d.

which has an 80.13% ownership stake in the aforementioned company, the subsidiary Radenska, d. d. also

owns a 19.17% ownership stake in the company.

Procedures connected to the sale of the investment commenced in October 2010 when a mandate for

the organised sale was submitted to the company KPMG, d. o. o., Ljubljana. A detailed tax inspection of

operations was performed by the companies Ernest & Young, d. o. o., Ljubljana and Schonherr (Austria)

in November 2010. A call for bids in the newspapers Delo and Financial Times (UK) was published on 30

November 2010. The deadline for submitting an interest in participation was 14 December 2010. On 21 De-

cember 2010 an informative memorandum signed by seven NDAs was dispatched to the potential investor.

The deadline for submitting non-binding bids was 28 January 2011. A number of non-binding offers arrived

by this date however the offered prices were lower than expected. Discussions with tenderers were carried

out in February regarding the possibility of increasing the non-binding bids. Discussions with three tender-

ers had been carried out by 1 February 2011 who will additionally obtain the Vendor due diligence for review

and participate in a management presentation. The deadline for the submission of improved non-binding

bids was implemented on 8 April 2011. On 14 April 2011 two non-binding tenderers were submitted a request

to improve their bids and precisely define the structure of the transaction by 26 June 2011.

In July the tenderers submitted combined offers which however were not in accordance with the pub-

lished offer of sale. The Management Board reviewed the offer and to temporarily cease the procedure of

sale until the end of September. On 22 July 2011, all potential bidders were notified that the sale of Delo, d. d.

was dependant on the concluded sale of Večer. At the same time, activities commenced for the restructure of

the company in terms of a division of activities on the basis of which a newly designed offer of sale for the

company would be prepared. Additionally, measures for streamlining operations in Delo, d. d. began being

implemented to improve business results. The sale of the investment is currently on hold. A new tender for

the sale of the company will be published in 2012.

B) ESTIMATED VALUE OF ThE COMPANy DELO, D. D., LjUBLjANA

The valuation was carried out by an accredited business appraiser registered with the Slovenian Institute

of Auditors.

The most important elements and findings during the valuation procedure are as as follows:

• The subject of the valuation was the majority ownership stake of the company (100%), enabling the ma-

jority owner to impact the process of adopting decisions on bodies of the company management as well

as impact the formulation of strategy and business decisions (on investments, borrowing and so on). The

majority owner may also implement status changes.

• The appraiser started work from the assumption that the company’s market value equalled the current

value of expected free cash flows, in accordance with a general financial assumption that the company’s

value equals the sum of all future benefits which it brings to its owner.

• The current value of expected free cash flows without including debt method was used in assessing the

value of the company. In this method, first the current value of expected free cash flows without pay-

ment of interest and principal (value of total capital) is assessed; afterwards all financial liabilities of the

company are deducted due to revaluation of the subject, i.e. the equity capital of the company. The value

obtained in this way is additionally adjusted for possible potential liabilities, premiums and discounts.

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• The appraiser also attempted to use the method of comparable companies and comparable transactions.

The utilised companies and transactions are not comparable enough in terms of size (the benchmark

company is significantly larger) and scope of activities (in addition to the publication of newspapers, the

company is also involved in publishing and other media) which consequently has an affect on both the

profitability and financial position of the company. As a result, this method was merely used as a control

method and observed only the

• required rate of return on equity capital, which for Delo is:

rDelo = (4.0% + 7.0% x 0.98 + 1.20%) x 1.10 = 13.3%,

• and the required rate of return for total (equity + debt) capital, which for Delo is (WACC - Weighted Aver-

age Cost of Capital):

rWACC = 13.3% x 0.68 + 6.5% x 0.32 x (1 - 0.20) = 10.7%,

• The appraiser used assessments of operations of 2011 and the 2012 Business Plan of Delo for prepar-

ing projections. In estimating future returns, the appraiser took the company’s potential into account,

determined on the basis of past operations of the company and analyses of its activities. The appraisal

envisaged two scenarios of company operations in the future (optimistic and pessimistic) which differ in

terms of envisaged net sales revenues and operating costs, and consequently the EBIT and EBIT margin.

• The 2012 Business Plan envisages modest economic growth in Slovenia (1%) and subsequently, and

extremely difficult year for media activity. A further decline in sold copies and low advertising revenues

is also foreseen with no increases in the price of editions envisaged in the plan. The 2012 Business Plan

is mainly focused on streamlining costs with the level of revenues remaining unchanged. The Business

Plan is relatively conservative from the aspect of revenues, while the envisaged streamlining of costs is

a necessity. Negotiations with labour unions regarding the aforementioned have not yet been concluded.

A gradual improvement of the economic situation and renewed growth of expenditures for advertising

through print media is envisaged for the period 2013-2016.

• Earnings before interest and taxes (EBIT) for 2011 is estimated at EUR 0.2 million (0.4% of sales revenues).

EBIT in 2012 due to the streamlining of costs and envisaged savings is forecasted at EUR 1.6 million accord-

ing to the pessimistic scenario and at EUR 1.9 million according to the optimistic scenario. Gradual growth

of EBITDA and EBIT of Delo is envisaged for the period 2013-2016 due to a growth in revenues, particularly

from advertising and growing prices for a portion of the company’s costs are fixed with certain reserves

possible particularly in the area of labour costs. The EBIT share in sales revenues up to 2016 will rise at a

level of 9.2% according to the optimistic scenario and to 7.6% according to the pessimistic scenario. The

five-year average EBIT margin for European companies in the area of printed media publishing comprises

10.8% while comparable companies in the region (particularly Croatia) achieved a lower EBIT margin in

2010 and are restructuring with the aim of streamlining costs (especially labour costs).

• Despite the high degree of indebtedness, a part of the assessed values originate from surplus financial

investments and surplus assets of the company Delo. Real estate and investment property in the amount of

EUR 927 thousand, the subsidiary Izberi in the amount of EUR 780 thousand and financial investments in

the amount of EUR 10,365 thousand were considered surplus assets by the appraiser.

• The control premium of 0% was observed since future yield for the average majority strategic owner have

already in principal been implemented.

• A discount of 15% for the lack of liquidity was taken into consideration in assessing the value of the majority

ownership stake (the Laško Group has a 100% ownership stake). The market share of the company in the

market (leading newspaper agency), strength of its brands as well as the strategic and political position of

the company were also taken into account.

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Based on all the denoted assumptions, the recoverable value of the 100% equity stake in Delo, d. d. on 31

December 2011 has been assessed for the purpose of verifying impairment in accordance with IAS 36, which

is identical to the value if used, namely:

EUR 34,290,000

with a possible value range of between EUR 29,820,000 according to the pessimistic scenario and

EUR39,490,000 according to the optimistic scenario or

EUR 51.4 per share

with a possible value range of between EUR 44.1 per share according to the pessimistic scenario and EUR

59.6 per share according to the optimistic scenario.

3. FINANCIAL INVESTMENT IN jADRANSKA PIVOVARA – SPLIT, D. D.

A) PROCEDURES IN ThE SALE OF A 99.11% STAKE IN ThE COMPANy jADRANSKA PIVOVARA – SPLIT, D. D.

The management of Pivovarna Laško decided in 2009 that due to its poor financial position and for ration-

alization purposes it would terminate production in Jadranska pivovara and relocate production to Laško or

sell the production line to the most favourable bidder. Its forecast regarding the relocation of production was

realised in 2010. In April 2010 Jadranska pivovara ceased the production activity and in the autumn of 2010,

also the filling of beer. The Company intensively sought a buyer throughout the year however no transaction

was concluded with the individual buyers interested in acquiring the production line.

In autumn 2010 a mandate for the sale of a 99.11% stake in Jadranska pivovara – Split, d. d. was therefore

submitted to the company Caper, d. o. o., Zagreb. The intention to sell the stake publically was published

in the Croatian newspaper Poslovni Dnevnik and the Mergemarkt business portal on 26 November 2011.

The company Caper prepared a list of potential buyers sending them a teaser by 17 December 2010. The

informative memorandum prepared on 24 December 2010 was submitted to two potential buyers, namely

SABMiler and Bavaria NV. The deadline for submitting non-binding bids was 2 March 2011. Prior to this date

an inspection of Jadranska pivovara was carried out for interested buyers. The deadline for the submission

of non-binding offers was extended twice. During this time both SABMiler and Bavaria NV withdrew their

offers however a new buyer appeared, Arena, d. o. o., Split. Despite the extension of the deadline for the sub-

mission of bids to 25 March 2011, Arena, d. o. o. did not submit a bid. The Management Board established

that the sales procedure as unsuccessful and will adopt a decision regarding further procedures.

B) ESTIMATED VALUE OF ThE COMPANy jADRANSKA PIVOVARA – SPLIT, D. D.

The long-term financial investment in the company Jadranska pivovara – Split, d. d. had already been

impaired in its entirety in 2009.

An appraisal of the company’s real estate and moveable property was performed by certified appraisers in

2011. According to the optimistic scenario the market value of the real estate on 31 December 2011 amounts

to EUR 6,388,680 and the market value under liquidation conditions EUR 5,308,990. The market value

under liquidation conditions according to the pessimistic scenario amounts to EUR 4,404,011 million. The

assessed market value of the equipment of Jadranska pivovara, d. d., (optimistic scenario) on 31 December

2011 amounts to EUR 3,574,700 and the market value under liquidation conditions (pessimistic scenario)

EUR 1,821,106.

From the appraisals of individual assets on 31 December 2011, it follows that the value of the assets of the

company has decreased in recent years therefore a new appraisal of the investment is required for there is

no indication of an improvement in the financial state of the said company. The value of the investment in

Jadranska pivovara, d. d.p was equal to zero on the last day of 2011.

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In the previous year, the Company classified the denoted investment among assets available-for-sale in ac-

cordance with IFRS 5. Since it is realistic to expect the investment to be sold within one year, the investments

was again shown among long-term financial investments in subsidiaries on 31 December 2011.

4. B. LONG-TERM FINANCIAL INVESTMENTS IN ASSOCIATED COMPANIES

INFORMATION ABOUT ASSOCIATES

Percentage Value of Profit/ Company Country of participation the total loss Company name activity the company in capital equity for 2011 ( in EUR ) ( in EUR )

Associated companies

Thermana, d. d., Laško Spa, hotel and Slovenia 20.630 % 28,739,199 221,533

similar

establishments

On 31 December 2011 Pivovarna Laško, d. d., owned 645,003 shares of Thermana, d. d., representing a

20.63% ownership stake in the aforementioned company. The original purchase value of the investment

comprised EUR 6,897,921. The investment was impaired in its entirety in 2010 with its value equal to zero.

The investments is undergoing a sales procedure. The Company issued a mandate for the organisation

of its sale to NLB, d. d., Ljubljana. An agreement on the implementation of the sale was prepared in 2010

and forwarded to owners of more than 50% of the investment. The procedure for acquiring the consent of

subscribers was carried out in February 2011. On 28 February 2011 the agreement was signed and reconciled

by NLB, d. d., Pivovarna Laško, d. d. and Zavarovalnica Triglav, d. d., which together represents a 44.85%

ownership stake in Thermana, d. d. Reconcilliation activities with the remaining potential signers of the

agreement on the implementation of sales of shares continued in 2011.

Pivovarna Laško, d. d. signed the Agreement on the joint sale of shares of the company Thermana, d. d. of

a 51.96% stake on 10 October 2011. NLB, d. d. as the sales broker commenced sales activities. A public tender

for the sale of the investment was published in the newspaper Delon on 28 November 2011 and in December,

a public invitation together with a teaser was sent to over 100 funds and 100 companies from the sector.

4. C. LONG-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Other investments in shares and stakes at acquisition cost 241,655 320,942

Total 241,655 320,942

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MOVEMENT OF ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Balance as at 1 January 320,942 55,840,789

Changes in the year:

Transfer to DFN in associated companies (MELR) - (56,724,195)

Revaluation - 1,423,146

Impairments (79,287) -

Divestments - (218,798)

Balance as at 31 December 241,655 320,942

The value of long-term financial assets available-for-sale fell by EUR 79,287 compared to the previous year.

The decrease is due to an impairment of the investment in the company Slopak in 2011 which was impaired

in its entirety due to the company’s poor financial position.

5. LONG-TERM LOANS

( in EUR ) 2011 2010

Other long-term loans 3,310 16,296

Total 3,310 16,296

Long-terms loans refer to long-term housing loans granted by the Company to its employees for the pur-

poses of solving their housing-related issues.

6. LONG-TERM RECEIVABLES FROM FINANCIAL LEASES

( in EUR ) 2011 2010

Long-term receivables from financial leases 751,266 573,467

Total 751,266 573,467

Long-term operating receivables from financial leases refer to the production equipment for the Bandidos

brand, which was given on financial lease to a business partner from Belarus. The value of the aforemen-

tioned receivable on the last day of 2011 amounted to EUR 517,100. The receivables from financial leases ma-

ture on 15 October 2015. The Company leased out packaging in the amount of EUR 275,132 to the company

Birra Peja Peć which will expire on 31 December 2014. The value of the aforementioned receivables on the

last day of the 2011 amounted to EUR 234,166.

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7. LONG-TERM NET RECEIVABLES FOR DEFERRED TAx

( in EUR ) 2011 2010

Long-term deferred tax receivables 18,240,502 15,436,180

Long-term deferred tax liabilities (1,070,058) (1,093,025)

Net long-term deferred tax receivables 17,170,444 14,343,155

Long-term receivables and liabilities for deferred tax are calculated on the basis of temporary differences

using the liability method in consideration of a 20% tax rate.

(in EUR ) 2011 2010

At the beginning of the year - deferred tax receivables 5,436,180 14,482,886

Change in income 2,895,197 1,097,155

Change in comprehensive income (90,875) (143,861)

Total 18,240,502 15,436,180

As at 31 December 2011 the Company showed net long-term receivables from deferred taxes in the amount

of EUR 17,537,166 which is EUR 3,194,011 less than in the previous year.

MOVEMENT OF LONG-TERM RECEIVABLES FOR DEFERRED TAx

Fair Liabilities to value ( in EUR ) employees (financial assets) Other Total

DEFERRED TAX RECEIVABLES

1 January 2010 390,021 13,727,427 365,438 14,482,886

Change in the income statement (73,919) 1,170,944 130 1,097,155

Change in comprehensive income - (143,861) - (143,861)

31 December 2010 316,102 14,754,510 365,568 15,436,180

Change in the income statement 2,528 2,253,051 639,618 2,895,197

Change in comprehensive income - (90,875) - (90,875)

31 December 2011 318,630 16,916,686 1,005,186 18,240,502

Long-term deferred tax assets, which are reflected in profit or loss, increased by EUR 2,895,197, while the

long-term operating receivables for deferred tax which impact comprehensive income decreased by EUR

90,875. Deferred tax assets arising from liabilities to employees in the amount of EUR 2,528 and the forma-

tion of tax losses in the amount of EUR 639,618 increased. Receivables in the amount of EUR 2,162,176 were

formed due to the impairment and revaluation of financial assets.

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Long-term deferred tax liabilities in the amount of EUR 1,093,025 in the financial position decreased

the amount of deferred tax receivables. The amount of long-term deferred tax liabilities did not essentially

change in comparison to 2010.

Long-term deferred tax liabilities relate to the revaluation of real estate which was conducted in 2008 and

2011. Deferred tax liabilities from the revaluation of real estate amounted to EUR 1,069,320.

MOVEMENT OF LONG-TERM DEFERRED TAx LIABILITIES

Fair value Fair value

( in EUR ) (land buildings) (financial assets) Total

DEFERRED TAX LIABILITIES

1 January 2010 1,092,511 34,833 1,127,344

Change in the income statement - (34,319) (34,319)

as at 31 December 2010 1,092,511 514 1,093,025

Change in comprehensive income (23,191) 224 (22,967)

as at 31 December 2011 1,069,320 738 1,070,058

Long-term deferred tax liabilities refer almost in their entirety to the conversion of real estate to fair value,

which is reflected in the revaluation surplus. A 20% tax rate was utilized. As at 31 December 2011 its value

equalled EUR 1,070,058.


( in EUR ) 2011 2010

Real estate available-for-sale 770,939 3,634,713

Other short-term assets available-for-sale 3,637,650 35,911,152

Total 4,408,589 39,545,865

Non-current assets held for sale is shown the value of business and warehouse space with adjoining land

in Ljubljana, which the Company plans to dispose of within one year, and 345,304 RARG shares RARG,

which was the end of 2011 the order of execution in favour of the lien creditor New Credit Bank of Maribor

dd (more in note No. 4).

Long-term financial liabilities of the Company amounted to EUR 35,911,152 million on 30 June 2011 and

decreased by the value of the short-term financial liabilities of loans carried over in the amount of EUR 9.4

million. Financial revenue in the amount of EUR 2010 million were 455.7% higher due to dividends (Merca-

tor, d. d.) and profits from the sale of several financial investments.Currently, no reason remains for the clas-

sification of the investment among assets available-for-sale since the investment cannot be sold in its current

form. Procedures for streamlining operations and a restructuring project are currently being implemented

in Delo, d. d. It is estimateed that the probability of selling the denoted investments will be significantly

higher following implementation of the restructuring processes.

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Currently, reasons for the classification of the investment among assets available-for-sale no longer exist,

because the investment can not be sold in the form in which it is today. Procedures for streamlining opera-

tions and a restructuring project are being carried out at the company Delo. It is estimated that the likelihood

of the sale of the aforementioned will be significantly greater as a result of restructuring processes.

In 2011 the denoted provisions decreased by the costs of amortisation in the amount of EUR 2,863,774.

The operations of Delo and Jadranska pivovara were implemented according to plan during the first half of

the year therefore management assesses that the fair value of these two groups for divestment reduced by

the costs of sale did not significantly change from the valuation performed in 5.

9. INVENTORIES

( in EUR ) 2011 2010

Materials and raw materials 5,442,140 5,929,076

Work in progress 998,140 749,917

Products 1,694,418 1,813,588

Merchandise 409,349 385,381

Total 8,544,047 8,877,962

The value of inventories compared to the previous year decreased by EUR 333,915 or by 3.8%. The value

of finished products and materials especially decreased. No inventories were pledged as at 31 December 2011

nor any revaluation of the values of inventories implemented. The book value of inventories does not exceed

their net recoverable value.

INVENTORy SURPLUSES AND DEFICITS

( in EUR ) 2011 2010

Inventory surpluses 82,428 16,603

Inventory deficits (75,598) (14,834)

No substantial deficits or surpluses were established during the regular annual inventory.

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10. A. ShORT–TERM OPERATING RECEIVABLES

( in EUR ) 2011 2010

Short-term trade receivables:

Domestic market 19,819,256 14,280,075

Foreign market 5,105,232 3,746,424

Less revaluation adjustments (5,195,905) (4,975,710)

Total 19,728,583 13,050,789

Short-term receivables to others 1,000,841 1,008,952

Advances 97,067 30,903

Less revaluation adjustments (91,310) (91,310)

Total 20,735,181 13,999,334

As at 31 December 2011 the Company disclosed EUR 13,999,334 in short-term operating receivables, rep-

resenting a EUR 6,735,849 reduction over the amount on the last day of the previous year. Due to decreased

sales, short-term operating receivables from domestic buyers predominantly decreased.

The disclosed value of short-term operating and other receivables reflects their fair value.

VALUE ADjUSTMENTS OF ShORT-TERM OPERATING RECEIVABLES

( in EUR ) 2011 2010

Balance as at 1 January 4,975,710 4,835,059

Recovered written-off receivables (79,594) (163,089)

Final write-offs of receivables (101,020) (240,813)

Revaluation adjustments in the year 400,809 544,553

Balance as at 31 December 5,195,905 4,975,710

The revaluation adjustment of trade receivables increased due to lawsuits in the amount of EUR 149,874

and due to a revaluation adjustment of receivables in the amount of EUR 250,935. Write-offs of receivables

decreased in the amount of EUR 101,020 and due to collected claims in the amount of EUR 79,594.

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MATURITIES OF TRADE RECEIVABLES

( in EUR ) 2011 2010


non-matured 18,072,827 12,174,153

up to 30 days 1,374,665 890,124

30 to 60 days 468,381 183,692

60 to 90 days 107,097 50,861

over 90 days 4,901,518 4,727,670


Trade receivables in the amount of EUR 6,035,411 are insured through guarantees in the amount of EUR

4,529,000. As at 31 December 2011 the Company had loans received insured through trade receivables in the

amount of EUR 7,900,000.

10. B. ShORT-TERM RECEIVABLES FOR ExCESS CORPORATE INCOME TAx PAyMENT

The Company showed a tax loss of EUR 651 in its 2011 tax return. The value of inventories as at 31 Decem-

ber 2011 comprised EUR 4,473,067 million and showed a EUR 5.5 million increase in comparison to the

last day of 2010. In 2010, the Company did not demonstrate a the tax base, so in 2011 it did not pay accrued

corporate income tax.

11. ShORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Short-term financial assets available-for-sale at cost 297,302 464,587

Short-term financial assets available-for-sale at fair value 49,729,099 56,233,962

Total 50,026,401 56,698,549

As at 30 June 2011 the amount of short-term granted loans including advances amounted to EUR 2011 mil-

lion, representing a decrease of EUR 6,672,148 million over the previous year.

1. FINANCIAL INVESTMENT IN ThE COMPANy POSLOVNI SISTEM MERCATOR, D. D., LjUBLjANA

As at 31 December 2011 the Company was the owner of 317,498 MELR shares (8.43%), which taking into ac-

count a market value of EUR 147 per share on 31 December 2011, amounts to EUR 46,672,206. The fair value

of the aforementioned stake as at 31 December 2011 is EUR 4,305,632 lower than the acquisition cost, which

amounted to EUR 50,977,838 or EUR 160.56 per share. EUR 160.56 without VAT. Management estimates

that the unsuccessful attempt to sell off the MELR shares, the fall in the share price means a permanent

impairment therefore it was decided to disclose them as a financial expense.

A) PROCEDURES IN ThE SALE OF A 23.43% STAKE IN ThE COMPANy PS MERCATOR, D. D., LjUBLjANA

Following unsuccessful discussions with banks, the Supervisory Board of Pivovarna Laško, d. d. instructed

the Management Board to implement the public sale of the MELR shares. A contract on consultation for the

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sale was signed with NLB, d. d. on 03.02.11. A public tender for the sale of the 23.43% stake in the company

PS Mercator owned by the Laško Group was published on 04.02.11. The tender prescribed the date 9 March

2011 as the deadline for the submission of binding bids.

Simultaneously with the public offering, negotiations with the financial fund Mid Europa Partners Ltd,

United Kingdom were being carried out in February. Three offers had been received by 09.03.11 from: Mid

Eura UK, Agrokor HR and Warburg Pincus US. The deadline for a decision on the sale of the company Mer-

cator was specified as 15 April 2011, which was later extended on 30 April 2011. Three bids from the following

tenderers were received within the deadline for the submission of bids by 18 September 24: On 26 April 2011

the Company received the decision of the Competition Protection Office no. 306-29/2011-4, which prohibits

companies from the Laško Group from disposing of MELR shares without the prior approval of the CPO.

The subsidiaries Pivovarna Union, d. d., Radenska, d. d., Radenci, Fructal, d. d. and Delo, d. d., also filed

actions for damages on 15 February 20 11 with the competent courts against the company Atka-Prima, d. o. o.

and Boško Šrot. On 29 April 2011 the Supreme Court of the Republic of Slovenia in its decision no. G 23/2011-

11 rejected the proposal for the issue of a temporary order to postpone the enforcement of the CPO decision.

The composition of the Supervisory Board of Pivovarna Laško, d. d. on 04.05.11 comprised: The Supervi-

sory Board agrees that it could not accept the offer of Agrokor due to the CPO decision no. Prior to the con-

clusion of the aforementioned Agreement the companies of the Group could not accept the offer of the com-

pany Agrokor, d. d. for the purchase of MELR shares owned by the companies in the Laško Group because

due to the decision of the Competition Protection Office of 26 April 2011 and decision on the rejection of the

temporary order of the Supreme Court of 29 April 2011, the Group could not dispose of the MELR shares.

Procedures connected to the signing of the Agreement on the Joint Sale of Mercator were carried out in

June 2011. The companies in the Group Pivovarna Laško, Pivovarna Laško, d. d., Pivovarna Union, d. d. and

Radenska, d. d., Radenci, concluded an agreement on the joint sale of shares of the company Mercator, d. d.

with the companies Nova Ljubljanska banka, d. d., Abanka Vipa, d. d., NFD Holding, d. d., NFD 1 Delniški in-

vesticijski sklad, d. d., Gorenjska banka, d. d., Nova kreditna banka Maribor, d. d., Hypo Alpe-Adria-bank, d. d.

and Banka Celje, d. d. which entered into force on 16 June 2011. Banka Koper, d. d. also entered the agreement

later on. In the Agreement, the sellers agreed that the sales procedure of the 50.03% stake in Mercator, d. d.

would be mplemented in cooperation with a financial advisor, who will be specified in the Agreement by the

contractual parties by mutual agreement. A contract on the sale of a 52.10% share of the company Fructal, d. d.

was signed with the buyer Nectar, d. o. o. in July 2011 for the contractual amount of EUR 35,300,000.


traordinary General Meeting of Shareholders of Pivovarna Laško, d. d.: The financial advisor presented the

consortium of sellers with the received offer on 19 October 2011. Four unbinding offers were presented, one

of them from a strategic tenderer. The consortium of sellers signed a contract with the only strategic bidder

on 7 November 2011 which gives the bidder exclusive treatment for a contractually specified period. On 16

December 2011 the SPA was approved by all members of the consortium except by the companies of the

Laško Group and NLB. The Supervisory Board of Pivovarna Laško postponed a decision on the SPA due to

the takeover intention of Pivovarna Laško by the American company Eatons Capital from Las Vegas. The

takeover intention of Eatons Capital was ruled as invalid by the Securities Market Agency on 22 December

2011. Radenska, d. d., Radenci, is a subsidiary of the parent company Pivovarna Laško, d. d., Laško.

The General Meeting shall be acquainted that in accordance with Article 47 of the Companies Act and

based on the findings of the Report on the Findings of a Special Audit of the Management of Individual

Transactions of Pivovarna Laško, d. d., dated 27 February 2010, an action for damages was filed on 27.12.11 A

General Meeting of Shareholders convocation was published on 29 December 2011, which would be held on

30 January 2012. A decision by the General Meeting for approval for the sale of Mercator shares to Agrokor

pursuant to Article 47 of the Takeovers Act was placed on the agenda. The exclusive treatment of Agrokor

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regarding negotiations was extended until the end of February 2012. At its session on 27 January 2012 the Su-

pervisory Board was acquainted with the contents of the Agreement for the sale of shares of Poslovni sistem,

Mercator, d. d. and gave its consent to the Agreement and called upon the Management Board to reduce the

risk of a breach of the Agreement in further negotiations. Agrokor withdrew from the sales procedure on 7

February 2012. The management’s position is to continue with the sale of the stake in Mercator.

2. OThER FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE

k.) Short-term financial assets available-for-sale shares of Probanka, d. d., in the amount of EUR 2,109,625

(6.27%), shares of Elektra Gorenjska, d. d., in the amount of EUR 947,268 (1.6%), shares in the company

Ceste Mostovi Celje, d. d., in the amount of EUR 238,355 (5.49%), and shares in the company Etol Celje, d. d.

in the amount of EUR 58,898 (0.21%). This investment had been valued in accordance with the rules of the

capital method in the consolidated financial statements last year and shown at a value of EUR 2011 million.

All investments except the one in the Etol shares are valuated according to the cost model. On the last day

of 2010 an impairment review of all assets available-for-sale was made. An impairment of EUR 3,107,634 of

Probanka shares worth on the the stock exchange value of the preference shares at EUR 9.9 per share was

disclosed, the effect of which was reflected among financial expenses.

MOVEMENT OF ShORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Balance as at 1 January 56,698,549 -


Impairment of MELR (3,397,229) -

Impairment of PRB (3,107,634) -

Revaluation/impairment of other investments (253) -

Transfer from long-term financial investments - 56,698,549

Divestments (167,032) -


12. ShORT–TERM GRANTED LOANS

( in EUR ) 2011 2010

Short-term deposits 880,000 2,050,402

Short-term loans 15,667,888 16,227,613

Less revaluation adjustment (15,442,150) (16,027,277)

Total 1,105,738 2,250,738

Short-term granted loans comprised EUR 2011 million on 30 June 2011 and regard bank deposits. In 2011 the

Group approved a loan worth EUR 1,833,608 to the subsidiary Jadranska pivovara – Split, d. d. to overcome li-

quidity problems and at the same time repaid a portion of the loan for which Pivovarna Laško, d. d. had given

collaterol to banks which Jadranska pivovara had taken out. All net assets of the Delo Group in the amount

of EUR 2011 million, Fructal Group in the amount of EUR 2,039,734 million and Jadranska pivovara, d. d.

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in the amount of EUR 4.6 million are shown under the group available-for-sale due to the planned sale

thereof in accordance with IFRS 2009. The value adjustment of short-term loans was implemented in this

manner since a great probability exists that the loans will not be repaid. The company has capital ties with

Pivovarna Laško, d. d., the latter of which was the 96.92 percent owner of Vital Mestinja as at 31 December

2010. with a conversion of loans granted in previous year.

Short-term loans granted to other entities decreased by EUR 300,000 in 2011 while deposits at banks

increased by EUR 1,170,402.

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13. CASh IN BANKS, ChEqUES AND CASh IN hAND

( in EUR ) 2011 2010

Cash in banks 262,562 16,323

Cash in hand and received cheques 35,574 27,633

Cash in transit 41,714 52,844

Total 339,850 96,800

14. DEFERRED COSTS AND ACCRUED REVENUES

( in EUR ) 2011 2010

Accrued revenues and deferred expenses 49,527 27,850

Total 49,527 27,850

15. CAPITAL

The capital of Pivovarna Laško, d.d. comprises called-up capital, capital reserves, revenue reserves, re-

tained profit or loss from previous years, surpluses from the revaluation of financial investments classified

into assets-for-sale and also not-yet distributed profit for the financial year.

Share capital is shown as registered capital (capital from stakes or financial investment loans). Share

capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is a deduction

from share capital.

Called-up capital of the company Pivovarna Laško, d. d. is defined in the company Statute and amounts

to EUR 36,503,304.96. It is divided inot 8,747,652 freely transferable registered nominal shares. Each share

gives its owner a voting right at the annual General Meeting of Shareholders and to participate in profits. The

nominal value of called-up capital amounted to EUR 36,503,304.96.

In 2011 the denoted provisions decreased by the costs of amortisation in the amount of EUR 15,136,619. As

at 31 December 2011, short-term liabilities increased by EUR 64,530,814 and amounted to EUR 195,951,579.

Legal reserves in the amount of EUR 3,650,331, reserves for own shares in the amount of EUR 409,385

and own shares as a deduction item in the amount of EUR 8,319 were shown under reserves.

Reserves for own shares decreased in 2011 due to a revaluation of EUR 4,156 due to the sale of 3,297 lots of

PILR comprising EUR 52,587 which the subsidiary Pivovarna Union, d. d. sold to its employees. Pivovarna

Laško, d. d. did not acquire any treasury shares in 2011. As at 31 December 2011 Pivovarna Laško, d. d. owned

755 lots of PILR shares, Radenska, d. d. 21,195 lots, Pivovarna Union, d .d. 2,131 lots and Fructal, d. d. 13,087

lots. Treasury shares were recalculated to the listed price on 31 December 2011 which comprised EUR 11.02

per share. The decline in the values of shares had an effect on decreasing the capital of individual companies

in the financial statements. Pivovarna, d .d. as the parent company has formed reserves for own shares for

the total value of shares owned by companies in the Laško Group. Reserves for own shares decreased by EUR

251,179 at the cost of other revenue reserves.

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Legal reserves may only be used for covering losses.

A revaluation surplus was created from revaluation effects of financial assets available-for-sale and real

estate at fair value. Long- and short-term financial investments of the Company, measured at fair value are

classified as investments available-for-sale. Initially, they are recognized at cost and are subsequently reval-

ued to the fair value. Due to the recognition of a permanent impairment of MELR shares to their lower fair

value, which was disclosed in profit or loss, the negative revaluation surplus formed in previous years in

the amount of EUR 908,403 was fully reversed. The revaluation surplus from other long-term investments

increased by EUR 1,121. Based on an appraisal by a certified appraiser of real estate, the Group revalued real

estate on the last day of the year, the negative effect of which amounted to EUR 115,944. Capital increased by

EUR 593,369 million due to transactions with the owners. The revaluation surplus for deferred tax already

accounted for decreased by EUR 67,907.

OwNERShIP STRUCTURE AS AT 31 DECEMBER 2011

Shareholder Position Stake in %

NLB, d. d. 1. 23.5119 %

Hypo Alpe-Adria-Bank AG 2. 7.0671 %

Kapitalska družba, d.d. 3. 7.0589 %

Probanka, d. d. 4. 7.0294 %

GB, d. d. Kranj 5. 6.2011 %

Skagen Kon-tiki Verdipapirfond 6. 5.7077 %

NFD 1, delniški podsklad 7. 5.0706 %

Abanka, d. d. 8. 3.2633 %

Banka Celje, d. d. 9. 2.8865 %

Banka Koper, d. d., Dvojezična firma: Banka 10. 2.6347 %

Infond Holding, d. d., - v stečaju 11. 2.3296 %

CPM, d. d. 12. 1.6224 %

D.S.U., d. o. o. 13. 1.5567 %

Infond, d. o. o., - PE Uravnoteženi vzajemni 14. 1.4097 %

Probanka upravljanje, d. o. o., - PE Vzajemni 15. 1.1295 %

Nova KBM, d. d. 16. 1.0022 %

Other minority shareholders 17. 20.5187 %

Total 100.0000 %

The book value of the shares of Pivovarna Laško, d. d. as at 31 December 2011 in accordance with IFRS

totals EUR 12.50. The market value of the shares at the end of 2011 amounted to EUR 11.02, which exceeded

the book value by 11.8%.

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16. PROVISIONS FOR LONG–TERM ACCRUED COSTS AND DEFERRED REVENUES

16. A. PROVISIONS FOR SEVERENCE PAy AND jUBILEE AwARDS

( in EUR ) 2011 2010

Provisions for severence pay and jubilee awards 1,088,909 1,105,422

Total 1,088,909 1,105,422

Provisions are formed for foreseen severance payments and payments of jubilee awards for long-time

service of employees on the balance sheet date, discounted by the current value. Provisions were formed for

expected payments.

When calculating potential liabilities from severance pay the provisions of the Decree on tax treatment for

the reimbursement of costs and other income from the employment relationship are also observed if the

amount of compensation exceeds the amount defined in the Decree on tax treatment for the reimbursement

of costs and other income from the employment relationship and the employer must also pay employee

contributions in the amount of 16.1% for the surplus amount.

Overview of additional assumptions:

• the growth of average wages in the Republic of Slovenia is assumed to be 3.5% annually and represents

the estimated long-term growth of wages;

• the growth of severance payment amounts upon retirement and jubilee awards in the amount of 3.5%

annually from the Decree on tax treatment for the reimbursement of costs and other income from the

employment relationship is taken into account in the calculation;

• the calculation of liabilities from severance payments is tied to the retirement service period of each

individual employee.

The selected discounted interest rate is 4.80% annually as the amount at the end of December 2010

amounted to a yield of 10-year company bonds with a high credit rating in the Euro zone.

MOVEMENT OF PROVISIONS FOR SEVERANCE PAy AND jUBILEE AwARDS

Retirement jubilee

( in EUR ) severance pay awards Total

Balance as at 1 January 2011 718,275 387,147 1,105,422

Increases 61,137 - 61,137

Decreases - utilisation (4,235) (36,384) (40,619)

Decreases - reversals - (37,031) (37,031)

Balance as at 31 December 2011 775,177 313,732 1,088,909

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Provisions for severance pay and jubilee awards decreased by actual retirements and payments of jubilee

awards in the amount of EUR 40,619 in comparison with 2010, and by the amount of provisions for jubilee

awards in the amount of EUR 37,031. The provisions increased by the amount of additional provisions for

severance payments in the amount of EUR 61,137 due to changes in the employment structure and modified

conditions of retirement.

16. B. PROVISIONS FOR LONG–TERM ACCRUED COSTS AND DEFERRED REVENUES

( in EUR ) 2011 2010

Long-term accrued costs and deferred revenues 132,488 135,620

Provisions 200,000 1,209,343

Total 332,488 1,344,963

The value of the net assets of the Fructal Group decreased by EUR 1.3 million on 31 December 2011, while

those of the Delo Group and Jadranska pivovara, d. d. increased by EUR 1.0 million and EUR 0.6 million

respectively. A value adjustment which was recognised among financial expenses was formed for the lien in

2009. A portion of the long-term accrued costs and deferred revenues in the amount of EUR 132,488 regards

an exemption for the contribution pension and disabled insurance for disabled persons over the defined

quota, which can only be used for the purposes defined in Article 61 of the Vocational Rehabilitation and

Employment of Disabled Persons Act – ZZRZI (investments into operating assets connected to the work of

disabled persons, improvement of working conditions for disabled persons, maintenance and creation of

new job positions for disabled persons, etc.).

MOVEMENT OF LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES

Newly- Balance Utilisation formed Stanje ( in EUR ) 1 jan 2011 in 2011 Eliminated in 2011 31 Dec 2011

Long-term accrued costs and deferred revenues

- over the disabled persons quota 135,620 59,890 - 56,758 132,488

Long-term accrued costs

and deferred revenues - JP surety 1,209,343 - 1,009,343 - 200,000

Total 1,344,963 59,890 1,009,343 56,758 332,488

Long-term accrued costs and deferred revenues decreased by EUR 1,630,255 in 2011 due to the transfer

of the current portion of liabilities from the surety to Jadranska pivovara to short-term accrued costs and

deferred revenues and the increased exemption for disability pension insurance for disabled persons in the

amount of EUR 59,890.

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17. LONG– TERM FINANCIAL INVESTMENTS

( in EUR ) 2011 2010

Long-term loans from banks 68,705,112 73,723,973

Long-term loans from other companies 37,465 -

Total 68,742,577 73,723,973

Transfer to short-term financial liabilities (43,453,224) (27,601,738)

Total 25,289,353 46,122,235

Long-term financial liabilities regard long-term loans received from banks. In comparison to the previous

year, the value of long-term loans decreased by EUR 20,832,883 EUR.

The interest rate for long-term loans in 2011 amounted to an average of 5.39%. The disclosed value of long-

term loans reflects their fair value.

MATURITIES OF LONG-TERM FINANCIAL LIABILITIES

( in EUR ) 2011 2010

Maturities from 4 to 6 years 4,323,172 4,204,044



Short-term portion of long-term financial liabilities 43,453,224 27,601,736

Total 68,705,112 73,723,973

In 2011 DARS d.d. took out a loan in the amount of EUR 4,350,000 with the bank BIIS which was fully

depleted in 668,861. In 2011 the amount of EUR 27,601,738 in long-term loans will fall due for payment, in

2012 EUR 12,814,211, in 2013 EUR 8,114,505, in 2014 EUR 4,323,172 and in 2015 EUR 4,204,044 EUR.

MOVEMENT OF ShORT-TERM LOANS FROM BANKS

Principal Principal Portion of the loans Change to Repayment dolga maturing Long-term (in EUR ) 1 jan 2011 short-term in 2011 31 Dec 2011 in 2012 portion

Bank 1 2,500,000 - - 2,500,000 1,607,143 892,857

Bank 2 5,010,000 4,350,000 660,000 - - -

Bank 3 11,153 - 8,861 2,292 2,292 -

Bank 4 66,202,820 - - 66,202,820 41,843,789 24,359,031

Total - banks 73,723,973 4,350,000 668,861 68,705,112 43,453,224 25,251,888

Long-term financial liabilities to banks are insured through liens on securities, real estate and moveable

assets, receivables and sureties given.

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18. ShORT-TERM LIABILITIES

18. A. ShORT–TERM OPERATING LIABILITIES

( in EUR ) 2011 2010

Short-term liabilities to Group companies and trade liabilities 7,833,917 4,603,366

Other short-term trade liabilities 6,321,150 7,181,607

Short-term operating liabilities to others:

to employees 680,087 591,793

to the State 5,783,249 4,396,447

Short-term liabilities for advances 197,777 116,620

Other short-term liabilities 361,110 358,117

Total 21,177,290 17,247,950

Kratkoročne poslovne obveznosti so se v primerjavi s preteklim letom povečale za Short-term operating

receivables increased by EUR 3,929,340 compared to the previous year. Operating liabilities in the amount

of EUR 14,155,067 million 66% higher due to increase trade payables and liabilities to the state (VAT and du-

ties). Liabilities to companies in the Group represented 55.3% of all trade payables. Among costs of services,

the increase in marketing costs by 24.8% or EUR 2011 million stood out while the costs of other services

decreased somewhat. As at 30 June 2011 total liabilities of the Group amounted to EUR 4,265,565 million

and represented 20.1% of total liabilities.

Liabilities to the State increased by EUR 1,386,803 in comparison the the previous year predominantly

because of VAT and fees from increased sales in December 2011. Liabilities to employees which totalled EUR

680,087 did not essentially change in comparison with the previous year.

AGE STRUCTURE OF TRADE LIABILITIES

( in EUR ) 2011 2010

Non-matured 8,952,248 6,733,372

Maturities of 1 to 30 days 1,333,446 3,106,555

Maturities of 31 to 60 days 1,683,566 1,880,185

Maturities of 61 to 90 days 1,495,007 30,968

Maturities of 91 to 180 days 655,404 57,886

Maturities of 181 to 360 days - -

Maturiites of over 361 days 35,396 (23,993)

Total 14,155,067 11,784,973

18. B. ShORT-TERM TAx LIABILITIES

As at 31 December 2011 the Company as on the last day of 2010 did not disclose any corporate income tax

liabilities. The Company showed a surplus of tax revenues over expenses in the amount of EUR 22,482 in

2011. The Company showed a tax loss of EUR 651 in its 2011 tax return. Uncovered tax loss on the last day of

2011 amounted to EUR 4,473,067.

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18. C. ShORT–TERM FINANCIAL LIABILITIES

( in EUR ) 2011 2010


Short-term financial liabilities for interest on loans 2,166,940 2,229,175

Short-term loans obtained from Group companies 42,449,526 41,245,435

Short-term loans obtained from banks 153,870,985 147,724,934

Other short-term financial liabilities 810,146 928,672

Total 242,750,821 219,729,953

As at 31 December 2011 short-term financial liabilities amounted to EUR 242,750,821. Short-term loans

taken out at banks amounted to EUR 197,324,209 and for the companies in the Group EUR 42,449,526.

MOVEMENT OF ShORT-TERM LOANS FROM BANKS

Short-term Debt balance New loans portion of Repayment Debt balance ( in EUR ) 1 jan 2011 in 2011 long-term loans in 2011 31 Dec 2011

Bank 1 3,000,000 - 1,607,143 - 4,607,143

Bank 2 7,330,186 5,000,000 - 6,200,000 6,130,186

Bank 3 10,000,000 - - - 10,000,000

Bank 4 51,500,000 3,000,000 41,843,789 - 96,343,789

Bank 5 11,400,000 - - - 11,400,000

Bank 5 2,994,751 - - 3,952 2,990,799

Bank 6 - 4,350,000 - - 4,350,000

Bank 7 2,000,000 - - - 2,000,000

Bank 8 53,500,000 - - - 53,500,000

Bank 9 - - 2,292 - 2,292

Bank 10 6,000,000 - - - 6,000,000

Total - banks 147,724,937 12,350,000 43,453,224 6,203,952 197,324,209

The value of short-term financial liabilities on the last day of 2011 amounted to EUR 242,750,821 which

had increased by EUR 23,020,865 compared to the previous year. Short-term loans from banks decreased

by EUR 21,997,538 while short-term loans acquired from banks by the companies in the Group increased

by EUR 1,204,091.

The average interest rate for short-term loans from banks in 2011 comprised 5.68% and for short-term

loans obtained by companies of the Laško Group by 6.2%. The disclosed value of short-term financial li-

abilities reflects their fair value.

To insure the short-term loans the Group pledged 539,516 shares (80.83%) of Delo, d. d., 4,399,803 shares

(86.92%) of Radenska, d. d., 440,295 shares (97.60%) of Pivovarna Union, d. d., 317,498 shares (8.43%) of

Poslovni sistem Mercator, d. d., 213,115 shares (6.27%) of Probanka, d. d., Maribor, 645,003 shares (20.6%)

of Thermana, d. d., Laško, 270,648 shares of Fructal, d. d. (48.67%), 293,126,554 shares of Zavarovalnica

Triglav, d. d. and 1,271 shares of Telekom. A portion of the short-term loans are additionally insured with a

mortgage and a lien on moveable assets and investment real estate. The book value of the pledged real estate,

moveable assets and investment real estate as at 31 December 2011 comprised EUR 37,216,704. Short-term

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loans of the Company are additionally insured through receivables whose value on 31 December 2010 was

EUR 7,900,000 and a lien on the brand names of Pivovarna Laško, d. d. in the amount of EUR 50,000,000.

The value of all unpaid short-term loans which were insured through shares, a mortgage, and liens on

moveable assets, investment real estate and receivables for insured short-term loans amounted to EUR

222,576,092 as at 31 December 2011. Short-term loans in the amount of 42,449,526 which the Company

obtained from its subsidiaries are insured with bills of exchange.

19. ACCRUED COSTS AND DEFERRED REVENUES

( in EUR ) 2011 2010

Short-term accrued costs and deferred revenues 5,483,052 6,138,742

Total 5,483,052 6,138,742

The liability regarding the surety for Jadranska pivovara in the amount of EUR 1,531,389 and liability from

the surety for Nova kreditna banka Maribor in the amount of EUR 3,637,650 is shown among accrued costs

and deferred revenues.

Accrued costs and deferred revenues were reduced by the cashed in surety for the loan to Jadranska pivovara.

Due to its poor financial position, Jadranska pivovara was unable to settle the matured loan instalments there-

fore Pivovarna Laško, d. d. settled the instalments in 2005, 2007 and 2008 on the basis of the signed surety.

The value of the surety for the loan to Jadranska pivovara – Split, d. d. at the end of 2009 amounted to

EUR 5,110,524 and on the last day of 2011 EUR 1,531,389. The short-term portion of the surety shown among

accrued costs and deferred revenues decreased by a payment in the amount of EUR 1,715,230 and increased

by the short-term portion of the surety in the amount of EUR 1,209,343.

The previous management board of Pivovarna Laško, d. d. pledged 345,304 shares of Radenska, d. d. for a

loan in the amount of EUR 6,250,000 which had been taken out with the Nova kreditna banka Maribor by

its controlling company at that time Center naložbe, d. d. Since Center naložbe, d. d. failed to repay the loan

upon maturity the creditor Nova kreditna banka Maribor, d. d. based on the contract on the lien of securities,

filed an application for execution. The Company filed an appeal against the writ of execution. In 2011, on the

basis of a final judgment in a dispute between the plaintiff Nova Kreditna banka Maribor, d. d., as the lien

creditor and defendant Pivovarna Laško, d. d., as the lien debtor, the Company reduced its investment in

Radenska, d. d. by 345,304 shares, which the previous Management Board of Pivovarna Laško had pledged to

the benefit of the company Center naložbe for its receipt of a loan from NKBM. The District Court in Mari-

bor ruled in favour of the suing party. The decision became final on 8 December 2011. The creditor NKBM

filed a motion for enforcement at the District Court in Celje on 22 December 2011 based on enforceable title

(Article 17 of the Enforcement and Securing of Civil Claims Act), on the basis of which the Court issued an

Order of Execution that same day. Enforcement had not yet been implemented by the date of confirmation of

the financial statements on 6 April 2012 however due to the aforementioned facts, the Company transferred

a portion of the investments in the amount of EUR 3,637,650 to assets available-for-sale. Due to the pledging

of RARG shares, financial expenses had already been recognised in 2009 and accrued costs and deferred

revenues formed in the identical amount.

The Company also shows liabilities to employees for unused work hours performed and unpaid holiday

leave among accrued costs and deferred revenues. In comparison to the previous year, the value of long-term

loans decreased by EUR 55,625 EUR.

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20. ANALySIS OF REVENUES FROM SALES AND ExPENSES

20. A. ANALySIS OF REVENUES FROM SALES By KEy PRODUCTS

( in EUR ) 2011 2010

Beer 71,539,206 73,197,493

Other beverages (water, sweet and fermented beverages) 1,507,797 821,735

Sales revenues from merchandise - Horeca distribution channel 19,065,985 16,211,970

Sales revenues from materials 642,159 238,749

Other 1,559,101 817,706

Total 94,314,248 91,287,653

Sales revenues decreased by 3.3% in comparison to the previous year. Revenues from the sale of products

and services on the domestic market decreased by EUR 1,690,415 and on the foreign market, increased by

EUR 1,246,837. Revenues from the sale of merchandise in the Horeca distribution channel also decreased,

namely by EUR 2,854,015. The share of beer sales in total revenues from the sale of products and services

comprises 95.9%, for sales of water 2% and for services 2.1%.

20. B. ANALySIS OF REVENUES FROM SALES By MARKET

( in EUR ) 2011 2010

Sales revenues in Slovenia 82,178,049 81,014,449

Sales revenues in foreign markets 12,136,199 10,273,204

Total 94,314,248 91,287,653

Sales revenues on the domestic market decreased by EUR 9,432,557 in comparison to the previous year,

while they increased by EUR 1,862,995 on the foreign market. The largest share of revenues is still achieved

on the markets of the former Yugoslavia with the share of sales on EU markets increasing.

20. C. OThER OPERATING REVENUES

( in EUR ) 2011 2010

Revenues from the elimination of provisions 37,031 379,776

Other operating revenues 379,837 233,240

Operating revenues from revaluation of short-term assets 752,420 392,224

Operating revenues from revaluation of long-term assets 1,368,961 54,023

Total 2,538,249 1,059,263

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20. D. ANALySIS OF COSTS By CATEGORy

Production Costs of year 2011 costs of products Sales general ( in EUR ) and goods sold costs activities Total

Costs of merchandise soled (Horeca) - 19,294,414 - 19,294,414

Costs of materials, raw materials

and merchandise 24,377,502 426,084 271,208 25,074,794

Cost of services 2,506,935 14,340,366 4,653,480 21,500,781

Depreciation 4,826,321 548,182 919,927 6,294,430

Labour costs 4,546,916 3,052,231 3,039,210 10,638,357

Operating expenses from

revaluation of long-term assets 15,018 60,187 1,413,198 1,488,403

Operating expenses from revaluation

of short-term assets 525 148,688 34,492 183,705

Costs of provisions 24,191 12,138 24,808 61,137

Other costs 289,001 257,616 1,187,727 1,734,344

Total 36,586,409 38,139,906 11,544,050 86,270,365

Revenue from compensation under the Agreement on the Performance of Contracts for 2009 in the

amount of EUR 3,989,637, because a portion of compensation under the Agreement on the Performance

of Contracts has already been charged and paid, but the service has not yet been performed. The acquisition

value of merchandise sold increase by 19%, costs of raw materials and materials by 4.5% and energy costs

by 13.1%. Costs of services increased by EUR 1,090,130 EUR or by 12.8%. 5.3%. Operating expenses from

revaluations increased by EUR 1,694,713 predominantly due to the revaluation of real estate and investment

property. Costs of amortisation in 2011 decreased in comparison to the previous year due to the aforemen-

tioned investments in previous years.

20. E. COSTS By FUNCTIONAL GROUP


Costs of merchandise soled (Horeca) - 19,294,414 - 19,294,414

Costs of materials,

raw materials and merchandise 24,377,502 426,084 271,208 25,074,794

Cost of services 2,506,935 14,340,366 4,653,480 21,500,781

Depreciation 4,806,321 548,182 919,927 6,274,430

Labour costs 4,546,916 3,052,231 3,039,210 10,638,357


revaluation of long-term assets 15,018 60,187 1,433,213 1,508,418


revaluation of short-term assets 525 148,688 251,596 400,809


Other costs 289,001 257,616 1,187,712 1,734,329

Total 36,566,409 38,139,906 11,781,154 86,487,469

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Costs of merchandise

soled (Horeca) - 16,213,903 - 16,213,903

Costs of materials,

raw materials and merchandise 23,125,737 379,615 298,779

Cost of services 2,720,203 13,768,762 3,921,687 20,410,652

Depreciation 5,493,739 526,259 976,076 6,996,074

Labour costs 4,524,364 3,002,812 2,743,469 10,270,645


revaluation of long-term assets 15,725 10,603 22,143 48,471


revaluation of short-term assets - 135,895 10,132 146,027


Other costs 340,310 50,434 1,379,575 1,770,319

Total 36,278,311 34,117,561 9,374,585 79,770,457

Production costs decreased by EUR 288,098 and costs of general activities by EUR 2,496,625. Selling

costs increased by EUR 4,022,345.

The costs of the audit performed by the company Deloitte revizija, d. o. o. for 2011 amounted to EUR

37,500.

2O. F. OThER OPERATING ExPENSES

( in EUR ) 2011 2010

Taxes, other charges 11,420 41,298

Duties related to water and ecology 285,850 333,223

Compensation for land 139,261 138,336

Membership fees 37,989 32,066

Other costs (grants, executions) 420,988 327,273

Defaul interest 272,958 197,019

Expenses from impairment of investment property 124,751 657,926

Other operating expenses 441,128 43,177

Total 1,734,345 1,770,318

2O. G.) ShORT-TERM GRANTED LOANS

( in EUR ) 2011 2010

Operating expenses from revaluation of short-term assets 217,104 -

Total 217,104 -

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21. NET FINANCIAL ExPENSES

( in EUR ) 2011 2010

Financial revenues without exchange rate differences 3,981,190 4,331,945

Financial revenues from profit participation 3,936,488 3,888,427

Financial revenues from loans granted 24,001 442,791

Financial revenues from operating receivables 20,701 727

Financial expenses without exchange rate differences (31,073,148) (22,944,703)

Financial expenses from impairment

and write-offs of financial investments (15,676,362) (9,902,701)

Financial expenses from financial liabilities (15,381,190) (13,042,002)

Financial expenses from operating liabilities (15,596) -

Exchange rate differences from financing 39 (452)

Negative exchange rate differences - (509)

Positive exchange rate differences 39 57

Net financial expenses (27,091,919) (18,613,210)

Financial expenses exceeded financial revenues by EUR 28,925,527. Financial expenses arising from finan-

cial liabilities amounted to EUR 15,381,190 and from impairment of financial investments EUR 17,509,970. T

Impairments of the following investments are shown among financial expenses: in Delo, d. d. in the

amount of EUR 8,183,810 based on appraisals performed by a certified business valuator, shares of Poslovni

system Mercator in the amount of EUR 4,305,632 on the basis of a revaluation to the fair market price,

shares of Probanka d. d., Maribor in the amount of EUR 3,107,634 based on a revaluations of their stock

value, a stake in the company Slopak in the amount of EUR 79,287 and the impairment of a loan given to

the subsidiary Jadranska pivovara – Split, d. d. in the amount of EUR 1,833,608

21. A. FINANCIAL ExPENSES FROM OPERATING LIABILITIES

( in EUR ) 2011 2010


and write-offs of financial investments 1,833,608 -

Net financial expenses 1,833,608 -

22. CORPORATE INCOME TAx

( in EUR ) 2011 2010

Deferred tax (2,528,474) (1,097,155)

Total (2,528,474) (1,097,155)

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( in EUR ) 2011 2010

Profit and loss before taxation (18,423,464) (7,389,415)

Tax calculated according to the valid tax rate:

Revenue tax calculated according to a 20% tax rate (3,684,693) (1,477,883)

Adjustment of revenues to granted revenue tax level (3,571,580) (3,901,721)

Non-recognised tax expenses 18,684,561 11,313,618

Tax base I (3,310,483) 22,482

Change in tax base 112,394 137,209

Tax base II (3,198,089) 159,691

Tax relief - (159,691)

Tax base III (3,198,089) -

Tax loss (3,198,089) -

Tax - -

Both investments were revalued in 2011 by EUR 3,198,089. Due to determined tax losses, no tax relief

which could be brought forward to the next year were established. On the last day of 2011 the Company

showed an uncovered tax loss of EUR 4,473,067 of which deferred tax receivables according to a 20% tax rate

amounted to EUR 254,865 which will be accounted for in future years from taxable income.

The authorities can examine the operations of a business and require the payment of additional tax as a

result, along with past interest or penalties which have to do with the revenue tax or other taxes and contri-

butions, anytime within five years of when the tax is levied. The Management Board of the Company is not

aware of any circumstances which could represent significant liabilities under this heading.

23. ExChANGE RATE DIFFERENCES

Exchange rate differences from operations and financing considered in the Income Statement are as fol-

lows:

( in EUR ) 2011 2010

Exchange rate differences from financing 39 (453)

Total 39 (453)

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24. CASh FLOw FROM OPERATIONS

( in EUR ) 2011 2010

Operating profit for the period 10,502,063 11,223,795

Adjustments for:

Depreciation of property,

plant and equipment and investment property 6,059,192 6,764,714

Depreciation of intangible fixed assets 235,238 231,360

Write-offs and revaluation of long-term assets 260,557 520,027

Write-offs and revaluation of short-term assets 561,870 146,027

Net movement in provisions 156,248 (1,937,886)

7,273,105 5,724,242

Changes in working capital

Inventories and non-current assets available-for-sale 333,915 2,244,907

Operating and other receivables (7,244,121) 975,658

Operating and other liabilities 2,064,312 (247,436)

(4,845,894) 2,973,129

Cash generated from operating activities 12,929,274 19,921,166

25. DIVIDENDS PER ShARE

( in EUR ) 2011 2010

Loss from the current year (15,528,268) (6,292,260)

Number of all issued ordinary shares 8,747,652 8,747,652

Number of treasury shares 755 755

Weighted number of issued ordinary shares 8,746,897 8,746,897

Net loss per share (1.78) (0.72)

Adjusted net loss per share (1.78) (0.72)

Net loss per share is calculated with the distribution of net revenue which belongs to the shareholders and

with the weighted average number of shares which are on the market during the year, with the exception of

the average number of own shares.

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26. COMPREhENSIVE yIELD PER ShARE

( in EUR ) 2011 2010

Comprehensive yield of majority owners (14,802,595) (5,134,628)


Number of treasury shares 755 755


Comprehensive yield per share (1.69) (0.59)

Adjusted comprehensive yield per share (1.69) (0.59)


The Company did not pay out dividends in 2009 and 2010.

28. FINANCIAL RISKS

28. A. CREDIT RISK

Credit risk comprises all risks having an effect on decreasing the economic benefits of the Group due to

the insolvency of business partners (buyers) and non-fulfilment of contractual liabilities. For this reason, the

Group regularly supervises and monitors financial receivables from both wholesalers and retailer customers.

The Company predominantly does business with known and verified business partners whose credit ratings

it monitors concurrently. Based on the aforementioned a limit is defined for each partner representing the

limit for goods that can be supplied to an individual buyer. Buyers displaying a markedly low credit rating

are provided with goods only on on an advance payment basis. In this manner buyers are restricted from

purchasing goods exceeding their payment capacities. Within the scope of credit risk management, the

Company utilizes mutual and chain compensation which also have a positive effect on ensuring adequate

cash flow for the Company. Accounts receivables are insured with traditional instruments for claim insur-

ance, such as: bill, bank guarantee and mortgage. bill, bank guarantees and mortgages. The Finance Office

monitors the receivables by business partner and maturity on a concurrent basis and through concurrent

collection both internally via their own collection offices and via external agencies with a large portion of re-

ceivables collected prior to judicial enforcement. The charging of default interest, issuing of written remind-

ers and in the end phase also implementation of judicial enforcement of matured receivables has resulted

in improved payment discipline of buyers and limits the write-off of uncollectible receivables to a minimum.

The Company did not record any significant write-offs of receivables due to non-payment in 2010. Credit risk

is managed and represents a moderate degree of exposure.

28. B. INTEREST RATE RISK

Interest rate risks represent the possibility change in the interest rate on the financial market, mainly due

to taking out long-term loans linked to a variable interest rate (EURIBOR). According to economic forecasts

for the Euro area, a turnaround in the trend of projected growth of the reference rate can be expected. The

current forecast is moving towards a reduction in the Euribor. Financing under variable interest rate condi-

tions represents one third of all Company financing while the other two thirds represents loans with a fixed

interest rate. The hedging of interest rates is undoubtedly a good idea in the case of long-term debt based on

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variable interest rates; the Company’s loan principals fall due in the next three years. The Company achieved

an agreement with bank creditors regarding a payment moratorium for all long-term credit instalments

and to extend the payment deadlines of all short-term loans till 30.03.12. Events on the financial market are

monitored as due to the high degree of indebtedness the Company will have to conclude an appropriate

interest-rate hedge in the correct moment. The company’s exposure to interest rate risks is assessed as still

high, but manageable.

Average Amount interest Difference ( in EUR ) of interest rate in % in interest

Actual financial expenses

from interest 15,381,190 5.83 -

Expenses if the interest

rate is raised by 1% 18,019,473 6.83 2,638,283


rate is lowered by 1% 12,742,907 4.83 (2,638,283)


rate is raised by 1.5% 19,338,615 7.33 3,957,425


rate is lowered by 1.5% 11,423,765 4.33 (3,957,425)

If the average interest rate increased by 1% expenses would increase by EUR 2,638,283, and for 1.5% by

EUR 3,957,425.

If the average interest rate increased by 1% expenses would increase by EUR 2,638,283 EUR, and for 1.5%

by EUR 5,910,337. EUR 3,957,425

28. C. CURRENCy RISK

Currency risk had a negligible impact on the Company’s operations in 2011 for the majority of transactions

with foreign markets were denominated in euros.

28. D. LIqUIDITy RISK

On the last day of 2011 the Company disclosed a surplus of short-term liabilities over short-term assets in

the amount of EUR 184,201,830 representing a considerable liquidity risk.


sale of all non-strategic investments began to be intensively implemented in 2010. Procedures for the sale

of a 93.73% stake in Fructal, d. d., 79.25% stake in the newspaper company Večer, d. d., 100% stake in the

company Delo, d. d., 23.34% stake in Poslovni sistem Mercator, d. d., and all other investments and property

not required for business commenced in 2011. The procedure of sale of the company Fructal, d. d. which

was 93.73 % owned by Pivovarna Union, d. d. to the strategic partner Nectar from Serbia was successfully

implemented in December 2011. The purchase price was EUR 35,300,000.

The procedure for the sale of a 23.34% stake in the company Poslovni sistem Mercator which was in-

tensively carried out in 2011 was not successfully concluded; however the sale of the stake will continue in

2012. Procedures for the sale of all other non-strategic investments and assets not required for business will

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also continue. In the event of successfully concluded divestments, the Group will immensely decrease its

indebtedness and consequently its exposure to liquidity risk. Nevertheless, uncertainty remains regarding

the successful divestment of financial investments and unnecessary assets. The consolidated financial state-

ments include the financial statements of the parent company Pivovarna Laško, d. d. and its subsidiaries in

which the parent company possesses a majority stake and controlling influence. Therefore the payment of

dividends by the subsidiaries is envisaged in the financial restructuring plan. In this way the parent company

would partially improve its liquidity position and business result. The increase in sustainable sources would

enable the maintenance and increase of value of the assets or its owners.

Until the successfully implemented sale of individual investments, the Company will experience serious

liquidity problems which it will only be able to successfully resolve through agreements with banks (with the

latter acting as creditors or as important owners of the Company). The only solution for the liquidity posi-

tion of the Company in the event of the unsuccessful sale of the assets is the acquisition of new sustainable

sources (capital increase). Discussions with banks regarding the possibilities of a comprehensive reprogram-

ming of debt in the long-term are being carried out within the scope of strategic measures involving financial

restructuring Discussions with regard to the reprogramming of debt are being implemented daily whereas

discussions regarding the acquisition of new sustainable sources have not yet taken place. The changes are

described on page 132 of this Annual Report.

It is calculated as a ratio between the total value of capital and number of shares:

( in EUR ) 2011 2010

Financial liabilities 268,040,173 265,852,191

Cash and cash equivalents 339,850 96,800

Net financial liabilities 267,700,323 265,755,391

Capital 109,571,175 124,168,014

Gearing ratio (in %) 244.32 214.03

From the gearing ratio, it is apparent that the Company is over-indebted.

28. E. CASh FLOw RISK

Cash flow risk is reflected in risk regarding the fair values of assets. Risk can be managed using derivative

financial instruments. The Company did not insure against fair value risks in 2011 therefore the risks defined

in the table below exist.

Difference - effect Fair value Difference - effect on revaluation Difference - effect as at on the value surplus/ on deferred ( in EUR ) 31 Dec 2011 of investments profit or loss tax liabilities

Balance as at 31 Dec 2011 46,672,206 - - -

Increase in price by 20% 56,006,647 9,334,441 7,467,553 1,866,888

Decrease in price by 20% 37,337,765 (9,334,441) (7,467,553) (1,866,888)

Increase in price by 5% 49,005,816 2,333,610 1,866,888 466,722

Decrease in price by 5% 44,338,596 (2,333,610) (1,866,888) (466,722)

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The calculation of risks pertains to a long-term financial investment into Mercator Poslovni Sistem, which

represent 99.9% of the value of financial assets intended for sale, which are evaluated according to their

fair value.

The Company breaks down the measurement of financial assets (categorised in accordance with IAS 39)

in the statement of financial position according to the following levels:

• Level 1: fair values are derived from market prices (excluding adjustments) on active securities markets,

• Level 2: fair values directly or indirectly derived from other sources on the market which can be moni-

tored, other than market prices in active markets for securities and

• Level 3: fair values resulting from valuation techniques based on the sources that that can not be moni-

tored on markets.

FINANCIAL ASSETS AVAILABLE-FOR-SALE AT FAIR VALUE AS AT 31 DECEMBER

( in EUR ) 2011 2010

Level 1 46,672,206 50,069,435

Level 2 3,056,893 6,164,527

Total 49,729,099 56,233,962

29. DISCONTINUED OPERATIONS

Due to the termination of operations of the company Jadranska pivovara – Split, d. d., in accordance with

IFRS 5, Pivovarna Laško, d. d., disclosed the effets thereof from discontinued operations. A loss of EUR

1,683,990 is shown from discontinued operations which relates to a revaluation adjustment of receivables

in the amount of EUR 217,104, an impairment of loans in the amount of EUR 1,833,608 and the creation of

long-term deferred tax assets from the impairment of loans in the amount of EUR 366,722.

30. CONTINGENT LIABILITIES

Contingent liabilities regard guarantees or sureties granted in the amount of EUR 15,819,000. Sureties

in the amount of EUR 8,900,000 were granted to subsidiaries for loans taken out at banks while EUR

2,000,000 with affiliates. The subsidiary Radenska, d. d. was given a surety in the amount of EUR 5,900,000

EUR and the subsidiary Pivovarna Union, d. d. a surety in the amount of EUR 3,000,000. A guarantee in the

amount of EUR 310,000 was given to the Customs Administration for liabilities arising from excise duties.

A contingent liability for Pivovarna Laško, d. d. also arises from the patronage statement signed by the for-

mer management of the Company on 31 December 2008 to Perutnina Ptuj, d. d. The patronage statement was

not disclosed in the Annual Report for 2008 due to the former Management Board’s failure to disclose it. On

20 November 2009 Perutnina Ptuj, d. d. demanded a refund of EUR 11,600,120 from Pivovarno Laško. The

denoted amount regards a loan taken out on the basis of a signed patronage statement by Perutnina Ptuj, d. d.

and approved by the companies Center naložbe, d. d. and Infond Holding, d. d. Pivovarna Laško, d. d. with

the aid of legal experts is examine the claim and desires to establish the likelihood of having to return the

demanded amount. It has obtained a number of legal opinions for this purpose. Based on the legal opinions

obtained the management of the Company estimates that no obligation to pay the demanded amount exists

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for Pivovarna Laško, d. d. therefore the Company did not disclose the said liability in its accounting ledgers.

On 15 February 2011 Pivovarna Laško, d. d. received a lawsuit in connection to the patronage statement from

the District Court in Celje which Mr. Boško Šrot as the Director of the Company supposedly signed on 10

January 2009. In the lawsuit, the plaintiff Perutnina Ptuj, d. d. is demanding a payment of EUR 10,116,489

with the legally prescribed default interest from 1 January 2010 onwards until payment. Pivovarna Laško, d. d.

has filed an appeal against the lawsuit in court.

LAwSUIT DUE TO ALLEGED VIOLATION OF TAKEOVER LEGISLATION (MERCATOR)

Pivovarna Union, d. d. together with the other defendants (Pivovarna Laško, d. d., Radenska, d. d. and

Infond Holding, d. d. currently undergoing bankruptcy) received a demand for payment of various damage

claims (totalling EUR 408,218.05) from 28 plaintiffs due to the supposed violation of takeover legislation,

supposed reconciliation of operations and supposed attainment of the takeover threshold from individual

shareholders. The court called a hearing on 9 November 2011 in the matter case ref. no. V Pg 1490/2010

thereby concluding the main hearing. With its judgement of 30 November 2011 the court rejected all claims

of the plaintiff as unfounded and ordered the plaintiffs to cover the costs of the procedure. The judgment is

not yet final. According to the court, the denoted procedure was a draft procedure although following an ex-

amination of the extract, it was determined that the court had not issued a decision on the execution of a draft

procedure. The plaintiffs began withdrawing their lawsuit following the issue of the judgement. Twenty-four

plaintiffs have withdrawn from the lawsuit to date. Based on the withdrawal of the lawsuit, the court will halt

the procedure through a decision and order the plaintiffs to pay the legal costs thereof.

LAwSUIT AGAINST ERA GOOD

On 1 January 2012 the Group received a lawsuit from the plaintiff Era Good, d. o. o. against the defendants

Pivovarna Laško, d. d., Pivovarna Union, d. d., and Radenska, d. d. regarding payment of compensation in

the total amount of EUR 958,356.00 (Pivovarna Laško EUR 509,749.55, Pivovarna Union EUR 348,458.24,

Radenska EUR 100,148.21) together with default interest. The defendant in its lawsuit asserts that the rebate

policy such as the one established by the Laško Group constitutes an abuse of its dominant position under

Prevention of the Restriction of Competition Act (ZPOmK-2), that it is discriminatory. The rebate policy of

the Laško Group placed the defendant at a competitive disadvantage, causing damage to the defendant. In

this matter, the court issued a decision ordering the plaintiff and defendant to file a preparatory form by 14

May 2012 at the latest in which they should indicate all relevant arguments and submit all evidence. The

Group feels the lawsuit to be without basis and unfounded.

31. BUSINESS MERGERS

No business mergers were implemented in 2011.

32. RECEIPTS OF MANAGEMENT AND EMPLOyEES ACCORDING TO INDIVIDUAL CONTRACTS

The Company is managed by the Management and Supervisory Boards whose gross earnings are shown

in the tables below:

( in EUR ) 2011 2010

MANAGEMENT BOARD

Fixed part of receipts 520,304 272,000

Other receipts (benefits) 10,717 3,204

Total 531,021 275,204

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Other Management Fixed part receipts and other

( in EUR ) of receipts (benefits) contracts Total

MANAGEMENT BOARD IN 2011

(while a member of the Management Board)

Dušan Zorko 192,000 382 - 192,382

Gorazd Lukman 120,000 6,089 - 126,089

Matej Oset (from 5 Aug. 2011 onwards) 47,043 3,193 - 50,236

Mirjam Hočevar

(from 1 May 2011 onwards) 80,000 - - 80,000

Marjeta Zevnik

(from 5 Aug. 2011 onwards) 48,261 - - 48,261

Robert Šega (until 31 March 2011) 30,000 1,053 - 31,053

Total 517,304 10,717 - 528,021

Based on his resignation statement of 14 March 2011, the mandate of the Supervisory Board member re-

sponsible for finance Robert Šegi ended on 31 March 2011. Mirjam Hočevar was appointed new member of

the Supervisory Board responsible upon the recommendation of the Chairman of the Management Board

Dušan Zorko, MSc at the Supervisory Board Session of 31 March 2011 on 1 April 2011 for a mandate period

until 30 August 2015.

The Supervisory Board of Pivovarna Laško, d. d., at the recommendation of the Chairman of the Manage-

ment Board Dušan Zorko, MSc appointed the additional members of the Management Board on 5 August

2011, namely: Marjeta Zevnik – member of the Management Board, responsible for legal, human resources

and general affairs and Matej Oset – member of the Management Board, responsible for the production

and technical sector, both for a mandate period from 5 August 2011 to 30 August 2015. The appointment of

additional members to the Management Board is based on an amendment of the Statue approved at the

17th regular General Meeting of Shareholders on 24 June 2011, which now enables the appointment of a

maximum five-member Management Board.

Earnings received by employees on the basis of individual contracts in 2011 are shown in the tables below:

( in EUR ) 2011 2010

INDIVIDUAL CONTRACTS

Fixed part of receipts 1,087,376 1,104,839


Total 1,120,776 1,132,309

In 2011 the members of the Supervisory Board of Pivovarna Laško, d. d., received session fees in the total

amount of EUR 73,526 in accordance with Article 30 of the Statute and the decision of the last General Meet-

ing of Shareholders.

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( in EUR ) 2011 2010

SUPERVISORY BOARD

Marjan Mačkošek 9,048 4,845

Vladimir Malenković 13,865 4,080

Peter Groznik 10,170 3,018

Bojan Košak 7,320 3,762

Andrej Kebe 8,652 4,270

Aleksander Svetelšek 4,000 1,351

Anton Turnšek 4,582 1,881

Bojan Cizej 5,552 -

Dragica Čepin 2,838 -

Borut Jamnik 3,763 -

Borut Bratina 3,736 -

Total 73,526 23,207

( in EUR ) 2011 2010

AUDIT COMMITTEE OF THE SUPERVISORY BOARD

Marko Koleša 539 1,012

Peter Groznik 698 349

Bojan Košak 495 990

Marjan Mačkošek - 528

Total 1,732 2,879

33. TRANSACTIONS wITh RELATED PARTIES

33. A. SALES TO ASSOCIATES

( in EUR ) 2011 2010

Radenska, d. d. Radenci 972,404 844,359

Vital Mestinje, d. o. o. 816 799

Union Group 11,762,662 11,958,601

Delo Group 2,880 2,832

Jadranska pivovara - Split, d. d. 49,373 616,066

Total - subsidiary companies 12,788,135 13,422,657

Total - associated and other affiliated companies 708,232 51,494,356

Total 13,496,367 64,917,013

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33. B. PURChASES FROM ASSOCIATES

( in EUR ) 2011 2010

Radenska, d. d. Radenci 2,994,119 2,473,348

Vital Mestinje, d. o. o. 252,729 232,055

Union Group 20,803,297 19,051,647

Delo Group 31,131 27,341



Laško Grupa, d. o. o., Zagreb 867,426 -



Total 26,256,571 24,440,837

The data are shown at gross value with value added tax included in the amounts. Purchases from associ-

ates apply predominantly to purchases of merchandise from the Horeca distribution channel.

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OPEN ITEMS FROM SALES/PURChASES FROM ASSOCIATES

( in EUR ) 2011 2010

Operating receivables from Group companies


Vital Mestinje, d. o. o. 42 108

Union Group 1,242,011 1,207,018

Delo Group 2,880 2,832

Jadranska pivovara - Split, d. d. 2,590,857 2,541,484

Laško Grupa, d. o. o., Zagreb 38,916 -

Popravek vrednosti terjatev, Jadranska pivovara - Split, d. d. (2,590,857) (2,373,753)



Total 1,583,905 8,117,705

Receivables from interest of the Laško Group


Value adjustment of receivables of Jadranska pivovara - Split, d. d. (523,048) (523,048)

Total - subsidiary companies - -

Operating liabilities to Group companies


Vital Mestinje, d. o. o. 118 21,954

Union Group 7,415,762 4,153,308

Delo Group - 1,835

Jadranska pivovara - Split, d. d. 13,489 -



Total - associated and other affiliated companies 2,148 633,748

Total 7,836,065 5,237,115

33. C. LOANS OBTAINED FROM ASSOCIATES

( in EUR ) 2011 2010


Union Group 9,300,000 8,100,000

Firma Del, d. o. o., Laško 49,526 45,435

Total 42,449,526 41,245,435

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Liabilities from long-term loans received increased by EUR 1,204,091 million in 2011 from the loan to Pivo-

varna Uniond, d. d. and by EUR 1,200,000 from the transfer of interest from the loan of Firma Del, d. o. o.

Interest liabilities from loans obtained from Radenska, d. d. as at 31 December 2011 amounted to EUR

177,108 and from the company Pivovarna Union, d. d. EUR 48,182.

33. D. LOANS GRANTED TO ASSOCIATES

( in EUR ) 2011 2010


Jadranska pivovara - Split, d. d. (long-term loan) 8,820,150 8,378,000

Value adjustment of loans granted to

Jadranski pivovari - Split, d. d. (8,820,150) (8,378,000)

Total - subsidiary companies - -

Other affiliated companies

Infond Holding, d. d., Maribor 1,699,613 1,699,613

Center naložbe, d. d., Maribor 5,900,000 5,900,000

Value adjusted of loans granted (7,599,613) (7,599,613)

Total - other affiliated companies - -

Total - -

The Company approved a short-term loan of EUR 1,833,608 to the subsidiary Jadranska pivovara – Split, d. d.

for the payment of severance pay and to overcome liquidity problems. Due to the signed surety of 2009,

the Group has paid the matured instalments of the loan of Jadranska pivovara, d. d. in the amount of EUR

1,715,229. Revaluation adjustments in the amount of EUR 1,833,608 were implemented for the loans which

had a negative impact on the current business result.

33. E. FINANCIAL REVENUES

( in EUR ) 2011 2010



Union Group 44,331 -

Jadranska pivovara - Split, d. d. - 415,575

Total 1,184,020 1,555,219

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33. F. FINANCIAL ExPENSES

( in EUR ) 2011 2010



Union Group 527,458 464,405

Delo, d. d., Ljubljana - impairments 8,183,810 6,501,966

Jadranska pivovara - Split, d. d. - impairment of loans and interest 1,833,608 1,779,670

Total 12,630,176 10,589,136

33. G. SURETIES GRANTED TO ASSOCIATES

( in EUR ) 2011 2010


Jadranska pivovara - Split, d. d. (for bank loans) 1,531,389 3,246,619

Fructal, d. d., Ajdovščina (662,624 RARG shares - for bank loans) - 6,957,552

Radenska, d. d., Radenci (for bank loans) 5,900,000 7,850,000

Pivovarna Union, d. d., Ljubljana (for bank loans) 3,000,000 8,747,490

Total 10,431,389 26,801,661

Value adjustment of the surety in Jadranska pivovara - Split, d. d. (1,531,389) (3,246,619)


Other affiliated companies

Birra Peja, a. d., Peć 2,000,000 2,000,000

Center naložbe, d. d., Maribor - 3,625,692

Value adjustment of the surety - (3,625,692)

Total - other affiliated companies 2,000,000 2,000,000

Total 10,900,000 25,555,042

As at 31 December 2011 the amount of sureties given to associates totalled EUR 8,900,000, representing

a decrease of EUR 14,655,042 over the previous year.

34. BUSINESS EVENTS FOLLOwING ThE END OF ThE FISCAL yEAR

Business events following the end of the fiscal year in Pivovarna, d. d. are described on pages 130 to 132 of

the Business Report of the Annual Report, Chapter 2.15. No business events which could have an effect on

the financial statements occurred following the end of the fiscal year.

The Annual General Meeting of Shareholders of Pivovarna Laško, d. d. was held on 30 January 2012 and

NLB as the largest owner and Banka Celje due to the decision of the Securities Market Agency were unable

to exercise their voting rights). The General also adopted a resolution that approves the management con-

tract which has concluded on 27 December 2011 between Pivovarna Laško, d. d. Laško, d. d. as the parent

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company and Pivovarna Union, d. d. as the subsidiary and the management contract, which was concluded

on 27 December 2011 between Pivovarna Laško, d. d. Laško, d. d. as the parent company and Radenska, d. d.,

Radenci as a subsidiary. The General Meetings of Shareholders of Pivovarna Union, d. d. and Radenska, d. d.,

Radenci also gave their consent to the individual management contracts on 31 January 2012. The manage-

ment contracts have linked Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d., Radenci from

actual an actual group into a contractual group.

4.1.9 STATEMENT OF ThE MANAGEMENT

The Management Board of the company Pivovarna Laško, d. d. is responsible for the preparation of the an-

nual report of the Company as well as the financial statements, in a manner providing the public with a fair

presentation of the financial position and the results of operations of the Company in accordance with the In-

ternational Financial Reporting Standards adopted by the European Union and the Companies Act for 2011.

The Management Board of Pivovarna Laško, d .d. confirms the Business Report and Financial Statements

with explanatory notes for the year ended 31 December 2011 and declares:

• that the financial statements have been prepared under the assumption that Pivovarna Laško, d. d. is a

going concern;

• that appropriate accounting policies were consistently applied and that any changes thereof have been

disclosed;

• that the accounting estimates have been prepared in a fair and diligent manner and are in accordance

with the principle of prudence and good management.

The Management Board is responsible for the implementation of measures to ensure the maintenance of

the value of the assets of the Company and for the prevention and detection of fraud and other irregularities.


Dušan Zorko, MSc


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset


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4.2

audiTEd CONSOlidaTEd fiNaN-Cial STaTEmENTS Of ThE LaškO grOup fOr ThE 2011 fiSCal yEar iN aCCOrdaNCE wiTh ifrS

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4.2.1 CONSOLIDATED STATEMENT OF ThE FINANCIAL POSITION OF ThELAŠKO GROUP AS AT 31 DECEMBER 2011

( in EUR ) Note 2011 2010

ASSETS

Non-current assets 321,093,374 265,643,825

Intangible fixed assets 1 87,017,785 66,016,523

Property, plant and equipment 2 180,695,007 153,632,750

Investment property 3 9,117,703 4,656,484

Non-current financial assets in subsidiaries 4.A 364,803 207,148

Financial assets available-for-sale 4.B 1,239,563 718,449

Long-term financial investments

in associated companies 4.C - 317,148

Long-term loans 5 11,079,110 10,444,245

Long-term receivables 6 877,146 717,347

Long-term deferred tax receivables 7,18.C 30,702,257 28,933,731

Short-term assets excluding short-term

deferred and accrued costs and revenues 248,064,577 370,997,307

Non-current assets available-for-sale 8 8,960,939 286,684,408

Inventories 9 22,079,914 21,376,855

Short-term operating receivables 10.A 46,730,029 30,660,793

Short-term receivables for excess tax paid 10.B 407,636 1,595,596

Financial assets available-for-sale 12.A 143,271,798 24,554,570

Short-term loans 11 5,110,497 4,733,715

Cash in banks, cheques and cash in hand 13 21,503,764 1,391,370

Short-term accured and deferred costs and revenues 14 525,338 210,569

Total short-term assets 248,589,915 371,207,876

TOTAL ASSETS 569,683,289 636,851,701

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4.2.1 CONSOLIDATED STATEMENT OF ThE FINANCIAL POSITION OF ThELAŠKO GROUP AS AT 31 DECEMBER 2011


( in EUR ) Note 2011 2010

CAPITAL 125,473,457 131,889,003

Minority capital 16 7,647,527 9,557,633

Majority capital 15 117,825,930 122,331,370

Share capital 36,503,305 36,503,305

Capital reserves 78,908,924 78,908,924

Profit reserves 3,650,331 3,650,330

Revaluation surplus 10,907,339 42,217,836

Net profit from previous years 15,504,846 110,742

Net profit/loss (27,669,598) (25,574,602)

Revaluation reserves 20,783 (13,485,165)

LIABILITIES 444,209,832 504,962,698

Provisions and long-term accrued

costs and deferred revenues 17 7,068,763 4,805,958

Provisions for severance pay and jubilee awards 17.A 4,785,771 2,788,161

Long-term accrued costs and deferred revenues 17.B 2,282,992 2,017,797

Long-term liabilities 18 40,536,520 84,263,898

Long-term financial liabilities 18.A 40,532,009 84,263,898

Long-term operating liabilities 18.B 4,511 -

Short-term liabilities 19 388,171,257 411,167,663

Liabilities of the group for disposal 8 - 67,250,490

Short-term operating liabilities 19.A 36,777,184 30,636,500

Short-term tax liabilities 19.B 2,963,742 -

Short-term financial liabilities 19.C 348,430,331 313,280,673

Short-term accrued costs and deferred revenues 20 8,433,292 4,725,179

Total short-term liabilities 396,604,549 415,892,842

TOTAL LIABILITIES 569,683,289 636,851,701

The explanatory notes and policies on pages 235 to 305 are a constituent part of the Financial Statements

of the Laško Group.

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4.2.2 CONSOLIDATED INCOME STATEMENT OF ThE LAŠKO GROUP FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) Note 2011 2010

Retained operating profit

Net sales revenue 21 264,737,273 250,319,305

Changes in inventories of products

and work in progress 21 467,270 (2,081,674)

Capitalised own products and services 21 197,804 23,108

Other operating revenues 21 5,498,458 2,987,775

Costs of goods, materials and services 21 (168,051,199) (152,962,129)

Labour costs 21 (49,303,255) (48,993,729)

Depreciation of intangible fixed

assets and property, plant and equipment 21 (19,585,979) (20,968,032)

Prevrednotovalni poslovni odhodki (11,820,395) (8,993,597)

Long-term provisions 21 (298,655) (537,108)

Other operating expenses 21 (5,918,214) (6,335,617)

OPERATING PROFIT 15,923,108 12,458,302

Financial revenues 22 9,548,495 2,178,402

Financial expenses 22 (49,705,487) (25,963,027)

Share of profit/loss in associated companies 23 - 4,112,331

OPERATING PROFIT BEFORE TAXES (24,233,884) (7,213,992)

Taxes 24 3,432,744 2,819,947


PERIOD FROM RETAINED OPERATING PROFIT 30 (20,801,140) (4,394,045)

Generated operating profit - Jadranska pivovarna Split (3,610,790) (4,926,041)

Generated operating profit - Fructal (3,094,368) (16,498,719)


PERIOD FROM GENERATED OPERATING PROFIT (6,705,158) (21,424,760)

TOTAL NET PROFIT/LOSS FOR

THE ACCOUNTING PERIOD (27,506,298) (25,818,805)

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4.2.2 CONSOLIDATED INCOME STATEMENT OF ThE LAŠKO GROUP FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011


( in EUR ) Note 2011 2010

Minority owners’ share of net profit/loss 163,300 244,203

Majority owners’ share of net profit/loss (27,669,598) (25,574,602)

Total net profit/loss per share of

the majority owners’ share

Net profit/loss per share (3.18) (2.94)

Adjusted net profit/loss per share (3.18) (2.94)

Total net profit/loss per share of

the minority owners’ share

Net profit/loss per share 0.02 (0.03)

Adjusted net profit/loss per share 0.02 (0.03)

Net profit/loss per share from operations



Net profit/loss per share from retained operating profit





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4.2.3 CONSOLIDATED STATEMENT OF COMPREhENSIVE INCOME OF ThE LAŠKO GRO-UP FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) 2011 2010

Net profit/loss for the accounting period (27,506,298) (25,818,805)

OTHER COMPREHENSIVE INCOME

Revaluation reserve from associated companies - 69,307

Financial assets available-for-sale (1,521,580) (3,207,490)

Profit/loss from property revaluation 6,226,259 489,484

Deferred taxes from revaluation (461,873) 132,347

Deferred taxes from revaluation - associated companies - (2,442,531)

Other comprehensive income - capitalisation

method Mercator (transfer to IPI) 15,882,356 -

Final consolidation FRAG 1,335,234 -

OTHER COMPREHENSIVE INCOME 21,460,396 (4,958,883)

TOTAL COMPREHENSIVE INCOME (6,045,902) (30,777,688)

Other comprehensive income 21,460,396 (4,958,882)

Minority owners’ share (1,812,706) (247,540)

Majority owners’ share 23,273,102 (4,711,342)

Total comprehensive income (6,045,902) (30,777,688)

Minority owners’ share (1,649,406) (491,743)

Majority owners’ share (4,396,496) (30,285,945)

Total comprehensive income

of majority owners’ share per share (0.50) (3.48)

Adjusted total comprehensive income

of majority owners’ share per share (0.50) (3.48)



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me

- -

- -

- -

- -

(395

,105

) -

(395

,105

) (6

6,76

8)

(461

,873

)

Oth

er c

ompr

ehen

sive

inco

me

- cap

ital

met

hod

Mer

cato

r (r

eval

uatio

n of

PP

E)

- -

- -

- -

37,9

76,7

94

- (3

7,97

6,79

4)

- -

- -

Oth

er c

ompr

ehen

sive

inco

me

- cap

ital m

etho

d M

erca

tor

(tra

nsfe

r to

IP

I)

- -

- -

- -

- -

4,18

5,14

2

13,5

54,4

72

17,7

39,6

14

- 17

,739

,614

Fina

l con

solid

atio

n FR

AG

-

- -

- -

- 3,

189,

158

-

(1,8

53,9

24)

- 1,

335,

234

(1

,857

,258

) (5

22,0

24)

231

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

RE

PO

RT

LA

ŠK

O G

RO

UP

4.2.

4 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

hA

NG

ES

IN O

wN

ER

’S E

qU

ITy

OF

ThE

LA

ŠKO

GR

OU

P F

OR

Th

E P

ER

IOD

1 jA

NU

ARy

– 3

1 DEC

EM

BE

R 2

011

Rese

rves

N

et

To

tal

Tota

l

Shar

e C

apit

al

Lega

l fo

r tre

asur

y Tr

easu

ry

Tota

l pro

fit

profi

t fro

m

Net

Re

valu

atio

n Re

valu

atio

n m

ajor

ity

Min

ority

TO

TAL

( in

EUR

) ca

pita

l re

serv

es

rese

rves

sh

ares

sh

ares

re

serv

es p

revi

ous y

ears

pr

ofit

surp

lus

rese

rves

ca

pita

l ca

pita

l C

API

TAL

Tota

l cha

nge

in c

ompr

ehen

sive

inco

me

in 2

011

- -

- -

- -

41,1

65,9

52

(27,

669,

598)

(3

1,44

7,32

2)

13,5

54,4

72

(4,3

96,4

96)

(1,6

49,4

06)

(6,0

45,9

02)

Cha

nge

in c

apita

l

Allo

catio

n of

rem

aini

ng p

ortio

n of

net

pro

fit

purs

uant

to a

Gen

eral

mee

ting

deci

sion

-

- -

- -

- (25

,574

,602

) 25

,574

,602

-

-

- -

Cre

atio

n of

res

erve

s

for

trea

sury

sha

res

(sta

kes)

-

- -

(190

,759

) -

(190

,759

) (6

0,42

0)

- -

- (2

51,1

79)

- (2

51,1

79)

Util

isat

ion

of r

eser

ves

for

trea

sury

sha

res

(sta

kes)

-

- -

(154

,041

) -

(154

,041

) -

- -

(1

54,0

41)

- (1

54,0

41)

Oth

er

- -

- -

- -

(136

,826

) -

136,

826

(4

8,52

4)

(48,

524)

(4

7,78

1)

(96,

305)

Tota

l cha

nge

in c

apita

l -

- -

(344

,800

) -

(344

,800

) (2

5,77

1,84

8)

25,5

74,6

02

136,

826

(4

8,52

4)

(453

,744

) (4

7,78

1)

(501

,525

)

CLO

SIN

G B

ALA

NC

E

as a

t 31

Dec

embe

r 20

11

36,5

03,3

05

78,9

08,9

24

3,65

0,33

1

467,

504

(4

67,5

04)

3,65

0,33

1

15,5

04,8

46

(27,

669,

598)

10

,907

,339

20

,783

11

7,82

5,93

0

7,64

7,52

7 1

25,4

73,4

57

The

exp

lana

tory

not

es a

nd p

olic

ies

on p

ages

235

to 3

05

are

a co

nstit

uent

par

t of t

he F

inan

cial

Sta

tem

ents

of L

aško

Gro

up.

232

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

RE

PO

RT

LA

ŠK

O G

RO

UP

4.2.

5 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

hA

NG

ES

IN O

wN

ER

’S E

qU

ITy

OF

ThE

LA

ŠKO

GR

OU

P F

OR

Th

E P

ER

IOD

1 jA

NU

ARy

– 3

1 DEC

EM

BE

R 2

010

Rese

rves

N

et

To

tal

Tota

l

Shar

e C

apit

al

Lega

l fo

r tre

asur

y Tr

easu

ry

Tota

l pro

fit

profi

t fro

m

Net

Re

valu

atio

n Re

valu

atio

n m

ajor

ity

Min

ority

TO

TAL

( in

EUR

) ca

pita

l re

serv

es

rese

rves

sh

ares

sh

ares

re

serv

es p

revi

ous y

ears

pr

ofit

surp

lus

rese

rves

ca

pita

l ca

pita

l C

API

TAL

OP

ENIN

G B

ALA

NC

E

as a

t 1 J

anua

ry 2

011

36,5

03,3

05

78,9

08,9

24

3,65

0,33

1

1,36

3,20

0 (

1,36

3,20

0)

3,65

0,33

1

- -

40,4

53,8

25

(6,8

99,0

71)

152,

617,

314

9,

977,

067

162

,594

,381

Tran

sact

ions

with

ow

ners

Div

estm

ent o

f ow

n sh

ares

(sta

kes)

-

- -

(52,

587)

52

,587

-

- -

- -

- -

-

Paym

ent o

f div

iden

ds

- -

- -

- -

- -

-

- (7

5,11

2)

(75,

112)

Incr

ease

/dec

reas

e in

cap

ital

- -

- -

- -

- -

- -

- 14

7,42

2

147,

422

Oth

er c

hang

es

- -

- -

498,

309

49

8,30

9

- -

- -

498,

309

-

498,

309

Tota

l tra

nsac

tions

with

ow

ners

-

- -

(52,

587)

55

0,89

6

498,

309

-

- -

- 49

8,30

9

72,3

10

570,

619

Cha

nge

in c

ompr

ehen

sive

inco

me

Net

pro

fit fo

r th

e fin

anci

al y

ear

- -

- -

- -

- (2

5,57

4,60

2)

- -

(25,

574,

602)

(2

44,2

04)

(25,

818,

806)

Rev

alua

tion

surp

lus

from

inta

ngib

le fi

xed

asse

ts

- -

- -

- -

- -

- -

- (9

3,90

3)

(93,

903)

Rev

alua

tion

surp

lus

from

prop

erty

, pla

nt a

nd e

quip

men

t -

- -

- -

- -

- 53

1,33

4

- 53

1,33

4

51,7

96

583,

130

Rev

alua

tion

surp

lus

from

inve

stm

ent p

rope

rty

- -

- -

- -

- -

- -

- 25

8

258

Rev

alua

tion

surp

lus

from

finan

cial

inve

stm

ents

- M

ELR

-

- -

- -

- -

- (3

,015

,100

) -

(3,0

15,1

00)

(192

,390

) (3

,207

,490

)

Taxe

s re

late

d to

indi

vidu

al

item

s of

com

preh

ensi

ve in

com

e -

- -

- -

- -

- 14

5,64

8

- 14

5,64

8

(13,

301)

13

2,34

7

Con

vers

ion

rese

rves

-

- -

- -

- -

- -

69,3

07

69,3

07

- 69

,307

Oth

er c

ompr

ehen

sive

inco

me

- cap

ital

met

hod

Mer

cato

r (r

eval

uatio

n of

PP

E)

- -

- -

- -

- -

4,21

2,87

0

(6,6

55,4

01)

(2,4

42,5

31)

- (2

,442

,531

)

233

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

RE

PO

RT

LA

ŠK

O G

RO

UP

4.2.

5 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

hA

NG

ES

IN O

wN

ER

’S E

qU

ITy

OF

ThE

LA

ŠKO

GR

OU

P F

OR

Th

E P

ER

IOD

1 jA

NU

ARy

– 3

1 DEC

EM

BE

R 2

010

Rese

rves

N

et

To

tal

Tota

l

Shar

e C

apit

al

Lega

l fo

r tre

asur

y Tr

easu

ry

Tota

l pro

fit

profi

t fro

m

Net

Re

valu

atio

n C

onve

rsio

n m

ajor

ity

min

ority

TO

TAL

( in

EUR

) ca

pita

l re

serv

es

rese

rves

sh

ares

sh

ares

re

serv

es p

revi

ous y

ears

pr

ofit

surp

lus

rese

rves

ca

pita

l ca

pita

l C

API

TAL

Tota

l cha

nge

in c

ompr

ehen

sive

inco

me

in 2

010

- -

- -

- -

- (2

5,57

4,60

2)

1,87

4,75

2

(6,5

86,0

94)

(30,

285,

944)

(4

91,7

44)

(30,

777,

688)

Cha

nge

in c

apita

l

Cre

atio

n of

res

erve

s fo

r ow

n sh

ares

(sta

kes)

-

- -

(498

,309

) -

(498

,309

) -

- -

- (4

98,3

09)

- (4

98,3

09)

Oth

er

- -

- -

- -

110,

742

-

(110

,742

) -

- -

-

Tota

l cha

nge

in c

apita

l -

- -

(498

,309

) -

(498

,309

) 11

0,74

2

- (1

10,7

42)

- (4

98,3

09)

- (4

98,3

09)

CLO

SIN

G B

ALA

NC

E

as a

t 31

Dec

embe

r 20

10

36,5

03,3

05

78,9

08,9

24

3,65

0,33

1

812,

304

(8

12,3

04)

3,65

0,33

1

110,

742

(2

5,57

4,60

2)

42,2

17,8

35 (

13,4

85,1

65)

122,

331,

370

9,

557,

633

131

,889

,003

T

he e

xpla

nato

ry n

otes

and

pol

icie

s on

pag

es 2

35 to

30

5 ar

e a

cons

titue

nt p

art o

f the

Fin

anci

al S

tate

men

ts o

f the

Laš

ko G

roup

.

234

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

RE

PO

RT

LA

ŠK

O G

RO

UP

4.2.6 CONSOLIDATED STATEMENT OF CASh FLOwS OF ThE LAŠKO GROUP FOR ThE PERIOD 1 jANUARy – 31 DECEMBER 2011

( in EUR ) Note 2011 2010

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 25 32,797,639 54,712,234

Tax expenditures 699,747 -

Interest paid 709,316 (1,005,670)

Net cash generated from operations 34,206,702 53,706,564

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of subsidiary companies, net expenditures 31 (286,000) -

Purchase of property, plant and equipment 2 (10,255,894) (10,964,743)

Profit/loss from divestment

of property, plant and equipment 2 119,014 65,533

Purchase of intangible fixed assets 1 (816,716) (527,742)

Acquisition/sale of financial

assets available-for-sale 4.B,11 6,154,364 1,067,114

Sale of non-current assets

and liabilities available-for-sale 30 35,300,000 -

Interest received 22 759,304 1,718,756

dividends and capital gains 22 7,411,835 616,102

Net cash generated from investing activities 38,385,907 (8,024,980)

CASH FLOWS FROM FINANCING ACTIVITIES

Interest paid 22 (23,094,295) (22,074,537)

Acquisition of own shares 15 90,616 52,587

Decrease in capital - (132,705)

Increase/decrease in borrowings 18.19 (30,129,819) (22,333,754)

Dividends paid to owners 15 (65,069) (75,112)


NET INCREASE/DECREASE

IN CASH AND CASH EQUIVALENTS 19,394,043 1,118,063

Cash and cash equivalents at the beginning of the year 2,109,721 991,658

Cash and cash equivalents at the end of the year 21,503,764 2,109,721



235

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

RE

PO

RT

LA

ŠK

O G

RO

UP

4.2.7 ACCOUNTING POLICIES AND NOTES TO ThE CONSOLIDATED FINANCIAL STATEMENTS

GENERAL INFORMATION

The main activities of the Laško Group (Group) are: production of beer, mineral and spring waters, soft

drinks and syrups for the production of beverages, distilled spirits, wholesale service and the newspaper

publishing activity.

Pivovarna Laško, d. d. (Company) is the parent company of the Laško Group with its headquarters in Slo-

venia: Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Group’s ordinary shares are quoted on the Ljubljana Stock Exchange under the designation “PILR”.

The Group’s share capital totals EUR 36,503,304.96 representing 8,747,652 ordinary freely negotiable regis-

tered no-par-value shares No limitations on the payment of dividends and other equity payments exist.

The Group operates on the basis of a going-concern.

The consolidated financial statements were approved by the Company’s Management Board on 6 April 2011.

ACCOUNTING GUIDELINES

1. BASIS FOR PREPARATION OF ThE REPORT

The same accounting policies were applied in 2011 as in the preceding years.

These obligatory consolidated financial statements have been prepared for the purpose of adhering to

legislative requirements. In accordance with law the Company must ensure the independent audit of the

financial statements. The audit is limited to the audit of mandatory financial statements for general use

thereby fulfilling the legal requirement o fan audit of obligatory financial statements. The audit treats the

obligatory financial statements as a whole and does not offer assurance regarding individual types of items,

accounts or transactions. Audited financial statements are not intended for use by any party for the purposes

of decision-making regarding ownership, financing and any other concrete transactions connected to the

Company. Correspondingly, users of the obligatory financial statements may not rely exclusively on the

financial statements and must carry out other suitable procedure prior to making decisions.

The financial statements are prepared in accordance with the International Financial Reporting Standards

(IFRS) as adopted by the the International Accounting Standards Board (IASB) and interpretations issued by

the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union.

A) STANDARDS AND INTERPRETATIONS CURRENTLy IN FORCE

The following amendments to the existing standards issued by the International Accounting Standards

Board (IASB) and adopted by the EU are currently valid:

• Amendments to IAS 24 “Related party disclosures” - Simplification of the disclosure requirements for

government-related entities and clarification of the definition of a related party, adopted by the EU on 19

July 2010 (effective for annual periods beginning on or after 1 January 2011);

• Amendments to IAS 32 “Financial Instruments: presentation” – Accounting for the issue of shareholder rights,

adopted by the EU on 23 December 2009 (effective for annual periods beginning on or after 1 February 2010);

• Amendments to IFRS 1 “First-time Adoption of international financial reporting standards”- Limited

exemption from comparative IFRS 7 disclosures for first-time adopters, adopted by the EU on 30 June

2010 (effective for annual periods beginning on or after 1 July 2010);

236

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

011

4

. F

INA

NC

IAL

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PO

RT

LA

ŠK

O G

RO

UP

• Amendments to various standards and interpretations “Improvements to IFRS (2010)” resulting from

the annual improvement project for IFRS published on 6 May 2010 (IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS

27, IAS 34, IFRIC 13) primarily to remove inconsistencies and clarify wording, adopted by the EU on 18

February 2011 (most amendments are to be applied for annual periods beginning on or after 1 January

2011, depending on the standard/interpretation);

• Amendments to IFRIC 14 “IAS 19 – limit on a defined benefit asset, minimum funding requirements

and their interaction” - Prepayments of a minimum funding requirement, adopted by the EU on 19 July

2010 (effective for annual periods beginning on or after 1 January 2011);

• IFRIC 19 “Extinguishing financial liabilities with equity instruments”, adopted by the EU on 23 July 2010

(effective for annual periods beginning on or after 1 July 2010).

The adopted amendments of existing standards did not affect the Company’s accounting policies.

B) STANDARDS AND INTERPRETATIONS ISSUED By ThE IASB AND ADOPTED By ThE EU, BUT NOT yET EFFECTIVE

On the day of approval of these financial statements the following standards, revisions and interpreta-

tions adopted by the EU have been issued, but are not yet effective:

• Amendments to IFRS 7 “Financial Instruments: disclosures” - Transfers of financial assets, adopted by

the EU on 22 November 2011 (effective for annual periods beginning on or after 1 July 2011).

The Company opted not to adopt these standards, amendments and interpretations before they enter

into force. The Company estimates that the use of these standards, amendments and interpretations will

not have a significant impact on the Company’s financial statements during the period of initial application.

C) STANDARDS AND INTERPRETATIONS ISSUED By ThE IASB, BUT NOT yET ADOPTED By ThE EU

Currently the IFRS as adopted by the European Union do not essentially differ from regulations adopted

by the IASB with the exception of the following standards and interpretations which were not confirmed for

use on 6 April 2012:

• IFRS 9 “Financial Instruments” (effective for annual periods beginning on or after 1 January 2013);

• IFRS 10 “Consolidated Financial Statements” (effective for annual periods beginning on or after 1 Janu-

ary 2013);

• IFRS 11 “Joint Arrangements” (effective for annual periods beginning on or after 1 January 2013);

• IFRS 12 “Disclosures of Interests in Other Entities” (effective for annual periods beginning on or after 1

January 2013);

• IFRS 13 “Fair Value Measurement” (effective for annual periods beginning on or after 1 January 2013);

• IAS 27 (amended in 2011) “Separate Financial Statements” (effective for annual periods beginning on

or after 1 July 2013);

• IAS 28 (amended in 2011) “Investments in Associates and Joint Ventures (effective for annual periods

beginning on or after 1 January 2013);

• Amendments to IFRS 1 “First-time Adoption of International Financial Reporting Standards” - High hy-

perinflation and the removal of agreed on dates for first-time users of IFRS (effective for annual periods

beginning on or after 1 July 2011);

237

LA

ŠK

O G

RO

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A

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011

4

. F

INA

NC

IAL

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PO

RT

LA

ŠK

O G

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UP

• Amendments to IFRS 7 “Financial Instruments: Disclosures”- Set-off of financial assets and liabilities


• Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments: disclosures” - Man-

datory date of establishment and disclosure of revenues.

• Amendments to IAS 1 “Presentation of Financial Statements” - Presentations of items of other compre-

hensive income (effective for annual periods beginning on or after 1 July 2012);

• Amendments to IAS 12 “Income Tax - Deferred Tax”: Recovery of Underlying Assets” (effective for annual

periods beginning on or after 1 July 2012);

• Amendments to IAS 19 “Employee Benefits”- Improvement of the accounting treatment of post-employ-

ment earnings (effective for annual periods beginning on or after 1 January 2013);

• Amendments to IAS 32 “Financial Instruments: Presentation”- Set-off of financial assets and liabilities


• IFRIC 20 “Stripping Costs in the Production Phase of a Surface Mine” (effective for annual periods

beginning on or after 1 January 2013).

The Company estimates that the adoption of these standards, amendments and interpretations will not

have a significant impact on the Company’s financial statements during the period of initial application.

At the same time, the accounting for protection against risks connected to the portfolio of financial assets

and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Company assesses that the accounting of risk hedging connected to the portfolio of financial assets

and liabilities to be in accordance with the requirements of IAS 39: “Financial instruments: recognition and

measurement” will not have a significant impact on the Company’s financial statements if used on the date

of the statement of financial position.

2. CONSOLIDATION

Subsidiary companies in which the Group’s indirect or direct equity is larger than half of voting rights or

can in any other way influence operation are considered consolidated. They are consolidated in the Group’s

statements from the day when the Group took over their controlling interest, and their consolidation ends

when the Group has no controlling interest in them anymore. All transactions and receivables and liabilities

among the Group’s companies are eliminated for the purpose of consolidation. Impairments of the long-

term investments in Delo, d. d. and Fructal, d. d. to the agreed contractual values have also been eliminated.

Their reduction to the assessed value is reflected in the consolidation as a weakening of the brands which

had enjoyed brand recognition upon acquisition. Impairment of dividends received from subsidiaries was

also eliminated. For the purpose of ensuring consistent and correct data for the needs of the Group’s consoli-

dation and financial reporting, accounting policies needed to be harmonized with the controlling company’s

policies.

The Group uses the purchase method for the accounting of takeovers. The acquisition cost of the takeover

is assessed as the fair value of assets and capital instruments given and assumed liabilities on the day of

transaction, together with the expenses directly attributable to the takeover. Assumed assets, liabilities and

conditional liabilities attaching to a takeover are initially recorded at the fair value on the day of the takeo-

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ver, irrespective of the size of the minority interest. A surplus of the acquisition price over the fair value of

the Group’s interest in net assets of an acquired undertaking is recorded as positive goodwill. If the carry-

ing amount of the investment exceeds the net value of the subsidiary’s assets, the difference is recognised

through profit or loss as an impairment loss.

The Group treats transactions with minority holders the same as transactions with external partners. Prof-

its and losses of minority holders are disclosed in the Group’s income statement.

3. COMPOSITION OF AFFILIATES

The interrelated group of companies in which the company Pivovarna Laško, d. d., holds its financial

investments is composed of the following companies:

Value of Percentage total capital Profit/loss Company name Company activity Country participation in EUR in 2011 in EUR

ODVISNE DRUŽBE

Vital Mestinje, d. o. o. Beverage production Slovenia 96.920% 3,366,215 8,428

Radenska, d. d., Radenci Beverage production Slovenia 93.813% 79,736,226 3,052,843

Skupina Union Beverage

and beer production Slovenia 97.895% 94,261,537 7,316,434

Skupina Delo Newspaper

and publishing Slovenia 80.834% 17,480,363 (1,528,898)

Firma Del, d. o. o., Laško Beer production Slovenia 100.000% 51,723 1,273

Jadranska pivovara - Split, d. d. Beer production Croatia 99.459% 4,542,877 (3,731,895)

Laško Grupa, d. o. o., Sarajevo Trade intermediary BiH 100.000% 14,588 23,525

Laško Grupa, d. o. o., Zagreb Trade intermediary Croatia 100.000% 14,650 5,716

Pivovarna Laško, d. d., Trubarjeva 28, Laško, draws up the consolidated annual report for the parent com-

pany and for subsidiaries in the Laško Group. Due to their material irrelevance, the following companies are

not included in the consolidation: Firma Del, d. o. o., Laško, Laško Grupa, d. o. o., Sarajevo, Radenska Miral,

d. o. o., Radenci, Radenska, d. o. o., Zagreb and Radenska, d. o. o., Belgrade.

4. RECOGNITION OF REVENUES

Revenues are recognised on the basis of the sale of products, services and merchandise and takeovers

of these on the part of customers (exclusive of VAT and excise duties), foreseen reclamations, rebates and

discounts. Sales revenues are recognised when a significant portion of the risk and benefits of ownership of

the goods is transferred from the seller to the buyer.

Group revenues are a sum of the revenue of individual companies included in the Group. Revenues

obtained within the group of companies are excluded from group revenues. Other revenues realised are

recognised on the following basis:

• Interest revenues – are recognised upon their arising unless a doubt exists that they will be collected,

whereby the amount is written off for the replacement value. Interest revenues from that point on are

recognised on the basis of interest rates serving as a discontinuation of future cash flows

• Revenues from dividends are recognised when the Company becomes entitled to receive dividend payments.

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5. INVESTMENTS INTO SUBSIDIARIES

A consolidated subsidiary company is a company where the controlling company has the controlling capi-

tal share or controlling influence due to any other reason and which enters the group for which joint finan-

cial statements are prepared.

Investments into subsidiaries are assessed at their original historical costs in individual financial state-

ments. Revenues from profit sharing are acknowledged as revenue from financing, when they are paid or

when the General Meeting approves a preposition on profit sharing and payment of the dividend. Invest-

ments are impaired whenever their replaceable values are lower than their book values. Losses attributed to

impairments are immediately recognised in the income statement.

6. INVESTMENTS IN AFFILIATES

Associated companies are companies in which the company has between 20% and 50% of the voting

rights, and where it has a significant impact on business, but they are not controlled. Financial investments

in associated companies are valued at cost, but must be reviewed each year, and may not exist if the circum-

stances indicate the need for impairment. To this end, valuations are carried out of investments in associated

companies authorized by the business appraisers. If the estimated value of an investments is lower than cost,

the difference is recognized as a financial expense and has a demonstrable impact on the level of income.

Investments in associated companies are calculated according to the capital method. Associated compa-

nies are companies in which the company has between 20% and 50% of the voting rights, and where it has

a significant impact on business, but they are not controlled.

The financial investment in the associated company is calculated according to the capital method in ac-

cordance with IAS 28 from the date it became an associated company. According to the capital method a fi-

nancial investment is first carried at cost with the book value increasing or decreasing to reflect the investor’s

share in the company’s profit or loss in which the investor has a significant influence which occurs following

the date on which the financial investment was implemented. The amount obtained from the distribution

of the net profit of the company in which the investor has a significant influence decreases the book value

of the financial investment. A recalculation of the book value is also required if the investor’s proportionate

equity stake changes, however, these changes are not shown in the income statement. Such changes also

include those resulting from a revaluation of tangible fixed assets and financial investments, exchange rate

differences and recalculation of the differences arising following the business merger.

Upon the acquisition of a financial investment, the associated company calculates each difference between

the costs of the financial investment and the investor’s share in the net fair values of the identifiable assets,

debts and contingency liabilities in accordance with IFRS 3 – Business Mergers.

Goodwill connected to the associated company is included in the book value of the financial investment.

Amortization of this goodwill is not allowed and is therefore not included when establishing the investor’s

share in the profits or losses of the associated company.

Each surplus of the investor’s share in the net fair values of the identifiable assets, debts and contingency

liabilities of the associated company over the costs of the financial investment is excluded from the book val-

ue of the financial investment and instead included as a revenue upon the established investor’s share in the

net profits or losses of the associated company for the period in which the financial investment was acquired.

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Total Profit/ Percentage value of loss ( in EUR ) Company activity Country participation capital in 2011

SUBSIDIARY COMPANIES

Thermana, d. d., Laško spa, hotel and Slovenia 20.63% 28,719,105 201,439

similar accomodation

facilities

Birra Peja, Sh. a., Peć beer and beverage production Kosovo 39.55% 2,835,643 (726,236)

Slopak, d. o. o., Ljubljana packaging waste

management Slovenia 29.22% 670,525 (496,095)

As at 31 December 2011 the Group showed the equity investment into the company Birra Peja, Sh. a., Peć, Ko-

sovo, investment into the company Thermana, d. d., Laško and investment into the company Slopak, d. o. o.,

Ljubljana among long-term financial investments.

The Group’s ownership stake in the associated company Birra Peja, Sh. a., Peæ, Kosovo on the last day of

2011 comprised 39.55%, the stake in the company Slopak 29.22% and the stake in Thermana 20.63%.

7. CURRENCy OF REPORTING

A) FUNCTIONAL AND REPORTING CURRENCy

The items disclosed in the financial statements of individual companies of the Group are nominated in

the currency of the primary environment - the country in which an individual company operates (this is the

so-called “functional currency”). The consolidated financial statements are disclosed in euros, which is the

functional and presentation currency of the controlling company (Pivovarna Laško, d. d.).

B) TRANSACTIONS AND BALANCES

Foreign currency transactions are converted into the reporting currency using the exchange rate valid on

the day of the transaction. Profits and losses arising from these transactions and in the conversion of cash

and liabilities, denominated in a foreign currency, are recognised in the Income Statement.

Exchange rate differences arising from debt securities and other financial instruments are recognised at

fair value and are included in the profit or loss of transactions with foreign currencies. Exchange rate dif-

ferences in non-monetary items such as securities kept for trading are shown as a portion of the increase

or decrease of fair value. Currency differences in securities available-for-sale are included in the revaluation

reserves on equity.

C) COMPANIES IN ThE GROUP

Income statements and cash flow statements of subsidiary companies abroad are converted into the re-

porting currency of the controlling company on the basis of the average foreign currency rate, and balance

sheets are converted into the reporting currency with the use of the exchange rate valid at 31 December. If

a company is sold abroad, the currency differences realized at the sale are recognized in the profit or loss

statement as a part of the profit/loss of the sale.

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Intangible fixed assets comprise investments in the acquisition of patents, licenses, brand names, good-

will, intangible fixed assets under development, computer software and other intangible fixed assets (IAS 38).

An intangible fixed asset is only recognised as an asset if it is likely that future economic benefits will flow to

the Company and if its cost can be reliably measured.

Pivovarna Laško, d. d. uses the cost model (IAS 38.74), thus intangible assets are carried at cost less any

amortisation and impairment losses and collective loss due to impairment.

B) GOODwILL

Goodwill represents a surplus in the cost of an acquired company over the fair value of the net asset share

of the acquired company on the day of the acquisition. Goodwill arising upon the acquisition of subsidiary

companies is recognized in intangible fixed assets. Goodwill is checked, tested for impairments and meas-

ured at the initial value decreased by cumulated impairments on an annual basis. Profits or losses at the

sale of a company include the current value of positive goodwill referring to the company sold. A test of the

impairment of the goodwill of the investment in the Union Group was made on 31 December 2011 which

showed that the value thereof had not changed from the previous year.

A) PATENTS, BRAND NAMES AND LICENSES

Disbursements for the purchase of patents, brand names and licenses are capitalised and amortised using

the straight-line method during their “useful periods of life” (amortisation period). If the useful period of

life cannot be determined, such assets are not depreciated and only a test of impairment is performed on

an annual basis.

If a revaluation is required, the value of intangible fixed assets must be estimated and written-off up to the

amount of their replacement values. The life span of brands cannot be determined therefore an impairment

test was performed. Based on the appraisal performed by the certified business appraiser on 31 December

2011, an impairment of the brands of Delo, d. d. in the amount of EUR 3,619,545 was made. As a result of

the successfully concluded sale of the company Fructal, d. d., Ajdovščina, the consolidated income statement

shows an impairment of the brands of the aforementioned company in the amount of EUR 5,272,016.

The useful period for other intangible assets ranges from 3 to 10 years.

C) OThER INTANGIBLE ASSETS

Whenever computer software is not considered a constituent part of the appropriate computer hardware,

they are treated as intangible assets. Other intangible assets are shown at cost less any amortisation and

impairment losses and collective losses due to impairment. The useful period for other intangible assets is

10 years.

9. FINANCIAL ASSETS

The Group classifies its investments into the following categories: financial assets at fair value through

profit or loss, loans and receivables, financial investments held-to-maturity and financial assets available-for-

sale. The classification depends on the purpose for which the investment was acquired.

A) FINANCIAL ASSETS AT FAIR VALUE ThROUGh PROFIT OR LOSS

This category is divided into two sub-categories: financial assets for trade and assets determined by fair

value through profit or loss upon recognition. Investments obtained for the purpose of generating profit

from short-term (less than one year) fluctuations in price are classified as available-for-trade and fall under

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short-term assets. These assets are measured at fair value; realised/unrealized profit and loss arising from

changes in fair value are included in the income statement for the period in which they arose. The Group

did not possess any investments within the scope of this category in 2011.

B) LOANS AND RECEIVABLES

Loans and receivables are non-derivative financial assets with unchangeable or determinable payments

which are not traded on the active market. They are included under short-term assets, except those with

maturities exceeding 12 months following the balance sheet date. In this case, they are classified among long-

term assets. Loans and receivables are shown in the balance sheet under operating and other receivables

according to paid values while observing the effective interest rate.

C) hELD-TO-MATURITy FINANCIAL INVESTMENTS

Investments with fixed maturities which the Management Board of the Company intends to retain to ma-

turity are classified as investments held to maturity and are classified among long-term assets. The Group

did not possess any investments within the scope of this category in the current period.

D) FINANCIAL ASSETS AVAILABLE-FOR-SALE

Financial assets available-for-sale are those non-implemented financial assets marked as available-for-sale

or those not classified in any other category. They are also valued according to their fair values, if their fair

value can be ascertained. In the event the investment is subject to trade on the securities market, then the

fair value is deemed as the market price. The fair value of a particular investment may also be valuated. Valu-

ations are carried out by accredited business appraisers, who are registered at the Slovenian Institute of Audi-

tors. Revaluation effects on the new fair value either increase or decrease the value of equity - revaluation sur-

plus. Effects of impairment of financial assets increase financial expenses and have an effect on profit or loss.

Those financial assets for which the fair value cannot be established are valued at cost.

The Group assesses whether there is objective evidence that a financial asset or group of financial assets

is impaired on each balance sheet date. In the event of the sale of financial assets available-for-sale, the char-

acteristic of long-term reduction in their fair values below cost is considered an indicator of an impairment

of shares. If such evidence exists for financial asset available for sale, the cumulative loss measured as a

difference between cost and the current fair value shown as an impairment loss in the income statement - is

removed from capital or comprehensive income and shown in the income statement. Reversals of impair-

ments shown in the income statement cannot be performed for capital instruments.

10. DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives are those instruments which are used for protection against exposure to financial risks. They

are used as a tool to protect against a change in the fair value or cash flow of a risk-exposed protected item.

As a subject of trade, it represents an independent financial instrument exposed to risk.

Initially, they are recognized at cost and are subsequently revalued to the fair value. Profit or loss from the

revalued derivative for the protection of the fair value against risk is recognized in profit and loss. Revalua-

tion of a financial instrument which is used for cash flow protection is recognized directly in equity when

the protection is successful, while the unsuccessful part of the profit or loss from the instrument for the

protection against risk is recognized in the income statement.

The Group uses derivative financial instruments to hedge against interest rate exposure. Integrated deriva-

tives must be separated from the host contract and accounted for as a derivative only if the economic features

and risks of the integrated derivative are not closely connected with the economic features and risks of the

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host contract, if a special instrument with the same provisions as the integrated derivatives is sufficient for

the determination of the derivative, and if a complex instrument is measured at the fair value through the

income statement.

11. TANGIBLE FIxED ASSETS

Tangible fixed assets include real estate, equipment and piece inventory. Since 2008 real estate has been

valued using the revaluation model. Prior to this period they were valued at cost. Equipment and piece inven-

tory are carried at cost less any amortisation and impairment losses.

Amortisation is calculated according to the straight-line method. The expected functional useful lives of

individual asset groups comprise:

real estate 20 - 40 years;

plant and machinery 4 - 10 years;

computer hardware 2 - 4 years;

motor vehicles 4 - 8 years;

other equipment 3 - 7 years.

Land is not amortised for it is considered as having an unlimited life. Similarly, assets under acquisition

are also not amortised until they are available for use.

Since the book value of assets is greater than the estimated recoverable amount, assets must be revalued

to the estimated recoverable amount (impairment) – IAS 36. The recoverable value of the asset is the larger

of the following: its fair value decreased by sale expenses, or its value in use.

Profits and losses arising from the disposal of land, buildings and equipment are determined on the basis

of their book values and have an effect on profit and loss. Returnable packaging (drums, bottles and crates)

are shown among tangible fixed assets while observing a useful life of 3 or 5 years.

Costs of financial liabilities for financing investments in tangible fixed assets are capitalized during the

period the investment is being prepared for use. Subsequent costs are included in the book value of the asset

or are recognised as a special assets, which is only suitable if the future economic benefits connected to this

asset will be observed in the Group and if the costs of such an asset can be reliably measured. The book value

of spare parts is not disclosed separately. The costs of all other repair and maintenance work are included in

the Income Statement in the period they occur.


Investment property is property (land and buildings, parts of buildings or both) owned by the Group or

under financial lease for the purpose of earning rent or increasing the value of the property. Investment

property is not used for production or the sale of goods or services, for administrative purposes or for regular

operations.

Investment property is land or buildings, acquired the appreciation of long-term investments or leased out

and not for sale in the near future. Investment property is only recognised as an asset if it is likely that future

economic benefits will flow to the company and if its cost can be reliably measured.

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In 2008 the Group changed from using the cost method to using the fair value model for measuring

investment property. When preparing the annual financial statements a test for signs of impairment and

need for revaluation is conducted each year. Bearing in mind the modified valuation policy on the fair value

model, the revaluation effects (impairments and enhancements) are reflected in the profit and loss account.

13. IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets which have a limited functional life are not amortized and are tested annually for impairment. As-

sets which are amortised are tested for impairment whenever events or circumstances reflect impairment in

an asset. Losses due to impairment are recognised for the surplus of the book value amount over the asset’s

replacement value. The replacement value is higher for fair value assets less costs of sales and value upon

use.

For the purpose of establishing impairment, assets are broken down into their smallest unit for which

cash flows can be defined, independently from other units (cash generating units). The value of goodwill is

assessed annually depending on a need for impairment.


Non-current assets (group for disposal) available-for-sale are those non-current assets for which the book

values are estimated to be reconciled predominantly with their sale in the following twelve months and

which will not be further used. Non-current assets classified as held for sale are measured at the lower of

two values: book value or fair value, decreased by selling costs. On the last day of 2011, the Group disclosed

the investment into the company Večer, d. d. and real estate intended for sale among non-current assets

available-for-sale.

15. INVENTORIES

Inventories are stated at the lower of cost and net realisable value according to the method of weighted

average pricing. The value of finished products and work in progress consists of total manufacturing costs

which includes the costs of processing materials, production labour costs, amortization, services and other

manufacturing costs. The net realizable value is estimated based on customary sales prices decreased by the

costs of conversion and sales.


At initial recognition, operating receivables are shown at fair value, later they are measured based on

paid values using the effective interest rate method less impairment. Impairments of operating receivables

are made when the Group expects that it will not be capable of realising the entire amount of the matured

receivable. The impairment amount represents the difference between the book value and the current value

of (expected) estimated future cash flows discounted by the effective interest rate. The impairment amount

is recognised in profit or loss.

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17. CASh AND CASh EqUIVALENTS

For the cash flow statement, cash and cash equivalents comprise cash on hand, sight deposits at banks

and investments into the money market instruments with no bank overdrafts. Overdrafts of bank accounts

are included under short-term financial liabilities in the balance sheet.

18. PROVISIONS

Provisions are recognised when the Company shows a legal obligation as a result of past events for which

a probable likelihood exists in the future that it will have to settle the liability and when a reliable estimate of

the liability can be made. Provisions may not be formed to cover future losses from operations.

19. PROVISIONS FOR SEVERANCE PAy AND jUBILEE AwARDS

The net liabilities of the Group in connection to long-term benefits under years of service, except for pen-

sion schemes are the earnings which employees obtain in exchange for their service during current and

previous periods. Such liabilities are calculated using the method of foreseen significance of units and are

discounted to their current values.

20. DEFERRED TAxES

Deferred taxes are shown in their entirety while observing liability methods based on temporary differ-

ences between taxes associated with assets and liabilities and disclosed tax amounts in the consolidated fi-

nancial statements. Deferred tax is accounted for at the acquisitions with respect to the initial recognition of

assets and liabilities which have no influence either on the operating profit, tax profit or loss. Deferred tax is

calculated using the tax rate (and legislation) as prescribed by law and valid on the balance sheet date which

is expected to be used at the time the deferred tax is realised or liability for deferred tax settled.

Deferred tax receivables are recognised if a possibility exists that a tax gain is expected in the future using

temporary differences. Deferred tax liabilities are recognised upon revaluation of assets. Deferred tax is dis-

closed on the basis of temporary differences arising from investments in subsidiary companies, except when

time balance of the closure of temporary differences is under the Group’s control and there is a probability

that temporary differences will not be cancelled in the near future. Deferred tax liabilities are shown as a

set-off amount in in the balance sheet. The tax rate in 2011 comprised 20%.

21. OPERATING LIABILITIES

Operating liabilities comprise credit to suppliers for purchased merchandise or services and liabilities

to employees, the State, owners or others. Short-term accrued costs and deferred revenues are also treated

as operating liabilities. Liabilities are recognised if it is likely that due to their settlement, factors enabling

economic benefit are decreased and the amount for settlement can reliably be measured. They are initially

recognised at fair value, and later measured according to realised payments using effective interest rates.

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22. FINANCIAL LIABILITIES

Financial liabilities are recognised at fair value upon their arising, exclusive of any arising transaction

costs. In the upcoming period, financial liabilities are measured according to their realised payment using

effective interest rates. Any difference between receipts (exclusive of transaction costs) and liabilities are

recognised in profit or loss throughout the entire period of the financial liability.

23. ShARE CAPITAL

Ordinary shares are classified under capital. Transaction costs directly associated with the issue of new

shares which are not connected to the acquisition of the company are shown as a decrease in capital. Any

surpluses over the fair value of received paid-in amounts in excess of the book value of newly issued shares

are recognised as paid-in capital surpluses.

24. OwN ShARES

If the Company reacquired its own shares (PILR)in the business year, the paid amount inclusive of trans-

action costs, exclusive of tax is deducted from total capital as own shares (treasury shares) until these shares

are removed, reissued or sold. The Company must form reserves for own shares in the identical amount for

that business year. At the same time it must form reserves for own shares for PILR shares owned by sub-

sidiaries. Reserves for own shares are released when its own shares are disposed of or removed, crediting

the source from which they were formed. Upon the sale of such shares, the difference between the sale and

book value of own shares are directly calculated into equity capital and have no effect on profit or loss. Own

shares is used for the purposes defined in Article 247 of the Companies Act.

25. DIVIDENDS

Until approved by the General Meeting of Shareholders, foreseen dividends are treated as retained earn-

ings.

26. REPORTING By SEGMENTS

Business segments are formed by products or services which on the basis of risk and benefits, differ from

the products and services of other segments. Regional (geographic) segments comprise products or services

within a specific economic environment which are exposed to risk and benefits which differ from risk and

benefits in other economic environments.

27. RESERVES

The tax statements of Pivovarna Laško, d. d., and companies of the Laško Group in Slovenia are drawn up

in compliance with the International Financial Reporting Standards as adopted by the EU and the Corporate

Income Tax Act.

The corporate income tax rate in 2010 comprised 20%. The tax base is the profit as a surplus of revenues

over expenses according to the Corporate Income Tax Act whereby revenues and expenses shown in the

income tax statement established according to law or accounting standards are used as the tax base.

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The tax base is decreased for recognized tax relief and for covering a loss brought forward.

28. ASSESSMENT OF ThE VALUES OF INDIVIDUAL ITEMS

On the basis of assessments of the management, appraisers, actuaries and other experts, the following

assets and liabilities were assessed: intangible fixed assets, real estate, investment property, financial invest-

ments and provisions. As this regards an assessment, there is some uncertainty regarding the attainment of

specific assumptions used at valuation.

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All intangible assets are measured according to the cost model. The brand names and goodwill items rep-

resent the largest value amongst long-term intangible fixed assets; the value of each is every year assessed

and the possible need for impairment determined. Due to the planned sale of the Delo Group, the entire

value of its brands was transferred among non-current assets available-for-sale in 2010 in accordance with

IFRS 5. Currently, no reason remains for the classification of the investment among assets available-for-sale

since it appears that the investment in its current form can not be sold in the short-term (within one year) at

a reasonable price therefore the brands of Delo, d. d. were transferred back among intangible assets.

Verification of the fair values of the brands was performed on 31 December 2011. Verification of the fair

value of the brands of Delo, d. d. was performed by a certified business appraiser registered with the Slove-

nian Institute of Auditors. The method of the current value of expected free cash flows without including

debt was used in assessing the value of the company.

Management’s assessment, based on an assessment of the company’s value, which was performed by a

certified business appraiser in 2010 and the business results in 2011 and envisaged projections of the value of

the Company in the coming years was used as the basis for verifying the need for impairment of the value of

the brands and goodwill of Pivovarna Union, d. d. The value of the brands and goodwill of Pivovarna Union,

d. d. as at 31 December 2011 was EUR 46,461,058 and the value of its goodwill EUR 17,197,380.

Based on valuations of Delo, d. d., in its consolidated financial statements, the Group shows an impair-

ment of the brands of Delo, d. d. in the amount of EUR 837,647. The value of the brands of the Delo Group

as at 31 December 2011 amounted to EUR 18,677,374.

PLEDGING OF BRANDS

For the purpose of insuring short-term loans from banks, the Company pledged brands in the amount

of EUR 50,000,000 consisting of a portion of the assets of the Group and in accordance with accounting

standards, own brands are not disclosed in the financial statements. The brands of the parent company Pivo-

varna Laško, d. d. were appraised by a certified business appraiser in 2010. The brands of the subsidiaries

Pivovarna Union and Delo subsidiaries have been pledged also within the scope of pledges on the invest-

ments in these companies.

ESTIMATED VALUE OF ThE COMPANy DELO, D. D.

The valuation of Delo, d. d. which also included a value assessment of its brands was carried out by an

accredited business appraiser registered with the Slovenian Institute of Auditors.

The most important elements and findings during the valuation procedure are as as follows:

• The subject of the valuation was the majority ownership share of the company (100%), enabling the ma-

jority owner to impact the process of adopting decisions on bodies of the company management as well

as to impact the formulation of strategy and business decisions (on investments, borrowing and so on).

The majority owner may also implement status changes,



value equals the sum of all future benefits which it brings to its owner(s).

• The method of the current value of expected free cash flows without including debt was used in assessing

the value of the company. In this method, first the current value of expected free cash flows without pay-




252

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method and observed only the

• required rate of return on equity capital, which for Delo is:

rDelo = (4.0% + 7.0% x 0.98 + 1.20%) x 1.10 = 13.3%,

• the required rate of return for total (equity + debt) capital for Delo is (WACC):

rWACC = 13.3% x 0.68 + 6.5% x 0.32 x (1 - 0.20) = 10.7%.

• The appraiser used assessments of operations of 2011 and the 2012 Business Plan of Delo for prepar-





• The 2012 Business Plan envisages modest economic growth in Slovenia (1%) and subsequently, and

extremely difficult year for media activity. A further decline in sold copies and low advertising revenues

is also foreseen with no increases in the price of editions envisaged in the plan. The 2012 Business Plan

is mainly focused on streamlining costs with the level of revenues remaining unchanged. The Business

Plan is relatively conservative from the aspect of revenues, while the envisaged streamlining of costs is

a necessity. Negotiations with labour unions regarding the aforementioned have not yet been concluded.

A gradual improvement of the economic situation and renewed growth of expenditures for advertising

through print media is envisaged for the period 2013-2016.

• Earnings before interest and taxes (EBIT) for 2011 is estimated at EUR 0.2 million (0.4% of sales rev-

enues). EBIT in 2012 due to the streamlining of costs and envisaged savings of EUR 1.6 million is fore-

casted at EUR 1.9 million according to the optimistic scenario. Gradual growth of EBITDA and EBIT of

Delo is envisaged for the period 2013-2016 due to a growth in revenues, particularly from advertising and

growing prices for a portion of the company’s costs are fixed with certain reserves possible particularly in

the area of labour costs. The EBIT share in sales revenues up to 2016 will rise at a level of 9.2% accord-

ing to the optimistic scenario and to 7.6% according to the pessimistic scenario. The five-year average

EBIT margin for European companies in the area of printed media publishing comprises 10.8% while

comparable companies in the region (particularly Croatia) achieved a lower EBIT margin in 2010 and are

restructuring with the aim of of streamlining costs (especially labour costs).

• Despite the high level of indebtedness, a portion of the assessed value originates from the surplus of fi-

nancial investments and surplus assets in the company Delo. Real estate and investment property in the

amount of EUR 927 thousand, the subsidiary Izberi in the amount of EUR 780 thousand and financial

investments in the amount of EUR 10,365 thousand were considered surplus assets by the appraiser.

• The control premium of 0% was observed since future yield for the average majority strategic owner have

already in principal been implemented.

• A discount of 15% for the lack of liquidity was taken into consideration in assessing the value of the ma-

jority ownership stake (the Laško Group has a 100% ownership stake). The market share of the company

in the market (leading newspaper agency), strength of its brands as well as the strategic and political

position of the company were also taken into account.

253

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Based on all the denoted assumptions, the recoverable value of the 100% equity stake in Delo, d. d. on 31

December 2011 has been assessed for the purpose of verifying impairment in accordance with IAS 36, which

is identical to the value if used, namely:

EUR 34,290,000

with a possible value range of between EUR 29,820,000 according to the pessimistic scenario and

EUR39,490,000 according to the optimistic scenario or

EUR 51.4 per share

with a possible value range of between EUR 44.1 per share according to the pessimistic scenario and EUR

59.6 per share according to the optimistic scenario.

254

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,633

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pro

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256

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PIV

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In 2010 due to the commencement of the procedure of divesture of investments, the Group transferred

tangible assets of the Delo Group and Jadranska pivovara – Split, d. d. to non-current financial assets avail-

able for sale in accordance with IFRS 5. Since no reason remains for the classification of the investments

among assets available-for-sale since it appears that the investment in its current form can not be sold in the

short-term (within one year) at a reasonable price, the tangible assets of the aforementioned were reclassified

among the tangible assets of the Group in 2011.

The divestment of tangible fixed assets represents the sale and write-off of such assets. The Group did not

financially lease any of its tangible assets.

An appraisal of the Group’s real estate was carried out by a certified real estate appraiser on 31 December

2011. The negative effects of the revaluation in the amount of EUR 7,375,539 are disclosed as operating

expenses of which EUR 2,251,248 is deducted due to discontinued operations. The positive effects of the

revaluation in the amount of EUR 5,444,119 resulted in a change to the value of capital and increased the

revaluation surplus.

The Group realized a profit of EUR 66,347 from the sale of tangible fixed assets which is shown as a reval-

uation of operating revenues and a loss of EUR 51,209 which is shown as a revaluation of operating expenses.

The Group pledged tangible fixed assets the value of which on 31 December 2011 amounted to EUR

123,612,816 to insure long- and short-term loans. The book value of pledged real estate amounted to EUR

108,872,621 and of pledged equipment EUR 19,144,206.

As shown in the Business Report of this Annual Report, denationalization claims have been initiated

against Radenska, d. d. The denationalization beneficiaries entered a notice of impending action in the land

registry denoting disputes with regard to all land parcels which are the subject of the denationalization pro-

cedure. The entry of the notice of dispute was also carried out for the aforementioned brands of Radenska,

d. d., Radenci.

As at 31 December 2011 the Group shows a liability for tangible fixed assets in the amount of EUR 545,428.

257

LA

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year 2011


ACQUSITION COST

1 January 2011 1,090,980 4,494,245 5,585,225

Revaluations - enhancements/impairments 123,119 1,635,281 1,758,400

Transfer of equipment from 2010 - (414,962) (414,962)

Value adjustment of transfer from PPE from 2010 - 123,484 123,484


available-for-sale) - 2,943,324 2,943,324

Transfer to non-current assets

available-for-sale - DELO - 80,159 80,159

31 December 2011 1,214,099 8,861,531 10,075,630


1 January 2011 - 928,741 928,741

Depreciation - 404 404

Transfer of value adjustments on equipment - (213,313) (213,313)


available-for-sale) - 240,613 240,613

Transfer from non-current assets

available-for-sale - DELO - 1,482 1,482

31 December 2011 - 957,927 957,927

CURRENT VALUE

31 December 2011 1,214,099 7,903,604 9,117,703

1 January 2011 1,090,980 3,565,504 4,656,484

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year 2010


ACQUSITION COST

1 January 2010 1,158,911 6,943,312 8,102,223

Revaluations - enhancements/impairments (79,717) (268,385) (348,102)

Transfer from property, plant and equipment 11,786 996,971 1,008,757

Transfer to assets available-for-sale - (2,943,324) (2,943,324)

Decrease in value - (109,465) (109,465)

Transfer to non-current

assets available-for-sale - FRUCTAL - (44,705) (44,705)


available-for-sale - DELO - (80,159) (80,159)

31 December 2010 1,090,980 4,494,245 5,585,225

CUMMULATIVE VALUE ADJUSTMENTS

1 January 2010 - 703,827 703,827

Depreciation - 7,217 7,217

Impairment - 368,721 368,721

Divestments - (5,388) (5,388)

Transfer from property, plant and equipment - 123,484 123,484

Transfer to assets available-for-sale - (240,612) (240,612)


available-for-sale - FRUCTAL - (27,026) (27,026)


available-for-sale - DELO - (1,482) (1,482)

31 December 2010 - 928,741 928,741

CURRENT VALUE

31 December 2010 1,090,980 3,565,504 4,656,484

1 January 2010 1,158,911 6,239,485 7,398,396

In 2011 the Group generated EUR 296,287 in revenues from rents and EUR 514,257 in expenses from

investment property. On the basis of an appraisal, the Group demonstrated impairments of investment

property worth EUR 124,760 and revaluation of operating revenues of EUR 1,883,150.

Investment property also includes property which is not used for carrying out the basic activity but leased

out by the Group. The following real estate property is recorded at Pivovarna Laško, d. d. as real estate property

investments: Sports Hall Tri Lilije, Hotel Hum, Hotel Savinja and Restaurant Grad Tabor and holiday capaci-

ties; at Radenska, d. d., the administrative building in Radenci and business buildings in Boračevo, Petanjci

and Sarajevo The investment property was assessed by a certified real estate appraiser on 31 December 2011.

The Management Board commenced with the procedure of selling the catering facilities Hotel Hum and

Hotel Savinja and Tri lilije sports arena in the beginning of 2011. The management of the subsidiary Raden-

ska has been endeavouring to sell the business building in Radenci for a number of years. The procedures

for the divestment of investment property, which represent unnecessary business assets, have not been suc-

cessful so far, therefore a transfer from non-current assets available-for-sale back to investment property was

made. The activities for their divestment are continuing. The companies will for the purpose of ensuring

liquidity, if required forcibly sell or auction off real estate which is unnecessary for business.

In order to ensure long-term and short-term loans, the Group pledged investment properties in the

amount of EUR 4,784,910.

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4. A. LONG-TERM FINANCIAL INVESTMENTS IN SUBSIDIARIES

Share in

( in EUR ) capital 2011 2010

STAKES IN GROUP COMPANIES

In Slovenia:

Radenska Miral, d. o. o., Radenci 100.00 % 160,363 -

Firma Del, d. o. o., Laško 100.00 % 7,427 7,427

167,790 7,427

Abroad:

Radenska, d. o. o., Zagreb 100.00 % 4,907 4,907

Radenska, d. o. o., Beograd 100.00 % 250 250

Laško Grupa, d. o. o., Zagreb 100.00 % - 2,707

Laško Grupa, d. o. o., Sarajevo 82.68 % 191,856 232,241

197,013 240,105

Transfer to assets available-for-sale - FRUCTAL - (40,384)

- (40,384)

Total 364,803 207,148

In accordance with IAS 27 the Company valuates long-term financial investments in subsidiaries accord-

ing to the cost model.

Due to their material irrelevance, the following companies are not included in the consolidation: Firma

Del, d. o. o., Laško, Laško Grupa, d. o. o., Sarajevo and Radenska Miral, d. o. o., Radenci, Radenska, d. o. o.,

Zagreb and Radenska, d. o. o., Belgrade. All other subsidiary companies are consolidated using the method

of full consolidation.

Long-term financial investments in subsidiaries in 2011 increased by EUR 160,363 EUR, due to the capital

increase in Radenska Miral, d. o. o., Radenci and decreased by EUR 2,707 due to the inclusion of the Laško

Grupa, d. o. o., Zagreb in the consolidation and due to the 17.32% stake in the company Laško Grupa, d. o. o.,

Sarajevo, owned by Fructal, d. d.

4. B. LONG-TERM FINANCIAL INVESTMENTS IN ASSOCIATED COMPANIES

Share in capital/ voting ( in EUR ) rights 2011 2010

Thermana, d. d., Laško 20.63 % - -

Poslovni sistem Mercator, d. d., Ljubljana 24.34 % - 132,934,216

Slopak, d. o. o., Ljubljana 29.22 % - 317,148

Birra Peja, Sh. a., Peć, Kosovo 39.55 % - -

Transfer to short-term financial

investments - MELR - (132,934,216)

Total - 317,148

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Investments in subsidiaries are valuated in accordance with the capital method. The value of investments

increases or decreases by the corresponding part of profit or loss. Revaluation to a higher fair value in accord-

ance with IFRS is not recognized. The fair value of investments traded on the organised securities market

is recognised on the basis of the listed price at the Ljubljana Stock Exchange whereas for other investments,

fair value is established based on a value assessment.

As at 31 December 2011 the Group showed the equity investment in a 39.55% stake of the company Birra

Peja, Sh. a., Peć, Kosovo (700 shares), 20.63% stake in the company Thermana, d. d., Laško (645,003 shares)

and 38.96% stake in the company Slopak, d. o. o., Ljubljana among long-term financial investments. In 2011,

due to the poor business results and poor financial situation of the company, the value of the investment

in Slopak, d. o. o. was completely impaired. Based on the appraisal of certified business appraisers, the

investments in the companies Thermana, d. d., and Birro Pejo, Sh. a. were assessed at EUR 0 for financial

reporting purposes on the last day of last year. A revaluation of the aforementioned investments was not

made on 31 December 2011 because the assumptions, on which valuations were made in the previous year,

had not changed.

The investment in MELR shares was no longer shown among financial investments in subsidiaries on

the last day of 2011 since the management of the Laško Group assesses that they no longer have a significant

influence on Poslovni sistem Mercator therefore the investment is no longer valuated using the capital

method since 1 January 2011. Due to the abandonment of the capital method of valuation the investment was

valuated according to the stock price of EUR 147.00 on 31 December 2011 and amounts to EUR 129,189,627

and is shown among short-term financial assets available-for-sale. The negative effects from the revaluation

of the investments in 2011 affect profit and loss.

INVESTMENT IN ThE SUBSIDIARy ThERMANA, D. D.

On 31 December 2011 Pivovarna Laško, d. d., owned 645,003 shares of Thermana, d. d., representing a

20.63% ownership stake in the aforementioned company. The original purchase value of the investment

comprised EUR 6,897,921. Based on a appraisal, the Group implemented an impairment of EUR 5,303,921

on investments in 2009, and an impairment of the remainder, i.e. EUR 1,594,000 in 2010. The impairment

was recognised based on the valuation from 2009 and in consideration of whether projected operations had

been observed in the valuation. Thermana also acquired additional loans in 2010 which will have a nega-

tive effect on cash flows in future years. Thermana, d. d. generated a net profit of EUR 201,439 in 2011. The

total amount of short-term liabilities of Thermana, d. d. amounted to EUR 83,055,352 on 31 December 2011

while short-term assets amounted to EUR 54,336,247. The ratio between foreign and own sources of assets

amounts to 65 : 35 to the benefit of foreign sources.

The investment is undergoing a sales procedure. Management awarded the mandate for the organisation

of the sale to NLB, d. d., Ljubljana. An agreement on the implementation of the sale had been prepared in

2010 and forwarded to owners of more than 50% of the investment. The procedure for acquiring the con-

sent of subscribers was carried out in February 2011. On 28 February 2011 the agreement was signed and

reconciled by NLB, d. d., Pivovarna Laško, d. d. and Zavarovalnica Triglav, d. d., which together represent a

44.85% ownership stake in Thermana, d. d. Reconciliation activities with the remaining potential signers of

the agreement on the implementation of sales of shares continued in 2011.

Pivovarna Laško, d. d. signed the Agreement on the joint sale of shares of Thermana (51.96% stake) on 10

October 2011. NLB, d. NLB, d. d. as the sales broker commenced with selling activities. A public tender for

the sale of the investment was published in the newspaper Delo on 28 November 2011 and in December, a

public invitation together with a teaser was sent to over 100 funds and 100 companies from the sector.

INVESTMENT INTO ThE ASSOCIATED COMPANy BIRRA PEjA, Sh. A., PEć

The company Birra Peja, Sh. a., Peæ is an associated company of Pivovarna Union, d. d. the latter of whom

263

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owns 700 shares or a 39.55% stake in the associate company. As at 31 December 2011 the value of all assets

of the company Birra Peja, Sh. a. totalled EUR 29,207,494 whereas long-term and short-term liabilities

totalled EUR 26,371,851. The company realised total revenues of EUR 18,744,001 in 2011 and a net loss of

EUR 726,236.

The Group impaired the investment and derivative financial instrument (option for the acquisition of an

additional stake) in this company in full in 2010. A valuation was carried out on the last day of 2010 by an

accredited business appraiser registered with the Slovenian Institute of Auditors. Using the method of the

current value of expected free cash flows, the appraiser estimated that on 31 December 2010 the market value

of the 39.55% equity stake in the company Birra Peja, Sh. a., Peć for financial reporting purposes equalled

zero. A revaluation of the aforementioned investments was not made on 31 December 2011 because the as-

sumptions, on which valuations were made in the previous year, had not changed.

The stake in Birra Pei, Sh. a. was still regarded as an investment in an associate company on 31 December

2011 Factor banka, d. d. had exercised its put option and sold an 18% stake in Birra Pei, Sh. a., to Pivovarna

Union, d. d. in December 2011. Pivovarna Union, d. d. only began to manage the company in January 2012.

INVESTMENT IN ThE SUBSIDIARy SLOPAK, D. O. O., LjUBLjANA

Pivovarna Laško, d. d. possessed a 29.22% stake of the company Slopak, d. o. o., Ljubljana on the last day

of 2011. In 2011, the investment decreased to EUR 79,287 due to the divestment of the Fructal Group, which

owns a 9.74% stake in the denoted company. The residual value of investment in the amount of EUR 238,131

was impaired in 2011 in full due to the negative result and poor financial situation of the company. Slopak

generated a loss of EUR 496,095 in 2011.

The total assets of Slopak, d. o. o., Ljubljana amounted to EUR 4,779,111 on 31 December 2011 while li-

abilities totalled EUR 4,108,586. The ratio between foreign and own funds amounts to 86 : 14 to the benefit

of foreign funds.

4. C. FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Other investments in shares and stakes at acquisition cost 796,053 727,345

Other investments in shares and stakes at fair value 443,510 568,136

Total 1,239,563 1,295,481

Transfer to assets available-for-sale - DELO - (577,032)

Total 1,239,563 718,449

Long-term financial assets are defined as investments available-for-sale. For investments whose fair values

can be reliably measured, the fair value of profits and losses are directly reflected in equity capital.

Long-term financial investments available-for-sale, valued at fair value amounted to EUR 796,053 with the

investment in the company Davidov hram, d. o. o. making up EUR 240,000 of this amount, the investment

in Skupna pokojninska družba, making up EUR 205,257, the investment in the company Geoplin, d. o. o.

making up EUR 104,485, the investment in Novi center Brdo EUR 103,824, in Gorenjski glas, d. d., EUR

49,685, in Radio tednik Ptuj EUR 20.992 and other minor investments. Long-term investments available-

for-sale which are valued at fair value were disclosed in the amount of EUR 443,510 on 31 December 2011 and

mainly include investments in mutual funds and some smaller investments.

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The fair value of investments that are valued at cost could not be assessed because of the insignificant

share in ownership, so their value considering the situation on the last day of the previous year has not

changed.

MOVEMENT OF FINANCIAL ASSETS AVAILABLE-FOR-SALE

in EUR ) 2011 2010

Balance as at 1 January 718,449 30,829,924


Transfer to DFN in associated

companies (MELR) + Thermana, d. d. - (317,148)

Acqusitions 195,167 825

Revaluation (250,896) (1,238,150)

Transfer to non-current assets available-for-sale - (26,896,371)

Transfer to non-current assets available-for-sale on 31 December 2010 - (724,539)

Transfer to non-current assets available-for-sale - Delo 577,032 (577,032)

Divestments (189) (359,060)

Balance as at 31 December 1,239,563 718,449

5. LONG-TERM LOANS

( in EUR ) 2011 2010

Long-term loans to associated companies 10,554,498 9,871,580

Other long-term loans 17,624,612 17,728,740

Less value adjustments (17,100,000) (17,100,000)

Transfer to assets available-for-sale - SPLIT - (56,075)

Total 11,079,110 10,444,245

The Group disclosed loans to Pivovarna Union, d. d. and the prescribed interests of the company Birra

Peja, Sh. a., Peć among long-term loans which amounts to EUR 10,554,498. Loans are secured through bills

and liens on real estate. Interest rates range from the 6-month EURIBOR + 2.98% to 6.1%. The last loan

instalments mature in 2014.

Other long-terms loans primarily refer to long-term housing loans granted by the Group to its employees.

The interest rate on average comprised a 6-month EURIBOR + 1%.

During long-term loans are disclosed including The loans that were made in the past to the company

Center naložbe, d. d. in the amount of EUR 17.1 million by the companies Radenska, d. d., and Pivovarna

Union, d. d. which were impaired in their entirety in 2009 are shown among long-term loans.

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( in EUR ) 2011 2010

Long-term receivables from financial leases 751,266 573,467

Other long-term operating receivables 125,880 144,541

Transfer to assets available-for-sale - DELO - (661)

Total 877,146 717,347

Long-term financial receivables comprised EUR 751,266 and refer to equipment for the production of

the Bandidos brand given under financial lease to a partner from Belarus (EUR 517,100) and for packaging

given under financial lease to the company EUR 234,166). The value of other long-term operating liabilities

amounted to EUR 125,880. Receivables from financial leasing mature on 31 December 2014.

7. LONG-TERM DEFERRED TAx RECEIVABLES

Long-term receivables and liabilities for deferred tax are calculated on the basis of temporary differences

with consideration of liability method and tax rate valid in the year the receivables or liabilities for deferred

tax are realized. The tax rate for the calculation of corporate income tax comprised 20% in 2011.

(in EUR ) 2011 2010

Long-term deferred tax receivables 46,472,483 40,283,165

Long-term deferred tax liabilities (15,770,226) (11,349,433)

Net long-term deferred tax receivables 30,702,257 28,933,732

As at 31 December 2011 the Company showed net long-term deferred tax receivables in the amount of EUR

30,702,257 which is EUR 1,768,525 less than in the previous year.

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Fair Liabilities to value ( in EUR ) Provisions employees (financial assets) Other Total

DEFERRED TAX RECEIVABLES

1 January 2010 115,989 1,305,959 41,894,025 1,166,951 44,482,924

Change in the income statement 12,045 (138,092) 2,053,962 328,281 2,256,196

Change in comprehensive income - - 273,465 - 273,465

31 December 2010 128,034 1,167,867 44,221,452 1,495,232 47,012,585


available-for-sale - FRUCTAL (95,576) (171,338) (3,119,887) (514,039) (3,900,840)


available-for-sale - DELO - (383,719) (2,272,041) (172,820) (2,828,580)

31 December 2010 32,458 612,810 38,829,524 808,373 40,283,165


available-for-sale - DELO - 383,719 2,272,041 172,820 2,828,580

Change in the income statement (38,391) 136,050 2,094,293 655,981 2,847,933

Change in comprehensive income - - 141,228 - 141,228

Adjustment with elimination

due to sale of FRAG 95,576 21,950 - 254,049 371,575

31 December 2011 89,643 1,154,529 43,337,086 1,891,223 46,472,481

As at 31 December 2011 deferred tax receivables from the impairment of financial investments in the

amount of EUR 43,337,086, from liabilities to employees for severance pay, jubilee awards and unused holi-

day leave in the amount of EUR 1,154,529, from provisions in the amount of EUR 89,643 and other in the

amount of EUR 1,891,223 are shown under long-term deferred tax receivables.

Receivables from tax losses of the subsidiary Jadranska pivovara – Split, d. d. which amounted to EUR

29,048,173 are not shown under long-term deferred tax receivables because the subsidiary does not expect

any taxable income in the future under this heading. Deferred tax receivables due to tax losses using a 20%

tax rate amounted to EUR 5,809,635.

Long-term deferred tax receivables increased by EUR 5,342,019 in comparison to the previous year. De-

ferred tax receivables arising from the revaluation of financial investments to fair value especially increased,

namely by EUR 4,626,562. Deferred tax receivables arising from employee benefits increased by EUR

541,719 and due to other headings by EUR 1,140,035.

The increase in deferred tax receivables in the amount of EUR 2,847,933 EUR increases profit or loss,

while the increase in the amount of EUR 141,228 increases comprehensive income and is reflected directly

in the statement of changes in equity.

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Fair value Fair value Fair value (land and (financial (brand (in EUR) buildings) assets) names) Other Total

DEFERRED TAX LIABILITY

1 January 2010 4,208,904 181,769 19,638,902 112,605 24,142,180

Change in the income statement (11,746) (34,319) (3,793,887) 28,291 (3,811,661)

Change in comprehensive income 53,688 (39,544) - (41) 14,103

31 December 2010 4,250,846 107,906 15,845,015 140,855 20,344,622


available-for-sale - FRUCTAL (762,910) (36,442) (2,466,967) - (3,266,319)


available-for-sale - DELO (1,643,034) - (4,085,836) - (5,728,870)

31 December 2010 1,844,902 71,464 9,292,212 140,855 11,349,433

Change in the income statement 20,100 - (4,685,069) 272,716 (4,392,253)

Change in comprehensive income 673,827 (70,726) - - 603,101


available-for-sale - DELO 1,643,034 - 4,085,836 - 5,728,870

Adjustment with elimination

due to sale of FRAG 14,106 - 2,466,967 - 2,481,073

31 December 2011 4,195,969 738 11,159,946 413,571 15,770,224

Long-term deferred tax liabilities as at 31 December 2011 amounted to EUR 15,770,224 and regards the

revaluation of Pivovarna Union brands in the amount of EUR 9,292,212 and Delo brands in the amount of

EUR 1,867,734, the revaluation of the real estate of the Group in the amount of EUR 4,195,969, the value

of the established revaluation surplus from financial assets available-for-sale in the amount of EUR 738 and

other revaluations in the amount of EUR 413,571. Long-term deferred tax liabilities in the statement of the

financial position were decreased by the amount of deferred tax receivables.


( in EUR ) 2011 2010

Real estate available-for-sale 770,939 3,634,713

Other non-current assets available-for-sale 8,190,000 283,049,695

Total 8,960,939 286,684,408

As at 31 December 2011, the value of non-current assets available-for-sale amounted to EUR 8,960,939.

The investment in the company Večer, d. d. in the amount of EUR 8,190,000 and business warehouse in

Ljubljana in the amount of EUR 770,939 are shown among non-current assets available-for-sale due to their

planned sale in 2011.

The value of non-current assets available-for-sale decreased by EUR 277,723,469 in 2011. The reduction

relates to the sale of the assets of the Fructal Group for EUR 67,052,031, the transfer of assets back to the

Delo Group to individual assets in the amount of EUR 63,063,431, the transfer of assets of the company

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Jadranska pivovara – Split, d. d. back to the individual assets in the amount of EUR 10,821,113, the transfer of

the investment in Poslovni system Mercator back to shor-term assets available-for-sale in the amount of EUR

132,934,216, the impairment of investment in the company Večer, d. d., in the amount of EUR 988,904 and

the reduction in the value of real estate available-for-sale in the amount of EUR 2,863,774. Due to the un-

successful procedures for the sale of MELR shares and forecasts of the deteriorating operations of Poslovni

sistem Mercator, the Group permanently impaired MELR shares to the stock price of EUR 147 EUR per share

and disclosed the investment among current assets available-for-sale.

In 2010, the investment in Delo, d. d. was disclosed among short-term assets available-for-sale in accord-

ance with IFRS 5 due to the planned sale thereof. Currently, no reason remains for the classification of the

investment among assets available-for-sale since the investment cannot be sold in its current form. Proce-

dures for streamlining operations and a restructuring project are currently being implemented in Delo, d. d.

It is estimateed that the probability of selling the denoted investments will be significantly higher following

implementation of the restructuring processes. The gradual closing of the company Jadranska pivovara, d. d.

is being carried out.

In 2011 the denoted provisions decreased by the costs of amortisation in the amount of EUR 2,863,774.

The reduction in value of EUR 2,702,712 regards the transfer of real estate (Hotel Hum, Savinja Hotel) for

which management estimates that no reasons for their classification in accordance with IFRS 5 remains. Ac-

cording to the appraisal, the value of the warehouse and office building in Ljubljana decreased by EUR

161,061.

Since the Group is selling the assets of companies that will be the subject of sale in 2011 at fair value, valu-

ations of the individual companies were prepared on 31 December 2011.

FINANCIAL INVESTMENT IN ThE COMPANy VEčER, D. D., MARIBOR

A) ESTIMATED VALUE OF ThE COMPANy VEčER, D. D., MARIBOR

Valuation was carried out by an accredited business appraiser registered with the Slovenian Institute of

Auditors.

The most important elements and findings during the valuation procedure as as follows:

• The subject of the valuation was the majority ownership share of the company (79.243%), enabling the

majority owner to impact the process of adopting decisions on bodies of the company management as

well as to impact the formulation of strategy and business decisions (on investments, borrowing and so

on). The majority owner may also implement status changes,



value equals the sum of all future benefits which it brings to its owner.

• The method of the current value of expected free cash flows without including debt was used in assessing

the value of the company. In this method, first the current value of expected free cash flows without pay-






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method and observed only the The estimated value of 1 share of equity capital of the company Večer for

the majority shareholder based pm comparable companies ranges between EUR 15 and 62. The lowest

value achieves the assessed values based on the MVIC / EBIT multiplier, reflecting the lower current

profitability of Večer. The average value calculated on the basis of all the methods is EUR 36.4, which is

within the range of the market value, estimated according to the DCF method (closer to the pessimistic

scenario),

• The required return on equity is:

rVečer = (4.0% + 7.0% x 1.02 + 1.14%) x 1.10= 13.5%,

• The required rate of return for total (equity + debt) capital for Večer is:

WACCVečer = 13.5% x 0.66 + 6.0% x 0.34 x (1 - 0.20) = 10.5%,

• The appraiser used assessments of operations of 2011 and the 2012 Business Plan of Večer for prepar-





The plans of the company had been relatively realistic in previous years.

• A fall in sales revenues is envisaged for 2012. The company foresees in 2012 primarily the preparation

of appropriate multimedia product offerings, restructuring, and computerization to optimize business

processes and the further improvement of the regional offer, all in order to improve the starting position

upon the transition to a new type of newspaper offer in the future. The growth in output in the period

2013-2016 is dependant on the growth of advertising and circulation revenues, partially on the acquisi-

tion of new users, editions and price increases and partially on new media content (mobile platforms

and portals) and new projects (e-publishing, e-content, Večer Plus). Within the scope of analyses of the

branch, it was found that local or regional newspaper level with specific regional content (TV, Internet)

have the greatest possibility of maintaining or increasing the number of subscribers. Thus an increase

in sales revenues of 3 - 4% according to the optimistic scenario or

• operating costs (towards EBIT) planned in accordance with the plan for 2012 and as follows for the period

2013-2016:

• costs of materials and services are planned in the same percentage tied to revenues from sales

without advertising;

• with regard to labour costs, the growth of wages is expected to equal 2% of sales revenues with

the number of employees further reduced by 2 employees in 2013, and later, an additional 165

employees;

• depreciation for all years is projected at the level for 2012 (EUR 243 thousand);

• revaluation adjustments of fixed assets are planned at 0.2% of sales revenues and the same ap-

plies for operating expenses;

• the level of operating profit (EBIT) in sales revenues in the period 2012-2016 ranges between

1.8% and 7.4% according to the optimistic scenario and between 1.8% and 5.2% according to the

pessimistic scenario; The operating forecast takes into account a gradual improvement of busi-

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ness and growth of the EBIT / EBITDA margins, primarily due to growth in advertising revenues

and labour costs which will not substantially increase if revenues increase; The five-year average

EBIT margin for European companies in the area of printed media publishing comprises 10.8%

while comparable companies in the region (particularly Croatia) achieved a lower EBIT margin

in 2010 (3.4%) and are restructuring with the aim of of streamlining costs (especially labour

costs).

• The existing tax legislation, under which income tax comprises 20%, was also considered in the

calculation of income tax. Part of the deferred tax receivables from long-term and short-term

investments (amounting to EUR 14 thousand) and tax effect of losses on sales of investments

below their book value (Dnevnik) were also considered in the calculation of income tax for 2012

and part of 2013.

• Investments are planned in an amount that would allow planned productivity improvements

and allow maintenance of technological equipment at the required level Večer does not possess

its own printing facilities, so that the historical and projected investments are mainly computer

equipment and software. The company predominantly envisages investments into computer

hardware and software for 2012. This will conclude the multi-year project in the editorial-infor-

mation system, so in the next few years, major investments in this area are not envisaged with

investments equal to the depreciation of investments in the future;

• Working capital is planned at 3.7% of sales revenues,

• as the basis for calculating free cash flow in the residential (after 2016) taking into account free cash flow

in 2016, which is adjusted for changes in working capital considering the balance of working capital in

the past year and the planned and estimated growth rate of the residual. It is envisaged that the company

will, after the planned period increase its free cash flow by 2.0% annually for both of the aforementioned

scenarios,

• a part of the assessed value arises from financial investments whose value based on the optimistic sce-

nario amounts to EUR 3,151 and based on the pessimistic scenario, EUR 2,994,000,

• Financial liabilities are taken into account in the amount of EUR 350,000 based on the balance of short-

term and long-term financial liabilities as at 31 December 2011,

• Premium shares considering their characteristics and the negligible amount within the scope of valua-

tion, are equal to ordinary shares,

• the control premium used was 0%,

• the discount for lack of liquidity used was 15%,

• the company Delo, d. d. is obliged in accordance with IFRS 5 (Non-current assets available-for-sale and

established operations) to measure non-current assets (or group for divestment) classified under assets

available-for-sale according to their book or fair values, decreased by the costs of the sale which is lower.

• The estimated fair value net realizable value less costs of sale of the investment in Večer, d. d. is thus

EUR 8,190,000

with a possible value range of between EUR 7,050,000 according to the pessimistic scenario and EUR

39,490,000 according to the optimistic scenario or

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EUR 40.4 excluding VAT

with a possible value range of between EUR 34.8 according to the pessimistic scenario and EUR 46.0

according to the optimistic scenario.

B) PROCEDURES IN ThE SALE OF A 79.243% STAKE IN ThE COMPANy VEčER, D. D., MARIBOR

The value of investments in the shares of the company ČZP Večer, d. d. is also shown among short-term

assets available-for-sale within the scope of assets of the Delo. d. d. The company Delo. d. d. acquired a

59.25% stake in the company ČZP Večer in 2008, thus becoming the 79.243% owner of the aforementioned

company. Delo, d. d. deos not have voting rights from the ownership of ČZP Večer shares surpassing 19.9%

due to Artilce 44 of the Prevention of Money Laundering Act therefore the Group financial statements were

not prepared.

Delo, d. d. had fulfilled the terms of the decision of the Consumpetion Protection Office and on 23 June

concluded a contract for the sale of shares of ČZP Večer, d. d. to the company 3Lan, d. o. o. The acquisition

prices were specified as EUR 9,250,000.

The contract was concluded under deferred conditions as specified in Item 3.1 of the said contract. One of

the essential conditions was the consent of the Ministry of Culture, on the basis of which 3 LAN, d. o. o. as

the buyer in accordance with the provisions of the Media Act would obtain more than 20% of the shares with

voting rights of the issuer ČZP Večer d. d.

An advance deposit of EUR 925,000 was also agreed on inn the Contract on the Sale of Shares of 23

June 2010. The deposit was placed in an escrow account of a notary public in Ljubljana under the Escrow

Contract, SV 584/10. It was agree in the cited notarial minutes that the notary public was obliged to transfer

the deposited amount to Delo, d. d. after receiving a written request whereby no additional documentation

had to be submitted. Delo, d. d. submitted a request to the notary public for the remittance of the deposit

after 3 LAN, d. o. o. notified the management board of Delo, d. d. on 16 December 2011 that the Ministry

of Culture had refused to grant consent for the acquisition of more than a 20% stake in the company ČŽP

Večer, d. d. on 13 December 2011 and as a result, it was withdrawing from the Cotnract on the Sale of Shares in

accordance with Item 4.2 of the Contract. The notary public remitted the total advance deposit to Delo, d. d.

on its account.

Negotiations between the contracting parties took place during a meeting on 11 January 2012 in which

the management board of the seller stated that all efforts of Delo, d. d. were focused at realising the sales

contract, while the management board of 3 LAN, d. o. o. asserted that the buyer had rightfully submitted

a withdrawal in accordance with the Contract. Delo, d. d. submitted a proposal that the buyer file a quality

suit in the administrative dispute against the decision of the Ministry of Culture no. 61513-7/2010/68 of 13

December 2011 in which the latter had decided to reject the application of the legal entity 3 LAN, d. o. o. for

the issue of consent for the acquisition of more than a 20% ownership stake in the assets of the company

ČZP Večer, d. d. The buyer, 3 LAN, d. o. o. did not file a suit against the denoted decision and through a cor-

respondence on 12 January 2012 demanded that Delo, d. d. return the deposit.

Item IV in the Contract on the Sale of Shares of 23 June 2010 specifies when a seller may withdraw from

the Contract without reimbursing the other contracting party for any damages. As a result, it may also

among other reasons withdraw from the Contract for the reason cited in Item 4.1.3, namely if it becomes

aware itself, through the buyer or indirectly through any other person if any of the three consents of Article

3 of the same Contract was refused. This item expressly defines that the seller’s right to withdraw is not de-

pendent on whether any legal recourse had been lodged against the decisions refusing consent or not. In the

actual case, the seller - Delo, d. d. was entitled to withdraw from the Contract after having been informed on

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16 December 2011 that the Ministry of Culture had not issued the appropriate consent. The last paragraph of

Item 4.1 specifies that if the seller withdraws from the said contract for any reason defined by this item, thus

also in the case of Item 4.1.3, it must within a period of three business days from the day of withdrawal , i.e.

16 December 2011, send the buyer a written notification of the reasons for the withdrawl, i.e. by 16 December

2011 and send the buyer a written notification that contains a short explanation of the reasons for the with-

drawal by registered mail or it would be deemed that the seller had not withdrawn from the contract.

The contract provisions of Item 4.1 must be read in conjunction with Item 4.3. which defines in what

cases the seller may retain the received deposit. Thus, Item 4.3.3. defines that the seller shall retain a deposit

received, if it withdraws from the contract in accordance with Item 4.1.3., if one of the three consents from

Article 3 of the contract (in this case, the refusal of consent by the Ministry of Culture) by the fault of the

buyer. Item 4.3.3 also defines that by the fault of the buyer means that consent is refused due to the omission

of due diligence and activities or efforts to obtain consent, thus that the buyer did not do everything neces-

sary and within its power to obtain the appropriate consent.

From the explanation in the decision of the Ministry of Culture of 13 December 2011 it can be deduced that

3 LAN, d. o. o. did not exert enough effort to obtain the consent and thus did not fulfil its obligations. The

company 3 LAN, d. o. o. was ordered by the Ministry of Culture to prepare a management strategy for the

company ČŽP Večer, d. d. which can be deemed a reasonable obligation and which 3 LAN, d. o. o. should

have fulfilled within the context of due diligence.

9. INVENTORIES

( in EUR ) 2011 2010

Materials and raw materials 13,600,208 19,831,502

Work in progress 2,232,780 3,938,198

Products 5,783,876 10,646,983

Merchandise 463,050 526,218

Transfer to assets available-for-sale - FRUCTAL - (11,607,022)


Transfer to assets available-for-sale - DELO - (1,236,600)

Total 22,079,914 21,376,855

The value of inventories compared to the previous year decreased by by EUR 1,114,894 or by 5.2%. No in-

ventories were pledged as at 31 December 2011 nor any revaluation of the values of inventories implemented.

The book value of inventories does not exceed their net recoverable value.

The Group established a surplus of EUR 93,904 of inventory and a deficiency of EUR 90,089 during the

regular annual inventory.

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10. A. ShORT–TERM OPERATING RECEIVABLES

in EUR ) 2011 2010

Short-term trade receivables:

Domestic market 44,186,763 43,446,494

Foreign market 5,693,121 5,718,851


Total 43,591,523 44,056,231

Short-tern operating receivables from others 3,984,057 5,486,328

Advances 984,265 292,599


Balance of receivables as at 31 December 2011 46,730,029 47,587,099




Balance of receivables as at 31 December 2011 46,730,029 30,660,793

The total short-term receivables of the Group amounted to EUR 46,730,029 as at 31 December 2011, re-

flecting a 52.4 increase over the last day of the previous year. The increase is predominantly the result of

increased sales in December 2011. The disclosed value of all short-term operating and other receivables

reflects their fair value.

VALUE ADjUSTMENTS OF ShORT-TERM OPERATING RECEIVABLES

( in EUR ) 2011 2010

Balance as at 1 January 5,109,114 6,931,669

Recovered written-off receivables (332,812) (336,055)

Final write-offs of receivables (620,985) (858,531)

Revaluation adjustments in the year 653,579 1,562,860

Increase in value adjustment due to lawsuits 10,620 1,048,057

Transfer to financial receivables (476,678) -

Other - 479,627

Total 4,342,838 8,827,627

Transfer from/to non-current assets available-for-sale - FRUCTAL - (1,772,990)

Transfer from/to non-current assets available-for-sale - SPLIT 1,125,738 (1,125,738)

Transfer from/to non-current assets available-for-sale - DELO 819,785 (819,785)


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( in EUR ) 2011 2010

TRADE RECEIVABLES

unmatured 35,795,134 31,481,677

up to 30 days 4,285,558 7,503,176

from 30 to 60 days 2,071,141 2,594,445

from 60 to 90 days 1,252,718 767,103

above 90 days 6,475,333 13,601,989

Balance as at 31 December 2011 49,879,884 55,948,390





Trade receivables in the amount of EUR 20,260,000 are used as insurance for bank loans.

10. B. ShORT-TERM RECEIVABLES FOR ExCESS CORPORATE INCOME TAx PAyMENT

( in EUR ) 2011 2010

Receivables for excess paid corporate income tax 407,636 1,612,961


Total 407,636 1,595,596

Short-term receivables for excess corporate tax payment refer to an excess of advance tax payments which

are calculated on the basis of liabilities for 2010. Receivables from surplus corporate tax payments are dis-

closed by Radenska, d. d. and Delo, d. d.

11. ShORT–TERM LOANS

( in EUR ) 2011 2010

Short-term portion of long-term loans - 346

Short-term deposits 3,275,000 4,186,633

Interest from loans to others 58,106 39,936

Short-term loans 84,744,473 83,961,209

Less valuation adjustment (83,630,813) (83,154,409)

Other short-term receivables from financing 663,731 -




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As at 31 December 2011 the Group disclosed EUR 1,113,660 in short-term loans granted and EUR 3,275,000

in short-term deposits.

The Group showed a revaluation adjustment of loans granted in the amount of EUR 83,630,813 on the last

day of 2011. During 2009 the Group approved loans totalling EUR 92,050,000 to two companies which were

its subsidiaries at the time of approval, namely: EUR 54,250,000 in short-term loans to the company Infond

Holding, d. d. and EUR 37,800,000 to the company Center naložbe, d. d. Due to insolvency and the intro-

duction of bankruptcy and forced settlement proceedings, in 2009 the Group implemented a revaluation

adjustment for the entire value of the loans granted to the two subsidiaries, showing financial expenses. As

at 31 December 2011 the Group shows a lower value of loans and a revaluation of granted loans in the amount

of EUR 9,400,000 due to the sale of Fructal, d. d. (the value of those loans and revaluation adjustments

were included in the group of assets available-for-sale at the end of 2010). At the same time, on 31 December

2011 the Group discloses a revaluation adjustment of interest on granted loans to the denoted companies

mentioned in the value of loans for lending to others in the amount of EUR 967,678.

The interest rates for short-term deposits range from 1.1 to 2.53%, and for short-term granted loans from

5.86 to 5.90%. The disclosed value of short-term loans reflects their fair value.

12. A. ShORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Short-term financial assets

available-for-sale at fair value 129,481,948 7,255,113

Short-term financial assets

available-for-sale at acquisition cost 14,023,419 17,299,457

Total 143,505,367 24,554,570

The value of short-term financial assets available-for-sale amounted to EUR 143,505,367 on the last day of

2011. In 2011 their value increased due to the transfer of the investment in Poslovni sistem Mercator (MELR)

from short-term assets available-for-sale and decreased due to the sale of ZVTG shares of Triglav zavaroval-

nica and several smaller investments and the impairment of individual investments.

The group discloses the following investments among short-term financial assets available-for-sale: invest-

ments in the shares of Poslovni sistem Mercator (23.34%) in the amount of EUR 129,189,627, investments in

the shares of Elektro Maribor, d. d. in the amount of EUR 6,728,124 (5.74%), in the shares of Probanka, d. d.

in the amount of EUR 2,109,625 (6.27%), in the shares of Premogovnika Velenje in the amount of EUR

4,000,000 (7.09%), in the shares of Elektra Gorenjska, d. d. in the amount of EUR 947,333 (1.6%), in the

shares of Ceste Mostovi Celje, d. d. in the amount of EUR 238,355 (5.49%) and investments into the mutual

funds Probanka Alfa, Perspektiva, Triglav renta, NLB skladi and the Primus mutual fund.

The value of the investment in MELR shares amounted to EUR 132,934,216 on the last day of 2011. The

management of the Laško Group assesses that it no longer has a significant influence on Poslovni sistem

Mercator therefore the investment is no longer valuated according to the capital method since 1 January 2011.

As at 31 December 2011 the Laško Group owns 878,841 shares or 23.34% stake (Pivovarna laško, d. d. 8.43%,

Pivovarna Union, d. d., 12.33% and Radenska, d. d., 2.57%) of Poslovni sistem Mercator, d. d. The Group

recognised financial revenues in the amount of EUR 7.030.728 due to dividends received in 2011. Due to the

abandonment of the capital valuation method, the Group recognised an impairement of EUR 21,484,202 in

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the consolidated income statement for 2011 which is partially reflected in the change in the value of capital.

The value of these investments decreased in the amount of EUR 3,107,637 in comparison to the previous

year due to impairment. The investment is valuated pursuant to the stock price of EUR 147.00 per share and

amounts to EUR 129,189,627 as at 31 December 2011.

MOVEMENT OF ShORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

( in EUR ) 2011 2010

Balance as at 1 January 24,554,570 -


Transfer from non-current assets available-for-sale (MELR) 132,934,216 -

Impairment (3,107,637) -

Revaluation (3,803,201) -

Transfer from reserves 233,569 -

Transfer from DFN - 24,554,570

Divestments (7,306,150) -


In 2011 the Group sold off the entire block of shares of Zavarovalnica Triglav, d. d., labelled ZVTG at a price

of EUR 17.50 per share, totalling EUR 7,570,224 which without taking into account the sale of shares held

by Fructal, d. d., amounted to EUR 7,098,424 which corresponds to the reduction in the amount of short-

term assets available-for-sale. Radenska, d. d. sold 366,944 shares in the total amount of EUR 6,421,520.00,

Pivovarna Union, d. d. sold 17,712 shares in the total amount of EUR 309,960 and Fructal, d. d. 26,960 in

the total amount of EUR 471,800.

In 2011 the sale of the investment in NLB fund in the amount of EUR 83,574, investment in the mutual

fund Primus in the amount of EUR 83,459 and investments in the mutual funds Triglav renta, Perspektiva

World Mix and Alfa uravnoteženi was also realised.

An impairment of the investments in the shares of Probanka, d. d. in the amount of EUR 3,107,634, MELR

shares as a difference between the value of the investment on 31 December 2011 and the value on the last day

of the previous year of EUR 3,744,589 and impairment of other investments in the amount of EUR 58,612

are shown among impairments.

For the purpose of insuring long- and short-term loans from banks, the Group pledged: 213,115 shares

(6.27%) of Probanka, d. d., Maribor, 1,922,321 shares (5.74%) of company name missing and 270,648 shares

of Elektro Gorenjske or 1.6% of all shares in the total amount of EUR 9,785,016.

12. B. DERIVATIVE FINANCIAL INSTRUMENTS

The Group discloses an option contract for the purchase of shares of the company Birra Peja, Sh. a., Peć

among derivative financial instruments which was appraised by a certified business appraiser at the end of

2010. Based on the appraisal, their fair value equals zero on 31 December 2010 and since the assumptions did

not change in 2011 the option contract also did not change and on 31 December 2011 equals zero.

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13. CASh IN BANKS, ChEqUES AND CASh IN hAND

( in EUR ) 2011 2010

Cash in banks 21,356,755 1,208,426

Cash in hand and received cheques 41,226 33,280

Cash in foreign currencies 57,453 37,248

Cash in transit 48,330 355,159

Transfer to non-current assets available-for-sale - SPLIT - (10,564)

Transfer to non-current assets available-for-sale - DELO - (232,179)

Total 21,503,764 1,391,370

Cash in banks, cheques and cash in hand reflect their fair values. Cash and cash equivalents compared to

the last day of last year increased significantly primarily due to the acquisition price paid for FRAG shares

and deposited funds. Pivovarna Union deposited the money paid for the redemption of the option to pur-

chase shares of Birra Pei, Sh. a. in the amount of EUR 4,739,782 and retained EUR 1,000,000 of the pro-

ceeds for a period of 18 months from the date of completion of the sale of FRAG shares. The majority of

cash in banks represents the remainder of the proceeds from the sale of FRAG shares in the amount of EUR

11,362,486.

14. DEFERRED COSTS AND ACCRUED REVENUES

( in EUR ) 2011 2010

Deferred costs and accured revenues 525,338 476,844



Total 525,338 210,569

Deffered costs and accrued revenues refer to short-term deferred costs or expenses and short-term ac-

crued revenues.

15. CAPITAL OF ThE MAjORITy ShAREhOLDERS

The capital of Pivovarna Laško, d.d. comprises called-up capital, capital reserves, revenue reserves, re-

tained profit or loss from previous years, surpluses from the revaluation of financial investments classified

into assets-for-sale and also not-yet distributed profit for the financial year.

Share capital is shown as registered capital (capital from stakes or financial investment loans). Share

capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is a deduction

from share capital.

Called-up capital of the Group is defined in the Statute and amounts to EUR 36,503,305. It is divided into

8,747,652 freely transferable registered nominal shares. Each share gives its owner one voting right at the

annual General Meeting of Shareholders and to participate in profits.

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As at 31 December 2011 capital reserves totalled EUR 78,908,924. In past years capital reserves were

formed from paid-in capital surpluses following two implemented capital injections from shareholders,

which exceeded the nominal value of paid-in shares and a general revaluation adjustment of capital. The

value of the paid-in capital surplus comprised EUR 79,231,564 and that of the general revaluation adjust-

ment of capital EUR 23,146,157. In past years, capital reserves were used to cover losses in the amount of EUR

23,468,797 so that their value on the last day of 2011 totals 78,908,924.

Legal reserves in the amount of EUR 3,650,331, reserves for own shares in the amount of EUR 467,504,

own shares as a deduction item in the amount of EUR 467,504 and other revenue reserves are shown among

reserves. Legal reserves may be used for covering losses or endowment capital. The value of the reserves did

not change in 2011. PILR, RARG, PULG and FRAG shares are shown among own shares. The Group had

24,081 PILR shares, 85 PULG and 19,236 RARG shares on the last day of 2011. The book value of PILR shares

comprised EUR 265,373 on 31 December 2011 with the value of shares in subsidiaries accounting for EUR

141,533. Pivovarna Laško, d. d. had 755 PILR shares valued at EUR 8,320 and 23,326 shares of its subsidiar-

ies valued at EUR 257,053. The Group divested 4,156 lots of its own PILR shares comprising a total value of

EUR 30,196 in 2011.

Net profit or loss from previous years increased due to the utilization of the revaluation surplus for the

portion related to the amortisation of revalued real estate.

The revaluation surplus was reduced by the effects of the revaluation of financial assets available-for-sale

and the new fair value of EUR 1,514,872 and increased by the effect of the revaluation of fixed assets in the

amount of EUR 6,108,231. The revaluation surplus was reduced further by the revaluation of deferred tax in

the amount of EUR 395,105. Due to the abandonment of the capital method of valuation of MELR shares, the

revaluation decreased by the share of the revaluation of fixed assets of the Mercator Group in the amount of

EUR 37,976,794 and increased net profit from previous years by the same amount. The revaluation surplus

also increased in proportion to all other changes in equity of Poslovni system Mercator in the amount of EUR

4,185,142, which is also recognized in the current income statement for 2011 and for the effects of the sale of

the Fructal Group in the amount of EUR 1,853,924.

The Group’s capital in 2011 also increased due to the rose translation of the reserves for foreign exchange

translation differences regarding foreign companies in the amount of EUR 13,554,472 and from the aban-

donment of the capital method of valuation of MELR and was formed as a percentage change of the capital

of the Mercator Group in 2009 and 2010.

The equity ownership structure as at 31 December 2011 is as follows:

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Shareholder Position Stake in %

NLB, d. d. 1. 23.512 %

Hypo Alpe-Adria-Bank AG 2. 7.067 %

Kapitalska družba, d.d. 3. 7.059 %

Probanka, d. d. 4. 7.029 %

GB, d. d. Kranj 5. 6.201 %

Skagen Kon-tiki Verdipapirfond 6. 5.708 %

NFD 1, delniški podsklad 7. 5.071 %

Abanka, d. d. 8. 3.263 %

Banka Celje, d. d. 9. 2.886 %

Banka Koper, d. d. 10. 2.635 %

Infond Holding, d. d., - v stečaju 11. 2.330 %

CPM, d. d., - v stečaju 12. 1.622 %

D.S.U., d. o. o. 13. 1.557 %

Infond, d. o. o., - PE Uravnoteženi vzajemni 14. 1.410 %

Probanka upravljanje, d. o. o., - PE Vzajemni 15. 1.129 %

Nova KBM, d. d. 16. 1.002 %

Other minority shareholders 17. 20.519 %

Total 100.000 %

16. CAPITAL OF ThE MINORITy ShAREhOLDERS

The capital of minority owners amounted to EUR 7,647,526 on the last day of 2011 and reflects a EUR

1,910,107 decrease in comparison to 2010. The capital of minority shareholders increased in 2011 by the as-

certained net profit of the current year or by EUR 163,000, by the revaluation of fixed assets in the amount

of EUR 118,028 and by the amount of deferred tax EUR 22,091 million. Decreases were recorded in the pay-

ment of dividends in the amount of EUR 64,835, the revaluation fo financial investments to their fair value

in the amount of EUR 95,567 and the share of minority shareholders due to the sale of the Fructal Group in

the amount of EUR 1,857,258.

17. PROVISIONS FOR LONG–TERM ACCRUED COSTS AND DEFERRED REVENUES

17. A. LONG-TERM LIABILITIES TO EMPLOyEES

( in EUR ) 2011 2010

Provisions for severence pay and jubilee awards 4,785,771 6,972,137

Transfer to liabilities for non-current

assets available-for-sale - FRUCTAL - (1,163,282)


assets available-for-sale - SPLIT - (956,251)


assets available-for-sale - DELO - (2,064,443)

Total 4,785,771 2,788,161

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Provisions are formed for foreseen severance payments and payments of jubilee awards for long-time

service of employees on the balance sheet date, discounted by the current value and based on actuarial

calculations.

The actuarial calculation of 31 December 2010 was performed for each employee so that it took into ac-

count the costs of retirement benefits appertaining to them on the basis of employment contracts and the

cost of all expected jubilee premiums for the total service period until retirement. The actuary took into

consideration the following assumptions in his calculation:

• Employees according to the collective agreement and employees with individual contracts except for the

Management Board are entitled to severance pay upon retirement equalling two average monthly gross

salaries in the Republic of Slovenia for the past three months or namely, in the amount of two employee

salaries if this proves more favourable for the employee.

• Jubilee awards are paid out to employees based on the total length of service, namely 50, 75% or 100%

of the average net salary in the company for the last three months for 10, 20 ,or 30 years respectively of

services completed.

• No growth in salaries and wages is foreseen for 2012;

• The 3.5 annual growth rate for severance payments and jubilee awards as prescribed in the Decree on

the levels of reimbursed work-related expenses and of certain income not to be included in the tax base

was taken into account;

• the calculation of liabilities from severence payments is tied to the retirement service period of each

individual employee.

• The selected discount interest rate is 4.8% per annum;

• Employee turnover is predominantly dependant on their age;

• employee mortality is taken into account through the use of mortality tables for 2007;

• the value of employer provisions in classifying an employee as redundant is equal to the current value of

provisions for severance pay.

17. B. PROVISIONS

( in EUR ) 2011 2010

Provisions and long-term accrued costs and deferred revenues 2,282,992 3,469,156


assets available-for-sale - FRUCTAL - (748,437)

Transfer to liabilities for non-current assets available-for-sale - SPLIT - (234,092)

Transfer to liabilities for non-current assets available-for-sale - DELO - (468,830)

Total 2,282,992 2,017,797

Long-term provisions relate to pending lawsuits of subsidiaries and are formed on the basis of attorney

opinions and estimates.

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MOVEMENT OF LONG-TERM PROVISIONS AND ACCRUED COSTS AND DEFERRED REVENUES

Retirement jubilee ( in EUR ) severance pay awards Other total

Balance as at 1 January 2011 1,633,374 1,154,787 2,017,797 4,805,958


assets available-for-sale - SPLIT 956,251 - 234,092 1,190,343


assets available-for-sale - DELO 2,064,443 - 468,830 2,533,273

Increases 113,168 185,487 56,758 355,413

Decreases - utilisation (64,061) (134,113) (68,632) (266,806)

Decreases - elimination (1,082,825) (40,740) (425,853) (1,549,418)

Balance as at 31 December 2011 3,620,350 1,165,421 2,282,992 7,068,763

The Group formed additional long-term provisions in 2011 for severance pay upon retirement and jubilee

awards in the amount of EUR 298,655 of which EUR 1,217,659 was dissolved or utilised. Other provisions

and long-term accrued costs and deferred revenues decreased by EUR 437,727 in 2011.

18. LONG-TERM LIABILITIES

18. A. LONG-TERM FINANCIAL LIABILITIES

( in EUR ) 2011 2010

Long-term loans from banks 142,835,017 163,007,254

Other long-term financial liabilities 39,810 -

Long-term loans from other companies - 71,019

Total 142,874,827 163,078,273

Transfer to short-term financial liabilities (102,342,818) (69,190,134)

Total 40,532,009 93,888,139




assets available-for-sale - SPLIT - (1,221,187)



Total 40,532,009 84,263,898

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MATURITIES OF LONG-TERM FINANCIAL LIABILITIES

( in EUR ) 2011 2010





Total 142,835,017 163,007,254

The interest rate for long-term loans of the Group fluctuated on average between 5.39 and 5.41% and for

the 6-month EURIBOR, between +3.25 and 3.9% in 2011.

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The Group took out EUR 1,000,000 in new long-term loans in 2011 and achieved an agreement with banks

regarding the rescheduling of short-term loans into long-term loans in the amount of EUR 4,350,000.

EUR 7,205,078 of the long-term loans were repaid. A total of EUR 69,190,134 in long-term loans fell due

for payment in 2012 and are shown as short-term loans.

The long-term financial liabilities of the Group are insured through a lien on securities, real estate and

moveable assets, as described in more detail in Note 19.c.

The disclosed value of long-term loans reflects their fair value.

18. B. LONG–TERM OPERATING LIABILITIES

( in EUR ) 2011 2010

Other long-term operating liabilities 4,511 6,501


Total 4,511 -

18. C. LONG-TERM DEFERRED TAx LIABILITIES

Long-term deferred tax liabilities are calculated on the basis of temporary differences with consideration

of liability method and tax rate valid in the year the receivables or liabilities for deferred tax are realized. The

tax rate for the calculation of corporate income tax comprised 20% in 2011. See Note no. 7.

19. ShORT-TERM LIABILITIES

19. A. ShORT–TERM OPERATING LIABILITIES

( in EUR ) 2011 2010

Short-term liabilities to Group companies as suppliers 518,209 68,946

Other short-term trade liabilities 19,907,908 30,386,922

Short-term operating liabilities to others:

to employees 4,347,753 4,897,704

to the State 9,985,476 9,284,076

Short-term liabilities for advances 657,435 707,106

Other short-term liabilities 1,360,403 2,716,187

Total 36,777,184 48,060,941




assets available-for-sale - SPLIT - (2,298,029)



Total 36,777,184 30,636,500

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Short-term operating liabilities on 31 December 2011 amounted to EUR 36,777,184, reflecting a EUR

2,243,607 decrease over the last day of the previous year, taking into account the exclusion of the operating

liabilities of the Fructal Group in 2010. ON 31 December 2011 in accordance with IFRS 5, the Laško Group

transferred all the short-term operating liabilities of the Fructal Group, Delo Group and company Jadranska

pivovara – Split, d. d. to liabilities connected to assets available-for-sale. The sale of the Fructal Group was

realised in 2011 while the short-term operating liabilities of the Delo Group and Jadranska pivovara, d. d.,

were transferred back from liabilities of the group of assets available-for-sale.

19. B. ShORT-TERM TAx LIABILITIES

( in EUR ) 2011 2010

Short-term tax liabilities 2,963,742 9,537


assets available-for-sale - DELO - (9,537)

Total 2,963,742 -

19. C. ShORT–TERM FINANCIAL LIABILITIES

( in EUR ) 2011 2010


Short-term financial liabilities from interests on loans 2,919,248 2,538,036

hort-term loans from banks 236,696,177 259,895,460

Other short-term liabilities from financing 6,472,086 6,265,335

Total 348,430,330 337,888,965

Transfer to liabilities for non-current assets

available-for-sale - FRUCTAL - (8,804,938)


available-for-sale - SPLIT - (2,138,564)


available-for-sale - DELO - (13,664,790)

Total 348,430,330 313,280,673

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The total short-term financial liabilities of the Group amounted to EUR 348,430,330 as at 31 December

2011 of which EUR 339,038,996 comprises loans from banks. The value of short-term loans from banks

increased by EUR 9,953,399 in comparison to the last day of the previous year. The increase arose from an

increase in the short-term portion of long-term loans in the amount of EUR 33,152,685 and a reduction for

actual repayment of the value in the amount of EUR 23,199,283. EUR 102,342,819 in long-term loans will

mature in 2012. In 2011 the Group repaid or reached agreements on the extension of short-term loans in

the amount of EUR 140,943,229, with EUR 233,332,649 in short-term bank loans repaid or extended and in

comparison to the previous year, had increased by EUR 20,373,580.

The disclosed value of short-term financial liabilities reflects their fair value.

To insure the short-term loans the Company pledged 667,444 shares (100%) of Delo, d. d., 4,399,803

shares (86.92%) of Radenska, d. d., 440,295 shares (97.6%) of Pivovarna Union, d. d., 861,110 shares

(22.87%) of Poslovni sistem Mercator, d. d., 213,115 shares (6.27%) of Probanka, d. d., Maribor, 1,922,321

shares of Elektro Maribor, d. d. (5.7%) and 645,003 shares (20.6%) of Thermana, d. d., Laško. The book

value of the pledged shares based on data from individual financial statements on which the specific shares

are valuated according to historical cost amounted to EUR 393,811,191 on 31 December 2011. A portion of the

short-term loans are additionally insured with a mortgage and a lien on moveable assets and investment

real estate. The book value of pledged real estate, moveable property and investment property totalled EUR

126,075,969 on 31 December 2011 with EUR 42,183,056 of the amount representing the pledged assets of

subsidiaries. Short-term loans of the Company are additionally insured through receivables whose value

on 31 December 2011 was EUR 20,260,000 and a lien on the brand names of Pivovarna Laško, d. d. in the

amount of EUR 50,000,000. The value of all unpaid short-term loans which were insured through shares,

a mortgage, liens on moveable assets, investment real estate and receivables for insured short-term loans

amounted to EUR 339,038,996 as at 31 December 2011, while the value of long-term bank loans totalled EUR

40,309,482.

The average effective interest rate for short-term loans taken out fluctuated between 5.68 and 5.99% of the

fixed or variable 1-month EURIBOR, increased by 4.3 to 4.5 percentage points and the 6-month EURIBOR,

increased by 4 percentage points.

20. ACCRUED COSTS AND DEFERRED REVENUES

( in EUR ) 2011 2010

Short-term accrued costs and deferred revenues 8,433,292 6,961,970


Transfer to liabilities for non-current assets available-for-sale - DELO - (2,227,039)

Total 8,433,292 4,725,179

Accrued costs and deferred revenues relate primarily to accrued costs for unused annual leave of employ-

ees and accrued severance pay for redundant employees and the receipt of a deposit of EUR 925,000 from

a potential purchaser for the acquisition of a stake in Večer, d. d.,Maribor by Delo, d. d. The buyer later

withdrew from the contract therefore pursuant to the contractual provisions; the deposit belongs to the seller.

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21. ANALySIS OF REVENUES FROM SALES AND ExPENSES

The analysis of revenues and expenses regards the retained operations, i.e. those of the Laško Group with-

out the Fructal Group and Jadranska pivovara. For the purpose of ensuring comparability, the data from 2010

are adapted with the effects of the Fructal Group and Jadranska pivovara – Split, d. d. removed.

21. A. ANALySIS OF SALES REVENUES By MARKET

( in EUR ) 2011 2010

Revenues from the sale of products

and services in Slovenia 232,246,501 224,399,517

Revenues from the sale of products

and services in foreign markets 30,331,941 24,873,450

Revenues from the sale of materials

and merchandise in Slovenia 1,453,408 914,415

Revenues from the sale of materials

and merchandise in foreign markets 705,423 131,923

Total 264,737,273 250,319,305

21. B. ANALySIS OF SALES REVENUES By COUNTRy

( in EUR ) 2011 2010

Sales revenues in Slovenia 233,699,909 225,313,932

Sales revenues in foreign markets 31,037,364 25,005,373

Total 264,737,273 250,319,305

In 2011 the Group generated 85% of its net sales revenues on domestic markets and the remaining 15% on

foreign markets. Sales revenues on foreign markets were predominantly realised from sales on the markets

of the former Yugoslavia and in the EU.

21. C. OThER OPERATING REVENUES

Other operating revenues amounted to EUR 5,498,458, and were EUR 2,510,683 higher than in the previ-

ous year. Revenues from the sale of fixed assets, collected receivables for which a revaluation of receivables

was formed in previous years, revenues from the dissolution of long-term provisions and obtained subsidies

are shown among other operating revenues.

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21. D. ANALySIS OF COSTS By CATEGORy

( in EUR ) 2011 2010

Costs of materials, raw materials and merchandise 93,299,604 80,659,230

Cost of services 74,751,595 72,302,899

Depreciation 19,585,979 20,968,032

Operating expenses from the revaluation of fixed assets 11,253,951 8,689,940

Operating expenses from the revaluation of current assets 566,444 303,657

Labour costs 36,545,742 35,141,377

Social security costs 6,994,618 6,588,258

Other labour costs 5,762,895 7,264,094

Costs of provisions 298,655 537,108

Other operating costs 5,918,214 6,335,617

Total 254,977,697 238,790,212

Operating expenses in 2011 amounted to EUR 254,977,697 showing an increase of EUR 16,599,318 over

the previous year. In 2011, the Group impaired the value of the brands of Delo, d. d. by the amount of EUR

5,837,647 and in 2010by EUR 8,543,891.Costs of materials, raw materials and merchandise in comparison

with the previous year increased by EUR 13,018,366, which is mainly due to increases in the prices of certain

raw materials, intermediate goods and energy. The costs of services in comparison with the previous year

increased by EUR 2,448,696, while the labour costs increased by EUR 309,525. A significant reduction was

recorded with regard to the depreciation expense, which compared with the previous year had decreased by

EUR 3,589,748 due to a reduction in investments in recent years.

21. E. COSTS By FUNCTIONAL GROUP


Costs of merchandise

soled (Horeca) - 746,537 - 746,537


and merchandise 82,468,327 8,946,235 1,138,507 92,553,069

Cost of services 23,131,801 40,775,978 10,843,814 74,751,593

Depreciation 15,457,275 2,051,256 2,077,448 19,585,979

Labour costs 32,169,033 7,656,702 9,477,521 49,303,256


the revaluation of fixed assets 1,838,856 973,817 8,441,278 11,253,951


the revaluation of current assets 4,936 194,721 366,787 566,444


Other costs 2,512,264 627,289 2,778,660 5,918,213

Total 157,656,989 61,989,966 35,330,742 254,977,697

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and merchandise 76,626,155 836,725 3,196,350 80,659,230

Cost of services 24,048,304 36,723,182 11,531,413 72,302,899

Depreciation 15,739,944 2,371,109 2,856,979 20,968,032

Labour costs 66,985 30,185 8,592,770 8,689,940


the revaluation of fixed assets 4,831 186,116 112,710 303,657


the revaluation of current assets 29,509,115 9,616,971 9,867,643 48,993,729


Other costs 2,707,780 1,598,795 2,029,042 6,335,617

Total 148,896,775 51,458,365 38,435,072 238,790,212

The value of audit costs for the Laško Group in 2011 totalled EUR 122,500.

22. NET FINANCIAL ExPENSES

( in EUR ) 2011 2010

Financial revenues without exchange rate differences 9,547,842 2,123,526

Financial revenues from profit participation 7,373,270 558,121

Financial revenues from loans granted 671,111 1,455,427

Financial receivables from operating receivables 341,183 107,622

Financial revenues from the sale of securities 1,162,278 2,356

Financial expenses without exchange rate differences (49,703,678) (25,865,191)


and write-offs of financial investments (26,071,300) (5,674,697)

Financial expenses from financial liabilities (23,370,461) (20,222,912)

Financial expenses from operating liabilities (261,917) 32,418

Exchange rate differences from financing (1,156) (42,960)

Negative exchange rate differences (1,809) (97,836)

Positive exchange rate differences 653 54,876

Net financial expenses (40,156,992) (23,784,625)

The surplus of financial expenses over financial revenues comprises EUR 40,156,992.

Financial expenses for interest from bank loans amounted to EUR 23,370,462 while financial expenses

from the impairment of financial investments amounted to EUR 26,071,346. The majority of financial ex-

penses from the impairment of financial investments, or EUR 21,484,202 resulted from the impairment

of MELR shares. Among impairments of other investments, the greatest impairment was recorded for the

shares of Probanka, d. d. in the amount of EUR 3,107,637 company Večer, d. d. in the amount of EUR 988,904.

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23. ShARE OF ThE (LOSS)/PROFITS IN ASSOCIATED COMPANIES

( in EUR ) 2011 2010

Share in (loss)/profit in associated companies - 4,112,331

Total - 4,112,331

The Group did not generate and financial revenues or financial expenses in 2011 from the heading of

participation in the profits of subsidiaries since the investments in the subsidiaries were impaired and their

values are equal to zero. The Group generated financial revenues from participation in the profits of Poslovni

system Mercator in the amount of EUR 4,112,331 in 2010.

24. CORPORATE INCOME TAx

( in EUR ) 2011 2010

Current tax 1,697,944 946,449

Deferred tax (5,130,688) (3,766,396)

Total (3,432,744) (2,819,947)

Due to the positive tax base, the companies Pivovarna Union, d. d. and Laško grupa, d. o. o., Zagreb dis-

closed a tax liability of EUR 1,697,944.

The income tax of the Group differs from the theoretical tax amount which would arise if the basic tax rates

of the domestic country were used. The tax base is calculated as a difference between taxable revenues and

taxable expenses at the level of each individual company in the Group. If taxable expenses exceeds taxable

revenues the company will show a tax loss which can be covered from future taxable revenues. The follow-

ing companies in the Laško Group showed a covered tax loss as at 31 December 2011: Pivovarna Laško, d. d.,

in the amount of EUR 4,473,067, Jadranska pivovara – Split, d. d., in the amount of EUR 29,048,173 and

Radenska, d. d. in the amount of EUR 1,258,460.

The tax base is reduced by tax deductions related to:

• deductions for research and development;

• deductions for voluntary supplementary pension insurance;

• deductions for the employment of disabled persons and

• deductions for donations.

The authorities can check the operations of a business and require the payment of additional tax as a result,

along with past interest or penalties which have to do with the revenue tax or other taxes and contributions,

anytime within five years of when the tax is levied. The Management Board of the Company is not aware of

any circumstances which could represent significant liabilities under this heading.

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Deferred tax which affects profit or loss is shown in the table entitled movement of long-term receivables

for deferred tax (Note 7) and in the table entitled movement of long-term liabilities for deferred tax (Note 18. C).

25. CASh FLOw FROM OPERATIONS

( in EUR ) 2011 2010

Operating profit for the period 9,887,269 (9,945,684)

Adjustments for:

Depreciation of property,

plant and equipment and investment property 18,802,472 23,345,636

Depreciation of intangible fixed assets 783,506 1,095,821

Write-offs and revaluation of long-term assets 19,435,782 27,244,086

Write-offs and revaluation of short-term assets 680,023 1,138,202

Net movement in provisions 153,486 725,229

Exchange rate differences from operations 354,734 -

Payment of profit participation in associated companies - 6,327,373

Total adjustments 40,210,003 59,876,347

Changes in working capital

Inventories and non-current assets available-for-sale (6,158,966) 15,918,998

Operating and other receivables (16,536,979) (27,406,638)

Operating and other liabilities 5,396,313 16,269,211

(17,299,632) 4,781,571

Cash generated from operating activities 32,797,640 54,712,234

26. SEGMENT REPORTING

26. A. BUSINESS SEGMENTS

Business segments are divided into four parts each of which is monitored separately, i.e. beer segment,

other beverages segment, newspaper-publishing segment and other segment.

The other segment monitors the sale of services, by-products and merchandise. This segment includes all

investments that fall outside the core business of the Group. The liabilities of the other segment include the

value of financial liabilities on 31 December 2011 which the Group assumed for the financing of investments

(also including the loans granted to the companies Center Naložbe, d. d. and Infond Holding, d. d. the value

of which was completely impaired in 2009 following the non-settlement of financial liabilities).

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Newspaper year 2011 Other publishing ( in EUR ) Beer beverages activity Other Total

Net sales revenues by segment 147,610,795 55,274,902 54,601,594 7,249,982 264,737,273

Net sales revenues 147,610,795 55,274,902 54,601,594 7,249,982 264,737,273

Operating profit/loss 26,707,281 (5,115,419) (5,540,059) (128,695) 15,923,108

Financial expenses (net) (40,156,994)

Profit/loss before taxes (24,233,886)

Taxes 3,432,744

Profit/loss for the accounting period (20,801,142)

Assets by segment 199,351,784 99,113,802 42,251,029 146,630,862 487,347,477

Brands 46,461,058 - 18,677,374 - 65,138,432

Goodwill 17,197,380 - - - 17,197,380

Liabilities by segment 267,120,802 48,895,502 54,709,064 73,484,463 444,209,831

Investments 5,527,440 4,247,528 1,165,827 278,462 11,219,257

Depreciation 11,438,609 5,038,461 3,025,250 83,658 19,585,978


revaluations and provisions 5,480,557 265,288 6,074,550 298,655 12,119,050

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Newspaper year 2011 Other publishing ( in EUR ) Beer beverages activity Other Total

Net sales revenues by segment 136,016,473 51,780,628 53,728,877 6,562,880 248,088,858

Net sales revenues 136,016,473 51,780,628 53,728,877 6,562,880 248,088,858

Operating profit/loss 22,531,067 (2,450,653) (8,201,132) (1,651,336) 10,227,946

Financial expenses (net) (26,414,716)

Share of (loss)/profit in associated companies 6,742,331

Profit/loss before taxes (9,444,439)

Taxes 2,819,947

Profit/loss for the accounting period (6,624,492)

Assets by segment 159,068,557 159,390,693 72,240,500 182,493,514 573,193,264

Brands 46,461,058

Goodwill 17,197,380

Liabilities by segment 280,486,144 84,249,126 64,735,823 75,491,635 504,962,728

Investments 8,739,010 4,088,024 1,452,545 373,665 14,653,244

Depreciation 12,900,975 4,522,423 2,920,426 624,208 20,968,032


revaluations and provisions 1,239,182 (831,198) 8,585,613 537,018 9,530,615

Sales by geographic segments are disclosed in Note 26. B.

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26. B. GEOGRAPhIC SEGMENTS

( in EUR ) 2011 2010

Net sales revenues

Slovenia 233,699,908 223,083,485

Foreign markets 31,037,365 25,005,373

Total 264,737,273 248,088,858

Assets

Slovenia 460,740,784 525,763,815

Foreign markets 26,606,693 47,112,300

Investments in associated companies - 317,148

Brands (Slovenia) 65,138,432 46,461,058

Goodwill (Slovenia) 17,197,380 17,197,380

Total 569,683,289 636,851,701

Investments

Slovenia 11,219,257 13,979,725

Foreign markets - 673,519

Total 11,219,257 14,653,244

Net sales revenues on foreign markets were predominantly realised on the markets of the former Yugo-

slavia while assets on foreign markets relate exclusively to assets in the countries of the former Yugoslavia.

27. LOSS PER ShARE

Net loss per share is calculated with the distribution of net revenue which belongs to the shareholders,

with the weighted average number of shares which are on the market during the year, with the exception of

the average number of own shares.

( in EUR ) 2011 2010

Total yield of majority shareholders (27,669,598) (25,574,602)


Own shares 38,079 42,973


Net yield per share (3.18) (2.94)

Adjusted yield per share (3.18) (2.94)

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( in EUR ) 2011 2010

Loss from continuig operating (20,801,140) (4,394,045)


Own shares 38,079 42,973




28. COMPREhENSIVE yIELD PER ShARE

( v EUR ) 2011 2010

Total coprehensive incom of majority owners’ share (6,045,902) (30,285,944)


Own shares 38,079 42,973





The parent company Pivovarna Laško, d. d. did not pay out dividends in 2011, nor did it pay dividends in

2010. In 2011 it only paid out dividends to its subsidiary Radenska, d. d. Minority shareholders of Radenska,

d. d. obtained dividends totalling EUR 64,835.

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30. DISCONTINUED OPERATIONS

Due to the termination of operations of the company Jadranska pivovara – Split, d. d., in accordance with

IFRS 5, Pivovarna Laško, d. d., disclosed the effets thereof under the heading discontinued operations:

NET PROFIT OR LOSS FOR ThE PERIOD DUE TO DISCONTINUED OPERATIONS

(FRUCTAL GROUP AND jADRANSKA PIVOVARA – SPLIT, D. D.)

( in EUR ) 2011 2010

Net sales revenues 58,675,181 56,098,848

Changes in inventories of products and work in progress 1,050,201 1,054,304

Capitalised own products and services 20,730 30,170

Other operating revenues 1,115,289 1,756,639

Costs of goods, materials and services (46,477,435) (44,729,950)

Labour costs (9,516,038) (10,945,522)

Amortisation and depreciation of (10,128,560) (22,862,116)

intangible and property, plant and equipment (84,745) (1,750,880)

Other operating liabilities (690,462) (995,811)

OPERATING PROFIT/LOSS (6,035,839) (22,344,318)

Financial revenues 202,074 156,966

Financial expenses (1,203,069) (1,445,328)

OPERATING PROFIT BEFORE TAXES (7,036,834) (23,632,680)

Taxes 1,777,821 59,221

Deferred taxes (2,109,497) (2,267,141)


PERIOD FROM RETAINED OPERATING PROFIT (6,705,158) (21,424,760)

Generated profit/loss per share

for majority stake from operations



CASh FLOw FROM DISCONTINUED OPERATIONS

( in EUR ) 2011 2010

Net cash flow from operating activities (182,087) 4,070,115

Net cash flow from investing activities 35,171,405 (1,188,127)


Total net cash flow 11,450,828 (160,661)

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31. SALE OF ThE FRUCTAL GROUP

Pivovarna Union, d. d. sold its investment in its Fructal, d. d., Ajdovščina for a contractual price of EUR

35,300,000 on 16 December 2011. It retained EUR 1,000,000 of the received proceeds for 18 months of the

date of the conclusion of sale which it shows among cash and cash equivalents. EUR 22,937,514 in loans

were repaid to banks from the acquisition price, while the remainder of the acquisition price in the amount

of EUR 11,362,486 was retained by Pivovarna Union in the form of short-term deposits with banks for the

purpose of repaying received loans.

32. FINANCIAL RISKS

32. A. CREDIT RISK

Credit risk comprises all risks having an effect on decreasing the economic benefits of the Group due to

the insolvency of business partners (buyers) and non-fulfilment of contractual liabilities. For this reason, the

Group regularly supervises and monitors financial receivables from both wholesalers and retailer customers.

The Company predominantly does business with known and verified business partners whose credit ratings

it monitors concurrently. Based on the aforementioned a limit is defined for each partner representing the

limit for goods that can be supplied to an individual buyer. Buyers displaying a markedly low credit rating

are provided with goods only on an advance payment basis. In this manner buyers are restricted from pur-

chasing goods exceeding their payment capacities. Within the scope of credit risk management, the Group

utilizes mutual and chain compensation which also have a positive effect on ensuring adequate cash flow for

the Group. Accounts receivables are insured with traditional instruments for claim insurance, such as: bill,

bank guarantee and mortgage. The finance departments of individual companies monitor the receivables

by business partner and maturity on a concurrent basis and through concurrent collection both internally

via their own collection offices and via external agencies with a large portion of receivables collected prior to

judicial enforcement. The charging of default interest, issuing of written reminders and in the end phase

also implementation of judicial enforcement of matured receivables has resulted in improved payment disci-

pline of buyers and limits the write-off of uncollectible receivables to a minimum. The Group did not record

any significant write-offs of receivables due to non-payment in 2011. Credit risk is managed and represents

a moderate degree of exposure.

32. B. INTEREST RATE RISK

Interest rate risks represent the possibility change in the interest rate on the financial market, mainly due

to taking out long-term loans linked to a variable interest rate (EURIBOR). According to economic forecasts

for the Euro area, a turnaround in the trend of projected growth of the reference rate can be expected. The

current forecast is moving towards a reduction in the Euribor. Financing under variable interest rate condi-

tions represents one third of all Company financing while the other two thirds represents loans with a fixed

interest rate. The hedging of interest rates is undoubtedly a good idea in the case of long-term debt based on

variable interest rates; the Company’s loan principals fall due in the next three years. The Group achieved

an agreement with bank creditors regarding a payment moratorium for all long-term credit instalments and

to extend the payment deadlines of all short-term loans till 30 March 2012. Events on the financial market

are monitored as due to the high degree of indebtedness the Group will have to conclude an appropriate

interest-rate hedge in the correct moment. The Group’s exposure to interest rate risks is assessed as still

high, but manageable.

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Average Amount interest Difference ( in EUR ) of interest rate in % in interest

Actual financial expenses from interest 23,961,900 5.18 -


rate is raised by 1% 28,587,749 6.18 4,625,849


rate is lowered by 1% 19,336,051 4.18 (4,625,849)


rate is raised by 1.5% 30,900,674 6.68 6,938,774


rate is lowered by 1.5% 17,023,126 3.68 (6,938,774)

If the average interest rate increased by 1% expenses would increase by EUR 4,625,849, and for 1.5% by

EUR 6,938,774.

If the average interest rate decreased by 1% expenses would decrease by EUR 4,625,849 EUR, and for 1.5%

by EUR 6,938,774

32. C. CURRENCy RISK

Currency risk had a negligible impact on the Group’s operations in 2011 for the majority of transactions

with foreign markets were denominated in euros.

32. D. LIqUIDITy RISK

As at 31 December 2011 the Laško Group shows a surplus of short-term liabilities over short-term assets in

the amount of EUR 148,014,634 which represents a high level of liquidity risk to which the parent company

Pivovarna Laško, d. d. is most exposed.


sale of all non-strategic investments began to be intensively implemented in 2010. In the event of suc-

cessfully concluded divestments, the Group will immensely decrease its indebtedness and consequently its

exposure to liquidity risk. Within the Group, indebtedness of individual companies will decrease in various

degrees. Uncertainty remains regarding the success of the divestment of financial investments and unnec-

essary property, even alongside a successful disinvestment the partner company Pivovarna Laško, d. d. will

still remain over-indebted while individual subsidiary companies will have an excess of freely liquid assets.

Therefore the payment of dividends by the subsidiaries is envisaged in the financial restructuring plan. In

this way the parent company would partially improve its liquidity position and business result. The increase

in sustainable sources would enable the maintenance and increase of value of the assets or its owners.

The sale of the Fructal Group was successfully concluded in 2011 while selling procedures for the remain-

ing investments were unsuccessfully concluded.

Procedures for the sale of a 79.25% stake in the newspaper company Večer, d. d., 100% stake in the

company Delo, d. d., 99.10% stake in the company Jadranska pivovara – Split, d. d. and a 23.34% stake in

the company Poslovni sistem Mercator, d. d. were being carried out in 2011. The Management Board will

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continue to endeavour to sell off non-strategic investments and assets not required for business and renew

activities with respect to divestment.

Until the successfully implemented sale of individual investments, the Group will experience serious li-

quidity problems which it will only be able to successfully resolve through agreements with banks (with the

latter acting as creditors or as important owners of the Group). The only solution for the liquidity position

of the Group in the event of the unsuccessful sale of the assets is the acquisition of new sustainable sources

(capital increase). Discussions with banks regarding the possibilities of a comprehensive reprogramming

of debt in the long-term are being carried out within the scope of strategic measures involving financial

restructuring as a supplement to permanent reconciliation with banks on the extension of payment for

matured loan instalments to the level of the Group. Discussions with regard to the reprogramming of debt

are being implemented daily whereas discussions regarding the acquisition of new sustainable sources have

not yet taken place.

It is calculated as a ratio between the total value of capital and number of shares:

( in EUR ) 2011 2010

Financial liabilities 388,962,339 406,826,783

Cash and cash equivalents 21,503,764 1,391,370

Net financial liabilities 367,458,575 405,435,413

Capital 125,473,457 131,889,003

Gearing ratio (in %) 292.86 307.41

From the gearing ratio, it is apparent that the Company is over-indebted.

32. E. CASh FLOw RISK

Cash flow risk is reflected in risk regarding the fair values of assets. Risk can be managed using derivative

financial instruments. The company did not insure against the fair value risks in 2011 therefore the risks

defined in the table below exist and relate to the shares of Poslovni sistem Mercator (MELR).

The market price of MELR shares as at 31 December 2011 was EUR 147. If the prices of the shares should

increase or decrease, a risk regarding a change in the fair values denoted in the table below could arise. In-

vestments carried at cost or investments in associated companies valuated in accordance with the rules of

the capital method are not included in the risk calculation.

Difference-effect Difference-effect Fair value on the value on revaluation Difference-effect as at of financial surplus/ on deferred ( in EUR ) 31 Dec 2011 investments profit or loss tax liabilities

Market value of MELR

shares as at 31 Dec 2011 129,189,627 - - -





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The Group breaks down the measurement of financial assets (categorised in accordance with IAS 39) in

the statement of financial position according to the following levels:

• Level 1: fair values are derived from market prices (excluding adjustments) on active securities markets,

• Level 2: fair value directly or indirectly derived from other sources on the market which can be monitored,

other than market prices in active markets for securities and

• Level 3: fair values resulting from valuation techniques based on the sources that that can not be moni-

tored on markets.

FINANCIAL ASSETS AVAILABLE-FOR-SALE MEASURED AT FAIR VALUE AS AT 31 DECEMBER

( in EUR ) 2011 2010

Level 1 129,487,600 7,809,049

Level 2 9,785,017 12,892,650

Level 3 8,190,000 9,178,904

Total 147,462,617 29,880,603

33. CONTINGENT LIABILITIES

Contingent liabilities refer to guarantees or sureties given in the amount of EUR 2,083,516 to associated

companies for loans taken out with banks and to other non-related entities in the amount of EUR 470,000.

It should be mentioned that contingent liabilities also include the contingent liability arising from the pa-

tronage statement signed by Mr. Boško Šrot, the previous Director of Pivovarna Laško, d. d. in January 2009

which was addressed to the company Pertutnina Ptuj, d. d. With this statement, the parent company Pivo-

varna Laško, d. d. guarantees Perutnina Ptuj, d. d. that it would fulfil the denoted obligations of EUR 20 mil-

lion with pertaining interest. Contingent liabilities of the Group in the annual report for the year ended on

31 December 2008 were not disclosed in accordance with IFRS. On 20 November 2009 Perutnina Ptuj, d. d.

demanded a refund of EUR 11,600,120 from the parent company Pivovarna Laško, d. d.. The denoted amount

regards a loan taken out on the basis of a signed patronage statement by Perutnina Ptuj, d. d. and approved

by the companies Center naložbe, d. d. and Infond Holding, d. d. The Group with the aid of legal experts is

examining the claim and desires to establish the likelihood of having to return the demanded amount. It has

obtained a number of legal opinions for this purpose. Based on the legal opinions obtained the management

of the Group estimates that no obligation to pay the demanded amount exists for the Group therefore the

Group did not disclose the said liability in its accounting ledgers.

On 15 February 2011 Pivovarna Laško, d. d. received a lawsuit in connection to the patronage statement

from the District Court in Celje which Mr. Boško Šrot as the Director of the Company supposedly signed on

10 January 2009. In the lawsuit, the plaintiff Perutnina Ptuj, d. d. is demanding a payment of EUR 10,116,489

with the legally prescribed default interest from 1 January 2010 onwards until payment. Pivovarna Laško, d. d.

has filed an appeal against the lawsuit in court.

Thirty plaintiffs - small shareholders of the company Mercator, d. d. filed an action against the companies

Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d. and Infond Holding, d. d. (undergoing bank-

ruptcy proceedings) for the payment of compensation (in the total amount of EUR 418,505.65) due to viola-

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tions of the Takeovers Act. The plaintiffs contend that due to the ommission of the duty for the sumbission

of the takeover bid on the part of Pivovarna Laško, d. d., Pivovarna Union, d. d., Radenska, d. d. and Infond

Holdinga, d. d., (undergoing bankruptcy proceedings), they were not aware of the takeover due to which they

suffered damages in the amount of EUR 257.19 per share. In a decision on 30 November 2011, the court re-

jected the demands of the plaintiffs as unfounded during one of the procedures. According to the court, the

denoted procedure was merely a draft procedure. The remaining plaintiffs began withdrawing their lawsuits

following the issue of the judgement. Twenty-four plaintiffs have withdrawn from the lawsuit to date. The

Group excepts the remaining plaintiffs to also withdraw their lawsuits.

On 13 January 2012, the Group received a lawsuit from the plaintiff Era Good, d. o. o. against the defend-

ants Pivovarna Laško, d. d., Pivovarna Union, d. d. and Radenska, d. d., Radenci regarding the payment of

compensation in a total amount of EUR 958,356.00 (Pivovarna Laško EUR 509,749.55, Pivovarna Union

EUR 348,458.24, Radenska EUR 100,148.21) with default interest. The defendant in its lawsuit asserts that

the rebate policy such as the one established by the Laško Group constitutes an abuse of its dominant posi-

tion under Prevention of the Restriction of Competition Act (ZPOmK-2), that it is discriminatory. Due to the

Laško Group’s policy of rebates, the plaintiff was placed at a competitive disadvantage and suffered damage

as a result. In this matter, the court issued a decision ordering the plaintiff and defendant to file a prepara-

tory form by 14 May 2012 at the latest in which they should indicate all relevant arguments and submit all

evidence. The Group feels the lawsuit to be without basis and unfounded.

The denationalisation beneficiaries Michael Wiesler and Barbara Purre-Wiesler (the grandchildren of Dr.

Anton Šairič) filed a request on 20 December 2010 in an out-of-court procedure based on the Enforcement

of Criminal Sanctions Act for the restitution of seized property which was nationalised from Anton Šarič

through a judgement of the court Sodišča slovenske narodne časti. The beneficiaries assessed the value of

the property to be EUR 14.5 million. The beneficiaries assessed the value of the assets to be EUR 14.5 mil-

lion. They are additionally enforcing the return of 12 brands of Radenska, d. d., Radencie and payment of

damages for the right to the mineral water and land on which the mineral water springs were located On 23

December 2010 the beneficiaries in accordance with the Enforcement of Criminal Sanctions Act carried out

the entry into the land register in the form of a notice of dispute on all land parcels that are the subject of the

denationalization procedure. The entry of the notice of dispute was also carried out for the aforementioned

brands of Radenska, d. d., Radenci. It is expected that resolution of the denoted denationalisation claims will

be a long-term process and may significantly affect future operations of the subsidiary Radenska, d. d. and

the Laško Group.

34. BUSINESS MERGERS

No business mergers were implemented in 2011.

35. RECEIPTS OF MANAGEMENT AND EMPLOyEES ACCORDING TO INDIVIDUAL CONTRACTS

The Management Board and Supervisory Board of the parent company Pivovarna Laško, d. d. and the

majority of companies associated with the Laško Group and their earnings for 2011 are presented in the

tables below:

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Other

Fixed part receipts

( in EUR ) of receipts (benefits) Total

MANAGEMENT BOARD

Dušan Zorko 252,800 12,734 265,534

Gorazd Lukman 132,000 6,089 138,089

Matej Oset 47,044 3,192 50,236

Mirjam Hočevar 92,000 2,454 94,454

Marjeta Zevnik 48,261 - 48,261

Drago Kavšek 132,000 5,715 137,715

Ales Škraba 45,226 - 45,226

Emilija Mitevska 21,299 - 21,299

Ilija Vidoevski 21,347 - 21,347

Milan Hojnik 44,800 4,584 49,384

Mira Močnik 83,688 2,341 86,029

Zvonko Murgelj 89,053 1,566 90,619

Jurij Giacomelli 141,120 15,427 156,547

Samo Čok 92,687 8,714 101,401

Borut Matjaščić 107,416 - 107,416

Robert Šega 30,000 1,053 31,053

Total 1,380,741 63,869 1,444,610

( in EUR ) 2011 2010

INDIVIDUAL CONTRACTS

Fixed part of receipts 3,523,669 3,705,769


Management and other contracts 3,000 -

Variable part (performance allowance) 197,080 175,494

Jubilee awards 1,595 -

Severance pay - 238,875

Total 3,928,019 4,315,016

( in EUR ) 2011 2010


Session fees 1,732 2,879

Total 1,732 2,879

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( in EUR ) 2011 2010


Marko Koleša 539 1,012

Peter Groznik 698 349

Bojan Košak 495 990

Marjan Mačkošek - 528

Total 1,732 2,879

( in EUR ) 2011 2010

SUPERVISORY BOARD

Marjan Mačkošek 9,048 4,845

Vladimir Malenković 16,335 4,080

Peter Groznik 13,381 3,018

Bojan Košak 7,320 3,762

Andrej Kebe 8,652 4,270

Aleksander Svetelšek 4,000 1,351

Anton Turnšek 6,796 7,417

Bojan Cizej 8,022 -

Dragica Čepin 13,682 9,183

Mirjam Hočevar 7,001 8,434

Marjeta Zevnik 12,426 14,896

Pavel Teršek 2,044 2,286

Franko Lipičar 4,173 2,895

Omar Dominik 4,173 2,895

Primož Mlekuš 1,192 -

Terezija Peterka 8,106 11,400

Robert Šega 6,194 6,194

Sonja Tominec - 2,559

Gorazd Šetina - 1,978

Tadeja Filipič Stojanovič - 2,156

Branko Šafarič - 2,156

Anton Medvešek 2,384 4,003

Iztok Počkaj Vilijam 667 1,110

Jure Jež - 1,110

Lilijana Ipavec 667 889

Franc Rojnik 1,703 4,258

Branimir Piano 5,419 5,419

Janko Remic 1,703 4,258

Jure Ferlin 5,419 2,860

Borut Jamnik 3,763 -

Borut Bratina 3,736 -

Total 158,006 119,682

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36. TRANSACTIONS wITh RELATED PARTIES

PURChASES FROM RELATED PARTIES

( in EUR ) 2011 2010

Purchases from subsidiary companies 327,161 163,978

Purchases from other affiliated companies 1,392,507 9,916,991

Total 1,719,668 10,080,969

( in EUR ) 2011 2010

Liabilities to subsidiary companies 23,422 23,664

Liabilities from purchases from

associated and other affiliated companies 76,215 2,569,364

Total 99,637 2,593,028

SALES TO RELATED PARTIES

( in EUR ) 2011 2010

Sales to subsidiary companies 5,228 -

Sales to associated companies and other affiliated companies 4,206,468 142,031,437

Total 4,211,696 142,031,437

( in EUR ) 2011 2010

Receivables from subsidiary companies 200 -

Receivables from sales to associated

and other affiliated companies 1,822,348 19,105,523

Total 1,822,548 19,105,523

37. BUSINESS EVENTS FOLLOwING ThE END OF ThE FISCAL yEAR

Business events following the end of the fiscal year in the Laško Group are described on pages 130 through

132 of the Business Report of the Annual Report, Chapter 2.15. No business events which could have an effect

on the financial statements occurred following the end of the fiscal year. The Group already denoted events

following the date of the financial statements for individual disclosures.

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4.2.8 STATEMENT OF ThE MANAGEMENT

The Management Board of the company Pivovarna Laško, d. d. is responsible for the preparation of the

annual report of the Laško Group as well as the financial statements, in a manner providing the public with

a fair presentation of the financial position and the results of operations of the companies in accordance

with the International Financial Reporting Standards adopted by the European Union and the Companies

Act for 2011.

The Management Board of Pivovarna Laško, d .d. confirms the Business Report and Consolidated Finan-

cial Statements of the Laško Group with explanatory notes for the year ended 31 December 2011 and declares:

• that the financial statements have been prepared under the assumption that the Laško Group is a going

concern;

• that appropriate accounting policies were consistently applied and that any changes thereof have been

disclosed;

• that the accounting estimates have been prepared in a fair and diligent manner and are in accordance

with the principle of prudence and good management.

The Management Board is responsible for the implementation of measures to ensure maintenance of the

value of the assets of the Laško Group and for the prevention and detection of fraud and other irregularities.


Dušan Zorko, MSc


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset


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•

wATER IS LIFE. AT

PIVOVARNA LAŠKO wE

PUT A PARTICULARLy

STRONG EMPhASIS ON ThE

COMMITMENT OF MAINTAINING

A hIGh qUALITy OF OUR

wATER SOURCES.

•

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N O T E S

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311

N O T E S

C O L O P H O N

Publisher: Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško

Design: atelje.Balant, Ljubljana

Text: Pivovarna Laško, d. d.

Translating: LPI.SI

Print: Tiskarna Formatisk, d. o. o., Ljubljana

Edition: 30

July 2012

Annual report 2011 lasko group

Documents

Transcript of Annual report 2011 lasko group